Oil & Gas Exploration and Production

Transcription

1 Oil & Gas Exploration and Production Weekly Comp Tables Stocks up 0.3% over the past week. Our E&P coverage universe was up 0.3% over the past week versus the EPX, which rose 0.1%, and the S&P, which increased 0.9%. Spot gas fell 5.2% to $3.72/Mcf, and spot oil rose 2.0% to $96.69/Bbl. The JPM E&P group is up 12.3% YTD. E&Ps trading at 102% of NYMEX NAV. The stocks are trading at 102% of NAV using NYMEX prices (long-term prices of $4.34/Mcf gas and $85.54/Bbl oil). In 2009, 2010, 2011, and 2012, the group traded at an average of 89%, 96%, 88%, and 109% of NYMEX NAV, respectively. E&Ps trading at 6.1x/5.2x 2013E/2014E EBITDA. Assuming the J. P. Morgan price deck, the group is trading at 6.1x 2013E EBITDA and 5.2x 2014E EBITDA. The median E&P stock is trading at $2.60/Mcfe on an EV/proved Mcfe basis. NAVs imply $4.86/Mcf and $82.86/Bbl. Based on our NAV calculations for the E&P group, the E&P stocks are discounting a flat Henry Hub gas price/wti oil price of $4.86/$ 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 Beyond JPM WTI Oil ($/bbl) $95.05 $94.16 $91.10 $90.00 Deck Henry Hub Gas($/Mcf) $4.06 $2.79 $3.57 $4.50 NYMEX WTI Oil ($/bbl) $94.06 $94.89 $94.68 $ /13/2013 Henry Hub Gas($/Mcf) $4.04 $2.79 $3.81 $4.34 Source: J.P. Morgan estimates, Bloomberg Note: For NYMEX, we base Beyond on 2016 average prices. We are in the process of rolling out the above JPM deck for all models. The following are using the old price deck: 2013 $96.55 / $4.16 and long term $100 / $5.50. XCO, KWK, GDP, PVA, PDCE, PQ. 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 Balance Sheet 11 Hedges 12 Margins 13 Market Cap & Enterprise Value 14 Stock Performance 15 Tiered Performance 16 See page 17 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 LAST NET ASSET VALUE Price PRICE / Implied PRICE / SHARE Target NAV NAV PT Upside RATING COMPANY TICKER 6/13/2013 JPM DECK NYMEX YE 13 JPM NYMEX YE 13 JPM NYMEX PT N Anadarko Petroleum APC $87.45 $ $96.23 $ % 91% 90% 21% 10% 11% N Apache Corporation APA $85.12 $ $92.50 $ % 92% 111% 22% 9% -10% N Chesapeake Energy CHK $21.00 $25.19 $20.18 $ % 104% 105% 20% -4% -5% N Devon Energy DVN $55.04 $72.35 $60.61 $ % 91% 88% 31% 10% 14% OW EOG Resources EOG $ $ $ $ % 102% 90% 7% -2% 11% OW Noble Energy NBL $58.34 $64.18 $58.85 $ % 99% 99% 10% 1% 1% OW Southwestern Energy SWN $36.96 $27.16 $25.17 $ % 147% 91% -27% -32% 10% Large Cap Median 83% 99% 91% 20% 1% 10% OW Cabot Oil & Gas COG $70.57 $85.40 $77.96 $ % 91% 86% 21% 10% 16% OW Cimarex Energy XEC $71.77 $91.36 $83.22 $ % 86% 82% 27% 16% 21% OW Cobalt International Energy CIE $25.76 $26.73 $24.63 $ % 105% 82% 4% -4% 22% N Concho Resources CXO $86.95 $87.74 $77.29 $ % 112% 85% 1% -11% 18% OW Continental Resources CLR $87.56 $ $ $ % 81% 72% 39% 24% 39% OW Denbury Resources DNR $18.18 $24.23 $22.12 $ % 82% 69% 33% 22% 46% OW EQT Corporation EQT $80.03 $74.55 $67.96 $ % 118% 94% -7% -15% 6% N EXCO Resources XCO $7.72 $15.11 $3.22 $ % 240% 119% 96% -58% -16% OW Newfield Exploration NFX $22.83 $32.80 $24.29 $ % 94% 80% 44% 6% 25% OW Pioneer Natural Resources PXD $ $ $ $ % 109% 93% 6% -8% 7% N QEP Resources QEP $29.53 $34.74 $30.95 $ % 95% 78% 18% 5% 29% NR Quicksilver Resources KWK $2.09 $11.66 $0.08 NA 18% 2613% NA 458% -96% NA OW Range Resources RRC $74.79 $72.25 $63.48 $ % 118% 86% -3% -15% 16% UW SandRidge Energy SD $4.83 $0.42 $0.00 NA 1162% NA NA -91% NA NA N SM Energy SM $62.35 $71.40 $59.58 $ % 105% 90% 15% -4% 11% N Ultra Petroleum Corp UPL $21.27 $22.26 $19.22 $ % 111% 95% 5% -10% 6% OW Whiting Petroleum WLL $48.72 $67.09 $59.11 $ % 82% 75% 38% 21% 33% N WPX Energy WPX $19.22 $16.15 $13.33 $ % 144% 120% -16% -31% -17% Mid Cap Median 86% 105% 85% 16% -4% 17% OW Approach Resources AREX $24.76 $49.70 $43.48 $ % 57% 63% 101% 76% 60% OW Berry Petroleum Company BRY $44.01 $44.42 $38.54 $ % 114% 92% 1% -12% 9% N Carrizo Oil & Gas CRZO $26.66 $6.13 $2.14 $ % 1246% 127% -77% -92% -21% OW Goodrich Petroleum GDP $12.14 $22.82 $0.00 $ % NA 74% 88% NA 36% N Halcón Resources HK $5.34 $8.08 $6.82 $ % 78% 63% 51% 28% 59% OW Laredo Petroleum LPI $19.93 $27.04 $19.76 $ % 101% 85% 36% -1% 18% OW Penn Virginia Corp. PVA $4.84 $3.27 $0.00 $ % NA 81% -32% NA 24% OW PDC Energy PDCE $52.09 $52.52 $18.39 $ % 283% 130% 1% -65% -23% OW PetroQuest Energy PQ $4.80 $7.66 $0.00 $ % NA 64% 60% NA 56% N Swift Energy SFY $13.74 $20.14 $15.71 $ % 87% 65% 47% 14% 53% Small Cap Median 71% 101% 77% 41% -1% 30% Group Median 83% 102% 86% 20% -2% 16% Source: Company reports, Bloomberg, and J.P. Morgan estimates Note: OW - Overweight, N - Neutral, UW - Underweight, NR - Not Rated SD Price target was withdrawn April 8, U.S. E&Ps - SUMMARY COMPS 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 $45.95 $59.89 $ % 190% 1.1% 2.3% N Apache Corporation APA $77.02 $26.60 $ % 111% 1.6% 3.1% N Chesapeake Energy CHK $1.69 $23.50 $ % 1243% 3.8% 4.7% N Devon Energy DVN $36.46 $35.88 $ % 151% 2.2% 3.0% OW EOG Resources EOG $51.65 $91.19 $ % 258% 1.1% 2.4% OW Noble Energy NBL $31.47 $32.71 $ % 185% 1.5% 4.9% OW Southwestern Energy SWN $16.80 $10.36 $ % 220% 3.7% 0.1% Large Cap Median 83% 190% 1.6% 3.0% OW