Saudi Aramco on Sunday said it plans to cut capital spending in the wake of the coronavirus outbreak, and also posted a plunge in profit for last year, missing forecasts in its first earnings announcement as a listed company.
Saudi Arabia’s decision last year to float shares in its state oil company – the most profitable company in the world – was one of the central elements in Crown Prince Mohammed bin Salman’s program for economic and political reform.
The record-setting IPO was touted as making the world’s biggest energy exporter more professional and transparent. The 21% decline in net profit for last year means it fell short of analysts’ forecasts for the period that culminated in the share sale, months before the coronavirus pandemic became a factor for oil prices.
In recent weeks, Riyadh has announced that it is ramping up production in an oil price war with Russia that has sent global prices plunging and contributed to the coronavirus rout on international financial markets.
The company said it expects capital spending for 2020 to be between $25 billion and $30 billion in light of current market conditions and recent commodity price volatility, compared to $32.8 billion in 2019.
Aramco has already taken steps to “rationalize” its planned 2020 capital spending, CEO Amin Nasser said in a statement.
“The recent COVID-19 outbreak and its rapid spread illustrate the importance of agility and adaptability in an ever-changing global landscape,” he said.
Aramco listed its shares in Riyadh in December in a record $29.4 billion initial public offering that valued it at $1.7 trillion. Its shares fell below the IPO price last week for the first time, as oil prices crashed after the collapse of an output deal between OPEC and non-OPEC members.—Reuters