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Saudi Aramco beats estimates with 30% Hike in Q1 Profit

Saudi Aramco reported a 30% jump in net income on Tuesday in a sign of continued recovery from the previous year’s oil market crash that saw full-year earnings for the state firm slashed in half. The company added that the net income rose to $21.7 billion in the first three months of the year, up from $16.6 billion in the same period last year.

This report beats some analysts’ estimates of $17.24 billion, despite lower oil production in February and March. The figure nears the firm’s net income level in the first quarter of 2019, which was $22.2 billion. The free cash flow in the first quarter of 2021 was $18.3 billion, up from $15 billion over the same period last year. Saudi Aramco oil producer also maintained its dividend, with $18.8 billion due to be paid out in both the first and second quarter.

Ellen Wald, president of Transversal Consulting and author of the book “Saudi, Inc. said that Aramco was forced to cut its capital expenditure last year as the pandemic hammered oil prices, and it continues to explore plans to sell assets to raise funds. The company cannot be ignored that the massive dividend commitment and the need to fund the Saudi government budget are weights on the company. That doesn’t mean Aramco isn’t well positioned, but no other major oil company has to deal with these burdens.

Saudi Aramco has been in talks to raise cash from other asset sales as well, including the $12.4 billion sales of its pipeline unit that could free up cash to pay down debt. In mid-April, the company penned a deal to sell a 49% stake in its pipelines to EIG Global Energy Partners, a U.S.-led consortium.

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