Cabot Oil & Gas COG $19.33 $66.07 $ % 365% 3.5% 0.4% OW Cimarex Energy XEC $36.63 $54.73 $ % 196% 1.5% 2.7% OW Cobalt International Energy CIE $3.87 $22.86 $ % 666% 0.5% 1.8% N Concho Resources CXO $39.96 $47.78 $ % 218% 0.7% 2.7% OW Continental Resources CLR $47.03 $74.71 $ % 186% 0.3% 3.6% OW Denbury Resources DNR $15.38 $8.86 $ % 118% 1.0% 3.7% OW EQT Corporation EQT $46.90 $27.64 $ % 171% 2.8% 0.3% N EXCO Resources XCO $2.92 $12.20 $ % 265% 0.3% 2.8% OW Newfield Exploration NFX $21.94 $10.87 $ % 104% 2.0% 7.4% OW Pioneer Natural Resources PXD $47.07 $ $ % 312% 0.3% 3.1% N QEP Resources QEP $34.58 $0.16 $ % 85% 3.3% 2.6% NR Quicksilver Resources KWK $8.23 $3.43 $ % 25% 15.8% 15.4% OW Range Resources RRC $14.95 $57.30 $ % 500% 2.8% 1.8% UW SandRidge Energy SD $3.09 ($2.67) $ % 156% 2.6% 3.3% N SM Energy SM $41.03 $30.37 $ % 152% 2.4% 3.8% N Ultra Petroleum Corp UPL $9.89 $12.37 $ % 215% 8.2% 0.6% OW Whiting Petroleum WLL $33.66 $33.43 $ % 145% 0.2% 4.2% N WPX Energy WPX $19.69 ($3.55) $ % 98% 8.5% 2.4% Mid Cap Median 86% 178% 2.2% 2.8% OW Approach Resources AREX $13.34 $36.36 $ % 186% 0.4% 6.6% OW Berry Petroleum Company BRY $48.59 ($4.18) $ % 91% 0.2% 1.2% N Carrizo Oil & Gas CRZO ($3.74) $9.87 $ % NA 4.0% 2.4% OW Goodrich Petroleum GDP ($6.23) $29.05 $ % NA 8.6% 5.3% N Halcón Resources HK $2.94 $5.14 $ % 182% 0.1% 4.7% OW Laredo Petroleum LPI $2.93 $24.11 $ % 681% 4.4% 5.5% OW Penn Virginia Corp. PVA $1.88 $1.39 $ % 257% 2.7% 6.9% OW PDC Energy PDCE $53.08 ($0.56) $ % 98% 1.4% 1.8% OW PetroQuest Energy PQ $2.76 $4.90 $ % 174% 5.8% 2.1% N Swift Energy SFY $21.37 ($1.23) $ % 64% 9.0% 8.6% Small Cap Median 71% 178% 3.3% 5.0% Group Median 83% 185% 2.2% 3.0% 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. We are in the process of rolling out our new JPM deck for all models. See page 1 for a list of stocks still using the old price deck. 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 $43.23 $53.00 $ % 202% N Apache Corporation APA $72.93 $19.57 $ % 117% N Chesapeake Energy CHK $0.06 $20.12 $ % 35000% N Devon Energy DVN $33.95 $26.66 $ % 162% OW EOG Resources EOG $49.23 $81.84 $ % 271% OW Noble Energy NBL $30.84 $28.01 $ % 189% OW Southwestern Energy SWN $16.47 $8.70 $ % 224% Large Cap Median 99% 202% OW Cabot Oil & Gas COG $18.26 $59.70 $ % 386% OW Cimarex Energy XEC $35.16 $48.06 $ % 204% N Cobalt International Energy CIE $3.87 $20.76 $ % 666% N Concho Resources CXO $37.11 $40.18 $ % 234% OW Continental Resources CLR $43.45 $65.15 $ % 202% OW Denbury Resources DNR $14.75 $7.37 $ % 123% OW EQT Corporation EQT $44.93 $23.03 $ % 178% N EXCO Resources XCO ($0.05) $3.27 $ % NA OW Newfield Exploration NFX $18.59 $5.70 $ % 123% OW Pioneer Natural Resources PXD $42.02 $93.10 $ % 350% N QEP Resources QEP $33.29 ($2.34) $ % 89% NR Quicksilver Resources KWK $2.52 ($2.44) $ % 83% OW Range Resources RRC $12.91 $50.57 $ % 579% UW SandRidge Energy SD $2.73 ($3.25) ($0.52) NA 177% N SM Energy SM $38.61 $20.97 $ % 161% N Ultra Petroleum Corp UPL $9.08 $10.14 $ % 234% OW Whiting Petroleum WLL $30.98 $28.13 $ % 157% N WPX Energy WPX $19.15 ($5.82) $ % 100% Mid Cap Median 105% 178% OW Approach Resources AREX $12.41 $31.07 $ % 200% OW Berry Petroleum Company BRY $43.98 ($5.44) $ % 100% N Carrizo Oil & Gas CRZO ($4.49) $6.63 $ % NA OW Goodrich Petroleum GDP ($9.92) $8.59 ($1.33) NA NA N Halcón Resources HK $2.88 $3.94 $ % 185% OW Laredo Petroleum LPI $2.25 $17.51 $ % 886% OW Penn Virginia Corp. PVA ($2.78) ($4.48) ($7.26) NA NA OW PDC Energy PDCE $33.46 ($15.07) $ % 156% OW PetroQuest Energy PQ $1.28 ($1.79) ($0.51) NA 375% N Swift Energy SFY $19.94 ($4.23) $ % 69% Small Cap Median 101% 185% Group Median 102% 189% 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 2013E 2014E 2013E 2014E 2013E 2014E 2013E 2014E N Anadarko Petroleum APC $16.26 $ x 4.5x $9,929 $11, x 4.6x N Apache Corporation APA $24.67 $ x 3.1x $12,428 $13, x 3.4x N Chesapeake Energy CHK $4.98 $ x 3.7x $4,822 $5, x 5.6x N Devon Energy DVN $12.46 $ x 4.0x $5,153 $6, x 4.6x OW EOG Resources EOG $22.99 $ x 5.0x $6,667 $7, x 5.2x OW Noble Energy NBL $9.18 $ x 5.2x $3,742 $4, x 5.0x OW Southwestern Energy SWN $4.72 $ x 6.2x $1,423 $1, x 6.0x Large Cap Median 5.4x 4.5x 6.0x 5.0x OW Cabot Oil & Gas COG $4.96 $ x 8.5x $1,099 $1, x 8.7x OW Cimarex Energy XEC $14.49 $ x 3.9x $1,277 $1, x 4.1x OW Cobalt International Energy CIE ($0.32) ($0.40) NA NA ($95) ($98) NA NA N Concho Resources CXO $14.06 $ x 4.6x $1,739 $2, x 5.5x OW Continental Resources CLR $13.35 $ x 4.7x $2,812 $3, x 5.2x OW Denbury Resources DNR $2.93 $ x 5.3x $1,255 $1, x 7.8x OW EQT Corporation EQT $7.72 $ x 7.4x $940 $1, x 8.2x N EXCO Resources XCO $1.68 $ x 3.4x $435 $ x 5.5x OW Newfield Exploration NFX $9.05 $ x 2.0x $1,474 $1, x 3.4x OW Pioneer Natural Resources PXD $14.68 $ x 8.4x $2,324 $2, x 8.6x N QEP Resources QEP $7.73 $ x 3.0x $1,259 $1, x 4.2x NR Quicksilver Resources KWK $0.98 $ x 1.6x $334 $ x 6.3x OW Range Resources RRC $5.96 $ x 7.9x $1,128 $1, x 8.8x UW SandRidge Energy SD $1.04 $ x 3.6x $1,036 $1, x 5.5x N SM Energy SM $18.16 $ x 2.6x $1,328 $1, x 3.3x N Ultra Petroleum Corp UPL $3.13 $ x 4.7x $586 $ x 6.3x OW Whiting Petroleum WLL $13.67 $ x 2.9x $1,767 $2, x 3.5x N WPX Energy WPX $3.83 $ x 3.0x $858 $1, x 3.6x Mid Cap Median 5.0x 3.9x 7.0x 5.5x OW Approach Resources AREX $3.14 $ x 5.3x $122 $ x 5.6x OW Berry Petroleum Company BRY $10.37 $ x 3.7x $671 $ x 5.3x N Carrizo Oil & Gas CRZO $7.43 $ x 2.8x $355 $ x 4.4x OW Goodrich Petroleum GDP $4.73 $ x 1.9x $251 $ x 3.1x N Halcón Resources HK $1.98 $ x 1.9x $927 $1, x 2.0x OW Laredo Petroleum LPI $3.24 $ x 4.4x $518 $ x 5.4x OW Penn Virginia Corp. PVA $4.24 $ x.7x $265 $ x 2.5x OW PDC Energy PDCE $7.03 $ x 6.4x $273 $ x 6.6x OW PetroQuest Energy PQ $2.18 $ x 1.6x $155 $ x 2.1x N Swift Energy SFY $8.63 $ x 1.4x $448 $ x 2.7x Small Cap Median 3.1x 2.4x 5.0x 3.8x Group Median 4.8x 3.8x 6.1x 5.2x 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 2011A RESERVES 2012E 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 15,230 71% $ ,356 54% 1% 5% N Apache Corporation APA FC 17,939 67% $ ,110 49% -5% -19% N Chesapeake Energy CHK FC 18,789 54% $ ,690 70% -16% -28% N Devon Energy DVN FC 18,666 71% $ ,418 51% -1% -12% OW EOG Resources EOG SE 12,323 51% $ ,864 44% -12% -16% OW Noble Energy NBL SE 7,256 42% $2.50 6,855 70% -6% -5% OW Southwestern Energy SWN FC 5,893 55% $2.86 4, % -32% -34% Large Cap Median 55% $ % -6% -16% OW Cabot Oil & Gas COG SE 3,033 59% $4.14 3,842 96% 27% 25% OW Cimarex Energy XEC FC 2,045 82% $3.04 2,259 55% 10% 4% OW Cobalt International Energy CIE SE NA NA NA NA NA NA NA N Concho Resources CXO SE 2,319 61% $4.57 2,683 39% 16% 4% OW Continental Resources CLR SE 3,051 40% $4.20 4,708 28% 54% 29% OW Denbury Resources DNR FC 2,772 56% $3.73 2,455 20% -11% 2% OW EQT Corporation EQT SE 5,365 55% $1.92 6, % 12% 6% N EXCO Resources XCO FC 1,330 74% $2.44 1,349 97% 1% -3% OW Newfield Exploration NFX FC 3,915 54% $1.79 3,403 52% -13% -14% OW Pioneer Natural Resources PXD SE 6,377 58% $3.69 6,514 34% 2% -12% N QEP Resources QEP SE 3,613 54% $1.68 4,382 65% 21% 51% NR Quicksilver Resources KWK FC 2,791 69% $0.86 2,844 77% 2% -14% OW Range Resources RRC SE 5,054 48% $2.30 6,506 74% 29% 17% UW SandRidge Energy SD FC 2,824 49% $3.29 3,395 42% 20% -28% N SM Energy SM SE 1,259 67% $3.19 1,760 47% 40% 20% N Ultra Petroleum Corp UPL FC 4,977 41% $1.65 3,075 96% -38% -37% OW Whiting Petroleum WLL FC 2,071 69% $3.32 2,273 10% 10% 2% N WPX Energy WPX SE 5,347 60% $1.01 5,517 75% 3% -8% Mid Cap Median 58% $ % 10% 2% OW Approach Resources AREX SE % $ % 24% -10% OW Berry Petroleum Company BRY SE 1,648 53% $2.40 1,656 27% 0% -19% N Carrizo Oil & Gas CRZO FC % $ % -16% -36% OW Goodrich Petroleum GDP SE % $ % 23% 19% N Halcón Resources HK FC % $ % 439% -61% OW Laredo Petroleum LPI SE % $3.98 1,131 48% 21% 0% OW Penn Virginia Corp. PVA SE % $ % 12% 1% OW PDC Energy PDCE SE 1,015 46% $1.67 1,216 66% 20% 29% OW PetroQuest Energy PQ FC % $ % 6% -3% N Swift Energy SFY FC % $1.47 1,107 57% 16% -16% Small Cap Median 47% $ % 18% -6% Group Median 55% $ % 8% -4% Group Total 161, ,317 * 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. *** RRC, CLR, PXD, SWN, SD, CIE, APC, WLL, SM, CXO, APA, UPL, EQT, NFX, CHK, DVN, XEC and COG YE12 are actual, not 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 2012E** 2013E 2014E 2013E 2014E 2013E 2014E 2013E 2014E N Anadarko Petroleum APC 1,606 1,717 1,808 4,704 4,954 7% 5% 12.2% 10.0% N Apache Corporation APA 1,710 1,749 1,864 4,792 5,106 2% 7% -7.5% 5.0% N Chesapeake Energy CHK 1,426 1,448 1,493 3,967 4,089 2% 3% 0.2% -6.2% N Devon Energy DVN 1,498 1,504 1,580 4,119 4,330 0% 5% -7.5% 0.3% OW EOG Resources EOG 1,024 1,064 1,200 2,914 3,287 4% 13% -0.6% 10.2% OW Noble Energy NBL ,672 1,956 16% 17% 14.8% 9.7% OW Southwestern Energy SWN ,737 1,934 12% 11% 10.8% 13.0% Large Cap Median % 7% 0% 10% OW Cabot Oil & Gas COG ,013 1,340 38% 32% 37.4% 36.0% OW Cimarex Energy XEC % 16% 4.8% 11.2% OW Cobalt International Energy CIE NA NA NA NA N Concho Resources CXO % 25% 11.8% 26.1% OW Continental Resources CLR ,036 40% 26% 21.2% 20.2% OW Denbury Resources DNR % 11% 1.3% 4.2% OW EQT Corporation EQT ,221 34% 29% 30.9% 37.5% N EXCO Resources XCO % 5% -17.8% -2.7% OW Newfield Exploration NFX % 20% -15.3% 9.1% OW Pioneer Natural Resources PXD ,069 1,249 16% 17% 1.4% 13.6% N QEP Resources QEP % 9% -15.4% 4.6% NR Quicksilver Resources KWK % 3% -12.8% -21.5% OW Range Resources RRC ,147 23% 24% 15.3% 21.1% UW SandRidge Energy SD % 12% 23.5% -5.3% N SM Energy SM % 15% 7.4% 11.3% N Ultra Petroleum Corp UPL % 5% -4.7% 6.8% OW Whiting Petroleum WLL % 17% 4.2% 8.7% N WPX Energy WPX ,416 1,549 2% 9% -11.9% -8.9% Mid Cap Median % 16% 4% 9% OW Approach Resources AREX % 38% 9.5% 25.1% OW Berry Petroleum Company BRY % 8% 1.6% 241.3% N Carrizo Oil & Gas CRZO % 24% -4.1% 3.9% OW Goodrich Petroleum GDP % 8% -3.1% -1.4% N Halcón Resources HK % 54% 46.3% 19.2% OW Laredo Petroleum LPI % 17% -0.7% 7.2% OW Penn Virginia Corp. PVA % 16% -27.3% 0.0% OW PDC Energy PDCE % 13% -17.3% 0.0% OW PetroQuest Energy PQ % 11% 17.5% 0.0% N Swift Energy SFY % 9% -11.6% -5.6% Small Cap Median % 14% -2% 2% Group Median % 13% 1% 8% Group Total 13,061 14,014 15,593 38,396 42,722 7% 11% *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. ** RRC, CLR, PXD, SWN, SD, CIE, APC, WLL, SM, CXO, APA, UPL, EQT, NFX, CHK, DVN, XEC and COG YE12 are actual, not estimated. Source: Company reports, Bloomberg, and J.P. Morgan estimates 7

