Saudi Aramco Earnings: First Performance-Linked Dividend Raises Yield

Saudi Aramco reported second-quarter net income fell to $30.1 billion from $48.4 billion the year before largely on lower oil prices and volumes. Total hydrocarbon volumes decreased to 13.5 million barrels of oil equivalent per day from 13.6 mmboe/d last year. Free cash flow decreased to $23.2 billion in the quarter from $54.1 billion the year prior. Net debt fell to negative $44.2 billion from net debt of negative $32.7 billion at end-2022 as the gearing ratio fell to negative 10.5% from negative 7.9%. We maintain our fair value estimate of SAR 30.50 and wide moat rating for Saudi Aramco.