The Saudi Arabian Oil Company, better known as Aramco, has disclosed its annual financial outcomes for the year 2023, with a declared net income of $121.3 billion, marking it as the company’s second-most profitable year to date.
These results, as outlined in a company press release, are a testament to Aramco’s relentless pursuit of shareholder value creation, bolstered by its operational agility, steadfast reliability, and cost-efficient production framework.
Aramco’s President and CEO, Amin H. Nasser, commented on the performance, stating, In 2023 we achieved our second-highest ever net income. Our resilience and agility contributed to healthy cash flows and high levels of profitability, despite a backdrop of economic headwinds. We also delivered a 30% year-on-year increase in total dividends paid in 2023 for our shareholders.
With capital expenditures ramping up in accordance with previous forecasts, Nasser pointed out that the company is well-positioned for a future where oil and gas remain integral to the global energy landscape, augmented by emerging energy solutions.
Nasser also highlighted strategic advantages stemming from a governmental directive to stabilize oil production at 12 million barrels per day. This move facilitates Aramco’s expansion in natural gas production and its burgeoning chemicals sector, allowing for greater versatility and market opportunity leverage. The company is concurrently advancing its crude oil projects to boost its operational reliability and market adaptability.
Aramco’s foray into international LNG investments, expansion of retail operations abroad, progress in overseas refining and chemical projects, and an evolving new energies portfolio underscore its strategic orientation towards seizing new market opportunities.
Financial highlights:
- Aramco’s net income in 2023 stood at $121.3 billion, a decrease from $161.1 billion in 2022, primarily due to lower crude oil prices and volumes, as well as shrinking refining and chemicals margins. However, this was partly offset by a decline in production royalties and lower income taxes and zakat.
- The company’s free cash flow was $101.2 billion, down from $148.5 billion the previous year. Despite this, Aramco’s balance sheet remains robust with a gearing ratio of -6.3% at the end of 2023.
- Total dividends amounted to $97.8 billion in 2023, a 30% increase from 2022. The company announced a base dividend of $20.3 billion for the fourth quarter, to be distributed in the first quarter of 2024, alongside a third round of performance-linked dividends of $10.8 billion.
- Capital investments in 2023 were $49.7 billion, marking a 28% increase from the previous year’s $38.8 billion.
For 2024, Aramco projects capital investments to be in the range of $48 to $58 billion, with an anticipated reduction in capital investment by about $40 billion from 2024 to 2028 due to maintenance of maximum sustainable capacity and project deferrals.
Operational highlights:
- In 2023, Aramco maintained an average hydrocarbon production of 12.8 million barrels of oil equivalent per day, achieving a remarkable supply reliability rate of 99.8%.
- The company’s gas projects are on track to substantially increase production by 2030. Notable projects include the Hawiyah Unayzah Gas Reservoir Storage and the expansion of the Hawiyah Gas Plant.
- Aramco has made strategic international investments, such as acquiring a stake in MidOcean Energy and a 10% interest in Rongsheng Petrochemical Company Limited.
- Aramco’s acquisition of Valvoline Inc.’s global products business and the Amiral complex project with TotalEnergies highlight its commitment to expanding its liquids-to-chemicals strategy.
- The company is also growing its global retail presence with acquisitions in Chile and Pakistan and is advancing its renewable energy initiatives, including the development of photovoltaic solar projects in Saudi Arabia.
- Aramco’s Yanbu Refinery was recognized as a World Economic Forum Global Lighthouse, reflecting its innovative use of Fourth Industrial Revolution technologies.