Saudi Aramco posted a surprise increase in third-quarter profit as a production boost helped mitigate the impact of lower crude prices and helped the oil giant break a yearslong streak of falling earnings.
Adjusted net income for the period rose about 1 percent to 104.9 billion riyals ($28 billion) from a year earlier, surpassing analyst estimates compiled by Bloomberg. Free cash flow exceeded the dividend payout for the first time in about two years, while net debt eased compared with three months ago.
The latest results follow a sequence of lower quarterly profit at Aramco over the past couple of years, and follow the firm’s move to raise output as part of an OPEC+ policy that’s helped it counter muted crude prices. The world’s biggest oil exporter is a lynchpin of the Saudi economy, with revenue from oil sales and hefty dividend payouts supporting the kingdom’s multitrilion-dollar economic rejig.
Oil prices in London have declined 13 percent this year to about $65 a barrel, well below the more than $90 that the International Monetary Fund says Saudi Arabia needs to balance its budget. That’s translated into pullbacks in some major infrastructure and tourism projects in the kingdom, while Aramco has also slowed some domestic refining and chemical plans as it focuses on a mega natural gas development.
Aramco sold its oil at about $70 a barrel in the third quarter, compared with nearly $79 a year earlier. But liquids production increased 3.8 percent to 10.8 million barrels a day, while natural gas output rose 5 percent.
The company’s “ability to quickly ramp-up production and capture rising demand drove our strong third quarter performance,” Chief Financial Officer Ziad Al-Murshed said in the statement.
Aramco’s free cash flow – funds left over from operations after accounting for investments and expenses – rose to $23.6 billion in the quarter. That was enough to cover the total dividend payout of $21.4 billion. The gearing ratio eased to 6.3 percent as of Sept. 30 from 6.5 percent in the previous three months.
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