RIYADH – The net income of Saudi state-run oil company Aramco dropped during the second quarter by 73 percent in the wake of a pricing war with Russia and production deceleration caused by the coronavirus pandemic.
The company announced on Sunday that during the second quarter it had registered $6.6 billion in net income, compared to $24.7 billion during the same period of last year.
During the first half of 2020, the oil giant recorded net income of $23.2 billion, 49.5 percent lower than the first six months of last year, the company said in a statement.
The cash flow from operating activities stood at $12.3 billion during the second quarter and at $34.8 billion in the first half of the year, while the free cash flow recorded $6.1 billion and $21.1 billion respectively.
Despite the partial impact, the oil company maintains the quarterly dividend of $18.75 billion that will be paid in the third quarter of the year.
Aramco made its stock market debut at local Tadawul in December exceeding expectations but the following oil crisis took its toll on the share.
The operations-equity ratio was 20.1 percent at the end of June, a leverage rate that the company attributes to the recent purchase of a large part of the petrochemical company SABIC and the consolidation of its net debt on Aramco’s balance sheet.
Finally, the capital expenses registered $6.2 billion during the second quarter of 2020 and $13.6 billion during the first half of the year.
Oil prices fell to their lowest in a decade due to the coronavirus, while a pricing war between Saudi Arabia and Russia that broke out in March has worsened the situation.
At the end of April, OPEC+, an alliance of the Organization of the Petroleum Exporting Countries and 10 other members, agreed to cut production by 9.7 million barrels per day.
Aramco cut its output by further million barrels per day in June.
“Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results,” president and CEO Amin Nasser said in a statement.
“Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength.”
Nasser promised to stick to the goals of long-term growth and a diversification strategy for the oil company, which continues to bet heavily on gas.
In this regard, the company highlighted that in the second quarter the Fadhili gas plant reached its maximum production capacity, some 2.5 billion cubic feet a day, in addition to the acquisition of 70 percent of SABIC for $69.1 billion.
“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies,” he added.