Saudi Aramco’s shares climbed after the government announced the oil giant could reduce its payouts to the state and redirect some of the cash to the local economy.
While the details were unclear, the move could alleviate pressure on Aramco’s balance sheet and free up some of the $73.5 billion of annual dividends it makes to the government, which owns 98% of the company. Payouts to minority shareholders, who get roughly $1.5 billion, will be maintained, the government said.
The world’s largest oil company has seen its debt levels soar in the last year due to the coronavirus-triggered collapse in energy prices and its $69 billion acquisition of chemicals maker Saudi Basic Industries Corp.
The Dhahran-based firm had to cut spending and borrow more to pay the $75 billion dividend in 2020. Free cash flow fell almost 40% to $49 billion, substantially below the level of the dividend.
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