It was clear to everybody that the recent Saudi started oil price war would finish with much horrible failure for the Saudi oil producers, just like the past 2014-2016 effort did, which was also started for the same reasons.
For Crown MbS (Muhammad bin Salman), the mastermind and backbone of oil price conflicts – the political and economic issues that Saudi Arabia now face to come a distant second to preserving anything he believes is left of his reputation, along with most obvious people demonstration of the internationally rejected omni-shambolic IPO (Initial Public Offering) for Saudi Aramco, a hydrocarbons giant. Resultantly, in order to stand with one of the attractions needed to inveigle someone to purchase the shares, in the triple locked guaranteed dividend payout, ups, and downs cut to key plans for Saudi Arabia are currently being declared.
Now Aramco obliged to give above 18.75 USD
Instead of a fifty percent increase in the net profit of Aramco for the 1st half of the year, an outcome of the Saudi-directed oil price war started at the time when the demand for the oil was already very low due to the pandemic Coronavirus. Moreover, the firm is now obliged to give more than 18.75 billion USD in that quarter alone to those who purchased Aramco shares during the Initial Public Offering. This payment obligation (which is seventy-five billion dollars for the whole year) will have to be paid via budget cuts over and above the fifteen billion USD in Aramco’s yearly capital spending indicated by the chief executive officer of Aramco, Amin Nasser, just after the profit amount.
Furthermore, this would take the total decline from about forty billion USD to about 25 billion dollars. Plus, many reports and studies have mentioned that even this 25-billion-dollar figure would be decreased to another 5 billion dollars, acquiring the whole capital spending in this year from 25 billion dollars to 20 billion dollars.
So whatever these cuts, it keeps a stark fact that 2 dividends combined for the 1st two quarters of the year far outstrip the total free cash flow of Aramco of 21.1 billion USD for the same passage of time.