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    Aramco sees profits soar in 2021 on higher prices

Summary

The Saudi state oil company delivered on its promise to pay $75bn in dividends for 2021.

by: NGW

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Aramco sees profits soar in 2021 on higher prices

Saudi Aramco saw its net profit more than double to $110bn in 2021 from $49bn a year earlier, on the back of higher prices, the company reported on March 21.

Cash flow from operating activities climbed to $139.4bn, from $76.1bn, while free cash flow leapt up to $107.5bn, from $49.1bn. The company also managed to reduce its gearing ratio to 14.2% by the end of December, versus 23% a year earlier.

Aramco declared a dividend of $18.8bn for the fourth quarter of last year, which it said would be paid by the end of this month. This will bring its full dividend for 2021 to $75bn, in line with the Saudi government's promise to investors when it took Aramco public in December 2019.

"Our strong results are a testament to our financial discipline, flexibility through evolving market conditions and steadfast focus on our long-term growth strategy, which targets value growth for our shareholders," Aramco CEO Amin Nasser said in a statement. However, he warned that while economic conditions had improved considerably, "the outlook remains uncertain due to various macro-economic and geopolitical factors."

Russia's invasion of Ukraine has exacerbated the economic instability that resulted from the coronavirus pandemic. There is also runaway global inflation, and while the energy crisis has benefitted oil and gas producers in the short term, there are concerns that it could result in demand destruction over the long term.

Aramco's average hydrocarbon production was 12.3mn barrels of oil equivalent/day in 2021, including 9.2mn boe/d of crude oil. This marks a decrease from 12.4mn boe/d in 2020. But the impact to revenue was more than offset by a recovery in oil prices, as well as the consolidation of Aramco's control of Saudi petrochemicals producer SABIC. 

Moving forward, Aramco has increased its capital expenditure guidance for 2022 to $40-50bn, and expects further growth in this spend until around the middle of the decade.