Aramco beats expectations with record quarterly profit of $42bn
Saudi-listed company’s profits hit SR159bn ($42bn) after revenue soared 51 percent to SR544bn
Saudi Aramco’s profit has surged 39 percent in the third quarter of 2022, surpassing the average of analysts’ forecasts.
Profits of the most profitable oil company in the world hit SR159 billion ($42 billion) after revenue soared 51 percent to SR544 billion, according to a bourse filing.
The oil giant was expected to post SR152 billion in net income, according to Bloomberg data, versus Al Rajhi Capital’s projection of SR154 billion.
Aramco said the results were primarily driven by higher crude oil prices and volumes sold.
Also, it was partly offset by a higher average effective royalty rate, due to stronger crude oil prices and increased sales volume, which resulted in an increase in production royalties.
“Aramco’s strong earnings and record free cash flow in the third quarter reinforce our proven ability to generate significant value through our low cost, lower-carbon intensity Upstream production and strategically integrated Upstream and Downstream businesses” said CEO Amin Nasser.
“While global crude oil prices during this period were affected by continued economic uncertainty, our long-term view is that oil demand will continue to grow for the rest of the decade given the world’s need for more affordable and reliable energy,” he added.
Further to the solid results, Aramco maintained stable quarterly dividends at SR70.3 billion, representing a per-share payout of SR0.3198 to be paid on Nov. 28.
Capital expenditure during the
quarter grew from $7.6 billion to $9 billion as Aramco continued to invest and capture growth opportunities.
In terms of nine-month performance, Aramco outperformed with an 68 percent profit surge to SR489 billion from SR291 billion a year earlier.
The Saudi-listed company increased its revenue to SR1.57 trillion, compared to SR944 billion in the first nine months of 2021.
Speaking with Arab News about the results, Wael Mahdi, an oil market analyst at Asharq TV, said, “Downstream revenues played a big role in increasing revenues of Aramco in the third quarter. What was surprising is that Aramco reported a loss in its income from downstream operations, at a time when downstream revenues went up by 90 percent from a year ago.”
Naif Aldandeni explained to
Arab News how the strong financial performance was facilitated by the fact that “it was supported by higher prices in a very well managed market reflected by OPEC+ Policy.”
“It was also a result of continued implementation of Saudi Aramco strategy to reduce the cost per barrel and driving low cost and efficient production to the oil market,” he disclosed.
Fawaz Al-Fawaz, a Saudi-based independent economist and columnist, told Arab News that “Aramco revenues and profits came in line with other international oil companies as both volume and prices but also refining margins improved. increased compared to third quarter of 2021 but lower sequentially because average price declined.”
Innovation hub
Saudi Aramco and tech-giant IBM have announced preliminary plans for a strategic collaboration to establish an innovation hub in Riyadh.
According to a press release, the collaboration aims to support tech-driven economic growth in the Kingdom, by promoting emerging advanced technologies which include hybrid cloud, artificial intelligence, and quantum computing, in the areas of circular economy, materials science, supply chain, sustainability, security, and digitization.
“The strategic collaboration of Aramco’s leadership with IBM’s enhanced technologies, R&D, and deep expertise, aspires to achieve potential breakthroughs in the energy sector that will have an industry-wide impact,” said Aramco’s senior vice president of Technical Services Ahmad Al Sa’adi.
Saad Toma, IBM’s general manager for the Middle East and Africa said that the collaboration will help materialize the goal to create a digital-led economy, as outlined in the Kingdom’s Vision 2030.
“This collaboration aims to help develop local skills and talent with the knowledge and expertise needed to build this vision for the future using IBM technologies and expertise.”