(Bloomberg) — Saudi Aramco’s profit soared in the first quarter following a recovery in global oil and gas markets, though free cash flow remained too low to fully cover dividend payments.The world’s biggest energy firm kept its quarterly payout, almost all of which goes to the Saudi Arabian government, at $18.75 billion. The money is vital for the kingdom as it tries to narrow a budget deficit that ballooned last year, with the coronavirus pandemic sinking oil prices and shutting down local businesses.The bumper results follow those last week of Big Oil firms such as Royal Dutch Shell Plc and BP Plc, whose earnings are back to pre-pandemic levels as major economies reopen and more people are vaccinated. Brent crude has gained 31% this year to more than $68 a barrel.“There are more reasons to be optimistic that better days are coming,” Chief Executive Officer Amin Nasser said in a statement Tuesday. “The momentum provided by the global economic recovery has strengthened energy markets.”Aramco’s adjusted net income for the quarter was 78.6 billion riyals ($21 billion), up 24% year-on-year and higher than analysts’ average estimate of roughly $19 billion. Free cash flow was $18.3 billion. The firm expects capital expenditure to be $35 billion in 2021, a figure unchanged from what it said in March.The company, based in Dhahran in eastern Saudi Arabia, has seen its debt load spike after earnings collapsed with the spread of the pandemic and it opted to maintain the $75 billion annual dividend.Gearing UnchangedGearing, a measure of net debt to equity, increased from minus 5% in early 2020 to 23% by the end of the year as Aramco borrowed to fund the dividend and buy a $69 billion stake in chemicals maker Saudi Basic Industries Corp. from the kingdom’s sovereign wealth fund. The debt ratio remained the same at the end of March, but may fall in this quarter because a U.S.-led group agreed to invest $12.4 billion in Aramco’s oil pipelines. The Saudi company is also considering selling a stake linked to its natural-gas pipelines.Aramco’s downstream business, which now includes contributions from Sabic, swung to a profit as higher commodity prices boosted margins for refined products such as transport fuels and plastics. Earnings before interest and tax for the unit were $4.4 billion, compared to a loss of $5 billion a year earlier.The downstream arm, which Aramco wants to expand, made full-year losses in 2019 and 2020.The upstream business, mainly consisting of oil and gas production, saw earnings before interest and tax rise 6.4% to $40 billion. While it was boosted by higher energy prices, Saudi Arabia’s OPEC commitments meant Aramco reduced crude output during the quarter to an average of 8.6 million barrels a day. That’s the lowest in a decade.The Organization of Petroleum Exporting Countries and its allies — a 23-nation grouping known as OPEC+ — began unprecedented supply cuts last year to bolster prices. Saudi Arabia, the cartel’s de facto leader along with Russia, is implementing extra curbs on top of what OPEC requires, though it plans to end them by July.The Saudi government may sell more shares in Aramco over the next two years as it looks to transfer cash to the sovereign wealth fund, which aims to become one of the world’s largest with over $2 trillion of assets.The kingdom is in talks to divest a 1% stake, worth around $19 billion, to a “leading” energy company, Crown Prince Mohammed Bin Salman said last month. It may also sell some more Aramco shares on the local stock exchange, he said. The government raised almost $30 billion in 2019 when it listed 2% of the firm on the local bourse.Aramco’s shares rose 0.4% to 35.55 riyals at 11:22 a.m. in Riyadh, extending their gain this year to 1.6%.(Updates throughout.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.