A brief description of the oil sector 2.- Calculations of inventory ratios, other financial ratios and industry ratios using the available financial information 3.- A peer evaluation of the selected companies and a final recommendation (justified and supported) of which company should be in the model portfolio

PRCF1-126 A I (1).pdf 2 X G OER C:/Users/lamsh/Downloads/CF1-126-A-1%20(1).pdf ** D YouTube M Gmail 2 Microsoft Edge ? 1 25 + B | A | It's November 2016 and Theres finished her BBA degree a few months ago in June. She took 8 few weeks to celebrate and then she started looking for a job. The hiring environment has been a He camplicated in recent months. She senter resume and applications loreal number of companies and contacts throughout her network just to get a few interviews. In the end, she had four rounds of interviews at one of the top investment banks in Europe. So when she finally got the call teling her that she got the job she was enthusiastic. She would be working as a junior equity research analyst in one of the best companies, and she loved the challenge. The first weeks had been a lot of work getting to know procedures and remembering names, but her work hadn't been very exciting. So when she got the call from the head of the Research Department she was very nervous. Ignacio asked her to come to the office and started explaining the new Assignment to her. She was going to help with coverage of the oil sector Ignacia explained the consequences of getang it right Currently the model portfolio had two companies from the sector. Total (European) and Chevron (USA) Due to turbulence that the sector was experiencing the head of research decided to reduce exposure to the sector so only one company could remain in the portfolio. Therese needs to recommend which is the better option frecommend which stock to hold and which one to sel Theresa is exched by the opportunity to show the knowledge that she gained in her finance and caunting classes. She wants to do things the right way by being organized. When she began to work on the assignment, she remembered the Top-down approach that starts with the macro context then looks at the sector and finishes by looking at the specifics of the company. Her first step was to look at the macroeconomic content and then to look at the drivers of the sector. She chose to focus on the price evolution of ol and prepared both a long-term price graph (Exhibit 1) and a shorter graph evolution (Exhibit 2 She could see strong surgs in the long term graph, which, with the remarch, she corrected with the most relevant moments in the sector Locking at the short term graph, she saw a sharp drop in oil prices. Intuitively, she thought that this should be hurting the sector, but it was too early in the arch to see all of the possible implications of this recent trend. Next, Theresa locked at demand and supply forces and investigated OPEC. She found that the Bedien was distributed mainly bulweer three types of companies Colem, upstream and Integrated "Malars) Then she gathered the most relevant financial Information (Appendix) of the companies in the portfolio Chevron and Total). She would use this information to perform a relative valuation, comparing the most relevant ratios between peer companies: I L 99+ S 0 ENG 4:50 12/2/2021 PRCF1-126 A I (1).pdf 2 X G OER C:/Users/lamsh/Downloads/CF1-126-A-1%20(1).pdf ** D YouTube M Gmail 2 belicrosoft Edge ? 