Oil and Gas Industry

Global Oil & Gas Titans

Performance and Outlook

Table of Contents

1. Executive Summary

2. Industry Overview

○ 2.1 Oil & Gas Market Landscape

○ 2.2 Key Industry Trends and Challenges

○ 2.3 Competitive Positioning and Benchmarking

3. Company Analyses

○ 3.1 Saudi Aramco (ARMO)

○ 3.2 ExxonMobil (XOM)

○ 3.3 Chevron (CVX)

i. Company Overview

Business Description

Stock Price Performance Summary

Key Financial Metrics

ii. Operations Overview

Operations

Key Operating Measures

Marketing and Customers

Key Risks

iii. Accounting Analysis

iv. Financial Analysis

v. Forecasting Key Value Drivers

vi. Valuation Results

Model/ Results

Recommendation

○ 3.4 Shell (SHEL)

4. Comparative Financial Analysis

5. Valuation and Forecasting

6. Investment Recommendations

7. Appendices & Exhibits

1. Executive Summary

● Purpose: Evaluation of four major Oil & Gas companies using financial statement

analysis.

● Key Takeaways: Industry trends, financial health of each firm, and investment

recommendations.

● Investment Outlook: Summary of buy/hold/sell decisions based on financial

performance and market conditions.

2. Industry Overview

2.1 Oil & Gas Market Landscape :

Global Energy Demand & Supply

The global oil and gas industry remains a cornerstone of the world economy, supplying

over 80% of global energy consumption. According to the International Energy Agency

(IEA), global oil demand stood at 100.6 million barrels per day (mbpd) in 2023, with

projections suggesting an increase to 102.3 mbpd by 2024, driven by economic growth

and rising industrial activity.

However, the market remains highly volatile due to several key factors:

● OPEC+ Production Policies: The Organization of the Petroleum Exporting

Countries (OPEC) and allies (OPEC+) play a major role in stabilizing oil prices.

Recent output cuts in 2023 aimed to counter weaker demand, keeping Brent crude

prices around $80-$90 per barrel.

● Geopolitical Risks: Conflicts in Ukraine, the Middle East, and U.S.-China trade

tensions continue to impact energy supply chains.

● Transition to Renewable Energy: Rising ESG concerns and policies such as the

EU’s Carbon Border Tax and U.S. Inflation Reduction Act are pushing oil

companies to diversify into natural gas, hydrogen, and carbon capture.

Key Market Players

The oil and gas sector is dominated by two primary types of companies:

1. National Oil Companies (NOCs) – State-owned entities controlling over 50% of

global reserves.

○ Saudi Aramco (ARMO) – The world’s largest oil producer (~13 mbpd

production).

○ PetroChina (CNPC), Rosneft (Russia), ADNOC (UAE), Petrobras (Brazil).

○ These companies operate under government policies and are less profit-

driven than Western counterparts.

2. Integrated Oil Majors (IOCs) – Publicly traded corporations focusing on

exploration, production, refining, and retail.

○ ExxonMobil (XOM), Chevron (CVX), Shell (SHEL), BP, TotalEnergies.

○ These firms are investing heavily in renewables and liquefied natural gas

(LNG) to hedge against declining oil demand.

Market Share Breakdown (2023 Estimates):

● Saudi Aramco – 12.7% of global crude production.

● ExxonMobil & Chevron – Leading U.S. producers, with growing LNG

investments.

● Shell & BP – Strong in European markets and transitioning into green energy

projects.

Role of Natural Gas & LNG

Natural gas is gaining importance as a cleaner alternative to coal and oil.

● LNG demand grew by 5% in 2023, led by European and Asian markets.

● The U.S., Qatar, and Australia dominate LNG exports, while China and India

drive demand.

2.2 Key Industry Trends and Challenges

2.2.1 Transition to Renewable Energy: Increasing ESG Pressures and

Net-Zero Targets :

The global energy transition is reshaping the oil and gas industry, with companies facing

intensified pressure to decarbonize. Governments, investors, and consumers are

demanding net-zero commitments, impacting business strategies and capital allocation.

Key Trends Driving the Transition:

● Net-Zero Policies: Over 130 countries have pledged carbon neutrality by 2050 or

earlier. The European Union, U.S., and China are leading regulatory efforts,

enforcing stricter emissions rules.

● ESG (Environmental, Social, Governance) Investing: Over $40 trillion in global

assets are now managed under ESG criteria, forcing oil companies to disclose

climate risks and reduce carbon footprints.

● Renewables & Low-Carbon Investments:

○ Saudi Aramco is expanding in hydrogen & carbon capture, committing $50

billion toward green and blue hydrogen projects.

○ Shell & BP are shifting to solar, wind, and EV charging infrastructure,

aiming for 50% non-oil revenue by 2035.

○ ExxonMobil & Chevron remain focused on LNG and carbon capture, rather

than complete energy diversification.

Challenges for Oil & Gas Companies:

● Stranded Assets Risk: As demand for fossil fuels declines, companies face the risk of

underutilized refineries and oil reserves.

● Carbon Taxes & Regulation: The EU’s Carbon Border Tax (2023) and U.S.

Inflation Reduction Act impose higher costs on high-emission producers.

● Technological Uncertainty: Many renewable technologies (hydrogen, biofuels) are

not yet cost-competitive with traditional fossil fuels .

2.2.2 Geopolitical Risks: Impact of Regional Conflicts, U.S. Sanctions,

and Trade Policies :

Oil markets are highly sensitive to geopolitical events, as over 60% of global crude

reserves are located in politically unstable regions. Any supply disruption directly affects

prices and profitability.

Key Geopolitical Risks Impacting Oil Markets:

1- Russia-Ukraine War (2022-Present)

● Led to EU bans on Russian oil, forcing Europe to rely on Middle Eastern and U.S.

imports.

● Triggered a global energy crisis with oil prices spiking to $120 per barrel in 2022

before stabilizing around $80-$90.

● Benefited producers like Saudi Aramco and ExxonMobil, who filled the supply

gap.

2- U.S. Sanctions on Oil-Producing Nations

● Iran & Venezuela: Long-term sanctions have restricted their exports, reducing

global supply.

● Russia (Post-2022): Western nations froze Russian assets & limited its energy

exports, altering trade flows.

3- Middle East Instability

● Ongoing Israel-Palestine conflict & Yemen's attacks on Saudi oil facilities

increase supply risks.

● Saudi Aramco’s infrastructure is a prime geopolitical target, raising security

concerns.

4 -China-U.S. Trade Tensions

● China is the world’s largest oil importer, and trade restrictions impact crude

demand & shipping routes.

● The U.S. has imposed tech export bans, slowing China’s energy sector expansion.

Challenges for Oil Companies:

● Uncertain Investment Climate: Geopolitical conflicts create supply uncertainty, making

long-term investments risky.

● Nationalization & Resource Control: Countries like Russia & Venezuela have

seized foreign oil assets, making private investment riskier.

● Supply Chain Disruptions: Energy infrastructure (pipelines, tankers) is

increasingly vulnerable to cyberattacks and military strikes.

2.3 Competitive Positioning and Benchmarking

2.3.1 Market Positioning: Comparing Saudi Aramco, ExxonMobil, Chevron, and

Shell :

The Oil & Gas industry is dominated by a mix of National Oil Companies (NOCs)

and Integrated Oil Majors (IOCs).

● Saudi Aramco is the largest oil company globally in terms of production and

reserves.

