Aramco Reports $68 Billion Profit Ahead Of IPO

Aramco reported a net profit of $68 billion for the first nine months of the year at the same time as it announced an intention to float on the local stock exchange, Tadawul.

According to the company’s statement regarding its intention to float, which also included data on its nine-month performance, its free cash flow position was also solid, at $59 billion, with capex calculated at $23 billion.

The net result of Aramco for the first half of the year was $46.9 billion, which means the company netted $21.1 billion during the third quarter of the year.

Looking forward, Aramco seems to have ambitious spending plans regardless of where oil prices are headed. It said it planned to spend $35-40 billion next year and $40-45 billion in 2021. The one allowance for a downward price trend was the statement that it would cut its capex in case oil prices fell.

In dividends—an area that prospective investors are keeping a close eye on—Aramco declared an ordinary payout of $13.4 billion for the third quarter. In addition to this, it will later declare an interim dividend of $9.5 billion, payable to the Saudi government as sole shareholder. Next, year, Aramco plans to pay out $75 billion in dividends.

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Dividends and their longevity are what is expected to draw investors to the Aramco IPO, scheduled for December. However, reports about coercion of Saudi investors and the arranging banks’ difficulties in coming up with a specific valuation of the company have continued to haunt the IPO of the century.

However, the attractiveness is certainly there. Aramco reported average daily production of 11.6 million barrels of oil and condensates for 2018. Proved oil and condensate reserves stood at 226.8 billion barrels at end-2018, making Aramco the largest oil company in the world in terms of reserves, as well as profits.

By Irina Slav for Oilprice.com

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