Saudi Arabian oil giant Aramco on Sunday reported a record annual net profit of $161.1 billion for 2022, up 46% from the year earlier, on higher energy prices, increased volumes sold and improved margins for refined products.
The profits follow similar reports in February from international peers BP, Shell, Exxon Mobil and Chevron which have mostly posted record profits for last year.
Oil prices swung wildly in 2022, climbing on geopolitical worries amid the war in Ukraine, then sliding on weaker demand from top importer China and worries of an economic contraction.
“Given that we anticipate oil and gas will remain essential for the foreseeable future, the risks of underinvestment in our industry are real – including contributing to higher energy prices,” Aramco’s chief executive Amin Nasser said in the results statement.
To address those challenges, the company is not only focused on expanding oil, gas and chemicals production, but also investing in new lower-carbon technologies with potential to achieve additional emission reductions, Nasser said.
Aramco’s capital expenditure rose 18% to $37.6 billion in 2022 and the company said it expects this year’s spending to be around $45.0 billion to $55.0 billion including external investments.
Aramco declared a dividend of $19.5 billion for the fourth quarter, an increase of 4% from the previous quarter.
Its board also recommended to issue bonus shares, with eligible shareholders receiving one share for every 10 shares owned.
Free cash flow reached a record of $148.5 billion in 2022, compared to $107.5 billion in 2021.
After being arrested in July for carrying a satellite phone without permission from authorities while on vacation, a senior executive of Saudi Aramco spent nearly a week in custody in Uttarakhand. He was released after paying a Rs 1,000 fine.
According to Fergus MacLeod, Saudi Aramco’s head of investor relations, he was arrested on July 12 at his hotel in the Valley of Flowers National Park. The 62-year-old man was imprisoned in Chamoli until July 18.
Authorities detained the British executive after obtaining the coordinates of the phone, which MacLeod claims he turned on and off at his hotel but did not use while on vacation with friends, some of whom were Saudi Aramco colleagues.
A part of Chamoli district is located along the Line of Actual Control with China.
Without government permission, foreign nationals are not permitted to own or operate satellite phones in India. Satellite phones, which receive signals from satellites rather than terrestrial towers like cellphones, were used by terrorists during the 2008 Mumbai attacks, prompting the bans.
MacLeod, who has led investor relations at Saudi Aramco since 2017, told the Financial Times that he was unaware of the ban and had passed through two Indian airports while openly carrying the phone without being stopped by security.
Narendra Singh Rawat, a Chamoli police officer, confirmed MacLeod’s arrest. Rawat stated that the executive had carried the phone “by mistake.”
MacLeod stated that he purchased the device legally in the UK in 2017 for personal use and carried it with him while travelling in the Saudi desert in case of an emergency in remote areas with poor mobile phone signal.
“It was a frightening place and a highly traumatic experience, where I was in a communal cell with long-term prisoners who had committed very serious crimes,” said MacLeod.
MacLeod, who complied with authorities, claimed that his friends secured his release from jail by posting bail on his behalf. He couldn’t leave the nation, though, until after a court hearing on July 27, when he pleaded guilty and paid a Rs 1,000 ($12) fine.
This comes at a time when Saudi Arabia seeks to strengthen ties with India, which is becoming an increasingly important buyer of Saudi crude oil as the country’s middle class expands. MacLeod, who previously worked as the head of investor relations at BP and as an oil analyst at Deutsche Bank, was hired by Saudi Aramco to help professionalise its operations and management structures ahead of its historic IPO in 2019.
In this June 15, 2015 file photo, a Saudi man walks through the Tadawul Saudi Stock Exchange in the … [+] Saudi Arabian capital, Riyadh (AP Photo/Hasan Jamali)
Copyright 2018 The Associated Press. All rights reserved.
The Middle East is bucking a global slump in stock market listings, with an almost 300% rise in the number of companies making their debuts on bourses across the region so far this year.
According to data from consultancy firm EY, there have been 31 initial public offerings (IPOs) in the region in the first nine months of 2022, up 288% on the same period in 2021. Between them, these deals have raised some $14.7 billion, up 550% year-on-year.
The pace of new listings has been slowing down as the year has progressed, but the oil windfall that the region’s energy producers are enjoying means the level of activity is expected to remain relatively high for some time.
There were 15 IPOs in the first three months of the year, raising a combined $4 billion. In the second quarter the number of listings dropped to nine, although the amount raised grew to $9 billion.
In the most recent quarter, from July-September, there were seven listings which between them raised $1.5 billion in proceeds. The largest of these was the Dubai road toll operator Salik, which raised more than $1 billion. However, most of the deals were in Saudi Arabia, accounting for five of the seven. The only other one was in Morocco, where Disty Technologies raised $17m on the Casablanca Stock Exchange.
Despite the relative slowdown over the course of the year, the Middle East and North Africa (MENA) is outperforming most other parts of the world when it comes to stock market activity.
In the first three quarters of this year, there have been a total of 992 IPOs worldwide, according to EY, some 44% less than in the opening nine months of 2021. Between them they have raised $146 billion, a 57% drop year-on-year. The consultancy says the U.S. is set to record its lowest proceeds from stock market listings in almost 20 years.
“Despite IPO volumes and values declining significantly in the majority of other global markets, the MENA region continues to forge its own path with a steady stream of new listings in Q3, adding to the large number of IPOs already announced across exchanges in the year-to-date,” said Brad Watson, MENA strategy and transactions leader at EY.
Many parts of the world are facing constraints on economic activity, with high oil prices feeding into rising inflation and dampening investor sentiment. However, in the Middle East many countries are enjoying a surge in oil and gas revenues, which is leading to improved investor sentiment. As a result, most local stock markets have been rising this year, led by the Abu Dhabi Stock Exchange which is up 15% so far this year.
IPO pipeline
There continues to be a strong pipeline of new deals, with EY describing the outlook for IPOs in the MENA region in the final quarter of 2022 and into 2023 as “promising”.
Gregory Hughes, EY’s IPO and transaction diligence leader for the MENA region, said investor confidence in the region has remained high “despite challenging financial headwinds across the world. As we look into Q4, we see no signs of that changing.”
Among the deals coming to the market are Saudi utility Marafiq, which secured $897 million in orders for its shares in early October and is due to make its market debut in the coming days. The Dubai government is also planning to sell a 10% stake in district cooling firm Empower next month, with a book-building exercise expected to start on October 31.
Slightly further out, oil giant Saudi Aramco is planning to sell a stake in its energy trading division either later this year or in 2023 and grocery retailer Lulu Group International is planning to list on the Abu Dhabi Securities Exchange next year.
