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Saudi Aramco, the world’s largest oil company by production and market value, reported on Tuesday a 15.4% annual decline in third-quarter earnings, due to lower oil prices and weaker refining margins, but maintained its $31.1 billion quarterly dividend, most of which goes to the Kingdom.
Aramco, which is also the world’s top crude oil exporter, booked a net income of $27.564 billion for the third quarter, down from $32.583 billion for the same period last year.
Despite the drop, the earnings beat a $26.89 billion average consensus estimate by Visible Alpha.
Earnings before interest and tax fell by 18.1%, primarily as a result of lower crude oil prices, lower crude oil volumes sold, and weakening refining margins.
The key drivers of Aramco’s lower third-quarter results were the same as those for Big Oil and other major oil and gas producers—lower oil and gas prices in Q3 compared to a year earlier, and weak refining margins due to sluggish demand growth and increased global refining capacity.
Aramco continued its dividend policy to distribute huge payouts to its shareholders, the biggest of which is the Kingdom of Saudi Arabia via a direct stake of almost 81.5% and an indirect interest via the sovereign wealth fund, the Public Investment Fund (PIF), which has 16% of Aramco.
For the third quarter, the Saudi state oil giant declared a base dividend of $20.3 billion, plus the sixth distribution of performance-linked dividends of $10.8 billion, bringing the total declared dividends for the third quarter to $31.1 billion.
Saudi Arabia relies on income from oil exports and Aramco’s dividend payouts to finance an ambitious Vision 2030 program, with which the Saudi Crown Prince, Mohammed bin Salman, wants to turn the Kingdom into an investment-friendly destination of doing business and grand projects and to reduce reliance on oil.
Commenting on the Q3 results, Aramco’s president and CEO Amin Nasser said “As we focus on strategic growth opportunities and capturing value through integration and diversification, we intend to maintain our positive momentum and cement our position as a leading global energy and petrochemicals player.”
