A comparative analysis of Shell Oil and Saudi Aramco by Hussain Hakim Ali Khan.pptx

7/23/2019 A comparative analysis of Shell Oil and Saudi Aramco by Hussain Hakim Ali Khan.pptx

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A comparative analysis

Saudi Aramco vs. Shell

Global

By: Hussain Hakim Ali KhanDate of Completion: !th"ovember #$%


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INTRODUCTION TO SAUDIARAMCO COMPANY

State&o'ned company

(ocation: Kin)dom of Saudi Arabia

*ully inte)rated petroleum enterpriseinvolved in e+ploration, production,

re-nin), marketin), distributin) andpetrochemical e+ploration.

*ourth lar)est natural )as reserves


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INTRODUCTION TO SHELLLO!AL COMPANY

Business industry/: 0ner)y and

1etrochemical company

1roducts: 0+plorin) crude oil and natural )as,manufacturin) petrochemical products

1resence: 2# countries

0mployees: 3 4#,###

1roduct cate)ory: on the road and solutionsfor businesses.


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HISTORY O" SAUDI ARAMCOCOMPANY

5il discoveries and e+plorations leadthe transformation of Saudi Arabia

from desert nation into a moderneconomy

6he )overnment drasticallyincreased its shareholdin) from %7in $4!8 to fully o'ned in $42#.


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HISTORY O" SHELL OILCOMPANY

9arcus, alon) 'ith his brother Samuelembarked upon to found a company namedShell 6ransport and 6radin) Company.

*acilitated e+portin) British merchandise toapan and import of commodities from the9iddle 0astern nations

6urned lar)est producer of su)ar, ;our and'heat.


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!EINNINS O" OILTRANSPORTATION #SHELL$


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DI""ERENTIAL ANALYSIS!ET%EEN THE T%O COMPANY

5perations of Shell 5il Company = not involved in oil incontrast to Saudi Aramco Company.


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PRODUCT LINES & SAUDIARAMCO COMPANY

Gasoline

"atural Gas

1etrochemical products

*ourth lar)est producer of natural)as.


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PRODUCT LINE & SHELL OILCOMPANY

Subdivided into t'o cate)ories:

$. 5n the road

. Solutions for business

8. Solutions


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PRODUCT LINE ' ON THEROAD

$. Card services

. *uels

8. 5il (ubricants

>. Shell Station (ocator

%. (oyalty

?. Shell motorsport


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PRODUCT LINE & SOLUTIONS"OR !USINESS

$. Shell (1G

. Shell aviation

8. Shell chemicals

>. Shell commercial fuels

%. Shell sulphur solutions

?. Shell marine products

!. Shell tradin) and shippin)

2. Shell lubricants for suppliers

4. Shell lubricants for business


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DI""ERENTIAL POINTS!ET%EEN T%O COMPANIES

Greater product ran)e of shell

Shell has more diversi-ed andvarie)ated product line than SaudiAramco

Shell = )lobal presence

Saudi Aramco = restricted to $#&$%

developed countries


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"INANCIAL ANALYSIS & SHELLLO!AL COMPANY

(o'

$. 5peratin) 1ro-t 9ar)in = same in #$> and #$8

. "et pro-t mar)in = 87 #$>/, >7 #$>/

. @eason:$. 0conomic do'nturn due to fallin) oil prices. 0+pandin) operations in underdeveloped nations


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@50 = 47

@5C0 = !7 and @5A = >7

Current @atios, uick @atios and Cash cover ratios =$$?7, 487 and %7 in #$> as compared to $$$7, !47and >87 in #$8

Debt to total asset ratio = $27 in #$> and $!7 in #$8

Cheaper debt cost than that of common or preferredshare

6a+ savin)s


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(oss of pro-ts due to intereste+pense.

