Saudi Aramco’s net profit drops 45% in the third quarter

Saudi Aramco’s net profit fell 44.6% in the third quarter of 2020 compared to the same period last year, reflecting continued damage to oil demand and prices from the global coronavirus pandemic. Net profit dropped to 44.21 billion riyals ($11.8 billion) this quarter from 79.84 billion riyals in the third quarter of 2019.

The figure is in line with analyst estimates, revealing a recovery from the historic revenue drop in the second quarter that saw profits plummet to 24.75 billion riyals. The Saudi kingdom’s state oil company saw lower crude oil prices and volumes sold, as well as weaker refining and chemicals margins, the company said in its release Tuesday. It also saw a decrease in oil production royalties, a drop in the royalty rate from 20% to 15%, and lower income taxes and zakat (Islamic taxes).

The national producer has maintained its third-quarter dividend of .75 billion, to be paid in the fourth quarter. Its second-quarter dividend was declared at the same level in August, also to be paid in the following quarter. Aramco’s first quarter dividend was paid in the second quarter.

Aramco listed 1.5% of its shares locally on the Saudi Tadawul last year, which analysts say has reshaped many of the company’s priorities, including that of its commitment to shareholders.

Aramco’s stock price on the Saudi Tadawul was up just under 1% at 34.50 riyals per share within an hour of the exchange’s open. Brent crude was trading at .55 per barrel, having dropped dramatically at the start of this week as several European countries return to lockdowns amid soaring coronavirus cases. The international oil benchmark is down more than 36% year-to-date.

Like virtually all oil producers, the company announced significant cuts to capital expenditure as crude prices crashed with the onset of the pandemic. Capex for the third quarter was .4 billion, with projects including a planned billion crude-oil-to-chemicals project with the Saudi Basic Industries Corporation (SABIC) put on hold or being “reevaluated.” The company has said it expects capital expenditure to be at the lower end of the billion to billion range for 2020, compared to .7 billion for 2019.

Saudi Aramco’s net profit drops 45% in the third quarter on weak oil demand, CNBC, Nov 3