Oil pressures did not hold Aramco back in 3Q: Saudi Aramco’s net income was slightly down 2.3% y-o-y to SAR 101 (USD 26.9 bn) in the third quarter, the oil giant said in an earnings release (pdf). The figure — up just shy of 19% compared to the second quarter — significantly outperformed the median estimate of analysts at SAR 88.8 bn, signaling easing pressure from lower oil prices as output volumes increased.

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Revenue and sales income was down 10% y-o-y to SAR 418.2 bn (USD 111.5 bn) during the quarter. Aramco sold oil at an average realized price of just above USD 70 / bbl, compared to USD 79.3 in the same quarter last year. Lower prices for refined and chemical products also weighed down on revenue, partially offset by higher volumes sold.

In the first nine months, Aramco logged a net income of SAR 283.6 bn (USD 75.6 bn), a decrease of some 9.9% y-o-y. Revenue and sales income also inched down some 8.6% to SAR 1.25 tn, compared to 1.37 tn in the same period last year.

Dividends covered: The company’s free cashflow reached some USD 23.6 bn, up 7% y-o-y and significantly recovering from USD 15.2 bn logged at the end of the second quarter. The recovery is enough to cover 3Q dividends at USD 21.4 bn — including some USD 219 mn in performance-linked dividends — with distribution set for 26 Nov.

Net debt is also inching down for the first time since 2Q 2023, reaching USD 30.5 bn. The gearing ratio — an indicator of borrowing levels — slightly eased to 6.3%, compared to 6.5% in the second quarter.

IN CONTEXT- Oil prices have been under pressure this year, down some 13% since the year began to USD 65 a barrel following an Opec+ policy reversal that saw it quickly unwind production cuts since April. “There will always be a trade-off between targeting price and targeting volume. And the decision this year from Opec+ to unwind its restraint is showing that member nations want to target volume and market share,” acting chief economist at Emirates NBD told Bloomberg.

Aramco was able to adapt just fine, says President and CEO Amin Nasser. “We increased production with minimal incremental cost, and reliably supplied the oil, gas and associated products our customers depend on.”

The oil giant expects oil and gas demand to keep growing for decades to come, buoyed by consumption in developing markets particularly in Asia, Nasser said in an interview with CNBC. Demand will grow by 1.1-1.3 mn bbl / d this year and almost the same next year, he said.

Confident enough to raise targets: Aramco raised its 2030 gas production capacity growth target to some 80% above 2021 levels, compared to an earlier goal just above 60%. The increase is set to bring total production to some 6 mn barrels of oil equivalent per day, on the back of the unconventional gas expansion at Jafurah.

A chunk of capital spending is also going towards AI champion Humain, amid efforts transform the Kingdom into a global leader in the field, Nasser told CNBC. Aramco is targeting capital expenditures of USD 52-58 bn this year.

Market reax: Aramco’s share price was up 0.7%, closing at SAR 25.79. The price is down 8.16% YTD, narrowing the annual decline and moving in line with the TASI index.

The story made the rounds in the international press: Reuters | Bloomberg | Wall StreetJournal | Associated Press

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