Saudi Aramco Becomes Second Biggest Company in the World

Saudi Aramco has overtaken global tech giant Microsoft and became the world’s second largest company as its market value has soared to $2.11 trillion, second only to another global tech giant Apple Inc.

Aramco occupied the second place after Aramco’s shares rose on following the Saudi Arabia’s Crown Prince and Prime Minister His Royal Highness Mohamed bin Salman’s announcement to transfer 4% of the state oil company to ‘Sanabil,’ an entity owned by the Saudi Sovereign Wealth Fund PIF (Public Investment Fund) in April this year.

The transfer was made to strengthen the PIF’s financial position and its credit rating, the Crown Prince said about three weeks ago.

“This is a private transfer between the Kingdom and Sanabil, and the company is not a party to the transfer and did not enter into any agreements or pay or receive any proceeds from the transfer,” Aramco said in a stock exchange filing.

Net Profits in 2022

Aramco reported a net profit of $161.1 billion for 2022, up from $110 billion a year earlier and a record net earnings result for the company, which joins every other big oil producer in the world to benefit from higher oil prices. This is the highest profit ever declared by an oil firm anywhere in the world.

The jump in profits also made Aramco the world’s most profitable company last year, ahead of Apple and the rest of big tech firms. The 2022 profit figure was, in fact, higher than the profits of Apple, Exxon, and Microsoft combined.

The oil company also boasted a record cash flow from operating activities, at $186.2 billion, and a record free cash flow, at $148.5 billion.

In comments on the company’s results, chief executive Amin Nasser noted that he expected oil and gas demand across the world to remain robust, fuelling the future growth of the company. He also cautioned, however, that global underinvestment in new production threatened the security of supply.

Stable Outlook

Saudi Aramco’s profits for 2022 exceeded the profits of Apple, Microsoft, and ExxonMobil combined, according to the ranking on the Companies Market Cap website. Fitch Ratings have also upgraded Saudi Aramco’s rating to A+, with a stable outlook.

It is also the company’s highest-ever profits since being listed, up by 46.5% to 604 billion riyals ($161 billion), compared with 412.4 billion riyals ($109 billion) in 2021.

Saudi Aramco’s first quarter 2023 results will be released on 9 May 2023 and the company has kept an open policy and already announced that it has every intention to increase its crude production by spending up to $55 billion in 2023 on capital projects.

According to OPEC Chief correspondent Amena Bakr, the company’s Q1-2023 net income estimate, which is based on 16 analyst forecasts, is $31.2 billion.

Saudi Arabia currently has a production capacity of 12 million barrels per day (BPD) and the company plans to expand it by 1 million BPD by 2027 through a series of offshore and onshore incremental projects.

Additional Oil

In March 2023, Amin Nasser said that the company was aiming for 3 million BPD of additional oil export capacity by the end of this decade. This will be led by incremental oil and gas projects in the country and by replacing liquid fuels.

According to Nasser, one million BPD additional crude capacity would come from Aramco’s ongoing capacity enhancement program by 2027, and an additional one million BPD from availing additional gas in the utility sector, which is presently being used as liquids.

He also said that the expansion work on Aramco’s gas production capacity will bring additional natural gas liquids and condensate, freeing up another one million BPD by 2030. He, however, noted that there is no government mandate to go beyond 13 million BPD of oil production at present.