Introduction to the report

Transcription

1 JANUARY 2011 This document is the property of Rystad Energy. The document must not be reproduced or distributed in any forms, in parts or full without permission from Rystad Energy. The information contained in this document is based on Rystad Energy s global oil & gas database UCUBE, public information from company presentations, industry reports, and other, general research by Rystad Energy. The document is not intended to be used on a stand-alone basis but in combination with other material or in discussions. The document is subject to revisions. Rystad Energy is not responsible for actions taken based on information in this document. This document is joint property of Derrick Petroleum Services, Rystad Energy and PLS. References and citations to the document are encouraged but distribution or copying in any forms, in parts or full require permission from the owners. The information and analyses presented in this document are based on proprietary data contained in Derrick Petroleum Services Global E&P Transactions Database and Rystad Energy s 1 global upstream asset database UCUBE, and general industry and company research. The document is not intended to be used on a stand-alone basis but in combination with other material or in discussions and is subject to revisions. Derrick Petroleum Services, Rystad Energy and PLS are not responsible for actions taken based on information in this document.

2 Introduction to the report The Global E&P Transactions 2010 Review is a collaborative product of three companies: Derrick Petroleum Services from India, Rystad Energy from Norway and PLS (Petroleum Listing Services) from the US. The report is based on Derrick Petroleum Services Global E&P Transactions Database which includes information and analyses of all worldwide E&P transactions, Rystad Energy s Upstream databases (UCUBE) and PLS research & analysis. The report is structured around 3 sections: A global overview, a North America review (representing the largest share of the global M&A market), and reviews of other regions of the world. The report is intended to provide an account and description of global M&A activity of the past year and deals in play as of the year end. The global M&A market is a large and varied market, and the report is therefore introductory in nature and subject to continuous updates and refinements. It is intended as a source of information and reference document and ideally a source of inspiration and benchmarks for successful M&A activity in the E&P industry. M&A and transaction activity are key enablers for E&P companies strategies. It is however opportunistic and dependent on counterparties actions and priorities. The report covers transactions that actually took place; many more were attempted, by corporate and business development teams that pursued opportunities, in some cases for several years for a specific transaction. Many people try to observe patterns of M&A activity or to prescribe upcoming trends. Given the opportunistic nature, the tendency of the industry to move together in the same direction, and at the same time compete, and the extraordinary events that every year make a difference, looking ahead may be futile, in many cases more of the same will be as good as any prescription. Notwithstanding this, at the start of 2011, E&P companies look confident, stepping up their investment programs after 2 years of relative indecision and uncertainty. As companies seek to invest, they will look for opportunities to invest in other companies portfolio and high grade their own. Ultimately, this will drive for more M&A activity. 2

3 Contents Summary Global overview, key trends and statistics Regional reviews North America South America Europe Africa Middle East Russia and Central Asia Asia-Pacific 3

4 Key observations on global M&A activity 2010 Deal activity 2010 at $211bn, record high US top region on its own, South America new number 2 with 17% of world total Corporate deals back to historic levels around 45%, down from 2009 high Conventionals are still conventional, 69% of the market Majors stepped up, also into conventionals Chinese/Asian NOC eager buyers, 19% share of market (up from 1% in 2007) BP post-macondo sales accounting for 9% of the activity Implied reserves values mixed trends, oil up, gas still not recovered Deals in play year end 2010 at record high levels of $93bn 2010 global M&A deal flow set a record high of $211 billion, above the historic highs that occurred during most of Measured by number of transactions above $100m, 2010 had 3 of the most active quarters in recent history. US is the top region for M&A on its own but the number 2 region changes every year; in 2010 it was South America with 17% of world total, with the majority of investments (2/3 of the top 10 deals) done by Chinese NOCs. Corporate deals as a share of the total was 45% in 2010, closer to the historic range 34-37% in than 2009 at 74% (64% without the XOM-XTO deal). A key feature of 2010 was trades involving partial company stakes, e.g., Cairn India, Gazprom, Lukoil; accounting for 16% of world total activity. Conventionals share of the M&A market was 69%, reversing recent years declining share from 90% in 2007 to 51% in Majors stepped up, with BP and Chevron s acquisitions of Devon s deepwater GoM and international conventional assets. Unconventional deals included acquisition of Atlas Energy by Chevron; and Arrow Energy by Shell. Chinese/Asian NOCs were eager buyers in 2010, accounting for 19% of global activity, or $40bn, having grown steadily from 1% since Key region was South America with 4 of the top 5 deals, including Sinopec s JV with Repsol, Brazil and CNOOC s JV with Bridas for Pan American Energy. BP s divestments for funding post-macondo costs was a key driver of 2010 activity, accounting for 9% of the world total activity or ~$20bn. Key deals included Pan American Energy to CNOOC; assets in 3 countries to Apache. BP is likely to have more divestments planned, may be only half way to its target. On a worldwide basis, the implied reserves values, $/2P reserves (entitlement*), recovered largely by the end of 2009 and stayed at similar levels throughout 2010, but still below the high levels of Implied proved oil reserves values in US went above 2008 levels, but for gas is still below. At year end 2010, deals in play, on the market amount to $93bn. This compares with $46bn at year beginning and only $20bn mid

5 2010 global M&A deal flow at a record high $211 billion In 2010, the total E&P Transaction activity hit a record of $211bn. This was 42% higher than the total in 2009 and 2007 and 85% higher than in In 2009, E&P transaction activity had recovered from the low of A significant contribution to the overall number was the $41bn acquisition of XTO by ExxonMobil Deal activity was robust in all quarters of 2010, but was the strongest in Q4. The number of high value deals, above $100m, reached its highest quarterly level by Q at 58. The largest deal was around $9bn (Cairn India), which is the third largest deal since 2007 (2009 included XOM-XTO and Suncor- Petro-Canada, 2006 saw the larger deals with Anadarko-Kerr-McGee and Statoil-Hydro). Value of global E&P transactions USD billion Number of transactions, split by high and low value deals Q1 Q2 Q3 Q4 Total 2008 Q1 Q2 Q3 Q4 Total 2009 Q1 Q2 Q3 Q4 Total 2010 Q1 Q2 Q3 Q4 Total ExxonMobil acquisition of XTO Energy 135 Q Low value deals (<$100 million) High value deals (>$100 million) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q Deal value total for 2009 excludes the $4bn ExxonMobil Kosmos deal in Ghana which was announced in 2009, but could not be completed in The 2010 deal totals do not include the $42.5bn payment in stock made by Petrobras to the Brazilian Government for additional pre-salt license areas. This is to ensure like-to-like comparison with previous years when payments for new license awards have not been counted in deal value totals Source: Derrick Petroleum Services Global E&P Transactions Database 5

6 Top 20 global deals by value Multiple categories, including sale of partial stakes, Chinese/NOC eager buyers, BP divestments post-macondo and Majors step-up Top deals for different transaction categories included: Sale of a partial interest in one E&P company by another industry player, e.g., sale of 51% stake in Cairn India by Cairn Energy; Lukoil s stock repurchase from ConocoPhillips; E.ON s sale of 3.5% interest in Gazprom; and Shell s divestiture of a 10% interest in Woodside Chinese/Asian NOCs aggressively buying up global assets, in particular in South America e.g., parts of Repsol s Brazil portfolio and Pan American Energy, and elsewhere, e.g., ConocoPhillips interest in Syncrude project. BP s divestments for funding post- Macondo costs, including sale of interest in Pan American Energy and assets across three countries to Apache. Unconventional and conventional acquisitions by Majors, including Atlas Energy by Chevron; Arrow Energy by Shell, Devon s Brazil and Azerbaijan portfolio by BP. Value of top 20 global E&P transactions 2010 USD million Vedanta Group to acquire 51% stake in Cairn India* Sinopec acquires 40% interest in Repsol s Brazilian business BP sells 60% interest in Pan American Energy to Bridas Apache acquires BP gas assets Mikhail Gutseriyev buys back Russneft Lukoil repurchases 13.05% stake from ConocoPhillips Exco Resources to go private in $5B transaction E.ON sells 3.5% stake in Gazprom Shell acquires Marcellus acreage from East Resources ConocoPhillips sells interest in Syncrude Project to Sinopec Chevron acquires Atlas Energy Apache acquires Mariner Energy Shell divests 10% stake in Woodside CONSOL Energy acquires Dominion's E&P business Shell and PetroChina acquire Arrow Energy KNOC acquires Dana Petroleum Devon Energy divests Brazilian operations to BP CNOOC forms JV with Bridas Energy for South American assets Sinochem acquires 40% interest in Peregrino oil field from Statoil 3070 Sistema to acquire 49% stake in Russneft 3040 * Vedanta acquisition of stake in Cairn India is pending approval by the Indian government; Petrobras equiy for pre-salt reserves swap is not included Source: Derrick Petroleum Services Global E&P Transactions Database 6

7 Regional distribution of M&A activity US top region on its own, with alternate number 2 every year; 2010 was South America with 17% of world total Top region for M&A activity is North America with $112bn or 53% of world total (including GoM). This activity level is almost 2 times the region s share of global production and asset values. US has consistently been the top ranked region in terms of deal value transacted. The second ranked region (after US) has been different each of the past few years in 2007 it was Former Soviet Union as a result of the Yukos asset sell offs; in 2008 it was Australia because of the CBM LNG deals; in 2009 Canada took the position and in 2010 it is South America which has seen a massive step up in activity driven by Asian NOCs as well as OECD oil companies. Annual transaction value by region USD billion Annual transaction value: Top two regions and Rest of the world USD billion 24% 18% % 34% % % %=$147bn 100%=$114bn 100%=$149bn 100%=$211bn % 13% 16% 20% 23% 17% 96 % % % % 4 % % Middle East Europe Africa South America Asia Pacific Russia and Central Asia Canada United States Middle East Europe Africa South America Asia Pacific Russia and Central Asia Canada Africa United States Rest of the world Source: Derrick Petroleum Services Global E&P Transactions Database 7

8 Global map view of selected, key assets traded during 2010* * Map shows key asset(s) involved in transactions, size of circle indicates remaining reserves in full field (not share traded), color indicates life cycle of the asset, excludes partial stakes in companies such as Woodside, Lukoil, Gazprom, and Russneft; transactions in North America onshore are shown mainly with net shares and for transactions above $1bn Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis 8

9 Contents Summary Global overview, key trends and statistics Regional reviews North America South America Europe Africa Middle East Russia and Central Asia Asia-Pacific 9

10 Corporate deals as a share of the total was 45% in 2010, closer to the historical normal than in 2009 Corporate deals as a share of the total was 45% in 2010, closer to the historic range 34-37% in than 2009 at 74% (64% without XOM-XTO deal). Included in the corporate deals are transactions involving partial interests in companies which was a new, key feature in In several deals one E&P company sold a partial interest in another industry player, e.g., sale of 51% stake in Cairn India by Cairn Energy; Lukoil s stock repurchase from ConocoPhillips; E.ON s sale of 3.5% interest in Gazprom; and Shell s divestiture of a 10% interest in Woodside. Deals by type of transaction %=$147bn 100%=$114bn 100%=$149bn 100%=$211bn 1% 7% 7% 48% 37% 23% 3% 7% 33% Sale of a partial interest in one E&P company by another E&P company 34% 15% 2% 2% 7% 74% 7 % 2 % 7 % 48 % 20% 30% 1% 4% 36 % 45% Corporate M&A Producing fields Fields under development Discoveries (undeveloped) Mix of asset types The total value of all such deals in 2010 was $33bn, whereas the total deal value for such deals put together for previous three years (2009, 2008 & 2007) was only $5.2bn. Main contributors to that figure was from 2 deals: OMV selling 21% stake in MOL to Surgutneftegas for $1.9bn (2009); and Repsol YPF divesting part of its stake in the YPF unit to Petersen Group for $2.2bn (2007). Cairn Energy sells 51% stake in Cairn India to Vedanta Group BP sells 60% interest in Pan American Energy to Bridas ConocoPhillips reduces 13.05% stake in Lukoil E.ON sells 3.5% stake in Gazprom Shell divests 10% stake in Woodside Petrobank Energy sells its 66% stake in Petrominerales Repsol sells 3.26% in YPF to Eton Park and Capital Denbury sells 46.15% stake in Encore Energy to Vanguard Iberdrola divests 15.68% interest in Petroceltic Source: Derrick Petroleum Services Global E&P Transactions Database 10

11 Conventionals are still conventional, accounting for 69% in 2010, up from 51% in 2009 Share of unconventionals in total deal value reduced from 49% in 2009 to 31% in However, a significant part of the unconventional deal value in 2009 was due to a single deal, the acquisition of XTO by ExxonMobil (unconventionals share without XTO would be 30%). Share of conventional and unconventional deals % % 100%=$147bn 100%=$114bn 100%=$149bn 100%=$211bn 6% 1% 1% 3% 15% 14% 6% 4% 2% 21 % 21% 23% 51% 60% 34% 69% 90% 69 % Conventional Shale/Tight gas Oilsands CBM Number of deals greater than $1bn, both conventional and unconventional, were greater in 2010 than in any of the previous three years. Clearly the deal market was robust for both types of assets. Number of deals with transaction value greater than $1 billion Unconventional Conventional Source: Derrick Petroleum Services Global E&P Transactions Database 11

