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Saudi’ Arabia’s Aramco, the state-owned oil firm of the Kingdom of Saudi Arabia, is the world’s most profitable company with a net income of $111 billion.
The oil company which is the largest in the world, revealed it’s earnings for the first time ever as it plans to issue a $10 billion bond to acquire a 70 percent stake in Saudi Basic Industries Corporation (SABIC).
Aramco hopes to acquire the stake in SABIC, the national petrochemical company of Saudi Arabia for $69.1 billion.
By comparison, Royal Dutch Shell, the largest publicly traded oil company, made $23.4 billion, while ExxonMobil, the largest US oil company, made $20.8 billion in 2018.
Apple, the world’s most profitable public company, made $59.4 billion in 2018, just a little over half of what Aramco made.
According to data from rating agencies Fitch and Moody’s, the oil giant does not match up to its international counterparts in terms of cash generated per barrel.
Aramco is rated below Shell and Total’s AA- rating as it makes $26 per barrel of oil, compared to Shell’s $38 per barrel and Total’s $31 per barrel.
The SABIC acquisition is dubbed as a plan B for the Saudi government; as an initial public offering (IPO) of Aramco initially planned for 2018 would have valued the company at $2 trillion.
According to Moody’s, Aramco pays 50percent of its profit on income tax, plus royalties of between 20percent and 50percent of the company’s revenue depending on the price of oil.
Meanwhile, OPEC oil supply sank to a four-year low in March 2019, a Reuters survey found, as top exporter Saudi Arabia over-delivered on the group’s supply-cutting pact while Venezuelan output fell further due to sanctions and power outages.
The 14-member Organisation of the Petroleum Exporting Countries pumped 30.40 million barrels per day (bpd) last month, the survey showed on Monday, down 280,000 bpd from February and the lowest OPEC total since 2015.
The survey suggests that Saudi Arabia and its Gulf allies are pressing ahead with even larger supply cuts than called for by OPEC’s latest deal, shrugging off pressure from U.S. President Donald Trump to increase supply. On Thursday, Trump again called for OPEC to pump more oil to lower prices.
Crude oil is trading above $68 a barrel, close to a 2019 high, boosted by the Saudi move and involuntary supply curbs in Venezuela and Iran, which are both under U.S. sanctions that limit their exports.
“The will is there to bring global oil inventories lower,” said Tamas Varga of oil broker PVM, referring to OPEC strategy.
“Unless there is a sudden jump in OPEC production or a complete break-down in the U.S.-China trade talks, financial investors will find oil attractive to pour more money into.”
