Saudi Aramco has benefited not only from a roughly 45% rise in oil prices this year, but also from the gradual increase in output by Saudi Arabia and other OPEC+ members. From January to March this year, Saudi Aramco produced an average of 10.2 million barrels per day, up 20% from a year earlier.
Saudi Aramco’s profits soared as oil prices and production surged.
On Sunday, May 15, Saudi Aramco, the world’s largest oil producer, announced its first-quarter 2022 financial results. According to the financial report, Saudi Aramco’s revenue in the first quarter was 467 billion riyals (about 110.35 billion US dollars), a year-on-year increase of 72%; operating profit was 277.71 billion riyals, an increase of 83% year-on-year.
Net profit (including minority interests) in the first quarter was 148 billion riyals (about 39.47 billion US dollars), compared with 81.44 billion rials (about 21.7 billion US dollars) in the same period last year, an increase of 82% year-on-year and an increase over the fourth quarter of 2021 21.9%.
Aramco’s first-quarter net profit is expected to be $38.5 billion, according to the median estimate of 12 analysts provided by the company. It was also the highest profit on record since its listing, after the Russian-Ukrainian crisis sent oil prices soaring.
In midday trading on May 11, Saudi Aramco’s share price hit an all-time high, with a market value of about $2.43 trillion, surpassing Apple for the first time since 2020 to become the world’s most valuable listed company. Profits at global energy companies such as BP and Shell have risen to their highest levels in at least a decade, driven by rising commodity prices. Like them, Aramco’s performance was boosted by a surge in crude oil prices following the escalation of the Russian-Ukrainian crisis in late February.
By the end of the first quarter, benchmark Brent crude was up nearly 70% from the end of March 2021 at $107.91 a barrel and is now at $111.19 a barrel.
In addition, the company has benefited not only from the roughly 45% rise in oil prices so far this year, but also from the gradual increase in production by Saudi Arabia and other OPEC+ members. From January to March this year, Saudi Aramco produced an average of 10.2 million barrels per day, up 20% from a year earlier.
At the end of 2019, Aramco went public in Riyadh, raising nearly $30 billion, selling 1.7 percent of its shares mainly to the Saudi public and regional institutions. The company said its net profit hit its highest quarterly level since listing, with the increase in first-quarter profit mainly due to higher crude oil prices and sales volumes, as well as higher margins in its refining, processing and sales divisions.
According to Reuters, Yousef Husseini, deputy head of equity research at EFG Hermes, said:
We believe Brent prices will be lower in the second half of the year, so we expect Aramco’s net profit to fall back and peak in the second quarter.
The company’s second-quarter dividend remained unchanged at $18.8 billion , in line with market expectations, and approved a dividend of 1 share for every 10 shares. Aramco also said that its downstream margins improved in the first quarter and that it was pursuing opportunities to develop its downstream division.
Saudi Aramco CEO Amin Nasser said in a statement:
During the first quarter, we made further progress in our strategic downstream expansion in Asia and Europe, and we continued to develop opportunities that complement our growth goals.
Shares in the company have risen 25% since the end of 2021, outpacing the nearly 14% rise of the Saudi benchmark index.
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