Aramco profit drops 24% to $121bn on lower crude prices

Aramco

Saudi Aramco said net profit fell 24 percent year on year to SAR455 billion ($121.3 billion) in 2023.

The profit drop was due to lower crude oil prices and volume sales, as well as reduced refining and chemicals margins, despite decreased production royalties and lower income taxes.

Free cash flow reached $101 billion last year, compared to $148.5 billion in 2022.

Total dividends reached $97.8 billion in 2023, up 30 percent year on year.

The world’s largest oil producer also declared a base dividend of $20.3 billion for the fourth quarter of 2023, which will be paid in the first quarter of 2024.

Last August, the company announced its intention to calculate the first performance-linked dividends based on the combined full-year results of 2022 and 2023.

The payout would be distributed over six quarters starting from the third quarter of 2023.

The full-year performance-linked dividend to be paid this year is expected to be $43.1 billion, including the $10.8 billion in the first quarter, subject to the board’s approval.

“In 2023, we achieved our second-highest ever net income. Our resilience and agility contributed to healthy cash flows and high levels of profitability, despite a backdrop of economic headwinds,” said president and CEO Amin Nasser.

Last year, capital investments reached nearly $50 billion, including $42 billion organic capex, up 28 percent year on year.

However, Aramco expects capital investments to be between $48 and $58 billion this year, growing until the middle of the decade.

Additionally, the directive to maintain maximum sustainable capacity (MSC) at 12 million barrels per day (bpd), mainly from the deferral of projects not yet commissioned and reductions in infill drilling, is expected to reduce capital investment by $40 billion between 2024 and 2028.

“The recent directive from the government to maintain our MSC provides increased flexibility, as well as an opportunity to focus on increasing gas production and growing our liquids-to-chemicals business.

“At the same time, we continue to make progress on several strategic crude oil increments, which will contribute to our reliability, operational flexibility and ability to seize market opportunities,” Nasser added.

Average hydrocarbon production stood at 12.8 million barrels of oil equivalent per day (mmboed), including 10.7 million bpd of total liquids.

Progress continues on the Marjan, Berri, Dammam, and Zuluf crude increment projects. In addition, the gas projects are also advancing, with a goal of increasing production by more than 60 percent by 2030 compared to 2021.

These projects include the Hawiyah Unayzah gas reservoir storage, Hawiyah gas plant expansion and the first unconventional tight gas from the South Ghawar operational area.

Saudi Arabia last week completed the transfer of an 8 percent stake in Aramco to the sovereign Public Investment Fund ahead of a planned flotation of the oil major.

“The transfer is a continuation of Saudi Arabia’s long-term initiatives to boost and diversify the national economy and expand investment opportunities in line with Vision 2030,” state-owned Saudi Press Agency reported, citing Crown Prince and Prime Minister Mohammed bin Salman.

The share transfer will further solidify PIF’s strong financial position and credit rating, he added.

Following the transfer, the government’s total ownership of Aramco will be 82 percent.

The stake is worth $163.6 billion, Reuters reported, citing Aramco’s market capitalisation.