7 key points from Saudi Aramco’s bond prospectus

Oil giant Saudi Aramco disclosed its closely-guarded financial data to bond investors for the first time on Monday. The company looks to issuing bonds into global debt capital markets and also strengthening its downstream business by recently acquiring a majority stake in Saudi Basic Industries Corp (SABIC).

Here are a few key points from the bond prospectus:

World’s most profitable firm

Saudi Aramco was officially the world’s most profitable firm in 2018, with a net income of $111 billion. The oil giant’s net income surged by 50 percent year-on-year (YoY) to reach $111 billion in 2018. In 2017, its net income stood at $75.9 billion, and at $13.2 billion a year in 2016.

Production ratios

In 2018, Saudi Aramco produced 13.6 million barrels per day (bpd) of oil, including 10.3 million bpd of crude oil. The company’s crude oil production accounted for approximately one in every eight barrels of crude oil produced globally from 2016 to 2018. As at Dec. 31, 2017, Saudi Aramco’s proved liquids reserves were more than five times the combined proved liquids reserves of the five major independent oil companies (IOCs).

Refining capacity

As of Dec. 31, 2017, Saudi Aramco’s net refining capacity made it the fourth largest integrated refiner in the world. The company had a gross refining capacity of 4.9 million bpd and net refining capacity of 3.1 million bpd as of Dec. 31, 2019. Aramco expects the Jazan petrochemical refinery and the PRefChem integrated refinery and petrochemicals complex to commence operations by the end of 2019, which will increase its gross refining capacity to 5.6 million bpd and net refining capacity to 3.7 million bpd.

Read: Saudi Aramco world’s most profitable firm in 2018 with net income of $111 bln

Gas portfolio

Saudi Aramco’s gas portfolio is rich in liquids, demonstrated by the production of 0.2 million bpd of unblended condensate and 1.1 million bpd of natural gas liquids (NGLs) in 2018. The company is the exclusive supplier of natural gas in the Kingdom, the seventh largest natural gas market in the world, and supplied 8.9 billion standard cubic feet per day of natural gas and 1 billion standard cubic feet per day of ethane in 2018.

Merger and acquisition

On March 27, 2019, Saudi Aramco announced that it had entered into a purchase agreement with the Public Investment Fund (PIF) to acquire 70 percent equity interest in SABIC for total consideration of $69.1 billion. It is expected to close the deal in 2020, subject to customary closing conditions.

Credit Ratings

Credit ratings agencies Fitch and Moody’s rated A+ and A1 to Saudi Aramco respectively. Moody’s said Saudi Aramco benefits from a very large operational scale, significant downstream integration and strong financial flexibility given its low cost structure and robust balance sheet. This provides considerable credit resilience through oil price cycles.

Read: Fitch assigns ‘A+’ ratings for Saudi Aramco with stable outlook

Business strategies

Saudi Aramco expects to maintain its position as the world’s leading crude oil producer by production volume and the lowest cost producer while providing reliable crude oil supply to customers. The company remains focused on increasing the strategic integration of its upstream and downstream businesses, creating an integrated global downstream refining and chemicals business and enhancing its domestic and global marketing businesses.

Write to Paromita Dey at paromita.d@argaamplus.com