Aramco's second-quarter profit slips 3% on lower crude output

DUBAI (Reuters) -Oil giant Saudi Aramco on Tuesday reported a 3.4% fall in second-quarter profit on lower crude volumes and softer refining margins.

Aramco posted second-quarter net income of 109.01 billion riyals ($29.03 billion) in the three months to June 30, beating a company-provided median estimate from 15 analysts of $27.7 billion.

Dividends of $31.1 billion were declared for the second quarter, including $10.8 billion in performance-linked payouts. Aramco introduced the performance-linked dividends last year, on top of a base dividend that is paid regardless of results, an uncommon practice among listed companies.

Aramco said on Tuesday it expects $124.2 billion in total dividends in 2024, roughly in line with previous guidance of $124.3 billion.

The Saudi government directly holds nearly 81.5% of Aramco and relies heavily on the company's payouts, which include royalties and taxes. Saudi's sovereign wealth fund PIF holds another 16% of Aramco and also benefits from its dividends.

Aramco's capital expenditure in the second quarter rose nearly 14% year-on-year to $12.1 billion, partly due to investments to maintain crude maximum sustainable capacity at 12 million barrels per day and expansion of its gas business.

"Aramco remains confident in its forecasts for medium- and long-term demand growth, and the company continues to execute its growth strategy," it said in a statement.

Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries, is pumping roughly 9 million barrels per day (bpd), about three quarters of its capacity. It has made cuts along with other OPEC members and allies including Russia, together known as OPEC+.

OPEC+ has been cutting output by a total of 5.86 million barrels per day, or about 5.7% of global demand, in a series of steps agreed since 2022 to bolster the market amid uncertainty over global demand and rising supply outside the group.

Brent crude was trading at about $77.1 on Tuesday, its lowest level since January, amid concerns about global economic growth. Aramco's shares are down nearly 19% this year, trailing the performance of Western oil majors.

Lower output and prices have pressured Saudi state finances. Last week, the kingdom reported a second quarter deficit of over $4 billion.

To meet its financing needs, the government sold a fresh chunk of Aramco earlier this year, raising $12.35 billion. It has also been one of the most active emerging market debt issuers, raising $17 billion from eurbond sales.

Aramco itself raised $6 billion from bonds last month and the Public Investment Fund (PIF), which is steering a sprawling economic agenda known as Vision 2030 to cut the kingdom's oil reliance, has also raised billions in debt this year.

($1 = 3.7545 riyals)

(Reporting by Yousef Saba and Sarah El Safty; Editing by Muralikumar Anantharaman, Tom Hogue and Susan Fenton)