Saudi Aramco posted the biggest adjusted profit of any listed company globally, driven by higher crude prices and production.
Aramco followed its major oil rivals in rising profits. Net income rose to $48.4 billion in the second quarter, compared with $25.5 billion a year earlier, the state-controlled company said on Sunday. Profits beat an analyst estimate of $46.2 billion for the company. Revenue rose 80 percent to $150 billion, beating analysts’ estimates. Free cash flow rose 53 percent from a year ago to $34.6 billion.
Aramco’s “short-term global forecasts expect oil demand to continue growing for the rest of the decade despite low economic pressures,” CEO Amin Nasser said.
Instead of increasing payouts to shareholders, the company is using it to invest in reducing debt and significantly expanding its production capacity.
The Saudi Arabian state-controlled company, a vital source of revenue for the kingdom, left its quarterly dividend unchanged at $18.8 billion. That, unlike most Western majors, has increased payouts to shareholders. Aramco reduced its gearing, a measure of debt, to 7.9 percent from 14.2 percent at the end of 2021.
Energy companies have grown in the first half of this year. Russia’s invasion of Ukraine has rocked the market, sending oil prices above $100 a barrel and pushing up refining margins, with Aramco benefiting from higher production and sales prices. Demand, meanwhile, continues to rebound from the coronavirus pandemic in most parts of the world. Such as Exxon Mobil Corporation and Shell Pvt.
The quarter could mark a high point for Aramco. Brent crude averaged $112 a barrel between April and June, falling below $95 as the U.S. and European economies slowed and due to China’s Covid lockdowns.
Still, Saudi Arabia is boosting production alongside other OPEC+ members, a producer cartel led alongside Russia. In the second quarter, the kingdom produced 10.5 million barrels of crude oil per day. It raised that figure to about 11 million in July, and some analysts doubt it has much profit potential, but it is under pressure from the US and other major importers.
“Crude continues to work on increasing its maximum sustainable capacity from 12 million barrels per day to 13 million barrels per day by 2027,” Aramco said.
Aramco listed in Riyadh in 2019, although it is still 98 percent state-owned. Its shares have gained 25 percent this year, giving it a market value of $2.4 trillion.
The company is scheduled to release more detailed results on Monday, including the performance of the top and bottom segments.