Ahead of Saudi Aramco issuing its first bonds in international markets, an assessment published by Moody’s Investors Services gave a rare first look into Aramco’s revenue and earnings. The state-owned oil firm’s finances show net profits reached USD $111 billion last year. Revenue hit USD $355.9 billion last year and it produced 10.3 million barrels per day of crude oil in 2018.
In another assessment issued Monday, Fitch Ratings said Aramco posted profits of $224 billion before interest, tax, depreciation, and amortization. The standing places Aramco among the world’s most profitable companies, compared to Apple at USD $60 billion, Royal Dutch Shell at USD $23 billion, and Exxon Mobil at USD $21 billion. The company began as a U.S. venture with a concession for oil rights in Saudi Arabia and was fully acquired by the Saudi government in 1980.
Moody’s said Aramco paid USD $58.2 billion in dividends in 2018 and USD $50.4 billion in 2017. It remains unclear exactly how these dividends are distributed within the Saudi monarchy and its ruling family. Fitch said Aramco accounted for around 70 percent of the Saudi government’s budget revenue between 2015-2017, but it wasn’t immediately clear if that figure included the dividends mentioned by Moody’s.
In anticipation of a partial listing of Aramco on an international exchange, the Saudi government reduced Aramco’s tax rate from 85 percent to 50 percent in 2017. Saudi Arabia is attempting to create new income streams and lessen the government’s dependence on oil for revenue.
Ellen Wald, President of Transversal Consulting and the author of “Saudi Inc,” a book about Aramco’s corporate history, said “I would say that this tells us that Aramco is worth at least one trillion dollars.” King Salman and his son, Crown Prince Mohammed bin Salman, have taken a much more active role in controlling various power centres in the kingdom, including Aramco.
Aramco said it will start to meet with investors about selling its bonds which, if issued, would be priced in dollars and traded on the London Stock Exchange. The bonds are expected to help pay for Aramco’s USD $69 billion acquisition of majority shares in Saudi petrochemical firm SABIC from the kingdom’s sovereign wealth fund.
Fitch said its conservative forecasts show Saudi Aramco’s net debt rising to around $35 billion by 2021, after incorporating the SABIC transaction. The USD $69 billion deal with SABIC pumps capital into the Public Investment Fund, which is overseen by the crown prince. Prince Mohammed has transformed the fund in order to back major development projects throughout the kingdom amid delays to an initial public offering of Aramco, which he’d touted as a way to raise capital for the PIF’s projects.
The deal was struck after the crown prince’s early efforts at attracting Western investors for his social and economic transformation plans suffered a setback following the killing of Washington Post columnist Jamal Khashoggi by Saudi agents inside the country’s consulate in Istanbul last year.