Aramco Q2 profits plunge 73% as virus hits prices
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Saudi Aramco second-quarter profits plunged a massive 73 percent due to sharply lower oil prices as the coronavirus crisis undercut global demand.
But the company, recently dethroned by Apple as the world’s most-valuable listed company, has fared better than several international energy giants, all reeling from a drop in oil demand since the start of the novel coronavirus pandemic.
Aramco yesterday posted a net profit of US$6.6 billion for the three months to June 30, compared to US$24.7 billion for the same period last year.
The results were in line with analysts’ expectations and reflected a downbeat oil market as coronavirus-led economic shutdowns crush demand for crude.
“Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results,” Aramco’s chief executive Amin Nasser said in a statement.
“Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength.”
The world’s top five oil firms — BP, Chevron, ExxonMobil, Royal Dutch Shell and Total — have reported combined losses of US$53 billion for the second quarter.
Aramco’s net profit for the first half also slumped 50.5 percent to US$23.2 billion, compared to US$46.9 billion in the same period last year. Nasser said Aramco’s results reflected its “financial resilience” as he observed a “partial recovery in the energy market” amid an easing of virus restrictions in some countries.
But amid low crude prices, Aramco is looking at cutting its 2021 budget by between 8 and 10 percent from this year’s already reduced levels, the Energy Intelligence group reported last month.
Aramco has said it expects capital expenditure to be at the “lower end of the US$25 billion to USUS$30 billion range” this year.
That is significantly lower than its expenditure of US$32.8 billion in 2019, according to Energy Intelligence.
“Cutbacks have already caused Aramco to delay plans to expand production from its offshore fields,” Energy Intelligence said.
“The offshore program was a core element of a push to raise the company’s oil production capacity.”
Saudi Arabia, the world’s biggest crude exporter, has been hit hard by the double whammy of low prices and sharp cuts in production.
Prices hit a two-decade low below US$20 a barrel in April and May as the pandemic cut demand, before rebounding to US$44 a barrel after OPEC+ producers agreed to record output cuts. After the move, Saudi oil production dropped to 7.5 million barrels per day in June from last year’s average 10 million bpd.
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