The Saudi Arabian Oil Company (Aramco) has reported a net income of $6.6 billion for the second quarter (Q2) and $23.2 billion for the first half (H1) of 2020, respectively, compared to $24.7 billion and $46.9 billion in the corresponding periods of 2019.

Despite continued global economic disruption and challenges facing the energy sector, Aramco continued to deliver on its commitment to shareholders by declaring a dividend of $18.75 billion for the second quarter, compared to $13.4 billion for the second quarter of 2019.

Free cash flow was $6.1 billion in the second quarter and $21.1 billion for the first half of 2020, respectively, compared to $20.6 billion and $38.0 billion for the same periods in 2019.

The gearing ratio was 20.1% at the end of June, mainly reflecting deferred consideration for the Saudi Basic Industries Corporation (SABIC) acquisition and the consolidation of SABIC’s net debt onto Aramco’s balance sheet.

Capital expenditure was $6.2 billion in the second quarter and $13.6 billion for the first half of 2020. Aramco continues to implement its capital spending optimization and efficiency program, and expects capital expenditure to be at the lower end of the $25 billion to $30 billion range for 2020.

Aramco President & CEO Amin H Nasser, said:  “Despite Covid-19 bringing the world to a standstill, Aramco kept going. We have proven our financial resilience and operational reliability, setting a record in our business operations, while at the same time taking steps to ensure the health and safety of our people.”

“Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results. Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength. This helped us deliver on our plan to maintain a second quarter dividend of $18.75 billion to be paid in the third quarter.

“We will continue to pursue our long-term growth and diversification strategy to capture unrealized and additional value from every hydrocarbon molecule we produce – driving global commerce and enhancing people’s lives. The completion of our historic acquisition of a 70% stake in SABIC is yet more evidence of that forward momentum and a testament to our healthy financial position.

“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies. Meanwhile, we continue to place people’s safety first and have adapted to the new normal, implementing wide-ranging precautions to limit the spread of Covid-19 wherever we operate.

“We are determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business – which has one of the lowest upstream carbon footprints in the world,” Nasser added.

Operational highlights

The Covid-19 pandemic has spread rapidly throughout the world, resulting in substantial reductions in consumer and business activity and significantly reduced demand for crude oil, natural gas and petroleum products.  

Under these challenging market conditions, Aramco continued its strong track record of reliable supply, achieving 99.8% reliability in the delivery of crude oil and other products in the second quarter of 2020.

The company demonstrated reliable upstream performance with total hydrocarbon production of 12.7 million barrels per day of oil equivalent in the second quarter of 2020.

Aramco achieved a historic highest single day crude oil production of 12.1 million barrels on April 2, 2020.

To meet future global and domestic energy demand, Aramco continues to expand its gas business. In line with this strategy, the Fadhili Gas Plant reached its full production capacity of 2.5 billion standard cubic feet per day during the second quarter, after successfully completing its commissioning activities.

The downstream business continues to deliver on its long-term strategy of strategic integration and diversification. – TradeArabia News Service