Saudi Aramco maintained its pledge to make good on its dividend payments, saying Thursday that it would mobilize cash and debt to fulfill the $18.75 billion payouts for the first quarter of this year despite taking a hit from the coronavirus pandemic and lower oil prices.
“It will be a combination of both,” Aramco CEO Amin Nasser told press during a call, referring to both using the firm’s cash and tapping debt markets.
“We would like to use our free cash definitely most of time, but other debt instruments from banks or bonds are also available for us as we have a strong balance sheet.”
The state oil giant, the world’s largest single producer of crude, saw a 25% hit to its net income in the first quarter as oil prices plunged amid global lockdowns while countries tried to fight the spread of the virus.
“The worst is definitely behind us,” the CEO added, even amid reports that the company, which employs some 800,000 people, is shedding hundreds of jobs. The report from Bloomberg, citing multiple unnamed sources, was not confirmed by Aramco.
“Aramco is adapting to the highly complex and rapidly changing business environment caused by the Covid-19 pandemic … We constantly review and revisit our operating expenditures where necessary,” the company said in a statement given to CNBC concerning its employees.
“We are not providing information regarding the details of any action at this time, but all our actions are designed to provide us more agility, resilience and competitiveness, with a focus on long-term growth.”
The months since the pandemic set in have seen the worst financial downturn for Saudi Arabia in decades, with the double blow of the coronavirus and low oil prices forcing it to enact austerity measures including cutting public spending and tripling its value-added tax.
The kingdom has led OPEC and its allies in a historic production cutting deal in an effort to boost prices, which have seen a substantial recovery since prices crashed in March. The OPEC kingpin has dropped its production to its lowest levels in more than 20 years.
International benchmark Brent crude was trading at $41.40 per barrel on Thursday at noon ET, down 34% year to date but up 114% since hitting a two-decade nadir in April.