Saudi oil giant Aramco on Tuesday reported a 15.4% drop in third-quarter profit due to lower crude prices and weaker refining margins, but maintained its generous dividend at $31.1 billion for the quarter.
Aramco posted net income of $27.6 billion in the three months to Sept. 30, which still beat a company-provided median estimate of $26.9 billion.
Citi had forecast net income of $26.3 billion in a research note in October.
The dividend includes $10.8 billion in performance-linked payouts. Aramco introduced performance-linked dividends last year after bumper profits in 2022 when oil prices soared, on top of a base dividend that is paid regardless of results - uncommon among listed companies.
Aramco has said it expects to declare total dividends of $124.3 billion in 2024, of which $43.1 billion would be performance-linked dividends.
The Saudi government, which directly holds nearly 81.5% of Aramco, relies heavily on the company's payouts, which also include royalties and taxes. Its sovereign Public Investment Fund (PIF) holds another 16% of Aramco and also benefits from its dividends.
The PIF, which manages roughly $925 billion in assets, is steering a sprawling economic agenda known as Vision 2030 to reduce the kingdom's reliance on oil. The plan has ploughed vast sums into everything from sports and electric cars to planned futuristic desert cities.
Reuters has reported the PIF is weighing a reorganization that includes reprioritizing projects and reviewing some expenses, after Finance Minister Mohammed Al Jadaan said earlier this year that Vision 2030 will be "adjusted as needed," with some projects scaled back or extended and others accelerated.
Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), is pumping roughly 9 million barrels per day, about three-quarters of its capacity after agreeing to cuts with OPEC members and allies including Russia.
Crude benchmark Brent LCOc1 was trading at $75.12 a barrel on Tuesday, trading in a tight range ahead of the U.S. election. The Saudi government needs oil at about $98.40 a barrel to balance its budget, the IMF projected last month. O/R
Aramco's shares are down about 17% this year, trailing the performance of Western oil majors Exxon and Shell, but broadly in line with BP, which is down 18%.
Lower output and prices have pressured state finances. A preliminary budget statement in late September showed the kingdom expects to post a fiscal deficit of 118 billion riyals ($32 billion) this year, equal to 2.9% of GDP, wider than the 79 billion riyals projected in the 2024 budget statement in December.
To meet its financing needs, the government sold a fresh chunk of Aramco earlier this year, raising $12.35 billion. The kingdom was the largest debt issuer among emerging markets in the first half.
Saudi total public debt was nearly 1.15 trillion riyals ($306.17 billion) at the end of June, up 9.4% from a year earlier, according to finance ministry data.
Public debt is projected to rise to 1.172 trillion riyals by year-end, higher than a previous estimate of 1.103 trillion riyals.
Aramco itself, as well as the PIF and several other state-linked firms, have also raised billions in debt this year.
($1 = 3.7558 riyals)
(Reuters - Reporting by Yousef Saba; Editing by Kim Coghill, Varun H K and Christian Schmollinger)