Saudi Aramco, the world’s top oil exporting company, on Tuesday reported a 25 percent fall in first-quarter net profit to 62.48 billion riyals or $16.64 billion after zakat and tax for the quarter to March 31 from 83.29 billion riyals a year earlier.
The state oil giant’s cashflow remained strong compared to other oil majors, reflecting its strong balance sheet and resilience.
Aramco said its planned acquisition of a 70 percent equity stake in Saudi petrochemical maker SABIC is on track to close in the second quarter. Sources told Reuters this week that the $70 billion deal was likely to be restructured.
Aramco’s cash flows from operating activities, stood at $22.4 billion in the first quarter, compared to $24.5 billion in the same period of 2019. It said free cash flow was $15 billion, compared to $17.4 billion in Q1 2019.
In comparison Royal Dutch Shell reported cash flows of just below $15 billion in the first quarter of this year, the highest among the Western oil majors.
Aramco had kept its oil output at around 9.8 million barrels per day during the first three months of the year under the OPEC+ supply cut pact, before opening the oil taps in April after the collapse of earlier supply cut talks in early March.
Brent crude prices fell 65.6 percent in the first quarter, before OPEC+ producers agreed to cut oil supply by a record 9.7 million barrel per day from May to help shore up prices and curb oversupply.
On Monday, Saudi Arabia said it would deepen output cuts in June beyond its quota under the latest OPEC+ deal to help drain a supply glut, prompting a rise in crude prices, Reuters reported.
Aramco said its results reflected lower oil prices, declining refining and chemicals margins and “inventory re-measurement losses”.
“Looking ahead to the remainder of 2020, we expect the impact of the COVID-19 pandemic on global energy demand and oil prices to weigh on our earnings,” Aramco’s CEO Amin Nasser said.
“We continue to reinforce the business during this period by reducing our capex and driving operational excellence. Longer term we remain confident that demand for energy will rebound as global economies recover.”
Aramco said it continues to expect capital spending for 2020 to be between $25 billion and $30 billion. Capital expenditures for 2021 and beyond remain under review. Capital expenditures in the first quarter were $7.4 billion, compared to $7.2 billion for the same period in 2019, Aramco said.