Aramco: Comprehensive Analysis of Financial Performance and Its Impact on the

Saudi Aramco was established as a national entity to take responsibility for oil exploration, development, and production for the Kingdom of Saudi Arabia. Since its beginnings in the 1930s, it quickly became a key pillar of the Saudi economy, relying on massive oil reserves and exceptional production capabilities. Today, Aramco plays a pivotal role in financing the state budget, with its revenues constituting the largest share of government income. Its impact extends beyond the oil sector, contributing to national development programs, funding infrastructure projects, and supporting the ambitious Saudi Vision 2030 to diversify national income sources. With part of its shares listed on the Tadawul market, Aramco has transformed into a public company characterized by greater transparency in financial reporting, increasing its appeal to local and foreign investors. The government's ownership and the Public Investment Fund's stake of about 90% in the company's shares reflect its status as a strategic symbol and a key lever for the national economy.

Aramco attracted widespread global attention when it launched its initial public offering in December 2019, which was considered the largest in financial market history. The Aramco stock was listed under the symbol 2222 on the Tadawul market, with the offering price set at 32 Saudi Riyals per share. Since then, the stock has experienced periods of rise and fall in parallel with global oil price fluctuations and the company's financial performance. The stock rose following the recovery of oil prices after the COVID-19 pandemic, reaching record levels during peak demand in 2022, before declining relatively with price drops in 2024. Today, Aramco's stock represents nearly a quarter of the Saudi market index (TASI), making it a major influence on the overall index movement. The company commits itself to regular disclosure policies and high transparency in results, which enhances investor confidence and makes the stock a primary target for local and global investment funds.

In recent years, Aramco has maintained its financial strength despite a relative decline in profits due to falling oil prices in 2024. The net income for 2024 reached approximately $106.2 billion, compared to $121.3 billion in 2023, reflecting a decline of about 12%. This decrease is primarily attributed to lower crude prices and rising operational costs. Nevertheless, the company maintained high operating cash flows of $135.7 billion in 2024, with free cash flows amounting to $85.3 billion. Aramco continued to inject substantial capital investments totaling $53.3 billion in 2024, with expectations of continued growth in investment spending in 2025. These indicators confirm the company's ability to finance its expansions and protect the sustainability of dividends even in volatile market conditions.

Investors monitor several key indicators for Aramco's stock:
- Stock Price: It ranged between 32 and 36 Riyals at the end of 2024 and the beginning of 2025, influenced by oil market fluctuations and company performance.
- Market Capitalization: It changes with stock price and the number of outstanding shares, ranging between $2 and $2.5 trillion in 2024-2025, making it the largest in Saudi Arabia and one of the largest companies globally.
- Price-to-Earnings Ratio (P/E): It ranged between 12 and 18, which is relatively low compared to major energy companies and indicates the quality of the company's earnings.
- Cash Dividends: Aramco announced record dividends of $85.4 billion for 2025, translating to an annual yield exceeding 6% at certain times. This stable dividend policy enhances the stock's appeal to investors seeking regular income.

Aramco's operations are divided into two main sectors: the upstream sector, which includes oil and gas exploration and extraction, representing the core of the company's production strength with the largest proven oil reserves in the world (257 billion barrels). The downstream sector includes refining, petrochemical processing, and product distribution, and has seen significant expansions through investments in local and global refineries. Aramco's acquisition of a significant stake in SABIC has strengthened its presence in the petrochemical sector and enhanced its business integration. The company is also investing in developing natural gas, hydrogen, and new energy projects to keep pace with global shifts in the energy sector.

Aramco is committed to a generous and stable dividend distribution policy, usually paid quarterly. The total cash dividends for 2024 amounted to approximately $85.4 billion, distributed between base dividends and performance-linked dividends. This translates to a yield on the stock price often ranging between 4% and 9% depending on the price level at the time of distribution. These high levels of cash yield have made Aramco's stock one of the most attractive in the Saudi market for investors seeking regular income. The distribution policy reflects the management's commitment to maximizing shareholder value, based on the company's ability to generate substantial cash flows even during periods of oil price volatility.

Aramco focuses on strategic expansion both domestically and internationally. Domestically, it invests in developing oil and gas reserves, expanding refining and petrochemical capacities, and investing in renewable energy projects and carbon capture technologies. Globally, the company has enhanced its presence through partnerships and alliances with leading oil companies such as ExxonMobil, BP, and Total. Recent expansions included the development of the Samref refinery, signing partnerships in India and China, and entering technological projects such as developing the first quantum computer in the Kingdom. This strategy aims to diversify income sources, enhance competitiveness, and keep pace with global shifts in the energy sector.

In response to global pressures to reduce emissions and transition to clean energy, Aramco has launched ambitious projects in blue and green hydrogen and developed carbon capture technologies. It has also invested in solar energy and research projects in artificial intelligence and big data to improve operational efficiency. Through these initiatives, the company aims to reduce its carbon footprint, ensure environmental sustainability, and prepare for the requirements of the global energy transition. Although the contribution of these projects to revenues remains limited currently, they represent a long-term strategic direction within the framework of Saudi Vision 2030.

Aramco faces intense competition from global oil companies such as ExxonMobil, Chevron, BP, Shell, and Total, as well as major national companies like ADNOC and Qatar Energy. Aramco is distinguished by its vast reserves and low production costs, giving it a competitive advantage in low-price environments. The company also collaborates with its competitors on joint projects and the development of new technologies. Key challenges include transitions to renewable energy, price volatility, and global regulatory changes. Nevertheless, Aramco maintains a leading global position, supported by its production volume, cost control, and business integration across the oil value chain.

In 2024-2025, several strategic developments occurred in Aramco's journey, most notably the offering of 1.545 billion additional shares to raise approximately $12 billion, aimed at diversifying funding sources and supporting investments. An additional stake was transferred to the Public Investment Fund as part of the state ownership restructuring. Aramco has formed new alliances, most notably with ExxonMobil to develop the Samref refinery, and a partnership with French company Pasqal to develop the first quantum computer in Saudi Arabia. It also signed 17 memoranda of understanding with American companies in clean energy and cybersecurity. These moves support the company's ambitions for expansion and innovation and enhance its position within the global economy.

Aramco's profits are primarily dependent on global oil prices, as crude oil constitutes the largest part of its revenues. The year 2024 witnessed a relative decline in profits due to falling prices, but the company managed to maintain strong cash flows thanks to operational efficiency and low production costs. Aramco is working to reduce its exposure to fluctuations by diversifying products, expanding into gas and petrochemicals, and investing in renewable energy. The experience of recent years reflects the company's resilience in facing market shocks and its ability to continue delivering attractive returns to shareholders even during price downturns.

Aramco plays a pivotal role in achieving the targets of Saudi Vision 2030, whether through supporting the national economy or diversifying income sources. The company contributes to financing infrastructure projects, investing in manufacturing industries, and developing the renewable energy sector. It also supports scientific research, training, and localization programs. The international partnerships that Aramco engages in contribute to transferring knowledge and modern technologies to the Kingdom. Additionally, Aramco serves as a platform for developing human capital, providing extensive training and employment opportunities for young national talents.

Aramco faces a future filled with opportunities and challenges. On one hand, the growing global demand for hydrocarbon energy allows for continued strong revenues in the medium term. On the other hand, environmental trends impose pressures to accelerate the transition to clean energy, necessitating investment in energy transition projects. Competition with global oil and gas companies, regulatory changes, and oil price volatility will remain influential factors. Aramco's ability to innovate, diversify products, and enhance operational efficiency will be critical in maintaining its leadership and ensuring its position in the global market.