Saudi Arabia’s state-owned oil company Aramco reported a 38% drop in its net profit for the second quarter of 2023, as lower crude oil prices and weaker refining and chemicals margins weighed on its performance. The company posted a net income of $30.1 billion for the three months ended June 30, down from $48.4 billion in the same period last year.
Despite the decline, Aramco’s net profit exceeded analysts’ expectations of $29.8 billion, and the company maintained its commitment to pay a quarterly dividend of $19.5 billion to its shareholders. Aramco also announced a new performance-linked dividend scheme, which will distribute an additional $9.9 billion in the third quarter, based on 70% of its free cash flow for 2022 and 2023, net of the base dividend and other amounts.
Aramco’s revenue for the second quarter was $76.5 billion, down 14% from $88.9 billion in the same period last year. The company attributed the decrease to lower crude oil prices, which averaged $66.6 per barrel in the second quarter, compared to $69.2 per barrel in the same period last year. Aramco’s crude oil production averaged 9.2 million barrels per day (bpd) in the second quarter, down from 9.8 million bpd in the same period last year.
Aramco’s refining and chemicals segment also saw a decline in its earnings before interest and taxes (EBIT), which fell to $3.4 billion in the second quarter, from $6.6 billion in the same period last year⁴\. The company said that this was due to lower margins and higher turnaround activities at some of its facilities.
Commenting on the results Aramco President & CEO Amin H. Nasser, said: “Our strong results reflect our resilience and ability to adapt through market cycles. We continue to demonstrate our long-standing ability to meet the needs of customers around the world with high levels of reliability. For our shareholders, we intend to start distributing our first performance-linked dividend in the third quarter.
“At Aramco, our mid to long-term view remains unchanged. With a recovery anticipated in the broader global economy, along with increased activity in the aviation sector, ongoing investments in energy projects will be necessary to safeguard energy security.
“We are maintaining the largest capital spending program in our history, with the aim of increasing our oil and gas production capacity and expanding our Downstream business — with petrochemicals projects, such as our $11 billion expansion of the SATORP refinery with TotalEnergies, essential to meet future demand.
“At the same time, we remain optimistic about the potential for new technologies to reduce our operational emissions, and our recent blue ammonia shipments to Asia highlight the growing market interest in the potential of alternative, lower-carbon energy solutions.”
Aramco is the world’s largest oil producer and exporter, and one of the most profitable companies in the world. It listed 1.5% of its shares on the Saudi stock exchange (Tadawul) in December 2019, raising $25.6 billion in the world’s biggest initial public offering (IPO). The company is majority-owned by the Saudi government, which holds 98.5% of its shares.