Connect with us

Hi, what are you looking for?

Commodities & Futures

Saudi Aramco to cut capex after 2020 profit drops 44.4%

Commodities11 minutes ago (Mar 21, 2021 03:00AM ET)

(C) Reuters. FILE PHOTO: An employee rides a bicycle next to oil tanks at Saudi Aramco oil facility in Abqaiq

By Hadeel Al Sayegh and Saeed Azhar

DUBAI (Reuters) – Saudi Arabian state oil giant Aramco said on Sunday it expects to cut capital expenditure after it reported a 44.4% slump in 2020 net profit, hit by lower crude oil prices and sales as the coronavirus pandemic depressed demand.

The company lowered its guidance for spending to around $35 billion from a range of $40 billion to $45 billion previously, according to a disclosure to the Tadawul bourse.

Aramco declared a dividend of $75 billion for 2020 and signalled it was seeing pickup in oil demand.

“The dividend is in line with expectations, which is what holders of Aramco will care about most, but lower capex implies the company does not expect high oil prices to last for the long-term,” said Hasnain Malik, head of equity research at Tellimer.

Net profit fell to 183.76 billion riyals ($49.00 billion) for the year that ended Dec. 31, from 330.69 billion riyals a year earlier.

Analysts had expected a net profit of 186.1 billion riyals in 2020, according to the mean estimate of analysts in Refinitiv’s Eikon.

“Looking ahead, our long-term strategy to optimize our oil and gas portfolio is on track and, as the macro environment improves, we are seeing a pick-up in demand in Asia and also positive signs elsewhere,” Saudi Aramco (SE:2222) Chief Executive Amin Nasser said in the statement.

Aramco’s 44.4% drop in 2020 profit compares with a 30.7% decline in oil revenues last year for the Saudi government, with steady dividends to the government despite the lower oil prices contributing to Aramco bearing the brunt of the crisis more than the treasury, said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

Earnings in the top western oil and gas companies including Royal Dutch Shell (LON:RDSa) and BP (NYSE:BP) dropped to multi-year lows in 2020. Exxon Mobil (NYSE:XOM), the largest U.S. energy company, posted its first annual loss.

Brent crude last traded at $64.53 a barrel on Friday, up from $51.80 on Dec. 31, 2020. Oil prices lost just over a fifth of their value in 2020.

Aramco said free cash flow amounted to $49 billion last year, down from $78.3 billion in 2019.

The company has a $5 billion payment towards the acquisition of a stake in Saudi Basic Industries Corp coming up this April, according to an HSBC report in February.

It has only paid $7 billion out of the combined $75 billion transaction cost, including interest, for the SABIC deal.

($1 = 3.7505 riyals)

Saudi Aramco to cut capex after 2020 profit drops 44.4%

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like


Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit, sed quia non numquam eius modi tempora incidunt.


Nemo enim ipsam voluptatem quia voluptas sit aspernatur aut odit aut fugit, sed quia consequuntur magni dolores eos qui ratione.


Quis autem vel eum iure reprehenderit qui in ea voluptate velit esse quam nihil molestiae consequatur, vel illum qui dolorem eum.


Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit, sed quia non numquam eius modi tempora.

Disclaimer: it's managers and its employees (collectively "The Company") do not make any guarantee or warranty about what is advertised or above. Information provided by this website is for research purposes only and should not be considered as personalized financial or health advice. Copyright © 2021 Wise Gazette. All Rights Reserved