Saudi Aramco's Q1 crude output edges lower with more emphasis on downstream

Dubai — Saudi Aramco on Tuesday said its crude oil output fell to 9.8 million b/d during the coronavirus-challenged first quarter from 10.1 million b/d for the same period last year, as it began focusing more spending on its downstream sector.

The state-run oil giant, in its quarterly earnings report, said its net income declined 25% on the year to $16.7 billion in the quarter.

"Not surprisingly, our financial performance in the first three months of 2020 was impacted by the ongoing effects of the COVID-19 global pandemic as well as lower oil prices," CEO Amin Nasser said in a statement. "During the first quarter, we took steps to optimize our planned 2020 capital spending while working to identify opportunities to further improve operational productivity."

Capex plans for the year remain the same as earlier guidance, $25 billion-$30 billion. However, analysts told S&P Global Platts they expect Aramco to undertake further cost-cutting measures to mitigate damage from the ongoing market conditions.

The company said its upstream capex expenditures fell 2%, while downstream spending was up 27% on the year.

Aramco -- which listed a small percentage of its shares on December 11 on the Saudi domestic stock exchange Tadawul -- scored the world's biggest IPO of $29.4 billion, beating the previous record held by Chinese e-commerce giant Alibaba, which raised $25 billion in 2014.

As part of its pitch to investors during the share sale, Aramco pledged to issue a $75 billion dividend annually for five years. In keeping with this promise, the company declared a dividend of $18.75 billion for the first quarter.

Following the results announcement Tuesday, Saudi Aramco shares were trading at Riyal 30.90 on Tadawul. By contrast, its IPO price in December was Riyals 32 ($8.53), giving the company a valuation of $1.7 trillion in December.