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Aramco recorded its second-highest ever net income in 2023 despite falling 25% y-o-y to USD 121.3 bn on sagging oil prices and lower production, according to its latest earnings release (pdf). Revenues fell 17.6% y-o-y to USD 440 bn over the same period, the company said in a filing to Tadawul. “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.
On a quarterly basis, the oil giant’s bottom line fell 18% y-o-y to USD 27.4 bn in 4Q 2023, and the top line was down 5.7% y-o-y to USD 122.5 bn, according to data seen by Argaam.
Capex rose 28% y-o-y to USD 49.7 bn in 2023 and is expected to come in between USD 48 bn and USD 58 bn this year. Meanwhile, capex is expected to drop by USD 40 bn in the next four years due to government instructions to cap the maximum production target to 12 mn bpd. 85% of the capex in 2023 was organic, signaling a focus on core and existing business and a sign of the company’s push for growth and efficiency, it said.
Dividend payouts rose 30% y-o-y to USD 98 bn in 2023 of which USD 43.1 bn was performance-linked. The government relies heavily on Aramco’s dividend to bridge the budget deficit and finance its diversification away from oil — oil accounts for about 75% of government revenues at present.
A big pot for PIF: The Public Investment Fund’s (PIF) will take away c. USD 5 bn in quarterly dividend payments, Bloomberg reports. The sovereign fund doubled up its stake in Aramco to 16% this week, a transfer of stock worth about USD 164.
Aramco is eyeing more investment in China, where oil demand remains robust, Reuters reported yesterday, citing statements by Nasser during a media call that followed the company’s results. “So far we are in the early part of 2024, demand is healthy and growing in China,” he said.
Aramco + MidOcean on LNG: Aramco could explore with LNG company MidOcean Energy the possibility of investing in LNG projects outside of Australia, he said. “We are partnering with MidOcean in Australia and we might partner with them in other enclaves,” Nasser said. His remarks came months after Aramco agreed to acquire a strategic minority stake in MidOcean Energy for USD 500 mn, marking its first foray into global LNG. Aramco is still awaiting necessary approvals for the transaction to close. MidOcean Energy has been seeking to acquire interests in four Australian LNG projects.
And a play for LNG in the US: Nasser confirmed that Aramco was kicking the tires on investments in US LNG projects, stopping short of getting into specifics. “We are in discussion with a number of companies,” he said.
Talks on Aramco acquiring a 15%-20% stake in a powertrain JV by French automaker Renault and China’s Geely are still ongoing, he said. The state-owned oil company signed a letter of intent last year to grab a minority stake in the planned JV which aims to develop and supply internal combustion engines (ICE) and hybrid technologies. The investment is part of a plan by Aramco to up investments in new, lower-emission technologies.
Market reax: Aramco’s shares were up 1.4% to SAR 32.2 apiece by the end of trading yesterday.
