Saudi Aramco profit up 90% in second quarter amid energy price boom

An employee watches over Saudi Aramco’s oil mill in Abqaiq, Saudi Arabia October 12, 2019.

Maxim Shemetov | Reuters

Saudi oil giant Aramco on Sunday reported a staggering 90% increase in second-quarter net income and record half-year results as high oil prices continue to drive historic windfalls for “Big Oil.”

Aramco said strong market conditions helped boost its net income to $48.4 billion in the second quarter, up from $25.5 billion a year earlier. The result easily surpassed analyst estimates of $46.2 billion.

“Our record second quarter results reflect increasing demand for our products, especially as a low-cost producer with one of the lowest upstream carbon intensities in the industry,” said Aramco President and CEO Amin Nasser.

Aramco said net profit for the half rose to $87.9 billion, easily outperforming the largest publicly traded oil companies, including Exxonmobil, Chevron and BP and other “Big Oil” companies, all of which are benefiting from a rise in commodity prices.

Oil prices soared above $130 a barrel earlier this year as the global energy crisis, exacerbated by supply disruptions following the Russian invasion of Ukraine, rocked global markets and contributed to decades of high inflation.

“While global market volatility and economic uncertainty persist, events in the first half of this year support our view that continued investment in our industry is essential – both to ensure markets remain well supplied and to ensure an orderly energy transition.” facilitate,” added Nasser.

Aramco said it expects the post-pandemic recovery in oil demand to continue for the remainder of the decade, despite what it called “downward economic pressures on the global short-term forecast”.

The eruption results are also a major windfall for the Saudi Arabian government, which relies heavily on its Aramco dividend to fund government spending. The Kingdom reported a budget surplus of $21 billion in the second quarter.

Aramco said it would maintain its $18.8 billion dividend payment in the third quarter, backed by a 53% increase in free cash flow to $34.6 billion.

Big profit

Aramco uses its large profits to invest in its own production capabilities in both hydrocarbons and renewables, while also paying off debt.

“We are advancing with the largest capital program in our history and our approach is to invest in the reliable energy and petrochemicals the world needs, while developing low-carbon solutions that can contribute to the broader energy transition,” the company said.

Saudi Arabia, along with its OPEC+ counterparts, is under increasing pressure to ramp up oil production to bring down high prices. Company executives said limited global spare production capacity was a major concern for the global price outlook.

Aramco said it reached total hydrocarbon production of 13.6 million barrels of oil equivalent per day in the second quarter, and was working to increase capacity from 12 million barrels of oil per day to 13 million barrels of oil per day by 2027.

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