- Saudi Aramco, Saudi Arabia’s state-owned oil company, filed for its international bond debut Monday with crazy high profits.
- The company made $111.1 billion in net income last year, according to Moody’s, making it more profitable than Apple, Amazon, and Alphabet (Google’s parent company) combined.
- Aramco is issuing a $10 billion bond to investors after doubling its profits in 2018 on the back of improved oil prices.
Saudi Arabia’s state-owned oil giant blows the rest of the world out of the water with its gargantuan profits.
Saudi Aramco reported $111.1 billion in net income last year, according to Moody’s, making it more profitable than Apple, Amazon, and Alphabet combined. The company filed for its international bond debut on Monday, a $10 billion issuance following a doubling of its profits after oil prices rose last year.
For context, Apple’s earnings shot up to $60 billion last year, while Amazon brought in $10 billion in profits. Similarly, the oil giants Exxon Mobil and Royal Dutch Shell made profits of $20.8 billion and $17.5 billion in 2018.
The company’s credit rating, A1 from Moody’s, is tied to that of Saudi Arabia given the links between the two entities.
"The company is wholly-owned by the state and is expected to remain largely under government ownership even after any potential IPO in the future," Moody's said. "The oil sector also comprises a substantial portion of Saudi Arabia's GDP and dominates its exports."
It's the first major opportunity for investors to scrutinize the offering of one of the world's largest energy companies given the usually secretive nature of Aramco's disclosures. It's part of a transparency push on behalf of Saudi Arabia as part of a will-they-won't-they over the company's plans for an initial public offering, which it shelved last year. One of the main advantages of issuing the bond is to gain high ratings from the various credit agencies. (Aramco doesn't need the money, after all.)
Among the key risk factors purported by the company are environmental issues and other climate-change-related challenges indicating a broad understanding of the manifold demand constraints facing the oil and gas industry. Saudi Aramco accounted for approximately one in eight barrels of crude oil produced globally from 2016 to 2018, according to the prospectus.
Oil prices were boosted last year after Saudi-led efforts at a meeting of major oil exporters secured supply cuts in an attempt to improve languishing prices by taking approximately 1.2 million barrels a day out of the market.
Saudi Arabia is attempting to diversify its oil-heavy economy and attract new capital to the kingdom.