Aramco will introduce an additional dividend, potentially boosting payouts for Saudi Arabia’s government by billions of dollars just as weaker oil prices edge the state’s budget into a deficit.
The stock surged as much as 7.2% in early trading, before trimming gains to 3.7%, still taking it to the highest level since September.
The new dividend will be “in the amount of 50%-70%” of Saudi Aramco’s annual free cash flow, net of the base payout and other amounts including external investments, the world’s largest energy company said on Tuesday, shortly before it released earnings. The amount will be “determined with the annual results.”
The state-controlled company made a net profit of $31.9 billion for the first quarter, slightly below analysts’ expectations and down 19% from a year earlier. Free cashflow was $30.9 billion and the dividend was maintained at $19.5 billion.
The Saudi Arabian government owns 90% of Aramco’s stock directly, with a further 8% held by the sovereign wealth fund. The shares have climbed 16% this year in Riyadh, outperforming those of Western Big Oil rivals such as Shell Plc and Exxon Mobil Corp.
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