Oil & Gas Exploration and Production

Transcription

1 Oil & Gas Exploration and Production Weekly Comp Tables Stocks down 1.0% over the past week. Our E&P coverage universe was down 1.0% over the past week versus the EPX, which fell 1.7%, and the S&P 500, which increased 0.8%. Spot gas fell 8.6% to $2.44/Mcf, and spot oil rose 1.3% to $108.84/Bbl. The J.P. Morgan E&P group is up 12.4% YTD. E&Ps are trading at 78%/112% of JPM/NYMEX NAV. Using the J.P. Morgan equity research price deck (long-term $5.50/Mcf gas and $100.00/Bbl oil), the group is trading at 78% of NAV. Historically, the E&Ps have traded within the range of 70% to 110% of NAV, and usually they trade close to NAV. The stocks are trading at 112% of NAV using NYMEX prices (long-term prices of $3.98/Mcf gas and $99.68/Bbl oil). In 2008, 2009, 2010 and 2011, the group traded at an average of 52%, 89%, 96% and 88% of NYMEX NAV, respectively. E&Ps are trading at 7.2x/5.7x 2011E/2012E EBITDA. Assuming the J.P. Morgan price deck, the group is trading at 7.2x 2011E EBITDA and 5.7x 2012E EBITDA. The median E&P stock is trading at $2.71/Mcfe on an EV/proved Mcfe basis. NAVs imply $4.83/Mcf and $100.29/Bbl. Based on our NAV calculations for the E&P group, the E&P stocks are discounting a flat Henry Hub gas/wti oil prices of $4.83/$ Our DCF NAV company models allow us to calculate the flat commodity price deck that matches the current stock prices to the companies NAVs. Figure 1: Price Deck Assumptions e 2013e Beyond JPM WTI Oil ($/bbl) $79.50 $95.05 $96.24 $ $ Deck Henry Hub Gas($/Mcf) $4.39 $4.06 $3.60 $4.25 $5.50 NYMEX WTI Oil ($/bbl) $77.33 $94.06 $ $ $ /1/2012 Henry Hub Gas($/Mcf) $4.39 $4.04 $2.80 $3.57 $3.98 Source: J.P. Morgan estimates, Bloomberg Oil & Gas Exploration & Production Joseph Allman, CFA AC Jeanine Wai (1-212) jeanine.wai@jpmorgan.com Jessica Lee (1-212) jessica.s.lee@jpmorgan.com J.P. Morgan Securities LLC J.P. Morgan analyst page on Bloomberg JPMA ALLMAN<GO> Contents Summary Comps 2 Net Asset Values (JPM) 3 Net Asset Values (NYMEX) 4 Cash Flow & EBITDA 5 Reserves 6 Production 7 Ex-Leasehold PD F&D Metrics 8 All-In PD F&D Metrics 9 Reserves & Production Metrics 10 Market Cap & Enterprise Value 11 Balance Sheet 12 Hedges 13 Margins 14 Stock Performance 15 Tiered Performance 16 Earnings Calendar 17 See page 18 for analyst certification and important disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

2 U.S. E&Ps - SUMMARY COMPS LAST NET ASSET VALUE Price PRICE / Implied PRICE / SHARE Target NAV NAV PT Upside RATING COMPANY TICKER 3/1/2012 JPM DECK NYMEX YE 12 JPM NYMEX YE 12 JPM NYMEX PT N Anadarko Petroleum APC $85.81 $91.62 $79.67 $ % 108% 103% 7% -7% -3% OW Apache Corporation APA $ $ $ $ % 94% 86% 18% 6% 17% UW Chesapeake Energy CHK $24.93 $31.79 $18.64 $ % 134% 172% 28% -25% -42% OW Devon Energy DVN $74.13 $ $81.95 $ % 90% 85% 45% 11% 18% OW EOG Resources EOG $ $ $ $ % 99% 103% 21% 1% -3% OW Noble Energy NBL $95.93 $ $83.67 $ % 115% 87% 15% -13% 15% OW Southwestern Energy SWN $33.70 $48.28 $13.57 $ % 248% 88% 43% -60% 14% Large Cap Median 83% 108% 88% 21% -7% 14% N Cabot Oil & Gas COG $35.97 $36.77 $14.92 $ % 241% 97% 2% -59% 3% OW Cimarex Energy XEC $82.97 $98.58 $78.15 $ % 106% 98% 19% -6% 2% OW Cobalt International Energy CIE $31.00 $30.29 $29.82 $ % 104% 95% -2% -4% 5% N Concho Resources CXO $ $90.27 $87.03 $ % 126% 121% -18% -21% -18% N Continental Resources CLR $92.86 $74.64 $67.32 $ % 138% 110% -20% -28% -9% OW Denbury Resources DNR $20.38 $26.81 $29.08 $ % 70% 87% 32% 43% 15% OW EQT Corporation EQT $53.90 $61.12 $33.74 $ % 160% 86% 13% -37% 16% N EXCO Resources XCO $7.47 $17.58 $1.37 $ % 545% 107% 135% -82% -6% OW Newfield Exploration NFX $36.06 $84.62 $65.30 $ % 55% 63% 135% 81% 58% OW Pioneer Natural Resources PXD $ $ $ $ % 70% 64% 50% 43% 55% OW Plains Exploration PXP $45.04 $56.24 $55.06 $ % 82% 94% 25% 22% 7% N QEP Resources QEP $33.83 $49.65 $34.89 $ % 97% 90% 47% 3% 11% N Quicksilver Resources KWK $5.65 $14.48 $5.04 $ % 112% 113% 156% -11% -12% OW Range Resources RRC $64.60 $83.41 $36.88 $ % 175% 77% 29% -43% 29% N SandRidge Energy SD $8.58 $19.21 $17.89 $ % 48% 90% 124% 109% 11% N SM Energy SM $80.57 $74.69 $49.33 $ % 163% 95% -7% -39% 5% N Ultra Petroleum Corp UPL $24.89 $52.55 $21.82 $ % 114% 74% 111% -12% 35% N Whiting Petroleum WLL $59.67 $67.03 $69.03 $ % 86% 112% 12% 16% -10% Mid Cap Median 79% 109% 95% 27% -8% 6% N Approach Resources AREX $35.06 $34.14 $31.88 $ % 110% 121% -3% -9% -17% UW ATP Oil and Gas ATPG $8.04 $12.79 $9.42 $ % 85% 124% 59% 17% -19% OW Berry Petroleum Company BRY $55.01 $67.70 $69.75 $ % 79% 90% 23% 27% 11% N Carrizo Oil & Gas CRZO $30.29 $33.44 $8.76 $ % 346% 112% 10% -71% -11% OW Goodrich Petroleum GDP $17.40 $27.62 $4.88 $ % 357% 89% 59% -72% 12% OW Laredo Petroleum LPI $25.16 $23.53 $9.99 $ % 252% 93% -6% -60% 7% UW McMoRan Exploration MMR $14.48 $6.46 $0.08 $ % 18100% 223% -55% -99% -55% OW Penn Virginia Corp. PVA $5.14 $11.42 $6.32 $ % 81% 129% 122% 23% -22% OW PDC Energy PETD $34.85 $50.87 $25.32 $ % 138% 98% 46% -27% 2% OW PetroQuest Energy PQ $6.15 $10.69 $0.36 $ % 1708% 82% 74% -94% 22% N Swift Energy SFY $30.59 $43.46 $25.23 $ % 121% 109% 42% -18% -8% UW Venoco VQ $10.99 $14.72 $12.01 $ % 92% 147% 34% 9% -32% Small Cap Median 73% 129% 111% 38% -22% -10% Group Median 78% 112% 95% 28% -11% 5% Source: Company reports, Bloomberg, and J.P. Morgan estimates Note: OW - Overweight, N - Neutral, UW - Underweight 2