● ExxonMobil, Chevron, and Shell are leading Western integrated oil companies,

competing on refining, petrochemicals, and renewables.

● Saudi Aramco dominates in revenue, net income, and reserves, reflecting its low

production costs (~$2.80/bbl) and government-backed operations.

ExxonMobil & Chevron focus on upstream & refining, while Shell is shifting

towards LNG and renewables.

➢ Competitive Strengths & Weaknesses :

● Saudi Aramco: Strength – Largest oil reserves, lowest production cost; Weakness –

Limited diversification outside oil.

● ExxonMobil: Strength – Global refining presence, strong upstream portfolio;

Weakness – High break-even cost ($35-$40/bbl).

● Chevron: Strength – Well-balanced between oil & LNG; Weakness – Lower

production scale than Aramco & Exxon.

● Shell: Strength – Biggest LNG producer, strong ESG focus; Weakness – Declining

oil reserves.

2.3.2 Industry Benchmarks: Financial Ratios Comparison :

To compare financial strength, we analyze profitability, leverage, and

efficiency metrics.

Profitability:

● Saudi Aramco has the highest profit margins due to low-cost production and strong

pricing power.

● Exxon, Chevron, and Shell have lower margins due to higher production costs & refining

exposure.

Efficiency (ROA, ROE):

● Aramco’s ROA (35.93%) is nearly double that of Exxon & Chevron, reflecting strong

asset utilization.

● Aramco’s ROE (79.72%) is the highest, showing strong shareholder returns.

Leverage (Debt-to-Equity):

● Aramco maintains low debt levels (0.3 D/E ratio) compared to Western peers.

● Shell & Exxon have higher debt due to capital-intensive renewable projects &

acquisitions.

3. Company Analyses

3.1 Saudi Aramco (ARMO) –

History & Evolution of Saudi Aramco

Saudi Aramco, officially known as the Saudi Arabian Oil Company, is the largest oil

company in the world by production and reserves. The company was founded in 1933 as

a joint venture between the Saudi government and Standard Oil of California (now

Chevron). Over time, the Saudi government gradually increased its ownership, fully

nationalizing Aramco in 1980.

Key milestones in Aramco’s history include:

● 1938 – First major oil discovery in Dammam, Saudi Arabia.

● 1950s-1970s – Expansion into global markets, construction of pipelines and

refineries.

● 1980 – Full government ownership, making it a National Oil Company (NOC).

● 2019 – Largest IPO in history, raising $25.6 billion and listing on the Tadawul

Stock Exchange.

● 2022-Present – Strategic expansion in refining, petrochemicals, and renewables

(hydrogen, carbon capture).

Ownership Structure :

● Majority Stakeholder: The Saudi government owns ~90% of Aramco, giving it

direct control over operations, pricing, and production levels.

● Public Investors: The remaining 10% is publicly traded on the Saudi Stock

Exchange (Tadawul).

● Dividend Policy: As a state-controlled company, Aramco distributes large

dividends to fund Saudi Arabia’s economic programs.

Global Operations & Market Reach :

Saudi Aramco operates globally, supplying crude oil, refined products, and chemicals to

Asia, Europe, and North America.

● Key Export Markets: China, India, Japan, South Korea, U.S. & EU.

● Strategic Partnerships: Joint ventures with TotalEnergies, Sinopec, and Reliance

for refining & petrochemical expansion.

Business Segments

Saudi Aramco operates in three primary business divisions:

1- Upstream – Exploration & Production :

Aramco's core business is crude oil & natural gas exploration, drilling, and production.

● Oil Production: 13.6 million barrels per day (mbpd), making it the world’s largest

producer.

● Proven Reserves: 259 billion barrels, ensuring production sustainability for

decades.

● Key Oil Fields:

○ Ghawar Field – The world’s largest onshore oil field (~58 billion barrels).

○ Safaniya Field – The world’s largest offshore oil field.

○ Manifa & Shaybah Fields – Major oil reserves supporting production

capacity.

2- Downstream – Refining, Marketing & Distribution :

Saudi Aramco is a global leader in refining and fuel distribution.

● Refining Capacity: More than 5.5 million barrels per day across Saudi Arabia,

China, the U.S., and India.

● Global Refineries: Operates joint ventures with Shell, TotalEnergies, Sinopec, and

Reliance.

● Aramco’s Retail Fuel Network: Expanding in Asia & the Middle East, competing

with Shell & BP.

3- Petrochemicals & Chemicals :

Saudi Aramco is investing heavily in petrochemicals to diversify beyond crude oil.

● Acquisition of SABIC (2020) – A $69 billion deal, making Aramco a top global

petrochemical player.

● Chemical Products: Plastics, polymers, and specialty chemicals for automotive,

construction, and packaging.

3.1.1 Income Statement Analysis

Saudi Aramco’s revenue and net income have experienced significant fluctuations over the past

five years due to macroeconomic conditions, oil price volatility, and geopolitical events. The

company remains the largest oil producer globally, benefiting from low production costs and

high-profit margins.

Revenue Trends

Saudi Aramco’s revenue follows a cyclical pattern, primarily driven by crude oil demand,

OPEC+ production policies, and global economic activity.

● 2018–2019: Revenue increased from 315.24 billion USD (2018) to 329.82 billion USD

(2019), reflecting moderate oil price adjustments.

● 2020 (Pandemic Shock): Revenue dropped sharply to 229.00 billion USD, a 30.6%

decline from 2019, due to the COVID-19 oil price crash.

● 2021–2022 (Recovery Phase): As the global economy rebounded and oil demand

surged, revenue climbed to 400.35 billion USD (2021) and peaked at 535.40 billion USD

(2022).

● 2023 (Stabilization): Although still strong, revenue adjusted slightly to 486.50 billion

USD as oil prices stabilized.

Net Income Trends

Despite revenue fluctuations, Saudi Aramco maintains high profitability due to its low

production cost (~$2.80 per barrel) and dominant market position.

● 2018–2019: Net income fell from 111.45 billion USD (2018) to 103.37 billion USD

(2019), aligning with moderate revenue adjustments.

● 2020 (Pandemic Shock): Net income collapsed to 41.18 billion USD, reflecting reduced

oil prices and lower production volumes.

● 2021–2022 (Recovery Phase): Net income recovered to 123.55 billion USD (2021) and

peaked at 187.10 billion USD (2022) as crude oil prices surged.

● 2023 (Stabilization): Some normalization occurred as net income adjusted to 154.60

billion USD with stabilized oil markets.

Cost of Sales and Margins

Saudi Aramco’s gross profit margin remains significantly higher than industry peers due to its

vertically integrated supply chain and government support.

● Gross Profit Margin: Declined from 67.5% (2018) to 57.2% (2020) before stabilizing at

63.6% (2023).

● Net Profit Margin: Followed a similar trend, dropping from 35.4% (2018) to 18.0%

(2020) but later recovering to 35.0% (2022).

●

3.1.2 Balance Sheet Analysis

Saudi Aramco’s balance sheet remains strong, supported by stable asset growth, equity

accumulation, and controlled liabilities.

Total Assets and Equity

● Total Assets: Saudi Aramco maintains approximately 373.00 billion USD in total assets

as of 2023, showing consistent growth over the years.

● Total Equity Growth: Grew from 125.52 billion USD (2018) to 168.00 billion USD

(2022), driven by retained earnings and strong profitability.

