Saudi Aramco Profit Slides 23% on Volume Miss
As Saudi Arabia continues to voluntarily reduce production volume as an important member of the Organisation of Petroleum Exporting Countries and allies, Aramco, its national oil company has reported a steep decline in profitability.
Saudi Arabian Oil (Aramco), said Tuesday that net profit came to $32.58 billion in the three months ended in September, down 23% from $42.43 billion a year earlier, when it benefited from soaring energy prices following Russia’s invasion of Ukraine.
The oil company said it would pay its shareholders a base dividend of $19.51 billion for the third quarter–in line with the previous quarter–and a performance-linked dividend of $9.87 billion, for a total of $29.38 billion.
Free cash flow fell to $20.34 billion from $44.97 billion in the same period of last year, while the gearing ratio declined to minus 7.6% as of Sept. 30 from minus 7.9% as of the end of last year.
Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, said over the weekend that it will extend output cuts of 1 million barrels a day until the end of the year in an effort to boost prices.
In recent weeks, crude prices have swayed amid concerns that the Israel-Hamas war could spill over into a broader regional conflict and affect supplies, but weaker economic expectations and concerns about demand are also weighing in, with Brent crude currently trading at around $85 a barrel.
Aramco’s revenue rose to 424.1 billion Saudi riyals (112.97 billion) in the quarter from SAR402.56 billion in the previous-year period, while capital expenditure increased to $11.03 billion from $9.04 billion.
“Aramco believes energy demand is likely to increase over the mid-to-long term and is investing in its growing, integrated portfolio through the largest capital program in its history,” the company said.
On Tuesday, Aramco kept its December official selling prices for flagship Arab light crude for buyers in Asia unchanged from the prior month at $4 a barrel over the Oman/Dubai average. The price set by the state oil giant is seen as a barometer for how the Kingdom sees the demand outlook. U.S. Forecasts $100bn Revenue for Nigeria’s Creative Industries by 2030
