2021

Saudi Aramco

First quarter interim report

For the period ended March 31, 2021

Saudi Aramco

1

First quarter interim report 2021

Aramco at a glance

First quarter 2021

Financial highlights

Net income

EBIT*

Free cash flow*

Net cash provided by

(billion)

(billion)

(billion)

operating activities

(billion)

SAR 81.4

SAR 153.7

SAR 68.5

SAR 99.3

$21.7

$41.0

$18.3

$26.5

Capital expenditures

Dividends paid

Dividends paid

ROACE*

(billion)

(billion)

per share

(%)

SAR 30.8

SAR 70.33

SAR 0.35

14.2

$8.2

$18.75

$0.09

Gearing*

Earnings per share

Average realized

(%)

(basic and diluted)

crude oil price

($/barrel)

23.0

SAR 0.39

60.2

$0.10

  • Non-IFRSmeasure: refer to Non-IFRSmeasures reconciliations and definitions section for further details.

2 Saudi Aramco

First quarter interim report 2021

Key results

Financial results

First quarter ended March 31

SAR

USD*

All amounts in millions unless

2021

2020

2021

2020

otherwise stated

Net income

81,440

62,478

21,717

16,661

EBIT

153,680

128,258

40,982

34,202

Capital expenditures

30,750

27,740

8,200

7,397

Free cash flow

68,549

56,327

18,279

15,021

Dividends paid

70,325

50,226

18,753

13,394

ROACE1

14.2%

26.3%

14.2%

26.3%

Average realized crude oil

price ($/barrel)

n/a

n/a

60.2

51.8

  • Supplementary information is converted at a fixed rate of U.S. dollar 1.00 = SAR 3.75 for convenience only.

1. Calculated on a 12-month rolling basis.

CEO's statement

President and CEO

Amin H. Nasser

The momentum provided by the global economic recovery has strengthened energy markets, and Aramco's operational flexibility, financial agility and the resilience of our employees have contributed to a strong first quarter performance. For our customers we remain a supplier of choice, and for our shareholders we continue to deliver an exceptional quarterly dividend.

We made further progress towards our strategic objectives during the quarter and our portfolio optimization program continues to identify value creation opportunities, such as the recent announcement of our landmark $12.4 billion pipeline infrastructure deal. We also expect Saudi Arabia's newly- launched Shareek program to present growth opportunities, through incentives which encourage partnerships and investment.

Given the positive signs for energy demand in 2021, there are more reasons to be optimistic that better days are coming. And while some headwinds still remain, we are well-positioned to meet the world's growing energy needs as economies start to recover.

Saudi Aramco

3

First quarter interim report 2021

First quarter highlights

The energy markets saw a strong recovery in the first quarter of 2021 due to the ongoing rebalancing of supply and demand fundamentals, in addition to improved sentiment for an increase in global demand spurred by ongoing vaccination programs. This led to a steady increase in crude oil prices, while discipline from refiners and petrochemicals producers helped improve margins. Capitalizing on these increasingly encouraging market conditions, Aramco delivered strong quarterly earnings and cash flows, while maintaining its low Upstream production cost and high level of operational agility.

To unlock value from its asset base and maximize shareholder return, Aramco continues progressing with its ongoing portfolio optimization program. In April 2021, Aramco signed a share sale and purchase agreement to sell a 49% equity interest in Aramco Oil Pipelines Company, a newly-formed Aramco subsidiary, to a consortium of investors led by EIG Global Energy Partners for cash consideration of SAR 46.5 billion ($12.4 billion). As part of this infrastructure deal, Aramco Oil Pipelines Company will lease and leaseback usage rights in Aramco's stabilized crude oil pipelines network for a 25-year period, and in return, will receive a tariff from Aramco. Aramco will continue to retain full ownership and operational control of its stabilized crude oil pipelines network. The cash proceeds will be used for general corporate purposes.

Aramco continues to maintain its highly disciplined approach to capital allocation and expects 2021 capital expenditures to be approximately $35 billion, compared to the original guidance of $40 - $45 billion.

A dividend of SAR 70.33 billion ($18.76 billion) was declared for the first quarter of 2021.

Upstream

Upstream continues to enhance Aramco's position as one of the world's top energy producers with an average total hydrocarbon production of 11.5 mmboed in the first quarter. This includes an average crude oil production of 8.6 mmbpd.

Upstream continues to invest in developing cutting-edge technologies and digital transformation programs. In January, Aramco and Saudi Telecom Company (stc) commissioned the Dammam 7 supercomputer. Named after the first successful oil well discovered in Saudi Arabia, the Dammam 7 supercomputer is among the ten most powerful supercomputers in the world with a processing capacity of

55.4 petaflops. The supercomputer is capable of running detailed 3D earth models with the intent of improving exploration and development successes while reducing associated risks.

