Aramco reports record net income of $161.1 billion in 2022
$161.1 billion in net income was a record in 2021 ($110.0 billion)
Record $186.2 billion in cash flow from operating activities (2021: $139.4 billion)
While work is being made on numerous fronts to offer dependable, affordable, and more sustainable energy, capital spending climbed 18.0% year over year
$148.5 billion in free cash flow, which is a record (2021: $107.5 billion)
Gearing ratio*: -7.9% as of December 31 (12.0% by the end of 2021)
Net income in Q4 2022 was around $3.3 billion, in line with the analyst estimate
In keeping with its goal to deliver a sustainable and progressive dividend, the board declared a Q4 cash distribution of $19.5 billion, an increase of 4.0% from Q3 2022
The board also suggests giving qualifying shareholders bonus shares
With the launch of a $1.5 billion sustainability fund and one of the largest projected carbon capture and storage centers in the world, there is a focus on low-carbon energy alternatives
With a 99.9% supply reliability rate, reliability has a strong track record
The Saudi Arabian Oil Company (also known as "Aramco" or "the Company") today released its financial results for the full year of 2022, announcing a record net income of $161.1 billion—its biggest annual profits as a publicly traded company. Aramco also issued a $19.5 billion dividend for the fourth quarter, which will be paid in the first quarter of 2023.
Stronger crude oil prices, better sales volumes, and increased margins for refined products all contributed to the positive results, and the company is continuing to expand its capacity for producing oil and gas as well as its downstream portfolio in order to satisfy anticipated future demand.
Amin H. Nasser, President and CEO of Aramco, commented on the findings:
"Aramco had record financial results in 2022, during which time oil prices rose as a result of rising global demand. Along with maintaining our long-term plan, we also worked to address energy security and sustainability by increasing capability and capacity throughout the value chain.
Given that we believe oil and gas will continue to be necessary for a while, underinvesting in our sector carries serious risks, including raising energy costs. Aramco has started the biggest capital spending program in its history in order to take advantage of our distinct advantages at scale and contribute to the global solution. Last year, our capex increased by 18.0% to reach $37.6 billion.
"Our focus is not only on increasing the production of oil, gas, and chemicals but also on investing in new, lower-carbon technologies with the potential to reduce emissions even further—in our own operations and for end users of our products."
Aramco's net income rose from $110.0 billion in 2021 to a record $161.1 billion in 2022, a 46.5% rise. Stronger crude oil prices, better sales volumes, and increased margins for refined goods are all factors contributing to the increase in net income. When certain non-cash items of $3.3 billion are excluded from the calculation, Q4 2022 net income is in line with analyst projections.
In contrast to the $107.5 billion in 2021, free cash flow* reached a record $148.5 billion in 2022. Aramco continues to prioritize having a solid balance sheet, and at the end of 2022, it had a gearing ratio of -7.9% as opposed to 12.0% at the end of 2021.
For the fourth quarter, Aramco declared a $19.5 billion dividend that would be paid in Q1 2023. This is in line with the company's dividend policy, which seeks to offer a sustainable and progressive dividend, and marks an increase of 4.0% over the prior quarter. The Board of Directors also recommended, subject to the necessary permissions from the Extraordinary General Assembly and regulatory bodies, the distribution of bonus shares to qualified shareholders in the ratio of one share for every ten shares owned.
The amount spent on capital projects in 2022 was $37.6 billion, up 18.0% from 2021. With foreign investments, Aramco anticipates 2023 capital expenditures to range between $45.0 billion and $55.0 billion, with capex rising until around the middle of the decade.
Another energy infrastructure deal that Aramco executed in February 2022 saw a group of investors, led by BlackRock Real Assets and Hassana Investment Company, pay $15.5 billion for a 49% share in the company's newly formed subsidiary, Aramco Gas Pipelines Company (AGPC).
13.6 million barrels of oil equivalent per day (mmboed), or 11.5 million barrels per day (mmbpd) of total liquids, were produced on average by Aramco in 2022.
By supplying crude oil and other products with a 99.9% reliability rate in 2022, Aramco maintained its illustrious history of supply reliability. This level of dependability was attained by Aramco for the third year in a row.
In order to boost the long-term productivity of Saudi Arabia's reservoirs, upstream is continuing to carry out its expansion strategies. It is also moving forward with the implementation of the government's directive to raise Aramco's crude oil MSC to 13.0 mmbpd by 2027.
By 2025, it is anticipated that the Marjan and Berri crude oil additions will have added production capacities of 300,000 barrels per day (bpd) and 250,000 bpd, respectively. Construction and engineering work on these projects is still ongoing.
By 2026, a central facility to process 600,000 bpd of crude oil from the Zuluf field is anticipated to be in place thanks to the Zuluf crude oil increase, which is currently in the engineering phase. The Dammam development project, which is anticipated to add 25,000 bpd and 50,000 bpd of crude oil by 2024 and 2027, respectively, is also still under construction.
The Haradh and Hawiyah fields' compression projects have started commissioning activities, and full capacity is anticipated to be attained in 2023. The first underground natural gas storage project in the Kingdom, the Hawiyah Unayzah Gas Reservoir Storage, is in an advanced stage of construction and has started its injection activities. By 2024, the program is expected to be able to supply the Kingdom's Master Gas System with up to 2.0 billion standard cubic feet per day of natural gas.
In order to take part in the construction of a significant integrated refinery and petrochemical complex in northeast China, Aramco made its final investment decision. The project offers Aramco the chance to provide the complex with up to 210,000 bpd of crude oil feedstock. Regulational approvals are one of the closing criteria for the deal.
Aramco entered into an equity purchase deal in August to pay $2.65 billion for the worldwide products division of Valvoline Inc. The strategic acquisition, which was finalized in March 2023, would enhance Aramco's portfolio of premium-branded lubricant products, improve its ability to produce base oils globally, and increase its in-house R&D efforts and relationships with original equipment manufacturers.
Three agreements with Polish refiner and fuel retailer PKN Orlen were finished in November, increasing Aramco's foothold in the downstream market in Europe. As part of the deal, the company obtained stock shares in a 210,000 bpd refinery in Gdask, as well as 100% ownership of a related wholesale company and 50% ownership of a joint venture for the distribution of jet fuel.
In December, Aramco and TotalEnergies decided to proceed with building a sizable petrochemical plant in Saudi Arabia. It will help Aramco improve its liquids-to-chemicals plan by enabling an existing SATORP refinery. The decision to invest is contingent on the usual approvals and closing requirements.
Aramco set up a $1.5 billion Sustainability Fund in October to put money into the technology required to achieve a secure and inclusive energy transition. The fund intends to invest in both the creation of new low-carbon fuels as well as technologies that support the company's publicly stated Scope 1 and Scope 2 net-zero 2050 ambitions in its wholly owned operational assets.
Aramco and the Ministry of Energy signed a collaborative development agreement in November to build one of the world's largest projected carbon capture and storage hubs in Jubail, Saudi Arabia, with a storage capacity of up to 9 million metric tons of carbon dioxide annually by 2027.