8 U.S. E&Ps - Ex-Leasehold PD F&D METRICS Ex-leasehold Proved Developed F&D RODD Asset 3 Yr Avg (Return on Drilling Dollars) Intensity RATING COMPANY TICKER 2009A 2010A 2011A ( A) 2009A 2010A 2011A 2011A* N Anadarko Petroleum APC $2.95 $1.62 $1.91 $ % 65% 52% 41% N Apache Corporation APA $4.04 $4.40 $4.54 $ % 15% 14% 96% N Chesapeake Energy CHK $1.77 $2.25 $2.43 $2.51 6% 5% 9% 222% N Devon Energy DVN $2.71 $2.96 $2.47 $2.92 3% 3% 9% 117% OW EOG Resources EOG $3.17 $3.24 $3.46 $3.24 7% 14% 15% 74% OW Noble Energy NBL $5.14 $9.22 $6.12 $6.95 0% -6% 2% 140% OW Southwestern Energy SWN $1.61 $1.70 $1.67 $1.65 5% 5% 11% 64% Large Cap Median $2.95 $2.96 $2.47 $2.92 6% 5% 11% 96% OW Cabot Oil & Gas COG $2.77 $1.46 $2.14 $1.67 0% 11% 9% 83% OW Cimarex Energy XEC $2.44 $2.44 $3.33 $ % 26% 15% 89% OW Cobalt International Energy CIE NA NA NA NA NA NA NA NA N Concho Resources CXO $2.00 $2.32 $3.20 $ % 64% 39% 65% OW Continental Resources CLR $2.86 $9.52 $3.84 $ % -2% 27% 51% OW Denbury Resources DNR $2.09 $2.95 $4.06 $ % 25% 49% 38% OW EQT Corporation EQT $1.90 $1.48 $1.84 $1.87 2% 5% 6% 36% N EXCO Resources XCO $3.13 $1.46 $2.26 $2.11-5% -8% 5% 107% OW Newfield Exploration NFX $3.00 $2.09 $3.91 $ % 31% 10% 78% OW Pioneer Natural Resources PXD $2.15 $2.27 $2.95 $ % 16% 15% 76% N QEP Resources QEP $2.17 $2.59 $2.12 $2.43 6% 4% 14% 48% NR Quicksilver Resources KWK $1.39 $1.51 $1.58 $1.55 3% 1% 3% 144% OW Range Resources RRC $1.94 $2.01 $2.07 $1.74 8% 7% 9% 49% UW SandRidge Energy SD $5.13 $1.89 $3.09 $2.80-3% 29% 15% 85% N SM Energy SM $4.49 $4.16 $4.17 $3.96 2% 6% 9% 90% N Ultra Petroleum Corp UPL $1.55 $1.80 $1.67 $ % 9% 15% 125% OW Whiting Petroleum WLL $3.82 $2.99 $6.69 $ % 36% 7% 95% N WPX Energy WPX $1.88 $1.99 $1.48 $1.99-2% -4% -10% 94% Mid Cap Median $2.17 $2.09 $2.95 $2.80 8% 9% 10% 83% OW Approach Resources AREX $6.15 $11.65 $7.11 $8.76-2% -5% -1% 170% OW Berry Petroleum Company BRY $2.36 $2.93 $2.99 $ % 28% 26% 55% N Carrizo Oil & Gas CRZO $0.83 $1.18 $2.73 $ % 66% 26% 120% OW Goodrich Petroleum GDP $3.02 $2.76 $3.93 $3.07 0% 16% 7% 135% N Halcón Resources HK NA $1.49 $2.62 $11.27 NA 56% 32% 82% OW Laredo Petroleum LPI $4.72 $3.37 $4.51 $ % 35% 20% 107% OW Penn Virginia Corp. PVA $2.79 $1.52 $6.82 $3.87 5% 31% -1% 235% OW PDC Energy PDCE $9.45 $4.09 $2.99 $ % 0% 11% 96% OW PetroQuest Energy PQ $3.99 $3.88 $2.20 $2.73-7% -6% 11% 92% N Swift Energy SFY $2.62 $3.00 $4.64 $ % 20% 5% 86% Small Cap Median $3.02 $2.97 $3.46 $3.71 5% 24% 11% 101% Group Median $2.77 $2.38 $2.99 $3.10 6% 12% 11% 89% Source: Company reports and J.P. Morgan estimates Asset Intensity = PD F&D (all in) x Production / Discretionary Cash Flow * RRC, CLR, PXD, SWN, SD, CIE, APC, WLL, SM, CXO, APA, UPL, EQT, NFX, CHK, DVN, XEC and COG YE12 are actual, not estimated. 8

9 All-in Proved Developed F&D RODD 3 Yr Avg (Return on Drilling Dollars) RATING COMPANY TICKER 2009A 2010A 2011A ( A) 2009A 2010A 2011A N Anadarko Petroleum APC $5.01 $2.69 $2.07 $2.92 0% 21% 45% N Apache Corporation APA $4.11 $4.99 $5.05 $ % 9% 10% N Chesapeake Energy CHK $3.67 $4.21 $4.02 $3.99-4% -5% -2% N Devon Energy DVN $3.25 $3.50 $2.82 $3.14 0% -1% 6% OW EOG Resources EOG $3.59 $3.51 $3.71 $3.61 5% 10% 13% OW Noble Energy NBL $6.61 $10.06 $6.83 $7.57-3% -8% 0% OW Southwestern Energy SWN $1.70 $1.83 $1.83 $1.79 5% 0% 7% Large Cap Median $3.67 $3.51 $3.71 $3.61 0% 0% 7% OW Cabot Oil & Gas COG $3.25 $1.67 $2.41 $2.20-2% 6% 5% OW Cimarex Energy XEC $3.27 $2.80 $3.68 $ % 17% 11% OW Cobalt International Energy CIE NA NA NA NA NA NA NA N Concho Resources CXO $2.55 $3.01 $3.77 $ % 33% 29% OW Continental Resources CLR $3.40 $11.00 $4.16 $ % -3% 22% OW Denbury Resources DNR $2.68 $4.43 $5.10 $ % 15% 12% OW EQT Corporation EQT $1.96 $1.63 $1.99 $1.84 2% 3% 5% N EXCO Resources XCO $5.14 $2.71 $3.06 $ % -10% -20% OW Newfield Exploration NFX $3.36 $2.36 $3.82 $3.24 8% 21% 6% OW Pioneer Natural Resources PXD $2.79 $2.57 $3.14 $2.90 8% 9% 13% N QEP Resources QEP $2.43 $2.84 $2.30 $2.50 4% 0% 12% NR Quicksilver Resources KWK $1.81 $1.96 $2.11 $1.96 0% -2% 0% OW Range Resources RRC $2.58 $2.52 $2.43 $2.49 3% 2% 5% UW SandRidge Energy SD $5.72 $2.31 $3.42 $3.33-5% 15% 12% N SM Energy SM $5.25 $4.52 $4.36 $4.53-2% 3% 6% N Ultra Petroleum Corp UPL $1.59 $1.98 $1.82 $ % 5% 13% OW Whiting Petroleum WLL $4.11 $3.21 $7.14 $ % 27% 5% N WPX Energy WPX $2.18 $2.74 $1.86 $2.38-4% -10% 11% Mid Cap Median $2.79 $2.71 $3.14 $3.24 4% 5% 11% OW Approach Resources AREX $6.73 $12.46 $7.45 $8.09-3% NA -1% OW Berry Petroleum Company BRY $3.21 $3.44 $3.06 $ % 16% 26% N Carrizo Oil & Gas CRZO $1.40 $1.80 $3.48 $ % 22% 16% OW Goodrich Petroleum GDP $3.28 $3.03 $4.42 $3.52-2% 13% 4% N Halcón Resources HK NA $1.49 $2.62 NA NA 56% 32% OW Laredo Petroleum LPI $4.82 $3.42 $4.55 $4.16 8% 25% 20% OW Penn Virginia Corp. PVA $3.54 $1.91 $7.88 $3.51 2% 24% -3% OW PDC Energy PDCE $10.58 $4.71 $3.39 $ % -4% 7% OW PetroQuest Energy PQ $5.82 $4.80 $2.69 $ % -12% 3% N Swift Energy SFY $4.12 $3.45 $4.97 $4.19 6% 12% 3% Small Cap Median $4.12 $3.43 $3.95 $3.68 2% 16% 6% Group Median $3.36 $2.92 $3.45 $3.31 3% 9% 7% 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 2013E PROD. 2013E PROD. RLI** 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 9.4 $3.61 $11, % 2.6% 88% 55% N Apache Corporation APA 10.2 $3.62 $9, % -0.5% 43% 46% N Chesapeake Energy CHK 10.4 $1.06 $7, % 12.4% 100% 74% N Devon Energy DVN 11.9 $1.77 $7, % 5.1% 76% 57% OW EOG Resources EOG 12.4 $2.24 $15, % 3.5% 82% 46% OW Noble Energy NBL 16.2 $3.19 $14, % 0.8% 56% 53% OW Southwestern Energy SWN 6.7 $0.82 $6, % 20.4% 100% 100% Large Cap Median 10.4 $2.24 $9, % 3.5% 82% 55% OW Cabot Oil & Gas COG 12.1 $1.99 $18, % 35.2% 100% 94% OW Cimarex Energy XEC 9.1 $2.25 $10, % 9.6% 100% 49% OW Cobalt International Energy CIE NA NA NA NA NA NA NA N Concho Resources CXO 14.6 $3.62 $24, % 20.9% 100% 38% OW Continental Resources CLR 18.0 $3.02 $27, % 29.0% 100% 28% OW Denbury Resources DNR 19.2 $3.81 $26, % -7.2% 100% 6% OW EQT Corporation EQT 17.6 $1.16 $12, % 28.9% 100% 95% N EXCO Resources XCO 7.1 $1.26 $6, % 18.1% 100% 95% OW Newfield Exploration NFX 12.6 $2.76 $8, % -0.1% 84% 44% OW Pioneer Natural Resources PXD 17.5 $1.81 $23, % 8.9% 100% 37% N QEP Resources QEP 12.2 $1.76 $7, % 11.5% 100% 68% NR Quicksilver Resources KWK 19.7 $0.81 $6, % 13.7% 81% 78% OW Range Resources RRC 21.3 $1.89 $17, % 16.1% 100% 77% UW SandRidge Energy SD 9.3 $2.43 $11, % -18.5% 100% 54% N SM Energy SM 7.1 $2.75 $8, % 19.8% 100% 50% N Ultra Petroleum Corp UPL 13.1 $1.70 $7, % 4.0% 100% 97% OW Whiting Petroleum WLL 11.7 $3.57 $14, % 5.8% 100% 13% N WPX Energy WPX 10.3 $1.09 $3, % -6.5% 96% 78% Mid Cap Median 12.6 $1.99 $11, % 11.5% 100% 54% OW Approach Resources AREX 23.5 $1.47 $19, % 5.2% 100% 30% OW Berry Petroleum Company BRY 18.9 $3.46 $16, % -4.8% 100% 20% N Carrizo Oil & Gas CRZO 9.8 $1.89 $14, % -1.2% 100% 61% OW Goodrich Petroleum GDP 11.4 $0.91 $12, % -15.8% 100% 60% N Halcón Resources HK 17.1 $3.10 $28,040 NA NA 100% 15% OW Laredo Petroleum LPI 12.7 $1.89 $18,267 NA NA 100% 54% OW Penn Virginia Corp. PVA 22.1 $0.99 $10, % -28.2% 100% 36% OW PDC Energy PDCE 24.9 $1.33 $15, % -16.9% 100% 59% OW PetroQuest Energy PQ 7.6 $1.29 $4, % 2.0% 100% 74% N Swift Energy SFY 12.9 $2.40 $6, % -1.8% 100% 43% Small Cap Median 15.0 $1.68 $14, % -3.3% 100% 48% Group Median 12.5 $1.89 $12, % 4.5% 100% 54% *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. RRC, CLR, PXD, SWN, SD, CIE, APC, WLL, SM, CXO, APA, UPL, EQT, NFX, CHK, DVN, XEC and COG YE12 are actual, not estimated. 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 - BALANCE SHEET LTM EBITDA / NET DEBT TO NET DEBT TO REINVESTMENT RATE INTEREST BOOK CAP EBITDA (CFI / CFO) RATING COMPANY TICKER YE12E* YE13E YE12E* YE13E 2012E* 2013E 2012E* 2013E (excludes acquisitions) N Anadarko Petroleum APC 10.6x 12.9x 34% 29% 1.2x 0.9x 90% 82% N Apache Corporation APA 51.5x 47.9x 29% 28% 1.1x 1.0x 119% 106% N Chesapeake Energy CHK 50.0x 55.2x 44% 44% 3.2x 2.6x 272% 190% N Devon Energy DVN 13.7x 14.1x 25% 27% 1.4x 1.4x 181% 106% OW EOG Resources EOG 27.4x 28.9x 29% 30% 0.9x 0.9x 130% 114% OW Noble Energy NBL 21.7x 28.3x 22% 25% 0.7x 0.8x 125% 118% OW Southwestern Energy SWN 45.4x 64.6x 35% 31% 1.0x 0.9x 127% 94% Large Cap Median 27.4x 28.9x 29% 29% 1.1x 0.9x 127% 106% OW Cabot Oil & Gas COG 10.5x 15.3x 32% 28% 1.3x 0.8x 143% 89% OW Cimarex Energy XEC 107.3x 185.8x 16% 22% 0.6x 0.8x 145% 129% OW Cobalt International Energy CIE NA NA 0% 19% NA NA NA NA N Concho Resources CXO 7.7x 7.6x 47% 45% 2.2x 1.9x 122% 109% OW Continental Resources CLR 13.2x 13.0x 53% 53% 1.9x 1.6x 217% 146% OW Denbury Resources DNR 9.8x 10.3x 28% 37% 1.3x 2.4x 111% 102% OW EQT Corporation EQT 5.3x 8.8x 38% 34% 2.4x 1.5x 170% 110% N EXCO Resources XCO 6.1x 5.9x 68% 67% 3.8x 3.9x 86% 116% OW Newfield Exploration NFX 10.3x 9.6x 52% 55% 1.8x 2.3x 155% 138% OW Pioneer Natural Resources PXD 9.7x 11.2x 37% 24% 1.7x 1.1x 166% 138% N QEP Resources QEP 11.3x 9.6x 49% 51% 2.3x 2.3x 110% 126% NR Quicksilver Resources KWK 2.0x 1.9x 77% 78% 6.3x 6.8x 184% 167% OW Range Resources RRC 4.8x 5.4x 54% 55% 3.4x 2.8x 206% 130% UW SandRidge Energy SD 3.6x 3.8x 51% 41% 3.7x 2.5x 274% 342% N SM Energy SM 15.2x 15.4x 50% 52% 1.5x 1.3x 163% 121% N Ultra Petroleum Corp UPL 9.2x 5.6x 146% 125% 2.2x 3.0x 88% 84% OW Whiting Petroleum WLL 19.7x 21.1x 34% 38% 1.2x 1.3x 123% 135% N WPX Energy WPX 10.2x 8.6x 20% 27% 1.4x 2.2x 178% 179% Mid Cap Median 9.8x 9.6x 48% 43% 1.9x 2.2x 155% 129% OW Approach Resources AREX 16.0x 14.0x 14% 27% 1.4x 2.0x 326% 212% OW Berry Petroleum Company BRY 7.4x 7.5x 62% 58% 2.7x 2.4x 132% 101% N Carrizo Oil & Gas CRZO 6.4x 7.6x 63% 61% 3.4x 3.0x 354% 164% OW Goodrich Petroleum GDP 3.7x 4.6x 77% 76% 3.0x 2.6x 148% 128% N Halcón Resources HK 2.4x 5.3x 44% 44% 15.0x 2.0x 623% 145% OW Laredo Petroleum LPI 5.1x 5.0x 59% 62% 2.7x 2.9x 244% 175% OW Penn Virginia Corp. PVA 4.0x 3.9x 47% 52% 3.0x 3.2x 157% 164% OW PDC Energy PDCE 3.9x 5.0x 45% 49% 3.4x 3.1x 244% 179% OW PetroQuest Energy PQ 9.3x 15.5x 50% 40% 1.8x 0.9x 136% 84% N Swift Energy SFY 6.1x 6.7x 45% 47% 2.5x 2.2x 227% 134% Small Cap Median 5.6x 6.0x 48% 51% 2.8x 2.5x 235% 155% Group Median 9.7x 9.6x 45% 44% 2.0x 2.1x 156% 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 * RRC, CLR, PXD, SWN, SD, CIE, APC, WLL, SM, CXO, APA, UPL, EQT, NFX, CHK, DVN, XEC and COG YE12 are actual, not estimated. 11

