Source: Sharecast
The world’s largest oil company said adjusted net income rose about 1% year-on-year to SAR 104.9bn (£21.4bn), snapping a years-long sequence of lower quarterly profit and topping consensus forecasts.
Reported net income was broadly flat to slightly lower compared with a year earlier, reflecting softer prices and weaker refined and chemicals margins.
Revenue slipped from the prior-year period but came in ahead of analyst estimates, while free cash flow increased to $23.6bn from $22bn a year earlier, enough to cover the total dividend for the first time in about two years.
Aramco’s board approved a base dividend of $21.1bn for the quarter and a further $0.2bn performance-linked payout to be distributed in the fourth quarter, with shareholders set to receive a base dividend of SAR 0.3278 per share plus a modest top-up.
Earnings per share held steady at SAR 0.40.
The company’s gearing ratio edged down to 6.3% at the end of September from 6.5% three months earlier, and net debt eased slightly to 114.3bn riyals.
Aramco’s improvement in earnings came despite a weaker pricing backdrop.
Brent crude has fallen about 13% this year to around $65 a barrel, well below the level the International Monetary Fund estimates Saudi Arabia needs to balance its budget, while West Texas Intermediate is also sharply lower.
The company said it sold its oil at roughly $70 a barrel in the quarter, compared with nearly $79 a year earlier.
It offset some of that pressure by lifting liquids production 3.8% to 10.8 million barrels a day and increasing natural gas output by 5%, with overall hydrocarbon production about one million barrels of oil equivalent per day higher than at the end of the first quarter.
Management said the ability to ramp up volumes at low marginal cost was key to the quarter.
“We increased production with minimal incremental cost, and reliably supplied the oil, gas and associated products our customers depend on, driving strong financial performance and quarterly earnings growth,” president and chief executive Amin Nasser said.
Chief financial officer Ziad Al-Murshed said Aramco’s “ability to quickly ramp-up production and capture rising demand drove our strong third-quarter performance.
The results came against the backdrop of an OPEC+ decision to continue unwinding production cuts introduced two years ago.
The group had raised its output targets by about 2.9 million barrels per day since April and agreed another 137,000 barrels-per-day increase for December, while signalling a pause in further hikes during the first quarter of next year.
At the same time, fresh Western sanctions on Russia were complicating the bloc’s strategy, as Moscow faces constraints on lifting output.
Aramco used the quarter to underline its long-term gas and downstream strategy.
The company raised its 2030 sales-gas production target, now aiming for around 80% growth from 2021 levels, up from a previous goal of more than 60%, with total gas and associated liquids expected to reach about 6m barrels of oil equivalent per day by the end of the decade.
It completed an $11.1bn midstream deal at the Jafurah unconventional gas field, where a new subsidiary will lease and then lease back key processing assets over 20 years, and continued work on the Fujian refining and petrochemical venture with China’s Sinopec.
Alongside its core hydrocarbon projects, Aramco had been active on the corporate front, increasing its stake in Petro Rabigh to roughly 60% through the purchase of a 22.5% holding from Sumitomo Chemical and moving further into digital technologies with a minority stake in AI firm HUMAIN, which is majority-owned by Saudi Arabia’s Public Investment Fund.
The company also drew strong demand for a $3bn sukuk, or Sharia-compliant bond, issue, reinforcing its access to capital markets.
Nasser said Aramco’s ability to adapt to “new market realities” had again been demonstrated, and that upstream capacity and technology-driven growth remained central pillars of its strategy.
At 1319 SAST (1019 GMT), shares in the Saudi Arabian Oil Companty were up 0.7% in Riyadh, at SAR 25.76.
Reporting by Josh White for Sharecast.com.
