Saudi Aramco profits jump 90% in second quarter amid rising energy prices

An employee looks at the Saudi Aramco oil plant in Abqaiq, Saudi Arabia on October 12, 2019.

Maxim Shemedov | Reuters

Saudi oil giant Aramco on Sunday reported a 90% jump in second-quarter net income and record half-year results, as higher oil prices continue to deliver historic headwinds to “big oil”.

Strong market conditions helped boost its second-quarter net income to $48.4 billion, up from $25.5 billion a year earlier. The result easily beat the $46.2 billion estimate.

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

Half-year net income rose to $87.9 billion, easily outpacing the biggest listed oil companies, including ExxonMobil, Chevron and BP and other “big oil” companies. Rising commodity prices.

Oil prices soared above $130 a barrel earlier this year as the global energy crisis, worsened by supply disruptions stemming from Russia’s invasion of Ukraine, rattled global markets and contributed. Decades of high inflation.

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

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

The blowout results are a major blow to the Saudi Arabian government, which relies heavily on its Aramco dividends to fund government spending. The Kingdom reported a $21 billion budget surplus in the second quarter.

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

Key benefits

Aramco is using its major gains to invest in its own production capacities in both hydrocarbons and renewables, while also paying down debt.

“We are leading 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 contribute to the broader energy transition,” the company said.

Saudi Arabia, along with its OPEC+ peers Under increasing pressure Increase oil production to reduce high prices. Company executives said limited global spare manufacturing capacity is a key concern for the global price outlook.

Aramco said it achieved total hydrocarbon production of 13.6 million barrels of oil equivalent per day in the second quarter and plans 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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