Divyam Dewan Nathan D’souza Raj Sharma Rishabh Vig

INSAAF Fund
We are Socially Responsible & Promise a Good Return on Investment

Senior Manager Investor

Dilemma Background Analysis

Conclusion
Background
 Brief Timeline

First tanker with Saudi government

Petroleum exported purchases Aramco

1935 1968 1986

1939 1980

The first test well

Aramco becomes the
is drilled Major environmental
World’s Largest
initiatives begin
Oil Producer

Dilemma Background Analysis

Conclusion
 Cyber-Attack
On 30,000 Killing of
Workstations Jamal Khashoggi

2001 2015 2019

2012 2018

2019
Pledge to reduce Drone Attack
Launch -
greenhouse On Aramco
“Environmental
Master Plan”
gas intensity Oil Rigs IPO

Dilemma Background Analysis

Conclusion
 Initial Public Offering

Expectations Reality

Raise $100 Billion Raised $25 Billion

$ 2 Trillion Valuation $ 1.7 Trillion Valuation
Sell 5% Stake Sold 1.5% Stake

Dilemma Background Analysis

Conclusion
6
 Vibrant Thriving
Society Economy

Red Sea Project NEOM

Ambitious
Nation

Qiddiya
Dilemma Background Analysis
Conclusion
 Shareholding Pattern
Govt Instituitions
Public & Private 13%
Funds
26%

Saudi Companies
37%
$
Non-Saudi
Investors
23%

Dilemma Background Analysis

Conclusion
Financial
Analysis
 Revenue

Change in 1
Oil Prices Change in
Oil Prices

Dilemma Background Analysis Conclusion

 Peer Comparison
Recent Price Reserves (bil of
Company ($)
2019 EPS Current P/E Dividend Yield (%) Market Value (bil)
barrels)

Saudi Aramco 8.97 0.46 19.5 5.0 1,750 256.9

British Petroleum 35.36 1.18 29.97 7.13 119.94 10.7

Chevron 109.01 1.54 70.79 4.73 206.12 12.1

Exxon Mobil 59.13 3.36 17.60 5.89 250.19 24.3

Royal Dutch Shell 49.17 3.9 12.61 7.65 193.87 11.6

Total 48 4.17 11.51 6.02 124.89 12.1

Dilemma Background Analysis Conclusion

 Revenue
400

300

200
An increase of 163% across 3 years
100

0
0 2016 2017 2018

EBITDA
300

225

150
An increase of 138% across 3 years
75

0
0 2016 2017 2018

Dilemma Background Analysis Conclusion

 Net Income
120

90

60 An increase of 753% across 3 years

30

0
0 2016 2017 2018

Free Cash Flow

112.5

90

67.5
An increase of 4200% across 3 years
45

22.5

0
0 2016 2017 2018

Dilemma Background Analysis Conclusion

 Ratios
2018 2017 Change

Net Profit Margin

Return on Equity
Profitability
Operating Profit Margin Ratios

Return on Capital Employed

Return on Assets

Dilemma Background Analysis Conclusion

 2018 2017 Change

Liquidity
Current Ratio
Ratios

Debt/Equity

Solvency
Leverage Ratio Ratios

Interest Coverage Ratio

Dilemma Background Analysis Conclusion

 2018 2017 Change

Fixed Asset Turnover

Debtors Turnover
Activity
Ratios
Creditors Turnover

Inventory Turnover

Dilemma Background Analysis Conclusion

 Geopolitical Risk

1.7 % Drop

36.80 SAR 12th Dec 2019

An 8.2% Drop 33.80 SAR 23rd Feb 2020

Dilemma Background Analysis Conclusion

No Growth MAX

Dilemma Background Analysis Conclusion

 Sustainable Future

Dilemma Background Analysis Conclusion

 Stock Xchange

Dilemma Background Analysis Conclusion

 OPEC Saudi Aramco

Requires maintenance
Controls Amount of Current MSC is
of Minimum Daily Barrel
Oil production Production
12 MMB/day

Dilemma Background Analysis Conclusion

 Controllability

Taxation Cuts Dividend Cuts

Since the government is a majority
Tax rate slashed from 80% to 50% saving
Owner of Aramco, they can cut dividends
Aramco $100 Billion in taxes
whenever needed.

Dilemma Background Analysis Conclusion

 Royalty Agreement

Dilemma Background Analysis Conclusion

 Low Cost
Base

Strengths

Less Carbon Attractive

Intensive Ops Dividend Yield

Dilemma Background Analysis Conclusion

ESG Analysis
Present Energy Scenario

Dilemma Background Analysis Conclusion

 Promotion of Bio-
diversity

Shaybah Wildlife Artificial Coral Desert Mangrove

Sanctuary Reef Plantation Plantation

Dilemma Background Analysis Conclusion

 National Endowment Climate Initiatives

1. 100 ft 2.

