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Saudi Arabia's state oil company Aramco, under pressure from the West to boost output amid soaring prices, pledged on Sunday to hike investments by around 50% this year as it reported a doubling in 2021 profits.
Saudi Aramco (SE:2222) benefitted from a more than 50% surge in oil prices last year, as increased COVID-19 vaccination rates and loosening restrictions resulted in demand outpacing supply.
Prices then leaped above $100 a barrel last month to hit 14-year highs after Russia invaded Ukraine, leading Western nations to urge Saudi Arabia and other producers to raise output.
Aramco said it aimed to boost its capital expenditure (capex) to $40-50 billion this year, with further growth expected until around the middle of the decade. Capex was $31.9 billion last year, up 18% from 2020 - indicating an increase of about 50% for this year at the middle of the guidance range.
The company made $110 billion in net profit last year, up from $49 billion a year earlier. Analysts had expected a net profit of $106 billion, according to the mean estimate of analysts on Refinitiv's Eikon.
Aramco shares surged over 4% in early trade to a high of 43.85 riyals, valuing the company at 8.76 trillion riyals ($2.34 trillion).
A $2 trillion valuation was a goal sought by de-facto Saudi leader Crown Prince Mohammed bin Salman before the company's record $29.4 billion initial public offering in 2019.
He has announced plans to sell more Aramco shares.
The surge in Aramco's valuation on Sunday moved it above that of Microsoft (NASDAQ:MSFT), though it remains behind Apple's (NASDAQ:AAPL)'s $2.68 trillion.
The Saudi government said last month that Crown Prince Mohammed, who is leading a huge investment drive to diversify the kingdom's economy, had transferred 4% of Aramco shares to the country's sovereign wealth fund.
Aramco has said it plans to raise its crude oil "maximum sustainable capacity" to 13 million barrels a day by 2027 and wants to boost gas production by more than 50% by 2030.
The company's average hydrocarbon production was 12.3 million barrels of oil equivalent per day last year.
Aramco also plans to develop a significant hydrogen export capability and become a global leader in carbon capture and storage technology, it said.
"Although economic conditions have improved considerably, the outlook remains uncertain due to various macro-economic and geopolitical factors," CEO Amin Nasser said in a statement.
"But our investment plan aims to tap into rising long-term demand for reliable, affordable, and ever more secure and sustainable energy."
Aramco said its free cash flow was $107.5 billion last year, compared with $49.1 billion in 2020. It declared a dividend of $75 billion for 2021, in line with its earlier pledge. - Investing
