Saudi Aramco posts 160% rise in the third quarter profit

DUBAI, United Arab Emirates — Saudi Arabia’s oil giant Aramco has posted a 158% increase in third quarter net income to $30.4 billion dollars, as the world’s largest oil companies continue to benefit from the reopening of the global economy and soaring oil and gas prices.

The result beat expectations, with analysts expecting a median net income of $29.1 billion for the quarter. Aramco reported net income of $11.8 billion in the third quarter of 2020.

“Our exceptional third quarter performance was a result of increased economic activity in key markets and a rebound in energy demand,” Aramco President and CEO Amin Nasser said on Sunday.

“Some headwinds still exist for the global economy, partly due to supply chain bottlenecks, but we are optimistic that energy demand will remain healthy for the foreseeable future,” Nasser added.

Aramco said the increase in net income was the result of higher crude oil prices and volumes sold, and stronger refining and chemicals margins in the quarter, as the company benefits from rebounding global energy demand and increased economic activity in key markets.

WTI crude oil has soared above $85 in recent weeks, a level not seen since 2014, as the market shifts focus from demand recovery to supply scarcity. Natural gas prices are up around 130% this year, meaning the full extent of the global energy crisis is more likely to be felt in the fourth quarter results.

Aramco declared a significant dividend of $18.8 billion to be paid in the fourth quarter. The payout can be covered by a jump in free cash flow to $28.7 billion in the third quarter, up from $12.4 billion for the same period in 2020. Gearing, a measure of the company’s debt position, also improved to 17.2% from 23% due to higher oil prices and stronger cash flows.

Aramco also said it would “invest for the future” with capital expenditure of $7.6 billion in the third quarter, representing a 19% increase, compared with the same period in 2020. Aramco said it expected 2021 capital expenditure to be approximately $35 billion.

The results confirm a bumper quarter for so-called “Big Oil,” a term used to refer to the world’s biggest oil and gas companies. U.S. oil majors ExxonMobil and Chevron also benefited from rising prices, reporting profit that soared to multiyear highs in the quarter. Royal Dutch Shell reported record cash flow, while TotalEnergies also saw a sharp rise in performance.

The strong numbers come as the sector faces renewed scrutiny from activists and cynicism over its climate ambitions. Companies, including Aramco and the UAE oil giant Adnoc, have launched climate initiatives just days ahead of the COP26 climate summit, while simultaneously planning to invest to increase oil production in the coming years.

“I think most people would agree that climate change is one of the biggest challenges facing…