LONDON: Saudi Aramco reported its second-highest earnings as a listed company thanks to a surge in oil and gas prices, though its refined fuels and chemicals business was hit by the global economic slowdown.
The Saudi Arabian state-controlled firm kept its dividend – the world’s largest – unchanged at US$18.8bil (RM89bil) for the third quarter, despite generating record free cash flow of US$45bil (RM213bil).
Its gearing ratio, a measure of net debt to equity, turned negative for the first time since early 2020, underscoring the sharp improvement in market conditions for Aramco since the start of the coronavirus pandemic.
Aramco’s net income was US$42.4bil (RM201bil).
That was down from US$48bil (RM227bil) between April and June, but up around 40% year-on-year.
Western Big Oil firms such as BP Plc and Exxon Mobil Corp posted similarly strong results.
Oil prices have declined from 14-year highs in March as rising inflation and central bank monetary tightening slow the global economy. Yet Brent futures have still gained more than 20% this year and are trading around US$94 (RM445) a barrel.
“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,” chief executive officer Amin Nasser said in a statement.
The upstream arm of the world’s biggest oil company continued its robust performance, making pre-tax profits of US$78bil (RM370bil).
The downstream unit, responsible for refining, chemicals and fuel distribution, made a pre-tax loss of US$1.1bil (RM5.2bil), compared with a profit of almost US$4bil (RM18.9bil) a year earlier.
“This result was largely driven by inventory revaluation losses” as prices of refined products fell, Aramco said. Sabic, a chemicals firm 70%-owned by Aramco, announced a steep drop in profit amid lower demand for goods from paints to plastics.
Nasser said Aramco would be an exception to the “global underinvestment in our sector” and that it would continue to raise oil and natural gas output. The Saudi government and others in the Persian Gulf have criticised Western firms and investors for trying to transition to clean energy too quickly.
Aramco has benefited from the Organisiation of Oil Exporting Countries and its allies – a 23-nation alliance led by Saudi Arabia and Russia – increasing production this year. — Bloomberg