12 Majors continued to acquire unconventional assets, but also got back into the conventional deals market In 2010, the Majors bought conventional and unconventional assets in more balanced measures unlike 2009 when the Majors focused predominantly on unconventional assets. For 2010, the split was 35% conventionals/65% unconventionals based on the largest deals as show in chart. Acquisitions by Majors in 2010 split by conventional/unconventional assets/portfolios USD million Shell acquires Marcellus acreage from East Resources Chevron acquires Atlas Energy Devon Energy divests Brazilian operations to BP Devon Energy divests deep-water GoM assets to BP Total and Suncor form oil sands strategic alliance in Alberta The unconventional assets acquired by the Majors included Marcellus: Shell-East Resources, Chevron-Atlas Eagle Ford: Shell from various sellers, BP-Lewis Energy Oil sands: Total-Suncor, Total- UTS, BP-Value Creation Australia CBM: Shell-Arrow Energy, Total-Santos/Petronas Shell acquires 50% of Arrow Energy BP and Chevron acquire stake in ACG field from Devon Energy Total acquires interest in Tullow's Ugandan assets Total acquires UTS Energy Shell acquires additional acreage in Eagle Ford shale play BP acquires stake in Value Creation's Alberta oilsands project Total acquires 20% interest in GLNG project Petrohawk sells Fayetteville assets to Exxonmobil Unconventional Conventional The conventional assets acquired by the Majors included US (ExxonMobil-Ellora) GoM: BP-Devon, BP-Shell, Chevron-Devon Brazil: BP-Devon Azerbaijan: BP/Chevron-Devon Uganda: Total-Tullow North Sea: BP-Total ExxonMobil acquires Ellora Energy BP acquires additional interest in Valhall and Hod fields from Total Total acquires 7.5% interest in GLNG project from Santos BP acquires two GoM fields from Shell Chevron acquires interest in St. Malo project from Devon Energy BP and Lewis Energy form Eagle Ford Shale JV Source: Derrick Petroleum Services Global E&P Transactions Database 12

13 Chinese and other Asian NOCs share of global market now 19%, up from only 1% in 2007 Total value of assets acquired by Chinese and other Asian NOCs has been increasing every year since 2007 and hit another record in In 2010, Chinese NOCs (Sinopec, CNOOC, CNPC, Sinochem and China Investment Corp) did acquisitions amounting to $34bn, Other Asian NOCs (KNOC & PTTEP) did acquisitions amounting to $6bn. Other Asians like Mitsui and Reliance entry into US shale gas for almost $3bn is not included in these accounts. Acquisitions by Chinese and other Asian NOCs USD billion Chinese and other Asian NOCs vs. global transaction market China Investment Corp CNPC (Parent) Sinopec (Listed) Sinochem CNPC (Petro-China) CNOOC (China) Other Asian NOCs Sinopec (Parent) Acquisitions by Chinese and other Asian NOCs as a share of total global deal value has been increasing steadily, from only 1% in 2007 to 19% in %=$147bn 100%=$114bn 100%=$149bn 100%=$211bn 0% 1% 99% 90% 4% 6% 86% 11% 3% 3 % 81% 81 % 16% 16 % 3% Chinese NOC Asian NOC Others Source: Derrick Petroleum Services Global E&P Transactions Database 13

14 Key acquisitions by Chinese and other Asian NOCs in 2010, largely in South America and Africa Four of the top five deals by Chinese NOCs were in South America. Clearly this was their focus region for growth in 2010: Sinpopec bought 40% of Repsol s Brazilian business, marking its entry into Brazil s pre-salt resources. Among other assets, Sinopec now has an interest in the Guara and Carioca discoveries. CNOOC on the other hand grabbed a piece of mature producing assets in Argentina through the acquisition of a net 50% interest (through two deals) in Pan American Energy. Relatively smaller Sinochem, went after heavy oil by acquiring a 40% interest in Statoil s Peregrino field offshore Brazil Chinese NOC acquisitions USD million Sinopec acquires 40% interest in Repsol s Brazilian business ConocoPhillips sells interest in Syncrude Project to Sinopec BP sells 60% interest in Pan American Energy to Bridas and CNOOC CNOOC forms $3.1B JV with Bridas Energy for South American assets Sinochem acquires 40% interest in Peregrino oil field from Statoil Sinopec acquires interest in Angola Block 18 from parent Sinopec acquires Argentina unit of Oxy CNOOC and Chesapeake form Eagle Ford JV Shell and PetroChina acquire Arrow Energy Cnooc and Total acquire interest in Tullow's Ugandan assets China Investment Corp forms oilsands JV with Penn West Sinopec acquires 18% interest in Gendalo-Gehem project from Devon Energy divests interest in Panyu field to CNOOC Apart from South America, the Chinese also acquired assets in Canada, US, Angola, Australia, Uganda, Indonesia, and Colombia. A remarkable deal for other Asian NOCs was the rare, hostile takeover of UK-based Dana Petroleum by KNOC. Sinopec acquires interest in four Llanos Basin blocks from Hupecol CNOOC to buy 50% stake in China United Coalbed Methane Company Other Asian NOC acquisitions USD million KNOC acquires Dana Petroleum PTTEP acquires 40% interest in Statoil's Oilsands project KNOC acquires all of Hunt Oil's Canadian assets Source: Derrick Petroleum Services Global E&P Transactions Database 14

15 BP post-macondo divestments during 2010 reached ~$20 billion BP has completed almost $20bn worth of divestitures post-macondo. The two biggest deals, each worth $7bn, were the divestiture of BP s 60% interest in Pan American Energy and the sale assets across US, Canada and Egypt to Apache. BP divestitures post-macondo USD million BP sells 60% interest in Pan American Energy to Bridas Apache acquires BP's gas assets The BP-Apache deal was remarkable in the sense that it was truly win-win. BP got an excellent price and could complete a large deal fairly quickly. Apache got hold of assets that are an excellent fit with its expertise in exploiting mature fields. Talisman and Ecopetrol jointly acquire BP s Colombian operations TNK-BP acquires BP's assets in Venezuela and Vietnam United Energy Group acquires BP's Pakistan assets Marubeni acquires BP's four mature GoM fields Hess acquires 20% interest in BP's Tubular Bells field 40 BP has announced plans to divest certain assets in North Sea and in Louisiana. BP could also consider divesting a part of its interest in the Prudhoe Bay field in Alaska. BP additional divestment program USD million Deal heading Value Range ($ MM) BP to sell certain North Sea assets $1,000 - $10,000 BP to divest stake in Prudhoe Bay field $1,000 - $10,000 BP to divest Tuscaloosa gas assets in central Louisiana $100 - $500 Source: Derrick Petroleum Services Global E&P Transactions Database 15

16 Implied reserves value recovered in 2010, stronger for oil than for gas On a worldwide basis, the implied reserves values, $/2P reserves (entitlement*), recovered largely by the end of 2009 and stayed at similar levels throughout 2010, but still below the high levels of Implied reserves by country and by hydrocarbon type is readily available for US and Canada whereas the rest of the world gives limited data sets for statistical analysis. $/boe 2P Entitlement reserves for worldwide transactions For the US, implied proved oil reserves values appear robust with 2010 full year average $15.6/boe for proved reserves, whereas gas reserves values are still below 2007 and 2008 levels albeit up from 2009 levels. For Canada, the separation of implied reserves values for gas and oil widened further in 2010, following the last years trend. For the full year, the average price of oil deals was $16.5/boe for 2P reserves and of gas reserves was $9.4/boe. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q $/boe Net proved reserves for US $/boe Gross 2P 18.8 reserves for Canada $/BOE (Oil) $/BOE (Gas) Note: All deals with Deal Value greater than $10 million have been considered in this analysis * Entitlement reserves are net of royalties and government share of profit oil Source: Derrick Petroleum Services Global E&P Transactions Database

17 Transaction metrics for selected deals outside North America Buyer Seller Hydrocarbon Country type Deal Value ($MM) Unadjusted $ per 2P (Ent) Assumptions for calculating adjusted metrics Vedanta Cairn Energy Oil India 8, Adjustments for 51% value of Cairn India's midstream assets (100% valued at $2bn) and Contingent Resources (100% valued at $420 million) Adjusted KNOC Dana Oil + Gas United Kingdom 3, Adjustment for value of value to contingent resources. -- North Sea- 36 MMBOE at $6.0 per BOE for a total of $216 million. -- Egypt-12 MMBOE at $2.0 per BOE for a total of $24 million. -- For other international operations MMBOE at $1.0 per boe Sinochem Statoil Oil Brazil 3, Sinopec (Listed) Sinopec (Parent) Oil Angola 2, Adjustment for value of contingent resources. ($248 million at $5/BOE). Sinopec Oxy Oil Argentina 2, BP Devon Energy Oil Azerbaijan 2, Ecopetrol BP Oil + Gas Colombia 1, Adjustments for value of midstream assets ($895 million). United Energy Group Ltd BP Gas Pakistan Minor adjustments for value paid by the buyer for inventory of supplies and equipment Apache BP Oil + Gas Egypt Apache has also disclosed the value of exploration assets to be $90 million and midstream assets to be $150 million Dana Suncor Energy Oil + Gas Netherlands Adjustment for value of Alkmaar gas storage project and near term risked prospective resources. Value assumed to be 0.5 times CPR* valuation. Hess Total Oil Norway BP Total Oil Norway Scottish & Southern Hess Gas United Kingdom Centrica Suncor Energy Gas Trinidad and Tobago Dana Suncor Energy Oil United Kingdom Adjustments for value of Perth discovery and some capital allowances Maurel & Prom Shell Oil Nigeria Sinopec Hupecol Oil Colombia Centrica Shell Oil + Gas Norway Minor adjustments for tax allowances UI Energy Corp Genel Enerji AS Oil Iraq Adjustment for the value of contingent resources. ($35.5 EnQuest PLC Stratic Oil United Kingdom Enquest has ascribed a value of $39 million for tax losses and capital allowances Bayerngas Salamander Energy Endeavour Energy Gas United Kingdom SOCO Oil Thailand * Competent Persons Report Source: Derrick Petroleum Services Global E&P Transactions Database 17

18 World total M&A activity, or portfolio recycling, average 3% per year of world s total asset The value of global M&A activity compared to the value of all oil & gas assets worldwide amount to around 3%. This represents an average, annual portfolio transaction level for the world s E&P companies. Regional distribution of global asset values, resources, production and M&A activity 2010 North America Asset values* Resources** Production M&A activity North America 25 % North America 20 % North America 20 % 52 % M&A activity vs. asset values*** 6% North American M&A activity have accounted for 50-60% of global activity during the last years. In 2010 North American M&A activity is at about twice the share of the region s share of global asset values in South America in 2010 also had a higher share of M&A activity compared to the region s share of global asset values. Russia and Central Asia Asia Pacific Middle East Russia and 15 % Central Asia Asia 14 % Pacific Middle 14 % East Russia and 18 % Central Asia Asia 12 % Pacific Middle East 30 % Russia and 20 % Central Asia Asia 12 % Pacific Middle 24 East % 13 % 10 % 0.1% 3% 2% 0.03% Other regions, Europe, Africa and Middle East, and Asia-Pacific in particular, have lower than average portfolio trading in South America Africa South 11 % America 11 % Africa South 9 % America 8 % Africa South 7 % America 10 % Africa 17 % 4 % 5% 1% Europe 9 % Europe 3 % Europe 7 % Europe 3 % 1% 100% = $6,900b 3,800 bn boe 135 mbpd $211b 3% * Asset values based on discounted after-tax cash flow to oil company as concession holder or contractor, discounted at 10% nominal rate, using forward oil prices (approximately $80/bbl real term) ** Remaining resources in producing fields, discoveries already made, and yet-to-find resources *** Share of global M&A activity by region relative to share of global asset values Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research and analysis 18

19 Contents Summary Global overview, key trends and statistics Regional reviews North America South America Europe Africa Middle East Russia and Central Asia Asia-Pacific 19

20 North America comprised 52% of global M&A activity North America recorded $110bn in publicly announced transactions or 52% of the total global volume of $211bn. North American deal flow while up 15-20% made up a lower percentage (52%) of the global market over years ; (58%, 53% and 64%). International buyers made significant investments in North America. Interest in North America is being driven by new shale opportunities and Canadian oil sands development. International buyers are also attracted by the region s stable fiscal regime, political climate; large shale reserves and technological expertise The US market saw the majors spend billions on land plays and corporate acquisitions. Driven by their goal to reduce international risk, increase their position in undervalued gas reserves and secure future (shale) drilling opportunities. North America s share of global M&A activity is ~2x the region s share of global production and asset value. Annual transaction values by country USD billion Annual transaction values North America vs. Rest of the world %=$147bn 100%=$114bn 100%=$149bn 100%=$211bn 42% 58% 47% 53% 36% 64% 48 % 48% 52 % 52% Canada United States North America Rest of world Source: Derrick Petroleum Services Global E&P Transactions Database 20

21 Top 20 US deals driven by shales, major oils and dramatic asset moves 14 of the top 20 US deals were motivated by shale objectives with some of the largest deals (East, Atlas, Exco, Consol, Reliance) in the Marcellus Top 20 transactions by deal type USD million Exco Resources to go private Shell acquires East Resources Apache s purchase of BP Permian assets and SandRidge s corporate acquisition of Arena were not driven by unconventional assets. While Concho s acquisition of Marbob has some Avalon Shale hope. Chevron acquires Atlas Energy Apache acquires Mariner Energy CONSOL Energy acquires Dominion's E&P business Apache acquires BP's Permian Basin assets Chesapeake JV's Eagle Ford position with CNOOC Energy XXI s and Apache s purchase of offshore assets from Exxon and Devon were somewhat driven by shales including Devon s refocus and Exxon s XTO commitment. Apache s acquisition of Mariner s deepwater assets was dramatic. Deal Type?. Of the top 20 deals 5 were corporate; ($19.2 B); 1 was a VPP; 5 joint ventures ($7.9 B) and 9 property transactions.($16.3 B) Shell sells South Texas tight gas fields to OXY Devon divests deep-water GoM assets to BP Atlas JV's Marcellus Shale position with Reliance Concho Resources and Apache acquire Marbob Energy's assets Oxy acquires Bakken acreage from Anschutz Exploration Anadarko JV's Marcellus Shale position with Mitsui Talisman and Statoil form JV, acquiring Enduring's Eagle Ford Assets Pioneer JV's Eagle Ford position with Reliance SandRidge Energy acquires Arena Resources Chesapeake sells Barnett shale VPP to Barclays Bank PLC Corporate VPP JV Property The top 20 deals totaled $44.6bn or 59% of the total market. The 14 clearly shale deals totaled $32.6bn or 43% of the US total. Hess acquires Bakken acreage from TRZ Energy LLC Apache acquires Devon Energy s GoM Shelf assets Energy XXI acquires nine GoM shelf fields from ExxonMobil Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 21

