Saudi Aramco's Q3 profits down 23% amid falling crude prices
Saudi Aramco reported a 23% decrease in net profit for the third quarter, with earnings dropping to $32.6 billion from $42.4 billion in the same period last year. The decline in profit is due to lower crude oil prices and reduced sales volumes, although it slightly surpassed the $31.8 billion estimate from analysts. Despite the dip in earnings, the company's stock price remained steady at 33.45 riyals, experiencing a 15% increase this year.
Lower oil prices partially offset by reduced royalties
The Saudi oil giant explained that the effects of lower oil prices and sales volumes were partially counterbalanced by a decrease in production royalties. Aramco's revenue during the quarter dropped to $113.09 billion from $144.99 billion a year ago. The company paid $14.7 billion in royalties and other taxes, a reduction from $24.3 billion during the same time last year.
Dividends and capital expenditure announcements
For the third quarter, Aramco announced a base dividend of $19.5 billion. It also approved a second distribution of performance-linked dividends with a $9.87 billion payout in the fourth quarter, which remains unchanged from its first performance-linked payout. The second distribution is based on Aramco's results in 2022 and the initial nine months of 2023, with future distributions anticipated to be adjusted for the rest of 2023. Additionally, capital expenditure increased to $11 billion from $9 billion a year earlier.
Outlook on energy demand and investment strategy
Aramco expressed optimism in the mid-to-long-term growth of energy demand, stating that it is "investing in its growing, integrated portfolio through the largest capital program in its history." This comes as Chevron and Exxon Mobil reported significant year-on-year declines in third-quarter profit due to weakening energy prices. Saudi Arabia, OPEC's de facto leader, announced it would extend its voluntary oil output cut of one million barrels per day until year-end.
