S&P 500 Energy Sector

Luke DiTomas

Alex Foisel

Ian McLeod

March 3, 2009

Review of Sector Presentation Proposal BP Pengrowth Energy Trust Transocean Technical Analysis Summary

Agenda

Sector Presentation Review Current SIM Weight: 8.05% Current S&P 500 Weight: 14.09% Currently underweight 604 basis points Underweight the sector by 209 basis

points relative to the S&P 500 An increase in current SIM Weight of

3.95%

Why not underweight more? Energy prices near bottom Valuation looks very cheap Increase in global energy demand

Why not overweight? Short-term demand for oil could further

contract Recession could extend longer than

expected

Consumer Discretionary, 8.19%

Consumer Staples, 12.85%

Energy, 14.09%

Financials, 10.72%Health Care,

15.94%

Industrials, 10.62%

Information Technology, 16.22%

Materials, 3.04%

Telecommunication Services, 3.72%

Utilities, 4.61%

S&P 500 Weight

Consumer Discretionary, 9.67%

Consumer Staples, 14.22%

Energy, 8.05%

Financials, 9.59%Health Care, 21.50%

Industrials, 8.27%

Information Technology, 18.97%

Materials, 1.79%

Telecommunication Services, 2.19%

Utilities, 2.89%

SIM Weight

Review

Class voted to increase energy sector portfolio weight by 395 bp

Current Energy Holdings

Company Market Value Current Portfolio Weight

ConocoPhillips $459,405 381 bp

BP $502,516 416 bp

Total $961,921 797 bp

Review

Regression: Crude Oil Prices and Energy Sector

Review

Proposal

Company BUY SELL HOLD Resulting Portfolio Weight

ConocoPhillips

0 bp 0 bp 381 bp 381 bp

BP 170 bp 0 bp 416 bp 586 bp

Pengrowth 75 bp 0 bp 0 bp 75 bp

Transocean 150 bp 0 bp 0 bp 150 bp

Total 395 bp 0 bp 797 bp 1192 bp

Proposal

British Petroleum- BP BP plc, also known as British Petroleum, is the second largest

publicly traded oil company and fourth largest U.S. refiner. Headquartered in London, England, they operate in three different business segments:

Exploration and Production Upstream Activities: Include oil and natural gas exploration and field development

and production Midstream Activities: Include the management of crude oil and natural gas

pipelines, processing and export terminals and LNG processing facilities

Refining and Marketing Responsible for the supply and trading, refining, marketing and transportation of

crude oil and petroleum products to wholesale and retail customers BP markets its products in more than 100 countries

Other BP Alternative Energy: Segment has already had substantial businesses in solar

photovoltaic, wind and gas-fired power and is developing projects in advanced biofuels and carbon capture and storage as well as new areas such as concentrated solar thermal power

BP

Business Analysis: BP Upsides

Dividend yield- 8.78%- $3.36 per share Intends to distribute more money to shareholders through dividends rather than

share repurchases Slight GDP growth means an increase in demand for petroleum based products

.93 correlation between GDP growth and demand for petroleum based products BP is expected to intensify its reserve acquisitions because of depressed asset

values and tight credit Balance sheet is very strong and can support growth through acquisitions

BP’s balance sheet is strong enough to withstand oil at $40-$50/bbl oil for 2-3 years

Reserve replenishment ratio- 15th straight year the ratio was >100% When oil prices are low, supply begins to contract, mature projects loose marginal

CAPEX meaning new growth is postponed, and EOR investments are cut Year-end reserves were: 18.2 billion barrels and a resource base of 43.4 billion

barrels BP’s combined reserved and non-proved resources were sufficient for 43 years of

production at the same rates as last year

2008 2007 2006 2005 2004EBIT $35,239 $32,352 $35,158 $32,682 $25,746Interest Expense $1,547 $1,393 $986 $874 $768Interest Coverage 22.78 23.22 35.66 37.39 33.52

BP

Business Analysis: BP Cont. Upsides Cont.

US auto industry is bailed out or nationalized Low crude oil prices provide an opportunity to launch another wave of

cost cutting and trim CAPEX- potential margin expansion in 2009 & 2010

Downsides Russia is currently experiencing policy change by the government and

may cause production to fall up to 10% or 1MBD BP’s joint venture, TNK-BP may see production fall Revenue was just under $35 billion in 2008 Reserve replacement was 146% for 2008

Obama administration proposed raising at least $31.5 billion over 10 years from the oil sector as part of a fiscal 2010 budget proposal

Tax benefits may be revoked which gave incentives to US refiners for hiring US workers

Crude oil prices continue to fall to $20-$30/bbl and remain there through 2009

Given the before mentioned correlation of the energy sector vs. oil prices

BP

DuPont Analysis BP is currently outperforming both the industry and market when

examining ROE Decrease in ROE can be attributed to large-scale projects which are only profitable

when oil is above $70/barrel

BP- 2008 Industry Median- 2008 Market Median- 2008 BP- 2007 BP- 2006ROE 23.5% 20.4% 6.5% 22.37% 26.08%ROA 9.3% 9.0% 0.5% 8.97% 10.24%Profit Margin 7.4% 3.4% 2.1% 7.33% 8.24%Asset Turnover 1.30x 1.90x 0.60x 1.24x 1.30xEquity Muitiplier 2.52x NA NA 2.49x 2.55x