3 U.S. E&Ps - NET ASSET VALUES (JPM PRICE DECK) VALUE OF TOTAL NAV SENSITIVITY PROVED UNBOOKED TOTAL P/TOTAL P/PROVED $ 0.10 $1.00 RATING COMPANY TICKER NAV + RESERVES NAV NAV NAV GAS PRICE OIL PRICE (AFTER TAX) N Anadarko Petroleum APC $40.62 $51.00 $ % 211% 1.1% 1.8% OW Apache Corporation APA $98.35 $30.68 $ % 111% 1.0% 1.7% UW Chesapeake Energy CHK $7.69 $24.10 $ % 324% 3.3% 3.3% OW Devon Energy DVN $70.21 $37.29 $ % 106% 2.3% 1.9% OW EOG Resources EOG $62.03 $78.88 $ % 188% 1.3% 1.9% OW Noble Energy NBL $53.79 $56.18 $ % 178% 1.7% 2.3% OW Southwestern Energy SWN $15.05 $33.23 $ % 224% 6.7% 0.2% Large Cap Median 83% 188% 1.7% 1.9% N Cabot Oil & Gas COG $13.09 $23.68 $ % 275% 3.9% 0.4% OW Cimarex Energy XEC $28.81 $69.77 $ % 288% 1.8% 2.1% OW Cobalt International Energy CIE $4.25 $26.05 $ % 730% 0.3% 1.2% N Concho Resources CXO $55.68 $34.60 $ % 197% 0.2% 1.4% N Continental Resources CLR $34.29 $40.35 $ % 271% 0.2% 1.3% OW Denbury Resources DNR $16.53 $10.28 $ % 123% 0.8% 2.8% OW EQT Corporation EQT $48.39 $12.73 $ % 111% 3.8% 0.2% N EXCO Resources XCO $3.91 $13.67 $ % 191% 15.0% 0.2% OW Newfield Exploration NFX $39.47 $45.15 $ % 91% 2.6% 4.8% OW Pioneer Natural Resources PXD $92.14 $75.39 $ % 121% 0.5% 3.0% OW Plains Exploration PXP $25.91 $30.33 $ % 174% 0.3% 1.8% N QEP Resources QEP $30.16 $19.49 $ % 112% 2.9% 1.6% N Quicksilver Resources KWK $7.50 $6.98 $ % 75% 8.6% 5.1% OW Range Resources RRC $17.32 $66.09 $ % 373% 4.0% 1.0% N SandRidge Energy SD $8.74 $10.46 $ % 98% 0.8% 4.2% N SM Energy SM $51.05 $23.64 $ % 158% 2.0% 2.0% N Ultra Petroleum Corp UPL $23.22 $29.33 $ % 107% 8.7% 0.5% N Whiting Petroleum WLL $34.95 $32.08 $ % 171% 0.1% 2.7% Mid Cap Median 79% 164% 1.9% 1.7% N Approach Resources AREX $12.53 $21.61 $ % 280% 0.2% 1.7% UW ATP Oil and Gas ATPG $5.08 $7.71 $ % 158% 2.7% 7.0% OW Berry Petroleum Company BRY $59.94 $7.76 $ % 92% 0.1% 2.0% N Carrizo Oil & Gas CRZO $7.76 $25.68 $ % 391% 4.1% 2.0% OW Goodrich Petroleum GDP ($2.63) $30.25 $ % NM 7.5% 3.0% OW Laredo Petroleum LPI $10.40 $13.14 $ % 242% 2.7% 2.7% UW McMoRan Exploration MMR ($0.12) $6.58 $ % NM 3.4% 0.3% OW Penn Virginia Corp. PVA $16.28 ($4.86) $ % 32% 5.1% 5.2% OW PDC Energy PETD $17.31 $33.56 $ % 201% 2.2% 3.4% OW PetroQuest Energy PQ $2.04 $8.65 $ % 301% 10.1% 2.1% N Swift Energy SFY $39.98 $3.48 $ % 77% 5.4% 2.9% UW Venoco VQ $19.08 ($4.36) $ % 58% 1.1% 3.3% Small Cap Median 73% 180% 3.0% 2.8% Group Median 78% 174% 2.3% 2.0% Source: Company reports, Bloomberg, and J.P. Morgan estimates Note: NAV sensitivity indicates change in value from the commodity price scenario that each stock is currently reflecting. 3

4 U.S. E&Ps - NET ASSET VALUES (NYMEX) VALUE OF STOCKS REFLECTING PROVED UNBOOKED TOTAL P/TOTAL P/PROVED $/Mcfe $/Bbl RATING COMPANY TICKER NAV + RESERVES = NAV NYMEX NAV NYMEX NAV Nat Gas Crude (AFTER TAX) N Anadarko Petroleum APC $36.81 $42.86 $ % 233% OW Apache Corporation APA $92.76 $22.85 $ % 118% UW Chesapeake Energy CHK $0.84 $17.80 $ % 2968% OW Devon Energy DVN $65.97 $15.98 $ % 112% OW EOG Resources EOG $53.88 $64.65 $ % 217% OW Noble Energy NBL $49.63 $34.04 $ % 193% OW Southwestern Energy SWN $9.61 $3.96 $ % 351% Large Cap Median 108% 217% N Cabot Oil & Gas COG $8.11 $6.81 $ % 444% OW Cimarex Energy XEC $26.36 $51.79 $ % 315% OW Cobalt International Energy CIE $4.25 $25.57 $ % 729% N Concho Resources CXO $54.96 $32.07 $ % 200% N Continental Resources CLR $32.54 $34.78 $ % 285% OW Denbury Resources DNR $18.10 $10.98 $ % 113% OW EQT Corporation EQT $37.61 ($3.87) $ % 143% N EXCO Resources XCO $0.11 $1.26 $ % 6791% OW Newfield Exploration NFX $35.86 $29.44 $ % 101% OW Pioneer Natural Resources PXD $86.12 $73.72 $ % 130% OW Plains Exploration PXP $26.21 $28.85 $ % 172% N QEP Resources QEP $26.45 $8.44 $ % 128% N Quicksilver Resources KWK $1.81 $3.23 $ % 312% OW Range Resources RRC $11.90 $24.98 $ % 543% N SandRidge Energy SD $7.85 $10.04 $ % 109% N SM Energy SM $46.87 $2.46 $ % 172% N Ultra Petroleum Corp UPL $12.01 $9.81 $ % 207% N Whiting Petroleum WLL $37.33 $31.70 $ % 160% Mid Cap Median 109% 186% N Approach Resources AREX $11.44 $20.44 $ % 306% UW ATP Oil and Gas ATPG $2.28 $7.14 $ % 353% OW Berry Petroleum Company BRY $61.63 $8.12 $ % 89% N Carrizo Oil & Gas CRZO $0.89 $7.87 $ % 3403% OW Goodrich Petroleum GDP ($8.83) $13.71 $ % NM OW Laredo Petroleum LPI $8.44 $1.55 $ % 298% UW McMoRan Exploration MMR ($0.73) $0.81 $ % NM OW Penn Virginia Corp. PVA $10.88 ($4.56) $ % 47% OW PDC Energy PETD $8.36 $16.96 $ % 417% OW PetroQuest Energy PQ $0.90 ($0.54) $ % 683% N Swift Energy SFY $35.41 ($10.18) $ % 86% UW Venoco VQ $17.72 ($5.71) $ % 62% Small Cap Median 129% 302% Group Median 112% 207% Source: Company reports, Bloomberg, and J.P. Morgan estimates 4

5 U.S. E&Ps - CASH FLOW & EBITDA DISCRETIONARY CFPS PRICE-TO-DCF E&P EBITDA(X)** EV*-TO-EBITDA(X) RATING COMPANY TICKER 2011E 2012E 2011E 2012E 2011E 2012E 2011E 2012E N Anadarko Petroleum APC $15.24 $ x 5.1x $8,589 $9, x 5.8x OW Apache Corporation APA $25.07 $ x 3.7x $12,551 $14, x 3.5x UW Chesapeake Energy CHK $6.25 $ x 4.3x $5,081 $4, x 5.3x OW Devon Energy DVN $15.40 $ x 5.0x $5,847 $6, x 5.4x OW EOG Resources EOG $17.25 $ x 5.8x $4,786 $5, x 6.3x OW Noble Energy NBL $13.06 $ x 6.1x $2,801 $3, x 5.6x OW Southwestern Energy SWN $4.90 $ x 6.2x $1,495 $1, x 6.6x Large Cap Median 5.6x 5.1x 6.4x 5.6x N Cabot Oil & Gas COG $2.68 $ x 8.8x $617 $ x 9.2x OW Cimarex Energy XEC $15.05 $ x 5.8x $1,211 $1, x 5.9x OW Cobalt International Energy CIE ($0.12) ($0.13) NA NA ($49) ($49) NA NA N Concho Resources CXO $11.22 $ x 8.2x $1,245 $1, x 8.6x N Continental Resources CLR $6.47 $ x 10.9x $1,246 $1, x 10.8x OW Denbury Resources DNR $3.14 $ x 6.2x $1,430 $1, x 6.7x OW EQT Corporation EQT $6.51 $ x 7.6x $649 $ x 7.4x N EXCO Resources XCO $2.47 $ x 2.6x $601 $ x 4.5x OW Newfield Exploration NFX $11.15 $ x 3.1x $1,703 $1, x 4.1x OW Pioneer Natural Resources PXD $13.16 $ x 6.9x $1,685 $2, x 7.1x OW Plains Exploration PXP $7.39 $ x 4.7x $1,222 $1, x 5.5x N QEP Resources QEP $7.07 $ x 4.4x $989 $1, x 5.1x N Quicksilver Resources KWK $1.68 $ x 2.8x $413 $ x 6.2x OW Range Resources RRC $4.62 $ x 11.7x $852 $1, x 12.4x N SandRidge Energy SD $0.98 $ x 7.9x $638 $ x 8.7x N SM Energy SM $12.78 $ x 4.7x $903 $1, x 5.3x N Ultra Petroleum Corp UPL $6.05 $ x 4.3x $1,016 $ x 5.6x N Whiting Petroleum WLL $10.51 $ x 5.0x $1,331 $1, x 5.6x Mid Cap Median 6.3x 5.8x 7.2x 6.2x N Approach Resources AREX $2.67 $ x 10.3x $76 $ x 9.8x UW ATP Oil and Gas ATPG $0.73 $ x 4.1x $483 $ x 4.6x OW Berry Petroleum Company BRY $7.75 $ x 5.2x $531 $ x 6.4x N Carrizo Oil & Gas CRZO $3.54 $ x 4.3x $166 $ x 5.7x OW Goodrich Petroleum GDP $3.22 $ x 3.7x $167 $ x 4.9x OW Laredo Petroleum LPI $2.59 $ x 7.7x $372 $ x 7.9x UW McMoRan Exploration MMR $1.17 $ x 15.4x $287 $ x 11.7x OW Penn Virginia Corp. PVA $3.18 $ x 1.2x $207 $ x 3.5x OW PDC Energy PETD $6.80 $ x 3.7x $188 $ x 5.0x OW PetroQuest Energy PQ $1.37 $ x 3.8x $98 $ x 4.2x N Swift Energy SFY $8.23 $ x 3.3x $394 $ x 3.8x UW Venoco VQ $1.68 $ x 4.2x $164 $ x 6.3x Small Cap Median 6.8x 4.2x 7.7x 5.4x Group Median 6.4x 5.0x 7.2x 5.7x Source: Company reports, Bloomberg, and J.P. Morgan estimates *Enterprise Value includes only the portion of the Enterprise Value associated with E&P assets (excluding mid-stream operations). **EBITDA(X) is E&P earnings (excluding midstream operations) before interest, taxes, depreciation, amortization, and exploration expense (for successful efforts accounting companies). 5

