SAUDI ARAMCO NET INCOME UP TO $87.9 BLN
ARAMCO - Dhahran, Saudi Arabia, August 14, 2022 - The Saudi Arabian Oil Company (“Aramco” or “the Company”) today announced its financial results for the second quarter of 2022, posting a 90% year-on-year (YoY) increase in net income and declaring a dividend of $18.8 billion to be paid in the third quarter.
The results set a new quarterly earnings record for the Company since its Initial Public Offering in 2019, and were primarily driven by higher crude oil prices and volumes sold, and higher refining margins.
Commenting on the results, Aramco President & CEO Amin H. Nasser, said:
“Our record second-quarter results reflect increasing demand for our products — particularly as a low-cost producer with one of the lowest upstream carbon intensities in the industry.
“While global market volatility and economic uncertainty remain, events during the first half of this year support our view that ongoing investment in our industry is essential — both to help ensure markets remain well supplied and to facilitate an orderly energy transition.
“In fact, we expect oil demand to continue to grow for the rest of the decade, despite downward economic pressures on short-term global forecasts.
“But while there is a very real and present need to safeguard the security of energy supplies, climate goals remain critical, which is why Aramco is working to increase production from multiple energy sources — including oil and gas, as well as renewables, and blue hydrogen.
“We are progressing the largest capital program in our history, and our approach is to invest in the reliable energy and petrochemicals that the world needs, while developing lower-carbon solutions that can contribute to the broader energy transition.”
Aramco achieved a record quarterly and half-year net income of $48.4 billion in the second quarter and $87.9 billion in the first half of 2022, compared to $25.5 billion and $47.2 billion, respectively, for the same periods in 2021. The increase in both periods was primarily driven by higher crude oil prices and volumes sold, as well as strong refining margins during the second quarter and higher downstream margins in the first half of 2022.
Free cash flow* increased by 53% to $34.6 billion in the second quarter and was $65.2 billion during the first half of 2022, compared to $22.6 billion and $40.9 billion, respectively, for the same periods in 2021. This increase was mainly driven by higher cash from operating activities.
Return on average capital employed* (ROACE) for the second quarter and half year ended June 30, 2022, was 31.3%, compared to 16.7% for the same periods in 2021, reflecting stronger crude oil prices and volumes sold, and improved downstream margins.
The Company continues to strengthen its balance sheet to maintain a high investment grade credit rating across market cycles. The gearing ratio* was 7.9% on June 30, 2022, compared to 14.2% on December 31, 2021, primarily due to higher operating cash flows, mainly reflecting stronger earnings, as well as improved downstream margins.
Funding costs continue to be optimized and the Company made a partial prepayment to the Public Investment Fund of the debt related to the Company’s acquisition of a 70% stake in SABIC in 2020. This reduced the principal amounts of the promissory notes outstanding by $12 billion, in addition to the $8 billion reduction in Q1 2022.
Aramco declared a dividend of $18.8 billion for the second quarter, to be paid in Q3 2022. In addition, and as previously disclosed in its 2021 Annual Report, the Company distributed bonus shares to shareholders in Q2 2022, at a rate of one share for every 10 shares held. Aramco aims to maintain a sustainable and progressive dividend in line with future prospects and underlying financial results.
Capital expenditure increased by 25% to $9.4 billion in the second quarter and by 8% to $16.9 billion for the first half of 2022, compared to the same periods in 2021. Aramco continues to invest to capture growth opportunities, progressing the strategic integration of its upstream and downstream segments, expanding its chemicals business, and developing prospects in low-carbon businesses.
Aramco second quarter and half-year 2022 results
Q2 net income rises 90% YoY to $48.4 billion
• Strong market conditions during second quarter drive up net income 22.7% from Q1 2022
• Net income: $48.4 billion (Q2) / $87.9 billion (H1)
• Cash flow from operating activities: $44.0 billion (Q2) / $82.2 billion (H1)
• Free cash flow*: $34.6 billion (Q2) / $65.2 billion (H1)
• Gearing ratio*: 7.9% (June 30) compared to 14.2% at end of 2021
• Q1 dividend of $18.8 billion paid in the second quarter; Q2 dividend of $18.8 billion to be paid in the third quarter
• Progress continues on oil and gas expansion, as well as development of lower-carbon energy solutions
• Inaugural sustainability report outlines plans to achieve operational net-zero emissions ambition