The Saudi juggernaut is marking time at the start of 2024. Saudi Aramco announced on Tuesday that it had achieved a net profit of $27.27 billion in the first quarter, down 14.5% compared to the same period of the year. ‘last year.
“ Net profit for the first quarter of 2024 is SAR102.27 billion ($27.27 billion), compared to SAR119.54 billion ($31.88 billion) for the same quarter in 2023 », indicated the oil and gas group in a document sent to the Saudi Stock Exchange.
The giant explains its mixed result as “ primarily the result of a decrease in the volume of crude oil sold “. The world’s largest crude exporter, Saudi Arabia currently produces around nine million barrels per day (bpd), well below its capacity of 12 million bpd.
Saudi Arabia: oil king Aramco lowers its prices
This follows a series of production cuts dating back to October 2022, when the oil-producing countries of OPEC+, which Riyadh co-leads with Moscow, announced a reduction in their production by two million barrels per day to boost the costs. In addition to this reduction, Saudi Arabia and several other members of OPEC+, the Organization of the Petroleum Exporting Countries and their allies, agreed in April 2023 to reduce production by more than 1 million bpd.
After an OPEC+ meeting in June 2023, Saudi Arabia then announced a further reduction of 1 million bpd. Finally, in March, the Saudi Ministry of Energy said that the latest reduction, which took effect in July 2023, would be extended until the second quarter of 2024, after which ” these additional reduction volumes will be returned gradually depending on market conditions “.
Saudi Arabia calls on its national giant
Aramco, as a national oil producer, is therefore subject to the decisions of the country’s de facto ruler, Crown Prince Mohammed bin Salman, who badly needs oil revenues to finance an ambitious program of economic and social reforms known as Vision. 2030. The latter aims to prepare the country for the post-oil era.
Especially since in December, the Saudi Ministry of Finance indicated that it forecast budget deficits until 2026, due to high spending on reforms. Against this backdrop, Saudi Arabia’s GDP declined by 1.8% year-on-year in the first quarter of 2024 compared to 2023, the General Authority for Statistics said in a preliminary estimate released last week. “ This decline is mainly due to a 10.6% drop in oil activities », According to the same Source.
In the meantime, limiting production therefore harms the revenues of Saudi Arabia and Aramco. To find short-term funds, Aramco sold 1.7% of its shares on the Saudi stock market in December 2019, raising $29.4 billion in the world’s largest IPO. Saudi Arabia also recently transferred a new tranche of Aramco shares to the Public Investment Fund (PIF), the center of a broad reform program in the kingdom.
Oil price at its highest in more than five months
Most other oil tankers in loss
Behind the reasons intrinsic to Saudi Arabia, the national oil company is also subject to a complicated geopolitical context. If oil prices, which had fallen since the 2022 peaks, rebounded after October 7 due to geopolitical risks with the war between Israel and Hamas, gas prices, on the other hand, have plunged since their records at the start of the war in Ukraine.
Thus, the British oil giant BP also recorded a sharp drop in profit in the first quarter due to falling gas prices which weighed on sales, and an unfavorable comparison effect. The group’s net profit fell by 72% over one year to $2.3 billion, for a turnover which fell by 13% over one year to $50 billion, according to a press release published this Tuesday. The profit underlying replacement costs, a measure excluding exceptional items which is most closely scrutinized by the markets, is down by almost half to $2.7 billion.
“ We delivered another financially resilient quarter and continue to make progress on our strategy » commented general manager Murray Auchincloss. “ We are simplifying and reducing complexity across BP and plan to generate at least $2 billion in savings by the end of 2026 through portfolio assessments, digital transformations, supply chain efficiencies », among others, he adds, quoted in the press release. The group announces a new share buyback program of $1.75 billion for the next three months as well as an increase in its debt due to investments.
Last week, Shell also published a net profit down 15.5% to $7.4 billion in the first quarter for a turnover having suffered a decrease of the same magnitude, but these better than expected figures had been well received by the market.
TotalEnergies against the current
Conversely, TotalEnergies reported a net profit of $5.7 billion in the first quarter of 2024, further improving its results by 3% compared to the first three months of 2023. On the other hand, the group shows an adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) – the profitability indicator most followed by investors – down 19% compared to the 1st quarter to $11.5 billion.
The company’s CEO, Patrick Pouyanné, quoted in a press release published on April 26, believes in particular that the results at the start of the year are ” in line with its ambitious objectives for the year 2024. »
TotalEnergies on the New York Stock Exchange?
Furthermore, the CEO of TotalEnergies also said he was considering a primary listing of his group on the New York Stock Exchange, “ a legitimate question “, he told Bloomberg, referring to the rise of the North American shareholder base, which holds nearly 50% of the company’s capital. “ It’s not a question of emotion. It’s a business question “, he added, pragmatically. The CEO was responding in particular to a question on the move of the main listing of the group, currently established in Paris, to the New York market. Today, the group already has titles registered in London and New York, but on a secondary basis.
“ We are facing a situation where European shareholders sell or maintain their stake, and American shareholders buy », justified the boss of the flagship of the CAC 40, during an interview. Since 2012, the share of North American institutional shareholding has increased from 33% to 48% (including 47% for the United States) in 2023 while that of Europe (excluding the United Kingdom) has increased from 45%. at 34% over the same period. Institutional ownership represents 78% of the company’s total ownership. “ The location of the head office is not in question, he says: it will remain in Paris », Bloomberg further clarified in his article.
(With AFP)