6 U.S. E&Ps - RESERVES Cost 2010A RESERVES 2011E RESERVES Accouting TOTAL % PVD. E&P** TOTAL ANNUAL GROWTH RATING COMPANY TICKER Method* Bcfe DVLPD EV / Mcfe Bcfe % GAS*** OVERALL PER SHARE (DEBT ADJ.) N Anadarko Petroleum APC SE 14,526 69% $ ,015 49% 17% 8% OW Apache Corporation APA FC 17,632 68% $ ,851 54% 1% 3% UW Chesapeake Energy CHK FC 17,096 53% $ ,528 88% 8% 20% OW Devon Energy DVN FC 17,881 69% $ ,666 56% 4% 6% OW EOG Resources EOG SE 11,697 52% $ ,468 63% 15% 10% OW Noble Energy NBL SE 6,550 46% $2.72 6,697 67% 2% -8% OW Southwestern Energy SWN FC 4,937 55% $2.24 5, % 20% 18% Large Cap Median 55% $ % 8% 8% N Cabot Oil & Gas COG SE 2,701 64% $3.34 3,232 97% 20% 20% OW Cimarex Energy XEC FC 1,884 77% $4.42 2,045 59% 9% 5% OW Cobalt International Energy CIE SE NA NA NA NA NA NA NA N Concho Resources CXO SE 1,941 57% $6.95 2,371 35% 22% 17% N Continental Resources CLR SE 2,188 38% $8.23 3,047 36% 39% 28% OW Denbury Resources DNR FC 2,388 60% $3.82 2,969 20% 24% 19% OW EQT Corporation EQT SE 5,220 49% $1.21 5, % 3% 4% N EXCO Resources XCO FC 1,499 55% $2.08 2,045 98% 36% 26% OW Newfield Exploration NFX FC 3,720 58% $2.04 4,192 64% 13% 9% OW Pioneer Natural Resources PXD SE 6,065 57% $2.71 6,377 40% 5% 7% OW Plains Exploration PXP FC 2,497 57% $3.84 2,659 48% 7% 30% N QEP Resources QEP SE 3,030 53% $1.76 3,493 79% 15% 14% N Quicksilver Resources KWK FC 2,902 68% $1.04 3,069 76% 6% -9% OW Range Resources RRC SE 4,442 49% $3.66 5,518 82% 24% 23% N SandRidge Energy SD FC 3,276 41% $2.84 4,066 48% 24% 32% N SM Energy SM SE % $6.51 1,259 53% 28% 13% N Ultra Petroleum Corp UPL FC 4,390 40% $1.27 5,255 96% 20% 15% N Whiting Petroleum WLL FC 1,829 71% $4.55 2,136 14% 17% 9% Mid Cap Median 57% $ % 20% 15% N Approach Resources AREX SE % $ % 5% -36% UW ATP Oil and Gas ATPG SE % $ % -6% -19% OW Berry Petroleum Company BRY SE 1,626 49% $2.60 1,705 38% 5% -5% N Carrizo Oil & Gas CRZO FC % $2.45 1,119 78% 33% 19% OW Goodrich Petroleum GDP SE % $ % 25% -5% OW Laredo Petroleum LPI SE % $2.82 1,287 65% 66% NA UW McMoRan Exploration MMR SE % $ % -9% -50% OW Penn Virginia Corp. PVA SE % $1.03 1,065 78% 13% -22% OW PDC Energy PETD SE % $1.50 1,005 75% 17% -15% OW PetroQuest Energy PQ FC % $ % 17% 10% N Swift Energy SFY FC % $ % 8% -3% UW Venoco VQ FC % $ % 13% -3% Small Cap Median 49% $ % 13% -5% Group Median 53% $ % 15% 9% Group Total 149, ,971 * SE signifies successful efforts accounting. FC signifies full cost. ** E&P EV excludes the value of other operations including midstream, coal, and chemical assets. Reserves are adjusted for acquisitions and divestitures. *** Note EQT 2011E reserves data is estimated. Source: Company reports and J.P. Morgan estimates 6

7 U.S. E&Ps - PRODUCTION TOTAL DAILY GROWTH GROWTH PER SHARE Bcfe MMcfepd Overall (Debt Adjusted) RATING COMPANY TICKER 2010A 2011E 2012E 2011E 2012E 2011E 2012E 2011E 2012E N Anadarko Petroleum APC 1,409 1,487 1,590 4,075 4,357 6% 7% 2.1% 3.0% OW Apache Corporation APA 1,440 1,638 1,805 4,489 4,944 14% 10% -2.0% 14.0% UW Chesapeake Energy CHK 1,035 1,193 1,317 3,269 3,607 15% 10% 18.4% -10.7% OW Devon Energy DVN 1,366 1,440 1,527 3,946 4,183 5% 6% 10.1% 9.8% OW EOG Resources EOG ,023 2,543 2,804 10% 10% 1.8% 4.4% OW Noble Energy NBL ,329 1,560 2% 17% -2.1% 5.2% OW Southwestern Energy SWN ,370 1,724 24% 26% 22.1% 22.4% Large Cap Median % 10% 2% 5% N Cabot Oil & Gas COG % 52% 40.9% 54.0% OW Cimarex Energy XEC % 8% -2.0% 2.1% OW Cobalt International Energy CIE NA NA NA NA N Concho Resources CXO % 20% 25.2% 16.9% N Continental Resources CLR % 36% 33.6% 28.0% OW Denbury Resources DNR % 11% -14.8% 7.7% OW EQT Corporation EQT % 30% 31.8% 24.9% N EXCO Resources XCO % 32% 46.6% 21.7% OW Newfield Exploration NFX % 7% -3.3% 4.5% OW Pioneer Natural Resources PXD % 23% 10.0% 6.3% OW Plains Exploration PXP % -7% 0.3% 11.5% N QEP Resources QEP % 13% 13.6% 10.4% N Quicksilver Resources KWK % 23% 39.7% 7.5% OW Range Resources RRC % 25% 9.3% 19.5% N SandRidge Energy SD % 18% -15.3% 18.2% N SM Energy SM % 34% 44.4% 21.4% N Ultra Petroleum Corp UPL % 18% 6.8% 13.6% N Whiting Petroleum WLL % 15% -9.3% 9.0% Mid Cap Median % 20% 10% 14% N Approach Resources AREX % 28% 5.9% 9.4% UW ATP Oil and Gas ATPG % 24% -23.6% -7.4% OW Berry Petroleum Company BRY % 10% -3.0% 6.6% N Carrizo Oil & Gas CRZO % 21% 4.7% 7.2% OW Goodrich Petroleum GDP % 18% -9.5% -13.9% OW Laredo Petroleum LPI % 24% NA 7.9% UW McMoRan Exploration MMR % -18% -23.7% -29.8% OW Penn Virginia Corp. PVA % 8% -27.5% -22.7% OW PDC Energy PETD % 20% -6.2% -13.9% OW PetroQuest Energy PQ % 25% -1.7% 15.6% N Swift Energy SFY % 20% 12.1% 9.1% UW Venoco VQ % 3% -11.9% -9.8% Small Cap Median % 20% -6% 0% Group Median % 18% 2% 8% Group Total 11,573 13,102 31,707 35,897 10% 13% *Enterprise Value is for E&P assets only (excluding midstream assets). Mcfe/d is adjusted in the EV/Mcfepd calculation for acquisitions, divestitures, and hurricanes to represent current pro-forma production. *Production growth per share includes average net debt divided by the average share price for the year. Note that an increasing stock price will increase the adjusted production growth per share. Source: Company reports, Bloomberg, and J.P. Morgan estimates 7

