Saudi Aramco's Q2 net profit plunges 73.4% on lower oil prices

[DUBAI] Saudi state oil group Aramco on Sunday reported a 73.4 per cent fall in second-quarter net profit, a steeper drop than analysts had forecast, and said it expected capital expenditure for 2020 to be at the lower end of a US$25 billion to US$30 billion range.

The world's biggest oil exporter said the rapid spread of Covid-19 globally had significantly reduced demand for crude oil, natural gas and petroleum products.

"We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies," chief executive Amin Nasser said in a statement.

Net profit fell to 24.6 billion riyals (S$8.99 billion) for the quarter to June 30 from 92.6 billion riyals a year earlier.

Analysts had expected a net profit of 31.3 billion riyals in the second quarter, according to the mean estimate from three analysts, provided by Refinitiv.

All major oil companies have taken a hit in the second quarter as lockdowns to contain the coronavirus limited travel, which hurt oil demand and sent oil prices tumbling to levels not seen in nearly two decades.

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Brent crude prices at the end of the second quarter were down 38 per cent from a year earlier, despite an agreement by OPEC+ producers to cut oil supply by a record 9.7 million barrel per day from May to help to shore up prices and curb oversupply.

Aramco said it would distribute a dividend of US$18.75 billion for the second quarter of this year, in line with its plan to pay a base dividend of US$75 billion for 2020.

BP earlier this month cut its dividend for the first time in a decade after a record US$6.7 billion second-quarter loss, while Royal Dutch Shell in April cut its dividend for the first time since World War Two.

REUTERS