MEOG: Big results and small qualifiers

This week’s MEOG covers Saudi Aramco’s bumper results announcement and Kuwait’s prequalification of companies for work on smaller oilfields.

Saudi Aramco this week announced its half-year results that were highlighted by a near quadrupling of Q2 net income compared to the same period last year.

With oil prices having rebounded significantly since the beginning of the year, concerns about Aramco’s ability to make its quarterly $18.75bn dividend payment were notable by their absence from media coverage of the results.

Meanwhile, with its finances clearly in a healthier state, the company is pressing forward efforts to increase its maximum sustainable capacity (MSC) for oil production by 1mn barrels per day (bpd), targeting a 550,000-bpd hike within four years.

Aramco reported net income of $25.2bn for Q2, up $3bn from the first three months of the year and an increase of around $19bn compared to 2Q2020. The first half net income of $47.2bn is more than double the total achieved during the same period last year and higher than the $46.9bn it reported in 1H2019 before the outbreak of the coronavirus (Covid-19) pandemic.

Free cash flow also nearly doubled year-over-year to $40.9bn as both price and demand recovered after more than a year of global travel and social restrictions that had seen earnings slashed throughout various sectors.

Meanwhile, state-owned Kuwait Petroleum Corp. (KPC) is reported to have qualified around 70 local companies to gain priority for work on small and medium oilfield projects under the emirate’s Badir initiative.

KPC sources were quoted by local media as saying that the company has set a list of prerequisites for qualification for work under the programme. They added that more firms are likely to be qualified for the scheme for contracts covering supplies, manufacturing and oilfield services.