Saudi Aramco second quarter profit soars on higher prices and picking up demand

DUBAI, Aug.8 (Reuters) – Saudi state oil producer Aramco (2222.SE) on Sunday reported a nearly four-fold increase in second-quarter net profit, beating expectations and boosted by higher prices of oil and a recovery in demand for oil.

Aramco said its results were supported by the global easing of COVID-19 restrictions, vaccination campaigns, stimulus measures and acceleration of economic activity in key markets.

Aramco joins other oil majors who have reported strong results in recent weeks.

Exxon Mobil (XOM.N) said last month that its second-quarter net profit was $ 4.69 billion, or $ 1.10 per share, from a loss of $ 1.08 billion, or 26 cents a share a year ago. Read more

Royal Dutch Shell (RDSa.L) posted its highest quarterly profit in more than two years, with adjusted profit of $ 5.53 billion, compared to profit of $ 638 million a year earlier. Read more

Oil prices, boosted by production cuts by the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC +, closed at $ 70.70 a barrel on Friday and gained more than 35% since the start of the year.

“Our second quarter results reflect a strong rebound in global energy demand and we enter the second half of 2021 more resilient and flexible as the global recovery

gaining momentum, ”Aramco CEO Amin Nasser said in a statement.

Aramco’s net profit reached 95.47 billion riyals ($ 25.46 billion) for the quarter ended June 30, from 24.62 billion riyal a year earlier.

Analysts had expected net income of $ 23.2 billion, according to the average estimate of five analysts.

The CEO of Aramco said on a call for results that global oil demand is expected to reach 99 million barrels per day by the end of the year and 100 million barrels next year.

Aramco is still working to increase its own capacity to 13 million barrels per day, Nasser said, reiterating a plan announced last year.

KEEP THE DIVIDEND

It declared a second quarter dividend of $ 18.8 billion, in line with its own target, which will be paid in the third quarter.

Credit Suisse analysts said late last month that they expected Aramco to declare a special dividend due to the rise in oil prices that had helped boost its free cash flow.

Yousef Husseini, equity research analyst at EFG Hermes, said Aramco could keep the extra money to participate in the new state-backed Shareek (Partner) initiative, to partner with private sector investments.

“I think the reason they maintained [the dividend] and our rationale was that they are withholding money to invest in future projects and in particular the “Shareek” program, “he said.

Aramco’s capital spending was $ 7.5 billion in the second quarter, an increase of 20% from the previous year.

A consortium including Washington DC-based EIG Global Energy Partners reached a deal in June to buy 49% of Aramco’s pipeline business for $ 12.4 billion. Read more

($ 1 = 3.7501 riyals)

Reporting by Hadeel Al Sayegh, Marwa Rashad and Saeed Azhar, additional reporting by Rania El Gamal. Editing by Raissa Kasolowsky and David Evans

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