●

Liabilities and Debt Structure

● Stable Liabilities: Aramco’s total liabilities have remained relatively stable at around

198 billion USD in 2023, demonstrating financial discipline.

● Debt-to-Equity Ratio: Dropped from 1.33 (2018) to 1.15 (2022), indicating a gradual

reduction in reliance on debt financing.

3.1.3 Cash Flow Statement Analysis

Saudi Aramco generates one of the highest operating cash flows globally, ensuring strong

dividend payouts and reinvestment capacity.

Free Cash Flow Trends

● 2018–2019: Free cash flow remained stable at around 165–172 billion USD due to strong

revenue generation.

● 2020 (Pandemic Shock): Free cash flow declined to 138.00 billion USD as crude oil

prices collapsed, but Aramco maintained positive operating cash flow.

● 2021–2022 (Recovery Phase): Free cash flow surged to 194.00 billion USD (2021) and

peaked at 230.00 billion USD (2022) alongside rising oil prices, supporting higher

dividend payments and capital investments.

Dividend Payments

As the largest publicly listed company in Saudi Arabia, Aramco distributes significant dividends

to its shareholders, primarily benefiting the Saudi government. Dividend payouts increased in

2021-2022 following higher net income.

3.1.4 Key Financial Ratios Analysis

Saudi Aramco outperforms most of its Western peers (ExxonMobil, Chevron, Shell) in

profitability, liquidity, and leverage metrics.

Profitability Analysis :

High Profit Margins: Saudi Aramco's net profit margin (34.95%) is more than double that of

ExxonMobil (13.3%) and Chevron (14.6%), reflecting its cost advantage.

Strong ROE & ROA: Saudi Aramco delivers significantly higher shareholder returns (ROE:

111.37%) than its Western counterparts, underscoring its superior profitability and capital

efficiency.

Liquidity Analysis :

Improved Short-Term Liquidity: While specific Current Ratio data is not available, Saudi

Aramco’s strong balance sheet and stable liabilities suggest effective working capital

management

Leverage & Debt Analysis :

Lower Debt Levels: Saudi Aramco’s Debt-to-Equity Ratio decreased from 1.33 (2018) to 1.15

(2022), indicating reduced reliance on debt financing. This positions Aramco as less leveraged

compared to ExxonMobil and Shell.

Debt Servicing Strength: Despite the absence of specific Interest Coverage Ratio data, Saudi

Aramco’s robust profitability and conservative leverage position suggest that it maintains a

strong ability to cover interest expenses and meet debt obligations comfortably.

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3.2 ExxonMobil (XOM) :

ExxonMobil is a globally integrated energy and petrochemical company that is headquartered in

Irving, Texas. It is one of the largest publicly traded oil and gas companies that performs

exploration, production, refining, distribution and sales of petroleum products. Exxon is one of a

handful of companies that is critical for supplying energy globally. Its operations span six

continents and includes both conventional and unconventional oil and gas resources, refining and

chemical manufacturing facilities and a growing commitment to lower carbon energy solutions.

Exxon is consistently pushing innovation by making processes more efficient and leading the

charge in carbon capture and storage.

History & Evolution of Exxon

● ExxonMobil traces back to 1870 when it was known as Standard Oil and was founded by

John Rockefeller

● Standard Oil dominated the US oil industry through vertical integration, controlling

everything from crude oil extraction to refining, transportation and retail distribution.

● In 1911 Standard Oil was in violation of antitrust laws and was ordered to break up into

34 independent companies.

● The two largest of those was Standard Oil of New Jersey (Exxon) and Standard Oil of

New York (Mobil)

● These two companies would grow independently expanding their refining and marketing

operations domestically and internationally.

● From 1911 to the 1970s, both companies established themselves as leaders in oil

exploration, refining and chemical production, investing heavily in offshore drilling,

focusing on places in the middle east, Africa and Latina America

● In 1973 and 1979 experienced oil crises triggered by geopolitical tensions and OPEC

embargo leading to massive fluctuations in global oil prices.

● During this time Exxon focused on research into energy efficiency, alternative fuels and

synthetic materials while Mobil focused on petrochemicals, advanced lubricants and

downstream marketing.

● In 1999 saw the merger of Exxon and Mobil for $81 billion dollars due to falling oil

prices and increased global competition.

● In the early 2000s, ExxonMobil expanded to deepwater drilling and unconventional oil

and gas.

Ownership Structure :

● ExxonMobil is a publicly traded company with a diverse shareholder base composed of

institutional investors and individual investors.

● 55.56% of Exxon’s shares are held by institutional investors, with the largest institutional

investor being the Vanguard group (8.15%), then BlackRock(6.61%) and then Jane Street

Corporation(4.83%).

● Exxon also holds a majority interest in Imperial Oil Limited which is a Canadian

petroleum company as well as Kearl Oil Sands Operations.

● This ownership structure allows ExxonMobil to maintain a strong presence in various

segments of the oil and gas industry, domestically and internationally.

Global Operations & Market Reach :

ExxonMobil is a leading global energy company with a comprehensive presence across oil, gas

and petrochemical industries across 6 continents. It is consistently ranked among the top of U.S

companies by total revenue and is recognized as one of the world’s largest publicly traded

energy providers. Exxon has been investing heavily in R&D, with thousands of scientists and

engineers working on advancing new catalytic materials and low energy process development.

The long term looks promising for Exxon as it continues to evolve and play a pivotal role in

meeting the world's energy needs while navigating the constantly changing energy industry.

Business Segments

● Upstream (~60%)

Exxon’s upstream segment highlights exploration, development and production of crude

oil, natural gas and liquified natural gas. This is Exxon’s biggest and the segment that

contributes the most to profitability. The regions explored consist of the Permian Basin

(U.S), offshore Guyana, Brazil, West Africa, the Middle East and Asia-Pacific. For

production, the company extracts crude oil and natural gasses and processes for the

purpose of sales. Exxon’s LNG is extracted in the regions of Qatar, Papua New Guinea

and Mozambique. The last upstream process for Exxon is DeepWater and

Unconventional resources. They have invested huge amounts of money in deepwater

drilling and shale oil in the US (Permian, Bakken, Eagle Ford.

● Downstream (~35%)

The downstream segment consists of refining and chemicals. In 2022, Exxon merged

refining and fuels with its chemicals business. This allowed ExxonMobil to convert crude

oil and natural gas into finished products. The final products included gasoline, diesel, jet

fuel, heating oil and marine fuel. They have refineries all over the world from the U.S to

Singapore and Europe. With all locations refining, they have the capacity to produce 4.5

million barrels per day. From the chemicals business, Exxon produces high quality

chemicals such as ethylene, polyethylene that are used in plastics and consumer products.

They also have lubricants and specialty products.

● Low Carbon Solutions (~5%)

The final business segment is focused on developing and scaling technologies that reduce

carbon emissions. This positions the company for long-term sustainability and

compliance with global climate goals. Exxon is the leader in carbon capture and storage

solutions. They have partnerships with companies and governments in the U.S, Canada,

and Europe.

3.2.1 Income Statement Analysis

Revenue Trends

● In the year 2020, ExxonMobil had decreased net revenue due to the COVID-19 pandemic

which also affected the net income of the company going negative.

● From 2021 to 2022, it can be observed there was a constant increase in Net revenue.

● The 2022 year was a booming year hitting all-time highs for revenue for ExxonMobil.