12 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 59.0% $ % $ % $ % N Apache Corporation APA 2.1% $ % $ % $ % $74.50 N Chesapeake Energy CHK 63.2% $ % $ % $ % $93.63 N Devon Energy DVN 68.5% $ % $ % $ % $91.47 OW EOG Resources EOG 11.3% $ % $ % 0.0% OW Noble Energy NBL 20.0% $ % $ % $ % $98.18 OW Southwestern Energy SWN 29.3% $ % 2.6% $ % Large Cap Median 29.3% $ % $ % $ % $92.55 OW Cabot Oil & Gas COG 66.1% $ % $ % $ % OW Cimarex Energy XEC 13.9% $ % $ % $ % OW Cobalt International Energy CIE 0.0% 0.0% 0.0% 0.0% N Concho Resources CXO 0.0% 68.1% $ % 40.5% $91.57 OW Continental Resources CLR 18.3% $ % $ % 53.4% $99.93 OW Denbury Resources DNR 0.0% 71.7% $ % 30.3% $90.00 OW EQT Corporation EQT 60.2% $ % 31.5% $ % N EXCO Resources XCO 29.1% $ % $ % $ % $ OW Newfield Exploration NFX 80.8% $ % $ % $ % $92.54 OW Pioneer Natural Resources PXD 79.5% $ % $ % $ % $93.70 N QEP Resources QEP 47.6% $ % $ % $ % $92.72 NR Quicksilver Resources KWK 66.1% $ % 39.1% $ % OW Range Resources RRC 69.0% $ % $ % $ % $93.41 UW SandRidge Energy SD 6.2% $ % $ % $ % $91.27 N SM Energy SM 30.1% $ % $ % $ % $90.68 N Ultra Petroleum Corp UPL 36.2% $ % 0.0% 0.0% OW Whiting Petroleum WLL 15.6% $ % $ % $ % $90.00 N WPX Energy WPX 0.4% $ % $ % 0.0% Mid Cap Median 29.6% $ % $ % $ % $92.54 OW Approach Resources AREX 69.9% $ % $ % 8.6% $90.00 OW Berry Petroleum Company BRY 20.8% $ % $ % 21.6% $94.27 N Carrizo Oil & Gas CRZO 30.0% $ % $ % $ % $90.00 OW Goodrich Petroleum GDP 0.0% 23.2% $ % $ % $ N Halcón Resources HK 15.6% $ % $ % $ % $90.26 OW Laredo Petroleum LPI 61.8% $ % $ % $ % $91.84 OW Penn Virginia Corp. PVA 0.0% 46.9% $ % 23.0% $68.51 OW PDC Energy PDCE 96.0% $ % $ % $ % $ OW PetroQuest Energy PQ 12.2% $ % 0.0% 0.0% N Swift Energy SFY 0.0% 2.7% $ % 0.0% Small Cap Median 18.2% $ % $ % $ % $91.05 Group Median 29.1% $ % $ % $ % $91.84 Total (Production Weighted) 41.4% $ % $ % $ % $88.22 *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. 12

13 U.S. E&Ps - MARGINS 2013E 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 $8.10 ($1.94) ($0.67) $5.49 ($3.22) $0.21 $2.48 N Apache Corporation APA $9.81 ($2.42) ($0.31) $7.08 ($3.42) $0.03 $3.68 N Chesapeake Energy CHK $4.59 ($1.03) ($0.38) $3.18 ($1.76) $0.15 $1.57 N Devon Energy DVN $5.43 ($1.81) ($0.46) $3.15 ($1.98) $0.28 $1.45 OW EOG Resources EOG $8.81 ($2.56) ($0.36) $5.89 ($3.66) $0.38 $2.61 OW Noble Energy NBL $8.16 ($1.39) ($0.72) $6.05 ($3.58) $0.08 $2.55 OW Southwestern Energy SWN $3.03 ($0.97) ($0.27) $1.79 ($1.29) $0.45 $0.96 Large Cap Median $8.10 ($1.81) ($0.38) $5.49 ($3.22) $0.21 $2.48 OW Cabot Oil & Gas COG $4.13 ($1.06) ($0.24) $2.83 ($1.70) $0.14 $1.27 OW Cimarex Energy XEC $7.25 ($1.96) ($0.29) $5.00 ($2.44) $0.04 $2.60 OW Cobalt International Energy CIE NA NA NA NA NA NA NA N Concho Resources CXO $11.02 ($2.15) ($0.80) $8.07 ($3.84) $0.31 $4.54 OW Continental Resources CLR $11.49 ($1.94) ($0.57) $8.97 ($3.49) $0.43 $5.91 OW Denbury Resources DNR $14.31 ($5.26) ($1.03) $8.01 ($3.32) $0.00 $4.70 OW EQT Corporation EQT $2.80 ($0.32) ($0.28) $2.21 ($1.62) $0.61 $1.20 N EXCO Resources XCO $4.45 ($1.35) ($0.51) $2.58 ($1.57) $0.06 $1.07 OW Newfield Exploration NFX $8.75 ($3.13) ($0.68) $4.95 ($3.91) $0.40 $1.43 OW Pioneer Natural Resources PXD $8.50 ($2.44) ($0.70) $5.36 ($2.73) $0.59 $3.23 N QEP Resources QEP $5.33 ($1.80) ($0.42) $3.11 ($3.06) $0.71 $0.77 NR Quicksilver Resources KWK $4.67 ($2.25) ($0.58) $1.85 ($1.37) $0.70 $1.18 OW Range Resources RRC $4.63 ($1.27) ($0.52) $2.83 ($1.65) $0.51 $1.69 UW SandRidge Energy SD $8.11 ($2.71) ($0.86) $4.54 ($2.82) $0.50 $2.22 N SM Energy SM $7.42 ($1.99) ($0.54) $4.90 ($3.76) $0.07 $1.20 N Ultra Petroleum Corp UPL $3.72 ($1.22) ($0.11) $2.39 ($1.08) $0.15 $1.45 OW Whiting Petroleum WLL $12.00 ($3.07) ($0.52) $8.41 ($4.77) ($0.02) $3.62 N WPX Energy WPX $4.10 ($1.65) ($0.59) $1.87 ($2.10) $0.11 ($0.13) Mid Cap Median $7.25 ($1.96) ($0.54) $4.54 ($2.73) $0.31 $1.45 OW Approach Resources AREX $8.30 ($1.68) ($1.42) $5.21 ($3.82) $0.09 $1.48 OW Berry Petroleum Company BRY $12.43 ($3.79) ($0.92) $7.72 ($3.16) $0.01 $4.57 N Carrizo Oil & Gas CRZO $7.29 ($0.95) ($0.78) $5.56 ($3.42) $0.33 $2.47 OW Goodrich Petroleum GDP $9.70 ($1.73) ($0.81) $7.16 ($4.44) ($0.04) $2.67 N Halcón Resources HK $12.20 ($2.18) ($0.76) $9.25 ($3.68) $0.07 $5.65 OW Laredo Petroleum LPI $8.88 ($1.59) ($0.94) $6.36 ($3.70) $0.30 $2.96 OW Penn Virginia Corp. PVA $11.11 ($1.69) ($1.36) $8.06 ($5.86) ($0.87) $1.33 OW PDC Energy PDCE $7.58 ($2.15) ($1.05) $4.38 ($2.97) $0.34 $1.75 OW PetroQuest Energy PQ $5.71 ($1.30) ($0.58) $3.83 ($1.73) ($0.01) $2.08 N Swift Energy SFY $8.81 ($2.34) ($0.73) $5.73 ($3.50) $0.00 $2.23 Small Cap Median $8.84 ($1.71) ($0.87) $6.05 ($3.59) $0.04 $2.35 Group Median $8.11 ($1.88) ($0.59) $5.10 ($3.19) $0.15 $2.15 Source: Company reports and J.P. Morgan estimates 13

