Saudi Aramco

Free cash flow durability and the performance-linked dividend mechanism remain the core long thesis through the 2030 capex cycle.

Saudi Aramco screens as the most defensive integrated oil major globally on a unit-economics basis. The company combines the lowest lifting cost in the industry with a sovereign-backed capital allocation framework that, since 2024, has explicitly tied incremental dividend distribution to realized free cash flow. We view this structure as a feature rather than a constraint: it removes the typical major-oil incentive to sustain headline yield through the trough of the cycle, and instead lets payout normalize with cash generation. Through the 2030 capex window — dominated by Jafurah unconventional gas, Master Gas Network Phase 3, and the downstream chemicals build-out — we expect upstream production discipline (OPEC+) to remain the binding constraint on top-line growth, while gas and chemicals provide the incremental EBITDA. Our SAR 34.50 target reflects a mid-cycle DCF with USD 75/bbl long-run Brent and a 9.0% WACC, equivalent to ~12.5x 2027E P/E. Key catalysts: Jafurah Phase 1 first gas, dividend reaffirmation post-2026 budget, and any signal on partial monopoly pricing reform for downstream products.