● From 2022 to 2024, there was a slight decrease in revenue as the world began to stabilize

after the pandemic and get back to normal levels.

Net Income Trends

● In 2020, it is observed that net income was negative which is a result of the

pandemic.The work slowed down and more people were not commuting or driving.

● Net income then began to increase from 2021 to 2022 where it peaked.

● From 2023 to 2024 we saw a slight decline in net income, but this is to be expected as

sales began to stabilize.

Cost of Sales and Margins

● Gross profit margins from 2020 to 2024 stayed relatively constant around 30%. Even

during the pandemic years Exxon was able to achieve constant gross profit margins of

30%.

● Observing the net profit margin, we can see that Exxon had a 13% decrease in 2022 but

bounced back the year after with an 8% net profit margin. Exxon’s net profit margin went

all the way up to 14% in 2023 but then stabilized around 10%.

3.2.2 Balance Sheet Analysis

Total Assets and Equity

● Exxon’s total assets increased by approximately 36%, which suggests that Exxon invested in

asset expansion from 2020 to 2024.

● Exxon’s shareholder equity also grew by about 65% suggesting enhance equity value over the

four years.

Liabilities and Debt Structure

● The liabilities Exxon had on their books remained relatively stable from 2020 to 2023 but saw an

increase in 2024.

● Focusing on 2020 to 2022, Exxon’s total debt decreased significantly which reflects Exxon’s

efforts to reduce debt and stabilize in the upcoming years.

Debt-to-Equity Ratio

● 2020: 0.43 Exxon had its highest debt-to-equity ratio during 2020 due to the pandemic, reflecting

increased leverage.

● 2021: 0.28 Significant reduction in order to strengthen its balance sheet

● 2022: 0.21 Exxon’s commitment to showcase financial discipline and improved earnings

● 2023: 0.20 Maintaining a conservative leverage position

● 2024: 0.16 Showcasing Exxon's strong equity base relative to its debt obligations

3.2.3 Cash Flow Statement Analysis

Free Cash Flow Trends

● 2020:The pandemic and the collapse of oil prices led to a FCF deficit of $2.6 billion, as

ExxonMobil struggled with reduced revenue and high capital spending.

● 2021:A recovery in oil prices and cost-cutting efforts resulted in $36.1 billion in free cash

flow, enabling the company to pay down debt and restart shareholder distributions.

● 2022: High oil prices, strong refining margins, and disciplined capital spending resulted

in ExxonMobil’s FCF of $58.4 billion.

● 2023-2024: While FCF declined from 2022 highs, ExxonMobil maintained strong cash

generation (~$30-33 billion annually) to support its dividend and share buybacks.

Dividend Payments

● 2020: ExxonMobil did not cut its dividend despite financial struggles, but the payout

ratio exceeded 100%.

● 2021-2022: Return to profitability allowed ExxonMobil to increase its dividend

gradually.

● 2023-2024: ExxonMobil continued raising dividends (~4% per year) and expanded stock

buybacks ($19.6B in 2024) to reward shareholders.

3.2.4 Key Financial Ratios Analysis

Profitability Analysis

● ExxonMobil's net profit margin shows a strong recovery from -13% in 2020 to 14% in

2022, driven by oil price rebounds and operational efficiencies. However, it stabilizes

around 9-10% from 2024 onward, reflecting consistent but moderate profitability in a

mature energy market.

● Return on equity (ROE) peaks at 28% in 2022 before declining to 11-13% by 2029,

largely due to reduced leverage and a lower equity multiplier. Similarly, return on assets

(ROA) reaches 15.7% in 2022 but stabilizes at ~7% in later years, indicating steady

operational efficiency despite capital-intensive investments in low-carbon initiatives.

Liquidity Analysis

● ExxonMobil's has indicated strong deleveraging efforts and reduced financial risk. The

company's improving asset turnover and consistent free cash flow generation suggest

solid liquidity management, ensuring it can meet short-term obligations while continuing

investments in energy transition initiatives.

Leverage & Debt Analysis

● ExxonMobil's Equity Multiplier declines from 2.03 (2020) to 1.61 (2029), signaling

reduced reliance on debt financing. The Debt-to-Equity Ratio drops from 28.7% to 8.4%

over the same period, reflecting significant deleveraging efforts.

● This shift toward a lower-leverage structure reduces financial risk but may slightly

constrain return on equity (ROE), as the company relies more on retained earnings and

operating cash flow rather than debt to finance growth.

3.3 Chevron Corp. (CVX) :

Business Description:

Chevron Corporation, through its subsidiaries, engages in the integrated energy and

chemicals operations in the United States and internationally. The company operates in

two segments, Upstream (exploration & production), and Downstream (refining &

marketing). The company was formerly known as ChevronTexaco Corporation and

changed its name to Chevron Corporation in 2005. Chevron Corporation was founded in

1879 and is headquartered in Houston, Texas. The company’s objective is to safely

deliver higher returns, lower carbon and superior shareholder value in any business

environment. Earnings of the company depend mostly on the profitability of its upstream

business segment. The most significant factor affecting the results of operations for the

upstream segment is the price of crude oil, which is determined in global markets outside

of the company’s control. In the company’s downstream business, crude oil is the largest

cost component of refined products. Periods of sustained lower commodity prices could

result in the impairment or write-off of specific assets in future periods and cause the

company to adjust operating expenses, including employee reductions, and capital

expenditures, along with other measures intended to improve financial performance.

History & Evolution of Chevron Corporation

Chevron Corporation (NYSE: CVX) is one of the world’s largest multinational energy

companies. Its history spans over 140 years, evolving from a small oil discovery operation

in California into a global leader in the energy sector. Pacific Coast Oil Company (PCOC)

was founded 1879, after discovering oil in Pico Canyon, California. PCOC was acquired

by Standard Oil which was broken in to Socal and Chevoron was introduced by Socal in

1926 for gasoline.

Key milestones in Chevron’s history include:

1933 – Secured oil exploration rights in Saudi Arabia, leading to the formation of the

Arabian American Oil Company (ARAMCO, now Saudi Aramco).

1950s – Expanded into Africa, Indonesia, and Latin America, reinforcing its global

presence.

1977 – Renamed Chevron Corporation to unify its brand

2000s – Expanded deepwater drilling operations in the Gulf of Mexico and West Africa.

2001 – Merged with Texaco, forming ChevronTexaco Corporation (later rebranded as

Chevron in 2005).

Energy Transition & Modern Era (2010s - Present):

2010 – Started massive projects in Australia (Gorgon & Wheatstone LNG).

2011 – Purchased Atlas Energy, gaining access to U.S. shale gas.

2015 – Divested few downstream assets for high-margin upstream production.

2020 – Acquired Noble Energy, expanding U.S. shale and Eastern Mediterranean.

2024 – AcquiredHess Corporation, boosting its Guyana and Bakken oil reserves.

Current Status & Future Outlook:

Chevron remains a top-tier integrated energy company with operations in over 180

countries. The company is balancing traditional oil & gas production with investments in

low-carbon energy solutions, such as hydrogen, carbon capture, and renewable fuels. Its

Permian Basin, deepwater, and LNG operations remain critical for future growth. The

company is targeting $10-15 billion of asset sales over the five-year period ending in 2028

to free up its working capital and invest in explorations. In 2021, the company guided to

capital spend of approximately $10 billion through 2028 to advance its lower carbon

ambitions. Beyond 2028, the company anticipates capital spending will be necessary to

progress the company’s 2050 upstream production Scope 1 and 2 net zero aspiration

and building of its lower carbon business lines.

