Even with oil prices having slumped, Saudi Aramco said it still intends to give at least $75bn (€67bn) to shareholders this year.
The world’s biggest company by market value, which listed in the Saudi Arabian capital of Riyadh in December, will pay the dividends on a quarterly basis, it said in its 2019 financial results released on Sunday.
Capital expenditure will be cut to between $25bn and $30bn this year, from $32.8bn in 2019.
Even so, the firm would still needs at least $100bn to meet its dividend and capital expenditure commitments alone, almost matching its 2019 payments.
The spread of the coronavirus and the oil-price war instigated by Saudi Arabia after Russia rejected co-ordinated production curbs has sent Brent crude prices spiraling.
They have fallen more than 50% since the end of December to around $32 a barrel, and some analysts predict they’ll drop further to below $10 a barrel.
Low oil prices would crimp Aramco’s earnings and hurt Saudi Arabia’s finances. The kingdom’s royalties dipped more than 12% in 2019 and it needs an oil price of $84 to balance this year’s budget.
Aramco’s shares lost 2.8% as of 11:25 a.m. in Riyadh on Monday to 27.90 riyals, a record low on a closing basis and 13% down from the listing price.
Aramco will be able to achieve a free cash flow of $63bn in 2020, according to Riyadh-based Al Rajhi Capital.
That calculation assumes the company pumps 10.7 million barrels per day and Brent crude prices average $30 a barrel.
Raising debt is an option as borrowing costs are low and the company is still within its debt-to-equity ratio of 5%-15%.
The yield on Aramco’s $3bn bond due in 2029 has climbed this month amid a global sell-off of emerging-market assets, but at 3.64% is barely higher than when the debt was issued in April.
The Saudi government could also cut its own dividend allocations while paying private shareholders, which own around 1.5% of the company, their portion of the $75bn.
Aramco’s profit slumped 21% in 2019 to 331 billion riyals (€79bn) because of lower oil prices and production. Drone and missile attacks on two major facilities in September temporarily slashed its supply by more than half.