Saudi oil giant Aramco tops own record with $48-billion profit in Q2

Saudi energy company Aramco said Sunday its profits jumped 90 per cent in the second quarter compared to the same time last year, helping its half-year earnings reach nearly $88 billion.

The increase is a boon for the kingdom and the crown prince's spending power as people around the world pay higher gas prices at the pump while energy companies rake in top earnings.

Saudi Aramco posted the biggest quarterly adjusted profit of any listed company globally driven by high crude prices and production.

Aramco followed big oil rivals reporting a surge in profits. Net income rose to $48.4 billion in the second quarter, up from $25.5 billion a year earlier, the state-controlled company said on Sunday. Profit beat a company compiled analyst estimate of $46.2 billion. Revenue climbed 80 per cent to $150 billion, beating analyst estimates. Its free cash flow rose by 53 per cent from a year earlier to $34.6 billion.
 

Aramco “expects oil demand to continue to grow for the rest of the decade, despite downward economic pressures on short-term global forecasts” Chief Executive Officer Amin Nasser said.

The company is using the windfall to reduce debt and invest in a huge expansion of its production capacity, rather than boost payouts to shareholders.

The Saudi Arabian state-controlled company kept its quarterly dividend, a crucial source of revenue for the kingdom, unchanged at $18.8 billion. That was unlike most Western majors, who increased payouts to shareholders. Aramco also reduced gearing, a measure of debt to equity, to 7.9 per cent from 14.2 per cent at the end of 2021.

Energy companies boomed in the first half of this year. Russia’s invasion of Ukraine roiled markets, sending oil prices above $100 a barrel and causing refining margins to soar, while 
 

Aramco is benefiting from both high production and sales prices. Demand, meanwhile, continued to rebound from the coronavirus pandemic in most parts of the world. Firms such as Exxon Mobil and Shell Plc made record earnings in the second quarter.

Saudi Arabia is ramping up output along with other members of Opec+, the producers’ cartel it leads alongside Russia. The kingdom pumped 10.5 million barrels a day of crude in the second quarter. It increased that figure to almost 11 million in July and is under pressure from the US and other major importers to go even higher, despite some analysts doubting it has much spare capacity.

Aramco said it “continues to work on increasing crude oil maximum sustainable capacity from 12 million barrels per day to 13 million by 2027.”

Aramco listed in Riyadh in 2019, though it’s still 98 per cent state owned. Its shares have gained 25 per cent this year, giving it a market valuation of $2.4 trillion.