● Chevron plans to increase production from 1 million barrels per day (bpd) in 2023

to 1.2-1.5 million bpd by 2027.

● Focus on capital efficiency and advanced drilling technologies to maximize returns.

● Continued investment in high-margin deepwater assets.

● LNG export agreements with Japan, South Korea, and China to secure long-

term sales to meet rising demands.

Ownership Structure

Chevron's ownership is heavily weighted towards institutional investors, with major asset

management firms like The Vanguard Group and State Street Corporation holding

significant stakes. This distribution is typical for large corporations, indicating strong

institutional confidence in Chevron's operations and future prospects.

Institutional investors hold a significant majority of Chevron's shares approximately

75.74% while individual investors and other non-institutional shareholders own

approximately 24.14%. Company insiders, including board members and corporate

officers, hold a minimal percentage of 0.13%.Major Institutional Investors:

● The Vanguard Group, Inc. owns 8.92% of Chevron's shares, which equates to

approximately 156.97 million shares.

● State Street Corporation holds around 8.33% of the shares, translating to about

149.68 million shares.

● Berkshire Hathaway Inc. owns approximately 6.6% of Chevron, amounting to

around 118.61 million shares.

Governance Structure:

Chevron's Board of Directors oversees the company's strategic direction and governance.

The Board comprises several committees, including Audit, Board Nominating and

Governance, Management Compensation, and Public Policy and Sustainability, all of

which are composed solely of independent directors.

Global Operations & Market Reach :

Chevron has a diverse global portfolio, balancing traditional oil & gas production with

investments in energy transition. Its strong upstream presence, refining & retail

operations, and LNG leadership make it one of the world’s most influential energy

companies. Chevron’s combined Operations for upstream, downstream and renewable

energy are in USA, Canada, Argentina, Brazil, Venezuela, Nigeria & Angola, Egypt &

Libya, Saudi Arabia, Iraq, Australia, Indonesia & Thailand, Kazakhstan.

● Revenue (~$200B, 2023): Chevron is one of the top 3 global oil companies

alongside ExxonMobil & Shell.

● Key Export Markets: China, Japan, South Korea, Europe, and Latin America.

● LNG Leadership: One of the top LNG exporters in the world, with major supply

agreements in Asia.

Business Segments

Chevron operates in three primary business divisions:

A- Upstream Upstream (Exploration & Production – ~70% of

earnings):

The Upstream segment engages in the exploration, development, production, and

transportation of crude oil and natural gas; liquefaction, transportation, and regasification

of liquefied natural gas; transporting crude oil through pipelines; processing, transporting,

storage, and marketing of natural gas; and carbon capture and storage, as well as a gas-to-

liquids plant.

● It has key operations in the U.S. (Permian Basin, Gulf of Mexico), Kazakhstan

(Tengiz field), Australia (LNG projects), and Africa.

● Benefits from high crude oil prices but is exposed to price volatility.

B- Downstream (Refining & Chemicals – ~25% of earnings):

Under the Chevron and Texaco brands, the Downstream segment refines crude oil into

petroleum products; markets crude oil, refined products, and lubricants; manufactures and

markets renewable fuels; transports crude oil and refined products through pipeline,

marine vessel, motor equipment, and rail car; and manufactures and markets commodity

petrochemicals, plastics for industrial uses, and fuel and lubricant additives.

● Operates refineries in the U.S., Asia, and Latin America.

● Profits depend on refining margins and consumer demand for petroleum products.

C- Renewables & New Energy (Energy Transition Focus):

Chevron is investing in low-carbon energy, with a focus on:

● Renewable Fuels: Biofuels production and blending.

● Carbon Capture & Storage (CCS): Projects in the U.S. and Australia.

● Hydrogen & Renewable Natural Gas (RNG): Expansion in North America and

Asia.

● Geothermal Energy: Exploration in Indonesia and the U.S.

3.3.1 Income Statement Analysis

Revenue Trend

Over the last four years, Chevron Corporation's revenue and profitability have fluctuated

due to global oil market conditions, supply chain dynamics, and internal financial

adjustments.

2021: Chevron earned $156 billion and returned to profitability at $60 per barrel after

rebounding from pandemic induced losses.

2022: Earned highest revenue of $235.7 billion driven by high oil prices of $100/ barrel

driven by Russia-Ukraine war.

2023: Revenue declined to %196.9 billion due to declined oil prices, recession fears and

high operating costs induced by inflation.

2024: Revenue was stable at $195.5 billion, but net income was significantly lower due to

impairment charges.

Revenue Forecast: Much of Chevron’s future performance will depend on oil price

trends, geopolitical stability, and efficiency in cost management.

Net Income Trends

Over the past four years, Chevron Corporation's net income has experienced significant

fluctuations, reflecting changes in global energy markets and company operations. Here's

a detailed overview:

Year

Net Income (USD Billion)

Year-over-Year Change (%)

2021

15.6

N/A

2022

35.4

+126.9%

2023

21.3

-39.8%

2024

17.75

-16.6%

2021: Chevron reported a net income of $15.6 billion, rebounding from a loss in 2020

due to the global economic recovery post-pandemic, which led to increased demand for

oil and gas.

2022: Net income surged to $35.4 billion, the highest in the company's history. This

increase was driven by elevated oil and gas prices resulting from geopolitical tensions

and supply constraints.

2023: Net income declined by 39.8% to $21.3 billion. The decrease was attributed to

lower oil prices and reduced refining margins.

2024: Net income further decreased by 16.6% to $17.75 billion. Factors contributing to

this decline included lower natural gas prices and narrowed refining margins.

The company is focused on investing in low carbon energy businesses until 2028 which

are expected to rise yields later.

Net Income Forecast: The income is likely to decrease though the demand and sales are

expected to grow at 8%, due to increase in exploration and production costs.

Cost of Sales and Margins

Chevron 's financial performance, specifically its cost of goods sold (COGS) and profit

margins, has experienced notable fluctuations due to various market dynamics. The profit

margin has stabilized at 39.5%.

2021: COGS stood at $111.8 billion.

2022: COGS increased by 33.7% to $149.5 billion, aligning with a significant revenue

surge due to elevated oil and gas prices.

2023: COGS decreased by 17.4% to $123.4 billion, reflecting a decline in revenue as

commodity prices normalized.

2024: COGS remained relatively stable, with a slight increase of 0.4% to $123.9 billion.

COGS Forecast: Due to increase in operational and exploration costs and global trade

uncertainties, the COGS will increase in future.

2022

2023

2024

2025

2026

2027

2028

2029

2030

COGS B

$171.1

$145.0

$147.6

$150.1

$162.1

$175.1

$189.2

$204.5

$225.2

Operating

10.48%

12.64%

14.20%

14.2%

Exploration

0.4%

0.5%

0.51%

0.5%

Crude oil

61.7%

60.5%

61.6%

63.5%

65.4%

67.4%

69.4%

71.45%

73.6%

Gross M

3.3.2 Balance Sheet Analysis

Total Assets and Equity

As of December 31, 2024, Chevron Corporation reported total assets of approximately

$256.938 billion, reflecting a 1.79% decrease from the previous year. In 2022 the growth

was 7.59% to $257.7B, in 2023 the growth was 1.52%.

