Maxime Chemetov | Reuters
The result beat expectations, with analysts expecting median net income of $ 29.1 billion for the quarter. Aramco reported third quarter 2020 net profit of $ 11.8 billion.
“Our exceptional performance in the third quarter is the result of increased economic activity in key markets and a rebound in energy demand,” Aramco President and CEO Amin Nasser said on Sunday.
“Some headwinds still exist for the global economy, in part due to supply chain bottlenecks, but we are optimistic that energy demand will remain healthy for the foreseeable future,” Nasser added.
Aramco said the increase in net income was the result of higher crude oil prices and volumes sold, as well as stronger refining and chemicals margins in the quarter, as the company benefited from the rebound in the market. global energy demand and increased economic activity in key markets.
The bargain of the market
Aramco declared a large dividend of $ 18.8 billion payable in the fourth quarter. The payment can be covered by an increase in free cash flow to $ 28.7 billion in the third quarter, from $ 12.4 billion for the same period in 2020. The gear, a measure of the debt position of the company, also improved to 17.2% from 23% due to higher oil prices and higher cash flow.
Aramco also said it would “invest for the future” with capital spending of $ 7.6 billion in the third quarter, a 19% increase over the same period in 2020. Aramco said that he expected capital spending for 2021 to be around $ 35 billion.
The results confirm a record quarter for “Big Oil,” a term used to refer to the world’s largest oil and gas companies. US oil majors ExxonMobil and Chevron also benefited from the price hike, posting profits that hit multi-year highs in the quarter. Royal Dutch Shell posted record cash flow, while TotalEnergies also saw strong performance growth.
Profit and pressure
« I think most people would agree that climate change is one of the biggest challenges facing society, ”Aramco Chairman Yasir Al-Rumayyan told CNBC via email.
“We need a transition that recognizes that petrochemicals are essential parts of modern life, including the smartphones we all use and the products we rely on to fight COVID,” a- he added.
Aramco aims to achieve net zero emissions from its wholly owned operations by 2050, and simultaneously plans to increase oil production to 13 million barrels per day by 2037. A separate Saudi commitment to invest nearly $ 190 billion to reach net zero emissions by 2060 received both praise and skepticism from oil industry watchers.
“The reality is that the energy transition will be long and complex, and therefore oil and gas will continue to play a key role,” Al-Rumayyan said, while commenting on the recent energy crisis and its link with the energy transition.
“The recent energy disruptions in the world demonstrate the need for a stable and inclusive energy transition,” Al-Rumayyan said. “We need a transition that provides a reliable, affordable and low-cost energy supply that leaves no one behind,” he added.
Aramco has said it will disclose more details on how it plans to navigate the energy transition and achieve its net zero strategy in its sustainability report due in Q2 2022.
“We fully recognize that we have a long way to go and that the journey will not be easy,” Al-Rumayyan said. “We are confident that we can meet the challenges and provide the leadership, expertise and tools necessary to support global progress towards a low emissions future. “