Surging oil prices propelled Saudi Aramco to its best quarter since the 2019 IPO, the Kingdom’s crown jewel said Sunday.
Net income rose 82% YoY to $39.5 billion, a stupendous haul that made a mockery of Western producers.
The figure (below) speaks for itself, but just in case: Aramco nearly quadrupled the next best haul from a supermajor, even after adjusting for various writedowns related to Russia.
For additional context, note that Aramco’s Q1 profit topped Apple’s 2021 holiday quarter haul and exceeded Goldman’s net earnings for the entire year. If you’d be inclined to say those comparisons are apples to oranges, I’d say: Exactly.
“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,” CEO Amin Nasser said Sunday, apparently without irony.
The company declared a dividend of almost $19 billion to be paid in Q2, and approved the distribution of one bonus share for every 10 shares held.
Aramco’s quarterly profit was its largest as a public company (figure below). In addition to higher oil prices, Q1’s gusher also reflected higher volumes and better downstream margins.
Nasser touted expansions in Asia and Europe and said he’s “more optimistic than ever” about Aramco’s potential to make a “positive contribution” to the global energy transition.
Consider this: Aramco’s net income during the depths of the oil crisis would’ve looked respectable had a supermajor reported the same figures during the first quarter of 2022, the best quarter for the world’s oil giants in years.
For example, Chevron’s Q1 adjusted net income was $6.5 billion, the highest in a decade. Aramco earned more than that during Q2 2020. Chevron’s Q1 free cash flow was $6.1 billion, the most since 2004. That figure for Aramco: $31 billion.
Early last week, as US tech shares crumbled, Aramco overtook Apple as the world’s most valuable company. “You can’t compare Apple to Saudi Aramco in terms of their businesses or fundamentals,” one CIO mused, in remarks to Bloomberg.
“Energy security is vital and we are investing for the long-term, expanding our oil and gas production capacity to meet anticipated demand growth,” Nasser went on to say Sunday.
Tim Cook, while commenting on Apple’s results late last month, reiterated that the company is “committed to being a force for good in the world, both in what we create and what we leave behind.”
Aramco’s shares are up 20% in 2022. Apple’s are down 19%.
How should stakeholders respond or think about those last two paragraphs?
Maybe the government is supposed to direct fundamentals such as “good,” but it’s resume over the last couple decades doesn’t show they feel the onus regarding energy. Now that fossil fuels are back en vogue for securities and cost of living, things will face even more friction.