22 Internationals and Majors flocked towards US shale gas opportunities International companies followed up 2009 activities by continuing to enter into US shale gas JVs and providing US operators much needed capital to develop their assets. The US is attractive to internationals because of its fiscal regime, large shale gas reserve potential and technological opportunities. The international firm s large balance sheets, low costs of capital and long term view allow them to pay up for US opportunities. The same could be said for traditional majors who also made aggressive moves into US shales in 2010 through corporate acquisitions like East Resources (Shell) and Atlas (Chevron). To fund new shale opportunities the majors also sold non-core assets. BP, an active shale player in 2009 sold over $3.8bn in US assets; $3.3bn in Canada and $12.2bn overseas to cover costs for Macondo damages. Shale JVs by International Companies USD million Chesapeake JV's Eagle Ford position with CNOOC Atlas JV's Marcellus position with Reliance Anadarko JV's Marcellus position with Mitsui Talisman and Statoil form JV; buying Enduring's Eagle Ford assets Acquisitions by Majors USD million Divestitures by Majors USD million Pioneer JV's Eagle Ford position with Reliance Exco JV's Marcellus position with BG Carrizo JV's Marcellus position with Reliance Talisman JV's Eagle Ford position with Statoil Lewis Energy JV's Eagle Ford position with BP Rex Energy JV's Marcellus position with Sumitomo Shell acquires East Resources's Marcellus acreage Chevron acquires Atlas Energy BP acquires deep-water GoM assets from Devon Shell acquires Eagle Ford play acreage ExxonMobil acquires Fayetteville assets from Petrohawk ExxonMobil acquires Ellora Energy BP divests Permian Basin assets to Apache Exxon sells GoM shelf fields to Energy XXI BP divests mature GoM fields to Marubeni Shell divests six GoM fields to W&T Offshore Conoco sells Barnett assets to Premier Natural Country of Origin China India Japan Canada, Norway India UK India Norway UK Japan Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 22

23 Public independents acquired oil reserves and de-leveraged balance sheets Many US public companies made aggressive commitments to oil reserves and liquids rich shales. 6 of 7 largest US acquisitions by Independents were oily assets. And the seventh deal by Oxy for $1.8bn to acquire Shells conventional gas reserves followed Oxy $1.4bn acquisition of Anshutz Bakken acreage and over $1.5-$1.8bn in Permian basin acquisitions. Apache and Oxy were very aggressive in Conventional plays with upside and fracture stimulation applications were highly sought after. US public independents used asset sales and joint ventures to deleverage their balance sheets and fund shale development. Independents shifted budgets to oil (capex & acquisitions) to adjust for soft gas prices. Acquisitions by US public Independents USD million Apache acquires BP assets in Permian Basin OXY acquires South Texas tight gas fields from Shell Concho Resources and Apache acquire assets of Marbob Energy Oxy acquires additional Bakken acreage from Anschutz Exploration Oxy acquires Yates Drilling Co Hess acquires additional Bakken acreage Energy XXI acquires nine GoM shelf fields from ExxonMobil Divestments by large public US Independents USD million Exco Resources to go private in $5B transaction Atlas Energy sells to Chevron for $4.3B Chesapeake and CNOOC form Eagle Ford JV Devon Energy divests deep-water GoM assets to BP for $1.8B Atlas Energy forms $1.7b JV with Reliance to develop Marcellus Shale Anadarko forms $1.4b JV with Mitsui to develop Marcellus Shale Pioneer forms $1.32b JV with Reliance in Eagle Ford Shale Chesapeake sells Barnett shale VPP for $1.15B Devon Energy divests interests in Cascade and St. Malo projects for $1b Transactions between large public US independents USD million Apache acquires Mariner Energy for $3.9b SandRidge Energy acquires Arena Resources for $1.3b Apache acquires Devon Energy s GoM Shelf assets for $1.1b Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 23

24 Apache tops most active buyers in the US in 2010 Majors and Internationals led the market with corporate acquisitions and joint ventures. Some Independents (Apache, Oxy, Concho, Williams) were aggressive with bolt on acquisitions and new expansion. Apache acquired nearly $8.5bn in assets in four high profile deals. 2 companies- BP & Shell made both the active buyers and active seller list. Atlas had the most interesting 2010 executing a JV with Reliance and then being taken over by Chevron Chesapeake executed 8 major deals including 3x VPPs and a 1x JV. The firm spent the proceeds on drilling and new land grabs in leading oil plays. Devon exited the Gulf to focus on its lower risk onshore opportunities. 3 private sellers took advantage of market conditions to cash out early shale positions. Sellers included Daniel Hughes, Common Resources and Enduring. Most active acquirers of US assets in 2010 (By total value) # Buyer Value ($ MM) Deal Count Areas 1 Apache 8,480 4 Permian, GOM (Shelf & Deepwater) 2 Shell 5,700 2 Marcellus, Eagle Ford 3 Chevron 4,633 2 Marcellus, GOM (Deepwater) 4 Consol 4,461 2 Appalachia (Conventional gas & CBM) 5 Oxy 4,300 3 Permian, Shell TX Gas, Bakken 6 Reliance 3,483 4 Marcellus, Eagle Ford 7 BP 2,217 3 GOM (Deepwater), Eagle Ford 8 CNOOC 2,160 1 Eagle Ford 9 Concho 1,542 3 Permian 10 Williams 1,541 4 Bakken, Marcellus Most active sellers of US assets in 2010 (By total value) # Seller Value ($ MM) Deal Count Areas 1 Atlas 6,249 3 Marcellus, Appalachia 2 Exco 5,906 2 Marcellus, Haynesville, Permian 3 East Resources 4,700 1 Marcellus 4 Chesapeake 4,628 8 Eagle Ford, Barnett, Appalachia CBM, Haynesville, Permian, Marcellus 5 Devon 4,150 5 GOM (Shelf & Deepwater) 6 Mariner 3,930 1 GOM (Shelf & Deepwater), Permian 7 BP 3,799 4 Permian, GOM (Deepwater) 8 Dominion 3,475 1 Appalachia, Marcellus 9 Anschutz 2,250 2 Bakken, Marcellus Shell 2,250 3 Shell TX Gas, GOM (Deepwater) Independent International Major Private Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 24

25 Marcellus tops Eagle Ford & Permian Basin as the most active US area or play The top three regions Marcellus, Permian and Eagle Ford accounted for $37.5bn in transactions or 50% of the total reported for US The year included significant conventional transactions along with higher profile unconventional sales US publicly announced transactions by region and play type USD million Conventional Unconventional Mixed Strong crude prices, new reservoir plays and technological applications stimulated Permian Basin deal flow. The Barnett and Haynesville shale areas saw reduced acreage transactions. The Barnett numbers included Chesapeake s VPP and EnerVest s surprising acquisition of Talon Overall, shale plays generally 500 see more deal flow as plays advance (Eagle Ford & Marcellus) and less deal flow (Haynesville & Barnett) as plays mature. 0 New plays like the Niobrara and Avalon Shale should see additional Conventional Unconventional Mixed deal flow in (1) Other category includes: Fayetteville, Woodford, Niobrara, West Coast, Utica & Alaska (2) GC Onshore does not include Hilcorp s acquisition of ConocoPhillip s Gulf coast package (10,000 BOED) (3) PLS included Exco s management buyout announcement in 2010 data Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 25

26 North American shale plays by location and maturity Key US shale plays: Barnett Shale in Texas, dry and wet gas zones, combo area with oil/condensate as well Fayetteville Shale in Arkansas, mainly dry gas Haynesville Shale on the Louisiana- Texas border, mainly dry gas Marcellus Shale in Appalaichia, covering multiple states with Pennsylvania as main state, NEpart dry, SW-part with wet gas area Bakken Shale, hybrid shale system with mainly oil production, also exploiting underlying Three Forks tight sands formation. North American shale formations defined by maturity Emerging plays: Eagle Ford in South Texas, oil and wet gas in addition to dry gas Niobrara in the Rockies, mostly oil Avalon in the Permian, mostly oil Utica in eastern Ohio and western Pennsylvani may be oil prone and future target by companies Canadian plays, notably Montney and Horn River in British Columbia, Utica in Quebec currently put on hold by Talisman. - Established - Developing - Exploratory Note: Map not exhaustive Source: Rystad Energy research 26

27 2010 saw a balanced marketplace of conventional and unconventional transactions Conventional asset trades regained a balanced share of the marketplace. Conventional oil reservoirs in the Permian, Rockies, Gulf Coast & Mid- Continent were highly sought after. However, the market is seeing a grey area between what is considered conventional and unconventional. Permian reservoirs like the Wolfberry & Bone Spring, are being drilled horizontally and fracture stimulated similar to unconventional reservoirs. The unconventional marketplace is being driven by motivated buyers (majors, internationals) and opportunistic sellers (e.g., American Oil & Gas, Common Resources, Ellora and Alta Resources all sold out after quickly building unconventional acreage positions). Shell acquired Atlas Resources for its Marcellus acreage and also got a JV with Indiabased Reliance Industries. Exco initiated a management-buyout driven by their rich gas reserves and resource potential. US transactions: Conventional vs. Unconventional USD million Table summary USD million Unconventional Conventional % 92% % 53% % 22% % 44% Conventional Unconventional Total Total Unconventional Conventional Woodford Shale Utica Shale Other Niobrara Shale Multiple Marcellus Shale Haynesville Shale Fayetteville Shale Eagle Ford Shale Coalbed Methane Barnett Shale Bakken Shale West Coast Rockies Permian Multiple Mid-Continent Gulf of Mexico (Shallow) Gulf of Mexico (Deep) GC Onshore Eastern Alaska Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 27

28 Sharp increase in US oil & mixed-commodity deals in 2010 The US market saw a sharp increase in oil and mixed commodity deals in 2010 as compared to 2009: Oil deals totalled $14.8bn in driven by higher prices; Wall Street preference and brokers promotion of liquids rich shales (Eagle Ford). Also, offshore divestments by ExxonMobil, Devon and Mariner contributed volumes. The market saw a decrease in gas deals through the first half of 2010 but corporate sales and contrarian gas bets seemed to take off in the second half of 2010 as firms like Chevron (East); ExxonMobil (XTO); EnerVest and OXY made bets on gas. Most analyst recorded Exxon s 2009 takeover of XTO as a gas based transaction. The deal actually made up ~80% of 2009 gas deals. Exxon continued the trend in 2010 as XTO spent $1.2bn acquiring Ellora and Petrohawk s Fayetteville assets. #146 gas transactions totalled $38.1bn in This value was driven by corporate sales of Atlas, East, Dominion and Exco for $20.3bn which makes up ~53% of 2010 total gas deals. US transactions by hydrocarbon type %=$49.6bn 100%=$45.4bn 100%=$61.0bn 100%=$76.1bn 30% 10% 1% 59% 2% 12% 13% 73% 14% 3% 83% 10 % 1 % 30 % 31% 19% 59 % 50% Gas Oil Oil + Gas Not mentioned Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 28

29 Variety of transaction structures used in the US Traditional property sales totalled $33.4bn in 2010 up dramatically over Corporate deals totalled $20.5bn in 2010 down from 2009 s total of $47.2bn. However 2009 numbers were skewed by Exxon s $41bn acquisition of XTO. Backing out XTO, 2010 corporate acquisitions were almost 3x times the 3 year average. Chesapeake and Exco used a variety of deal structures in Shell spent over $1.5bn in 2010 acquiring acreage in South Texas Eagle Ford trend. While international JVs got press and profile in 2010 the actual values of deals was only 14% of the market and in line with 2008 ratio of 18% US deals by transaction type (by total value) USD million Distribution 0.4 % 2 % 6 % A 46 % Royalty VPP Acreage Only JV 10 % Corporate Property 36 % C JV P R V Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 29

30 Implied $/BOED Permian Basin continues to lead the market for mature assets The Permian Basin received the highest production multiples, $80,000-$110,000 per flowing barrel equivalent, respectively. The metrics reflect the premium buyers were willing to pay for oil reserves; future drilling opportunities, behind pipe potential and reserve quality. Deepwater GoM saw the highest reserve metrics as a result of BP s acquisition of Shell s mature GOM assets in Dorado and Marlin. Gassy plays such as the Barnett, Fayetteville and CBM received low metrics due to the low gas price environment. Oxy paid a premium for Shell s conventional South Texas gas assets with part of the price driven by liquids content and low operating costs. US deal metrics by region $120,000 West Coast $100,000 Permian $80,000 Eastern $60,000 Rockies CBM Mid-Con $40,000 Barnett GC Onshore GoM (Shallow) GoM (Deep) Fayetteville $20,000 $0 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 Implied Value $/Proved Reserves BOE Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 30

31 Companies continue to pay healthy bonuses for US shale acreage The study shows over ~3.8 million acres were involved in transactions in the Eagle Ford, Marcellus and Haynesville in Over $8.6bn in deals were recorded in the Eagle Ford in 2010 compared to only $50 million in There were four Eagle Ford deals of over $1.0bn in 2010 including Chesapeake-CNOOC JV, ($2.1bn); Talisman-Statoil JV through Enduring, ($1.3bn); Reliance-Pioneer JV, ($1.3bn); and Shell s acquisition of Harrison Ranch, ($1.0bn). The Marcellus recorded >$17bn in deals in 2010 including JV s and large corporate sales but later deals (3Q/4Q) were done for seemingly lower acreage multiples. Despite soft gas prices the Haynesville core continued to see aggressive deals by Exco and BG in acquisitions of Common ($446m, $12,534/acre) and Southwestern ($355b; $14,371/acre). US unconventional weighted acreage metrics by quarter during 2010 USD thousand per acre Q1 Q2 Q3 Q Metrics Acreage Totals Thousand acres Eagle Ford Haynesville 126 Marcellus Total Eagle Ford Marcellus Haynesville Aggressive companies now paying 10-20x what exploration companies have historically paid for acreage. Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 31

