Saudi Arabian Oil Co (Aramco) posted a 12 percent decline in profit as the world’s biggest oil exporter reported first-half results for the first time, ahead of a potentially record-breaking share sale.
Net income was US$46.9 billion, down from US$52.9 billion a year earlier, state-owned Aramco said yesterday.
The results, reflecting a decline in crude prices and an increase in costs, are being closely watched as the company prepares for an initial public offering (IPO) next year, or in 2021.
“Despite lower oil prices during the first half of 2019, we continued to deliver solid earnings and strong free cash flow underpinned by our consistent operational performance,” chief executive officer Amin Nasser said in a statement.
The average selling price for Aramco’s crude fell to US$66 a barrel in the period from US$69 a year earlier.
Total hydrocarbon production held steady at 13.2 million barrels of oil equivalent a day, of which 10 million barrels was crude. The company is expanding its Marjan and Berri offshore fields to add capacity.
Aramco paid dividends of US$46.4 billion to shareholders in the first half, up from US$32 billion a year earlier. That included an additional US$20 billion to the Saudi Arabian government as a special payout.
Saudi Arabia announced plans for an IPO of Aramco three years ago, but the IPO was delayed to allow the company to acquire chemicals giant Saudi Basic Industries Corp (SABIC). Damman, Saudi Arabia-based Aramco sold bonds to buy a 70 percent stake in SABIC from the kingdom’s sovereign wealth fund.
Aramco is eager to bolster its downstream business, including through acquisitions at home and abroad. Yesterday, it continued its push into Asian oil refining with an agreement to buy a 20 percent stake in Reliance Industries Ltd’s oil-to-chemicals division at an enterprise value of US$75 billion.
The deal, announced by Reliance chairman Mukesh Ambani at the company’s annual general meeting in Mumbai, India, is the biggest foreign investment in the company’s history and covers all of Reliance’s refining and petrochemical operations, including the Jamnagar refinery, the world’s biggest.
Aramco would also supply the refinery with 500,000 barrels of oil a day on a long-term basis, Ambani said.
The deal is subject to due diligence, definitive agreements and regulatory and other approvals, Ambani added.
Aramco has been targeting refining deals in India since at least last year, when Nasser told reporters that the firm wanted to double capacity to produce gasoline and other fuels.