8 Ex-leasehold Proved Developed F&D RODD 3 Yr Avg (Return on Drilling Dollars) RATING COMPANY TICKER 2008A 2009A 2010A ( ) 2008A 2009A 2010A N Anadarko Petroleum APC $2.69 $2.95 $1.62 $ % 17% 68% OW Apache Corporation APA $3.27 $4.04 $4.44 $ % 14% 13% UW Chesapeake Energy CHK $2.26 $1.77 $2.25 $2.12 1% 11% 8% OW Devon Energy DVN $3.24 $2.71 $2.96 $3.01 0% 6% 4% OW EOG Resources EOG $2.82 $3.17 $3.24 $3.07 5% 9% 14% OW Noble Energy NBL $5.19 $5.14 $11.18 $6.73-3% 0% -10% OW Southwestern Energy SWN $2.50 $1.61 $1.70 $1.86 0% 12% 9% Large Cap Median $2.82 $2.95 $2.96 $3.01 1% 11% 9% N Cabot Oil & Gas COG $3.41 $2.77 $1.46 $2.18-2% 1% 15% OW Cimarex Energy XEC $4.60 $2.44 $2.44 $3.16 0% 32% 26% OW Cobalt International Energy CIE NA NA NA NA NA NA NA N Concho Resources CXO $2.01 $2.00 $2.32 $ % 89% 58% N Continental Resources CLR $4.41 $2.86 $9.52 $ % 44% 0% OW Denbury Resources DNR $2.57 $2.09 $2.95 $2.60 NA 68% 25% OW EQT Corporation EQT $2.16 $1.90 $1.48 $1.76 1% 4% 8% N EXCO Resources XCO $3.94 $3.13 $1.46 $1.61-5% -4% 15% OW Newfield Exploration NFX $3.59 $3.00 $2.09 $2.78 4% 14% 33% OW Pioneer Natural Resources PXD $3.18 $2.15 $2.27 $2.61 3% 16% 14% OW Plains Exploration PXP $4.04 $5.33 $5.40 $4.90 4% 2% 5% N QEP Resources QEP $5.51 $2.17 $2.59 $ % 8% 7% N Quicksilver Resources KWK $1.55 $1.39 $1.51 $1.50 5% 5% 5% OW Range Resources RRC $2.96 $1.94 $2.01 $2.28 0% 9% 7% N SandRidge Energy SD $2.91 $5.13 $1.89 $2.85 2% -3% 27% N SM Energy SM $3.88 $4.49 $4.16 $4.11 2% 4% 8% N Ultra Petroleum Corp UPL $1.58 $1.55 $1.80 $ % 17% 12% N Whiting Petroleum WLL $3.80 $3.82 $2.99 $ % 22% 38% Mid Cap Median $3.41 $2.44 $2.27 $2.61 3% 9% 14% N Approach Resources AREX $2.34 $6.15 $11.65 $3.97 8% -2% -5% UW ATP Oil and Gas ATPG NA NA $7.78 NA NA NA 16% OW Berry Petroleum Company BRY $2.49 $2.36 $2.93 $ % 25% 22% N Carrizo Oil & Gas CRZO $2.55 $0.83 $1.18 $1.40-3% 57% 66% OW Goodrich Petroleum GDP $4.60 $3.02 $2.76 $ % 2% 19% OW Laredo Petroleum LPI $4.45 $3.08 $3.37 $3.52 2% 33% 35% UW McMoRan Exploration MMR $4.63 $32.10 $49.55 $10.48 NA NA NA OW Penn Virginia Corp. PVA $3.20 $2.79 $1.52 $2.44 0% 5% 31% OW PDC Energy PETD $3.84 $9.45 $4.09 $4.37-5% -10% 2% OW PetroQuest Energy PQ $4.15 $3.99 $3.88 $ % -7% -6% N Swift Energy SFY $3.92 $3.12 $3.27 $3.56 8% 18% 22% UW Venoco VQ $11.44 $3.52 $5.61 $ % 4% -4% Small Cap Median $3.92 $3.12 $3.63 $3.56-2% 4% 19% Group Median $3.27 $2.95 $2.85 $3.01 2% 9% 14% Source: Company reports and J.P. Morgan estimates U.S. E&Ps - Ex-Leasehold PD F&D METRICS 8

9 All-in Proved Developed F&D RODD 3 Yr Avg (Return on Drilling Dollars) RATING COMPANY TICKER 2008A 2009A 2010A ( ) 2008A 2009A 2010A N Anadarko Petroleum APC $4.37 $5.01 $2.68 $3.72 0% 0% 24% OW Apache Corporation APA $3.32 $4.11 $5.04 $ % 14% 9% UW Chesapeake Energy CHK $3.52 $3.67 $4.21 $3.80-4% -3% -2% OW Devon Energy DVN $3.58 $3.25 $3.50 $3.47-2% 2% 1% OW EOG Resources EOG $3.00 $3.59 $3.51 $3.33 5% 5% 10% OW Noble Energy NBL $6.24 $6.61 $12.19 $7.90-5% -3% -10% OW Southwestern Energy SWN $2.60 $1.70 $1.83 $1.97-2% 10% 7% Large Cap Median $3.52 $3.67 $3.51 $3.72-2% 2% 7% N Cabot Oil & Gas COG $3.67 $3.25 $1.67 $2.45-3% -1% 9% OW Cimarex Energy XEC $5.19 $3.27 $2.80 $3.71-2% 14% 19% OW Cobalt International Energy CIE NA NA NA NA NA NA NA N Concho Resources CXO $2.60 $2.55 $3.01 $ % 56% 35% N Continental Resources CLR $4.76 $3.40 $11.00 $5.80 9% 31% -2% OW Denbury Resources DNR $2.85 $2.68 $4.43 $ % 57% 15% OW EQT Corporation EQT $2.22 $1.96 $1.63 $1.86 1% 3% 7% N EXCO Resources XCO $4.71 $5.14 $2.71 $1.64-7% -10% -2% OW Newfield Exploration NFX $4.00 $3.36 $2.36 $3.12 2% 10% 26% OW Pioneer Natural Resources PXD $3.59 $2.79 $2.57 $3.02 2% 10% 13% OW Plains Exploration PXP $6.93 $8.63 $10.87 $8.61-5% -5% -7% N QEP Resources QEP $5.75 $2.43 $2.84 $ % 6% 4% N Quicksilver Resources KWK $1.79 $1.81 $1.96 $1.84 2% 2% 2% OW Range Resources RRC $3.45 $2.58 $2.52 $2.82-1% 5% 6% N SandRidge Energy SD $3.03 $5.72 $2.31 $3.13 0% -3% 18% N SM Energy SM $4.22 $5.25 $4.52 $4.54 2% 0% 6% N Ultra Petroleum Corp UPL $1.60 $1.59 $1.98 $ % 15% 10% N Whiting Petroleum WLL $3.93 $4.11 $3.21 $ % 18% 32% Mid Cap Median $3.67 $3.25 $2.71 $3.12 2% 6% 9% N Approach Resources AREX $2.41 $6.73 $12.46 $4.19 7% -2% -5% UW ATP Oil and Gas ATPG NA NA $7.80 NA NA NA 16% OW Berry Petroleum Company BRY $2.85 $3.21 $3.44 $ % 13% 16% N Carrizo Oil & Gas CRZO $3.35 $1.40 $1.80 $2.05-7% 21% 30% OW Goodrich Petroleum GDP $4.83 $3.28 $3.03 $ % 0% 13% OW Laredo Petroleum LPI $7.01 $4.82 $3.42 $3.59-7% 11% 39% UW McMoRan Exploration MMR $4.71 $32.76 $81.12 $ % NA NA OW Penn Virginia Corp. PVA $3.44 $3.54 $1.91 $2.82-2% 1% 20% OW PDC Energy PETD $3.99 $10.58 $4.71 $4.74-5% -10% -2% OW PetroQuest Energy PQ $4.53 $5.82 $4.80 $ % -18% -12% N Swift Energy SFY $4.29 $4.62 $3.72 $4.11 4% 6% 17% UW Venoco VQ $11.67 $3.69 $5.96 $ % 4% -4% Small Cap Median $4.29 $4.62 $4.21 $4.11-7% 2% 16% Group Median $3.67 $3.54 $3.32 $3.47-1% 4% 9% Source: Company reports and J.P. Morgan estimates U.S. E&Ps - All-in PD F&D METRICS 9

