For decades, the Saudi Arabian government has kept the earnings of Saudi Aramco far out of arm’s reach. But yesterday the gargantuan oil company opened its books to reveal that it generated… wait for it… $111.1B in net income for 2018.
For context, it dwarfed Shell, its closest competitor in the oil space, by $87.2B, and earned more tickle than J.P. Morgan Chase, Alphabet, Facebook, and ExxonMobil combined — easily making Saudi Aramco the world’s most profitable company (sorry, Tim Apple).
The larger the oil field, the cheaper the costs
Saudi Arabia is home to the largest oil fields in the world (including Ghawar, which stretches 120 miles) — a luxury that helps companies like Aramco produce oil at a massive discount.
Last year, Aramco produced an average of 13.6B barrels per day — more than 3x that of ExxonMobil.
Now, the company has released its numbers as it prepares for a $15B bond sale, which the company plans to use to finance almost a $70B stake in Saudi Arabia’s petrochemical company.
A giant at the mercy of the black gold
Despite its staggering earnings, Saudi Aramco’s zip-tied relations to the SA government keep investors concerned.
According to Rehan Akbar, a senior credit officer at Moody’s, “The [Saudi Arabian] government’s budget is highly reliant upon contributions from Aramco in the form of royalties, taxes and dividends.”
And the country’s dependence on the oil market as a whole has proven to be a major headwind for a company like Saudi Aramco. In 2016 (when oil prices were way down), the company reported only $13.3B in net income.
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