32 US Selected deals in play at year end 2010 Record year for transactions in 2010, along with oversupplied market, bodes well for another strong year in US E&P M&A. Partial list of significant packages shows diversity in regions as well as asset types. The market has awaited the results of the Conoco divestment program for some time---brokers are mum. Large investment banks (BOAML, CSFB, Barclays) now highly active in US A&D market. Several independents out with multiple packages concurrently Chesapeake (Appalachia & Marcellus), SM Energy (Eagle Ford & Marcellus), EOG (GoM, Eagle Ford, Haynesville). Date Value range mm-dd-yy Seller Broker Deal heading Subregion Asset Type MUSD Chesapeake Offering 20% stake in Marcellus Shale operations Marcellus Shale Acreage Only 1,000-10, Seneca Jefferies Seeking JV partner for Marcellus assets Marcellus Shale JV 1,000-10, Quicksilver Credit Suisse; Tudor, Pickering, Holt & Co Considering strategic alternatives Barnett Shale Corporate 1,000-10, Range Scotia Waterous Selling Barnett Shale assets Barnett Shale Property 1,000-10, Apollo Global Management Scotia Waterous Parallel Petroleum Investment (~5,000 BOEPD) Permian Property 500-1, Chevron Looking to sell Cook Inlet assets Alaska Property 500-1, SM Energy BofA Merrill Lynch Looking at options for Eagle Ford acreage Eagle Ford Shale Property 500-1, EOG Haynesville acreage Haynesville Shale Acreage Only Cano Energy Still needs alternatives after Resaca failure to close Mid-Continent Corporate Petromax Operating Co Lantana Oil & Gas Partners Southeast & East Texas Woodbine Assets Mid-Continent Property 500-1, J.M. Huber Corp Scotia Waterous Divesting assets in Wyoming and Alabama Coalbed Methane Property Opal Resources LLC Albrecht & Associates Has Not Sold Wolfberry assets in Permian Permian Property BP BP marketing Tuscaloosa gas assets in Louisiana GC Onshore Property EOG BMO Capital Markets Exiting GoM offshore operations Gulf of Mexico (Shallow) Property SM Energy BofA Merrill Lynch Also considering JV options for Marcellus acreage Marcellus Shale JV PostRock Energy Corp Selling Marcellus acreage position Marcellus Shale Acreage Only Stonegate Production Co Raymond James & Associates Inc Eagle Ford oil window acreage Eagle Ford Shale Acreage Only Cabot BMO Capital Markets SeekingJV partner for Haynesville-Bossier acreage Haynesville Shale JV Chesapeake Seeking JV partner for Anschutz's Appalachian assets Multiple JV Eagle Energy Co LLC (Oklahoma) Scotia Waterous Cashing out of new Oklahoma Mississippian play Mid-Continent Property KACompass LLC Lantana Oil & Gas Partners Upper Gulf Coast; Eagle Ford oil acreage Eagle Ford Shale Acreage Only ConocoPhillips Jefferies ConocoPhillips offers Eagle Ford/Austin Chalk acreage Eagle Ford Shale Acreage Only ConocoPhillips Jefferies ConocoPhillips to divest certain GoM assets Gulf of Mexico (Deep) Property Nations Petroleum Co Ltd Macquarie Tristone Pendiing sale California Assets Incl Lost Hills (4,000 BOPD) West Coast Property 1,000-10, ConocoPhillips Scotia Waterous Announced Sale of Panhandle Sale Pkg To Private Equity Mid-Continent Property ConocoPhillips Scotia Waterous Announced sale of Permian Pkg to Private Equity firm Permian Property Cypress E&P Corp Scotia Waterous Texas Gulf Coast assets sold to Warburg Pincus Entity GC Onshore Property Sagebrush Resources LLC RBC Richardson Barr Pending sale of Bakken Assets To PertroHarvester Inc. Rockies Property * Listing based on formal announcements or news reports and may include transactions that have been cancelled but are still included as a record of events; listing include announcements made during 2010 only Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 32

33 Majors divestment programs & oil sands JVs drive Canadian M&A The Canadian marketplace was driven by additional oil sands acquisitions. Canada saw $12.8bn in oil sands deals. There were multiple oil sands JVs, primarily involving Majors, NOCs and other international firms. Much like shale gas, oil sands represents a very large resource base attractive to large firms. The Majors provided significant deal flow for Canadian buyers: Conoco sold $4.65bn in Canadian assets as part of its ~$15bn plus global divestment program. BP sold $3.3bn in Canadian assets in 2010 to raise capital for Macondo oil spill. Canada s top 20 deals by value saw 6x corporate acquisitions; 8x property deals (including oil sands) and 6x announced shale JV s Top 20 Canadian transactions USD million ConocoPhillips sells interest in Syncrude Project to Sinopec Apache acquires BP assets in Alberta and British Columbia PTTEP acquires 40% interest in Statoil's Oilsands project Talisman Energy sells non-core assets in Alberta Total and Suncor form oil sands strategic alliance in Alberta Total acquires UTS Energy for $1.1B Talisman and Sasol form Montney JV Crescent Point Energy acquires interest in Shelter Bay Canadian Natural Resources acquires assets in Canada Nexen sells heavy oil properties in Canada BP acquires stake in Value Creation's Alberta oilsands project Husky Energy acquires Canadian assets from ExxonMobil China Investment Corp forms oilsands JV with Penn West BP forms JV with Devon Energy to develop Kirby oil sands Corporate VPP JV Property 4650 KNOC, PTTEP, KOGAS and China Investment Corp represented Asian funds seeking access to long life Canadian reserves. ARC Energy acquires Storm Exploration Merger of Iteration Energy and Storm Ventures Legacy Oil + Gas acquires CanEra Resources Daylight Resources acquires West Energy 553 KNOC acquires all of Hunt Oil's Canadian assets 521 Midnight Oil acquires Provident Energy's upstream business 454 Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 33

34 Conventional Alberta deals topped oil sands 2501 in Canadian M&A activity The annual study records $13bn in 2010 conventional Alberta transactions. Significant deals included Apache BP ($3.2bn) & Talisman-Tourmaline ($1.8bn). Canadian oil sands reported $12.8bn in asset sales, corporate acquisitions and joint ventures for The Montney (BC & Alberta) recorded $2.3bn in trades or 5x times 2009 total and twice 2008 deals less Shell-Duverney. The number of oil sands deals went up, but the average deal value decreased significantly due to the 2009 Petro-Canada Suncor $18bn merger. Bakken & Saskatchewan plays totalled $2.6bn. The Montney and Bakken unconventional plays made up ~10% of the Canadian transactional market place Canadian transactions by region USD million Table summary USD million Total Oil sands Alberta Montney Cross-Region Saskatchewan Bakken (1) BC Other (2) Total HRB Quebec Manitoba HRB Newfoundland Manitoba Northern Newfoundland Territories Coalbed Northern Methane Territories Other Coalbed Nova Scotia Methane HRB Other Quebec BC Manitoba Newfoundland Bakken BC Northern Territories Saskatchewan Coalbed Methane Bakken Other Multiple Saskatchewan (blank) BC Montney Multiple Bakken Alberta Saskatchewan Montney Multiple Oilsands Alberta Montney Alberta Oilsands 1) PLS treats Bakken as a separate play from Saskatchewan conventional M&A and A&D 2) Other category includes: Northern Territories, CBM, Quebec, Manitoba, Newfoundland, Nova Scotia & Horn River Basin Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 34

35 Surprising sharp increase in Canadian gas deals in 2010 There was a sharp increase in Canadian gas transactions in 2010 as compared to Independents chose and were (sometimes) forced to sell gas assets with depressed prices and lack of marketing options. There was also a decrease in oil sands transactions in 2010.compared to 2009 however 2009 included the Suncor Petro-Canada merger which made up ~90% of 2009 oil sands values. The large Conoco Syncrude sale makes up ~36% of 2010 oil sands deals. Talisman sold conventional gas assets to Tourmaline for $1.8bn in order to focus on oil and unconventional gas plays in the US and Canada. US based Apache increased their stake in Canada while Hunt Oil announced a sale of their assets north of the border. Both Talisman and Encana continued to increase their presence in the US. Canadian transactions by hydrocarbon type %=$35.4bn 100%=$15.0bn 100%=$34.7bn 100%=$34.2bn 25% 48% Table summary USD million 20% 7% 13% 9% 12% 8% 66% 58% 28% 6% 20 % 20 % Gas Oil 37% 38% 20 % Oilsands 10% 20 % 15% Gas Oil Oil + Gas Oil sands Not mentioned Total Total Oil+Gas Not mentioned Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 35 (1) Other category includes: Northern Territories, CBM, Quebec, Manitoba, Newfoundland, Nova Scotia & Horn River Basin

36 Canada Select Deals in Play at Year-End 2010 An active 2010, combined with a large inventory at year-end, will lead to an active Partial list of significant packages shows diversity in regions as well as asset types. Significant number of packages outlined are conventional property deals. Significant transactions await announcement. Suncor s divestment program (from Petro-Canada merger) has seen $1.2B in assets sold to date divestment of Southern Foothills asset expected soon. The market eagerly awaits EOG s sale of gas assets in Alberta, as EOG focuses on liquids. Date Value range mm.dd.yy Seller Broker Deal heading Subregion Asset Type MUSD EnCana CIBC World Markets To divest Aurora property in central Alberta Alberta Property Chinook Energy Inc Peters & Co To sell Lochend property in Alberta Alberta Property Progress Energy RBC Richardson Barr To divest certain assets in British Columbia and Alberta BC Property Progress Energy BMO Capital Markets Offering certain Montney Shale assets Montney Property Texalta Petroleum FirstEnergy Capital Considers strategic alternatives Saskatchewan Corporate Progress Energy BMO Capital Markets Seeking JV partner to develop Montney Shale acreage Montney JV Pengrowth Scotia Waterous To divest Quirk Creek assets in Alberta Foothills Alberta Property Connacher Sayer Energy To divest certain assets in Alberta and Saskatchewan Alberta Property Advisors Ember Resources Macquarie Tristone Considers strategic alternatives Coalbed Methane Corporate Talisman Scotia Waterous To divest certain Alberta Foothills assets Alberta Property EnCana - Seeking JV for development of unconventional gas Multiple, BC JV 500-1, Nabors Industries Ltd; First Reserve Corp RBC Richardson Barr To divest interests in Horn River Basin assets HRB Property BlackPearl Resources Inc FirstEnergy Capita To divest Salt Lake property in southwest Saskatchewan Property Saskatchewan Trident Resources Corp Scotia Waterous To divest Montney acreage in British Columbia Montney Property Imperial Oil Scotia Waterous To divest Quirk Creek assets in Alberta Alberta Property EnCana TD Securities Inc To sell Alberta asset Alberta Property Celtic Exploration Ltd Royal Bank of Canada To divest certain non-core assets in Alberta Alberta Property Sifton Energy Inc CIBC World Markets Put up for sale Alberta Corporate Hemus Ltd PLS Inc Offers Heath and Bakken acreage Bakken Shale Acreage oil sands Quest Inc TD Securities Inc Considers strategic alternatives oil sands Corporate NAL Oil & Gas Trust FirstEnergy Capital To divest certain non-core assets in Canada Alberta Property Enerplus Scotia Waterous To divest certain non-core assets in Alberta Alberta Property EOG Macquarie Group To divest certain shallow gas assets in Western Canada Alberta Property 1,000-10, ConocoPhillips Scotia Waterous To divest certain assets in Canada Alberta Property 500-1, ConocoPhillips FirstEnergy Capital To divest Nisku assets in Alberta Alberta Property Cenovus Energy FirstEnergy Capital To divest certain gas properties in Alberta and Multiple Property Saskatchewan Sword Energy Inc Ross Smith Sousa To sell certain assets in Canada Alberta Property Connacher - To seek JV partner for Alberta oil sands development oil sands Acreage Suncor Energy Macquarie Group To divest significant portion of its gas assets in Canada Multiple Property 1,000-10,000 * Listing based on formal announcements or news reports and may include transactions that have been cancelled but are still included as a record of events; listing include announcements made during 2010 only Source: Derrick Petroleum Services Global E&P Transactions Database; PLS research & analysis 36

37 North America map view of selected, key transactions 2010* Western Canada/Alberta/BC Apache buying BP s assets Talisman sells to Tourmaline and others Sasol buys into JV with Talisman (Farrell Creek, Montney) Nexen sells heavy oil assets to Northern Blizzard Husky buying from ExxonMobil Rockies/Niobrara Noble Energy buys Suncor/Petro- Canada Shell acquiring East Resources Permian basin Apache acquiring all of BP s assets including infrastructure Concho and Apache (via BP preemption) acquire Marbob Energy s portfolio Sandridge Energy acquires Arena Denbury sells to Quantum (originally from Encore) Eagle Ford CNOOC buying/jv from Chesapeake Statoil/Talisman JV to acquire Enduring Resources Reliance JV with Pioneer and Newpek Shell buying from Cathexis Plains E&P buying from Dan A. Hughes and Houston American Energy Other Oxy buys Shell South Texas tight sand gas fields GOM see separate overview Oil sands ConocoPhillips sells interest in Syncrude to Sinopec PTTEP acquires 40% interest in Statoil's project Total and Suncor form strategic alliance (Fort Hills, Joslyn, Voyageur) Total acquires UTS Energy (Fort Hills) BP acquiring interest from Value Creation Group (Terre de Grace) Dakota/Bakken shale Oxy acquiring assets from Anschutz Hess buying acreage from TRZ Energy Williams buying Dakota-3 E&P Marcellus/Appalachia Shell acquiring East Resources Chevron acquiring Atlas Energy (also Utica and Antrim plays)reliance JV with Atlas Mitsui JV with Anadarko Consol buying Dominion E&P Consol buying remaining shares in CNX gas BG JV with Exco Fayetteville Petrohawk sale to ExxonMobil/XTO Haynesville ExxonMobil buys Ellora Energy Exco/BG buys Common Resources and assets from Southwestern Energy Denbury divests to private company Barnett shale Chesapeake VPP EV Energy Partners buying from Talon Oil & Gas * Map shows key assets involved in transactions (most valued above $1bn), size of circle indicates remaining reserves, net share for onshore assets (full field for GoM assets), color indicates life cycle of the asset Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis 37

