2 Minutes Summary
· The Company has 270 Billion barrels in Reserve and has an estimated valuation of the company is 5 Trillion USD.
· Saudi Aramco has invested $100 billion in India.
· Saudi Aramco owned 5 Refinery.
· In 2018 Company generated $111.1 Billion in net income.
· Company Raised $25.6 billion from its Initial Public Offer.
Do you know The World’s Most Profitable Company?
It is Saudi Aramco, the world’s biggest Oil Exporter and Most Profitable Company In the World, located In Saudi Arabia.
The Company has 270 Billion barrels in Reserve and has an estimated valuation of the company is 5 Trillion USD.
In the First half of 2019, the company has reported net income of $46.9 Billion. Source Wiki
Saudi Aramco has invested $100 billion in India.
This is a detailed case study on Saudi Aramco, How Saudi Aramco has become the most profitable company in the world.
So let’s Start The Case Study Of World’s Most Profitable Company
What’s in it for me?
- About Saudi Aramco (Overview)
- How Saudi Aramco Started
- Business Model Of Saudi Aramco
- How Much Profit Saudi Aramco Make
- Saudi Aramco’s Investment In India
- Management Team Of Saudi Aramco
- Facts & Figures
- Digital Links Of Saudi Aramco
- Funding & Rising
- World’s Biggest IPO By Saudi Aramco
- Companies Acquire By Saudi Armco
- Future Plan
- Financial Highlights
- Operational Highlights
About Saudi Aramco
Saudi Aramco was 87 years old Stated own Oil Company founded by Standard Oil Co. of California in 1933.
Saudi Arabia. Saudi Aramco is officially known for Saudi Arabian Oil Company and official based in Dhahran, Saudi Arabia
Saudi Aramco is the world’s largest company by revenue and profit. It has the second largest daily production in the world and has 270 Billion Barrels in reserve.
The Company started his first commercial oil production in 1939, but officially established in late 1988.
It operates the world’s largest single hydrocarbon network system.
Refinery Owned By Saudi Aramco
- Jazan Refinery and terminal projects
This Refinery was located in Jazan, Saudi Arabia. The construction of company was ongoing. This Refinery produced 400000 BBl/Day.
- Jeddah Refinery
This refinery was situated in Jeddah, Saudi Arabia, Its daily production is 78,000 bbl
- Ras Tanura Refinery
This Refinery refinery is located in Ras Tanura, Saudi Arabia. Its Daily production is 5,50,000.
- Riyadh Refinery
Riyadh Refinery is located in Riyadh, Saudi Arabia And its’ daily production is 126,000.
- Yanbu Refinery
This is refinery is located in Yanbu, Saudi Arabia. Its daily production is 245000.
Refining Ventures Owned by Saudi Aramco
- The Saudi Aramco Mobil Refinery Co. Ltd.
This Refining Venture is located in Yanbu and its daily refining capacity is 400000 bbl per day.
- The Saudi Aramco Shell Refinery Co. (SASREF)
This refining venture is situated in Jubail, Saudi Arabia. Its daily refining capacity is 3,00,000 barrel.
- Petro Rabigh
This Reffing Venture is located in Rabigh, Saudi Arabia. Its daily refining capacity is 400000.
- Saudi Aramco Base Oil Co. (Luberef)
This venture located in Jeddah, Saudi Arabia.
- Saudi Aramco Total Refining and Petrochemical Co. (SATORP)
This venture is located in Jubail, Saudi Arabia. Its daily Refining capacity is 4,00,000 barrel.
- Yanbu Aramco Sinopec Refinery (YASREF)
This Reffing venture is located in Yanbu, Saudi Arabia. Its refining capacity is 4,00,00 barrels per day.
- Fujian Refining and Petrochemical Co. (FRPC).
This Reffing Venture is located in China.
- Sinopec SenMei (Fujian) Petroleum Co. Ltd. (SSPC)
This Reffing Venture also located in China.
- Motiva Enterprises LLC, United States.
This reffing venture located in the United States. Its daily refining capacity is 635000 barrels per day.
- S-Oil, Republic of Korea
This Venture is located in Korea. Its daily Refining capacity is 669000 per day.
- Saudi Refining Inc., United States
This refinery is situated in the United States.
- Reliance Industries, India
This Venture is located in India. The company has recently invested in this company. See The Saudi Aramco India Section for more details.
How Saudi Aramco Started
Saudi Aramco is borne out by an agreement between the Saudi Arabian Government and Standard Oil Co. of California. The Company started its first commercial oil production in 1939.
After 1939 companies continuously expand their distribution efforts. In 1949 company hit 5,00,000 barrels per day. They Are also working on developing a pipeline. In 1950 they completed 1212 kilometre pipeline between trans and Arabian.
This pipeline is the world’s largest pipeline. This pipeline helped the company to export its oil to Europe and also cutting the cost of transport. The company rapidly expand their production operation and hit another milestone in 1962 with the crude oil production of 5 Million Barrels.
