Saudi Aramco’s profit fell 44% in 2020

Saudi Aramco, Saudi Arabia’s national oil company, said Sunday that its net income last year had fallen by 44%, to $49 billion, as lower oil prices stemming from the pandemic cut into earnings.

Company CEO Amin Nasser described 2020 in a statement accompanying the earnings data as “one of the most challenging years in recent history.”

But Aramco, the world’s largest oil producer, said it would stick by a pledge to pay a $75 billion dividend. Nearly all of the payment will go to the Saudi government, which owns about 98% of the company.

The company was listed on the local Tadawul exchange in 2019 in the largest valuation for an initial public offering.

Despite the listing, the Saudi government has retained its sway over the company’s oil production policies, leading to a roller-coaster year. On orders from the Saudi government, the company ramped up oil output last spring as it pursued a price war with Russia. The surge led the company to hit a record-production level of 12.1 million barrels a day in April and also contributed to a glut of oil and a sharp fall in global prices.

More recently, Aramco has been throttling back production under an agreement with other members of OPEC, as well as Russia and some other producers, a group called OPEC Plus. In January, Saudi Arabia said it would cut an additional 1 million barrels a day below the quota agreed with OPEC Plus, a policy that it is continuing. Average production for 2020 was 9.2 million barrels a day.

The data released Sunday showed that Aramco is paying out more money in dividends than it is earning from oil activities. Free cash flow, a measure of earnings produced after expenses, was also $49 billion, meaning, in effect, the company was borrowing $26 billion to pay shareholders.

Sunday's earnings statement was limited to a few highlights. Saudi Aramco is expected to provide more details during a call with financial analysts Monday.