RIYADH: Saudi Aramco’s profit has surged 39 percent in the third quarter of 2022, surpassing the average of analysts’ forecasts.

Profits of the most profitable oil company in the world hit SR159 billion ($42 billion) after revenue soared 51 percent to SR544 billion, according to a bourse filing.

The oil giant was expected to post SR152 billion in net income, according to Bloomberg data, versus Al Rajhi Capital’s projection of SR154 billion.

Aramco said the results were primarily driven by higher crude oil prices and volumes sold.

Also, it was partly offset by a higher average effective royalty rate, due to stronger crude oil prices and increased sales volume, which resulted in an increase in production royalties.

“Aramco’s strong earnings and record free cash flow in the third quarter reinforce our proven ability to generate significant value through our low cost, lower-carbon intensity Upstream production and strategically integrated Upstream and Downstream businesses” said CEO Amin Nasser.

“While global crude oil prices during this period were affected by continued economic uncertainty, our long-term view is that oil demand will continue to grow for the rest of the decade given the world’s need for more affordable and reliable energy,” he added.

Further to the solid results, Aramco maintained stable quarterly dividends at SR70.3 billion, representing a per-share payout of SR0.3198 to be paid on Nov. 28.

Capital expenditure during the quarter grew from $7.6 billion to $9 billion as Aramco continued to invest and capture growth opportunities.

In terms of nine-month performance, Aramco outperformed with an 68 percent profit surge to SR489 billion from SR291 billion a year earlier.

The Saudi-listed company increased its revenue to SR1.57 trillion, compared to SR944 billion in the first nine months of 2021.

Speaking with Arab News about the results, Wael Mahdi, an oil market analyst at Asharq TV, said, “Downstream revenues played a big role in increasing revenues of Aramco in the third quarter. What was surprising is that Aramco reported a loss in its income from downstream operations, at a time when downstream revenues went up by 90 percent from a year ago.”

Naif Aldandeni explained to Arab News how the strong financial performance was facilitated by the fact that “it was supported by higher prices in a very well managed market reflected by OPEC+ Policy.”

“It was also a result of continued implementation of Saudi Aramco strategy to reduce the cost per barrel and driving low cost and efficient production to the oil market,” he disclosed.

Fawaz Al-Fawaz, a Saudi-based independent economist and columnist, told Arab News that “Aramco revenues and profits came in line with other international oil companies as both volume and prices but also refining margins improved. increased compared to third quarter of 2021 but lower sequentially because average price declined.”

Share movement

Following the announcement, shares of Aramco traded 0.14 percent lower to end Tuesday’s session at a share price of SR34.85

Highlights

• During the quarter, Aramco produced 14.4 mmboed of hydrocarbons, demonstrating its efficient and reliable operations.This came as Aramco continued its gas expansion strategy to meet growing domestic demand, and increase MSC to 13.0 mmbpd by 2027 
• Artificial intelligence is a competitive advantage for Aramco and it supports its development in the Kingdom. During the quarter, Aramco and a private sector partner launched a Global AI Corridor that will support economic growth and job creation by building local capacity and growing talent, nurturing Saudi AI startups, and attracting high-impact capital investment and intellectual property. 
• Oil giant Saudi Aramco has launched an initiative to support the Kingdom’s small and medium enterprises sector with funding of over SR3 billion
• Aramco was reported to weigh an initial public offering of its unit Aramco Trading Co. that could potentially raise over $30 billion, slated to become one of the world’s biggest listings this year.
• Oil giant Saudi Aramco has launched Arabian Rig Manufacturing, a joint venture firm with American entity NOV, to manufacture drilling rigs and related equipment for the first time in Saudi Arabia.