2 25 + D | Am Profitability Liquidity and Solvency . Inventory Turnover one of the key ratios in the sector where managing a commodity in a volatile environment can really make the difference in terms of performance Industry Specific Ratios: Market Cap Proven Reserves in milion barrels of all equivalent (Mboe) also known as Price Proven Reserves (how many times proven reserves of oil and gas Are included in stock price a kind of PER specific to the industry Market Ratios like Price Earring Ratio (PER) Aller a long afternoon calculating ratios, se ted an idea of her recommendation, clear winner! Exhausted, she went to take a break at the coffee machine where she ran into one of the senior analysts, Bruna. She way yo excited about her report that she old him everything about it. Bruno stopped for a second to ponder the information and said, "Are you sure that all of your ratios are Comble? Are you making the right investment decision? Have you looked at recent political tensions affecting the sector and have you read about the LIFO Coalition7" Exhausted, Theresa just couldn't think anymore or se she had made a mistake, so she decided to go home and rest. In the moming, she woke up feeling refreshed. Suddenly, she remembered something from her university years. She went back to work and reviewed her report. At 15:00, she was ready to present it to her boss. She knew that in the stock markets, you never know what is going to happen in the next 12 months, but at least she knew that now she had done her work as an analyst correctly Please hep Thero write the professional report stating the appropriate investment recommendation. To justfy your decision you should include the following topics 1.- A brief description of the ol sector 2. Calculations of inventory ratios, other financial ratios and Industry ratlos using the available financial information 3.- A peer evaluation of the selected companies and a fral recommendation justified and supported) of which company should be in the model portfolio I L 99+ S 0 ENG 4:50 12/2/2021 PRCF1-126 A I (1).pdf 2 X G OER C:/Users/lamsh/Downloads/CF1-126-A-1%20(1).pdf ** D YouTube M Gmail 2 Microsoft Edge ? 3 25 Q + | Am EXHIBIT 1 1 Crude oil prices react to a variety of geopolitical and economic events Globale How Wom MM US 9-11 Sausando cere . Asthand This OPEC atarat 12 wpd OPEC orgots 17 2 2010 A Orge Irm o - Imported requistion control de l -l crude oil price Suraus Energy Instration, Theron estera EXHIBIT 2 Rising oil prices held down global oil consumption growth from 2005-2008, despite high economic growth percent change years ear) price per avere 2010) 200 foreca I L 99+ S 0 ENG 4:50 12/2/2021 PRCF1-126 A I (1).pdf 2 X OER C:/Users/lamsh/Downloads/CF1-126-A-1%20(1).pdf ** D YouTube M Gmail 2 Microsoft Edge ? 4 25 + | A% APPENDIX A SUNWHY BAENET FINANC. FIGLINES FROM TURAL TOTAL SUMMARY BALANCE SHEET S Millions 2014 Inventory 15.196 Total Current Assets 77.977 Long Term Assets 151.821 TOTAL ASSETS 229.798 2015 13.116 70.236 154.248 224.484 Current Liabilities Long Term Liabilities TOTAL LIABILITIES Equity TOTAL LIABILITIES AND EQUITY 53.673 82.594 136.267 93.531 229.798 50.975 78.100 129.075 95.409 224.484 TOTAL SUMMARY INCOME STATEMENT S Millions Revenues Cost of Goods Sold EBITDA Earning before taxes Taxes Non controlling interests NET INCOME 2014 212.018 152.975 34.123 12.864 8.614 6 4.244 2015 143.421 96.671 26.740 6.439 1.653 301 5.087 I ADDITIONAL INFO Dute as of 31/12/2015 Share Price Weighted average shares (in millions) 44,95 2.304 Total Liquid Proven reserves (Mboel 11.580 (1) Inventory method FIFO Source: Co reports and Morningstar I L L 99+ S 0 ENG 4:50 12/2/2021 PRCF1-126 A I (1).pdf 2 X G OR C:/Users/lamsh/Downloads/CF1-126-A-1%20(1).pdf ** D YouTube M Gmail 2 Microsoft Edge ? ! 5 25 + B A B. SUMERY OF RELEVANT FINANCIAL FUSE NON CHERION CHEVRON SUMMARY BALANCE SHEET S Millions 2014 Inventary 6.505 Total Current Assets 42.232 Long Term Assets 223.794 TOTAL ASSETS 266.026 2015 6.334 35.347 230.756 266.103 Current Liabilities Long Term Liabilities TOTAL LIABILITIES Equity TOTAL LIABILITIES AND EQUITY 31.926 77.909 109.835 156.191 266.026 26.464 85.753 112.217 153.136 266.103 CHEVRON SUMMARY INCOME STATEMENT S Millions Revenues Cast of Goods Sold EBITDA Earning before taxes Taxes Non controlling interest NET INCOME 2014 211.970 119.671 47.995 31.202 11892 69 19.241 2015 138477 69.751 25.879 4.842 132 123 4.587 ADDITIONAL INFO Data as of 31/12/2015 Share Price $ Weighted average shares in millions) Tutal Liquid Proven reserves (Mbue) 89.96 1.868 I 11.169 (1) Inventory method LIFO 2014 8135 2015 3745 LIFO Reserve I L 99+ S 0 ENG 4:50 12/2/2021 PRCF1-126 A I (1).pdf 2 X G OER C:/Users/lamsh/Downloads/CF1-126-A-1%20(1).pdf ** D YouTube M Gmail 2 Microsoft Edge ? 