Aramco’s bond prospectus lifts the tent on unrivalled metrics

By Richard Rostad, analyst, Oil & Gas 360

Saudi Aramco’s bond prospectus, released this week, provides a wealth of information on the largest oil company in the world.

Stretching nearly 470 pages, the prospectus illustrates everything from expected natural gas demand in the kingdom to the dangers of missiles falling on Aramco facilities. Some of the most interesting sections relate to the company’s financials and reserves.

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When compared to U.S. E&P companies, or even supermajors, Aramco’s numbers are in a different league.

The company has some of the lowest-cost assets in the world and operates on an unrivalled scale. Its vast reported earnings and huge scale, however, are balanced by an equally unmatched tax bill.

A few highlights [NOTE: all dollars are in billions]:

  • Aramco reported $111 billion in net income last year, on just under $356 billion in revenue. ExxonMobil, for comparison, earned $20.8 billion on $290 billion in revenue in 2019.
  • The company paid $55.6 billion in royalties and $101.7 billion in income taxes, meaning Aramco sent 44 cents of every dollar in revenue to the government in taxes.
  • Aramco spent $35 billion in CapEx last year, meaning the company generated $85.8 billion in free cash flow. U.S. and Canadian E&P companies, by contrast, outspent cash flow by a combined $3.3 billion in 2018.
  • Aramco reports $27.0 billion in total debt, but $48.8 billion in cash, making it perhaps the only major oil company in the world with negative net debt.
  • 2018 saw a 41.1% Return on Average Capital Employed, though this value was only 6.6% in 2016.
  • Aramco produced 10.3 MMBOPD of crude oil, 11.6 MMBPD of liquids and 13.6 MMBOEPD in 2018. By comparison, Texas produced an average of 5.3 MMBOEPD in 2018.
  • Aramco estimates it holds 259 billion BOE of reserves, but the kingdom estimates 336 billion BOE. U.S. and Canadian E&P companies, by comparison, hold a combined 73 billion BOE of reserves.
  • The Ghawar field still holds 58.3 billion BOE of reserves, 23% of the company total.
  • Saudi Aramco’s current production capacity is 12 MMBOPD, the Ghawar field can produce 3.8 MMBOPD.

For an interesting weekend read, the entire prospectus can be found here.

If You Were Looking for $86 Billion In Free Cash Flow

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