Saudi Aramco will use cash and borrowing to pay dividend of $18.75 billion for first quarter
Source: Upstream, By Nassir Shirkhani in Tehran
Saudi Aramco, the world’s largest oil company, will rely on cash and borrowings to honour its dividend of $18.75 billion for the first quarter of this year.
The company has seen its crude exports and revenues fall sharply this year in the wake of the Covid-19 pandemic.
When asked by reporters if Aramco would tap debt markets to pay the dividend or use its own cash, chief executive Amin Nasser said: “It will be a combination of both.
“We would like to use our free cash definitely most of time, but other debt instruments from banks or bonds are also available for us as we have a strong balance sheet,” he added.
Aramco reported a 25% fall in first-quarter net profit in May, missing analyst estimates. Its quarterly dividend was, however, in line with a plan for a full-year payout of $75 billion.
Analysts had expected the oil giant — which went public last year — to maintain payouts to minority shareholders while cutting the dividend to majority shareholder, the Saudi government, whose finances have been decimated by the pandemic.
Aramco has just completed its purchase of a 70% stake in petrochemicals company Saudi Basic Industries for $69 billion. It extended the payment period by three years to 2028 to help it ride out weak oil prices.
Aramco and the Saudi state Public Investment Fund (PIF) revised the payment structure for the transaction.
Following a seller loan provided by the PIF, Aramco will pay installments and loan charges until 2028, thus extending a previous 2025 deadline.
Under a previous agreement, 36% of the purchase price — roughly $25 billion — would have been paid in cash on completion.