Aramco is world's most profitable oil company: Bloomberg
Reuters
Published Apr 13, 2018 08:52AM ET
Aramco is world's most profitable oil company: Bloomberg
LONDON (Reuters) - Saudi Aramco is the world's most profitable oil company, Bloomberg reported on Friday, but its huge earnings and cash flows may still fail to justify its desired $2 trillion valuation.
Financial performance at Aramco has long been one of the best kept secrets in the oil industry but as the company prepares for a long-awaited initial public offering (IPO) this year or next it needs to tell investors what it earns and how it operates.
Bloomberg news agency cited company accounts as saying Aramco had net income of $33.8 billion in the first six months of 2017 and cash flows of $52.1 billion.
Aramco said: "This is inaccurate, Saudi Aramco does not comment on speculation regarding its financial performance and fiscal regime."
The accounts, prepared to the IFRS standard, showed the firm made $7.2 billion in net income in the first of half of 2016, when crude averaged $41 a barrel, Bloomberg said.
Saudi Arabia's Crown Prince Mohammed bin Salman, who has made the Aramco IPO a cornerstone of Saudi economic reform to 2030, wants to raise a record $100 billion by selling a 5 percent stake in Aramco on local and foreign exchanges.
That would give Aramco a market capitalization of $2 trillion, the biggest achieved by any company and dwarfing peers such as Exxon Mobil (N:XOM) and Royal Dutch Shell (L:RDSa).
By comparison, Shell's current cost of supplies earnings excluding one-offs - the closest equivalent to net income - stood at $7.4 billion in the first half of 2017, the same as Exxon's.
Exxon had cash flow from operations and asset sales at $16 billion in the first half of 2017, compared with Shell cash flows of $20.8 billion.
Exxon's current market capitalization stands at $327 billion and Shell is worth $285 billion.
Even though Aramco's cash flows are two to three times bigger, its desire for a market value six to seven times higher than those of Exxon or Shell might look too ambitious to many investors and analysts who have said the company could be worth more than $1 trillion.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.