38 Gulf of Mexico map view of selected, key transactions 2010* GoM Shelf portfolio transactions Apache buying Mariner Energy and Devon McMoRan buying PXP Energy XXI buys XOM W&T buys from Shell McMoRan acquires PXP s assets on GoM shelf below 500 ft, including Davy Jones ultradeep discovery, Blackbeard West and East, Flatrock field, Blueberry Hill and Hurricane Deep for $818m (90% in shares) Apache acquires Devon s shelf portfolio for $1.05b, including 80 platforms, 7 major fields and 75% operated production by Devon BP pre-empts W&T in Shell s sale of Dorado and Marlin Energy XXI buys ExxonMobil shelf assets for $1.012b, including 9 fields W&T buys Total s share in deepwater producing fields Virgo and Matterhorn for $150m Hess acquires additional 20% interest in Tubular Bells field from BP for $40m Marubeni buys BP interest in fields Nansen, Merganser, Zia and Magnolia for $650m ATP Oil & Gas sells ORRI in Gomez Hub for $155m W&T acquires property from Shell including deepwater Droshky, Tahoe, shallow water property, and infrastructure for $193m BP acquires all of Devon s deepwater portfolio for $1.8b including 30% in Kaskida, 4 producing fields (Zia, Magnolia, Merganser, and Nansen) sold to Maersk for $300m *Map shows key asset(s) involved in transactions (valued above $100m), size of circle indicates remaining reserves in full field (not share traded), color indicates life cycle of the asset Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis 38 Apache acquires Mariner Energy for $3.9b, including GoM shelf and deepwater, Permian basin and onshore unconventionals. GoM DW portfolio includes 7 discoveries under development and 50 prospects. Devon agrees sale of interests in Cascade and St Malo to Maersk who is preempted by Petrobras for Cascade, and Statoil, Chevron for St Malo for $1bn in total, but no preemption of the 25% interest in Jack which is Gazprom farms into Cuba Blocks N44, N45, N50, and N51 from Petronas

39 Contents Summary Global overview, key trends and statistics Regional reviews North America South America Europe Africa Middle East Russia and Central Asia Asia-Pacific 39

40 Historic transaction activity - South America region M&A activity in South America took a massive step up, totalled $36bn in 2010, making it the second largest region globally. Total of 75 transactions recorded (excluding new exploration awards), of which 45 deals with disclosed deal value. Brazil was the top country with several large sized transactions totalling $16bn. Argentina was number 2 with $13bn in total transactions, of which $10bn from the Pan American Energy related transactions. Colombia was ranked third with $4.3bn in disclosed transactions from 12 deals in total. 10 transactions were recorded above $1bn, with Chinese oil and gas companies involved in five of these worth $23bn in total. Annual transaction values by country USD billion Annual transactions South America vs. Rest of the world %=$147bn 100%=$114bn 100%=$149bn 100%=$211bn % Guatemala Other Somalia Guyana Jamaica Guatemala Barbados Bolivia Trinidad and Tobago Ecuador Colombia Peru Venezuela Trinidad and Tobago Brazil Venezuela Ecuador Colombia Peru Argentina Brazil Bolivia Argentina M&A activity in South America in 2010 as share of total global activity exceeds the region s share of resources and asset values which is in the range of 7-11%. 4% 4% 2% 96 % 17% South America Rest of the world 96% 96% 98% 83% Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE research & analysis 40

41 South America: Top 25 transactions of 2010 Transaction activity was dominated by Chinese NOCs, accounting for two thirds of the top 10 deals. Other international companies included BP, TNK-BP, Maersk, Talisman and Centrica top 25 transactions USD million Sinopec acquires 40% interest in Repsol s Brazilian business BP sells 60% interest in Pan American Energy to Bridas Devon Energy divests Brazilian operations to BP Chinese NOCs involved in multiple large deals; Sinopec buying 40% of Repsol Brazil and Argentina unit of Oxy, CNOOC forming JV with Bridas and Sinochem acquiring 40% of Peregrino. Sonangol made a noteworthy step out of Angola with the acquisition of Brazilian exploration company Starfish Oil and Gas for $350m. CNOOC forms JV with Bridas Energy for South American assets Sinochem acquires 40% in Peregrinofrom Statoil Sinopec acquires Argentina unit of Oxy SK Energy divests Brazilian operations to Maersk Talisman and Ecopetrol acquire BP s Colombian operations BP divests assets in Venezuela and Vietnam to TNK-BP Petrobank Energy sells its 66% stake in Petrominerales Repsol sells 3.26% in YPF to Eton Park and investment fund Suncor Energy divests Trinidad operations to Centrica Sonangol acquires Starfish Oil & Gas Hupecol sells interests in four Llanos Basin blocks Petrobras equity issued in exchange for pre-salt reserves valued at $42.5bn have not been included in the transaction statistics. P1 Energy acquires APO Energy Reverse merger of Suroco Energy and Winchester Oil & Gas Noble Energy withdraws from Ecuador block Sonde Resources sells 25% interest in Trinidad block to Niko Monitor Energy acquires 90% stake in SOCA Petroleum 66 Petrobras to acquire 30% interest in Itau field from Total 64 Niko Resources acquires Voyager Energy 33 Benchmark Energy to acquire Bolivar Energy 24 Gran Tierra Energy acquire 70% interest in four Brazilian blocks 23 Sagres Energy acquires PrivateCo with assets in Colombia 21 Petroamerica Oil acquires interest i Llanos Basin blocks 18 Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy research & analysis 41

42 South America region map view of selected key transactions 2010* BP divesting in Vietnam and Venezuela to TNK-BP for $1.8bn. BP reports that its net production from Venezuela is 25 kboed while net entitlement production from Vietnam was 15 kboed. BP had booked net reserves of 250 mboe in both countries prior to the transaction Talisman and Ecopetrol acquire 100% of BP Colombia subsidiary BP Exploration Company limited. Ecopetrol will take 51% and Talisman the remaining 49% in the assets reported with a gross production of 25 kboed Peru transactions, mainly farm-ins Inpex farms into Block 117 from Petrobras Gran Tierra farm-in Block 95 from Global Energy and 123, 124, 129 from ConocoPhillips Gulf United buys share in Block XXIV and TEA from Upland Petrominerales farms into Block 126 from Veraz Total selling down in Bolivia Itau field and Block XX to Petrobras for $64m Ipati and Aquio blocks to Gazprom Ownership in Pan American Energy with assets primarily in Argentina changed from 60% BP and 40% Bridas Energy to 50% CNOOC and 50% Bridas Energy through 2 large sized transactions totalling $10bn, of which BP received $7bn Sinopec acquire Occidental Petroleum Corporation (Oxy) assets in Argentina for $2.45bn. Occidental held interests in 23 concessions in Argentina and 22 producing about 50 kboed as of June In the same announcement Occidental published the purchase of oil and gas properties in South Texas and North Dakota for about $3.2bn Suncor Energy divests Trinidad operations to Centrica for $380m Sonangol acquired Starfish Oil & Gas for $350m with12 concessions, 1 for Guanambi producing field in the Reconcavo basin Devon divest its operations in Brazil, Azerbaijan and Deepwater Gulf of Mexico to BP for $7.0bn as part of its strategic plan to become an pure North Amercian onshore player. Brazilian assets valued at $3.2bn consisting of 8 offshore and 2 onshore blocks and included the producing Polvo field and the Xerelete, Wahoo and Itaipu discoveries. As part of the deal Devon buys 50% of BP s Kirby Oil Sands acreage in Canada for $500m including $150m drilling carry SK Energy selling its Brazilian assets to Maersk Oil, which includes the producing Polvo field and the Itaipu and Wahoo discoveries in the Campos Basin Sinochem acquires 40% of 100% Statoil operated Peregrino heavy oil field in Brazil for $3.1bn. Peregrino is expected to start production early 2011 and is reported to hold 500 MMbbl of recoverable reserves oil. Through a capital increase of $7.1bn, Sinopec acquire 40% of Repsol Brazil forming a new joint venture company to develop Repsol s Brazilian assets. Repsol key assets include Santos basin discoveries Guara, Carioca, Panoramix, Abare West, Piracuca, Iguacu, Vampira and Campos basin producing field Albacora Leste. Repsol also holds interests in several exploration licenses in Santos, Campos and Espirito Santos Basins * Map shows key asset(s) involved in transaction, size of circle indicates remaining reserves in full field (not share traded), color indicates life cycle of the asset Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis 42

43 Assessment of CNOOC s acquisition of Pan American Energy jointly with Bridas Energy November transaction price implies around 10% value upside from reserves or prices November 2010 transaction value of BUSD 7.1 for 60% ownership in Pan American Energy (PAE) implies 100% value BUSD Transaction excludes Bolivia portfolio (main asset was Chaco subsidiary, subject to Bolivia government expropriation). Completion is expected during first half CNOOC states end P reserves of 1.43 bn boe (1.59 bn boe if Bolivia included) of which 67% oil, implies reserves value of $8.3/boe proved reserves, or $9.1/boe including company debt. Rystad Energy UCUBE valuation based on end bn boe reserves is BUSD 10.4 at forward oil prices which implies higher reserves or oil prices reflected in the transaction price. Key drivers for upside valuations include continued growth in reserves from existing fields, benefits from government incentive programs, potential relief in price regulations (impact on netbacks), and exploration upside, e.g., from San Jorge offshore exploration activity. Portfolio overview key regions Northwest Neuquina Golfo San Jorge Austral Cash flow profile Million USD; 100% PAE* Oil and gas production Thousand boe per day; 100% PAE* NPV at alternative oil prices ($/bbl, real term) Million USD; 10% discount rate, 100% PAE* Oil price: 120 Forward (~80) 50 $11.8 bn Transaction value * Pan American Energy (PAE) was a JV established 1997 by BP (Amoco) (60%) and Bridas Corp (40%). CNOOC in March 2010 paid BUSD 3.1 for 50% of Bridas Corp, effectively becoming 20% owner of PAE. November 2010 Bridas Corp acquires BP s 60% ownership in PAE for $7.06bn, for Bridas Energy and CNOOC to become equal owners of Bridas Corp and PAE. Source: Company presentations (including CNOOC); Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis 43

44 South America deals in play as of year end 2010* Key opportunities in South and Central America region include: OGX to sell a 30% interest in its blocks located in the Campos Basin in Brazil. There has been speculation that Sinopec and CNOOC are bidding for the assets, Shell considering divestment of stakes in four offshore blocks including the Atlanta and Oliva heavy oil fields and Bem-Te-Vi pre salt discovery, Petrobras confirmed January 4, 2011 to be considering a potential transaction with Eni to buy their 33.3% share in Galp Energia Date Value range dd.mm.yy Seller Broker Deal heading Country Asset Type MUSD OGX Petroleo e Gas - To sell 30% interest in Campos Basin oil discoveries Brazil Discoveries >10, Shell - To divest stakes in four offshore oil blocks Brazil Development 500-1, BPZ Energy Credit Suisse To farm-out interest in Peru and Ecuador assets Peru Development Harvest BofA Merrill Lynch Considers strategic alternatives Venezuela Corporate M&A Canacol Energy Ltd - Looking to sell producing assets in Brazil Brazil Producing Gold Oil Plc - Seeking farm-in partner for offshore Peru block Peru Farm-out Gold Oil Plc - Seeking partners for exploration block in Peru Peru Farm-out Maple Energy plc - Seeking JV partner to develop shale gas blocks Peru Discoveries Sagres Energy Inc - Seeking partner for offshore exploration drilling Jamaica Farm-out Exploraciones Oromin SA - To farm out interest in Argentina concession Argentina Farm-out Panoro Energy; Brasoil Stellar Energy Offering interest in three Santos Basin blocks Brazil Farm-out Government - offering seized oil concessions as service contracts Ecuador Producing Woodside - Considering the sale of Brazilian assets Brazil Discoveries CGX Energy Inc - Seeking partner for oil exploration licence Guyana Farm-out Gold Oil Plc - To farm out interest in two Peruvian blocks Peru Farm-out Infinity Energy Resources - Seeking partner for offshore concessions Nicaragua Farm-out Karoon Gas Australia Ltd IndigoPool Seeking partner for Santos Basin program Brazil Farm-out Listing is a snap-shot of opportunities as of year end 2010 and is subject to continuous revisions and updates. * Listing based on formal announcements or news reports and may include transactions that have been cancelled but are still included as a record of events; listing include announcements made during 2010 only Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy research & analysis 44

45 Contents Summary Global overview, key trends and statistics Regional reviews North America South America Europe Africa Middle East Russia and Central Asia Asia-Pacific 45

46 Historic transaction activity Europe region M&A activity in Europe has remained at similar levels as recent years, amounting to around 4% of world total activity by transaction value in However, 2009 asset swap between Shell-Hess with undisclosed values would have added around $3bn to for that year (deal was closed 2010). UK activity is increasingly important largely due to KNOC s acquisition of Dana Petroleum, accounting for 65% of UK total activity in Norway activity increased in size and diversity with transactions from all types of asset maturity. Only smaller levels of transaction activity in rest of Europe. Europe s share of global M&A activity is comparable to the region s share of production and asset value when state ownership** is excluded given the limited availability of these portfolios in the transaction market. Annual transaction value by country USD billion Undisclosed Shell-Hess swap adds around $3bn* Annual transaction value Europe vs. Rest of the world %=$147bn 100%=$114bn 100%=$149bn 100%=$211bn 6% % % 4 % % Slovenia Albania Italy Austria Turkey Germany Bulgaria Denmark Czech Ireland Republic Spain Poland Serbia France Romania Cuba Hungary Italy Turkey Netherlands Denmark Norway Ireland Serbia United Kingdom Romania Hungary Northwest Europe/North Sea Rest of the world 96 % 94% 92% 95% 97% * 2009 Shell-Hess swap Valhall for Clair and Gabon scaled by Total divestment of Valhall stake in 2010 (implies Valhall sale by Shell at $1.77bn and value of Clair estimated at $1.2bn, difference in value is then due to Gabon) ** State ownership considered to include Statoil, SDFI (Petoro), and EBN (Netherlands) Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis 46

