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Eye of Riyadh
Eye of Riyadh
Environment & Energy | Sunday 15 March, 2020 1:21 am |
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Saudi Aramco reports strong 2019 results despite difficult macro environment 3 Dhahran

The Saudi Arabian Oil Company (“Saudi Aramco” or
“the Company”) today announced its full-year 2019 financial results, delivering strong profits
and dividends despite a lower price environment and challenging margins in refining and
chemicals.
Financial Highlights
Net income was $88.2 billion for the full-year 2019, compared to $111.1 billion in 2018. The
decrease was primarily due to lower crude oil prices and production volumes, coupled with
declining refining and chemical margins, and a $1.6 billion impairment associated with Sadara
Chemical Company.
Free cash flow* was $78.3 billion, compared to $85.8 billion the previous year. This was primarily
due to lower income, offset by lower capital expenditures and favorable working capital
movements.
The balance sheet showed a gearing ratio of -0.2% at the end of 2019, demonstrating the
Company’s strong and prudent financial framework.
Total dividend payments were $73.2 billion in 2019. As disclosed in the IPO prospectus, the
Company has declared ordinary dividends of $3.9 billion, covering the period from December 5,
2019, the date IPO shares were allocated to investors, through December 31, 2019. These
ordinary dividends represent a proportion of the $13.4 billion total ordinary dividends declared
for the fourth quarter 2019. The dividends of $3.9 billion will be paid on March 31, 2020 to
registered shareholders as at March 18, 2020.
Saudi Aramco: Public
With respect to calendar year 2020, and as described in the Company’s IPO prospectus, the
Company, subject to Board approval, intends to declare aggregate ordinary cash dividends of at
least $75.0 billion a year, paid quarterly. First quarter 2020 dividends are anticipated to be
announced along with the Company’s first quarter 2020 financial results, which are expected to
be published in May 2020.
Capital expenditure last year was $32.8 billion, compared to $35.1 billion in 2018. The Company
expects capital spending for 2020 to be between $25 billion and $30 billion in light of current
market conditions and recent commodity price volatility. Capital expenditure for 2021 and
beyond is currently under review. The Company’s low upstream costs and low sustaining capital
provide significant flexibility and demonstrate differentiation to its peers.

In 2019, the Company remained one of the world’s largest producers of crude oil and condensate
with an average total hydrocarbon production of 13.2 million barrels per day of oil equivalent.
Saudi Aramco’s total 2019 hydrocarbon reserves under the Concession Agreement were 258.6
billion barrels of oil equivalent (boe), compared to 256.9 billion boe in 2018.
Following the attacks on two facilities in September, the Company restored production levels
within 11 days, due to its emergency response training and procedures. As a result, the Company
demonstrated its long-standing reputation for reliability.
In February 2020, the Company received regulatory approval for the development of the Jafurah
unconventional gas field in the Eastern Province. It is the largest unconventional gas field in the
Kingdom to date, with an estimated 200 trillion cubic feet of resources. The field will be gradually
developed in phases. The start of production of the first phase is expected in early 2024.
In its downstream business, the Company continued to enhance its portfolio, optimizing
operations and capturing value from strategic integration across the hydrocarbon value chain.
Saudi Aramco entered into a share purchase agreement last year to acquire the Public Investment
Fund’s 70% equity interest in SABIC, one of the world’s largest chemicals companies, for $69.1
billion. The acquisition will accelerate Saudi Aramco’s downstream strategy and help capture
rising demand for petrochemical products over the longer term. Upon closing of the SABIC
transaction, anticipated in the first half of 2020, the Company is expected to become one of the
world’s largest petrochemical producers by production capacity.
Strategic Highlights
In December 2019, Saudi Aramco completed the world’s largest initial public offering. This
followed a $12 billion inaugural international bond issuance in April 2019.
Saudi Aramco continued to maintain a position of strong safety with respect to occupational and
process safety performance. This was achieved by continuing to emphasize operational
discipline, visible commitment to safety, and innovative safety technologies.
Saudi Aramco: Public
Saudi Aramco improved its environmental performance of its upstream operations, reducing
carbon intensity to an estimated 10.1 kg of C02e/boe in 2019 compared to 10.2 kg of C02e/boe
the previous year. In addition, the Company is in the process of planting one million trees across
the Kingdom, and has also launched a mangrove project with more than two million mangrove
seedlings planted.

Commenting on the results, Saudi Aramco President & CEO Amin H. Nasser, said:
“2019 was an exceptional year for Saudi Aramco. Through a variety of circumstances – some
planned and some not – the world was offered unprecedented insight into Saudi Aramco’s agility
and resilience.”
“Our unique scale, low costs, and resilience came together to deliver both growth and worldleading returns, while also maintaining our position as one of the world’s most reliable energy
companies.”
“These strengths, combined with a strong balance sheet and a disciplined and flexible approach
to capital allocation, allow us to underpin our goal of sustainably growing free cash flow to
support dividends to our shareholders despite continued volatility of markets.”
“The recent COVID-19 outbreak and its rapid spread illustrate the importance of agility and
adaptability in an ever-changing global landscape. This is central to Saudi Aramco’s strategy and
we will ensure that we maintain the strength of our operations and our finances. In fact, we have
already taken steps to rationalize our planned 2020 capital spending.”
“As the world deals with the difficult and dual challenge of satisfying demand for more energy
alongside responding to the rising desire for cleaner energy, I believe we are well positioned
given our oil production is among the least carbon intensive in the world.”

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