The 1.79% decline in total assets in 2024 was driven by impairments, cash reductions,

and depreciation, rather than a fundamental weakening of the company.

Liabilities and Debt Structure

Chevron’s liabilities were $97.46 B in 2022 which grew 2.2% in 2023 and in 2024 it

grew to $103.78 B.

Debt and finance lease liabilities are

2022: Debt and finance lease liabilities were $23.339 B.

2023: A decrease to $20.836 B.

2024: An increase to $24.541 B.

Debt to Equity Ratio

Chevron’s Debt ratio has been increasing over the last 4 years while it’s Debt to Equity

ratio is decreasing. Chevron is depending on its equity to finance for its operations from

increasing retained earnings. The increase in Net Debt ratio suggests that the company is

using cash reserves for its operations and acquisitions though debt is not increasing.

2022

2023

2024

Debt Ratio

3.3

7.3

10.4

Debt to Equity Ratio

00.17

0.16

0.15

3.3.3 Cash Flow Statement Analysis

Free Cash Flow Trends

Over the past four years, Chevron Corporation (CVX) has experienced fluctuations in its

free cash flow (FCF):

2021: FCF increased to $21.1 billion from $1.7 billion in 2020.

2022: FCF rose to $37.6 billion, marking a 78% year-over-year increase.

2023: FCF decreased to $19.8 billion, a 47% decline from 2022.

2024: FCF further declined to $15.0 billion, down 24% from 2023.

This trend indicates a peak in 2022, followed by a decline in the subsequent years. The

decrease in 2023 and 2024 could be attributed to factors such as increased capital

expenditures and changes in operating cash flows. In 2024, Chevron's net cash provided

by operating activities was $31.5 billion, with capital expenditures of $16.4 billion,

resulting in a free cash flow of $15.0 billion.

Dividend Payments

Chevron continues to grow to its dividend payouts despite its slowing FCF. Chevron’s

dividend policy has been a key part of its investment case, but with declining free cash

flows, the company must be cautious about how it balances its dividend payments and

financial flexibility. Total dividends paid in against Free Cash Flows was:

2021: $10.7 B (FCF $21.1 B)

2022: $11.5 B (FCF $37.6 B)

2023: $ 12 B (FCF $19.8)

2024: $ 12 B (FCF $15B)

The company is signaling a mature stable-decline state of lifecycle with its growing

dividends policy.

3.3.4 Key Financial Ratios Analysis

Financial Metrics

2023

2024

2025

2026

2027

2028

2029

2030

Net Profit Margin

13%

ROE

13%

12%

10%

ROA

Current Ratio

2.6

2.5

3.1

Debt/Equity

0.13

0.16

0.15

0.14

0.13

0.10

ROIC

21.5%

17.1%

17.5%

16.2%

14.8%

13.2%

11.6%

9.4%

Profitability Analysis:

Fluctuating Profit Margins: Chevron’s net profit margin peaked at 15.9% in 2022 before

declining to 9% in 2024, highlighting the impact of oil price cycles and ongoing

operational pressures limiting its profit margins. While strong, it remains lower than

Saudi Aramco’s margins, reflecting higher operating costs.

ROE & ROA: Chevron’s ROE surged 98% to 18.49% in 2022, before adjusting to 12%

in 2024, showing strong shareholder returns.

ROA surged to 14.3% in 2022 followed a similar pattern, declined 4% in 2022 which

indicates operational inefficiencies, acquisitions spree, higher impairment charges.

Liquidity Analysis:

Stable Short-Term Liquidity: Chevron’s Current Ratio is steady at 2.5 reflecting a strong

balance sheet with stronger working capital management and a solid ability to cover

short-term obligations.

Chevron aims to release its working capital by divesting $10-$15 B assets before 2028 to

improve its explorations activities and global portfolio.

Leverage & Debt Analysis:

Reduced Debt Dependence: Chevron’s Debt to equity has reduced from 18.5%to 15% in

the last 5 years, demonstrating disciplined debt management. Though this aligns with

industry trends of reducing leverage in response to market volatility, for future growth in

CAPEX it must increase its leverage.

ROIC: Chevron’s ROIC has experienced a decline to 17% in 2024 reflecting challenges

in effectively utilizing the capital for generating profits. The company remains

competitive as the industry median is 11%.

3.4 Shell (SHEL) :

History & Evolution of Shell

Shell PLC, originally founded in 1907 as Royal Dutch Shell through the merger of Royal

Dutch Petroleum and the Shell Transport and Trading Company, has grown into one of

the world's largest oil and gas companies. Initially focused on oil exploration and

distribution, Shell expanded globally, playing a key role in the development of offshore

drilling and liquefied natural gas (LNG). Over the decades, it has diversified into

renewables and low-carbon energy, aligning with global sustainability goals. In 2022, the

company rebranded as Shell PLC, moving its headquarters to London and shifting its

focus towards energy transition initiatives.

Key milestones in Shell’s history include:

● 1907 – Formation of Royal Dutch Shell: Merger of Royal Dutch Petroleum and

the Shell Transport and Trading Company to compete with Standard Oil.

● 1910 – First Major Oil Discovery: Shell discovers oil in Borneo, marking its

expansion into large-scale exploration and production.

● 1929 – IPO and Stock Exchange Listing: Shell goes public, listing shares on major

stock exchanges, increasing its global investment and operations.

● 1950s–2000s – Expansion and Technological Innovation: Growth into offshore

drilling, liquefied natural gas (LNG), and refining, solidifying its role as a global

energy leader.

● 2022 – Rebranding and Energy Transition: Shell PLC relocates headquarters to

London, rebrands, and accelerates investments in renewables and low-carbon

energy solutions.

Ownership Structure :

● Ownership Structure: Shell PLC is a publicly traded company with a broad

shareholder base, including institutional investors, retail shareholders, and pension

funds. The majority of shares are held by institutional investors such as BlackRock

and Vanguard.

● Majority & Minority Shareholders: No single majority shareholder exists, but

large institutional investors hold significant stakes, while individual retail

investors and mutual funds make up the minority shareholders.

● Dividend Policy: Shell follows a progressive dividend policy, aiming to provide

steady returns to shareholders while balancing reinvestment in energy transition

projects. The company typically pays quarterly dividends, adjusting based on

profitability and cash flow.

Global Operations & Market Reach :

Shell PLC operates in over 70 countries, with a strong presence in Europe, North

America, Asia, and Africa. Its global operations span upstream (oil and gas exploration

and production), midstream (transportation and trading), and downstream (refining,

chemicals, and retail fuel stations). The company is also expanding into renewable

energy, including wind, solar, hydrogen, and electric vehicle charging networks. With a

vast supply chain and customer base, Shell serves diverse markets, from industrial and

commercial sectors to everyday consumers through its fuel and energy products.

Business Segments

Shell operates in three primary business divisions:

Shell PLC operates through several primary business segments:

● Upstream: Focuses on the exploration and extraction of crude oil and natural gas.

In 2022, Shell's upstream production was approximately 1.9 million barrels of oil

equivalent per day, with key operations in regions like the North Sea, the Gulf of

Mexico, Nigeria, and Brazil. As of December 31, 2022, Shell's proved oil and gas

reserves totaled approximately 9.6 billion barrels of oil equivalent.

● Integrated Gas: Manages liquefied natural gas (LNG) operations and the

conversion of natural gas into liquids. In the third quarter of 2024, Shell's LNG

sales volumes reached 17 million metric tons, reflecting a 13% increase in profits

for this segment.

