This Company Singlehandedly Produced More Oil Than the Entire U.S.

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It's no secret that U.S. crude oil production has grown rapidly in recent years. Last year, the nation pumped out an average 6.33 million barrels of oil per day, with output in November and December even exceeding an average 7 million barrels per day -- the highest level since December 1992.

Yet one oil company managed to singlehandedly produce more oil than all the companies drilling in the U.S. last year. It shouldn't come as much of a surprise, then, that the company I'm talking about is Saudi Aramco, Saudi Arabia's national oil company. Let's take a closer look.

Progress in reducing expenses
In 2012, Saudi Aramco produced a record 9.5 million barrels per day, up 5% from the 9.07 million barrels per day it produced in 2011. In a foreword to the company's latest annual report, Aramco President and CEO Khalid al-Falih characterized last year's production as "the highest level in our company's history."

Aramco's exports grew as well, rising to 6.89 million barrels a day, up 4% from 6.63 million in 2011. More than half of the company's exports found their way to Asian markets, which accounted for 53.2% of the total. Meanwhile, the U.S. accounted for 16.5% of all Aramco exports last year, up from 16% the previous year.

The company's exports of refined products, however, were relatively flat, coming in at 344,000 barrels per day, up marginally from 337,000 b/d in 2011. Again, Asia was the largest market, accounting for slightly more than half of all exports, while Europe accounted for 9.5%. Meanwhile, just 0.2% of Aramco refined products exports were shipped to the United States.

Though Aramco is better known as an oil producer, it also boasts impressive refining capacity. In addition to around 1 million barrels per day of wholly owned refining capacity in the kingdom, it commands stakes in an additional 1.1 million barrels a day of capacity through domestic joint ventures.

The Saudi national oil company is also working on three new refining facilities in Saudi Arabia, partnering separately with Chinese oil giant Sinopec and French oil major Total (NYSE: TOT  ) for two of them. It also has major interests in refining ventures in the U.S., China, and Japan, including the Port Arthur refinery in Texas, which it operates with joint venture partner Royal Dutch Shell.

Final thoughts
Though Aramco produced more oil than the U.S. did last year, the comparison clearly doesn't tell the whole story. While the U.S. encourages competition among exploration and production companies of all sizes, the kingdom's national oil company enjoys something of a monopoly. Last year, it accounted for roughly 95% of the roughly 9.96 millions barrels of oil per day that Saudi Arabia produced.  

Moreover, Saudi Arabia has been pumping out massive amounts of oil for several decades. The U.S., on the other hand, has only recently seen a surge in production because of the application of advanced drilling technologies in shale formations.

In North Dakota's Bakken shale, for instance, Continental Resources (NYSE: CLR  ) , the leading producer in the play, reported 58% production growth last year, while Kodiak Oil & Gas (UNKNOWN: KOG.DL  ) , a smaller operator that also has a major presence in the play, said production nearly tripled from 2011 to 2012.

As these and other oil companies continue to lower costs by making their operations more efficient, US oil output should continue to grow (as long as oil prices stay relatively high and stable), albeit probably not as sharply as it has in the past two or three years.

And though I'm skeptical about claims that U.S. oil production could surpass that of Saudi Arabia's by 2020 -- mainly because of technical qualms about how exactly one classifies 'oil' -- it's hard to foresee a near- to medium-term future where the U.S. doesn't command a leading position in the global energy landscape.

Kodiak Oil & Gas is no doubt a dynamic growth story -- it offers tremendous opportunities, but with those opportunities come great risks. Before you hitch your horse to this carriage, let us help you with your due diligence. To find out whether Kodiak is currently a buy or a sell, you're invited to check out The Motley Fool's premium research report on the company, which comes with a full year of updates and analysis as key news breaks. To get started simply click here now.


Read/Post Comments (2) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 02, 2013, at 1:38 PM, amvet wrote:

    The definition of oil is crucial, for example, look at Canadian production.

    2011 honest crude oil*** 2.900 million bpd. Crude + other stuff.***.3.597 MM bpd.

    2012 honest crude oil ***3.131 million bpd.Crude + other stuff ***3.868 MM bpd.

    In Canada, adding NG liquids and other stuff inflates crude production by about one quarter and hides any decrease in crude production. NG liquids have much less energy than crude.

    For 2013 Texas reported 1.813 MM bpd for Texas and the EIA reported 2.295 MM bpd for Texas, even though the EIA claims they will use Texas rules when reporting Texas production. A 26% + "improvement" in production.

  • Report this Comment On June 04, 2013, at 10:08 AM, birge1 wrote:

    and if american engineers had not worked at ARAMCO (Arabian-AMERICAN Oil Co) in the 50's, we never would have heard of OPEC ! or had 9/11 or had our troops die in 2 worthless wars there. sadly, only hindsight is 20-20.

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