Saudi Aramco’s second-quarter profit fell 3.4% on lower crude oil sales and weak refining margins, the company said today.
The company reported net income of 109.01 billion riyals ($29.03 billion) in the three months ended June 30, beating the average estimate of 15 analysts published by the company of $27.7 billion.
Distributions
The company announced a dividend of $31.1 billion for the second quarter, including a dividend tied to last year’s performance of $10.8 billion.
The company introduced dividends linked to performance last year, in addition to basic dividends that are paid regardless of results, a practice not common among listed companies.
Aramco said on Tuesday it expects total dividends of $124.2 billion in 2024, roughly in line with its previous forecast of $124.3 billion.
The Saudi government owns about 81.5% of Aramco and relies heavily on the company’s payments, which include royalties and taxes. The Saudi sovereign wealth fund owns another 16% of the company and also benefits from its dividends.
Aramco’s capital spending in the second quarter rose by about 14% year-on-year to $12.1 billion, an increase that reflects “progress in development work to increase crude oil production to maintain maximum sustainable production capacity at 12 million barrels per day, and increased development activity to support the strategic expansion of gas operations.”
Reflect #Aramco_Results Strong financial performance and positive progress in our long-term growth strategy for the second quarter and first half of 2024 to enable a more secure and sustainable energy future#Aramco
— Aramco (@saudi_aramco) August 6, 2024
Demand growth
“Saudi Aramco remains confident in its medium- and long-term demand growth forecasts as it continues to execute its growth strategy,” the company said in a statement.
Saudi Arabia, the de facto leader of OPEC, pumps nearly 9 million barrels per day, or three-quarters of its capacity, and has agreed to production cuts with other members of the OPEC+ alliance, which includes Russia and other allies.
The OPEC+ alliance cut production by a total of 5.86 million barrels per day, or 5.7% of global demand, in a series of steps agreed since 2022 to support the market amid uncertainty over global demand and rising supply from non-member countries.
Brent crude fell 0.14% to $76.20 at the time of writing, amid concerns about global economic growth.
Aramco’s stock has lost about 19% of its value since the beginning of this year, in a decline in line with the performance of the stocks of major Western oil companies.
We announce the completion of a USD 6 billion bond issuance, which witnessed wide demand from a variety of international institutional investors.
Learn more 👇
https://t.co/MehfvMqkWb#Aramco pic.twitter.com/F8UTrSVkvU— Aramco (@saudi_aramco) July 18, 2024
The Saudi budget has been hit by lower oil production and falling prices. The government announced last week that the budget deficit in the second quarter exceeded $4 billion.
Seeking to meet its financing needs, the government sold additional shares in Aramco earlier this year, raising $12.35 billion.
The Saudi government has been among the biggest beneficiaries of emerging economy debt markets, raising $17 billion in international bond sales.
Aramco itself raised $6 billion in a bond issue last month, and the Public Investment Fund, the sovereign wealth fund leading the kingdom’s Vision 2030 plan to reduce its reliance on oil revenues, has raised several billion dollars in debt issues this year.
