BREAKING NEWS | Aramco’s Dividend Defence Are Triple-Locked

RIYADH | SAUDI ARABIA – Saudi Arabia has deployed its triple-bottomed dividend defence sooner than expected. The Saudi state energy giant is handing $18.75 billion to investors this quarter even though earnings plunged to little more than a third of the amount. It’s a contrast with rivals BP and Royal Dutch Shell, which both trimmed their payouts. But even if crude demand plunges again, the $1.8 trillion firm has multiple ways of ensuring rewards for shareholders.

Given that the price of West Texas Intermediate crude briefly turned negative in April, Aramco’s net income of $6.6 billion in the three months to June is a testament to its efficiency. On average, each barrel of oil cost it just $7.5 to produce, including $4.7 per unit of capital spending. Even at an average price of just $23, Aramco remains comfortably in the black.

A gradual recovery in crude prices is Aramco boss Amin Nasser’s first wish. The black stuff is now trading at $44 a barrel, and with gasoline and diesel demand in China almost back at pre-crisis levels, Goldaman Sachs analysts reckon in might finish the year as high as $63.

Even if prices remain subdued, however, Nasser has scope to ride out the storm. With just $6.1billion of free cash flow in the quarter, Aramco will effectively borrow nearly $13 billion to fund its payout. After this year’s takeover of petrochemicals group Saudi Basic Industries, net debt has jumped to $286 billion. But that’s still only a fifth of total funding, compared with 36% for BP. To hit a similar ratio, Aramco would have to fund its $75 billion annual dividend entirely out of debt three years in a row.

Public investors who bought 1.5% of Aramco’s shares last year have one more line of defence. The company has promised to pay their dividend, which costs $1.1. billion a year, ahead of its main shareholder, the Saudi government. Cutting its contribution to state coffers would doubtless cause conniptions in Riyadh but keep Aramco’s capital markets reputation intact. Little wonder Aramco shares are down just 6% this year, against BP’s 35% decline. For thick – skinned investors, that’s fitting reward for turning a blind eye to Saudi’s abysmal human rights record or Aramco’s impact on the climate.

G20 NEWS | Saudi Arabia Hosts Global Summit To Discuss Challenges Facing Entrepreneurs

President of the G20 Young Entrepreneurship Alliance (YES) Summit 2020 has affirmed that various initiatives have been prepared to be presented during meetings of G20 Leaders. In a press conference on Monday in Riyadh, Prince Fahd bin Mansour bin Nasser Bin Abdulaziz said the Kingdom will host the two-day YEA Virtual Summit on Oct.29. More … Continue reading G20 NEWS | Saudi Arabia Hosts Global Summit To Discuss Challenges Facing Entrepreneurs

BREAKING NEWS | France Warns Citizens To Be Cautious As Anger Seethes In Muslim World Over Cartoons

PARIS | FRANCE – France warned its citizens living or traveling in several Muslim-majority countries to take extra security precautions on Tuesday as anger surged over cartoons of the Prophet Mohammad. In a sign that some countries want to limit the fallout, Saudi Arabia condemned the cartoons but held back from echoing calls by other … Continue reading BREAKING NEWS | France Warns Citizens To Be Cautious As Anger Seethes In Muslim World Over Cartoons

ROYALS | Prince Harry Says Upbringing Blinded Him To Unconscious Racial Bias

Britain’s Prince Harry said it took him years to realize that unconscious racial bias existed and his eyes had been opened by spending time in his wife Meghan’s shoes. The prince spoke during a conversation about racism with Patrick Hutchinson, the Black activist who was photographed by Reuters carrying a white man to safety during … Continue reading ROYALS | Prince Harry Says Upbringing Blinded Him To Unconscious Racial Bias

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s