● Downstream: Encompasses refining, marketing, and distribution of oil products.

Shell's refining capacity is substantial, with interests in multiple refineries

worldwide. The company also maintains a vast retail network, operating

approximately 46,000 service stations across 70 countries, serving over 32 million

customers daily.

● Chemicals: Involves the production of petrochemicals used in various industries.

Shell's chemical plants are located in countries including the USA, Canada,

Singapore, China, Germany, the UK, and the Netherlands. In 2021, the chemicals

segment generated revenues of $17 billion, with a production volume of 14.2

million tonnes.

● Renewables:The company is also expanding into renewable energy sectors,

including wind, solar, hydrogen, and electric vehicle charging infrastructure,

aligning with global sustainability trends.

3.4.1 Income Statement Analysis

Revenue Trends

Shell PLC’s revenue has fluctuated significantly over the past four years due to oil price

volatility, economic disruptions, and shifts in global energy demand.

● 2020 (Pandemic Impact): Revenue was $180.54B, declining sharply due to the COVID-

19 crisis, which led to reduced oil demand and lower prices.

● 2021 (Recovery Phase): Revenue rebounded 44.8% to $261.5B, as global energy

demand picked up with economic recovery.

● 2022 (Boom Year): Revenue surged to $381.3B, benefiting from high oil prices driven by

geopolitical tensions and supply constraints.

● 2023 (Stabilization): Revenue fell 16.9% to $316.6B, reflecting a more balanced oil

market and moderating crude prices.

Net Income Trends

Shell has experienced notable earnings volatility, with a major loss in 2020 but a strong rebound

in subsequent years.

● 2020: Reported a net loss of $21.68B, primarily due to pandemic-related disruptions and

lower oil prices.

● 2021: Swung back to profitability with $20.1B in net income as oil markets recovered.

● 2022: Net income peaked at $42.3B, driven by record-high crude prices.

● 2023: Profitability declined to $19.4B, in line with revenue adjustments and moderating

oil prices.

Cost of Sales and Margins

Shell's gross margin has fluctuated in response to external economic conditions and changes in

operational efficiency.

● Gross Profit Margin: Declined from 36.1% (2020) to 33.1% (2022) before stabilizing at

34.1% (2023).

● Net Profit Margin: Fell to -12% in 2020, recovered to 7% (2021), 11% (2022), and settled

at 6% (2023).

3.4.2 Balance Sheet Analysis

Total Assets and Equity

Shell PLC maintains a stable asset base while adjusting its equity levels based on earnings,

dividends, and share buybacks.

● Total Assets: Grew from $379.27B (2020) to a peak of $443.18B (2022) before slightly

declining to $413.02B (2023) due to asset divestitures and capital efficiency measures.

● Total Equity Growth: Increased from $158.47B (2020) to $200.57B (2022) before

adjusting to $182.00B (2023), reflecting capital returns to shareholders and retained

earnings impact.

Liabilities and Debt Structure

Shell has managed liabilities prudently, balancing debt repayment and capital allocation.

● Total Liabilities: Grew from $220.80B (2020) to $242.61B (2022) before declining to

$231.02B (2023), showing financial discipline in managing obligations.

● Debt Levels: Decreased from $108.00B (2020) to $95.00B (2023), indicating reduced

reliance on debt financing.

Debt-to-Equity Ratio

● 2020: 0.69 → Higher leverage due to pandemic-related financial pressures.

● 2021: 0.51 → Debt reduction as profitability improved.

● 2022: 0.44 → Strong earnings led to lower leverage.

● 2023: 0.43 → Stabilization after capital returns and investment adjustments.

3.4.3 Cash Flow Statement Analysis

Free Cash Flow Trends

Shell PLC consistently generates strong operating cash flows, enabling capital investments,

debt reduction, and shareholder distributions.

● 2020: Free cash flow was $50.69B, as lower oil prices pressured cash generation.

● 2021: Increased to $64.10B, supported by oil price recovery and higher demand.

● 2022: Surged to a record $91.01B, benefiting from high crude prices and strong refining

margins.

● 2023: Moderated to $77.18B, reflecting normalizing oil prices and production

adjustments.

Dividend Payments

Shell has maintained stable dividend distributions while ensuring financial flexibility.

● 2020: $7.42B in dividends, despite pandemic-related pressures.

● 2021: Slightly reduced to $6.25B as Shell optimized capital allocation.

● 2022: Increased to $7.40B, in line with record cash flows and higher earnings.

● 2023: Further increased to $8.39B, emphasizing a strong capital return policy.

3.4.4 Key Financial Ratios Analysis

Profitability Analysis

● Fluctuating Profit Margins: Shell’s net profit margin peaked at 11% in 2022 before

declining to 6% in 2023, highlighting the impact of oil price cycles. While strong, it

remains lower than Saudi Aramco’s margins, reflecting higher operating costs.

● Cyclical ROE & ROA: Shell’s ROE surged from -13.96% in 2020 to 22.21% in 2022,

before adjusting to 10.37% in 2023, showing strong but volatile shareholder returns.

ROA followed a similar pattern, peaking at 9.55% in 2022 before moderating to 4.77% in

2023.

Liquidity Analysis

● Stable Short-Term Liquidity: Shell’s Current Ratio increased steadily from 1.25 (2020) to

1.40 (2023), reflecting stronger working capital management and a solid ability to cover

short-term obligations.

Leverage & Debt Analysis

● Reduced Debt Dependence: Shell lowered its Debt-to-Equity Ratio from 69.55% in 2020

to 43.70% in 2023, demonstrating disciplined debt management. This aligns with

industry trends of reducing leverage in response to market volatility.

● Improved Interest Coverage: Shell’s Interest Coverage Ratio rebounded from -6.60 in

2020 to 20.38 in 2022, before settling at 6.98 in 2023. While strong, this reflects a

decrease in earnings compared to peak oil price years.

4. Comparative Financial Analysis

4.1 Side-by-Side Comparison of Key Financials

The global oil & gas sector is dominated by a mix of national oil companies (NOCs) and

integrated oil majors (IOCs).

Saudi Aramco, as the largest producer, leads in revenue, profitability, and financial stability

compared to ExxonMobil, Chevron, and Shell.

Financial Performance in 2024

Company

Revenue

(USD B)

Net Income

(USD B)

FCF

(USD

ROE

ROA

Debt to Equity

S Aramco

437

106.2

85.3

23.52%

16%

0.04

ExxonMo

bil

331.46

33.7

12.78%

0.14

Chevron

268.49

17.6

11.59%

0.16

Shell

289

23.7

9.92%

0.36

Key Observations

Saudi Aramco’s Revenue & Profitability Lead the Industry

● Aramco’s $437B revenue exceeds any of the other leading oil companies .

● Net income ($106.2 B) is nearly triple ExxonMobil ($33 B), showing

superior profitability.

Superior ROE & ROA Reflect Efficiency

● Aramco’s ROE (23.52%) and ROA (16%) surpass ExxonMobil and

Chevron (~12%), (7%).

● Higher returns reflect low production costs and strong asset utilization.

Lower Debt Levels Ensure Financial Flexibility

● Debt-to-Equity Ratio (0.045) is the lowest, reducing financial risk.

● Western majors (ExxonMobil: 0.14, Chevron: 0.16) also have relatively

less debt financing compared to previous years.

