Saudi Aramco (SA:2222) has stuck with its $75bn (£57bn) 2020 dividend plan despite the oil price crash in the first half.
Saudi Arabia’s ramp up of oil supply and cut to its own prices prices in March was a major contributor to the oil price crash, as demand slumped due to Covid-19 shutdowns and Brent crude went down to $20 per barrel (bbl). The state-owned oil company listed in December in its home country with the promise of big investor payouts.
In the three months to 30 June, its net income was down 73 per cent on last year, to $6.6bn. Free cash flow was still $6bn for the quarter, although the dividend will cost triple triple this at $18bn. Free cash flow was $20.6bn in the 2019 June quarter.
Chief executive Amin Nasser said Aramco had proven its “financial resilience” after the oil price crash.
Production overall was 12.7m barrels of oil equivalent per day (boepd) in the quarter, with a record day for oil of 12.1mbbl, while producers all over the world were watching balance sheets crumble because of the price crash.
Mr Nasser said a “partial recovery” in the energy market was now evident. Saudi Arabia agreed in June to cut some supply, although this has now been turned back on, according to Panmure Gordon analyst Colin Smith. He said the Saudi producer had swung from net cash at the end of March to gearing of 20 per cent as of 30 June, which the company put down to completion of the SABIC deal.
Aramco closed a $69bn deal to buy 70 per cent of the petrochemicals company in the quarter.