In 1973 Saudi Arabian government purchased 25% stake in the company and In later 1973 government increase their stake to 60%. But In 1980, Arabian Government purchased the rest of Stack in the Company. Saudi Aramco’s growth never stopped there, they started investing in other international companies and started their global partnership. In 1991, they purchased a 35% stake in S-Oil Company of South Korea.
Business Model of Saudi Aramco
Let me explain to you the business model of Saudi Aramco. Saudi Aramco is an oil production company. A significant portion of Saudi Aramco consists of an exploration of Oil. Thus Saudi Aramco has an advanced team of Geophysics and geologist. They have an advance research centre where they conduct their research.
Their Business model is very simply they find oil and establish their refinery. In a refinery, oil was produced and They sales oils to other countries and corporations. The Company also has refining and chemical business. Currently, the Company’s Capacity is 5.4 Million Barrel per day. Saudi Aramco owned many Oil Refining Ventures.
Some of them are based on Saudi Arabia and others are in Europe, Asia and the United States. The company also dealing with chemicals. The company also has shipping business in which companies ship crude oil, refine oil and natural gas to several countries.
How Much Profit Saudi Aramco Make
Saudi Aramco is the world’s largest profit-making and revenue-generating Company. The company also passed the most profitable company apple and Google. In 2018 Company generated $111.1 Billion in net income. In this period Apple company made a net profit of $59.5 billion. This secret reveals how much profitable company is.
You can take an estimation of a company’s revenue by this figure. Before the year 2018, there is no financial data of the company available for Public. This was the first financial data revealed by the company for the public because the company was planning to launch Its first Initial Public Offer.
Saudi Aramco’s Investment In India
Saudi Aramco has made many global investments. Saudi Aramco also invested in India. In India, the company’s first strategic investment was $44 billion in which company jointly hold 50% stake.
The rest of stake will be owned by Indian Oil Corp, BPCL & HPCL. The company also made a great deal with Reliance Industry. In these deal, Saudi Aramco invested $15 Billion for 20% Stake in Reliance Oil To Chemical for $75 Billion Valuation.
This deal was best FDI Deal For India. The company also Supply 5,00,000 crude oil barrels to Reliance Industries limited Refinery at Jamnagar on per day basis.
Management Team of Saudi Aramco
The Giant Saudi Aramco is owned By Saudi Arabia government. Amin H. Nasser is the Chief Executive Officer and President of Company.
|CEO||Amin H. Nasser|
|Chairman||HE Yasir Othman Al-Rayyan|
Facts & Figure
|Categories||Energy, Oil and Gas, Renewable Energy|
|Headquarters||Regions Gulf Cooperation Council (GCC)|
|Number of Employees||10001+|
|Legal Name||Saudi Arabian Oil Co.|
Funding & Rising
|Organisation Name||Funding Amount||Funding Series||Date|
|Hyundai Oil Bank||$1.2 Billion||Secondary Market- Hyundai Oil bank||Dec 17, 2019|
|NextWave||Not Disclosed||Corporate Round NexWafe||June 19, 2018|
|Golden Scent||Not Disclosed||Series A Golden Scent||Dec 21, 2017|
|Desktop Metal||$115 Million||Series D Desktop Metal||July 17, 2017|
|Oxymel||Not Disclosed||Funding Round Oxymem||June 20, 2017|
|Rive Technology||$17.1 Million||Series E Rive Technology||No 12, 2015|
World’s Biggest IPO By Saudi Armco
The Company launched its Initial Public Offer In 2019. Saudi Aramco values her Initial Public offer at $2 Trillion. But According to A Survey Conduct By Bloomberg, the pool shows that the 40% investors valued it as $1.2-$1.5 Trillion and other valued it $1.1 trillion or less. Company Raised $25.6 billion from its Initial Public Offer.
This is the highest amount raised by any company in the World. The Company breakdown the record of Alibaba- A Chinese E-Commerce Giant. The Company’s Share started trading from 11 Dec with a price of 35.20 SAR. The highest share price of the Company is 38.70 SAR and the lowest price of the share is 34.25 SAR.
Companies Acquire By Saudi Aramco
1 Saudi Aramco Acquired SABIC A Diversified Manufacturing Company for $69.1 Billion on 27 March 2019.
2 ARLANXEO operates as a synthetic rubber company is another acquired By Saudi Arabia For $1.6 billion on 8 August 2018
Saudi Aramco has continuously worked fast to grow their organization. Some of their plans are following
- They want to develop their organization as much more technology and knowledge-driven organization
- By 2030, they want to double their Refining Capacity
- They also want to expand their Business into Chemicals
- Create New technologies Using Their Research and Development efforts
- Invest in New Business lines
- Acquire more potential Organization
Net income remained robust at $16.7 billion for the first quarter, despite lower crude oil prices as well as declining refining and chemicals margins and inventory re-measurement losses.
Cash flow from operating activities was strong at $22.4 billion in the first quarter, compared to $24.5 billion in the same period of 2019.
The impact of declining crude oil prices and refining and chemicals margins was partially offset by favourable movements in working capital.
Free cash flow was robust at $15.0 billion in the first quarter, compared to $17.4 billion in the same period last year.
