Oil giant Saudi Aramco sees 2020 profits drop to $49 billion

Oil giant Saudi Aramco sees 2020 profits drop to $49 billion
Source: AP
2 Min Read

Daily US Times: Saudi Arabia’s state-backed oil producer Saudi Aramco announced on Sunday that its profits nearly halved in the last year to $49 billion, a big drop that came as the Covid pandemic roiled global energy markets.

Saudi Arabian Oil Co. released its annual financial results a year after the coronavirus pandemic sent the oil price crashing to all-time lows as people stopped travelling around the world to contain the spread of the virus. The price has edged up in recent weeks, however, as travel restrictions ease, more people get vaccinated against Covid-19 and commerce increases. Still, analysts caution that a peak in oil demand may still be far off.

Despite the 44% drop in net income, the Saudi Aramco said it would stick to its previously announced promise of paying quarterly dividends of $18.75 billion — $75 billion a year — due to commitments the company made to shareholders in the run-up to its initial public offering.

Nearly all of the dividend money goes to the Saudi government. The government of Saudi Arabia which owns more than 98% of the company.

Aramco’s policy to pay dividends significantly higher than its 2020 free cash flow of 49 billion dollars stands in sharp contrast to other oil producing giants that have cut payouts.

Seeking a cash infusion to pay the billions of dollars in the face of dwindling revenue, Aramco recently has issued international bonds.

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