47 Europe: Top 25 transactions of 2010 KNOC s acquisition of Dana Petroleum was top transaction for the region and accounts for 57% of the Europe region when combined with Dana s simultaneous acquisitions of Suncor in Netherlands and UK top 25 transactions European region USD million KNOC acquires Dana Petroleum Dana Petroleum acquires Netherlands subsidiary of Suncor Hess acquires additional interest in Valhall and Hod from Total The types of active companies also broadened and included KNOC, Scottish & Southern, KazMunaiGaz (farmed into BG license), Marubeni (into Norway). Also, Majors BP, Total, Eni, and Chevron active, together with step-up by Statoil and Talisman. Energy companies, Centrica bought Statfjord (Shell, Norway), VNG and Bayerngas Norwegian subsidiaries bought in Denmark (Hejre) and UK (Cygnus), respectively, and Scottish & Southern acquired mature UK gas fields and infrastructure from Hess, formed strategic alliance with Faroe and took a direct share ownership in the company. Smaller sized company mergers also took place, with Petrofac and Lundin forming EnQuest as a mature UK portfolio company, then acquiring Stratic, and Norway s Bridge Energy merged with sister company Silverstone, UK, and went public. BP acquires additional interest in Valhall and Hod from Total Hess divests certain UK North Sea assets Suncor Energy divests certain UKCS assets to Dana Petroleum Eni divests certain Italian assets to Gas Plus Centrica acquires additional interest in Statfjord unit from Shell TransAtlantic Petroleum to acquire certain gas assets in Turkey Statoil acquires additional 20.67% interest in Mariner discovery EnQuest acquires Stratic Energy Spring Energy sells certain Norwegian assets to Talisman Endeavour International divests 12.5% in Cygnus to Bayerngas TransAtlantic acquires Zorlu Energy's Turkish E&P operations Faroe Petroleum acquire 18% in Blane oil field from ENI Marathon Oil sells interest in Norwegian licences to Statoil Hess acquires 50% stake in Toreador s shale oil permits, France Premier Oil gets option to acquire 39.9% interest in Fyne licence Noreco sells 20% interest in Grosbeak oil discovery to Talisman Noreco sells interest in two Norwegian oil fields to Marubeni Talisman to acquire 60% interest in shale gas licenses in Poland Regal Petroleum sells Barlad concession in Romania to Chevron Valiant Petroleum to acquire additional 30% in UKCS field EnQuest sells interest in Slovenian gas project Ithaca Energy acquires UK North Sea assets from GDF Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy research & analysis 47

48 Europe region map view of key 2010 transactions by asset life cycle and full field reserves* Lundin and Petrofac create EnQuest, then acquire Stratic Energy Centrica increasing ownership in mature Statfjord field with late life gas development potential buying Shell s share TAQA acquiring Total s stake in the Otter field KNOC acquiring Dana Petroleum with assets in the North Sea region and Africa Total buying Eni s 20% and Chevron s 10% stakes in Laggan/Tormore gas field development project to become 80% owner (and operator) Hess divesting mature gas fields, including Lomond and Everest and infrastructure in Central and Southern North Sea to Scottish & Southern Energy (SSE) Dana acquiring Suncor/Petro-Canada portfolios in UK and Netherlands Bayerngas buying 12.5% interest in Cygnus gas development project from Endeavour and 25% in Clipper South gas development project from Fairfield Talisman acquiring stakes in Grosbeak discovery from Noreco and Spring, and Beta discovery from Spring Statoil increasing ownership stakes in Gudrun from Marathon, Mariner (UK) from Nautical, and Gygrid from Concedo, and reducing stake in Gro to PGNiG Marubeni acquiring Noreco s stakes in development project Oselvar and producing field Enoch Total divesting stake in Valhall long life oil field to BP and Hess (Hess already acquired Shell stake in 2009) VNG acquiring 15% stakes in Hejre/Svane HPHT development projects from operator Dong (new stake 35%) Bridge Energy swapping its 50% share in Vanquish discovery with BP s 25% interest in Vulcan East and Victoria gas fields *Map shows key asset(s) involved in transaction, size of circle indicates remaining reserves in full field (not share traded), color indicates life cycle of the asset Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis 48

49 Transaction specifics KNOC acquisition of Dana Petroleum with portfolio in the North Sea and Africa, bought at 56% premium with additional upside KNOC in pursuit of the company s strong growth ambitions expressed as GREAT KNOC made an indicative bid for Dana Petroleum June 2010 for 1,700 p/share, later increased to 1,800 p/share. August 20, KNOC launched public offer at 1,800 p/share reported to have 49% shareholder support with bid 56% up from 3 months average share price before bid was revealed June 30. By September 24, KNOC declared its bid unconditional with 64% shareholder support, effectively succeeding with the company acquisition. Rystad Energy s UCUBE valuation implies acquisition price 25% below net asset value at forward oil prices, including the value of Petro-Canada s portfolios in Netherlands and UK acquired simultaneously by Dana. Key value drivers for Dana s portfolio include UK field development projects, e.g., the Western Isles Development project and Egypt exploration. Portfolio overview Europe and North Africa Cash flow profile Million USD Oil and gas production by country Thousand boe per day NPV at alternative oil prices ($/bbl, real term) Million USD; 10% discount rate Transaction value $3.63bn* *Based on indicative bid 1,800p/share, 92.5 million ordinary shares outstanding, net debt year end 2009 of MUSD 230, value of Faroe shareholding MUSD 100, consideration and debt for Petro-Canada/ Suncor Netherlands MUSD 534 and UK MUSD 372; USD/GBP 1.56 Source: KNOC and Dana Petroleum company reports; Rystad Energy UCUBE, research & analysis 49 Oil price: 120 Forward (~80) 50

50 Europe deals in play as of year end 2010* Selected opportunities in Europe region include: BP potentially selling off assets in the North sea, part of post- Macondo process, Noreco considering strategic alternatives claiming its underlying portfolio value is not reflected in current share prices, Other Majors possible divestments of mature asstes, e.g., ExxonMobil divesting Njord gas field Multiple other opportunities, with large number of farm-out opportunities. Successful exploration companies with large contingent resources likely acquisition targets due to high capex requirements. Poland likely to become hot spot for M&A activity as results and plans for shale gas drilling gets underway. Listing is a snap-shot of opportunities as of year end 2010 and is subject to continuous revisions and updates. Date Value range dd.mm.yy Seller Broker Deal heading Country Asset type MUSD Noreco BofA Merrill Lynch Considers strategic alternatives Denmark/Norway Corporate M&A 1,000-10, BP - Looking to sell certain North Sea assets United Kingdom Producing 1,000-10, Shell; ExxonMobil IndigoPool Looking to sell Anasuria assets, UK North Sea United Kingdom Producing 500-1, ExxonMobil - Possible divestment of stake in Njord gas field Norway Producing Mediterranean Oil & Gas CIBC World Markets Considers strategic alternatives Italy Corporate M&A Bridge Resources Corp - Considers strategic alternatives United Kingdom Corporate M&A Canamens Energy; SK - To divest interest in Kraken oil discovery United Kingdom Discoveries Shell; ExxonMobil IndigoPool Looking to divest Corvette field United Kingdom Producing Valiant Petroleum - Seeking farm-in partner for UK North Sea block United Kingdom Farm-out Aurelian Oil & Gas plc Stellar Energy Divesting interests in four Romania concessions Romania Mix of assets Ithaca Energy Inc - To farm-out 50% interest in Hurricane discovery United Kingdom Discoveries Sumitomo Stellar Energy To farm-out interest in UK North Sea license United Kingdom Farm-out Veritas Geophysical Ltd Stellar Energy To divest three UK North Sea blocks United Kingdom Farm-out Repsol - To farm-out 20% interest in four offshore permits Spain Farm-out Repsol - To farm-out 35% interest in offshore permit Spain Farm-out Sterling Rsc; GB Petrol. Envoi To farm-out interest in UK North Sea license United Kingdom Farm-out E.ON AG - Seeking farm-in partner for UK North Sea block United Kingdom Farm-out Wintershall - To farm-out interest in UK North Sea license United Kingdom Farm-out Northern Petroleum Envoi Seeking strategic options for Weald Basin assets United Kingdom Development Wintershall - To farm out interest in UK North Sea oil discovery United Kingdom Discoveries Falcon Oil - Seeking partners for Mako Trough Project Hungary Discoveries Ithaca Energy Inc; Dyas - Offering interest in UK North Sea oil discovery United Kingdom Discoveries APC A/S IndigoPool Seeking partner to develop gas field Germany Discoveries ExxonMobil IndigoPool Offering interest in deepwater licence Ireland Farm-out Serica Energy - Seeking partner for exploration licence Spain Farm-out Elixir Petroleum - Seeking partner for unconventional gas project France Farm-out Xtract Energy; Merty IndigoPool Seeking partners for Turkish licence Turkey Farm-out Bridge Resources Corp Stellar Energy To farm out 50% interest in UK North Sea oil prospect United Kingdom Farm-out FX Energy Envoi Seeking partners to explore Poland licences Poland Farm-out Legs Resources Plc IndigoPool To farm-out interests in Poland concessions Poland Farm-out Realm;Source Enrg Prtn. - Seeking partner(s) for three shale gas concessions Poland Farm-out Park Place Energy Corp - Seeking JV for shale gas exploration permit Bulgaria Farm-out PA Resources; Spyker - To farm-out interest in offshore Danish license Denmark Farm-out Serica Energy; RWE - To farm-out interest in exploration license Ireland Farm-out Cirrus Energy Corporation FirstEnergy Capital To farm-out interest in certain offshore assets Netherlands Farm-out * Listing based on formal announcements or news reports and may include transactions that have been cancelled but are still included as a record of events; listing include announcements made during 2010 only Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy research & analysis 50

51 Contents Summary Global overview, key trends and statistics Regional reviews North America South America Europe Africa Middle East Russia and Central Asia Asia-Pacific 51

52 Historic transaction activity Africa region M&A activity in Africa in 2010 was back down to the average levels of recent years activity was driven by NOC-led transactions by Sinopec (Addax), Sonangol (Marathon Block 32), Libya NOC (Verenex) and Santander sale to IPIC of shareholding in Cepsa (Algeria) saw a range of exploration related transactions, in the East Africa rift and deepwater plays and West African Transform Margin (or deepwater Upper Cretaceous) play, building on Tullow s early success in Uganda and Ghana, and Anadarko offshore Mozambique. Africa growth has in many countries been lead by exploration successes of the independents, e.g., Tullow, Kosmos, Heritage, in addition to contributions by NOC and Majors. Recent and future exploration success by the independents create new opportunities for M&A. Annual transaction value by country USD billion Annual transaction value Africa vs. Rest of the world %=$147bn 100%=$114bn 100%=$149bn 100%=$211bn 5% % % % 4 % 4% Somalia Other Niger Gabon Saharawi Mauritania Arab Dem. Rep. Libya Ethiopia Equatorial Guinea Angola Ghana Uganda Madagascar Egypt Congo Tanzania Algeria Nigeria *Multiple Countries Seychelles Af rica Rest of the world Africa s share of global M&A activity is less than half the region s share of global production and asset values. 95% 94% 90% 96% Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis 52

53 Africa transactions: Top 25 transactions during 2010 Top transactions in Africa region are Tullow s acquisition of Heritage s interest and subsequent divestment to CNOOC and Total. Sinopec transaction is a reorganization of portfolio from parent to international subsidiary. Several larger sized transactions without valuations disclosed: Gazprom-Eni swap Elephant, Libya for Siberia assets Perenco s acquisition of Total s Cameroon mature asset portfolio Large number of exploration related transactions, including African Petroleum's reverse takeover of Global Iron for West Africa Afren acquiring Black Marlin for its East Africa exploration portfolio Africa Oil acquired Centric Energy Majors active in farm-in deals, e.g., Chevron Liberia, Total Ivory Coast and Nigeria JDZ, ExxonMobil Tanzania. Limited activity by Asian NOCs, key deal is CNOOC into Uganda, smaller sized Inpex farm-in Soco DRC, and Sinopec reorganization in Angola top 25 transactions Africa by value of transactions USD million CNOOC and Total acquire interest in Tullow's Ugandan assets Sinopec acquires interest in Angola Block 18 from parent Tullow exercises pre-emption right to acquire Heritage's assets Apache acquires BP assets in Egypt Global Iron acquires two exploration blocks offshore Liberia Shell divests interest in three Nigerian onshore licences Afren acquires Black Marlin Energy Petrofac acquires 12.6% stake in Seven Energy Woodside Petroleum divests Sierra Leone and Liberia assets Iberdrola divests 15.68% interest in Petroceltic Africa Oil acquires Centric Energy Sea Dragon acquires 50% interest in Egyptian concession Panoro divests 40% interest in Ajapa field Tullow to acquire 50% interest in Kenya and Ethiopia licenses East West Petroleum acquires 20% interest in Egyptian oil field Geofinance NV acquires 46% stake in Candax Energy Cooper Energy farms out 15% stake in Tunisian permit Gulf Keystone transfers interest in Algerian gas permit to BG Centric Energy farms out 50% interest in Kenyan block Cove Energy to acquire 15% interest in five blocks in Kenya WHL Energy acquires SEYCO Energy CAMAC Energy to acquire interests in offshore Nigerian licences Groundstar Resources sells 70% interest in Egyptian block Hardy Oil divests Nigerian operations to Inergia Petroleum TransGlobe Energy to acquire 50% in Egyptian concession Madalena Ventures sells 15% interest in Tunisian permit Source: Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy research & analysis 53

