Saudi Aramco now boasts the title of the world’s most valuable company after reporting its first-quarter earnings. Aramco’s record net income of $39.5 billion represents an 82% increase year-over-year thanks to higher crude prices and widening downstream margins.
In a statement, Aramco said it plans to issue a first- quarter dividend of $18.8 billion during the second quarter. It became a publicly traded company on Riyadh's stock exchange in December 2019.The Saudi Arabian government owns 98% of the company.
The ascendance of Aramco has dethroned US tech giant Apple which became the world’s first publicly traded company to reach a market value over $3 trillion earlier this year. However, the recent rout in technology stocks has since diminished Apple’s value to around $2.3 trillion.
Apple was seen as ushering in a new era of tech dominance in 2011 when for the first time the computer and phone maker surpassed ExxonMobil’s market capitalization to become the world’s most valuable listed company.
As of this month, Aramco’s market capitalization is more than $2.4 trillion and comes on the heels of surging crude prices.
Following Russia’s invasion of Ukraine, global crude prices reached a 14-year high of $139/bbl in March but have since retreated lower. On Monday, 16 May, both West Texas Intermediate and Brent crude futures traded above $113/bbl.
According to the International Energy Agency, Russia’s crude output started the year at around 10 million B/D but dropped by 700,000 B/D in April as wells were shut in. The agency estimates that as of May, Russia's shortfall will total 3 million B/D due to storage limits and the impact of international sanctions.
Amin Nasser, Aramco president and CEO, said in a statement on the quarterly results that the oil company is pushing to increase its oil and gas production ceiling to meet demand growth.
“Against the backdrop of increased volatility in global markets, we remain focused on helping meet the world’s demand for energy that is reliable, affordable, and increasingly sustainable,” he said.
Combined hydrocarbon production is reported by Aramco to be at 13 million BOE/D. Crude production by itself is around 12 million B/D.
Aramco's goal to raise its capacity ceiling to between 13.3 and 13.4 million B/D by 2026 or 2027. That aim was reiterated on Monday by Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman who was speaking at an energy conference .
In regard to Aramco’s downstream gains of late, the energy minister pointed to a chart showing refining margins hitting record highs of $47/bbl. He said the figure represents a 650% increase over the 5-year average ending in March, which is when margins began to soar.
“What does this tell you? Simple—it tells you that there is no refining capacity commensurate with the current demand,” or for the demand expected to be reached over the next few months, said Bin Salman.
He added that Aramco’s plans to lift its production capacity will be aided in large part by offshore developments along with greenfield projects in the Neutral Zone that is shared with Kuwait.
Other upstream developments highlighted by Aramco included the near completion of gas compression projects at the Haradh and Hawiyah fields which is expected to add 1.3 Bcf/D of gas supply by year’s end.
