Saudi Aramco’s Profit Fell 44 Percent in 2020

Saudi Aramco, Saudi Arabia’s national oil company, said Sunday that net income fell 44 percent to $ 49 billion last year as oil prices fell due to the pandemic in earnings.

The company’s managing director, Amin H. Nasser, described 2020 in a statement on the earnings data as “one of the most challenging years in recent history”.

However, Aramco, the world’s largest oil producer, said it would stick to its promise to pay a dividend of $ 75 billion. Almost all of the payment goes to the Saudi government, which owns around 98 percent of the company.

The company was listed on the local Tadawul Stock Exchange in the largest rating for an IPO in 2019.

Despite the listing, the Saudi government continues to have a grip on the company’s oil exploration policies, resulting in a roller coaster year. By order of the Saudi government, the company increased oil production in the spring of 2020 when it was fighting a price war with Russia. The surge caused the company to hit record production levels of 12.1 million barrels per day in April and also contributed to an oil glut and a sharp drop in world market prices.

More recently, Aramco has cut production under an agreement with other members of the Organization of Petroleum Exporting Countries, as well as Russia and a few other manufacturers, a group called OPEC Plus. In January, Saudi Arabia announced it would cut another 1 million barrels a day below the quota agreed with OPEC Plus, a policy it is continuing. Average production for 2020 was 9.2 million barrels per day.

Data released on Sunday showed that Aramco pays more dividends than it makes from oil operations. Free cash flow, a measure of profit after expense, was also $ 49 billion, meaning the company raised $ 26 billion to pay to shareholders.

In yet another reflection of the turmoil in the oil markets last year, the company cut investments 18 percent from 2019 to $ 27 billion. Aramco anticipated investments of around $ 35 billion in 2021, less than previously forecast of $ 40 billion to $ 45 billion.

Aramco has received the award as the most profitable company in the world in recent years. But the impact of the pandemic, which briefly caused some oil futures to dip below zero, as well as the appeal of tech products and services while people were working from home, pushed Apple forward. Apple’s net income for fiscal 2020, which ended September 26, was $ 57 billion.

The income statement on Sunday was limited to a few highlights. Saudi Aramco is expected to provide more details on Monday during a meeting with financial analysts.

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