Unlike its Nigerian counterpart bogged down by subsidies, and inefficient operation, Saudi Aramco has announced plans to reward shareholders with $18.8bn in the second quarter of 2022, capitalising on soaring crude prices following Russia’s invasion of Ukraine.
In its latest financial report, Saudi Aramco said it will maintain its dividend pay-out, currently one of the biggest in the world, committing to return another $18.8bn to shareholders in the second quarter of 2022, covered by a 68percent year-on-year increase in free cash flow to $30.6 billion dollars.
The payment is a vital source of revenue for the Saudi Arabian government, which still owns 94 percent of Saudi Aramco stock. It listed a sliver of the company’s shares in December 2019 and passed another 4 percent to the Saudi sovereign wealth fund this year.
The record quarter for Aramco comes amid a standout quarter for Big Oil, which is benefiting from a sharp rise in oil and gas prices. Aramco said its earnings were driven by higher crude oil prices, rising volumes sold and improved downstream margins.
“During the first quarter, our strategic downstream expansion progressed further in both Asia and Europe, and we continue to develop opportunities that complement our growth objectives,” Aramco President and CEO Amin Nasser said in the earnings release Sunday.
The company also said it would use $4 billion dollars in retained earnings to distribute bonus shares to shareholders — amounting to one share for every 10 shares held.
Aramco, which is at par with Apple Inc as the world’s most valuable companies, reported a net income of $39.5 billion for the quarter to March 31 from $21.7 billion a year earlier.
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The world’s top oil exporter was forecast to post a net income of $38.5 billion, according to a median estimate from 12 analysts provided by the company.
“Against the backdrop of increased volatility in global markets, we remain focused on helping meet the world’s demand for energy that is reliable, affordable and increasingly sustainable,” Nasser said.
Saudi Aramco’s first-quarter capital expenditure was $7.6bn. The state-backed group has said it expects capital spending of $40-50 bn in 2022, up from $31.9 bn last year, with further growth expected until around the middle of the decade.
“Energy security is vital and we are investing for the long term, expanding our oil and gas production capacity to meet anticipated demand growth,” Nasser added.
He also said he was optimistic about supporting customers and the transition to alternative energy sources in the future.
Gearing, which the company defines as a measure of the degree to which operations are financed by debt, dropped to 8 percent from 14.2 percent in December.
On the other hand, Aramco’s counterpart, Nigerian National Petroleum Corporation (NNPC) Limited, is not only unable to bail out Nigeria’s troubled economy but has also not been able to make remittances to the Federation Account due to its huge subsidy spending on petrol.
Figures obtained from the NNPC Limited showed that the oil firm spent N210.38bn, N219.78bn and N245.77bn as subsidies on petrol in January, February and March 2022 respectively, translating to N675.93bn during the three-month period.
