Oil and gas companies have played a major role in the world’s economies as our society developed methods to use and demand oil and gas. The biggest company was Standard Oil owned by John D Rockefeller which was broken up and became 7 large oil companies the biggest being Exxon. As time went on the oil producing countries formed their own companies and now the biggest oil and gas company is Saudi Aramco. The company was owned by the Saudi government but it decided to sell some to investors and now the Saudi Aramco trades on stock exchange.
In early November the company reported its 3rd quarter profit and in an article by Isabel Debre of the Associated Press, the company reported a profit of $30.4 in the 3rd quarter. When Exxon was losing money, Saudi Amamco made $11.8 billion, now that oil and gas prices are up, the profits continue to roll in.
Aramco chief executive Amin Nasser described the results as exceptional. His team is optimistic that energy demand will remain healthy for the foreseeable future.
In every commodity company as prices rise with demand, there is a desire to increase output, not to lower the prices but to capitalize on the higher prices. Saudi will increase production by 400,000 barrels a month to a total of 11.5 million for the year.
Linking to dividend paying stocks, in commodity companies as an investor you are looking for a low cost producer which can sell at market rates for a the commodity. Ideally the market rate is well above production and distribution costs so if the price fluctuates the company still makes a profit. Saudi’s production is less than $5 a barrel and sells for over $80 a barrel. As an investor, it is long term hold.
There are more questions than answers, till the next time – to raising questions.