Oil & Gas 360 Publishers Note: We are watching the long term plan from the Saudi Aramco management team, as they are taking a different path than the other major oil companies. In my opinion they are on the right track.
London, 3 November (Argus) — State-controlled Saudi Aramco has reported a profit of $11.8bn for the third quarter, around half the level of the same period last year but 78pc higher than the previous three months.
The sharp quarter-on-quarter rise was underpinned by a recovery in oil prices, with the price of Saudi crude averaging $43.6/bl in July-September, compared with $23.4/bl in the second quarter. This more than offset lower production in the period. Saudi Arabia told the Opec secretariat that it produced 8.81mn b/d of crude in the third quarter, compared with 9.32mn b/d in the previous three months.
The country’s crude quota under the Opec+ agreement increased to 8.99mn b/d in August from 8.49mn b/d in May-July. But second-quarter output was boosted by record production in April before the deal came into force.
Aramco delivered $12.4bn of free cash flow in July-September, more than double the $6.1bn it generated in the previous three months. It was not enough to cover the firm’s quarterly dividend payment of $18.75bn, but Aramco said it would still honour its pledge to pay the same amount in the fourth quarter.
The Saudi government, which owns over 98pc of Aramco’s equity, gets the lion’s share of the dividend. The balance goes to private shareholders who bought shares when 1.5pc of the company’s equity was floated on the domestic stock exchange a year ago.
Aramco said the financial results highlight its “financial and operational strength, despite market volatility and the impact of Covid-19 on the global economy”.
Aramco’s third-quarter capital expenditure (capex) came to $6.4bn, marginally higher than the previous three months but a sharp fall compared with $8.1bn in the same period last year. The company said in August that it expects to reduce capex to around $25bn this year from previous guidance of $35bn-40bn as a result of this year’s oil demand crunch.
“We continue to adopt a disciplined and flexible approach to capital allocation in the face of market volatility. We are confident in Aramco’s ability to manage through these challenging times and deliver on our objectives,” chief executive Amin Nasser said.