14 U.S. E&Ps - MARKET CAP & ENTERPRISE VALUE DILUTED MARKET ADJUSTED ENTERPRISE SHORT SHARES CAP NET DEBT VALUE DIVIDEND INTEREST RATING COMPANY TICKER (MM) ($MM) ($MM) ($MM) YIELD % OF FLOAT N Anadarko Petroleum APC 501 $43,854 $9,928 $53, % 1.9% N Apache Corporation APA 400 $34,065 $12,185 $46, % 2.0% N Chesapeake Energy CHK 758 $15,918 $13,416 $29, % 11.8% N Devon Energy DVN 407 $22,401 $6,877 $29, % 2.1% OW EOG Resources EOG 274 $36,518 $5,436 $41, % 1.5% OW Noble Energy NBL 362 $21,119 $2,130 $23, % 1.7% OW Southwestern Energy SWN 351 $12,977 $1,615 $14, % 2.7% Large Cap Total $186,852 $51,586 $238,438 OW Cabot Oil & Gas COG 212 $14,932 $981 $15, % 1.6% OW Cimarex Energy XEC 87 $6,211 $851 $7, % 2.9% OW Cobalt International Energy CIE 411 $10,578 ($435) $10, % 3.7% N Concho Resources CXO 105 $9,154 $3,098 $12, % 1.9% OW Continental Resources CLR 186 $16,308 $3,504 $19, % 8.4% OW Denbury Resources DNR 391 $7,107 $3,051 $10, % 4.3% OW EQT Corporation EQT 151 $12,097 $2,345 $14, % 2.3% N EXCO Resources XCO 214 $1,653 $1,735 $3, % 18.1% OW Newfield Exploration NFX 135 $3,082 $3,001 $6, % 6.5% OW Pioneer Natural Resources PXD 137 $20,192 $3,492 $23, % 4.5% N QEP Resources QEP 178 $5,253 $3,181 $8, % 4.2% NR Quicksilver Resources KWK 170 $355 $2,056 $2, % 16.7% OW Range Resources RRC 164 $12,229 $2,747 $14, % 4.7% UW SandRidge Energy SD 581 $2,805 $3,991 $6, % 11.5% N SM Energy SM 67 $4,177 $1,434 $5, % 2.7% N Ultra Petroleum Corp UPL 153 $3,253 $1,824 $5, % 21.6% OW Whiting Petroleum WLL 119 $5,797 $1,755 $7, % 2.7% N WPX Energy WPX 199 $3,827 $1,269 $5, % 7.4% Mid Cap Total $139,013 $39,883 $178,896 OW Approach Resources AREX 39 $954 $105 $1, % 22.9% OW Berry Petroleum Company BRY 54 $2,398 $1,612 $4, % 6.4% N Carrizo Oil & Gas CRZO 40 $1,067 $979 $2, % 15.1% OW Goodrich Petroleum GDP 37 $444 $625 $1, % 22.2% N Halcón Resources HK 367 $1,959 $1,157 $3, % 18.2% OW Laredo Petroleum LPI 128 $2,556 $1,184 $3, % 13.3% OW Penn Virginia Corp. PVA 46 $223 $763 $ % 17.2% OW PDC Energy PDCE 30 $1,568 $586 $2, % 22.1% OW PetroQuest Energy PQ 62 $299 $158 $ % 5.3% N Swift Energy SFY 43 $590 $821 $1, % 15.4% Small Cap Total $12,059 $7,989 $20,048 Group Total $337,924 $99,458 $437,382 Source: J.P. Morgan, Bloomberg and company reports. Negative Net Debt reflects working capital greater than the debt requirements of a company. Dividend yield is based on projected rather than historical dividends. 14

15 U.S. E&Ps - STOCK PERFORMANCE LAST PRICE RETURN SINCE ANNUAL RETURN RATING COMPANY TICKER 6/13/2013 6/6 5/14 YE N Anadarko Petroleum APC $ % -1.5% 17.7% -2.6% 0% 22% 62% -41% N Apache Corporation APA $ % 2.5% 8.4% -13% -24% 16% 38% -31% N Chesapeake Energy CHK $ % 1.2% 26.4% -25% -14% 0% 60% -59% N Devon Energy DVN $ % -7.4% 5.8% -16% -21% 7% 12% -26% OW EOG Resources EOG $ % -2.4% 10.4% 23% 8% -6% 46% -25% OW Noble Energy NBL $ % -0.8% 14.7% 8% 10% 21% 45% -38% OW Southwestern Energy SWN $ % -1.2% 10.6% 5% -15% -22% 66% 4% Large Cap Median -0.3% -1.2% 10.6% -2.6% -14.0% 6.8% 46.1% -30.7% OW Cabot Oil & Gas COG $ % 3.0% 41.9% 31% 101% -13% 68% -36% OW Cimarex Energy XEC $ % 1.2% 24.3% -7% -30% 67% 98% -37% OW Cobalt International Energy CIE $ % -4.6% 4.9% 58% 27% -12% NA NA N Concho Resources CXO $ % 5.4% 7.9% -14% 7% 95% 97% 11% OW Continental Resources CLR $ % 4.1% 19.1% 10% 13% 37% 107% -21% OW Denbury Resources DNR $ % -0.8% 12.2% 7% -21% 29% 36% -63% OW EQT Corporation EQT $ % 4.6% 35.7% 8% 22% 2% 31% -37% N EXCO Resources XCO $ % -2.2% 14.0% -35% -46% -9% 134% -41% OW Newfield Exploration NFX $ % -4.0% -14.7% -29% -48% 50% 144% -63% OW Pioneer Natural Resources PXD $ % 5.0% 37.9% 19% 3% 80% 198% -67% N QEP Resources QEP $ % 0.2% -2.4% 3% -19% NA NA NA NR Quicksilver Resources KWK $ % -12.6% -26.9% -57% -54% -2% 169% -81% OW Range Resources RRC $ % -1.5% 19.0% 1% 38% -10% 45% -33% UW SandRidge Energy SD $ % -6.9% -23.9% -22% 11% -22% 53% -83% N SM Energy SM $ % 0.5% 19.4% -29% 24% 72% 69% -47% N Ultra Petroleum Corp UPL $ % -0.7% 17.3% -39% -38% -4% 44% -52% OW Whiting Petroleum WLL $ % 5.2% 12.3% -7% -20% 64% 114% -42% N WPX Energy WPX $ % 6.5% 29.2% -18% NA NA NA NA Mid Cap Median 0.1% 0.4% 15.7% -6.9% 3.1% 15.5% 96.8% -42.0% OW Approach Resources AREX $ % -9.4% -1.0% -15% 27% 199% 6% -43% OW Berry Petroleum Company BRY $ % -2.1% 31.2% -20% -4% 50% 286% -83% N Carrizo Oil & Gas CRZO $ % -3.1% 27.4% -21% -24% 30% 65% -71% OW Goodrich Petroleum GDP $ % -10.1% 30.3% -32% -22% -28% -19% 32% N Halcón Resources HK $ % -17.0% -22.8% NA NA NA NA NA OW Laredo Petroleum LPI $ % 15.7% 9.7% -19% NA NA NA NA OW Penn Virginia Corp. PVA $ % 3.2% 9.8% -17% -69% -21% -18% -40% OW PDC Energy PDCE $ % 4.7% 56.9% -5% -17% 132% -24% -59% OW PetroQuest Energy PQ $ % 0.0% -3.0% -25% -12% 23% -9% -53% N Swift Energy SFY $ % 2.9% -10.7% -48% -24% 63% 43% -62% Small Cap Median 1.5% -1.1% 9.7% -20.2% -19.5% 40.0% -1.9% -56.0% Group Median 0.3% -0.7% 12.3% -14.5% -14.3% 20.9% 56.7% -41.7% Commodities Spot Gas ($/MMBtu) (NGUSHHUB % -5.2% 8.7% 15% -29% -27% 3% -24% Spot Oil ($/bbl) (USCRWTIC % 2.6% 5.3% -7% 8% 15% 78% -54% Indices EPX - U.S. E&P Index ^EPX % -1.3% 8.9% -8% -10% 22% 61% -45% OSX - Oil Service Index ^OSX % -2.0% 15.8% 2% -12% 26% 61% -60% S&P500 ^SPX 1, % -0.8% 14.7% 13% 0% 13% 23% -38% DJIA IQ , % -0.3% 15.8% 7% 6% 11% 19% -34% NASDAQ Comp ^COMP 3, % -0.5% 14.1% 16% -2% 17% 44% -41% Russell 2000 ^RUT % 0.4% 16.5% 15% -5% 25% 25% -35% Source: Company reports, Bloomberg, and J.P. Morgan estimates. HK - Former symbol for Petrohawk. Performance only relevant from February 2012 onward. 