Aramco $75 Billion Payout No Problem as Oil Recovers, BofA Says - Bloomberg

Aramco $75 Billion Payout No Problem as Oil Recovers, BofA Says - Bloomberg

The rally in oil prices has all but expunged any likelihood that Saudi Aramco will fail to meet its $75 billion dividend payout next year, according to Bank of America Corp.

Far from missing the payment, the company may even boost it in 2022 as it increases production and benchmark crude prices head back toward $70 a barrel, the bank said.

Aramco’s pledge to pay an annual $75 billion to shareholders during its first five years as a publicly traded company was thrown into doubt last year as oil tumbled amid the Covid-19 pandemic, prompting the company to slash spending and increase borrowing. It also put an additional strain on Saudi Arabia’s finances. The government, which owns 98% of Aramco after selling shares in a December 2019 initial public offering, has depended on the dividend to help plug its budget deficit.

“Aramco would be well-placed to implement its higher dividend distribution guidance given during the IPO and even increase dividends beyond its minimum $75 billion pledge,” Bank of America analysts including Houston-based Doug Leggate and Karen Kostanian in Moscow said in a report. “Aramco is one of the few companies globally that can substantially boost output without committing additional capex.”