Logo of Aramco, officially the Saudi Arabian Oil Group, Saudi petroleum and natural gas company, seen on the second day of the 24th World Petroleum Congress at the Big 4 Building at Stampede Park, on September 18, 2023, in Calgary, Canada.
Artur Widak | Nurphoto | Getty Images
Saudi Arabia’s state oil giant Aramco reported a 25% decline in profit to $121.3 billion in 2023, down from $161.1 billion in 2022, and boosted its mega dividend payout despite “economic headwinds.”
Aramco raised its base dividend for the fourth quarter by 4% to $20.3 billion dollars, and lifted its performance-linked dividend by 9% to $10.8 billion, resulting in a $31 billion dollar payday for the Saudi government and Aramco stakeholders.
Despite the earnings decline, the result still represents Aramco’s second-highest net income on record, far outpacing the profitability of its largest global peers.
“The year-on-year decrease can be attributed to lower crude oil prices and volumes sold, as well as reduced refining and chemicals margins, partially offset by a decrease in production royalties during the year and lower income taxes and zakat,” Aramco said in a statement.
Aramco said total revenue also fell 17% to $440.88 billion, down from $535.19 billion last year. Free cash flow also fell to $101.2 billion in 2023, compared to $148.5 billion in 2022.
“It was a year that saw global oil demand reach record levels despite geopolitical volatility, economic headwinds, and inflationary pressures,” Aramco CEO Amin Nasser told the earnings call on Sunday.
“We expect the global oil market to remain healthy over the remainder of this year, and we expect it to be fairly robust with growth of about 1.5 million barrels,” Nasser added. Saudi Arabia led OPEC+ countries last week in a decision to extend voluntary oil output cuts until the end of June.
Changing Hands
The earnings come after the Saudi government transferred an additional 8% of Aramco shares, worth $164 billion, to Saudi Arabia’s Public Investment Fund (PIF). Yasir Al-Rumayyan is both the chairman of Aramco’s Board of Directors and the governor of the PIF.
The share transfer to PIF is one of the largest transactions Aramco has undertaken since listing, and will allow the PIF to benefit from Aramco’s mega dividend payout policy.
Aramco paid $97.8 billion in dividends in 2023, up 30% from 2022. The full year performance-linked dividend for 2024 is expected to be $43.1 billion alone.
The share transfer “doesn’t change anything,”…
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