Saudi Aramco, the world’s largest oil producer, said it remains committed to paying its quarterly dividend, amounting to $18.75 billion every three months, despite a sharp drop in profit driven by lower crude prices.
Aramco’s dividend commitment has been a bellwether for energy investors—a large, recurring payout the company promised to make in a bid to lure investors to its long-delayed initial public offering last year. Other big oil companies, such as Royal Dutch Shell PLC and BP PLC, have cut their dividends in recent months to preserve cash, amid sharply falling oil demand and prices thanks to the pandemic.
The Saudi Arabia Oil Co., as it is officially called, said Tuesday that free cash flow came in at $12.4 billion in the quarter, significantly below the dividend payout. Aramco didn’t break out how it would make up the shortfall, but the company’s debt ticked higher in the quarter.
Aramco said its net debt as a percentage of total market value, its preferred metric for borrowing, rose to 21.8% at the end of the quarter, up from 20% in the quarter ended June 30.
The state oil giant is reviewing plans to expand at home and abroad in the face of sharply lower oil prices and the heavy dividend burden, The Wall Street Journal previously reported.
