Updated posts 2026
In the latest financial report, Saudi Arabia’s state-owned oil behemoth, Aramco, revealed a 23% decrease in net profit for the third quarter ending on September 30. The decline, attributed to “lower crude oil prices and volumes sold,” brought the company’s net profit down to $32.6 billion, a notable contrast from the previous year’s $42.4 billion. Nevertheless, the Q3 results surpassed analyst expectations, which had been near $31.8 billion.
The company’s free cash flow was substantially reduced to $20.3 billion, less than half of the $45 billion recorded in the third quarter of 2022. Despite these challenges, Aramco remained committed to its dividend payout of $29.4 billion to both investors and the Saudi government. This figure encompasses a base dividend payout of $19.5 billion, slated for disbursement in the fourth quarter, with an additional $9.9 billion as a performance-linked dividend.
The gap between those two numbers is worth pausing on. Paying out $29.4 billion while generating $20.3 billion in free cash flow means drawing on reserves or borrowing to cover the difference, a stretch few companies would attempt. Aramco’s position is unusual because its largest shareholder is also the Saudi state, which relies on those payments to fund a national budget and an ambitious diversification program. The dividend functions less like a return to investors than like a transfer to the treasury, which makes cutting it a political decision as much as a financial one.
The $9.9 billion performance-linked dividend will be paid out in Q4, based on the combined results of the full-year 2022 and the first nine months of 2023, as detailed in the company’s earnings release.
Aramco’s capital expenditure for the quarter escalated to $11.02 billion from $9.03 billion during the same period in the previous year. The company’s expansion plans include finalizing an agreement on its inaugural international liquified natural gas (LNG) investment and its foray into the South American market through a downstream retail acquisition.
The dip in profitability mirrors industry trends, with major energy players like ExxonMobil and Chevron witnessing substantial annual declines in the third quarter, largely due to weaker oil prices affecting the sector.
Saudi Arabia, a key player in the Organization of the Petroleum Exporting Countries (OPEC), has been implementing production cuts as part of OPEC’s formal policy and voluntary reductions. The country is maintaining a voluntary cut of 1 million barrels per day until the end of the year, with plans to review this production strategy in December.
Aramco’s President and CEO, Amin Nasser, stated, “Our robust financial results reinforce Aramco’s ability to generate consistent value for our shareholders, and we continue to identify new opportunities to evolve our business and meet the needs of customers.”
Notably, in August, Fortune magazine ranked Aramco as the world’s second-largest company by revenue, following Walmart and surpassing Apple and Amazon. This ranking came after Aramco’s record-breaking annual profit announcement of over $160 billion in 2022, during a period of high oil prices spurred by Russia’s invasion of Ukraine. For further financial insights and industry updates, keep visiting ImpactWealth.org.
