Saudi Aramco, the world’s largest oil producer, reported a 3.4% decline in second-quarter profit due to reduced crude volumes and weaker refining margins.
According to Reuters, the company’s net income for the quarter ending June 30 was 109.01 billion riyals ($29.03 billion), surpassing the median analyst estimate of $27.7 billion.
Despite the decline in profit, Aramco declared dividends totaling $31.1 billion for the second quarter, including $10.8 billion in performance-linked payouts.
The introduction of performance-linked dividends last year, in addition to the base dividend, is an uncommon practice among listed companies.
The company expects to distribute $124.2 billion in total dividends in 2024, consistent with previous guidance.
The Saudi government, which owns nearly 81.5% of Aramco, heavily relies on the company’s dividends, including royalties and taxes. The Public Investment Fund (PIF), holding another 16% stake, also benefits from these payouts.
In the second quarter, Aramco’s capital expenditure increased by nearly 14% year-on-year to $12.1 billion, driven by investments to maintain the crude maximum sustainable capacity at 12 million barrels per day and expand its gas business.
The company remains optimistic about medium- and long-term demand growth and is continuing to execute its growth strategy.
Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), has been pumping approximately 9 million barrels per day (bpd), about three-quarters of its capacity.
Alongside other OPEC+ members, including Russia, Saudi Arabia has been cutting output by a total of 5.86 million bpd since 2022 to stabilize the market amid global demand uncertainty and rising supply outside the group.
Brent crude was trading at around $77.1 on Tuesday, the lowest level since January, amid concerns over global economic growth. Aramco’s shares have fallen nearly 19% this year, underperforming Western oil majors.
The decline in oil output and prices has put pressure on Saudi Arabia’s state finances, resulting in a second-quarter deficit of over $4 billion. To meet its financial needs, the government sold a new portion of Aramco earlier this year, raising $12.35 billion.
Additionally, Saudi Arabia has been one of the most active emerging market debt issuers, raising $17 billion from Eurobond sales.
Aramco itself raised $6 billion from bonds last month, while the PIF, which leads the Vision 2030 economic diversification initiative, has also raised billions in debt this year.
