Saudi Aramco reports 21% drop in 2019 profit on lower prices

Dubai — Saudi Aramco, the world's largest crude oil exporter, said Sunday it's reduced its estimated 2020 capital expenditures due to "current market conditions" and said its 2019 profit fell 21% to $88.2 billion due to lower oil prices and reduced output.

The profit drop from $111.1 billion in 2018 was "primarily due to lower crude oil prices and production volumes, coupled with declining refining and chemicals margins, and a $1.6 billion impairment associated with Sadara Chemical," Aramco said in a statement. A webcast is scheduled for Monday at 3pm local time (12:00 GMT).

Aramco sold shares to the public last year in the world's largest initial public offering as part of the kingdom's Vision 2030 to diversify its energy-dependent economy. The company was able to restore output within 11 days after attacks on two facilities in September. It's now leading the Saudi-led oil price war after OPEC and allies failed to agree on further production cuts proposed on account of the coronavirus pandemic, or COVID-19.

"The recent COVID-19 outbreak and its rapid spread illustrate the importance of agility and adaptability in an ever-changing global landscape," Aramco CEO Amin Nasser said in the statement. "This is central to Saudi Aramco's strategy and we will ensure that we maintain the strength of our operations and our finances. In fact, we have already taken steps to rationalize our planned 2020 capital spending."

Aramco shares dropped 1.1% to Riyals 28.70 at the close of trading on the Tadawul exchange.

Output lower

Production of crude oil and condensate averaged 13.2 million boe/d last year, down from 13.6 million boe/d in 2018, including 10.3 million b/d of crude oil. Aramco's reserves for 2019 totaled 258.6 billion boe, compared with 256.9 billion boe in 2018.

Free cash flow fell to $78.3 billion from $85.8 billion with total dividend payments to shareholders at $73.2 billion in 2019, it said. For 2020, Aramco intends to declare cash dividends of at least $75.0 billion, it said.

Capital expenditure will be $25 billion to $30 billion this year compared with $32.8 billion in 2019, the company said.

(Updates with closing share price.)