1 25 + B | A | It's November 2016 and Theres finished her BBA degree a few months ago in June. She took 8 few weeks to celebrate and then she started looking for a job. The hiring environment has been a He camplicated in recent months. She senter resume and applications loreal number of companies and contacts throughout her network just to get a few interviews. In the end, she had four rounds of interviews at one of the top investment banks in Europe. So when she finally got the call teling her that she got the job she was enthusiastic. She would be working as a junior equity research analyst in one of the best companies, and she loved the challenge. The first weeks had been a lot of work getting to know procedures and remembering names, but her work hadn't been very exciting. So when she got the call from the head of the Research Department she was very nervous. Ignacio asked her to come to the office and started explaining the new Assignment to her. She was going to help with coverage of the oil sector Ignacia explained the consequences of getang it right Currently the model portfolio had two companies from the sector. Total (European) and Chevron (USA) Due to turbulence that the sector was experiencing the head of research decided to reduce exposure to the sector so only one company could remain in the portfolio. Therese needs to recommend which is the better option frecommend which stock to hold and which one to sel Theresa is exched by the opportunity to show the knowledge that she gained in her finance and caunting classes. She wants to do things the right way by being organized. When she began to work on the assignment, she remembered the Top-down approach that starts with the macro context then looks at the sector and finishes by looking at the specifics of the company. Her first step was to look at the macroeconomic content and then to look at the drivers of the sector. She chose to focus on the price evolution of ol and prepared both a long-term price graph (Exhibit 1) and a shorter graph evolution (Exhibit 2 She could see strong surgs in the long term graph, which, with the remarch, she corrected with the most relevant moments in the sector Locking at the short term graph, she saw a sharp drop in oil prices. Intuitively, she thought that this should be hurting the sector, but it was too early in the arch to see all of the possible implications of this recent trend. Next, Theresa locked at demand and supply forces and investigated OPEC. She found that the Bedien was distributed mainly bulweer three types of companies Colem, upstream and Integrated "Malars) Then she gathered the most relevant financial Information (Appendix) of the companies in the portfolio Chevron and Total). She would use this information to perform a relative valuation, comparing the most relevant ratios between peer companies: I L 99+ S 0 ENG 4:50 12/2/2021 PRCF1-126 A I (1).pdf 2 X G OER C:/Users/lamsh/Downloads/CF1-126-A-1%20(1).pdf ** D YouTube M Gmail 2 belicrosoft Edge ? 2 25 + D | Am Profitability Liquidity and Solvency . Inventory Turnover one of the key ratios in the sector where managing a commodity in a volatile environment can really make the difference in terms of performance Industry Specific Ratios: Market Cap Proven Reserves in milion barrels of all equivalent (Mboe) also known as Price Proven Reserves (how many times proven reserves of oil and gas Are included in stock price a kind of PER specific to the industry Market Ratios like Price Earring Ratio (PER) Aller a long afternoon calculating ratios, se ted an idea of her recommendation, clear winner! Exhausted, she went to take a break at the coffee machine where she ran into one of the senior