Saudi Aramco Q1 profit soars 82% on high oil prices

Saudi Aramco posted its highest profit since its record stock-market listing, after oil prices surged in the wake of Russia’s invasion of Ukraine.

Aramco, which last week surpassed Apple Inc. to become the world’s most valuable company, followed Big Oil rivals such as Shell Plc and BP Plc in reporting bumper earnings for the first quarter. Like them, the Saudi Arabian firm’s results were boosted by crude’s jump to $110 a barrel after Moscow’s attack in late February.

State-controlled Aramco made net income of $39.5 billion, up 82 per cent from a year earlier, when global energy demand was still severely suppressed by the coronavirus pandemic.

The company’s free cash flow rose almost to $31 billion, though it opted to keep its quarterly dividend unchanged at $18.8 billion. That enabled Aramco to reduce its leverage. Gearing, a measure of debt to equity, fell from 14 per cent in December to 8 per cent at the end of March. The gauge spiked above 20 per cent during the pandemic as profit slumped, forcing Aramco to borrow more.

Aramco has benefited this year not just from oil climbing about 45 per cent, but also from Saudi Arabia gradually increasing production along with other members of Opec+. The kingdom’s crude output averaged 10.2 million barrels a day between January and March, up 20 per cent.

Production is meant to keep growing until at least September, when the current agreement between the Organization of Petroleum Exporting Countries and its partners – a 23nation group led by the Saudis and Russia – expires.

Aramco’s shares rose 3.2 per cent to 41.95 riyals on Sunday, extending their gain this year to 29 per cent. The company raised almost $30 billion with an initial public offering in Riyadh in late 2019, though it’s still 98 per cent owned by the government. It is now valued at $2.46 trillion.

Saudi Arabia is one of the few major petroleum producers trying to boost output capacity. Many others are cutting back on exploration as they shift to renewable energy and try to curb their greenhouse gas emissions. The Saudis have blamed the run up in prices on the fall in investment.

Aramco is spending billions of dollars to increase its maximum sustainable crude output to 13 million barrels a day from 12 million by 2027.

It’s also aiming to raise natural gas output more than 50 per cent by 2030.