Saudi Aramco’s Q2 Earnings Drop 38% On Lower Oil Prices

• Saudi Aramco, the world’s largest oil company, saw profit fall by 38% in the second quarter of 2023.
• Lower oil prices meant Saudi Aramco saw its net income fall from $48.4 billion in the second quarter of 2022 to $30.1 billion this year.
• Despite the drop in earnings, the company plans to boost dividend payouts that it intends to distribute over six quarters beginning from Q3 2023.

Lower oil prices dragged down the profits at Saudi Aramco by 38% in the second quarter of 2023, but the world’s largest oil company is boosting dividend payout with a new performance-linked initiative.

Aramco reported on Monday a net income of $30.1 billion for the second quarter of 2023, down by 38% compared to the $48.4 billion net profit for the same period of 2022, when oil prices surged to above $100 per barrel after the Russian invasion of Ukraine.  

The net income for Q2 2023 slightly beat a company-provided median analyst estimate of $29.8 billion.

For the second quarter of 2023, Aramco’s average realized crude oil price was $78.80 per barrel, down from $113.20 a barrel for the same period in 2022.

Free cash flow slipped to $23.2 billion from $34.6 billion for the same period in 2022.

Aramco, however, is boosting dividend payouts as it intends to distribute performance-linked dividends over six quarters beginning in Q3 2023. The company plans to calculate the first performance-linked dividends based on the combined full-year results of 2022 and 2023. Aramco expects these performance-linked dividends to be calculated based on 70% of the Group’s combined full-year free cash flow for 2022 and 2023, net of the base dividend and other amounts including external investments.

“At Aramco, our mid to long-term view remains unchanged. With a recovery anticipated in the broader global economy, along with increased activity in the aviation sector, ongoing investments in energy projects will be necessary to safeguard energy security,” President and CEO Amin Nasser said in a statement.

Saudi Arabia has recently pushed for higher oil prices and “market stability”, by announcing a unilateral production cut of 1 million barrels per day (bpd) for July, August, and September. Last week, the Kingdom said it would extend its cut into September and signaled that the production reduction could be further extended or extended and deepened.   

By Tsvetana Paraskova for Oilprice.com

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