Saudi Aramco’s $75 billion dividend survives oil rout, earnings slump

Saudi Aramco’s $75 billion dividend survives oil rout, earnings slump

Saudi Aramco's $75 billion dividend survived one of the biggest disruptions in oil markets in decades as the coronavirus pandemic and a price war sent crude prices tumbling.

Aramco's payouts almost all go to the Saudi Arabian government, whose budget deficit widened in 2020 after the virus hammered energy markets and shut down businesses across the kingdom.

The world's biggest oil company has taken on more debt in the past 12 months to keep up the dividend in the face of dwindling cash flow, though its gearing remains below that of Big Oil firms such as Royal Dutch Shell Plc.

Saudi Arabia initially paid a combined $64 million in base fees to the IPO arrangers, with the top foreign banks on the deal getting about SAR 13m each

Net income for 2020 was 184 billion riyals ($49 billion), slightly above analysts' expectations and down 44 percent from the previous year. Free cash flow slumped almost 40 percent to $49 billion, substantially below the level of the dividend.

Cautious on Oil

Aramco expects capital expenditure this year to be $35 billion, down from previous guidance of as much as $45 billion. That signals it remains cautious on the outlook for oil markets despite prices climbing 25 percentsince the end