Saudi Arabian oil giant Saudi Aramco today reported second-quarter net income of $6.6 billion, a decrease of 73% from the $24.7 billion it earned in the year ago period due to the COVID-19 pandemic's impacts on demand and pricing. Income for the first half of 2020 was down 51% compared to the corresponding period in 2019.
The company said its "low production cost" and "unique scale" led to free cash flow that allowed it to maintain its $18.75 billion dividend for the second quarter, in line with the first-quarter payout. The company averaged crude oil production of 9.3 million barrels per day (mmbpd), and said it produced a single day record output of 12.1 (mmbpd) of crude oil on April 2. It intends to increase production capacity to 13 mmbpd without a major impact on capital expenditures, according to a Reuters report.
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President and CEO Amin Nasser said that the company is seeing some recovery in demand as global economies begin to reaccelerate. He was quoted in a company press release as saying, "We will continue to pursue our long-term growth and diversification strategy to capture unrealized and additional value." He added that capital expenditure for 2020 should be at the lower end of the $25 billion to $30 billion range.
Oil prices have rebounded from historic lows caused by the demand shock related to COVID-19 shutdowns and stay-at-home policies. After an April crash that sent market prices into negative territory, crude prices are now hovering about the $40-per-barrel level. Saudi Aramco says its upstream capital costs for oil equivalent produced are $4.70 per barrel, the lowest in the industry.
