Saudi Aramco profits drop after Covid-battered year, and maintain dividend

A worker at an oil processing facility of Saudi Aramco, a Saudi oil and gas company, at the Abqaiq oil field.

Stanislav Krasilnikov | TASS | Getty Images

Oil giant Saudi Aramco sank 44% year-on-year 2020 results, but maintained its $ 75 billion dividend payout, with CEO Amin Nasser describing the past twelve months as one of the “most challenging years” in recent history.

Saudi Arabia, the oil company in Saudi Arabia, reported net revenue of $ 49 billion in 2020, compared to $ 88.19 billion in 2019. The result was slightly lower than analysts’ expectation of $ 48.1 billion. but is still the highest of any public company worldwide.

“In one of the most challenging years in recent history, Aramco has demonstrated its unique value proposition through its significant financial and operational skills,” Saudi Aramco CEO Amin Nasser said in a company statement on Sunday.

Aramco said revenue was impacted by lower crude oil prices and volumes sold, and the weakening of refining and chemicals.

The firm also said it expects to cut capital spending in the coming year, lowering its spending forecast to $ 35 billion from the previous level to $ 40 billion to $ 45 billion.

Free cash flow fell nearly 40% to $ 49 billion, well below the level of its highly anticipated dividend. Aramco has also declared a $ 75 billion payout for 2020, despite concerns that it would take on additional debt to sustain it.

“Looking ahead, our long-term strategy to optimize our oil and gas portfolio is on track, and as the macro environment improves, we see an increase in demand in Asia and also positive signs elsewhere,” he added.

Shares in top Western oil and gas companies, including Royal Dutch Shell and BP, fell to lows in 2020 as the coronavirus pandemic wreaked havoc on the global economy and caused a historic collapse in oil prices. Exxon Mobil, the largest US energy company, showed its first annual loss.

Increasing attacks on oil facilities

Aramco’s facilities have been the target of several attacks by Yemen’s Houthi rebels – attacks that have intensified this year, with Saudi Arabia and Iran, the latter supporting the rebels, on opposite sides of Yemen’s bloody civil war.

Houthi rocket launches in parts of Saudi Arabia that hit Aramco facilities earlier in March briefly raised oil prices to more than $ 70 a barrel at its highest level in more than a year. Recently, the rebels took responsibility for drone strikes at an Aramco facility in the capital Riyadh on Friday, which caused a fire which, according to the Saudi Arabian Ministry of Energy, was quickly brought under control without any casualties.

Asked how the company wants to ensure investors and the global community that its infrastructure is well protected and prepared to prevent serious disruptions to its operations, CEO Amin Nasser emphasized that the attacks ‘have no impact on the business’. not.

“I think the most important thing is the willingness of our people,” Nasser told OilGasJobz during a news conference following the revenue issue. “There is always something you learn with each attack, and you will improve your emergency response … and you will have everything you need to repair these facilities when they are attacked.”

“We have learned a lot, we have been able to show with a reliability of 99.9% that we are able, under any scenario, to restart the facility and ensure the safety and security of our people and at the same time ensure that the supplies to our customers are met, ‘Nasser added.

“The attack on Riyadh is a good demonstration. Within hours of extinguishing the fires and completing the investigation, we started to put the facility (back) on,” he said. “Today, the Riyadh refinery has started upstream. So it is a testament to the ability and the emergency plan and the emergency response of first responders.”

Nasser also expressed his optimism about the prospects for oil demand in 2021.

“We have seen prices improve, with demand on demand, and a much better recovery. China is also very close to pre-pandemic levels,” the chief executive said.

“With more deployment of vaccines, we will take on more demand, so we are very optimistic about 2021 in terms of growth in demand, especially in the second half, and we can see that prices are responding so far to what we have in the market see., we look forward to a much better year in 2021. ‘

The international benchmark for Brent crude is $ 64.53 a barrel, up 25% from the previous year and 73% higher than a year ago.

Several oil analysts have raised their price forecasts for vaccination by 2021 to 2021 and Goldman Sachs predicted a $ 80 a barrel increase by the third quarter of this year – something unthinkable when WTI prices became negative for the first time in history has. years back.

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