Dubai: Saudi Aramco followed its Big Oil competitors with bumper earnings, boosted by a recovery in oil and chemical prices.
The world's biggest energy company made net profit of SR95.5 billion ($25.5 billion) in the second quarter, the highest level since the end of 2018. Free cash flow rose to $22.6 billion, above the state-controlled firm's quarterly dividend of $18.8 billion for the first time since the start of the coronavirus pandemic.
The reopening of major economies has triggered a surge in commodity prices, with crude up around 40 per cent this year. In the past two weeks, oil companies such as BP Plc, Chevron and Royal Dutch Shell have said they will increase share buybacks and payouts, confident the worst of the pandemic is over.
Aramco's annual dividend of $75 billion, the world's largest, is a crucial source of funding for Saudi Arabia. The government, which owns 98 pe cent of the company, is trying to narrow a budget deficit that ballooned last year as energy prices tanked with the spread of the virus.
The results "reflect a strong rebound in worldwide energy demand and we are heading into the second half of 2021 more resilient and more flexible, as the global recovery gains momentum," CEO Amin Nasser said in a statement on Sunday. "I remain extremely positive about the second half of 2021 and beyond."
Aramco's gearing, a measure of net debt to equity, fell to 19.4 per cent from 23 per cent at the end of 2020, though it remains above management's preferred cap of 15 per cent. It declined thanks to higher cash flow and the Dhahran-based firm using some proceeds from the sale of a stake linked to oil pipelines to pay down debt. In June, Aramco completed the $12.4 billion deal with a consortium led by U.S. group EIG Global Energy Partners LLC.
Aramco is continuing to do due diligence on a proposed investment in Reliance Industries' oil-to-chemicals refining business, al-Murshed said. In 2019, Aramco discussed buying a 20 per cent stake for roughly $15 billion, but the deal was delayed by the pandemic. It should be finalized this year, India's Reliance said in June.