The sharp rise in crude oil prices brought the Saudi Arabian oil company Saudi Aramco a record profit in the first quarter of 2022. Compared to the previous year, the group increased its revenues by a good 82 percent in the same period. The additional revenue amounts to 39.5 billion US dollars. In the same period of the previous year, the profit was 21.7 billion dollars.
Saudi Aramco benefits from higher crude oil price
The oil company Saudi Aramco is 95 per cent state-owned by Saudi Arabia and has been listed on the stock exchange since 2019. The company is now the largest oil production company in the world. Like the entire industry, Saudi Aramco has benefited from the sharp rise in the price of crude oil since the start of the Ukraine war. This has risen by a good 65 per cent in the first quarter of 2022. Compared to its competitors Shell and BP, however, the state-controlled company produces most of its oil from easily and cheaply developed fields on land or in shallow waters. For this reason, the company’s profits also rise more strongly than those of its competitors as the price of oil rises.
Image: Hauptsitz in Dharharn Eagleamn, Public domain, via Wikimedia Commons
Saudi Aramco overtakes Apple as world’s most valuable company
However, at almost 31 billion dollars, the group’s free cash and cash equivalents also reached a new record level. Nevertheless, the company does not want to increase the dividend for shareholders. Due to the high revenues, Saudi Aramco has replaced the technology giant Apple as the most valuable company on the stock exchanges. The share price has risen by almost two thirds since the beginning of the year. This means that the stock market value of the oil production company now stands at 2.42 trillion US dollars.
Additional revenue to be used to increase production volume
According to the company, the additional revenue will be used to expand oil production. The oil company already increased its production quota at the beginning of the year. In the first quarter, the company produced an average of 10.2 million barrels of crude oil per day. This corresponds to an increase of 20 per cent compared to the same period last year. With the additional revenues, the production volume is now to be expanded to 13 million barrels per day by 2027.
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