Aramco’s balance sheet remains strong and the gearing ratio decreased from -0.2% on December 31, 2019, to -4.9% on March 31, 2020.
Total dividends of $13.4 billion were paid in the first quarter, in respect of the fourth quarter of 2019. Dividends of $18.75 billion for the first quarter of 2020 are the highest of any listed company worldwide and will be paid in the second quarter.
Saudi Aramco Q1 profit dives, says virus to hit 2020 results
Energy giant Saudi Aramco reported a 25 percent slump in first-quarter net profits due to low oil prices, saying the coronavirus crisis will dampen demand and full-year earnings.
The world’s largest listed firm posted a net profit of 62.5 billion riyals ($16.66 billion) in the three months to March, compared to $22.2 billion a year earlier.
The company said the drop in earnings mostly reflected a decline in crude oil prices, as well as shrinking margins in the refining and chemicals businesses.
“The COVID-19 crisis is unlike anything the world has experienced in recent history and we are adapting to a highly complex and rapidly changing business environment,” CEO Amin Nasser said.
The energy behemoth said that a steep decline in global demand for energy caused by the coronavirus pandemic would weigh on its full-year results.
“Longer term we remain confident that demand for energy will rebound as global economies recover,” said Nasser, adding that the company plans to continue to reduce capital spending.
Aramco was listed on the Saudi Tadawul market in December following a historic $29.4 billion initial public offering — the world’s largest — but since then has faced a torrid environment.
Last year it reported a 20.6 percent decline in its annual net profit to $88.2 billion due to low oil prices and production levels.
Oil prices slumped to nearly two-decade lows in March, losing almost two-thirds of their value due to weak demand resulting from the impact of the coronavirus pandemic.
Prices plummeted further in April amid a price war between Russia and Saudi Arabia as the major producers scrambled to secure market share.
Riyadh’s production soared to a record 12.3 million, pushing stockpiles to unsustainably high levels.
Dividend of Q1
Saudi first-quarter capital expenditures were $7.4 billion, compared to $7.2 billion for the same period in 2019.
In light of market conditions and recent commodity price volatility, the Company continues to expect capital spending for 2020 to be between $25 billion and $30 billion.
Capital expenditures for 2021 and beyond remain under review.
Under challenging market conditions, Aramco maintained its pre-eminence in oil and gas production.
Aramco, through its wholly-owned subsidiary Aramco Gulf Operations Company Ltd. (AGOC), resumed operations at Al-Khafji Joint Operations (KJO). AGOC operates in the offshore partitioned territory between the Kingdom of Saudi Arabia and the State of Kuwait, with a 50% ownership in KJO.
Aramco Trading Company signed an agreement to offtake Aramco Gulf Operations Company’s full share of crude oil production following the restart of KJO.
During the first quarter, the Fadhili Gas Plant increased its processing capacity from 1.5 billion standard cubic feet per day (bscfd) at year-end 2019 to reach 2.0 bscfd during the first quarter of 2020.
Progress remains on track and the plant is expected to reach full capacity of 2.5 bscfd this year.
Despite a challenging market environment, the downstream business is keeping pace with its long-term strategy to capture value across the hydrocarbon value chain through further strategic integration and diversification of its operations.
Lower Crude, COVID-19 Impacts
Aramco’s ambitions to expand downstream and in Asia comes amid a challenging time of lower crude oil prices and demand destruction from the Covid-19 pandemic.
In March, the company announced 2020 capital spending (capex) would be $25bn-30bn, the midpoint of which is 16% down from 2019 capex of $32.8bn. Plus, 2021 capex plans would also be reviewed, it said.
A number of energy and chemicals companies have taken down their capex plans for 2020 – mostly on the order of 20-30%.
“Recent developments in the chemicals industry, including challenging supply and demand dynamics, are impacting the business today,” said Gudaimi.
“However, over the long term company expect their industry to experience strong demand growth, with the petrochemicals sector in particular expected to record the fastest growth in oil demand to 2040.
The executive cited per capita demand for polymers ranging from 80-100 kilograms (kg) in the US, Canada and South Korea, but just around 10kg in India and 5kg in Africa, highlighting the long-term growth potential in developing countries.
Press Release by Saudi Aramco
Aramco Announces First Quarter 2020 Results
Resilient performance despite challenging market conditions
• First-quarter net income: $16.7 billion
• First quarter free cash flow: $15.0 billion
• Gearing ratio of -4.9% reflects the further strengthening of balance sheet
• Dividends of $13.4 billion paid in the first quarter, in respect of Q4 2019
• Dividends of $18.75 billion to be paid in the second quarter, for Q1 2020
• Low upstream costs and sustaining capital provide significant flexibility
The Company launched its Initial Public Offer In 2019. Saudi Aramco valued its Initial Public Offer at $2 Trillion.
The Giant Saudi Armaco is owned By Saudi Arabia government. Amin H. Nasser is the Chief Executive Officer and President of Company.
Saudi Aramco’s Networth/ valuation is more than $2.03 trillion on the Saudi exchange.
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