analysts, Bruna. She way yo excited about her report that she old him everything about it. Bruno stopped for a second to ponder the information and said, "Are you sure that all of your ratios are Comble? Are you making the right investment decision? Have you looked at recent political tensions affecting the sector and have you read about the LIFO Coalition7" Exhausted, Theresa just couldn't think anymore or se she had made a mistake, so she decided to go home and rest. In the moming, she woke up feeling refreshed. Suddenly, she remembered something from her university years. She went back to work and reviewed her report. At 15:00, she was ready to present it to her boss. She knew that in the stock markets, you never know what is going to happen in the next 12 months, but at least she knew that now she had done her work as an analyst correctly Please hep Thero write the professional report stating the appropriate investment recommendation. To justfy your decision you should include the following topics 1.- A brief description of the ol sector 2. Calculations of inventory ratios, other financial ratios and Industry ratlos using the available financial information 3.- A peer evaluation of the selected companies and a fral recommendation justified and supported) of which company should be in the model portfolio I L 99+ S 0 ENG 4:50 12/2/2021 PRCF1-126 A I (1).pdf 2 X G OER C:/Users/lamsh/Downloads/CF1-126-A-1%20(1).pdf ** D YouTube M Gmail 2 Microsoft Edge ? 3 25 Q + | Am EXHIBIT 1 1 Crude oil prices react to a variety of geopolitical and economic events Globale How Wom MM US 9-11 Sausando cere . Asthand This OPEC atarat 12 wpd OPEC orgots 17 2 2010 A Orge Irm o - Imported requistion control de l -l crude oil price Suraus Energy Instration, Theron estera EXHIBIT 2 Rising oil prices held down global oil consumption growth from 2005-2008, despite high economic growth percent change years ear) price per avere 2010) 200 foreca I L 99+ S 0 ENG 4:50 12/2/2021 PRCF1-126 A I (1).pdf 2 X OER C:/Users/lamsh/Downloads/CF1-126-A-1%20(1).pdf ** D YouTube M Gmail 2 Microsoft Edge ? 4 25 + | A% APPENDIX A SUNWHY BAENET FINANC. FIGLINES FROM TURAL TOTAL SUMMARY BALANCE SHEET S Millions 2014 Inventory 15.196 Total Current Assets 77.977 Long Term Assets 151.821 TOTAL ASSETS 229.798 2015 13.116 70.236 154.248 224.484 Current Liabilities Long Term Liabilities TOTAL LIABILITIES Equity TOTAL LIABILITIES AND EQUITY 53.673 82.594 136.267 93.531 229.798 50.975 78.100 129.075 95.409 224.484 TOTAL SUMMARY INCOME STATEMENT S Millions Revenues Cost of Goods Sold EBITDA Earning before taxes Taxes Non controlling interests NET INCOME 2014 212.018 152.975 34.123 12.864 8.614 6 4.244 2015 143.421 96.671 26.740 6.439 1.653 301 5.087 I ADDITIONAL INFO Dute as of 31/12/2015 Share Price Weighted average shares (in millions) 44,95 2.304 Total Liquid Proven reserves (Mboel 11.580 (1) Inventory method FIFO Source: Co reports and Morningstar I L L 99+ S 0 ENG 4:50 12/2/2021 PRCF1-126 A I (1).pdf 2 X G OR C:/Users/lamsh/Downloads/CF1-126-A-1%20(1).pdf ** D YouTube M Gmail 2 Microsoft Edge ? ! 5 25 + B A B. SUMERY OF RELEVANT FINANCIAL FUSE NON CHERION CHEVRON SUMMARY BALANCE SHEET S Millions 2014 Inventary 6.505 Total Current Assets 42.232 Long Term Assets 223.794 TOTAL ASSETS 266.026 2015 6.334 35.347 230.756 266.103 Current Liabilities Long Term Liabilities TOTAL LIABILITIES Equity TOTAL LIABILITIES AND EQUITY 31.926 77.909 109.835 156.191 266.026 26.464 85.753 112.217 153.136 266.103 CHEVRON SUMMARY INCOME STATEMENT S Millions Revenues Cast of Goods Sold EBITDA Earning before taxes Taxes Non controlling interest NET INCOME 2014 211.970 119.671 47.995 31.202 11892 69 19.241 2015 138477 69.751 25.879 4.842 132 123 4.587 ADDITIONAL INFO Data as of 31/12/2015 Share Price $ Weighted average shares in millions) Tutal Liquid Proven reserves (Mbue) 89.96 1.868 I 11.169 (1) Inventory method LIFO 2014 8135 2015 3745 LIFO Reserve I L 99+ S 0 ENG 4:50 12/2/2021