Clean Oil
3. Emission to Value
Energy Efficiency
Co-Generation Systems

Flare Gas Recovery

Dilemma Background Analysis Conclusion

 Carbon Emission Per Barrel
Exxon 87
Suncor 82
Gazprom 65
Petrobras 64
Chevron 59
Total 54
Shell 53
BP 50
Roseneft 36
Aramco 26
Equinor 21
0 22.5 45 67.5 90 112.5

Dilemma Background Analysis Conclusion

Source : https://www.wsj.com/articles/for-ethical-investors-oil-isnt-aramcos-only-problem-11573731900
 Daily Production

3.8 Million/day 13.6 Million/day 3.7 Million/day

Dilemma Background Analysis Conclusion

 CO2
Saudi Aramco
59,262

Chevron Gazprom
43,345 43,230

Exxon NIL Co.

41,904 35,658

Dilemma Background Analysis Conclusion

 Microsoft

Carbon Negative Reverse Emissions

By 2030 By 2050

Pledged
$1 Billion

Dilemma Background Analysis Conclusion

 Health Care

& =

70,000+
Employees

Dilemma Background Analysis Conclusion

 Workforce
Diversity

71,000 Employees 70,000 Employees 82,000 Employees

20% Women Recruits 5% Women Recruits 46% Women Recruits

Dilemma Background Analysis Conclusion

 Corporate Governance

Board of Directors Board of Directors

9 Independant 5 Independant 5 Ministers

10 BODs
Government Ownership
98.5%

Dilemma Background Analysis Conclusion

 The Downstream Strategy

Acquired a 70% equity stake in Chemical Manufacturer SABIC

Acquired a 17% stake expected to close in 2020

Acquiring a 20% stake in Reliance Chemicals

Dilemma Background Analysis Conclusion

 $ 100 Million GHG
13 Companies
Pledge Solutions

Methane Reduction Carbon Dioxide Reduction Recycling Carbon Dioxide

Dilemma Background Analysis Conclusion

Conclusion
 The World’s Most Profitable Firm

Planet Profit Policy

$ 111 Billion
Dilemma Background Analysis Conclusion
 Win-Win Strategy!

S.NO Funds 1 Year Return 3 Year Return 5 Year Return

1. Brown Advisory Sustainable Growth 9.3% 13.0% 12.6%

2. Calvert Equity 11.3% 11.4% 10.8%

3. Vanguard FTSE Social Index 5.6% 11.2% 11.0%

4. Calvert US Large Cap Core Responsible fund 4.7% 9.7% 9.8%

5. Green Century Equity 3.8% 9.8% 9.4%

Dilemma Background Analysis Conclusion

Questions?
 Appendix 1
Data for Saudi Aramco’s Environmental , Social and Governance Contributions

1. Saudi Aramco social and environmental initiatives: https://www.saudiaramco.com/, https://oilandgasclimateinitiative.com/

2. Data on Saudi Arabia’s carbon emissions:
https://www.bloomberg.com/news/articles/2019-12-03/saudi-aramco-pitches-itself-as-the-low-carbon-investors-choice
3. Data on Saudi Aramco corporate governance and per barrel emission :
https://www.wsj.com/articles/for-ethical-investors-oil-isnt-aramcos-only-problem-11573731900-
4. Cumulative data on carbon emissions of top CO2 Emitting global companies in the world:
https://www.visualcapitalist.com/companies-carbon-emissions/-
5. Data for peer analysis for Saudi Aramco:
https://corporate.exxonmobil.com/-/media/Global/Files/sustainability-report/publication/2018-Sustainability-Report.pdf,
https://reports.shell.com/sustainability-report/2018/
 Appendix 2

Data for Saudi Aramco’s Financial Implications

1. Saudi Aramco Net worth: https://www.morningstar.com/articles/959024/whats-saudi-aramco-worth

2. To Buy or Not to Buy Aramco Shares:
https://www.forbes.com/sites/greatspeculations/2019/11/11/should-you-buy-the-saudi-aramco-ipo/#6bdbd4681c51
3. Impact of Aramco shares on Oil Markets :
https://www.businessinsider.in/finance/heres-why-saudi-aramcos-ipo-could-wreak-havoc-in-the-oil-markets/articleshow/5261
9820.cms
4. Policy Implications of Aramco Shares :
https://www.researchgate.net/publication/320807257_The_Aramco_IPO_Governance_Listing_Options_and_Policy_Implications
5. Rating of Aramco Shares: https://www.thetimes.co.uk/article/saudi-aramco-given-monster-rating-by-bernstein-f7zk0qvnn
 Appendix 3

Data for Saudi Aramco’s Future Plans and Vision

1. Saudi Aramco Cyber Attacks :

https://in.reuters.com/article/uk-saudi-aramco-security/saudi-aramco-sees-increase-in-attempted-cyber-attacks-idINKB
N2002P6
2. Saudi Aramco Acquisition of Reliance :
https://www.bloombergquint.com/business/reliance-industries-to-turn-into-a-holding-company-after-deal-with-saudi-a
ramco
3. Saudi Vision 2030: https://www.saudiembassy.net/vision-2030
4. Saudi Aramco “Independence” Issues :
https://www.cnbc.com/2019/12/12/saudi-aramco-is-polarizing-as-investors-question-its-independence.html
5. Energy-Environment Proposition:
https://www.nytimes.com/2019/12/06/business/energy-environment/saudi-aramco-ipo.html
 Appendix 4
Company Financial Crude Oil Production
 Appendix 5
Ratio Analysis
Appendix 6