REUTERS/Hamad I Mohammed
- Saudi Aramco, Saudi Arabia’s state-owned oil company, filed for its debut international bond Monday with crazy high profits.
- The company made $111.1 billion in net income last year, according to Moody’s, making it more profitable than Apple, Amazon, and Alphabet (Google’s parent company) combined.
- Aramco is issuing a $10 billion bond to investors after doubling its profits in 2018 on the back of improved oil prices.
Saudi Arabia’s state-owned oil giant blows the rest of the world out of the water with its gargantuan profits.
Saudi Aramco reported $111.1 billion in net income last year, according to Moody’s, making it more profitable than Apple, Amazon, and Alphabet combined. It comes as the company filed for its debut international bond on Monday, a $10 billion issuance following a doubling of its profits after oil prices rose last year.
For context, Apple’s earnings shot up to $60 billion last year while Amazon brought in $10 billion in profits making Aramco’s figures stratospheric in comparison. Similarly, oil majors Exxon Mobil and Royal Dutch Shell made profits of $20.8 billion and $17.5 billion in 2018, emphasising Aramco’s sheer vastness.
The company’s credit rating, A1 from Moody’s, is tied to that of Saudi Arabia given the huge intrinsic links between the two entities.
"The company is wholly-owned by the state and is expected to remain largely under government ownership even after any potential IPO in the future," said Moody’s. "The oil sector also comprises a substantial portion of Saudi Arabia’s GDP and dominates its exports."
It’s the first major opportunity for investors to scrutinize the offering of one of the world’s largest energy companies given the usually secretive nature of Aramco’s disclosures. It’s part of a transparency push on behalf of Saudi Arabia as part of a will-they-won’t-they over the company’s IPO plans which it shelved last year. One of the main advantages of issuing the bond is to gain high ratings from the various credit agencies. (Aramco doesn’t need the money, after all.)
Among the key risk factors purported by the company are environmental issues and other climate change-related challenges indicating a broad understanding of the manifold demand constraints which face the oil and gas industry. Saudi Aramco produced approximately one in every eight barrels of crude oil produced globally from 2016 to 2018, according to the prospectus.
Oil prices were boosted last year after Saudi led efforts at an OPEC+ meeting secured supply cuts in an attempt to improve languishing prices by taking approximately 1.2 million barrels a day out of the market.
Saudi Arabia is attempting to transition its economy away from hydrocarbons in order to diversify its oil-heavy economy and attract new capital to the Kingdom.
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Source: Business Insider – cburroughs@businessinsider.com (Callum Burroughs)