Saudi Aramco profits surge 90% in second quarter amid energy price boom

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

Maxim Shemetov | Reuters

Saudi oil giant Aramco reported a stunning 90% jump in second-quarter net income and record half-year results on Sunday, as high oil prices continue to drive historic windfalls for “Big Oil.”[ads1];

Aramco said strong market conditions helped push second-quarter net income to $48.4 billion, up from $25.5 billion a year earlier. The result easily beat analysts’ estimates of $46.2 billion.

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

Aramco said half-year net income rose to $87.9 billion, easily outpacing the biggest publicly traded oil companies, including Exxonmobil, Chevron and BP and other “Big Oil” companies, all of which are benefiting from a commodity price boom.

Oil prices rose to above $130 a barrel earlier this year as the global energy crisis, exacerbated by supply disruptions stemming from Russia’s invasion of Ukraine, roiled global markets and contributed to decades of high inflation.

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

Aramco said it expects the post-pandemic recovery in oil demand to continue for the rest of the decade, despite what it called “downward economic pressure on near-term global forecasts.”

The blowout results are also a major setback for the Saudi government, which relies on Aramco dividends to fund public spending. The kingdom reported a budget surplus of $21 billion in the second quarter.

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

Big wins

Aramco is using its large gains to invest in its own production capacity in both hydrocarbons and renewable energy, while paying down debt.

“We are moving forward with the largest capital program in our history, and our approach is to invest in reliable energy and petrochemicals that the world needs, while developing lower-carbon solutions that can contribute to the broader energy transition,” the company said.

Saudi Arabia, along with its OPEC+ counterparts, has been under increasing pressure to increase oil production to ease high prices. Company executives said limited global spare production capacity was a major 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 was working 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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