Tag: Aramco

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Saudi Aramco posts close to 300% leap in Q2 revenue on international demand restoration

Saudi Aramco posts near 300% leap in Q2 profit on global demand recovery

The Saudi Aramco logo is pictured at the oil facility in Abqaiq, Saudi Arabia on October 12, 2019.

Maxim Shemetov | Reuters

Saudi state oil giant Aramco reported a staggering 288% increase in net income to $ 25.5 billion for the second quarter, while maintaining its dividend of $ 18.8 billion amid large oil prices from higher prices and a rebound benefit from global demand.

Aramco’s net income of $ 25.5 billion for the quarter compared to $ 6.6 billion in the same quarter of 2020. Earnings exceeded expectations, with analysts posting an average net income of $ 24.7 billion for the quarter expect.

“Our second quarter results reflect a strong recovery in global energy demand and we are moving into the second half of 2021 with more resilience and flexibility as the global recovery picks up,” said Amin Nasser, President and CEO of Aramco, in an am Corporate statement published on Sunday.

Aramco said net income for the first half was $ 47.2 billion, compared to $ 23.2 billion in the first half of 2020, an increase of 103%. The company said the results were supported by easing Covid-19 restrictions around the world, vaccination campaigns, stimulus measures and accelerating activities in key markets.

“Although the challenges posed by Covid-19 variants are still uncertain, we have shown that we can adapt quickly and effectively to changing market conditions,” said Nasser.

Dividend plans

Aramco said free cash flow was $ 22.6 billion for the second quarter and $ 40.9 billion for the first half of 2021, compared to $ 6.1 billion and $ 21.1 billion, respectively. Dollars in the same time periods in 2020.

This is significant because free cash flow has now risen above the $ 18.75 billion quarterly dividend for the first time since the pandemic began. Aramco already pays the world’s largest dividend, but the improving outlook has led some analysts to call for higher payouts.

“A dividend hike is needed to stay competitive,” BofA analysts said in a research note ahead of the results. “Higher oil prices and OPEC + -driven production increases should support a significant increase in free cash flow over the next few years,” she added.

Aramco responded that its dividend would remain at “normal levels” for the quarter but would “advise” later on whether to stick to its current payout schedule.

“We’re looking at our sustainability program,” Nasser told CNBC on Sunday’s conference call. “Many of the elements of our capital program that we are currently considering have to do with crude oil-to-chemistry and hydrogen, and all of these programs offer great opportunities, particularly with the Shareek program,” he added.

Aramco, which is majority owned by the Saudi Arabian government, is an important source of income for the kingdom. “All of this will be reviewed with our board of directors and we will decide on an additional dividend payment at a later date,” said Nasser.

Price outlook

Oil prices soared around 40% to around $ 70 a barrel in 2021, prompting major oil rivals BP, Chevron and Royal Dutch Shell to raise dividends and launch share buyback programs.

“We assume that the recovery will continue,” said Nasser. “We’re seeing more economies opening and we expect demand to be around 99 million barrels by the end of the year … and 100 million barrels next year as a forecast for aggregate demand,” he added.

Amin Nasser, CEO of Saudi Aramco, gesticulates during a panel meeting on the third day of the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, January 23, 2020.

Jason Alden | Bloomberg | Getty Images

Aramco also said it lowered its gearing ratio – essentially how much the company is debt-financed to equity – to 19.4% on June 30, down from 23% on December 31, 2020. The decrease was mainly due to higher cash and cash equivalents and stronger operating cash flows and proceeds related to Aramco’s most recent crude oil pipeline transaction.

“Our historic $ 12.4 billion pipeline deal was an endorsement of our long-term business strategy from international investors and represents a significant advance in our portfolio optimization program,” said Nasser.

Capital expenditures were $ 7.5 billion for the second quarter and $ 15.7 billion for the first half of 2021, up 20% and 15% respectively. Capital expenditures are expected to be around $ 35 billion in 2021, according to Aramco.

Saudi Arabia’s Crown Prince Mohammed bin Salman said the kingdom would sell more Aramco shares earlier this year, but the company made no comment on the plans. Aramco also briefly stopped commenting on a previously announced oil-to-chemicals deal with Indian conglomerate Reliance Industries, which is expected to be formalized later this year.

“We are advancing a number of strategic programs that focus on sustainability and low carbon fuels, maximizing the value of our assets and driving our downstream integration and expansion,” added Nasser.