4.2 Cash Flow Comparisons: Strength of Cash Generation

Cash flow is a critical measure of a company’s financial resilience, dividend-paying

capacity, and reinvestment potential.

Key Observations in 2024

Company

Free Cash Flow (USD Billion)

CAPEX

CAPEX % of

Revenue

Saudi Aramco

85.3

50.3

12%

ExxonMobil

27.6

Chevron

Shell

21.1

Key Observations

Saudi Aramco Generates the Highest Cash Flow

● $85.3 B in operating cash flow is more than double Shell’s ($39B).

● ExxonMobil and Chevron are focused on returning value to customers with

Higher dividends while Aramco is increasing its capex spending.

Conservative Capital Spending Strategy

● Aramco’s Capex as % of revenue (12%) is significantly higher than the

industry peers indicating increase in investments.

● Western companies are investing more aggressively in renewables & LNG

while divesting the low yielding assets.

4.3 Efficiency Metrics

Efficiency ratios measure how effectively a company utilizes its assets to generate

revenue

Key Observations in 2024

Company

CAPEX % of

Revenue

Asset Turn Over

Ratio

Saudi Aramco

12%

0.67

ExxonMobil

0.82

Chevron

0.75

Shell

0.72

Key Observations

ExxonMobil & Shell Have Higher Asset Turnover

● ExxonMobil’s 0.82x asset turnover exceeds Chevron’s 0.75x, reflecting

greater efficiency in revenue generation.

● Aramco’s lower ratio is due to its massive infrastructure and reserves,

focusing on stability over rapid asset turnover.

CapEx Investments Align with Growth Strategy

● Saudi Aramco’s 12% CapEx-to-Revenue ratio suggests a disciplined capital

investment approach.

● ExxonMobil and Shell invest more heavily in future growth, including

renewables and refining capacity.

4.4 Competitive Outlook & Future Positioning

Strengths:

Industry Leader in Profitability – Aramco’s high margins & ROE secure its dominance.

Robust Cash Flow & Low Debt – Allows large dividends and financial flexibility.

Massive Reserves & Production Scale – Ensures long-term oil market control.

Challenges:

Lower Asset Turnover vs. Western Majors – Aramco focuses on stability rather than

efficiency. Growing ESG & Renewable Pressures – Western firms invest heavily in

alternative energy, while Aramco remains oil-centric.

Future Strategies:

● Expansion in Petrochemicals & LNG – To reduce oil revenue dependence.

● Increased Investments in Carbon Capture & Hydrogen – Aligning with net-

zero targets.

● Global Refining & Fuel Distribution Growth – Strengthening presence in

Asia & Europe.

5. Valuation and Forecasting

● Intrinsic Valuation: DCF model for each company with key assumptions.

5.3.1 Chevron PLC DCF

Assumptions (obtained from 2023 Annual Report:

● 7.5% Post-Tax WACC

● 8.7% FCF Growth

● 4% Dividend Growth

● 30-40% Distribution of cash flow from operations

● 3% global growth

Chevron Corp

2023

2024

2025

2026

2027

2028

2029

Net Income

$ 21,369

$ 17,661

$ 18,364

$ 16,484

$ 14,246

$ 11,609

$ 8,519

Operations CF

31,998.2

25,406.1

61,557.9

35,640.8

34,512.7

33,063.0

1,250.6

Total Dividends

11834

11937

9691

4459

4111

-2397

Shares Outstanding

1800

Dividend Per Share

0.00

6.57

6.63

5.38

2.48

2.28

-1.33

Market Cap

$147,228

$148,512

$120,572

$55,478

$51,147

-$29,823

Stock Price

$81.79

$82.51

$66.98

$30.82

$28.42

-$16.57

● Market Multiples Comparison: Relative valuation using P/E, EV/EBITDA, and

Price/Book ratios.

Chevron PLC Market Multiples

Chevron Corp

2024

2025

2026

2027

2028

2029

Price to

Earnings

14.07

13.65

12.35

6.57

7.44

-5.91

EV/EBITDA

4.22

4.67

3.91

1.98

1.91

-0.69

Price to Book

1.22

1.21

1.49

3.25

3.52

-6.04

● Sensitivity Analysis: How changes in oil prices and production affect fair value

estimates.

Chevron PLC Sensitivity Analysis 2024

Revenues

95%

100%

105.00%

$50

$85,453

$89,950

$94,448

$60

$102,543

$107,940

$113,337

$70

$119,634

$125,930

$132,227

$80

$136,724

$143,920

$151,116

$90

$153,815

$161,910

$170,006

$100

$170,905

$179,900

$188,895

$110

$187,996

$197,890

$207,785

CFC%

95%

100%

1.05%

$50

34%

30%

27%

$60

20%

16%

12%

$70

-3%

$80

-6%

-12%

-18%

$90

-20%

-26%

-32%

$100

-33%

-40%

-47%

$110

-46%

-54%

-62%

5.4.1 Shell PLC DCF

Assumptions (obtained from 2023 Annual Report:

● 7.5% Post-Tax WACC

● 6% FCF Growth

● 4% Dividend Growth

● 30-40% Distribution of cash flow from operations

● Capital Spending projection $22-22b annually

● 3% global growth

● Market Multiples Comparison: Relative valuation using P/E, EV/EBITDA, and

Price/Book ratios.

Shell PLC Market Multiples

● Sensitivity Analysis: How changes in oil prices and production affect fair value

estimates.

Shell PLC Sensitivity Analysis

6. Investment Recommendations

● Best stock for investment based on analysis.

● Risks to watch for each company.

● Conclusion on the industry outlook and future prospects.

○ Saudi Aramco has the world’s lowest production cost per barrel ($2.80).

○ U.S. producers mainly rely on shale production, and require $40-$50 per

barrel to remain profitable

○ Approximately 10% of Saudi Aramco’s exports go to the US, so it’s

affected to a lesser extent by changes in US oil demand.

○ The new Trump administration is positioning itself to deregulate the US Oil

industry, increasing US production, which would lead to a lower cost per

barrel.

○ As the leader of OPEC, Saudi Aramco can cut production in order to

stabilize oil prices where they need to be, as well as shift sales into Asia

and Europe to make up for US demand/supply.

○ Saudi Aramco is best positioned to benefit from the Trump’s administration

on increased US oil production.

○ Exxonmobil and Chevron can’t control supply like Saudi Aramco, and are

may see lower profits as US oil production is increased, however their

refining and chemical businesses may be able to offset these losses and

provide profit stability

 
○ Shell will also be impacted, but to a lesser extend than Exon and Chevron. 
Additionally, Shell’s LNG and renewables business provide income that is 
negatively correlated to oil prices. 
 
7. Appendices & Exhibits 
● Financial Data Tables & Graphs 
● Sources: Bloomberg, company reports, analyst research :  
 
○ Saudi Aramco Annual Report: 
https://www.aramco.com/en/investors/annual-report  
○ Shell PLC Annual Report: https://reports.shell.com/annual-
report/2023/ 
○ ExxonMobil Annual Report 
https://ir.exxonmobil.com/sec-filings 
 
Chevron 10K Statement 2024 
https://chevroncorp.gcs-
web.com/node/36876/html#ide8717194b4f4760a110dbf39ab1f2e5_34 
 
Chevron Financial Statements 2024 
https://www.sec.gov/cgi-
bin/viewer?action=view&cik=93410&accession_number=0000093410-
25-000009&xbrl_type=v# 
 
 
 

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