Aramco records four-fold increase in profits for Q2 2021

Shaybah Field02Aramco reported net income of US$25.5bn in the second quarter of 2021, compared to US$6.6bn in the same quarter of 2020, largely as a result of higher oil prices and a recovery in worldwide demand, supported by the global easing of COVID-19 restrictions, vaccination campaigns, stimulus measures and accelerating activity in key markets

The national oil company’s net income for the first half of the year was US$47.2bn, representing a 103% increase over the same period in 2020. Aramco declared a Q1 dividend of US$18.8bn paid in the second quarter and a Q2 dividend of US$18.8bn to be paid in the third quarter.

Aramco’s improved fortunes reflect those of other major oil companies, which have seen profits rise on the back of the recovery of the oil market. Oil prices have risen by around 35% since the beginning of this year, currently standing at around US$70/bbl.

Aramco’s capital expenditure was US$7.5bn in the second quarter and US$15.7bn for the first half of 2021, representing an increase of 20% and 15%, respectively, compared with the same periods in 2020. This increase was primarily due to the start of initial phases of construction and procurement activities relating to increment projects, and the consolidation of SABIC’s capital expenditure. The company forecasts total 2021 capital expenditure at approximately US$35bn.

During the second quarter, Aramco closed a US$12.4bn pipeline infrastructure deal with an international consortium that acquired a 49% stake in the newly formed Aramco Oil Pipelines Company, in which Aramco remains the majority shareholder. It raised US$6bn through the sale of US dollar-denominated Shari’a-compliant securities to leading institutional investors. Oil production during the quarter stood at of 11.7mn bpd of oil equivalent.

Commenting on the results, Aramco president and CEO Amin H Nasser, said, “Our second quarter results reflect a strong rebound in worldwide energy demand and we are heading into the second half of 2021 more resilient and more flexible, as the global recovery gains momentum. While there is still some uncertainty around the challenges posed by COVID-19 variants, we have shown that we can adapt swiftly and effectively to changing market conditions.

“Our historic US$12.4bn pipeline deal was an endorsement of our long-term business strategy by international investors, representing significant progress in our portfolio optimisation program. Our landmark US$6bn Sukuk reinforced our robust balance sheet, further diversifying our funding sources and expanding our investor base. And, once again, we delivered a dividend of US$18.8bn for our shareholders.

“We continue to move forward on a number of strategic programmes, which focus on sustainability and low-carbon fuels, maximising the value of our assets, and advancing our downstream integration and expansion journey. For all these reasons and more, I remain extremely positive about the second half of 2021 and beyond.”

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