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An employee watches over Saudi Aramco’s oil mill in Abqaiq, Saudi Arabia October 12, 2019.

Maxim Shemetov | Reuters

Saudi Arabian oil giant Aramco reported huge full-year profits on Sunday, more than doubling its year-over-year net profit to $110 billion.

Aramco’s net income in 2021 increased 124% to $110 billion in 2021, compared to $49 billion in 2020, thanks to higher crude oil prices, stronger refining and chemicals margins and the consolidation of its chemicals business, SABICs, full-year results.

The numbers were in line with expectations, with analysts polled by Reuters forecasting full-year net profit of $109.7 billion. Shares rose 4% on the news Sunday, according to Reuters data.

“Our strong results are a testament to our financial discipline, flexibility through changing market conditions and a steadfast focus on our long-term growth strategy, which is focused on delivering value to our shareholders,” said Aramco CEO Amin Nasser in the statement of results.

Rising oil

Aramco benefited from rising oil prices in 2021, with the international benchmark Brent oil moving above $80 a barrel by the end of the year, up about 50% for the 12-month period. Supply shortfalls added to a complex set of factors that caused significant uncertainty in the energy and raw materials complex even before the Russian invasion of Ukraine.

“While economic conditions have improved significantly, the outlook remains uncertain due to several macroeconomic and geopolitical factors,” he added.

Aramco also announced a fourth quarter dividend of $18.8 billion to be paid in the first quarter of 2022. The dividend will be covered by an increase in free cash flow to $107.5 billion in 2021, compared to $49.1 billion. in 2020.

Aramco said it would recommend using $4 billion in retained earnings to pay out bonus shares to investors, subject to approval. Under the recommendation, shareholders would receive one bonus share for every 10 shares owned. As a result, the total dividend for 2021 is $75 billion in cash, in addition to bonus shares.

Capital expenditure boost

The company also said it would invest to increase crude oil production capacity to 13 million barrels per day by 2027, expand liquids production to chemical products and aim to increase gas production by more than 50% by 2030. .

Aramco has also said it aims to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions for its entire assets under management by 2050. Scope 1 refers to direct emissions from sources owned or controlled by the company, while Scope 2 covers indirect emissions from the generation of purchased power consumed by the company.

Capital expenditures in 2021 were $31.9 billion, up 18% from 2020, primarily due to increased activity related to crude oil increases, the Tanajib gas plant and development drilling programs. Aramco expects capital expenditures to be approximately $40-50 billion in 2022, with continued growth expected through approximately the middle of the decade.

The numbers contrast sharply with the company’s 2020 revenue, which saw a 44% drop from the previous year due to the collapse in demand caused by the coronavirus pandemic.

At the time, Nasser described Aramco’s fiscal year 2020 as one of the most “challenging years” in recent history.

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