Oil giant Aramco reports first quarter record as oil prices soar

The logo of Saudi Aramco is pictured at the oil plant in Abqaiq, Saudi Arabia October 12, 2019.

Maxim Shemetov | Reuters

Oil giant Aramco reported a net profit increase of more than 80% on Sunday, topping analyst expectations and setting a new quarterly earnings record since its IPO.

The Saudi Arabian giant said net income jumped 82 percent to $39.5 billion in the first three months of the year, up from $21.7 billion year-on-year. Analysts polled by Reuters had forecast net income of $38.5 billion.

Aramco’s record quarter comes amid a standout quarter for Big Oil, which has benefited from strong oil and gas prices. Aramco said its earnings were driven by higher crude oil prices, increased selling volumes and improved downstream margins.

“During the first quarter, our downstream expansion strategy further progressed in both Asia and Europe, and we continue to develop additional opportunities for our growth goals.” Aramco President and CEO Amin Nasser said in Sunday’s earnings release.

“Amid increased volatility in the global market, we remain focused on helping meet the world’s need for reliable, affordable and increasingly sustainable energy.”

With a market capitalization of around $2.43 trillion on Wednesday, Aramco last week surpassed Apple become most valuable company in the world. The companies’ market capitalizations looked similar on Sunday.

Aramco stock is up more than 15% so far in 2022. In March, the oil giant report that its full-year profit last year more than doubled due to continuous oil price increase, boosted by Russia’s invasion of Ukraine, European Union sanctions on Russian oil and the prospect of tighter supplies.

Bonus shares

Aramco’s results reflect an ongoing dynamic in the oil and gas industry, which has benefited from a price increase of more than 45% since the start of the year. Earnings from Aramco’s global partners like BP and Cover reached a multi-year high, despite having to book the books for exit operations in Russia after the invasion of Ukraine.

As a result, Aramco is rewarding investors. The company said it will use $4 billion of retained earnings to distribute bonus shares to shareholders — the equivalent of one share for every 10 shares held. It also kept its massive dividend steady at $18.8 billion, covered by free cash flow that grew 68% year-over-year to $30.6 billion.

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