10 U.S. E&Ps - RESERVES & PRODUCTION METRICS RES. GROWTH PROD. GROWTH 2012E PROD. 2012E PROD. RLI** YE10 SEC PV-10 / EV / DEBT-ADJ DEBT-ADJ % UNITED % NATURAL RATING COMPANY TICKER (YEARS) Mcfe Mcfepd* PER SHARE*** PER SHARE*** STATES GAS (TOTAL) CAGR ( ) CAGR ( ) N Anadarko Petroleum APC 9.7 $2.33 $13, % 12.4% 87% 57% OW Apache Corporation APA 10.3 $2.37 $10, % 3.4% 38% 49% UW Chesapeake Energy CHK 10.8 $0.89 $6, % -0.4% 100% 74% OW Devon Energy DVN 11.5 $1.26 $8, % 3.9% 73% 62% OW EOG Resources EOG 11.9 $1.48 $13, % 5.4% 80% 58% OW Noble Energy NBL 13.9 $2.16 $13, % 2.9% 53% 56% OW Southwestern Energy SWN 9.2 $0.86 $7, % 48.9% 100% 100% Large Cap Median 10.8 $1.48 $10, % 3.9% 80% 58% N Cabot Oil & Gas COG 11.6 $1.21 $14, % 7.1% 100% 95% OW Cimarex Energy XEC 7.6 $1.92 $12, % 8.5% 100% 54% OW Cobalt International Energy CIE NA NA NA NA NA NA NA N Concho Resources CXO 12.8 $3.12 $32, % 23.1% 100% 36% N Continental Resources CLR 13.2 $2.12 $39, % 10.9% 100% 28% OW Denbury Resources DNR 17.8 $4.35 $25, % -9.5% 100% 11% OW EQT Corporation EQT 22.5 $0.92 $10, % 7.4% 103% 93% N EXCO Resources XCO 7.3 $0.90 $5, % -14.9% 100% 98% OW Newfield Exploration NFX 11.5 $2.06 $8, % 0.3% 83% 58% OW Pioneer Natural Resources PXD 18.9 $1.36 $18, % 1.3% 100% 41% OW Plains Exploration PXP 9.9 $1.81 $13, % -12.7% 100% 43% N QEP Resources QEP 11.3 $1.17 $7, % 17.3% 100% 79% N Quicksilver Resources KWK 18.2 $0.77 $7, % -1.2% 82% 80% OW Range Resources RRC 14.9 $1.05 $19, % 8.9% 100% 78% N SandRidge Energy SD 16.1 $1.38 $16, % -28.4% 100% 42% N SM Energy SM 4.8 $2.38 $11, % 1.8% 100% 54% N Ultra Petroleum Corp UPL 16.0 $1.75 $7, % 15.7% 100% 97% N Whiting Petroleum WLL 11.7 $2.76 $19, % 8.3% 100% 17% Mid Cap Median 12.8 $1.75 $13, % 7.1% 100% 54% N Approach Resources AREX 20.7 $1.07 $29, % -4.9% 100% 35% UW ATP Oil and Gas ATPG 13.8 $3.39 $18, % -25.2% 97% 32% OW Berry Petroleum Company BRY 19.8 $2.39 $18, % -12.8% 100% 25% N Carrizo Oil & Gas CRZO 14.7 $1.19 $13, % 3.7% 94% 67% OW Goodrich Petroleum GDP 11.4 $0.78 $11, % 8.3% 100% 78% OW Laredo Petroleum LPI 14.8 $3.65 $15,353 NA NA 100% 59% UW McMoRan Exploration MMR 4.6 $2.33 $13, % 1.3% 100% 66% OW Penn Virginia Corp. PVA 20.9 $0.93 $7, % -0.4% 100% 62% OW PDC Energy PETD 17.6 $0.79 $9, % -11.1% 100% 57% OW PetroQuest Energy PQ 6.0 $1.33 $5, % -2.3% 100% 79% N Swift Energy SFY 11.4 $2.26 $10, % -17.6% 100% 45% UW Venoco VQ 13.2 $2.28 $12, % -5.7% 100% 61% Small Cap Median 14.2 $1.79 $13, % -4.9% 100% 60% Group Median 12.3 $1.62 $13, % 1.8% 100% 58% *Enterprise Value is for E&P assets only (excluding midstream assets). Mcfe/d adjusted in the EV/Mcfepd calculation for acquisitions, divestitures, and hurricanes. **RLI is calculated using current quarter production annualized and current proved reserves, adjusted for acquisitions and divestitures. ***Production growth per share debt adjusted includes average net debt divided by the average share price for the year. Note that an increasing stock price will increase the adjusted production growth per share. Source: Company reports and J.P. Morgan estimates 10

11 U.S. E&Ps - MARKET CAP & ENTERPRISE VALUE DILUTED MARKET ADJUSTED ENTERPRISE SHARES CAP NET DEBT VALUE DIVIDEND RATING COMPANY TICKER (MM) ($MM) ($MM) ($MM) YIELD N Anadarko Petroleum APC 498 $42,731 $12,133 $54, % OW Apache Corporation APA 400 $43,663 $6,524 $50, % UW Chesapeake Energy CHK 753 $18,772 $10,333 $29, % OW Devon Energy DVN 405 $30,023 $3,561 $33, % OW EOG Resources EOG 272 $31,809 $4,181 $35, % OW Noble Energy NBL 180 $17,272 $2,815 $20, % OW Southwestern Energy SWN 351 $11,832 $1,292 $13, % Large Cap Total $196,102 $40,838 $236,940 N Cabot Oil & Gas COG 211 $7,587 $906 $8, % OW Cimarex Energy XEC 86 $7,145 $515 $7, % OW Cobalt International Energy CIE 392 $12,156 ($812) $11, % N Concho Resources CXO 105 $11,487 $2,009 $13, % N Continental Resources CLR 181 $16,837 $1,215 $18, % OW Denbury Resources DNR 392 $7,981 $2,246 $10, % OW EQT Corporation EQT 150 $8,101 $1,902 $10, % N EXCO Resources XCO 217 $1,621 $1,650 $3, % OW Newfield Exploration NFX 135 $4,868 $2,710 $7, % OW Pioneer Natural Resources PXD 123 $13,816 $2,163 $15, % OW Plains Exploration PXP 141 $6,351 $2,444 $8, % N QEP Resources QEP 179 $6,051 $1,619 $7, % N Quicksilver Resources KWK 172 $973 $2,187 $3, % OW Range Resources RRC 162 $10,493 $2,186 $12, % N SandRidge Energy SD 511 $4,383 $2,580 $6, % N SM Energy SM 67 $5,437 $971 $6, % N Ultra Petroleum Corp UPL 154 $3,838 $1,759 $5, % N Whiting Petroleum WLL 119 $7,073 $1,252 $8, % Mid Cap Total $136,199 $29,503 $165,701 N Approach Resources AREX 33 $1,166 $17 $1, % UW ATP Oil and Gas ATPG 52 $415 $1,848 $2, % OW Berry Petroleum Company BRY 54 $2,964 $1,302 $4, % N Carrizo Oil & Gas CRZO 39 $1,194 $690 $1, % OW Goodrich Petroleum GDP 38 $657 $576 $1, % OW Laredo Petroleum LPI 128 $3,211 $633 $3, % UW McMoRan Exploration MMR 161 $2,336 ($15) $2, % OW Penn Virginia Corp. PVA 46 $234 $694 $ % OW PDC Energy PETD 24 $830 $534 $1, % OW PetroQuest Energy PQ 62 $384 $114 $ % N Swift Energy SFY 43 $1,306 $450 $1, % UW Venoco VQ 62 $678 $708 $1, % Small Cap Total $15,375 $7,552 $23,447 Group Total $347,675 $77,893 $426,089 Source: J.P. Morgan, Bloomberg and company reports. *ATP's EV adds its Other Long-term Obligations. Negative Net Debt reflects working capital greater than the debt requirements of a company. 11