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 WLL EOG COG BRY LPI COG NBL NFX CLR WPX GDP DNR WPX SFY DNR CIE PVA PQ SWN SD CXO APA SWN SD PXD NBL QEP AREX WLL CHK APC DVN PDCE HK NFX UPL PXD XEC RRC AREX KWK RRC APA CHK PDCE SM BRY GDP LPI APC CXO XCO EQT QEP XCO KWK CRZO SM XEC SFY CLR PQ EOG HK EQT CIE DVN PVA UPL CRZO 3.3% 1.3% -0.6% -2.4% Stock P(x) Performance 5.0% 1.2% -1.5% -8.4% $2,556 $10,578 $9,154 $2,601 Current Market Cap $5,797 $5,253 $12,229 $2, Beta % 53% 57% 37% % Natural Gas (2013E) 38% 68% 55% 49% RLI (2012E) % 118% 109% 117% Reinvestment Rate (2013E) 146% 121% 114% 153% $5.56 $4.90 $4.95 $6.13 Cash Margins (2013E) $6.36 $3.83 $5.56 $ % 20% 29% 25% % Gas Hedged (2013E) 18% 30% 29% 64% $3.48 $2.69 $3.68 $3.54 PD F&D (2011A) $3.77 $3.68 $3.06 $ % 36% 50% 77% % Proved NAV/Total NAV (2012E) 50% 44% 43% 39% 49% 51% 59% 51% % Proved Developed (2011A) 55% 59% 53% 46% 7.6x 12.9x 14.1x 7.1x EBITDA/Interest (2013E) 8.6x 15.4x 10.3x 4.8x 15% 15% 5% 5% Production Growth (2013E) 16% 10% 8% 1% 21% 13% 11% 29% Debt Adj CFPS Growth (2013E) 21% 43% 10% 11% Performance Rank - Past Three Months Performance Rank YTD Top Performers Bottom Performers Top Performers Bottom Performers Tier 1 Tier 2 Tier 3 Tier 4 Tier 1 Tier 2 Tier 3 Tier 4 EQT EOG SWN RRC PDCE XEC DNR AREX WPX PQ DVN QEP COG SM SWN QEP PXD XCO WLL CXO PXD CLR EOG PQ APA NBL NFX SD EQT RRC PVA SFY SM LPI CLR SFY BRY APC LPI NFX COG CRZO CHK GDP GDP UPL APA HK UPL PDCE BRY KWK WPX NBL CXO SD PVA DNR AREX HK CRZO XCO DVN KWK APC CIE XEC CHK WLL CIE 6% 0% -6% -15% Stock P(x) Performance 31% 18% 10% -13% $12,097 $2,556 $6,211 $2,680 Current Market Cap $3,827 $6,211 $10,578 $1, Beta % 54% 44% 57% % Natural Gas (2013E) % Natural Gas (2013E) 61% 53% 46% 49% RLI (2012E) RLI (2012E) % 116% 135% 132% Reinvestment Rate (2013E) Reinvestment Rate (2013E) 138% 121% 106% 153% $4.90 $5.56 $5.00 $5.14 Cash Margins (2013E) Cash Margins (2013E) $4.38 $5.00 $6.36 $ % 20% 29% 27% % Gas Hedged (2013E) % Gas Hedged (2013E) 60% 29% 2% 55% $2.41 $3.48 $3.82 $3.60 PD F&D (2011A) PD F&D (2011A) $3.14 $3.68 $3.77 $ % 47% 54% 48% % Proved Developed (2011A) % Proved Developed (2011A) 54% 67% 55% 52% 11.2x 7.6x 14.1x 5.2x EBITDA/Interest (2013E) EBITDA/Interest (2013E) 8.6x 13.0x 10.3x 8.1x 7% 8% 10% 8% Production Growth (2013E) Production Growth (2013E) 9% 16% 2% 7% 13% 10% 13% 30% Debt Adj CFPS Growth (2013E) Debt Adj CFPS Growth (2013E) 27% 13% 10% 38% Source: Company reports, Bloomberg, and J.P. Morgan estimates 16

17 Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. Important Disclosures Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan covered companies by visiting calling , or ing with your request. J.P. Morgan s Strategy, Technical, and Quantitative Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call or research.disclosure.inquiries@jpmorgan.com. Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst s (or the analyst s team s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst s (or the analyst s team s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst s (or the analyst s team s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-australia) and U.K. small- and mid-cap equity research, each stock s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst s coverage universe can be found on J.P. Morgan s research website, Coverage Universe: Allman, Joseph D: Anadarko Petroleum (APC), Apache Corporation (APA), Approach Resources (AREX), Berry Petroleum (BRY), Cabot Oil & Gas (COG), Carrizo Oil & Gas Inc. (CRZO), Chesapeake Energy (CHK), Cimarex Energy Co. (XEC), Cobalt International Energy (CIE), Concho Resources, Inc. (CXO), Continental Resources, Inc. (CLR), Denbury Resources Inc. (DNR), Devon Energy (DVN), EOG Resources, Inc. (EOG), EQT Corporation (EQT), EXCO Resources, Inc. (XCO), Goodrich Petroleum (GDP), Halcón Resources Corporation (HK), Laredo Petroleum (LPI), Newfield Exploration Company (NFX), Noble Energy (NBL), PDC Energy (PDCE), Penn Virginia Corporation (PVA), PetroQuest Energy, Inc. (PQ), Pioneer Natural Resources (PXD), QEP Resources (QEP), Quicksilver Resources Inc (KWK), Range Resources Corp (RRC), SM Energy (SM), SandRidge Energy Inc. (SD), Southwestern Energy Company (SWN), Swift Energy Company (SFY), Ultra Petroleum Corp (UPL), WPX Energy (WPX), Whiting Petroleum Corporation (WLL) J.P. Morgan Equity Research Ratings Distribution, as of March 30, 2013 Overweight (buy) Neutral (hold) Underweight (sell) J.P. Morgan Global Equity Research Coverage 43% 44% 13% IB clients* 54% 47% 38% JPMS Equity Research Coverage 42% 50% 9% IB clients* 74% 64% 57% *Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above. Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered companies, please see the most recent company-specific research report at contact the primary analyst or your J.P. Morgan representative, or research.disclosure.inquiries@jpmorgan.com. Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues. Other Disclosures 17