Page 6 - DMEA Week 12 2022

DMEA COMMENTARY DMEA

Aramco reaps rewards

of oil price gains

Saudi Aramco has announced bumper results for 2021
and plans to increase spending to hike oil production.

MIDDLE EAST STATE-BACKED Saudi Aramco this week shareholders, in addition to the dividend.
posted its full-year results for 2021, registering Aramco did little to quell rumours of a poten-
a 124% increase in net income on the back of an tial dividend increase, noting that it “aims to
WHAT: almost $30 rise in the average realised price per maintain a sustainable and progressive dividend,
Aramco rode a wave of barrel of Brent compared to the year before. in line with future prospects, underlying growth
buoyant oil prices to On March 20, the company announced that in free cash flow, and long-term value creation
report massive increases net income had risen to $110bn, compared through investments in available opportunities.”
in income despite with $49bn in 2020, reflecting “higher crude A day later it held a webcast, adding more
production remaining oil prices, stronger refining and chemicals mar- colour to the figures and noting that dividends
largely unchanged. gins, and the consolidation of SABIC’s full-year and shareholder value were likely to increase
results”. without providing detail on what would trigger
WHY: The impact of price on the company’s per- such a move.
The company spoke of formance is particularly clear given that total Achievements in the upstream were high-
maintaining its oil market hydrocarbon production fell by 100,000 barrels lighted by progress on the so-called crude
pre-eminence and with a of oil equivalent per day to 12.3mn boepd, with increment projects – a raft of major oilfield
performance like this, few crude oil output remaining flat at 9.2mn bar- developments aimed at maintaining oil produc-
would bet against it. rels per day, suggesting that the company held tion capacity.
around 2.8mn bpd of spare capacity during the The ‘Ain Dar and Fazran reservoirs in the
WHAT NEXT: year. supergiant Ghawar oilfield were tied-in to pro-
Feeling bullish, it has vide an additional 175,000 bpd of combined
set a guidance of $40- Performance production capacity.
50bn for 2022 capital Free cash flow increased similarly from $49.1bn Meanwhile, work continues on the Berri,
expenditure as it works to $107.5bn, while Aramco said it had priori- Dammam, Khurais, Marjan and Zuluf incre-
to expand its oil and gas tised strengthening its balance sheet, reducing ments, which will add a further 1.3mn bpd
production capabilities its gearing ratio by 8.8% to 14.2%. between now and 2026.
as well as investing in the Despite cash flow concerns in 2020 that saw Total liquids production – comprising 9.2mn
downstream. the company tap international markets for bil- bpd of oil, 175,000 bpd of condensate, 200,000
lions of dollars – including a $6bn, sharia-com- bpd of natural gasoline, 291,000 bpd of butane
pliant Sukuk during Q2 2021 – the company has and 474,000 bpd of propane – sat at 10.36mn bpd
continued to live up to its promised $75bn per for the year. Crude oil exports comprised 6.3mn
year dividend payment, with its latest $18.75bn bpd.
instalment to be paid during this quarter. Buoyed by the achievement of a single-day
Meanwhile, its board of directors also rec- gas output record of 10.8bn cubic feet (306mn
ommended that $4bn of “retained earnings” cubic metres), natural gas production rose by
be capitalised and bonus shares distributed to 1.9% to 9.2 bcf (261 mcm) per day with ethane

P6 www. NEWSBASE .com Week 12 24•March•2022