Saudi Aramco Reports Third-Quarter Loss as Oil Prices Fall, Maintains Dividend

Saudi state oil giant Aramco reported a 15.4% drop in net profit for the third quarter, citing "lower crude oil prices and weakening refining margins." However, the company maintained a significant dividend of $31.05 billion.

Q2 v. Q3: Prices Shifted Significantly

• The average crude oil selling price in Q2 2024 was $85 per barrel, but it fell to $78.7 in Q3.
• This decline corresponded with an increase in non-OPEC supply volumes.

Key Factors Driving Drops

• A combination of increased non-OPEC supplies and a reduction in Aramco’s sales, admin, and general expenses attributed to gains from derivative instruments offset the negative impact.
• Reduced production royalties further mitigated the fiscal strain.

Dividends and Share Distribution

• The dividend includes a $20.3 billion base payout and a $10.8 billion atypical performance-linked payout.
• The Saudi government and the Public Investment Fund benefit significantly with holdings of approximately 81.5% and 16%, respectively.
• Public shares accounted for 100% of the remaining appreciation through a successful capital raising effort finalized in June.

Earnings and Capital Expenditure

• Aramco’s Earnings Before Interest and Taxes (EBIT) stood at $51.45 billion in Q3, down 17% year-on-year.
• Capital expenditure guidance increased by 20% to $13.23 billion for a robust investment approach through market cycles.

Penguin of the Oil Industry

• Saudi Arabia, the world’s largest crude exporter, dominated the OPEC+ group’s decision-making over a weekend, selectively delaying a planned December output hike by a month.
• Despite challenges in the industry, currently producing about 9 million barrels per day.

Leadership Insight

• CEO Amin Nasser reiterated Aramco’s resilience, stating, "Aramco delivered robust net income despite lower oil prices and continued our upstream developments."

Economic Diversification Drive

• Saudi Arabia’s economic diversification efforts under the Vision 2030 thrust will also benefit significantly from the revenues generated by Aramco.

Call to Action

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