Saudi Arabian Oil Co., better known as Saudi Aramco, has revealed that it is the world’s most profitable company. Saudi Arabia’s state-owned oil giant provided the first official glimpse of its earnings figures ahead of its debut international bond issuance on Monday.
The company has so far been reluctant to divulge its financial results, but it had to reveal them now so as to obtain a credit rating before its launch in the international bond market.
Aramco’s planned bond sale follows its announcement on March 27 of the acquisition of a 70 percent stake in petrochemical group Saudi Basic Industries Corp. or SABIC from the Public Investment Fund of Saudi Arabia in a private transaction for 259.13 billion Saudi riyal, or $69.1 billion.
For the year ended December 31, 2018, Aramco revealed net income of 416.52 billion Saudi riyal, or $111.07 billion. This compared to net income of 284.62 billion riyal in the prior year.
In contrast, Apple Inc. (AAPL), the world’s most profitable public company, reported net income of $59.53 billion in 2018. ExxonMobil Corp. (XOM), the largest U.S. oil company, made a profit of $20.84 billion in fiscal 2018.
Aramco’s revenue for the year was $355.94 billion, compared to ExxonMobil’s revenues of $290.21 billion and Apple’s revenues of $265.60 billion.
At the end of 2018, Aramco had cash and cash equivalents of $48.84 billion, while its net debt was $27.02 billion.
Aramco said in a statement that it has established a Global Medium Term Note Program and will conduct a series of fixed income investor meetings commencing on April 1, 2019.
The company also said that an offering of U.S. dollar-denominated senior unsecured notes under the program may follow, subject to market conditions.
Rating agencies Fitch Ratings Ltd. and Moody’s Investors Service Ltd. have issued a long-term issuer rating on Aramco of A+ and A1 respectively.
Saudi Aramco Pumps Oil at Fraction of Rivals’ Costs and Way More of It
Saudi Aramco can pump oil at a fraction of the cost of rivals and extracts more from beneath the Arabian Peninsula’s deserts and seas than the output of the five biggest international producers combined, helping clinch its spot as the world’s most profitable company.
The government-owned producer in Saudi Arabia extracts crude for $2.80 a barrel, less than half the costs of nearest rival Equinor ASA of Norway and a fifth of Exxon Mobil Corp.’s. The information comes from the prospectus for Saudi Aramco’s debut dollar bond and a person with knowledge of a presentation to investors.
Pumping Up Profits
Aramco extracts crude for a fraction of the cost of rivals.
The abundance of cheap crude makes for a raft of superlatives: crude production that’s exceeded 10 million barrels a day on average every year since 2015 makes it the world’s largest oil producing company; profit of $111 billion last year exceeds that of the world’s biggest companies.
Aramco’s low cost of production creates world-beating profit but cash flow lags rivals
Aramco is seeking to expand refining capacity and chemical production to better balance its business and sustain profit when oil prices slide.
Company’s 3.1 million barrels a day of net refining capacity make it world’s fourth-largest integrated refiner. Capacity will rise to 3.7 million barrels a day when two plants start later this year.
Aramco pumped 10.3 million barrels of crude a day in 2018.
Total liquids production of 11.6 million barrels a day last year was more than 20 percent greater than the combined production of Exxon, Chevron Corp., Total SA, Royal Dutch Shell Plc. and BP Plc.
Aramco’s also its own power utility: the company plans to nearly double electricity generating capacity to 12.2 gigawatts by 2020 from 6.54 gigawatts now.