Fitch affirms Saudi Aramco’s rating at “A” with stable outlook

Fitch Ratings affirmed Saudi Aramco’s Long-Term Issuer Default Rating (IDR) at "A" with a stable outlook.

The credit ratings agency said in a statement that Saudi Aramco's Standalone Credit Profile (SCP) was assessed at "AA+", indicating that its business profile is characterized by large-scale production, vast reserves, low output costs, and expansion into downstream and petrochemicals.

It also projected that Saudi Aramco's funds from operations (FFO) net leverage will amount to 1.0x by the end of 2021, as the rise is driven by a combination of the company’s acquisition of SABIC, dividend distributions, and low oil prices.

Due to the oil giant’s strong business profile, its lifting costs ($2.8/oil barrel equivalent in 2019) and upstream capex ($4.7/boe) are much lower than those of international integrated firms and some national oil companies - a significant advantage during volatile oil prices.

Fitch pointed out some assumptions adopted in the evaluation, as follows:

-Brent crude oil price assumptions in line with Fitch's base-case price deck – 2020: $41/bbl, 2021: $45/bbl, 2022: $50/bbl, 2023 and thereafter: $53/bbl.

-Refining margins of $2/bbl in 2020, reverting to $5.5/bbl until 2023.

-Upstream production ranging between 12 million barrels of oil equivalent per day (mmboepd) and 13 mmboepd for the next four years.

-Refining throughput of 3 million bpd for the next four years.

-Annual dividend payout of $75 billion.

-Capex of $25 billion to $27.5 billion per annum for the next four years.