Saudi Arabian Oil : Non-IFRS measures reconciliation and definitions

All amounts in millions unless otherwise stated

Non-IFRS measures reconciliations and definitions for the year ended December 31, 2021

Aramco uses certain non-IFRS financial measures to make informed decisions about its financial position and operating performance or liquidity. These non-IFRS financial measures have been included below to facilitate a better understanding of Aramco's historical trends of operation and financial position.

Aramco uses non-IFRS financial measures as supplementary information to its IFRS-based operating performance and financial position. The non-IFRS financial measures are not defined by, or presented

in accordance with, IFRS. The non-IFRS financial measures are not measurements of Aramco's operating performance or liquidity under IFRS and should not be used instead of, or considered as alternatives to, any measures of performance or liquidity under IFRS. The non-IFRS financial measures relate to the reporting periods described below are not intended to be predictive of future results. In addition, other companies, including those in Aramco's industry, may calculate similarly titled non-IFRS financial measures differently from Aramco.

Because companies do not necessarily calculate these non-IFRS financial measures in the same manner, Aramco's presentation of such non-IFRS financial measures may not be comparable to other similarly titled non-IFRS financial measures used by other companies.

Free cash flow

Aramco uses free cash flow to evaluate its cash available for financing activities, including dividend payments. Aramco defines free cash flow as net cash provided by operating activities less capital expenditures.

Free cash flow in 2021 was SAR 402,956 ($107,455), compared to SAR 184,267 ($49,137) in 2020, an increase of

SAR 218,689 ($58,318), or 118.7%.

This was largely due to higher operating

cash flows, mainly driven by stronger crude oil prices and improved refining and chemicals margins. This was partially offset by unfavorable changes in working capital, higher cash paid for the settlement of income, zakat and other taxes, an increase in capital expenditures related to crude oil increments, the Tanajib Gas Plant, other development drilling programs, and the consolidation of SABIC's full-year capital expenditures.

Free cash flow

$ billions

1072 21

	SAR			USD*
	Year ended December 31		Year ended December 31
All amounts in millions unless
otherwise stated	2021	2020	2021	2020
Net cash provided by
operating activities	522,601	285,297	139,360	76,079
Capital expenditures	(119,645)	(101,030)		(31,905)	(26,942)
Free cash flow	402,956	184,267		107,455	49,137

• Supplementary information is converted at a fixed rate of U.S. dollar 1.00 = SAR 3.75 for convenience only.

492020

All amounts in millions unless otherwise stated

Gearing

Gearing is a measure of the degree to which Aramco's operations are financed by debt. Aramco defines gearing as the ratio of net debt (total borrowings less cash and cash equivalents) to net debt plus total equity. Management believes that gearing is widely used by analysts and investors in the oil and gas industry to indicate a company's financial health and flexibility.

Aramco's gearing ratio was 14.2% as at December 31, 2021, compared to 23.0% as at December 31, 2020. The decrease in gearing was a result of higher cash and cash equivalents as at December 31, 2021, mainly driven by stronger operating cash flows attributable to higher crude oil prices, improved refining and chemicals margins, the consolidation of SABIC's full-year results and cash proceeds in connection with Aramco's crude oil pipeline transaction.

Gearing

%

14.22021

	SAR			USD*
	As at December 31		As at December 31
All amounts in millions unless
otherwise stated	2021	2020	2021	2020
Total borrowings (current
and non-current)	510,921	536,077	136,246	142,954
Cash and cash equivalents	(299,579)	(207,232)		(79,888)	(55,262)
Net debt	211,342	328,845	56,358	87,692
Total equity	1,280,668	1,101,094		341,512	293,625
Total equity and net debt	1,492,010	1,429,939		397,870	381,317
Gearing	14.2%	23.0%		14.2%	23.0%

• Supplementary information is converted at a fixed rate of U.S. dollar 1.00 = SAR 3.75 for convenience only.

232020.0