Major oil companies have taken a hit in the second quarter as lockdowns to contain the coronavirus limited travel, which reduced oil consumption and sent prices tumbling to levels not seen in nearly two decades. Aramco, which listed in Riyadh last year in a record $29.4 billion flotation, said the rapid spread of COVID-19 globally had significantly reduced demand for crude oil, natural gas and petroleum products. Nasser told reporters he had seen a partial recovery in the energy market and a pick-up in demand as economies gradually open after the easing of coronavirus lockdowns.
Aramco reported a 73.4% fall in second-quarter net profit, a steeper drop than analysts had forecast, and said it expected capital expenditure for 2020 to be at the lower end of a $25 billion to $30 billion range. Net profit fell to 24.6 billion riyals ($6.57 billion) for the quarter to June 30 from 92.6 billion riyals a year earlier. Analysts had expected net profit of 31.3 billion riyals, according to the mean estimate from three analysts.
Aramco shares were up about 0.4% in early trade. The group is currently the world’s second most valuable publicly traded company after Apple. Aramco said it will pay a dividend of $18.75 billion for the second quarter of this year, in line with plans for a $75 billion dividend for 2020. BP earlier this month cut its dividend for the first time in a decade after a record second-quarter loss, while Royal Dutch Shell in April cut its dividend for the first time since World War Two. Aramco’s free cash flow stood at $6.1 billion in the second quarter and $21.1 billion for the first half of 2020, respectively, compared with $20.6 billion and $38.0 billion for the same periods in 2019. Aramco’s gearing ratio was 20.1% at the end of June, mainly reflecting the deferred consideration for the acquisition of Saudi Basic Industries Corp and the consolidation of SABIC’s net debt on to Aramco’s balance sheet.