Saudi Aramco's Third-Quarter Net Profit More than Doubles

Saudi Arabian state oil producer Aramco said on Sunday its third-quarter net profit more than doubled, boosted by higher crude oil prices and volumes sold, beating analysts' forecasts.

The oil giant's best quarterly earnings since its listing in December 2019 was fuelled by the strongest quarterly average crude prices since its shares began trading.

Aramco shares were up 1% in early trade after the company disclosed its results and have risen about 9% this year to a market valuation of just over $2 trillion, a goal sought by de-facto Saudi leader Crown Prince Mohammed bin Salman before the company's initial public offering.

Saudi Aramco
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Aramco's net income jumped to $30.4 billion for the quarter to Sept. 30 from $11.8 billion a year earlier, it said in a bourse filing. That was above the median net profit forecast of $28.4 billion from four analysts.

"Our exceptional third quarter performance was a result of increased economic activity in key markets and a rebound in energy demand, as well as our unique low-cost position," Amin Nasser, Aramco's chief executive, said in a statement.

Rita Guindy, an analyst at Arqaam Securities, said the sequential earnings growth is mainly driven by the upstream segment – with a 12% quarter-on-quarter improvement in crude oil volumes at 9.6 million barrels per day and a higher oil price.

The company's free cash flow rose to $28.7 billion from $12.4 billion. It declared a dividend of $18.8 billion for the third quarter, in line with its guidance.

Saudi Aramco
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"There is good potential for a special dividend at the end of this year and that looks more and more likely now, in my view," said Yousef Husseini, analyst at EFG Hermes, noting Aramco's strong free cash flow and strong de-leveraging.

Oil prices have rallied to multi-year highs with global crude futures climbing 4.5% in the quarter, helped by the decision by OPEC+ to maintain its planned output increase rather than raising it on global supply concerns.

Brent oil futures are trading around $84.4 a barrel, up about 63% so far this year, while benchmark U.S. crude is at roughly $83.57 a barrel, up just over 70% over the same period.

Aramco's market capitalisation is just below Apple's market cap of $2.46 trillion, but above Alphabet's $1.9 trillion valuation.

Of its major rivals, Exxon Mobil Corp also posted its highest quarterly net profit since the last quarter of 2017, while Royal Dutch Shell reported a third-quarter profit of $4.13 billion last week, below analyst forecasts, sending its share price lower.

Aramco's capital expenditure rose 19% from a year earlier to $7.6 billion in the quarter.