Aramco Reports Net Income of $121.3 Billion

Underpinned by its unique operational flexibility, reliability and low-cost production base, reflect the Company’s ongoing commitment to creating value for its shareholders, Saudi Aramco, the global Arabia’s oil major, on Sunday reported its second highest ever net income of $121.3 billion, compared with $161.1 billion in 2022.

The year-on-year decrease is attributed to lower crude oil prices and volumes sold, as well as reduced refining and chemicals margins, partially offset by a decrease in production royalties during the year and lower income taxes and zakat.

Free cash flow reached $101.2 billion in 2023, compared with $148.5 billion in 2022 and the company’s balance sheet remains strong and its gearing ratio at the end of 2023 was -6.3%, compared to -7.9% at the end of 2022.

Total dividends of $97.8 billion were paid in 2023, up 30% from 2022. Aramco declared a base dividend of $20.3 billion for the fourth quarter, to be paid in Q1 of 2024. In addition, the Board has approved the third distribution of performance-linked dividends in the amount of $10.8 billion.

In August 2023, the company announced its intention to calculate the first performance-linked dividends based on the combined full-year results of 2022 and 2023, to be distributed over six quarters starting from the third quarter of 2023.

The full year performance-linked dividend to be paid in 2024 is expected to be $43.1 billion, including the $10.8 billion in Q1, based on the previously announced mechanism and subject to Board approval.

Capital Investments

On other hand, capital investments in 2023 reached $49.7 billion, including $42.2 billion organic capex. This represents a 28% increase from capital investments of $38.8 billion in 2022, including $37.6 billion organic capex.

Aramco expects 2024 capital investments to be approximately $48 to $58 billion, growing until around the middle of the decade. The directive to maintain maximum sustainable capacity at 12 million barrels per day, mainly from deferral of projects not yet commissioned and reductions in infill drilling, is expected to reduce capital investment by approximately $40 billion between 2024 and 2028.

Amin H Nasser, Aramco President & CEO, said that in 2023, the company achieved its second-highest ever net income. Its resilience and agility contributed to healthy cash flows and high levels of profitability, despite a backdrop of economic headwinds.

He said that the capital expenditures increased in line with guidance as the company sought to create and capture additional value from its operations, positioning itself for a future in which oil and gas will be a key part of the global energy mix for many decades to come, alongside new energy solutions.

“The recent directive from the government to maintain our maximum sustainable capacity at 12 million barrels per day provides increased flexibility, as well as an opportunity to focus on increasing gas production and growing our liquids-to-chemicals business. At the same time, we continue to make progress on several strategic crude oil increments which will contribute to our reliability, operational flexibility and ability to seize market opportunities,” he said.

He added: “In parallel, announcements of our first international investment in LNG, the growth of our international retail operations, continued progress in major overseas refining and chemical projects, and our emerging new energies portfolio all serve to highlight our ability to capitalize on new market opportunities and advance our strategic objectives.”

Smooth Progress

The company continued its progress on Marjan, Berri, Dammam and Zuluf crude increment projects, which are intended to enhance Aramco’s reliability, operational flexibility and ability to capture value from higher global demand, while contributing to its capability to maintain a maximum sustainable capacity of 12 mmbpd.

Aramco’s gas projects were also advancing with the aim of increasing gas production by more than 60% by 2030, compared to 2021 levels.

These projects include the Hawiyah Unayzah Gas Reservoir Storage, where injection activities have commenced with the goal of providing up to  two billion standard cubic feet per day (bscfd) for reintroduction into the master gas system; completion of the Hawiyah Gas Plant expansion, increasing the plant’s raw gas processing capacity by 800 million standard cubic feet per day (mmscfd), including approximately 750 mmscfd of sales gas capacity; and production of the first unconventional tight gas from the South Ghawar operational area.

The company also announced its first international investment in LNG, following the signing of definitive agreements to acquire a strategic minority stake in MidOcean Energy. Completion of the transaction is subject to closing conditions, which include regulatory approvals.

In line with Aramco’s strategic goal to advance its liquids-to-chemicals strategy, the Company acquired a 10% interest in Rongsheng Petrochemical Company Limited (Rongsheng Petrochemical).