Saudi Aramco posts $39.5 billion in first-quarter profit

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The Saudi Arabian Oil Company (Aramco) posted an 82% year-on-year increase in net profit to $39.5 billion, setting a new quarterly profit record for the company since its IPO in 2019, as it benefited from higher crude prices and improved. downstream margins.

Aramco also declared a first quarter dividend of $18.8 billion to be paid in the second quarter and approved the distribution of one free share for every 10 shares held in the company.

Chairman and CEO Amin H. Nasser said amid heightened global market volatility, he remains focused on meeting global demand for reliable, affordable and increasingly sustainable energy.

“Energy security is vital and we are investing for the long term, expanding our oil and gas production capacity to meet projected demand growth and creating long-term shareholder value by capitalizing on our low lifting, our low carbon upstream and our integrated downstream business,” he said.

“As we work with national and international partners to explore new and emerging technologies and solutions, from developing cleaner transportation technologies to establishing low-emission hydrogen and ammonia value chains I am more optimistic than ever about the positive contribution we can make, both to our customers and to the ongoing global energy transition.

Aramco First Quarter Financial Highlights

Cash flow from operating activities was $38.2 billion in the first quarter compared to $26.5 billion in the first quarter of 2021, free cash flow increased 68% year-on-year to reached $30.6 billion and capital expenditure amounted to $7.6 billion.

Its debt ratio decreased to 8% as of March 31, 2022, compared to 14.2% as of December 31, 2021, due to an increase in cash and cash equivalents, mainly attributable to operating cash flows. and higher treasury proceeds from the Aramco pipeline transaction.

Aramco reduced its total borrowings primarily through a prepayment to the Public Investment Fund in January, reducing the total principal amount outstanding on the $8 billion promissory notes originally issued in the acquisition of a 70% stake in SABIC, leading to a reduction in financing costs.

It has entered into a lease and sale-leaseback agreement involving its gas pipeline network with a consortium of investors led by BlackRock Real Assets and Hassana Investment Company. The consortium acquired a 49% stake in a new Aramco subsidiary, Aramco Gas Pipelines Company, with Aramco receiving initial proceeds of $15.5 billion.

Aramco First Quarter Operational Highlights

Aramco demonstrated reliable upstream performance with average total hydrocarbon production of 13 million barrels per day in the first quarter.

The company achieved 99.9% reliability in customer deliveries during the quarter and in its upstream business it made progress towards completion of the Hawiyah and Haradh compressor projects, both scheduled to enter service in by the end of 2022, adding 1.3 billion standard cubic feet per day (bscfd) of raw gas.

The company has also brought forward the construction of the Hawiyah Gas Plant Expansion (pictured), part of Haradh Gas’ incremental program, which is expected to be commissioned in 2023.

Aramco agreed to acquire a 30% stake in a 210,000 bpd refinery in Gdansk, Poland, as well as full ownership of an associated wholesale business, and also purchased a 50% stake in a Polish jet fuel marketing joint venture with BP.

The finalization of the acquisitions, from the Polish refiner and distributor of fuel Grupa LOTOS within the framework of its proposed merger with PKN Orlen, is subject to regulatory approvals.

In China, it made a final investment decision to participate in the development of a major integrated refining and petrochemicals complex. The joint venture, with North Huajin Chemical Industries Group Corporation and Panjin Xincheng Industrial Group, includes the establishment of a refinery and a 300,000 barrel per day petrochemical complex, subject to the completion of the joint venture transaction.

During the quarter, Aramco entered into new collaborations aimed at leveraging its global research and development network to advance low-emission transportation solutions.

These include a partnership with Hyundai Motor Group and King Abdullah University of Science and Technology (KAUST) to jointly research and develop an advanced fuel for hybrid electric vehicles to reduce their CO2 emissions.

Aramco has also entered into a long-term strategic partnership with Formula 1 team Aston Martin Aramco Cognizant and, through joint R&D, will support the team’s efforts to achieve Formula 1’s goal of sustainable fuels, as well as the development of fuel-efficient engine technologies for the road. more efficient hybrid vehicles and engines in motorsport.

The company has also expanded its international cooperation on the development of non-metallic solutions for the building industry, partnering with the China Building Materials Academy (CBMA) to launch the Non-Metallic Center of Excellence and Innovation. Metals (NEXCEL) in Beijing.

The center aims to promote the development and application of non-metallic technologies in structures to reduce their carbon footprint and provide superior life cycle cost, efficiency and environmental benefits over metallic alternatives.

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