“For all of these and other reasons, I am very positive about the second half of 2021 and beyond.”

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World News

Saudi Aramco revenue drops after Covid-battered 12 months, upholds dividend

Saudi Aramco profit drops after Covid-battered year, upholds dividend

A worker at an oil processing plant for Saudi Aramco, a Saudi Arabian state oil and gas company, in the Abqaiq oil field.

Stanislav Krasilnikov | TASS | Getty Images

Oil giant Saudi Aramco reported a 44% drop in full-year 2020 results but maintained its dividend payout of $ 75 billion. CEO Amin Nasser described the last twelve months as one of the “most challenging years” in recent history.

Saudi Aramco, Saudi Arabia’s giant state-owned oil company, posted net income of $ 49 billion in 2020, up from $ 88.19 billion in 2019. Earnings were slightly below analysts’ expectations of $ 48.1 billion, but is still the highest of all listed companies in the world.

“In one of the most challenging years in recent history, Aramco has demonstrated its unique value proposition through considerable financial and operational agility,” said Amin Nasser, chief executive of Saudi Aramco, in a statement from the company on Sunday.

Aramco said sales were impacted by lower crude oil prices and volumes sold, as well as weaker margins in refineries and chemicals.

The company also expects to cut investments in the coming year, slashing its spending forecast from $ 40 billion to $ 45 billion to around $ 35 billion.

Free cash flow was down nearly 40% to $ 49 billion, well below the level of the highly anticipated dividend. Aramco also declared a $ 75 billion payout for 2020, despite fears it would take on additional debt to keep it up.

“Looking ahead, our long-term strategy to optimize our oil and gas portfolio is on track. As the macro environment improves, we see a pickup in demand in Asia and positive signs in other countries,” he added.

Shares in leading Western oil and gas companies, including Royal Dutch Shell and BP, fell to multi-year lows in 2020 as the coronavirus pandemic devastated the global economy and sparked historic oil prices. Exxon Mobil, the largest US energy company, posted its first annual loss.

Escalating attacks on oil facilities

Aramco’s facilities have been the target of several attacks by the Houthi rebels in Yemen – attacks that escalated this year, with Saudi Arabia and Iran, the latter of which supports the rebels, opposing the sides of the bloody civil war in Yemen.

Houthi rocket bursts in parts of Saudi Arabia, which hit Aramco’s facilities in early March, briefly brought the price of oil above USD 70 a barrel to the highest level in more than a year. Most recently, the rebels took responsibility for drone attacks on an Aramco plant in the capital Riyadh on Friday, which led to a fire that, according to the Saudi energy ministry, was quickly brought under control without any losses.

When asked how the company wanted to reassure investors and the global community that its infrastructure was well protected and ready to prevent serious business disruptions, CEO Amin Nasser said the attacks had “no business impact.”

“I think the most important thing is the willingness of our employees,” Nasser told CNBC during a press conference after the results were released. “There is always something you learn from every attack and you go out and improve your emergency response … and you make sure you have what it takes to restore these facilities if they are attacked.”

“We learned a lot and were able to prove with a reliability of 99.9% that we are able to put the system back into operation in every scenario, to guarantee the safety of our employees and to guarantee this at the same time.” The deliveries to our customers are fulfilled, “added Nasser.

“The attack on Riyadh is a good demonstration. Within hours of putting the fires out and completing the investigation, we started (re) operating the facility,” he said. “The Riyadh refinery went live today. This is a demonstration of the capabilities and contingency plan and emergency response of the first responders.”

Nasser was also optimistic about the outlook for oil demand in 2021.

“We have seen prices improve, with demand picking up and recovery much better. China is also very close to pre-pandemic levels,” said the CEO.

“As the use of vaccines increases, we will see a stronger pick-up in demand, so we are very optimistic about demand growth, especially in the second half of the year, and we can see that prices so far are responsive to what we see in the market We look forward to a much better year in 2021. ”

The international benchmark for Brent crude is $ 64.53 a barrel, up 25% year-to-date and a whopping 73% year-over-year.

Several oil analysts have raised their 2021 price predictions for vaccine and demand confidence. Goldman Sachs is forecasting a spike to $ 80 a barrel by the third quarter of this year – something unimaginable when WTI prices went negative for the first time in history about one year ago.