Saudi Aramco Posts Record Annual Profits – OpEd
Saudi Aramco announced on Sunday its full-year 2022 financial results, reporting a record net income of US$161.1 billion — its highest annual profits as a listed company. Aramco also declared a fourth quarter dividend of US$19.5 billion, to be paid in the first quarter of 2023.
Commenting on the results, Aramco President and CEO Amin H. Nasser said, “Aramco delivered record financial performance in 2022, as oil prices strengthened due to increased demand around the world.
“We also continued to focus on our long-term strategy, building both capacity and capability across the value chain with the aim of addressing energy security and sustainability.”
“Given that we anticipate oil and gas will remain essential for the foreseeable future, the risks of underinvestment in our industry are real — including contributing to higher energy prices.
“To leverage our unique advantages at scale and be part of the global solution, Aramco has embarked on the largest capital spending program in its history, and last year our capex rose by 18.0% to reach US$37.6 billion.”
“Our focus is not only on expanding oil, gas and chemicals production, but also investing in new lower-carbon technologies with potential to achieve additional emission reductions — in our own operations and for end users of our products,” he added.
Aramco’s net income grew to a record US$161.1 billion in 2022, from US$110.0 billion in 2021, an increase by 46.5%.
The increase in net income reflects stronger crude oil prices; higher volumes sold and improved margins for refined products. Q4 2022 net income is in line with analyst estimates, excluding certain non-cash items of around US$3.3 billion.
Free cash flow reached a record US$148.5 billion in 2022, as compared to US$107.5 billion in 2021. Aramco continues to emphasize a strong balance sheet and its gearing ratio at the end of 2022 was -7.9%, compared to 12.0% at the end of 2021.
Aramco declared a dividend of US$19.5 billion for the fourth quarter, to be paid in Q1 2023. This represents a 4.0% increase compared to the previous quarter, aligned with the company’s dividend policy aiming to deliver a sustainable and progressive dividend.
Additionally, the Board of Directors also recommended the distribution of bonus shares to eligible shareholders in the amount of one share for every 10 shares held, subject to required Extraordinary General Assembly and regulatory approvals.
Capital expenditure in 2022 was US$37.6 billion, an increase of 18.0% from 2021. Aramco expects 2023 capital expenditure to be approximately US$45.0 billion to US$55.0 billion including external investments, with capex increasing until around the middle of the decade.
Aramco also completed an energy infrastructure deal in February 2022 resulting in a consortium of investors, led by BlackRock Real Assets and Hassana Investment Company, acquiring a 49% stake in a newly formed subsidiary, Aramco Gas Pipelines Company (AGPC), for US$15.5 billion.