Aramco, BP report high earnings as oil and gas prices surge
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BP's strong earnings, which included an “exceptional” performance from gas trading, is delivering a windfall for investors.
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DUBAI - Oil companies Saudi Aramco and BP have reported their second-highest earnings on record, thanks to a surge in oil and gas prices.
Aramco kept its dividend – the world’s largest – unchanged at US$18.8 billion (S$26.5 billion) for the third quarter, despite generating record free cashflow of US$45 billion.
Its gearing ratio – a measure of net debt to equity – turned negative for the first time since early 2020, underscoring the sharp improvement in business conditions for Aramco since the start of the coronavirus pandemic.
Aramco’s net income was US$42.4 billion in the third quarter. That was down from a record profit of US$48 billion between April and June
Oil prices have declined from 14-year highs in March as rising inflation and central bank monetary tightening slow the global economy. Yet, Brent futures have still gained more than 20 per cent in 2022, and are trading around US$94 a barrel.
“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,” said Aramco chief executive Amin Nasser in a statement.
The upstream arm of the world’s biggest oil company continued its strong performance, making income before taxes of US$78 billion. The downstream unit – responsible for refining, chemicals and fuel distribution – made a pre-tax loss of US$1.1 billion, compared with a profit of almost US$4 billion a year earlier.
“This result was largely driven by inventory revaluation losses” as prices of refined products fell, Aramco said. Sabic, a chemicals firm that is 70 per cent-owned by Aramco, announced a steep drop in profit on Sunday amid lower demand for products from paints to plastics.
BP announced a further US$2.5 billion of share buybacks, capping a stellar period for Big Oil after Russia’s invasion of Ukraine pushed up energy prices.
The company’s strong earnings, which included an “exceptional” performance from gas trading, is delivering a windfall for investors.
BP’s adjusted net income was US$8.15 billion – just below the record set in the second quarter – but still well ahead of the average analyst estimate of US$6.18 billion, the company said in a statement on Tuesday. It is more than double the level from a year ago.
Bumper profits have been used to pay down debt and reward shareholders. The company’s latest share buyback brings total repurchases announced in 2022 to US$8.5 billion. BLOOMBERG
