Saudi Aramco to Return $31 Billion to Shareholders, Government Despite Profit Dip — 2nd Update

By Christian Moess Laursen

Saudi Aramco plans to pay $31.05 billion in dividends to the Saudi government and its shareholders despite a fall in second-quarter profit.

Saudi Arabia's national oil company on Tuesday posted a quarterly net profit of $29.07 billion, down from the $30.83 billion it reported for the same period last year, after it sold less crude oil and its refining margins weakened, offsetting robust oil prices in the quarter.

The result was higher than the $27.7 billion the market had forecast, according to a median estimate provided by the company.

"Our strong results reflect our resilience and ability to adapt through market cycles," Chief Executive Amin H. Nasser said.

Crude-oil prices improved from the first quarter due to easing inflationary pressure, strong seasonal growth and falling oil inventories, the company said. Global oil demand remains strong despite headwinds in certain markets, Nasser said in a call, adding that Aramco sees further growth in demand in the latter half of the year.

However, prices have been low since the end of the second quarter amid broader concerns over the demand outlook in China and high levels of speculative selling across commodities. Brent crude dropped below $76.50 a barrel on Monday, hitting its lowest since January, after disappointing U.S. labor data sparked fears of a recession.

Prices have tumbled nearly 12% over the last month, while shares in Aramco have slumped around 17% this year. Still, the fossil-fuel giant said Tuesday it expects oil demand to grow in the second half-year on improving Chinese demand, a recovery in global aviation and depleted inventory levels globally.

Sustained low oil prices could put a dent in Saudi Arabia's ambitious investment plans. The world's biggest oil exporter relies heavily on Aramco's payouts to fund its megaprojects, which include a state-of-the-art city being built in the desert and a global airline, and to rapidly diversify its economy beyond oil.

Aramco, one of the most valuable companies globally, said it would pay a base a dividend of $20.28 billion for the second quarter and a performance-linked dividend of $10.77 billion, putting it on track to a total payout of $124.2 billion this year.

The government additionally raised $12.35 billion in an Aramco stock sale in June to fuel its projects as well as investments in new energy industries under its Vision 2030 plan.

Aramco aims to expand its global portfolio of liquefied natural gas, or LNG. This year it has signed agreements with two U.S. producers of the superchilled gas, Texas' NextDecade and California-based Sempra.

Aramco said it sees strong demand-led growth for LNG as the world continues its energy transition, with gas being a vital fuel and feedstock in various industries.

Most global oil majors booked second-quarter profits that were higher than market watchers had forecast. Exxon Mobil, Shell and BP all beat expectations, with the U.S. major recording one of its highest-ever second-quarter profits thanks to record output. Chevron, meanwhile, performed below expectations as downstream earnings were hit by weaker refining margins.

Aramco reported a quarterly hydrocarbon output of 12.3 million oil-equivalent barrels, an 8.9% decline from last year.

Cash flow from operations--another closely-watched metric--declined to $31.09 billion from $33.62 billion.

Write to Christian Moess Laursen at christian.moess@wsj.com

(END) Dow Jones Newswires

August 06, 2024 08:34 ET (12:34 GMT)

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