Saudi Aramco has revealed plans to pay a $75bn dividend to investors in 2020, as it forges ahead with preparations for an initial public offering (IPO).
A public float has been touted for some time, with a debut bond issued by the state-owned Saudi oil giant in April fanning the flames of speculation the firm was gearing up to go public.
The dividend announcement is considered an effort to boost investor interest ahead of a future public offering, with the company still hoping to secure a market valuation as high as $2tn.
A corporate overview on the Saudi Aramco website outlines plans for the $75bn shareholder dividend in 2020, as well as a “progressive growing dividend on a sustainable basis at board discretion”.
Saudi Aramco added in the statement: “For the years 2020 to 2024, if annual dividends declared would have been less than $75bn, dividends to non-government shareholders are intended to be prioritised so that they receive their pro-rata share of a $75bn equivalent dividend.
“In such case, the government will receive the remaining amount of dividend.”
Aside from the dividend, Saudi Aramco also announced a change to its royalty payments scheme on Brent crude oil – with the marginal rate amended to 15% for prices up to $70 per barrel, 45% between $70 and $100, and 80% if the price rises above $100.
Saudi Aramco IPO announcement follows debut bond
Saudi Aramco was revealed as the world’s most profitable company on 1 April when it released its debut bond, and has been expanding ever since with a flurry of acquisitions.
The oil and gas giant generated a gargantuan $111bn in profit last year, comfortably topping second-placed Apple, which became the first company to be valued at more than $1tn in August.
But drone strikes on its Abqaiq and Khurais oil facilities on 14 September have disrupted the plans for an IPO – initially tabled for 2020 or 2021.
Chairman Yassir al-Rumayyan has said publicly that the stock market listing will still go ahead within one year – although Reuters has reported the incident is likely to delay the float while the firm works to rebuild confidence and restore production.
Following the attacks, Saudi Arabia’s energy minister was quick to assure traders his country’s oil production would be back to normal by the end of September, while Prince Abdulaziz bin Salman said half the production lost as a result had already been recovered.