54 Africa region map view of key 2010 transactions by new owner and reserves traded* Gazprom agreement to acquire 50% of Eni s 33% stake in the Elephant field (net interest to Eni is 23 kboe/d production) in exchange for interests in northwest Siberian assets held by the Arctic Gas Company value not disclosed, >1 $bn deal value? Sierra Leone, Liberia, Ivory Coast Woodside traded for cash and GoM licenses with Anadarko out of Sierra Leone Blocks 6,7 and Liberia Blocks 15,16,17 Chevron farmed into Liberia blocks 11,12,14 with Oranto Global Iron reverse takeover of African Petroleum with Blocks 7&8 in Liberia and farmed into Buried Hill licenses in the Gambia Rialto acquired block CI-202 offshore Ivory Coast containing 5 discoveries from CLNR/ACC International after 2 years of negotiations Total farmed into deepwater block CI-100 in Ivory Coast Nigeria M&P/Seplat acquired Shell s interest in onshore OML 4, 38, and 41, for 76 mboe 2P reserves (Total s interest also acquired) Petrofac acquired a stake in Seven Energy Panoro divested its stake in Ajapa marginal field to operator Brittania-U JDZ Block 1: Total acquired Chevron s stake to become operator Cameroon: Perenco acquired Total s JV company with equity production stated at 8 kboe/d, value not disclosed Angola Block 18 Sinopec reorganization shareholding in JV with Sonangol, SSI, transferring 55% from the Sinopec Overseas company to Sinopec company, claimed thereby to be Sinopec s first international acquisition of upstream assets Total transferred Blocks 3-85 and 3-91 to Sonangol and was reported to consider divesting its 5% stake in Block 31 also (>2 bn boe discovered resources in the Block) *Map shows key asset(s) involved in transaction, size of circle indicates remaining reserves in full field (not share traded), color indicates life cycle of the asset Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis 54 Tunisia Geofinance acquired Candax with assets in Tunsia, including Bibane, (and Madagascar) PharmAust & Xstate farms into 10% of the Dougga discovery Egypt Apache acquiring BP s Western Desert assets (part of $7bn deal including North America) KNOC acquired Dana Petroleum Sea Dragon farmed into Dana Gas licenses at Kom Ombo including Al Baraka development lease East West Petroleum acquires 20% in Burg el Arab oil field from Kuwait Energy Company Africa Oil transactions Somalia/Puntland: Farmed down 10% of Dharoor and Nogal blocks to Red Emperor Acquired Centric Energy with licenses in Kenya Block 10B (Tullow earlier farmed in) and Mali Blocks 7&11 Afren acquired Black Marlin including subsidiary East African Exploration with ownership in Ethiopia: Blocks 2,6,7,8 Kenya: Blocks 10A, 1, L17/L18 Madagascar: Block 1101 Seychelles: Blocks A,B,C Tullow Uganda had acquired Heritage Oil s interests (pre-empting Eni in 2009), during 2010 pursued a divestment of its entire Uganda portfolio with one third each to Total and CNOOC Kenya/Tanzania Cove Energy farmed into Anadarko operated Blocks L1, 5, 7, 11A&B from Dynamic Energy Statoil farm-out 35% offshore Block 2 to XOM Dominion farmed into M&P s Kisangire and Mandawa blocks BG farm-in 65% of Ophir s offshore Blocks 1,3,4 Madagascar Ophir farmed into Block 2102 from Wilton Shaanxi Yanchang acquired stake in Sino Union which operates Block 3113 (Bekodoka) with billion bbl oil potential Gazprom stated intention to enter into Kudu gas field to power development project

55 Transaction specifics Tullow Oil Uganda portfolio with ongoing divestment to CNOOC and Total to form development consortium of 3 equal partners Tullow Oil together with partner Heritage Oil have had significant exploration success in Uganda since first discovery was made in In 2009, Heritage wanted to divest its holding, initially agreeing a sale to Eni which was pre-empted by Tullow. During 2010, Tullow then made agreement with Total and CNOOC to form an equal partnership for Tullow s larger portfolio in order to pursue a development program of the discoveries. Rystad Energy s UCUBE valuation implies acquisition price for the 30% below net asset value at forward oil prices. Key value drivers for Tullow Oil s Uganda portfolio include reserves estimates, project development, cost and production build-up and phasing, net-back estimates (local pricing, crude quality) which is probably a larger than usual set of value drivers. Portfolio overview Tullow Uganda fields Cash flow profile Million USD Oil and gas production Tullow Uganda Thousand boe per day NPV at alternative oil prices ($/bbl, real term) Million USD; 10% discount rate Transaction value $3.75bn* Oil price: 120 Forward (~80) 50 * Based on indicated transaction price of $2.5bn from Total and CNOOC for one third each of Tullow Oil s Uganda portfolio Source: Rystad Energy UCUBE, research & analysis 55

56 Africa deals in play as of year end 2010* Key opportunities in Africa region include ExxonMobil and Total reported by Sonangol representatives in November 2010 as considering a divestment of Block 31 interests, ONGC reported as potential buyer BP reported as divesting assets in Algeria, subject to government guiding and approvals, Shell continues divesting Nigeria onshore assets, OML30, 34, 40 and 42 in Nigeria, process in progress early Multiple other opportunities, with large number of farm-out opportunities. Listing is a snap-shot of opportunities as of year end 2010 and is subject to continuous revisions and updates. Date Value range dd.mm.yy Seller Broker Deal heading Country Asset Type MUSD ExxonMobil - Exiting Block 31 in Angola Angola Development 1,000-10, Shell - Looking to sell certain Nigeria onshore assets Nigeria Producing 1,000-10, Total - Selling 5% interest in Block 31, Angola Angola Development 500-1, INA-Naftaplin - Looking to exit Angola Angola Producing Sasol FirstEnergy Capital To divest interest in two deepwater blocks Nigeria Discoveries Dana - Offering 25% interest in Egyptian concession Egypt Discoveries Tower Resources Envoi To farm out 50% interest in Uganda block Uganda Farm-out Afren Stellar Energy Offering interest in offshore Ghana block Ghana Farm-out Canamens Energy Simco Petroleum Seeking farm-in partner(s) for two offshore licenses Morocco Farm-out VAALCO Energy - Seeking partner for offshore Angola block Angola Farm-out Vanoil Energy Ltd - Seeking farm-in partner for exploration block Kenya Farm-out Maurel & Prom Stellar Energy Selling interests in Tanzania and Mozambique permits Tanzania Mix of assets Repsol - To farm out interest in offshore block Equ. Guinea Discoveries ExxonMobil IndigoPool Considers options for 30% interest in deep water block Congo Discoveries InterOil E&P ASA - Seeking partner for Ebony discovery Ghana Discoveries BowLeven Envoi To sell 20% interest in onshore exploration permit Cameroon Farm-out Voyageur Oil and Gas - Offering interest in Tunisian exploration permit Tunisia Farm-out Maersk; Svenska FirstEnergy Capital To farm-out interest in two offshore blocks Angola Farm-out PetroSA Ernst & Young Offering interest in two offshore blocks South Africa Farm-out Carthago;Range;Med.O&G - Offering interest in Tunisian permit Tunisia Farm-out Key Petroleum - Divesting interests in two PSA areas Tanzania Farm-out New Age (African Gl.Enrg) Simco Petroleum Seeking partner for exploration acreage South Africa Farm-out Svenska FirstEnergy Capital To farm-out interest in offshore block Nigeria Farm-out Dominion Petroleum Ltd - Seeking partners for deepwater block Tanzania Farm-out Caithness Energy FirstEnergy Capital To divest interest in Moroccan permit Morocco Farm-out Roc Oil Co - To farm-out interest in deep water block Equ. Guinea Farm-out Maurel & Prom Stellar Energy To divest interest in three permits Gabon Farm-out Maurel & Prom Stellar Energy To sell interest in three Congo permits Congo Farm-out OMV - Seeking partner for offshore permit Tunisia Farm-out * Listing based on formal announcements or news reports and may include transactions that have been cancelled but are still included as a record of events; listing include announcements made during 2010 only Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy research & analysis 56

57 Contents Summary Global overview, key trends and statistics Regional reviews North America South America Europe Africa Middle East Russia and Central Asia Asia-Pacific 57

58 Historic transaction activity Middle East region M&A activity in the Middle East region is generally very limited. Although the region accounts for 25-30% of the world s production and reserves, the large share of state ownership limits transaction activity has seen a lot of international companies active in the region, in particular related to service contract awards in Iraq. This activity is not accounted for as M&A activity. Annual transaction value by country USD million , ,997 1, Bahrain IsraelBahrain Other Kuwait UAE - Ras al Khaim Qatar Jordan UAE - Abu Dhabi Yemen Iran UAE - Ras al Khaimah OmanKuwait Iran Iraq Saudi Arabia UAE - Sharjah UAE - Sharjah Syria UAE - Abu Jordan Dhabi Israel Israel Qatar Qatar Yemen Yemen Oman Iraq Syria Annual transaction value Middle East vs. Rest of the world 4 % %=$147bn 100%=$114bn 100%=$149bn 100%=$211bn 0.5% 0.1% 2% 1% Middle East Rest of the world 96 % 100% 98% 99% 100% Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy research & analysis 58

59 Middle East transactions: Top 25 transactions during 2010 Key transactions for the region include CNPC acquiring parts of Shell s portfolio in Syria value is not disclosed, estimated value is shown Genel Enerji divesting 5% in DNO operated Dohuk and Tawke fields and 10% in Miran field operated by Heritage Oil to South Korean company UI Energy. Transactions are pending approval from the Kurdish authorities, Tethys Oil farming down to Mitsui prior to exploration successes in blocks 3 and 4 onshore Oman holding several oil discoveries 2010 top 25 transactions Middle East by value of transactions USD million CNPC acquires 35% interest in Syria Shell Petroleum Genel Enerji to sell interests in three Iraqi fields Tethys Oil farms out 20% interest in two Oman blocks ShaMaran acquires stake in Kurdistan concession Bontan sells interest in offshore Israel licenses Agri Energy to acquire 20% interest in Syria block Avenue Energy to sell 32.5% interest in Israel oil field Adira Energy and Brownstone gets option to acquire licenses Adira Energy farms out 70% interest in offshore Israeli license Mitsui sells interest in El Bunduq oilfield Marathon Oil acquires interest in four Kurdistan blocks RAK Petroleum farms out 50% in Oman block Epsilon Energy sells Yemen subsidiary MENA to acquire 30% stake in Syria block from Kulczyk Oil Murphy Oil acquires 50% interest in Kurdistan block Rosneft to acquire 49% interest in Sharjah concession Selected transactions without disclosed deal values Adira Energy to acquire 70% interest in Israeli license RAK Petroleum acquires remaining 60% interest in UAE field Geoglobal Resources acquires 5% in licenses offshore Israel Total acquires 36% interest in Yemen block Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis 59

60 Middle East deals in play as of year end 2010* Selected opportunities in the region include: Abu Dhabi National Oil Co (ADNOC) reported to seek partner for development of the Shah sour gas field cited as $10-12bn Capex project; Occidental selected end of January ConocoPhillips pulled out of the partnership with ADNOC in April 2010, Groundstar Resources announced March 2010 to be considering strategic alternatives. Groundstar Resources is active in Kurdistan, Egypt and Guyana Date Value range dd.mm.yy Seller Broker Deal heading Country Asset Type MUSD Abu Dhabi NOC - Seeking partner to develop Shah gas field UAE - Abu Dhabi Development 1,000-10, Groundstar Resources Jennings Capital Inc Considers strategic alternatives Iraq Corporate M&A Edison - Offering 40% interest in offshore block Iran Farm-out Listing is a snap-shot of opportunities as of year end 2010 and is subject to continuous revisions and updates. * Listing based on formal announcements or news reports and may include transactions that have been cancelled but are still included as a record of events; listing include announcements made during 2010 only Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy research & analysis 60

61 Contents Summary Global overview, key trends and statistics Regional reviews North America South America Europe Africa Middle East Russia and Central Asia Asia-Pacific 61

62 Historic transaction activity Russia and Central Asia region M&A activity in the region is dominated by Russia, accounting for around 80% of the region. Annual transaction value by country USD billion 35.9 Corporate M&A, acquisitions of company minority (or majority) interests and multiple asset acquisitions are common with single asset transactions less frequent in the region in Tajikistan Georgia Moldova Armenia Other Kyrgyzstan Ukraine Ukraine Tajikistan Uzbekistan Uzbekistan Latvia Turkmenistan Georgia Turkmenistan Azerbaijan Moldova Ukraine Kazakhstan Azerbaijan Russia Kazakhstan Russia The region s share of global M&A activity is almost half of the region s share of global production and asset values which is ~15-20%. Annual transaction value Russia and Central Asia vs. Rest of the world %=$147bn 100%=$114bn 100%=$149bn 4 % 100%=$211bn 24% 8% 13% 13% Russia and Central Asia 76% 92% 87% 96 % 87% Rest of the world Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis 62

63 Russia and Central Asia transactions: Top 20 transactions during 2010 Transactions in region were largely driven by investments in equity share holdings. The largest asset deal is Devon s exit from Azerbaijan to BP valued at $2bn. Other selected transactions included Russneft: The original and ousted founder, Mr Gutseriyev, bought company back for $600m cash and $6bn debt. 49% was then acquired by Sistema, controlled by Mr. Yevtushenkov. Lukoil bought back parts of ConocoPhillips share holding for $5.8bn, who will still own 6.15%. E.ON sold its entire 3.5% stake in Gazprom for $4.7bn; of which 2.7% to Russian investment bank Vnesheconombank, rest in the market. E.ON started investing in Gazprom in 1998, by 2003 held 6.4%; reduced to 3.5% as part payment to Gazprom for a stake in Yuzhno-Russkoye gas field KazMunaiGas (KMG) bought from parent National Company KazMunaiGaz (owns 63% of KMG, listed 2006) to buy stakes in 3 companies for $2.25bn, including 50% of Kazakhoil Aktobe, 51% of Kazakturkmunai 50% of JSC Mangistaumunaigas 2010 top 20 transactions Russia and Central Asia by value of transactions USD million Mikhail Gutseriyev buys back Russneft Lukoil repurchases 13.05% stake from ConocoPhillips E.ON sells 3.5% stake in Gazprom Sistema to acquire 49% stake in Russneft KazMunaiGas EP acquires interest in three oil assets Devon Energy divests 5.63% stake in ACG field Gazprom divests 51% stake in SeverEnergia Novatek acquires 51% stake in Sibneftegas KazMunaiGas EP acquires two contracts in Kazakhstan Energees Investments offers to acquire Regal Petroleum Novatek acquires additional 26% interest in five Russian licenses Roxi Petroleum sells interest in Kazakhstan oil field Novatek acquires gas condensate field in Yamal peninsula International Petroleum acquires 75% in Siberian blocks TNK-BP wins rights for oil and gas license in Orenburg, Russia Rosneft win bids for three blocks in Samara region, Russia TNK-BP wins rights to develop gas field in Orenburg, Russia Cadogan Petroleum acquires five Ukraine wells Roxi Petroleum divests interest in Kazakhstan contract 3P International Energy acquires Galizien Energy Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy research & analysis 63

