OIL giant Saudi Aramco on Tuesday (Aug 6) reported a 3.4 per cent fall in second-quarter profit on lower crude volumes and softer refining margins.
Aramco posted second-quarter net income of 109.01 billion riyals (S$38.6 billion) in the three months to Jun 30, beating a company-provided median estimate from 15 analysts of US$27.7 billion.
Dividends of US$31.1 billion were declared for the second quarter, including US$10.8 billion in performance-linked payouts. Aramco introduced the performance-linked dividends last year, on top of a base dividend that is paid regardless of results, an uncommon practice among listed companies.
Aramco said on Tuesday it expects US$124.2 billion in total dividends in 2024, roughly in line with previous guidance of US$124.3 billion.
The Saudi government directly holds nearly 81.5 per cent of Aramco and relies heavily on the company’s payouts, which include royalties and taxes. Saudi’s sovereign wealth fund PIF holds another 16 per cent of Aramco and also benefits from its dividends.
Aramco’s capital expenditure in the second quarter rose nearly 14 per cent year-on-year to US$12.1 billion, partly due to investments to maintain crude maximum sustainable capacity at 12 million barrels per day and expansion of its gas business.
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“Aramco remains confident in its forecasts for medium- and long-term demand growth, and the company continues to execute its growth strategy,” it said in a statement.
Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries, is pumping roughly nine million barrels per day (bpd), about three quarters of its capacity. It has made cuts along with other Opec members and allies including Russia, together known as Opec+.
Opec+ has been cutting output by a total of 5.86 million barrels per day, or about 5.7 per cent of global demand, in a series of steps agreed since 2022 to bolster the market amid uncertainty over global demand and rising supply outside the group.
Brent crude was trading at about US$77.1 on Tuesday, its lowest level since January, amid concerns about global economic growth. Aramco’s shares are down nearly 19 per cent this year, trailing the performance of Western oil majors.
Lower output and prices have pressured Saudi state finances. Last week, the kingdom reported a second quarter deficit of over US$4 billion.
To meet its financing needs, the government sold a fresh chunk of Aramco earlier this year, raising US$12.35 billion. It has also been one of the most active emerging market debt issuers, raising US$17 billion from eurbond sales.
Aramco itself raised US$6 billion from bonds last month and the Public Investment Fund (PIF), which is steering a sprawling economic agenda known as Vision 2030 to cut the kingdom’s oil reliance, has also raised billions in debt this year. REUTERS
