Agenda

1. Michael Korn Mario Knezevic SashiKommineni

2. Agenda • Sector Overview Recap • Halliburton • Valero • Kinder Morgan • Enterprise Products • Recommendation

3. Energy Sector Weights

4. Energy Sector SIM Portfolio

5. Halliburton – Business Overview • One of the market’s top players in the Energy sector, and more specifically, the Energy Equipment and Services industry. • Has a global reach and is known for being very diversified in its operations. • The company has a strong foothold in its industry due to a cost-leadership strategy and continuous technological innovations

6. Halliburton – Business Overview • Founded in 1919 • Headquartered in Houston, Texas and Dubai, United Arab Emirates • Operations expand across 70+ countries • Roughly 50,000 employees • 2 main business segments divided into 14 product service lines

7. 5-Year HAL vs. S&P Energy Sector

8. HAL - Growth Drivers and Risks Growth Drivers • Technological advancements • Increase in oil prices • Opportunity in international economies • Diversified services Risks • Economic and political instability worldwide • Decrease and volatility in oil prices • Volume of capital spending by customers • Subjection to cyber/security attacks with increasing presence of technology

9. HAL – Financial Analysis

10. HAL – Financial Analysis

11. HAL – Multiples

12. HAL - Valuation Terminal Discount Rate – 10.50% Terminal FCF Growth Rate – 4.00% Current Price - $44.58 Target Price - $49.33 10.65% Upside 12.27% Upside with Dividend Yield

13. HAL – Sensitivity Analysis

14. Valero – Business Overview • One of the Energy sector’s majors players and a leader in the Oil & Gas Refining and Marketing industry • Comprised of its refining business, ethanol division, and master limited partnership of Valero Energy Partners which handles most of its logistics network • Has been one of the top-performing stocks in the energy sector, along with some of the other major oil refiners

15. Valero – Business Overview Recommendation: HOLD Ticker VLO Sector Energy Industry Oil & Gas Refining and Marketing Current Price (as of 11/3/2017) $80.88 Price Target $86.48 Upside 6.9% • Founded in 1980 • Headquartered in San Antonio, TX • Operates 15 refineries in North America and can refine up to 3.1 million barrels per day • Employs around 10,000 people • Was one of the largest retail operators (about 6,800 outlets) until they spun off their retail operations in 2013 Market Data Market Capitalization $36.071 billion Shares Outstanding 441.66 million 52-Week Price Range $58.47- $80.68 Beta 0.96 Financial Data (FY 2016) Revenue $75,659 Revenue Growth (YoY) -14% Operating Income $3,572 million Forward Dividend Yield: 3.60%

16. 1-Year VLO vs. S&P 500

17. VLO - Growth Drivers and Risks Growth Drivers • Benefits from VLP • Rising crack spreads • Increased oil demand • Widening Brent-WTI spread • Projects to improve refineries almost complete Risks • Oil price volatility • Potential for crack spreads to fall • High FCFs already baked into stock price

18. VLO – Financial Analysis • Profit Margin • Operating • ROA Margin • ROE Margin

19. VLO – Financial Analysis • High EPS • Low for other multiples

20. VLO - Valuation Terminal Discount Rate – 10.75 Terminal FCF Growth Rate – 3.75 Current Price - $80.88 Target Price - $86.48 6.9 % Upside

21. VLO – Sensitivity Analysis

22. Kinder Morgan – Business Overview • Founded as Kinder Morgan Energy Partners (KMP) in 1997 • Created several other companies listed in the stock exchange. • Kinder Morgan Management, LLC (NYSE: KMR) was formed to facilitate institutional ownership of KMP equity. • Completed a $38billion acquisition of El Paso Corp and created a publicly traded entity (NYSE: EPB) to its family of companies. • In 2014, all publicly held shares/units of KMP, KMR and EPB were acquired in a $76billion transaction. Kinder Morgan is now one publicly traded company with a ticker on the NYSE of KMI. • Headquartered in Houston, TX • one of the largest energy infrastructure companies in North America. The company specializes in owning and controlling oil and gas pipelines and terminals. • Kinder Morgan owns an interest in or operates approximately 84,000 miles of pipelines and 155 terminals

23. 5-Year KMI vs. S&P 500

24. KMI - Growth Drivers and Risks Growth Drivers • Asset footprint • Increased oil demand Risks • Oil price volatility • Safety Issues • Company fundamentals Picture shows asset footprint of KMI (Source: KMI Investor presentation)

25. KMI – Company Fundamentals • KMI has built a large asset base across the energy spectrum in the U.S • Achieved by aggressively purchasing third party assets of all sizes. • Rising acquisition costs create need for higher energy prices to justify paying increasing valuations. • KMI has a debt that is higher than its equity • With energy prices still depressed, this weighs on fundamental outlook. • In late 2015, management slashed the company’s dividend by roughly 75%, leaving its current yield in the 2.75% range, from as high as over 14%. So, it’s dividend yield isn’t great as well.

26. KMI - Valuation Terminal Discount Rate : 10% Terminal FCF Growth Rate : 4% Current Price: $17.46 Target Price: $11.27 -35.5% downside

27. KMI – Sensitivity Analysis

28. EPD – Business Overview • Enterprise Products Partners L.P. is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals. • Headquartered in Houston, TX. • Has grown significantly since its IPO in July 1998, increasing its asset base from $715 million to $52 billion at December 31, 2016

29. EPD – vs S&P500 vs KMI

30. EPD - Valuation Terminal Discount Rate : 10% Terminal FCF Growth Rate : 4% Current Price: $26.39 Target Price: $35.61 +34.9% upside

31. Recommendation • Recommendations bring our SIM portfolio weight to S&P 500 market weight