Saudi Arabian state oil big Aramco mentioned on Sunday it expects to chop capital expenditure after it reported a 44.four p.c stoop in 2020 web revenue, hit by decrease crude oil costs and gross sales because the coronavirus pandemic depressed demand.
The firm lowered its steerage for spending to round $35 billion from a spread of $40 billion to $45 billion beforehand, in accordance with a disclosure to the Tadawul bourse.
Aramco declared a dividend of $75 billion for 2020 and signalled it was seeing a 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,” mentioned Hasnain Malik, head of fairness analysis at Tellimer.
Aramco’s shares have been marginally down 0.6 p.c after the corporate printed its outcomes.
Through most of final yr, Aramco’s shares held up effectively in opposition to international oil firms in rising and developed markets, however underperformed in opposition to the corporate’s friends when oil costs recovered.
Net revenue fell to 183.76 billion riyals ($49.00 billion) for the yr that ended Dec. 31, from 330.69 billion riyals a yr earlier.
Analysts had anticipated a web revenue of 186.1 billion riyals in 2020, in accordance with the imply 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 Chief Executive Amin Nasser mentioned within the assertion.
Aramco’s 44.four p.c drop in 2020 revenue compares with a 30.7 p.c decline in oil revenues final yr for the Saudi authorities, with regular dividends to the federal government regardless of the decrease oil costs contributing to Aramco bearing the brunt of the disaster greater than the treasury, mentioned Monica Malik, chief economist at Abu Dhabi Commercial Bank.
Earnings within the high western oil and fuel firms together with Royal Dutch Shell and BP dropped to multi-year lows in 2020. Exxon Mobil, the biggest U.S. vitality firm, posted its first annual loss.
Brent crude final traded at $64.53 a barrel on Friday, up from $51.80 on Dec. 31, 2020. Oil costs misplaced simply over a fifth of their worth in 2020.
Aramco mentioned free money movement amounted to $49 billion final yr, down from $78.three billion in 2019.
The firm has a $5 billion cost in the direction of the acquisition of a stake in Saudi Basic Industries Corp developing this April, in accordance with an HSBC report in February.
