Page 4 - MEOG Week 33 2022

MEOG COMMENTARY MEOG

Aramco posts

bumper results for Q2

Saudi Aramco has done it again, posting the industry’s
highest profits as demand recovers and prices remain high.

SAUDI ARABIA MAJORITY state-owned Saudi Aramco Finances
announced its Q2 results this week, posting a While the press has been quick to express con-
90% year-on-year increase in net profit on the sternation at the scale of oil company results as
WHAT: back of two-thirds jump in the price of oil. living costs spiral in many countries, the profits
Aramco posted a 90% The results back up previous statements from announced by the majors pale in comparison to
increase in net profit the company’s president and CEO Amin Nasser, the $48.4bn net profit posted by Aramco. This
while oil and gas who has repeatedly called for greater upstream was almost $9bn higher than the three months
production grew to investment to cater to the coincidence of recov- prior and nearly double the level achieved in Q2
13.6mn boepd. ery from the coronavirus (COVID-19) pan- 2021.
demic and conflict in Ukraine. The company said that the improved perfor-
WHY: Commenting on the results, Nasser said: mance was “primarily driven by higher crude oil
Aramco posted a 90% “Our record second-quarter results reflect prices and volumes sold, as well as strong refin-
increase in net profit increasing demand for our products – particu- ing margins”.
while oil and gas larly as a low-cost producer with one of the low- Free cash flow (FCF) increased from $22.6bn
production grew to est upstream carbon intensities in the industry.” to $34.6bn and the company continues to pay
13.6mn boepd. He added: “While global market volatility and the $18.75bn per quarter dividend enshrined in
economic uncertainty remain, events during the its initial public offering (IPO), though with the
WHAT NEXT: first half of this year support our view that ongo- state still owning 94.3% of the company directly,
The profits are being put ing investment in our industry is essential – both and another 4% through the Public Investment
to work, paying off debt to help ensure markets remain well supplied and Fund (PIF), just $319mn per quarter goes to
and funding a capital to facilitate an orderly energy transition.” non-state entities and investors.
programme that will As has been de rigueur since its 2019 initial With return on average capital employed
enable future oil output public offering (IPO), Aramco’s announcement (ROACE) for Q2 increasing to 31.3%, up 14.6%
growth. came with little detail on the development of its y/y, Aramco reiterated capital expenditure
oil reserves, the key to the Kingdom’s financial (capex) guidance for 2022 at $40-50bn, the larg-
wellbeing. est capital programme in its history, $18bn more

P4 www. NEWSBASE .com Week 33 17•August•2022