John Goik John Glankler Christian Töpfner von Schütz

1. John Goik John Glankler Christian Töpfner von Schütz

2. Agenda • S&P 500 Energy Sector • Business & Economic Analysis • Financial Analysis / Valuation • Recommendation

3. S&P 500: # of Companies in Sectors

4. S&P 500 Energy Sector Global Industry Classification Standard (GICS)

5. S&P 500 Energy Sector

6. S&P 500: QTD Sector Performance

7. S&P 500: YTD Sector Performance

8. Energy Sector: Historical Performance

9. Energy Sector: Historical Performance

10. Energy Sector: Top 5

11. Agenda • S&P 500 Energy Sector • Business & Economic Analysis • Financial Analysis / Valuation • Recommendation

12. Oil Price - Outlook • Short Term: • High Inventories • Four month rally in prices stalled in early July • Demand down by 3.2 mb/d 2Q 2009 • Demand down by 2.2 mb/d 3Q 2009 • Demand expected to rise again by 1.4 mb/d 1Q 2010 to 85.9 mb/d • Oil price expected to be $55 on average in 3Q 2009 (Morgan Stanley) • Long Term: • Structural capacity issues • Production capacity likely to decline (weak price environment) • Utilization at 100% by 2013 • Demand limited by flat supply capacity

13. Correlation Between Crude & Stock Prices per Industry

14. Oil Supply

15. Oil Inventory

16. Oil Demand

17. Global Oil Demand

18. Future Projections • Oil Prices • Drop-off relative to past few years • Going to Hold Steady/Possibly Increase • Projections are cautiously optimistic • Oil Futures

19. Analysts Projections • Most analysts are skeptical about the near term • Global demand slashed by as much as 2.8% in 2009 • Earnings for 2009 are expected to be poor • But virtually all agree on long term growth in prices • Most predict an oil rebound late this year/early next year, projections as high as $85/barrel next year • Oil stocks themselves tend to lead the way out of a recession

20. Agenda • S&P 500 Energy Sector • Business & Economic Analysis • Financial Analysis / Valuation • Recommendation

21. Energy Sector: Top 5

22. Energy Sector: Top 5

23. Energy Sector Valuations % Change of Current Valuation From 15 Year Median

24. Industry Valuations – Trailing P/E % Change of Current Valuation From 15 Year Median

25. Industry Valuations – Forward P/E % Change of Current Valuation From 15 Year Median

26. Industry Valuations – P/S % Change of Current Valuation From 15 Year Median

27. Industry Valuations – P/CF % Change of Current Valuation From 15 Year Median

28. Industry Valuations – P/B % Change of Current Valuation From 15 Year Median

29. Industry Valuations – P/EBITDA % Change of Current Valuation From 15 Year Median

30. Agenda • S&P 500 Energy Sector • Business & Economic Analysis • Financial Analysis / Valuation • Recommendation

31. S&P 500 vs. SIM: Sector Weight Energy sector currently underweight by 137 basis points

32. Recommendation Increase weight of Energy sector by 137 basis points to par with S&P 500 : • Sector is undervalued and has mid to long-term growth potential • Current weakness should be used to add stock in this sector • Waiting until the next SIM trading window in Nov/Dec 09 could be too long since stocks will most likely move quickly on positive news • Positives: • Economic recovery (especially in China and India) • Expected rise in oil prices (mid to long-term) • Structural problems on the supply side (mid to long-term) • Risks: • High inventory/low demand in short term • Overall uncertainty in oil price predictions

33. Recommendation Industry to overweight Oil & Gas Drilling Integrated Oil & Gas Industry to underweight Oil & Gas Storage & Transportation Refining & Manufacturing

34. Energy Sector What Questions Do You Have?