Saudi Arabian Oil, known as Saudi Aramco, has revised its full-year capital expenditure outlook following a lower-than-expected net income for the third quarter, which aligned with market forecasts. The state-owned energy behemoth reported a third-quarter spending of $13.23 billion, an increase from $11.03 billion during the same period last year and higher than RBC Capital Markets' estimate of $13 billion.
The company has now narrowed its capex guidance for 2024 to a range between $51 billion and $54 billion, down from its previous estimate of $48 billion to $58 billion. This adjustment indicates fourth-quarter spending could fall between $13 billion and $16 billion. RBC's commentary noted that "the narrowing of the capex range is consistent with expectations given YTD spend." In a challenging environment marked by decreasing oil prices, the oil and gas powerhouse revealed a third-quarter net income of $27.56 billion, which matched analyst consensus largely due to its efficient upstream production and well-integrated downstream operations, supported by a consensus that stood at $26.9 billion, and RBC's forecast of $27.2 billion.
Year-over-year, net income decreased significantly to 103.37 billion Saudi riyals from 122.19 billion riyals, largely due to reduced refining margins, shifts in inventory valuation, and various non-cash charges in the downstream sector. Furthermore, revenue shrank to 416.63 billion riyals from 424.1 billion riyals, mainly because of a decline in crude oil prices as well as lower prices for refined and chemical products.
Operating cash flow showed resilience, rising to $35.2 billion from $31.4 billion, prompting the board to declare a dividend of 0.4815 riyal per share, surpassing last year’s dividend of 0.4554 riyal per share. Looking ahead, Aramco anticipates total dividends of approximately $124 billion in 2024.
RBC commented on the financials, stating "a decent set of results from Aramco this morning, with the beat on cash flow vs. our numbers partly driven by lower cash taxes." Despite these results, the stock experienced a slight decline in midday trading..