64 Russia and Central Asia deals in play as of year end 2010* Selected opportunities in Former Soviet Union include: Gazprom reported to be considering a sale of 10% of its 19.4% stake in OAO Novatek, Russia s second largest gas producer Rusia Petroleum, license holder of the giant Kovyakta gas field in the Irkutsk region, has been put up for sale. Rusia was earlier declared insovlent after TNK-BP filed a petition against the company in which it owns 62.9%, Russian Agency of Sub-Soil Resources (Rosnedra) offering large unlicensed oil fields Trebs and Titova. Bashneft reported to be most likely candidate satisfying government requirements in its application, Majority owner in Russneft Mikhail Gutseriyev announcing plans for a merger between Russneft and Bashneft within the next two or three years (May 2010). Date Value range dd.mm.yy Seller Broker Deal heading Country Asset Type MUSD Gazprom - Selling 10% stake in Novatek Russia Corporate M&A 1,000-10, RUSIA-Petroleum Co - Put up for sale Russia Corporate M&A 500-1, Sberbank - Divesting oil assets in East Siberia Russia Development 500-1, Novatek; Gazprom; Volga - To sell 49% interest in Yamal LNG Russia Development 500-1, Caspian Oil and Gas - Seeking JV partner for Kyrgyz licences Kyrgyzstan Farm-out Cadogan Petroleum IndigoPool Seeking partner for Ukraine license Ukraine Farm-out Itera - Looking to divest strategic stake Russia Producing Listing is a snap-shot of opportunities as of year end 2010 and is subject to continuous revisions and updates. * Listing based on formal announcements or news reports and may include transactions that have been cancelled but are still included as a record of events; listing include announcements made during 2010 only Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy research & analysis 64

65 Contents Summary Global overview, key trends and statistics Regional reviews North America South America Europe Africa Middle East Russia and Central Asia Asia-Pacific 65

66 Historic transaction activity Asia-Pacific region Transactions in the Asia-Pacific region amounted to $21.4bn in 2010, about 10% of global disclosed deal values. M&A activity was varying; in 2007 and 2009 Asia Pacific deals accounted for 2% and 4% of global deals, while in 2008 the region was the global number 2 region (behind US) with 21% of the total market. M&A activity for the region is 10% of the world total. The region is estimated to hold 12-14% of the world s total production, resources and asset values and M&A activity is therefore at a lower level than the world average in the Asia-Pacific region. Annual transaction value by country USD billion Annual transaction value Asia Pacific vs. Rest of the world %=$147bn 100%=$114bn 100%=$149bn 100%=$211bn 4 % 2% % % % Timor Sea JPDA Myanmar Philippines Brunei Bangladesh Mongolia New Zealand Bangladesh Malaysia Thailand Vietnam Pakistan Philippines Papua New Guinea New Zealand China Thailand Pakistan Indonesia Papua India New Guinea China Australia Indonesia India Australia Asia Pacif ic 98% 79% 96% 96 % 90% Rest of the world Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis 66

67 Asia-Pacific transactions: Top 20 transactions during 2010 The top transaction in the region, and also globally, is Vedanta s bid for Cairn India for $8.9bn. Australia is the top country with 45% of total transaction value and with 60% of the activity counting number of published deals. China third largest country with two deals totalling $865m. Indonesia and Thailand follow with $245m and $156m in disclosed transactions during CBM deal activity recovering. Five large CBM deals, 4 in Australia and 1 in China, accounting for more than $6bn top 25 transactions Asia-Pacific region USD million Vedanta Group to acquire 51% stake in Cairn India Shell divests 10% stake in Woodside Shell and PetroChina acquire Arrow Energy BP divests assets in Pakistan to United Energy Group Total acquires 20% in GLNG project from Santos and Petronas Sinopec acquires 18% in Gendalo-Gehem project from Chevron Santos sells 15% in GLNG project to KOGAS and Total Devon Energy divests interest in Panyu field to CNOOC Genesis Energy Holdings acquire CBM Project Petronas sells 7.5% interest in GLNG project to KOGAS Santos divests 40% interest in Evans Shoal gas field to Magellan CNOOC to buy 50% in China United Coalbed Methane Company Talisman acquires 25% interest in Jambi Merang block from Hess Apache acquires 55% stake in Spar field from Santos Dart Energy offers to acquire remaining 79% in Apollo Gas 110 Salamander acquires remaining 40% interest in Bualuang field 105 AGL Energy offers to acquire Mosaic Oil 105 Merger of Beach Energy and Impress Energy 69 Petrobras farms in 50% into Australian exploration license 60 Tap Oil acquires 75% stake in Northern Gulf Petroleum 48 InterOil acquires additional 1.05% interest in Elk/Antelope field 41 Raisama to acquire Peak Oil & Gas 38 RH Petrogas acquires interests in two Indonesian PSCs 37 Merger of Drillsearch Energy and Innamincka Petroleum 28 CNOOC to acquire 50% interest in five CBM permits 25 Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy research & analysis 67

68 Asia Pacific map view of selected, key transactions 2010* BP divest assets in Pakistan to United Energy Group for $775bn in cash. BP s portfolio in Pakistan included nine producing assets and exploration blocks on/offshore Vedanta Resources bid for 51-60% of Cairn India for between $8.5 and $9.6bn. Vedanta Group is a metals and mining company headquartered in London with primary operations in India with a market cap of $10bn (Dec 2010). Transaction expected approved by Q by India government Salamander acquires remaining 40% interest in Bualuang oil field for $105m BP divests Vietnam assets to TNK- BP in package deal including Venezuela Talisman acquires Hess 25% interest in Jambi Merang block offshore Indonesia for $180m Operator of Evan Shoal gas discovery Santos divests 40% to Magellan Petroleum for up to $180m. Evan Shoal is said to hold 6.1 Tcf of gas reserves including CO2 content Petrobras farms in 50% to MEO Australia offshore license WA-360- P including the East Artemis prospect with recoverable unrisked resources of 12Tcf. Apache acquires 55% stake in Spar field from Santos for $116M *Map shows key asset(s) involved in transaction, size of circle indicates remaining reserves in full field (not share traded), color indicates life cycle of the asset Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy UCUBE, research & analysis Devon Energy divests its 24.5% interest in the producing oil field Panyu offshore China to CNOOC for $515m. Devon report net production from the field in 2009 at 12 kbbld, with proved reserves year end 2009 at 16 million boe Sinopec acquires 18% of Chevron operated Indonesia gas condensate project for $680m. Project consists of 5 deepwater fields with start up RH Petrogas acquires Lundin's Kepala and Salawati PSCs for $37.1m InterOil acquires additional 1.05% interest in Elk/Antelope for $42m Total acquire 20% of CBM project GLNG in Queensland Australia from Santos (15%) and Petronas (5%) for $750m in September. Total and Kogas subsequently acquire 7.5% each in GLNG for $657m from Santos. In parallel, Kogas acquire 7.5% in the project from Petronas for $328m with 7.5 mtpa LNG contracted to Kogas and Petronas. FID is expected January 2011 with first LNG shipment Through a 50/50 joint venture, Shell and PetroChina acquire Australian coal seam gas player Arrow Energy for $3.5bn, including Dart Energy, a new company that will hold Arrow Energy s international assets. Subsequently, Dart Energy acquired the remaining 79% of Apollo Gas for shares and options in Dart Energy valued at $110m. Apollo Gas held exploration licenses in Sydney- Gunnedah basin, including PEL458 where Dart holds 15% interest AGL Energy offers to acquire Mosaic Oil for $105m 68

69 Assessment of specific transaction - Cairn India, world s largest deal in 2010, and second largest since 2006; share acquisition at 32% premium to pre-deal trading value Cairn India listed Bombay Stock Exchange (IPO January 2007), 62.4% owned by Cairn Energy, the UK listed company. August 2010, agreement between Cairn Energy and Vedanta, the industrial company, to sell up to 51% of the ownership in Cairn India for an agreed price of $8.48bn (share price INR 405/$8.66), a premium of 32% to average price last 3 months. Cairn India s main asset is the Mangala license/barmer block, acquired from Shell in 1997, onshore Rajasthan, where the first oil discovery was made in 2001, then 2004, in extensions of the Cambay rift basin. Development of these discoveries has resulted in a recent production growth for the company. Rystad Energy s UCUBE valuation implies the transaction price agreed with Cairn Energy is at a 26% premium to the net asset value, before adjustment for midstream asset values (indicative value $2bn on 100% basis). Portfolio overview Cairn India Cash flow profile Million USD Oil and gas production for Cairn India Thousand boe per day NPV at alternative oil prices ($/bbl, real term) Million USD; 10% discount rate Transaction value $16.6bn* * Transaction value based on consideration of MUSD 8,480 payable to Cairn Energy for 51% of the share ownership, scaled up to 100%. Vedanta will offer to acquire additional up to 20% of Cairn India shares at not less than INR 355/$7.59). Transaction is subject to approval by India authorities and is expected to be completed during Q Cairn India net debt is less than MUSD 200 as of September 30, Source: Rystad Energy UCUBE, research & analysis 69 Oil price: 120 Forward (~80) 50

70 Asia Pacific deals in play as of year end 2010* Selected opportunities in Asia Pacific region include: Inpex reported to consider selling stakes in its Ichthys LNG project. Inpex is operator with a 76% interest partnered by Total, ConocoPhillips reported to consider selling its 60% stake in the Caldita and Barossa gas discoveries (undeveloped). Caldita and Barrossa have been mentioned as candidates for feeding a second train to the Darwin LNG plant, MEO Australia farm down of its 100% operated NT/P68 license containing the Heron gas discovery, Listing is a snap-shot of opportunities as of year end 2010 and is subject to continuous revisions and updates. Date Value range dd.mm.yy Seller Broker Deal heading Country Asset Type MUSD Inpex - Offering interest in Ichthys project Australia Development 1,000-10, ConocoPhillips - Selling 60% stake in Caldita and Barossa gas fields Australia Discoveries 500-1, Serica Energy Jefferies Considers options for Indonesian assets Indonesia Mix of assets Sentry Petroleum Ltd BDO Capital Considers strategic alternatives Australia Corporate M&A Methanol Australia Ltd - To farm-out interest in Heron gas discovery Australia Discoveries Metgasco Limited - To sell 50% interest in CSG permit Australia Development Flex LNG IndigoPool To sell 20% interest in Timor Sea gas field Timor Sea JPDA Discoveries Eaglewood Energy Inc - To farm-out interest in offshore PNG license PNG Farm-out ENI - Seeking farm-in partners for five Timor Sea blocks Australia Farm-out Oil Basins Limited Envoi Seeking partner for exploration blocks Australia Farm-out AWE - To farm out 25% interest in offshore permit Australia Farm-out New Zealand Oil and Gas - Seeking partner for Taranaki basin permit New Zealand Farm-out ONGC (India) - Seeking partners to develop KG basin gas block India Discoveries AWE - To farm-out interest in offshore block Indonesia Farm-out New Zealand Oil and Gas - To farm out interest in two offshore permits New Zealand Farm-out Carnarvon NL - To farm out interest in four offshore permits Australia Farm-out AED Oil Pty Ltd Macquarie Group Seeking farm-in partner for Indonesian PSC Indonesia Farm-out New Standard Energy Ltd Euroz Limited Seeking partner for shale gas program Australia Farm-out Nexus Energy; AWE IndigoPool Offering 50% interest in offdhore permit Australia Farm-out Pakistan Petroleum Ltd - Seeking partners for four exploration blocks Pakistan Farm-out Red Sky Energy Ltd - Seeking farm-in partners for CSG project Australia Farm-out PTTEP (Thailand) - To divest certain interests in five blocks Myanmar Farm-out ExxonMobil IndigoPool Offering 40% interest in deepwater block Indonesia Farm-out Bengal Energy Ltd IndigoPool Offering 25% interest in Timor Sea permit Australia Farm-out (Undisclosed) IndigoPool Philippines' exploration farm-in opportunity Philippines Farm-out PNOC (Philippines) - Offering interest in offshore exploration contract Philippines Farm-out * Listing based on formal announcements or news reports and may include transactions that have been cancelled but are still included as a record of events; listing include announcements made during 2010 only Source: Derrick Petroleum Services Global E&P Transactions Database; Rystad Energy research & analysis 70

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72 CONTACTS DETAILS Derrick Petroleum Services is an independent oil and gas research and consulting firm based in Bangalore, India. The Company s research and databases have worldwide coverage, with special emphasis on emerging plays and international transactions. Contact person Yashodeep Deodhar yashodeep@derrickpetroleum.com Rystad Energy is an independent E&P strategy consulting firm based in Oslo, Norway. The firm supports clients on strategy, business development, and valuation utilizing UCUBE, Rystad Energy s proprietary, global database of oil and gas fields and E&P companies. Contact person Anders Wittemann anders.wittemann@rystadenergy.com PLS, Inc. is a leading industry research, transactions and advisory firm based in Houston, Texas. PLS publishes various information reports on mergers, acquisitions, divestments, capital markets, exploration, drilling and midstream services and manages a multiple listing service for assets on the market. Contact person Ronyld Wise rwise@plsx.com