FOR YEARS investors dreamed of peering into the books of Saudi Aramco, the oil colossus wholly owned by Saudi Arabia. On April 1st they got their wish. A 469-page bond prospectus revealed $111bn in net income last year, more than the five oil majors—Royal Dutch Shell, ExxonMobil, Chevron, Total and BP—managed combined. The document also highlighted Aramco’s constraints.
Like rivals, it faces swinging oil prices and uncertain long-term demand. The bond will help finance the acquisition of 70% of SABIC, a petrochemical company, from the kingdom’s sovereign wealth fund, for $69bn. This will diversify Aramco’s revenues—and give the state cash to invest in sectors beyond oil (especially now that a planned listing of 5% of Aramco’s shares has been postponed).
Aramco looks better prepared than rivals for a less fossil-hungry future. It is less indebted and produces roughly four times as much oil, at about one-third the cost per barrel (see chart). Yet Aramco also bears an unusual burden. In 2018 it paid Saudi income tax of $102bn, more than the combined profits of Apple and Samsung, the world’s most profitable listed firms. That is on top of royalties of $56bn and a dividend of $58bn. Credit raters at Fitch note that taxes limit Aramco’s funds flow from operations, a measure of profitability, to $26 a barrel, less than Shell’s $38 or Total’s $31. Ghawar, a giant field, was believed by some to pump 5m barrels a day, but only manages 3.8m. Fitch and Moody’s, another agency, rated Aramco A+ and A1, respectively—below ExxonMobil, Shell or Total.