Saudi Arabian state oil giant Aramco reported a near 38% drop in second-quarter net profit on Monday amid weaker oil prices and thinner refining and chemicals margins, as it boosted its dividend with a new performance-linked payout.
Aramco’s net profit fell to 112.81 billion riyals ($30.07 billion) for the quarter to June 30 from 181.64 billion riyals a year earlier, beating a company-provided median estimate from 15 analysts of $29.8 billion.
The group declared a base dividend of about $19.5 billion for the second quarter, roughly in line with its payout for the first quarter.
Aramco will begin paying performance-linked dividends for six quarters, starting with a $9.87 billion payout in the third quarter, it said.
The Saudi state remains overwhelmingly Aramco’s biggest shareholder. The government directly holds 90.19%, the sovereign Public Investment Fund owns 4% and another 4% is held by PIF subsidiary Sanabil, according to Refinitiv data.
Saudi Arabia has posted a budget deficit of 8.2 billion riyals in the first half of 2023, raising the possibility of a full-year deficit after it notched its first surplus in nearly a decade last year.
Most oil majors reported strong or record-breaking earnings in the second quarter of 2022 after Western sanctions against major exporter Russia squeezed an already undersupplied global market, causing a surge in crude and natural gas prices.
Brent has dropped from $113 a barrel a year ago, hit by concerns over an economic slowdown and ample supplies. Moscow and Riyadh have been trying to prop up prices.
Oil futures are now at their highest since mid-April after Saudi Arabia and Russia pledged last week to keep supplies down for another month to tighten global markets further. Brent was trading around $86 a barrel on Monday.
OPEC+, which groups the de facto Saudi-led Organization of the Petroleum Exporting Countries and allies led by Russia, pumps around 40% of the world’s crude. The group has been limiting supply since late last year to bolster the market.
“At Aramco, our mid to long-term view remains unchanged. With a recovery anticipated in the broader global economy, along with increased activity in the aviation sector, ongoing investments in energy projects will be necessary to safeguard energy security,” CEO Amin Nasser said in a statement.
The firm still sees capital expenditure at between $45 billion and $55 billion this year, Nasser said on a media call.
He expected Chinese demand to continue growing and said its chemicals sector was growing at a substantial pace and that Aramco continued to eye potential acquisitions there.
Aramco’s shares, which were up 2.2% at 0812 GMT on Monday, have risen about 12.7% this year to 32.9 riyals.
Reuters – by Maha El Dahan and Yousef Saba