State-owned oil corporation Saudi Aramco has reported a 50% collapse net income during the first half of its financial year on Sunday, highlighting a market-wide decline and of the world economy as the coronavirus pandemic continues to sweep the globe.
The Saudi Arabian government property revealed in a release that its net income dropped $23.2 billion during the first six months of 2020, a drop by half compared to the $46.9 billion gained over the same period in the preceding year.
Total free cash flow amounted to $21.1 billion for the first half, a significant reduction from $38 billion in 2019.
An Aramco chief acknowledged that the financial results for the second quarter show that global energy markets are experiencing their largest shock in decades.
“Strong headwinds from reduced demand and lower oil prices are reflected in our second-quarter results”, Aramco President and CEO Amin Nasser said in the release.
“The worst is likely behind us”, Nasser said to the earnings call.
Nasser reiterated that he is "fairly positive" about the long term demand for oil.
Oil prices became negative in April, and despite a steadying market, prices for Brent oil are still 30 percent lower.
HISTORIC: Oil prices went negative today for the first time in world history!— Jim Harris (@JimHarris) April 21, 2020
People aren't driving. Oil demand for #transportation has collapsed, storage is full. By July the price of oil will be ZERO said an #energy trader on @CNBC#EarthDay2020#EarthDay#ClimateCrisis pic.twitter.com/LMu9yk7fQ7
The largest crude producer also kept its second-quarter dividend of $18.75 billion, announcing that its payment would be paid in the third quarter. Similarly, a first-quarter dividend of the same amount was paid in the previous quarter.
“This demonstrates Aramco’s agility, strength and resilience across market cycles”, Nasser added, who made the payment despite calls for it to be scaled back.
“Our intention is to pay $75 billion dollars, subject to board approval and depending on market conditions”, Nasser said.
He said that the company has a "strong balance sheet" and "a lot of flexible capital on our hands”.
Aramco's competitors BP and Royal Dutch Shell have slashed dividends in response to the effects of the coronavirus pandemic and shocks to the sector.
New earnings numbers follow Aramco losing its position as the world’s largest listed company to Apple last week, despite shares being largely unaffected.
Energy firms in the US and Europe have had to reduce the value of oil assets and reassess price assumptions in order to tackle troubled shifting demands and global economic shocks.
Other companies in the US shale industry like Chesapeake's Energy have collapsed, under pressure from debt and unable to weather the current economic terrain.