Aramco, the Saudi Arabian national oil company, announced on Sunday that its third-quarter net profit more than doubled in the last quarter, helped by increased crude oil prices and quantities sold, outperforming analysts’ expectations.
The highest quarterly average crude prices since the company’s shares began trading drove the oil giant’s biggest quarterly earnings since its initial public offering (IPO) in December 2019.
Aramco shares rose 1 per cent in early trading after the firm announced its results, and have increased around 9 per cent so far this year to a market valuation of just over $2 trillion, a target set by de-facto Saudi leader Crown Prince Mohammed bin Salman before to the company’s initial public offering.
Aramco’s net income for the quarter ended Sept. 30 increased to $30.4 billion from $11.8 billion a year earlier, according to a market filing. This was more than four experts’ median net profit prediction of $28.4 billion.
“Our exceptional third quarter performance was a result of increased economic activity in key markets and a rebound in energy demand, as well as our unique low-cost position,” Amin Nasser, Aramco’s chief executive, said in a statement.
According to Rita Guindy, an analyst at Arqaam Securities, the upstream segment is driving the sequential profits gain, with crude oil volumes up 12% quarter-on-quarter to 9.6 million barrels per day and a higher oil price.
From $12.4 billion, the company’s free cash flow increased to $28.7 billion. In the third quarter, it issued a dividend of $18.8 billion, which was in line with its forecast.
“There is good potential for a special dividend at the end of this year and that looks more and more likely now, in my view,” said Yousef Husseini, analyst at EFG Hermes, noting Aramco’s strong free cash flow and strong de-leveraging.
Oil prices have risen to multi-year highs, with global oil futures up 4.5 percent in the first quarter, aided by OPEC+’s decision to preserve rather than enhance its planned output increase in response to global supply worries.
Brent oil futures are now trading about $84.4 per barrel, up nearly 63 percent this year, while benchmark US crude is trading around $83.57 per barrel, up just over 70 percent.
Aramco’s market capitalization is somewhat lower than Apple’s $2.46 trillion, but more than Alphabet’s $1.9 trillion.
Exxon Mobil Corp, one of the major rivals of Aramco, also recorded its biggest quarterly net profit since the fourth quarter of 2017, while Royal Dutch Shell reported a third-quarter profit of $4.13 billion last week, falling short of analyst expectations and sending its stock down. find out more
Aramco’s capital spending increased 19% year over year to $7.6 billion in the third quarter.
(Adapted from AlJazeera.com)