Saudi Aramco gives its shareholders an additional $10bn bonus

The world’s largest oil company, despite a drop in profits due to the fall of crude prices, will give an additional $10 billion back to its shareholders during this quarter.

Saudi Aramco announced that it will begin paying out performance-linked shares sooner than expected in addition to its regular quarterly dividend of $19.5 billion. The first $9.9bn will be paid out to shareholders of the state-controlled company over the next three months.

Aramco has paid out despite its second-quarter profit falling by 38% to $30 billion. The drop was mainly due to a 30% decline in its average selling price of oil, which dropped from $113.2 a barrel during the same period in 2022. Prices were soaring after Russia’s invasion in Ukraine.

Saudi Aramco in Dhahran has the exclusive right to exploit Saudi Arabia’s vast reserves of oil, which provide roughly one tenth percent of global demand. Aramco produced 13.5 million barrels per day of oil in its total oil and natural gas production during the second quarter.

Saudi Arabia owns 90% of the company, and the Public Investment Fund controls about 8%. The fund invests Saudi Arabia’s oil money to diversify the economy and move away from oil. It has also made notable investments in sports such as football and golf and in Activision Blizzard and Uber.

Aramco raised $25.6 billion in its first public offering, which was widely hailed in Saudi Arabia. Aramco is one of the most valuable companies in the world, with a $2.1 trillion market capitalisation, just behind Apple and Microsoft.

Amin Nasser, Aramco’s Chief Executive, stated: “Our results are a reflection of our ability to adapt and endure through market cycles. We continue to show our ability to provide high-quality service to customers all over the world. We plan to distribute our first performance-linked quarterly dividend to our shareholders in the third quarter.”

Nasser stated that the group anticipates a recovery of the global economy as well as an ongoing rebound in air travel. These factors will mean “investments in projects for energy security” are necessary.

Aramco’s initial $9.9 billion payout was based on its 2022 record results, where it earned $161.1 billion as well as the results of the first half 2023.

Biraj Borkhataria is an analyst with RBC Capital Markets. He said: “An extra $10 billion per quarterly for the next six months is a substantial addition to the base dividend of $78 billion annually.”

Citi analysts said Aramco was able to pay the performance-linked payout six months earlier than anticipated and above previous forecasts due to its “robust” financial framework. They said that the “key headline” was an acceleration of dividend policy in light of tightness on oil markets and the global monetary policies.

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