, +# in #$8

"et pro-t interest cover ratio in #$8$#+/ in #$> 2+/


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NON "INANCIAL ANALYSIS &SAUDI ARAMCO COMPANY

$. 5r)aniation structure

. Subsidiaries and oint ventures

8. 9arket

>. 1eople in Aramco


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ORANI(ATIONSTRUCTURE

$##7 )overnment stake

"ot listed in stock market and noshare issued

"o e+ternal auditin) and no -nancialstatement issuance


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SU!SIDIARIES AND )OINT*ENTURES

Global partnerships, oint venturesand subsidiaries a)reements

Enmatched reliability is its hallmark


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MAR+ET

5perational infrastructure = SaudiArabia

"o competition due to re)ulations bySaudi )overnment


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PEOPLE

Diversity of 4#,### employees

5ptimies the potential of its peopleand the or)aniation per se.


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NON "INANCIAL ANALYSIS O"SHELL OIL

5r)aniation Structure

Subsidiaries and oint ventures

Ep'ard and do'n'ard operations

9arket

Health and Safety


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ORANI(ATIONSTRUCTURE

(isted in diFerent stock markets indiFerent countries

1ublic (imited Company


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SU!SIDIARIES AND )OINT*ENTURES

Au)mented )ro'th level byacuisitions, partnerships and oint

ventures

Global presence and hi)h reputation


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UP%ARD AND DO%N%ARDOPERATIONS

ertical


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MAR+ET

2# nations = )lobal presence

Hi)h level of competition ande+pansion has enabled hirin) ofcompetitive and hi)hly skilledmanpo'er and hi)h ualityintellectual capital


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HEALTH AND SA"ETY

*e'er re)ulations in health andsafety and lo' investment

"i)eria = human ri)hts violationchar)es and uproar over thisinfrin)ement.

Hi)h reputation risk in this domain.


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S%OT ANALYSIS O" SAUDIARAMCO

Stren)ths:$. 0+ploration: 1ositive "1 proects of

oil drills and e+ploration andincreasin) ri)s due to lo' cost.

. @elations 'ith Saudi Government:Stron) relations and receives stron)patrona)e.


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Ieaknesses:

$. "ot diversi-ed sin)le commodity

.


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5pportunities:

Demand:

$. Bur)eonin) oil demand. (o' price elasticity

. 1etrochemicals:

$. Cost competitiveness arisin) from lo'prices

. Diversi-cation of commodities to includenon&oil products


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6hreats:1rices

$. olatility has enhanced risk and lo'prices are 'orsenin) the condition

.6errorism:. Con;icts in Syria and


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S%OT ANALYSIS O" SHELLOIL

Stren)ths:Stron) market position:

$. 2# countries and 4>,### employees. Decrease -nancial risk

.(atest 6echnolo)y:.Helped e+ploration of ne' sites.


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S%OT ANALYSIS O"SHELL OIL

Stren)ths contd./Brand @eco)nition:

$. 1resence and uality of service. Brand 0uity

. ertical


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Ieaknesses:Safety @ecords:$. *e'er rules and re)ulations related to

health and 'ell bein) of the employees. Accidents and -nancial losses related to

la'suits

. Sie and scale of )lobal operations:$.


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5pportunities:


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5pportunities:$. Diversi-cation to non&oil

commodities. (o' natural )as prices

S%OT ANALYSIS O"


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6hreats:1rices:

$. 1rice volatility. (o' prices

. 1olitical issues:$. 6hreatens 5perations. 0.). "i)eria case and Hoyer case

S%OT ANALYSIS O"


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6hreats: 0conomic Do'nturns:

$. (ed to decreased demand of fossilfuels

. Ieather$. 9ay lead to economic shocks e.)

Hurricane Hike


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CONCLUSION

Shell 5il is a lar)er company thanSaudi Aramco 'ith its diversi-ed

product lines conducive for itspro-tability and portfolio risk*inancial @isk for Shell 5il is hi)her

due to its privateness and lack ofany backin) unlike in Saudi Aramco

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A comparative analysis of Shell Oil and Saudi Aramco by Hussain Hakim Ali Khan.pptx

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