12 U.S. E&Ps - BALANCE SHEET LTM EBITDA / NET DEBT TO NET DEBT TO REINVESTMENT RATE INTEREST BOOK CAP EBITDA (CFI / CFO) RATING COMPANY TICKER YE11E YE12E YE11E YE12E 2011E 2012E 2011E 2012E (excludes acquisitions) N Anadarko Petroleum APC 9.5x 12.1x 41% 35% 1.5x 1.1x 276% 75% OW Apache Corporation APA 65.4x 102.1x 19% 13% 0.5x 0.3x 80% 81% UW Chesapeake Energy CHK 193.3x 78.7x 43% 56% 1.9x 3.8x 176% 250% OW Devon Energy DVN 33.5x 22.8x 16% 14% 0.5x 0.6x 93% 108% OW EOG Resources EOG 22.5x 31.5x 25% 30% 0.9x 1.0x 149% 129% OW Noble Energy NBL 38.1x 31.4x 27% 32% 1.0x 1.2x 144% 143% OW Southwestern Energy SWN 70.3x 65.4x 26% 29% 0.7x 0.9x 115% 128% Large Cap Median 38.1x 31.5x 26% 30% 0.9x 1.0x 144% 128% N Cabot Oil & Gas COG 8.4x 11.8x 30% 29% 1.4x 1.0x 165% 101% OW Cimarex Energy XEC x 677.8x 11% 17% 0.3x 0.6x 128% 125% OW Cobalt International Energy CIE 0.0x 0.0x 0% 0% NA NA NA NA N Concho Resources CXO 9.2x 10.4x 39% 34% 1.6x 1.2x 114% 85% N Continental Resources CLR 15.5x 17.2x 32% 31% 1.0x 0.9x 195% 114% OW Denbury Resources DNR 8.8x 7.8x 34% 35% 1.7x 1.8x 107% 105% OW EQT Corporation EQT 7.3x 6.9x 35% 39% 1.8x 1.9x 92% 138% N EXCO Resources XCO 10.6x 11.3x 49% 49% 2.6x 2.3x 77% 103% OW Newfield Exploration NFX 18.8x 17.8x 40% 38% 1.6x 1.5x 121% 107% OW Pioneer Natural Resources PXD 9.3x 12.7x 26% 27% 1.2x 1.0x 156% 123% OW Plains Exploration PXP 9.6x 21.8x 36% 35% 2.0x 1.7x 154% 116% N QEP Resources QEP 14.8x 14.9x 32% 32% 1.2x 1.2x 102% 110% N Quicksilver Resources KWK 2.4x 2.7x 66% 67% 5.0x 4.6x 219% 179% OW Range Resources RRC 5.9x 5.9x 45% 51% 2.4x 2.7x 58% 160% N SandRidge Energy SD 2.9x 3.2x 47% 43% 3.7x 3.6x 400% 323% N SM Energy SM 19.1x 22.9x 37% 41% 1.0x 1.0x 214% 127% N Ultra Petroleum Corp UPL 16.2x 15.1x 53% 52% 1.7x 2.1x 127% 135% N Whiting Petroleum WLL 21.0x 20.5x 29% 29% 0.9x 1.0x 126% 113% Mid Cap Median 9.5x 12.3x 35% 35% 1.6x 1.5x 127% 116% N Approach Resources AREX 26.6x 46.5x 3% 9% 0.2x 0.5x 164% 131% UW ATP Oil and Gas ATPG 1.5x 2.4x 107% 111% 3.8x 3.5x 265% 403% OW Berry Petroleum Company BRY 7.2x 8.5x 50% 47% 2.4x 2.0x 108% 104% N Carrizo Oil & Gas CRZO 5.4x 7.7x 57% 54% 4.1x 2.3x 268% 129% OW Goodrich Petroleum GDP 3.3x 4.3x 78% 81% 3.5x 3.1x 213% 196% OW Laredo Petroleum LPI 7.5x 7.2x 44% 49% 1.7x 2.0x 223% 181% UW McMoRan Exploration MMR 44.5x 431.2x 0% 27% 0.0x 1.4x 224% 328% OW Penn Virginia Corp. PVA 3.7x 4.1x 45% 54% 3.3x 3.5x 303% 203% OW PDC Energy PETD 5.1x 5.9x 44% 50% 2.8x 2.5x 179% 144% OW PetroQuest Energy PQ 10.3x 12.7x 34% 39% 1.2x 1.3x 133% 134% N Swift Energy SFY 10.0x 8.6x 31% 38% 1.1x 1.4x 130% 152% UW Venoco VQ 2.7x 3.2x 90% 86% 4.1x 3.6x 196% 167% Small Cap Median 6.3x 7.4x 45% 49% 2.6x 2.2x 205% 159% Group Median 9.6x 12.1x 36% 38% 1.6x 1.5x 152% 129% Negative Net Debt reflects working capital greater than the debt requirements of a company Source: Company reports and J.P. Morgan estimates Net Debt / EBITDA = YE Net Debt / Annual EBITDA 12

13 U.S. E&Ps - HEDGES % HEDGED AVG. % HEDGED AVG. % HEDGED AVG. % HEDGED AVG. PROD. PRICES* PROD. PRICES* PROD. PRICES* PROD. PRICES* RATING COMPANY TICKER GAS GAS OIL OIL GAS GAS OIL OIL N Anadarko Petroleum APC 26.4% $ % $ % $ % $ OW Apache Corporation APA 16.8% $ % $ % $ % $90.63 UW Chesapeake Energy CHK 66.6% $ % $ % $ % $96.40 OW Devon Energy DVN 43.3% $ % $ % $ % $98.51 OW EOG Resources EOG 35.1% $ % $ % $ % $ OW Noble Energy NBL 43.9% $ % $ % $ % $94.88 OW Southwestern Energy SWN 51.9% $ % 42.2% $ % Large Cap Median 43.3% $ % $ % $ % $97.45 N Cabot Oil & Gas COG 40.6% $ % $ % $ % $98.28 OW Cimarex Energy XEC 6.1% $ % $ % 42.8% $95.88 OW Cobalt International Energy CIE 0.0% 0.0% 0.0% 0.0% N Concho Resources CXO 22.9% $ % $ % $ % $93.85 N Continental Resources CLR 71.2% $ % $ % $ % $92.33 OW Denbury Resources DNR 132.5% $ % $ % $ % $94.84 OW EQT Corporation EQT 51.9% $ % 51.8% $ % N EXCO Resources XCO 58.3% $ % $ % $ % $95.70 OW Newfield Exploration NFX 80.5% $ % $ % $ % $95.00 OW Pioneer Natural Resources PXD 88.0% $ % $ % $ % $95.15 OW Plains Exploration PXP 66.9% $ % $ % $ % $ N QEP Resources QEP 63.3% $ % $ % $ % $88.53 N Quicksilver Resources KWK 58.1% $ % 39.0% $ % OW Range Resources RRC 82.9% $ % $ % $ % $92.90 N SandRidge Energy SD 37.1% $ % $ % $ % $89.35 N SM Energy SM 23.6% $ % $ % $ % $91.31 N Ultra Petroleum Corp UPL 76.4% $ % 47.5% $ % N Whiting Petroleum WLL 36.2% $ % $ % $ % $95.00 Mid Cap Median 58.2% $ % $ % $ % $94.92 N Approach Resources AREX 69.1% $ % $ % $ % $85.00 UW ATP Oil and Gas ATPG 66.2% $ % $ % $ % $95.85 OW Berry Petroleum Company BRY 22.6% $ % $ % $ % $94.41 N Carrizo Oil & Gas CRZO 44.7% $ % $ % $ % $95.00 OW Goodrich Petroleum GDP 40.2% $ % $ % $ % $ OW Laredo Petroleum LPI 32.6% $ % $ % $ % $95.00 UW McMoRan Exploration MMR 0.0% 0.0% 0.0% 0.0% OW Penn Virginia Corp. PVA 59.8% $ % $ % $ % $ OW PDC Energy PETD 56.7% $ % $ % $ % $92.80 OW PetroQuest Energy PQ 33.1% $ % $ % $ % N Swift Energy SFY 37.3% $ % 0.0% 0.0% UW Venoco VQ 91.5% $ % $ % $ % $96.24 Small Cap Median 42.5% $ % $ % $ % $95.00 Group Median 44.7% $ % $ % $ % $95.00 Total (Production Weighted) 44.5% $ % $ % $ % $96.37 *The hedged prices reflect the average price received on all hedged volumes (even if floors or collars are not in the money). Assumes the J.P. Morgan price deck is used. Excludes monetized hedges. Source: Company reports and J.P. Morgan estimates. 13

