Saudi Aramco posted the biggest quarterly adjusted profit of any listed company globally driven by high crude prices and production.
Aramco followed big oil rivals reporting a surge in profits. Net income rose to $48.4 billion in the second quarter, up from $25.5 billion a year earlier, the state-controlled company said on Sunday. Profit beat a company compiled analyst estimate of $46.2 billion. Revenue climbed 80 per cent to $150 billion, beating analyst estimates. Its free cash flow rose by 53 per cent from a year earlier to $34.6 billion.
Aramco “expects oil demand to continue to grow for the rest of the decade, despite downward economic pressures on short-term global forecasts” Chief Executive Officer Amin Nasser said.
The company is using the windfall to reduce debt and invest in a huge expansion of its production capacity, rather than boost payouts to shareholders.
The Saudi Arabian state-controlled company kept its quarterly dividend, a crucial source of revenue for the kingdom, unchanged at $18.8 billion. That was unlike most Western majors, who increased payouts to shareholders. Aramco also reduced gearing, a measure of debt to equity, to 7.9 per cent from 14.2 per cent at the end of 2021.
Energy companies boomed in the first half of this year. Russia’s invasion of Ukraine roiled markets, sending oil prices above $100 a barrel and causing refining margins to soar, while Aramco is benefiting from both high production and sales prices. Demand, meanwhile, continued to rebound from the coronavirus pandemic in most parts of the world. Firms such as Exxon Mobil Corp. and Shell Plc made record earnings in the second quarter.
The quarter may mark a high point for Aramco. While Brent crude averaged $112 a barrel between April and June, it’s since fallen below $95 as the US and European economies slow and due to China’s Covid lockdowns.
Still, Saudi Arabia is ramping up output along with other members of OPEC+, the producers’ cartel it leads alongside Russia. The kingdom pumped 10.5 million barrels a day of crude in the second quarter. It increased that figure to almost 11 million in July and is under pressure from the US and other major importers to go even higher, despite some analysts doubting it has much spare capacity.
Aramco said it “continues to work on increasing crude oil maximum sustainable capacity from 12 million barrels per day to 13 million by 2027.”
Aramco listed in Riyadh in 2019, though it’s still 98 per cent state owned. Its shares have gained 25 per cent this year, giving it a market valuation of $2.4 trillion.
The company is scheduled to release a more detailed breakdown of its results, including the performance of its upstream and downstream units, on Monday.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Copyrights © 2022 Business Standard Private Ltd. All rights reserved.
Upgrade To Premium Services
Business Standard is happy to inform you of the launch of “Business Standard Premium Services”
As a premium subscriber you get an across device unfettered access to a range of services which include:
In Partnership with
Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.
Team Business Standard