Oil giant Saudi Aramco on Sunday reported a 73.4% drop in net profit in the second quarter of 2020 from a year earlier, a direct consequence of the collapse in crude prices amid the pandemic of Covid-19.
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The Saudi company is, however, faring much better than many other international energy giants.
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Aramco, majority owned by the Saudi state, posted net profit of about $ 6.6 billion (about 5.6 billion euros) for April-June 2020, compared to $ 24.7 billion for the same. period last year.
“Our second quarter results reflect the strong disruptions due to reduced demand and falling oil prices,” company CEO Amin Nasser said in a statement.
“We have nonetheless made solid gains thanks to our low production costs, our unique scale, our agile workforce and our unmatched financial and operational strength,” he said.
Aramco’s net profit for the first half of the year fell 50.5% to $ 23.2 billion from $ 46.9 billion for the same period last year, the business.
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Five other major oil companies – BP, Chevron, ExxonMobil, Royal Dutch Shell and Total – recently reported combined losses of $ 53 billion for the second quarter of 2020.
Aramco’s results reflect its “financial resilience”, said Nasser, also saying he was optimistic about a “partial recovery of the energy market”, as many countries ease health restrictions in the face of the pandemic.
– Budget cuts –
Against this backdrop, Saudi Aramco plans to cut its 2021 budget by 8-10% from already reduced levels this year, Energy Intelligence Group reported in July.
The company expects capital spending to be “in the lower end of the $ 25 billion to $ 30 billion range” this year.
A figure significantly lower than its spending of $ 32.8 billion in 2019, according to Energy Intelligence.
“The reductions have already led Aramco to delay its plans to expand production from its offshore fields,” said the analysis center.
“The offshore program was an essential part of a policy to increase the company’s oil production capacity,” he adds in a report.
The world’s leading crude exporter, Saudi Arabia has seen its oil revenues hit hard by the double shock of low prices and sharp cuts in production.
The price of oil hit its two-decade low in April and May, below $ 20 a barrel, due to lower demand from the pandemic.
Prices rose to around $ 44 a barrel as several producing countries agreed to cut production.
– Billions of dividends –
As a result of the cuts, Saudi production fell to just 7.5 million barrels per day in June, well below its last year’s average of 10 million barrels per day.
Aramco’s profits were also affected by losses at petrochemical giant Saudi Basic Industries Co. (SABIC), which the oil juggernaut acquired for $ 69 billion.
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Aramco was first listed on Saudi markets in December, as part of the world’s largest IPO, generating $ 29.4 billion from the sale of 1.7% of its shares.
But the American Apple stole the world’s best-valued company position last week, with its capitalization reaching 1.9 trillion dollars, compared to 1.760 billion dollars for Aramco.
“Although the Covid-19 (disease) crippled the world, Aramco continued to function,” Nasser said.
Aramco will distribute $ 18.75 billion in dividends for the second quarter, fulfilling its promise to distribute at least $ 75 billion in dividends per year for five years, according to its CEO.
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