Aramco Expected to Post Strong Earnings Report

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Saudi Aramco is expected to report second-quarter earnings roughly four times higher than in the same period of last year, when the Covid-19 pandemic slammed the global economy and crushed oil prices. Analysts in the kingdom estimate Aramco's net income for the quarter to land in a range of around $23 billion-$26 billion, with the average of 15 estimates working out at $24.7 billion, a financial source said. That would compare with $6.6 billion in last year's second quarter and would equal the $24.7 billion reported in the pre-pandemic second quarter of 2019. "The pickup in economic activity around the world and the improvement in oil prices -- both because of better demand and because of the Opec-plus deal -- is helping oil companies rebound again," said a Saudi Arabia-based analyst. Aramco, which has been listed on the Saudi stock exchange since December 2019, is scheduled to report its earnings on Sunday and has also scheduled a press conference. There has been some talk in the kingdom that Aramco might raise dividend payments to minority shareholders -- who hold slightly less than 2% of the shares -- in response to the rebound in profits. However, sources close to the company say that is unlikely, given that Aramco's financial commitments have not gotten any lighter over the last year or two. Energy Intelligence understands that the company is still looking to monetize assets to raise funds for high-priority investment projects and to support the government's economic diversification plans. As part of that effort Aramco raised $12.4 billion in cash earlier this year from a pipeline leasing deal with EIG Global Energy Partners (IOD Apr.13'21). One banking source said the company may undertake a public sale and listing of shares in one of its business units to raise funds. Aramco has previously announced plans to ramp up capital spending this year after cuts in 2020, while maintaining its total dividend payments at $75 billion a year -- most of which goes to the Saudi government (IOD Mar.22'21). Capital spending for 2021 is set to rise to around $35 billion from $27 billion in 2020 and $33 billion in 2019. But that remains below pre-pandemic guidance of $40 billion-$45 billion. Amena Bakr, Dubai

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