Saudi Aramco made a lot of money in 2022.
Last year was a banner year for the world’s largest fossil fuel producers, but by comparison to Mohammed Bin Salman’s state behemoth, your favorite supermajor is a super-minor.
Although a detailed breakdown wasn’t due until Monday, full-year results released Sunday suggested Aramco’s net income in Q4 was $31 billion, double Exxon’s Q4 profit — plus an extra $5 billion.
Do note: That $31 billion quarterly haul was actually the “worst” quarter for Aramco since Q3 2021. So, Aramco made $11 billion more during its worst quarter in more than a year, than Exxon made in its best quarter in 152 years of corporate history (Q3 2022’s $20 billion haul).
The comparison isn’t apples-to-apples. But it’s not apples-to-oranges either. And it sure is amusing. Note that the Saudi economy is performing very well, even the non-oil sector. Business activity expanded at the briskest pace since 2015 last month.
For the full year, Aramco made $161 billion, almost triple Exxon’s adjusted full-year total. The other supermajors aren’t even in the same ballpark.
“Aramco delivered record financial performance in 2022, as oil prices strengthened due to increased demand around the world,” CEO Amin Nasser said Sunday. “We also continued to focus on our long-term strategy, building both capacity and capability across the value chain with the aim of addressing energy security and sustainability.”
While US majors are busy weighing the imperative of pacifying shareholders (who, seeing the writing on the wall vis-à-vis the phasing out of “dirty” energy, are trying to extract as much money as they can now to the detriment of capex) against political pressure to invest in production capacity (which they recognize as a gambit to placate voters, not any kind of about-face on clean energy), Aramco is doing both. The company raised its dividend and said it’ll lift capex by as much as 46% this year, to $55 billion (at the high-end).
Of course, Aramco doesn’t have to navigate the contradictory interplay between shareholder myopia tied to medium- and long-term government environmental planning and election-cycle expediency. By and large, the shareholders are the government and vice versa, and the government is just one guy. That really simplifies the strategic planning process.
“Given that we anticipate oil and gas will remain essential for the foreseeable future, the risks of underinvestment in our industry are real — including contributing to higher energy prices,” Nasser went on, adding that Aramco wants to be “part of the solution.” Fortunately in that regard, Aramco has “unique advantages” over other global producers, which allow it to “embark on the largest capital spending program in history.”
You can write your own jokes. Aramco’s quarterly earnings releases are the Ghawar reservoir of financial punchlines. Last year’s dividend was $75.8 billion. And they covered it pretty easily. Free cash flow was nearly $150 billion.