14 U.S. E&Ps - MARGINS 2012E OPERATING MARGIN ($/Mcfe) REV LOE & CASH EXPL & NET RATING COMPANY TICKER (EX. HDG) SEV. TAX G&A MARGIN DD&A HEDGES MARGIN N Anadarko Petroleum APC $8.68 ($2.42) ($0.70) $5.56 ($3.24) $0.39 $2.71 OW Apache Corporation APA $10.47 ($2.38) ($0.27) $7.83 ($3.00) $0.13 $4.96 UW Chesapeake Energy CHK $4.96 ($1.12) ($0.47) $3.36 ($1.50) $0.23 $2.09 OW Devon Energy DVN $5.84 ($1.68) ($0.42) $3.74 ($1.71) $0.30 $2.33 OW EOG Resources EOG $7.80 ($2.24) ($0.34) $5.21 ($3.70) $0.36 $1.88 OW Noble Energy NBL $7.97 ($1.32) ($0.58) $6.07 ($2.70) $0.05 $3.42 OW Southwestern Energy SWN $3.31 ($0.99) ($0.25) $2.07 ($1.31) $0.60 $ Large Cap Median $7.80 ($1.68) ($0.42) $5.21 ($2.70) $0.30 $2.33 N Cabot Oil & Gas COG $4.01 ($1.01) ($0.32) $2.68 ($1.80) $0.55 $1.42 OW Cimarex Energy XEC $7.61 ($1.99) ($0.24) $5.38 ($2.06) $0.00 $3.31 OW Cobalt International Energy CIE NA NA NA $0.00 NA NA NA N Concho Resources CXO $12.15 ($2.12) ($0.65) $9.38 ($3.23) ($0.07) $6.08 N Continental Resources CLR $12.07 ($2.16) ($0.55) $9.35 ($3.25) ($0.30) $5.80 OW Denbury Resources DNR $15.33 ($5.08) ($0.99) $9.27 ($2.76) $0.11 $6.61 OW EQT Corporation EQT $3.19 ($0.41) ($0.27) $2.52 ($1.35) $0.88 $2.05 N EXCO Resources XCO $3.79 ($0.96) ($0.49) $2.34 ($1.87) $0.50 $0.97 OW Newfield Exploration NFX $8.81 ($2.67) ($0.65) $5.49 ($2.50) $0.28 $3.28 OW Pioneer Natural Resources PXD $9.19 ($2.32) ($0.62) $6.25 ($2.66) $0.51 $4.11 OW Plains Exploration PXP $10.67 ($2.66) ($0.60) $7.40 ($2.93) $0.54 $5.01 N QEP Resources QEP $4.44 ($0.93) ($0.35) $3.16 ($2.65) $0.42 $0.93 N Quicksilver Resources KWK $4.62 ($2.27) ($0.43) $1.91 ($1.47) $0.70 $1.15 OW Range Resources RRC $5.06 ($0.83) ($0.68) $3.56 ($2.03) $0.47 $2.00 N SandRidge Energy SD $9.23 ($2.98) ($0.93) $5.33 ($2.30) ($0.70) $2.34 N SM Energy SM $8.02 ($2.14) ($0.65) $5.23 ($3.65) $0.11 $1.69 N Ultra Petroleum Corp UPL $3.99 ($1.10) ($0.10) $2.79 ($1.35) $0.61 $2.05 N Whiting Petroleum WLL $12.52 ($3.18) ($0.63) $8.71 ($3.92) $0.06 $4.86 Mid Cap Median $8.02 ($2.14) ($0.60) $5.28 ($2.50) $0.42 $2.34 N Approach Resources AREX $8.78 ($1.33) ($0.84) $6.60 ($2.94) $0.21 $3.87 UW ATP Oil and Gas ATPG $12.63 ($2.08) ($0.90) $9.65 ($6.12) $0.23 $3.76 OW Berry Petroleum Company BRY $11.86 ($3.49) ($0.73) $7.64 ($2.69) $0.00 $4.96 N Carrizo Oil & Gas CRZO $7.16 ($1.03) ($0.77) $5.36 ($1.81) $0.55 $4.10 OW Goodrich Petroleum GDP $6.12 ($1.17) ($0.66) $4.29 ($3.68) $1.02 $1.63 OW Laredo Petroleum LPI $9.97 ($1.55) ($0.87) $7.55 ($3.13) $0.07 $4.49 UW McMoRan Exploration MMR $7.50 ($3.03) ($0.92) $3.54 ($5.32) $0.00 ($1.78) OW Penn Virginia Corp. PVA $7.41 ($1.40) ($1.05) $4.96 ($5.31) $0.26 ($0.09) OW PDC Energy PETD $7.43 ($1.82) ($1.17) $4.44 ($3.49) $0.38 $1.33 OW PetroQuest Energy PQ $5.08 ($1.47) ($0.58) $3.03 ($1.91) $0.12 $1.24 N Swift Energy SFY $9.26 ($2.45) ($0.67) $6.13 ($3.66) $0.00 $2.47 UW Venoco VQ $8.92 ($3.00) ($1.29) $4.63 ($2.55) $0.87 $2.96 Small Cap Median $8.14 ($1.69) ($0.86) $5.16 ($3.31) $0.22 $2.72 Group Median $7.89 ($2.04) ($0.64) $5.23 ($2.69) $0.27 $2.40 Source: Company reports and J.P. Morgan estimates.

15 U.S. E&Ps - STOCK PERFORMANCE LAST PRICE RETURN SINCE ANNUAL RETURN RATING COMPANY TICKER 3/1/2012 2/23 1/31 YE N Anadarko Petroleum APC $ % 6.3% 12.4% 0.2% 22% 62% -41% 51% OW Apache Corporation APA $ % 10.4% 20.5% -24% 16% 38% -31% 62% UW Chesapeake Energy CHK $ % 18.0% 11.8% -14% 0% 60% -59% 35% OW Devon Energy DVN $ % 16.2% 19.6% -21% 7% 12% -26% 33% OW EOG Resources EOG $ % 10.1% 18.7% 8% -6% 46% -25% 43% OW Noble Energy NBL $ % -4.7% 1.6% 10% 21% 45% -38% 62% OW Southwestern Energy SWN $ % 8.2% 5.5% -15% -22% 66% 4% 59% Large Cap Median -1.3% 10.1% 12.4% -14.0% 6.8% 46.1% -30.7% 50.9% N Cabot Oil & Gas COG $ % 12.8% -5.2% 101% -13% 68% -36% 33% OW Cimarex Energy XEC $ % 42.1% 34.0% -30% 67% 98% -37% 17% OW Cobalt International Energy CIE $ % 54.7% 99.7% 27% -12% NA NA NA N Concho Resources CXO $ % 2.9% 17.1% 7% 95% 97% 11% NA N Continental Resources CLR $ % 15.1% 39.2% 13% 37% 107% -21% NA OW Denbury Resources DNR $ % 8.1% 35.0% -21% 29% 36% -63% 114% OW EQT Corporation EQT $ % 6.7% -1.6% 22% 2% 31% -37% 28% N EXCO Resources XCO $ % -5.0% -28.5% -46% -9% 134% -41% -8% OW Newfield Exploration NFX $ % -4.6% -4.4% -48% 50% 144% -63% 15% OW Pioneer Natural Resources PXD $ % 12.7% 25.1% 3% 80% 198% -67% 23% OW Plains Exploration PXP $ % 19.4% 22.7% 14% 16% 19% -57% 14% N QEP Resources QEP $ % 18.1% 15.5% -19% NA NA NA NA N Quicksilver Resources KWK $ % 12.8% -15.8% -54% -2% 169% -81% 63% OW Range Resources RRC $ % 12.3% 4.3% 38% -10% 45% -33% 87% N SandRidge Energy SD $ % 10.3% 5.1% 11% -22% 53% -83% NA N SM Energy SM $ % 11.0% 10.2% 24% 72% 69% -47% 5% N Ultra Petroleum Corp UPL $ % 3.6% -16.0% -38% -4% 44% -52% 50% N Whiting Petroleum WLL $ % 19.1% 27.8% -20% 64% 114% -42% 24% Mid Cap Median -1.3% 12.5% 12.8% 5.0% 16.2% 82.7% -44.7% 23.7% N Approach Resources AREX $ % -0.2% 19.2% 27% 199% 6% -43% NA UW ATP Oil and Gas ATPG $ % 14.2% 9.2% -56% -8% 212% -88% 28% OW Berry Petroleum Company BRY $ % 22.2% 30.9% -4% 50% 286% -83% 43% N Carrizo Oil & Gas CRZO $ % 24.7% 15.0% -24% 30% 65% -71% 89% OW Goodrich Petroleum GDP $ % 0.8% 26.7% -22% -28% -19% 32% -37% OW Laredo Petroleum LPI $ % 13.5% 12.8% NA NA NA NA NA UW McMoRan Exploration MMR $ % 23.4% -0.5% -15% 114% -18% -25% -8% OW Penn Virginia Corp. PVA $ % 11.0% -2.8% -69% -21% -18% -40% 25% OW PDC Energy PETD $ % 11.9% -0.7% -17% 132% -24% -59% 37% OW PetroQuest Energy PQ $ % -4.2% -6.8% -12% 23% -9% -53% 12% N Swift Energy SFY $ % -7.7% 2.9% -24% 63% 43% -62% -2% UW Venoco VQ $ % 3.6% 62.3% -63% 41% 381% -86% 13% Small Cap Median 2.3% 11.5% 11.0% -22.2% 41.5% 5.6% -59.3% 19.0% Group Median -1.0% 11.0% 12.4% -14.9% 20.9% 56.7% -42.6% 30.1% Commodities Spot Gas ($/MMBtu) (NGUSHHUB % -3.2% -18.1% -30% -27% 4% -21% 30% Spot Oil ($/bbl) (USCRWTIC % 10.5% 10.1% 8% 15% 78% -54% 57% Indices EPX - U.S. E&P Index ^EPX % 11.3% 11.5% -10% 22% 61% -45% 41% OSX - Oil Service Index ^OSX % 8.1% 18.5% -12% 26% 61% -60% 51% S&P500 ^SPX % 4.7% 9.3% 0% 13% 23% -38% 4% DJIA IQ % 2.7% 6.2% 6% 11% 19% -34% 6% NASDAQ Comp ^COMP % 6.2% 14.7% -2% 17% 44% -41% 10% Russell 2000 ^RUT % 2.8% 10.0% -5% 25% 25% -35% -3% Source: Company reports, Bloomberg, and J.P. Morgan estimates. 15