Downstream

The Downstream business is keeping pace with its long-term strategy through further strategic integration and diversification of its operations. In the first quarter of 2021, Downstream enhanced its operating model to further support integration across the hydrocarbon value chain that will better position Aramco to strengthen its financial performance, value creation and global growth.

In the first quarter of 2021, Aramco's Downstream segment, one of the world's largest refining and petrochemicals businesses, consumed 43.8% (Q1 2020: 35.5%) of Aramco's crude oil production.

Downstream developments in the first quarter of 2021 include:

  • Aramco safely and successfully started-up the Jazan refinery in January and work is progressing well to reach the 400 mbpd design capacity;
  • Aramco and the Dow Chemical Company (Dow), partners in the Sadara Chemical Company (Sadara) joint venture, entered into agreements to provide additional feedstock by increasing the quantity of ethane and natural gasoline supplied by Aramco.
    These also include a gradual increase in Aramco's rights to market, through SABIC, the finished products produced by Sadara over the next five years through an executive sales and operations planning committee. Additionally, Aramco and Dow agreed to guarantee up to an aggregate of SAR 13.9 billion ($3.7 billion) of senior debt principal in proportion to their ownership interests in Sadara, an amount that is significantly lower than the $10.0 billion shareholder completion guarantees that were released when Sadara achieved project completion in November 2020. The terms of the restructuring also include beneficial terms such as a principal repayment grace period until June 15, 2026 and an extension of the final maturity date from 2029 to 2038, in connection with all of the facilities. Sadara will also benefit from longer-term structural operating and feedstock improvements, further enhancing its cracker's flexibility and improving Sadara's position on the global manufacturing cost curve; and
  • The Company achieved 100.0% (Q1 2020: 99.7%) supply reliability in the first quarter through continued demonstration of its operational agility and logistics optimization.

Working safely, responsibly and sustainably

The rollout of vaccination programs around the world to combat COVID-19 is an encouraging development but the pandemic is far from over. Aramco is proactively maintaining its safety and prevention programs to minimize the risks related to the COVID-19 pandemic on its operations and ensuring the continuity of a vital and reliable energy supply to its customers around the world.

On the sustainability front, the Company successfully completed its program to plant one million trees following the planting of more than 500,000 trees during the first quarter of 2021. The program's main objective was to combat desertification, enhance native biodiversity and create shaded areas.

4 Saudi Aramco

First quarter interim report 2021

All amounts in millions unless otherwise stated

Financial performance

Summary of financial performance

First quarter ended March 31

SAR

USD*

All amounts in millions unless otherwise stated

2021

2020

2021

2020 % change

Income before income taxes and zakat

151,380

127,735

40,368

34,063

18.5%

Income taxes and zakat

(69,940)

(65,257)

(18,651)

(17,402)

7.2%

Net income

81,440

62,478

21,717

16,661

30.3%

  • Supplementary information is converted at a fixed rate of U.S. dollar 1.00 = SAR 3.75 for convenience only.

Financial results

Following the unprecedented conditions brought on by the COVID-19 pandemic, global energy markets bounced back strongly in the first quarter of 2021, resulting in improved demand and higher prices. Aramco's financial agility, unique operational flexibility and its cash generation ability once again enabled it to benefit from these improved market conditions to deliver strong earnings and cash flows for the first quarter of 2021.

Key factors affecting Aramco's financial results

  • Aramco's results of operations and cash flows are primarily driven by market prices and the volumes sold of hydrocarbons, and refined and chemicals products. Global demand for petroleum products continued to recover from the lows of 2020, though still remains below pre-pandemic levels. The prices for hydrocarbons, and refined and chemicals products improved in the first quarter of 2021, compared to the same period in 2020.
  • Aramco's consolidated statement of income for the first quarter of 2021 includes SABIC's results, following its acquisition of a 70% equity interest in June 2020.

Net income

Net income for the first quarter of 2021 increased to SAR 81,440

($21,717), from SAR 62,478 ($16,661) for the same period in 2020, primarily driven by higher crude oil prices, improved downstream

margins and the consolidation of SABIC's results, partly offset by lower

crude oil volumes sold.

Income taxes and zakat

The charge for income taxes and zakat for the first quarter of 2021 was SAR 69,940 ($18,651), compared to SAR 65,257 ($17,402) for the first quarter of 2020. This increase in 2021 was mainly due to higher earnings.

For non-IFRS measures, refer to Non-IFRSmeasures reconciliations and definitions section.

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Saudi Aramco - Saudi Arabian Oil Company published this content on 04 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 May 2021 06:24:04 UTC.