Anika Begay
Media representatives chat before the start of an Aramco press conference at the Plaza Conference Center in Dhahran, Saudi Arabia, on November 3, 2019.
Hamad Mohammed | Reuters
Saudi oil giant Aramco posted a net profit of $29.1 billion in the second quarter, down little more 3% from the same period last year, as crude oil production volumes remained low.
Net income for the first half of the fiscal year was $56.3 billion, down from $62 billion in the same period last year. The company also reported free cash flow for the second quarter of $19 billion compared to $23.2 billion the previous year.
Aramco reaffirmed its second-quarter base dividend of $20.3 billion and declared a performance-related dividend of $10.8 billion to be paid in the third quarter. The world’s largest oil company plans to declare total dividends of $124.2 billion in 2024, its earnings release said.
“We have again achieved market-leading results, with strong earnings and cash flow in the first half of the year,” Aramco CEO Amin Nasser said in the company’s press release.
“Building on these strong earnings, we have continued to distribute a sustainable and progressive basic dividend and a performance-related dividend that shares the benefits with our shareholders.”
Aramco’s share price rose 1.31% immediately after the opening of the Tadawul, the Saudi stock exchange, at 10:20 a.m. local time.
Many analysts had expected the oil company’s revenue to be largely flat. Analysts at Riyadh-based brokerage Al Rajhi Capital wrote in a July 22 report that they “expect Saudi Aramco’s Q2 2024 revenue to be nearly flat year-over-year, driven by lower production volumes nearly offset by higher Brent prices compared to Q2 2023.”
Lasting production cuts
According to a July OPEC report citing secondary sources, Saudi Arabia produced 8.99 million barrels per day in the second quarter.
The kingdom’s gross domestic product growth has contracted for four consecutive quarters, which economists say is largely due to cuts in oil production. The overall decline in the second quarter was led by an 8.5 percent decline in Saudi Arabia’s oil sector, the country’s General Statistics Authority said.
In early June, OPEC+, the alliance of OPEC and non-OPEC producers, agreed to extend joint oil production cuts through 2025, in an effort to support prices amid sluggish demand growth. The supply cuts have been in place for nearly two years.
Despite this, the international benchmark Brent Crude has slipped from the mid-$80s to the mid-$70s over the past month, both lower than several OPEC member states require to balance their budgets. Saudi Arabia needs Brent at $96 a barrel to balance its budget, according to estimates by the International Monetary Fund.