16 U.S. E&Ps - TIERED PERFORMANCE Performance Rank - Past Week Performance Rank - Past Month Top Performers Bottom Performers Top Performers Bottom Performers Tier 1 Tier 2 Tier 3 Tier 4 Tier 1 Tier 2 Tier 3 Tier 4 ATPG VQ DVN SM CIE CLR SM UPL CRZO COG DNR PETD XEC ATPG APA CXO GDP EOG APC XEC CRZO LPI SD GDP CIE CHK LPI SWN MMR KWK EOG AREX BRY WLL CLR PQ BRY COG SWN PQ SD EQT CXO AREX PXP PXD DNR NFX UPL QEP RRC SFY WLL RRC EQT NBL PVA APA NFX NBL QEP PETD APC XCO MMR PXP PXD KWK CHK PVA VQ SFY XCO DVN 4.1% -0.4% -2.2% -6.0% Stock P(x) Performance 20.8% 12.8% 8.2% -4.2% $1,979 $7,587 $11,487 $1,306 Current Market Cap $6,712 $3,211 $8,101 $1, Beta % 61% 57% 56% % Natural Gas (2012E) 58% 59% 57% 58% RLI (2011E) % 116% 108% 134% Reinvestment Rate (2012E) 114% 160% 128% 134% $4.62 $4.63 $6.25 $5.23 Cash Margins (2012E) $4.55 $4.96 $5.23 $ % 36% 41% 24% % Gas Hedged (2012E) 23% 37% 40% 34% $2.51 $3.51 $3.01 $4.52 PD F&D (2010A) $3.33 $2.57 $3.51 $ % 52% 47% 37% % Proved NAV/Total NAV (2010A) 38% 44% 62% 44% 45% 53% 57% 55% % Proved Developed (2010A) 55% 49% 55% 51% 6.0x 20.5x 12.1x 22.9x EBITDA/Interest (2012E) 21.2x 5.9x 12.1x 12.7x 18% 10% 20% 23% Production Growth (2012E) 9% 24% 11% 20% 10% 7% 12% 20% Debt Adj CFPS Growth (2012E) 2% 26% 9% 21% Performance Rank - Past Three Months Performance Rank Top Performers Bottom Performers Top Performers Bottom Performers Tier 1 Tier 2 Tier 3 Tier 4 Tier 1 Tier 2 Tier 3 Tier 4 CIE EOG CRZO PQ COG NBL MMR SFY CLR DVN SM EQT RRC EOG PETD XEC PXP APA SFY PVA AREX CXO QEP UPL BRY AREX PETD COG CIE PXD WLL XCO XEC GDP NBL NFX SM APC DNR NFX DNR ATPG CHK UPL EQT BRY DVN KWK VQ CXO RRC KWK PXP PQ GDP ATPG WLL APC MMR XCO CLR CHK CRZO VQ PXD QEP SWN LPI SD SWN APA PVA SD 24% 11% -1% -17% Stock P(x) Performance 24% 0% -21% -48% $7,109 $11,487 $5,437 $3,211 Current Market Cap $7,587 $13,816 $6,051 $1, Beta % 57% 66% 80% % Natural Gas (2012E) % Natural Gas (2011E) 51% 61% 66% 62% RLI (2011E) RLI (2011E) % 110% 144% 135% Reinvestment Rate (2012E) Reinvestment Rate (2011E) 164% 144% 126% 130% $6.83 $5.56 $4.44 $2.79 Cash Margins (2012E) Cash Margins (2011E) $5.00 $5.41 $3.79 $ % 41% 24% 37% % Gas Hedged (2012E) % Gas Hedged (2011E) 52% 35% 43% 60% $3.33 $3.50 $4.21 $1.98 PD F&D (2010A) PD F&D (2010A) $2.52 $3.44 $3.50 $ % 53% 49% 55% % Proved Developed (2010A) % Proved Developed (2010A) 49% 55% 60% 53% 10.6x 14.9x 22.9x 11.3x EBITDA/Interest (2012E) EBITDA/Interest (2011E) 8.4x 10.3x 14.8x 10.0x 11% 13% 20% 24% Production Growth (2012E) Production Growth (2011E) 38% 10% 16% 16% 9% 20% 12% 20% Debt Adj CFPS Growth (2012E) Debt Adj CFPS Growth (2011E) 28% 31% 15% 5% 16

17 EARNINGS CALENDAR EPS CFPS EARNINGS RELEASE - 4Q11 SOURCE CONFERENCE CALL - 4Q11 SOURCE TICKER COMPANY MEDIAN JPM ACTUAL MEDIAN JPM ACTUAL Day DATE ESTIMATED TIME DATE TIME (ET) DIAL-IN NUMBER PASSCODE / ID WEEK 1 MMR McMoran Exploration (0.11) (0.11) Tue 17-Jan 8:00 AM 9:00 AM Company 17-Jan 10:00 AM Company WEEK 2 EQT EQT Corp Thu 26-Jan 7:00 AM 7:00 AM Company 26-Jan 10:30 AM Company APC Anadarko Petroleum Mon 6-Feb 4:00 PM 5:30 PM Company 7-Feb 9:00 AM Company WEEK 4 PXD Pioneer Natural Resources Mon 6-Feb 4:30 PM 5:00 PM Company 7-Feb 10:00 AM Company NBL Noble Energy Thu 9-Feb 7:00 AM 8:00 AM Company 9-Feb 10:00 AM Company XEC Cimarex Energy Wed 15-Feb 6:00 AM 6:00 AM Company 15-Feb 11:00 AM Company DVN Devon Energy Wed 15-Feb 6:30 AM 8:00 AM Company 15-Feb 11:00 AM - - Company WEEK 5 UPL Ultra Petroleum Thu 16-Feb 8:00 AM 9:00 AM Company 16-Feb 11:00 AM - - Company VQ Venoco Inc Thu 16-Feb 5:00 AM 6:15 AM Company 16-Feb 11:00 AM Company APA Apache Corp Thu 16-Feb 8:00 AM 8:45 AM Company 16-Feb 2:00 PM - - Company EOG EOG Resources Thu 16-Feb 4:00 PM 5:00 PM Company 17-Feb 9:00 AM Company COG Cabot Oil & Gas Mon 20-Feb 6:00 PM 7:30 PM Company 21-Feb 9:30 AM - - Company CIE Cobalt International (0.07) (0.06) (0.03) (0.03) Tue 21-Feb 8:00 AM 8:00 AM Company Company CHK Chesapeake Energy Tue 21-Feb 4:00 PM 4:00 PM Company 22-Feb 9:00 AM Company NFX New field Exploration Tue 21-Feb 5:00 PM 6:00 PM Company 22-Feb 11:00 AM Company RRC Range Resources Tue 21-Feb 5:30 PM 6:00 PM Company 22-Feb 1:00 PM Company PVA Penn Virginia (0.34) (0.35) Wed 22-Feb 4:00 PM 4:30 PM Company 23-Feb 10:00 AM Company QEP QEP Resources Wed 22-Feb 4:00 PM 5:00 PM Company 23-Feb 11:00 AM Company CLR Continental Resources Wed 22-Feb 4:00 PM 5:00 PM Company 23-Feb 10:00 AM Company WEEK 6 GDP Goodrich Petroleum (0.22) (0.20) Wed 22-Feb 4:00 PM 5:30 PM Company 23-Feb 11:00 AM Company CXO Concho Resources Wed 22-Feb 4:00 PM 6:00 PM Company 23-Feb 10:00 AM Company WLL Whiting Petroleum Wed 22-Feb 4:30 PM 5:30 PM Company 23-Feb 11:00 AM Company SM SM Energy Co Wed 22-Feb 6:30 PM 7:00 PM Company 23-Feb 10:00 AM Company SFY Sw ift Energy Thu 23-Feb 6:30 AM 7:30 AM Company 23-Feb 10:00 AM Company PXP Plains Exploration Thu 23-Feb 7:00 AM 7:00 AM Company 23-Feb 9:00 AM Company BRY Berry Petroleum Thu 23-Feb 7:00 AM 7:00 AM Company 23-Feb 1:00 PM Company DNR Denbury Resources Thu 23-Feb 8:30 AM 8:30 AM Company 23-Feb 11:00 AM Company SD SandRidge Energy (0.02) (0.03) Thu 23-Feb 4:00 PM 4:30 PM Company 24-Feb 9:00 AM Company XCO EXCO Resources Thu 23-Feb 4:00 PM 5:30 PM Company 24-Feb 10:00 AM - - Company KWK Quicksilver Resources 0.00 (0.00) Mon 27-Feb 6:30 AM 7:30 AM Company 27-Feb 11:00 AM Company SWN Southw estern Energy Mon 27-Feb 4:30 PM 5:30 PM Company 28-Feb 10:00 AM Company WEEK 7 PQ Petroquest Energy Tue 28-Feb 5:30 AM 7:30 AM Company 28-Feb 9:30 AM Company CRZO Carrizo Oil & Gas Tue 28-Feb 6:30 AM 6:30 AM Company 28-Feb 11:00 AM Company PETD Petroleum Development Corp Thu 1-Mar 6:30 AM 7:30 AM Company 1-Mar 11:00 AM Company WEEK 8 AREX Approach Resources Thu 8-Mar 4:30 PM 5:00 PM Company 9-Mar 11:00 AM Company WEEK 9 ATPG ATP Oil & Gas (0.65) (1.56) 0.72 (0.32) Thu 15-Mar 8:15 AM 9:15 AM Bloomberg Bloomberg WEEK 10 LPI Laredo Petroleum Tue 20-Mar 4:00 PM 5:00 PM Company 21-Mar 10:00 AM Company Thu # 8:00 AM 8:45 AM Source: Company Reports, Bloomberg, and JPM Estimates. Note: Earnings release times and time ranges are approximated from historical earnings release data. 17