BP

DCF Valuation- V1 The implied equity value per share is $58.02, an upside of 51.26%

($ in million) ForecastYear 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E

Revenue 365,700 281,884 293,191 301,606 310,714 320,564 331,206 342,699 355,105 368,493 382,937 % Growth -22.92% 4.01% 2.87% 3.02% 3.17% 3.32% 3.47% 3.62% 3.77% 3.92%

Operating Income 35,239 26,107 27,509 28,291 29,145 30,069 31,067 32,145 33,309 34,565 35,920 Operating Margin 9.64% 9.26% 9.38% 9.38% 9.38% 9.38% 9.38% 9.38% 9.38% 9.38% 9.38%

Interest Expense and Income 956 141 - 90 93 96 99 103 107 111 115 Interest (net) % of Sales 0.26% 0.05% 0.00% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03%

Taxes 12,617 8,569 9,078 9,306 9,587 9,891 10,219 10,574 10,957 11,370 11,816 Tax Rate 33.0% 33.0% 33.0% 33.0% 33.0% 33.0% 33.0% 33.0% 33.0% 33.0% 33.0%Minority Interest 509 373 472 562 668 795 947 1,126 1,340 1,595 1,898

Net Income 17,397 18,431 19,744 19,456 20,133 20,877 21,695 22,595 23,586 24,679 25,887 % Growth 6% 7% -1% 3% 4% 4% 4% 4% 5% 5%

Add Depreciation, Depletion and Amortization 10,985 10,317 11,265 12,138 13,071 14,069 15,139 16,289 17,526 18,858 20,295 % of Sales 3.00% 3.66% 3.84% 4.02% 4.21% 4.39% 4.57% 4.75% 4.94% 5.12% 5.30%Plus/(minus) Changes WC (15,683) 17,373 9,177 (1,056) (1,087) (1,122) (1,159) (1,199) (1,243) (1,290) (1,340) % of Sales -4.29% 6.16% 3.13% -0.35% -0.35% -0.35% -0.35% -0.35% -0.35% -0.35% -0.35%Subtract Cap Ex 26,074 20,098 20,905 21,504 22,154 22,856 23,615 24,434 25,319 26,274 27,303 Capex % of sales 7.13% 7.13% 7.13% 7.13% 7.13% 7.13% 7.13% 7.13% 7.13% 7.13% 7.13%

Free Cash Flow (13,375) 26,023 19,282 9,033 9,962 10,968 12,060 13,250 14,550 15,974 17,538 YOY growth -295% -26% -53% 10% 10% 10% 10% 10% 10% 10%

Shares Outstanding 3,119.4 Terminal Discount Rate = 11.0%Terminal Value 257,428 Terminal FCF Growth = 3.92%NPV of free cash flows 90,335 50% Current Price 38.36$ Terminal 257,428.1 NPV of terminal value 90,662 50% P/E 9.9 Projected Equity Value 180,997 Implied equity value/share 58.02$ EV/EBITDA 5.02 Free Cash Flow Yield -7.39% Free Cash Yield 6.81%

Upside/(Downside) to DCF 51.26%

*Stock Price as of February 29, 2009 close

BP

DCF Valuation- V2 The implied equity value per share is $50.81, an upside of 32.46%

($ in million) Forecast TerminalYear 2008 2009E 2010E 2011E 2012E 2013E Value

Revenue 365,700 292,955 300,808 308,598 321,872 323,686 Terminal Discount Rate = 13.0% % Growth -19.89% 2.68% 2.59% 4.30% 0.56% Terminal FCF Growth = 3.92%

Terminal 264,831.7 EBITDA 52,575 54,152 56,995 60,985 66,474 72,988 P/E 12.0 Growth 41.00% 3.00% 5.25% 7.00% 9.00% 9.80% EV/EBITDA 5.22 Margin 14.38% 18.48% 18.95% 19.76% 20.65% 22.55% Free Cash Yield 8.74%

Operating Income 35,239 28,710 29,479 30,243 31,543 31,721 Operating Margin 9.64% 9.80% 9.80% 9.80% 9.80% 9.80%

Enterprise Vaule 148,494 178,702 216,582 256,137 305,778 372,239EV/EBITDA 2.8x 3.3x 3.8x 4.2x 4.6x 5.1x Terminal Value 264,832 EV/Revenue 0.41x 0.61x 0.72x 0.83x 0.95x 1.15x NPV of free cash flows 80,488 51%

NPV of terminal value 78,016 49%Net Income 21,666 20,038 20,575 21,108 22,016 22,140 Projected Equity Value 158,505 Margin 5.92% 6.84% 6.84% 6.84% 6.84% 6.84% Free Cash Flow Yield -5.75%

EPS $8.17 $5.74 $6.30 Shares Outstanding 3,119.4 Analyst Estimates $4.37 $5.97

Current Price 38.36$ Add Depreciation, Depletion and Amortization 10,985 10,722 11,558 12,419 13,540 14,206 % of Sales 3.00% 3.66% 3.84% 4.02% 4.21% 4.39% Implied equity value/share 50.81$ Plus/(minus) Changes WC (15,683) 17,373 9,177 9,412 9,817 9,872 % of Sales -4.29% 5.93% 3.05% 3.05% 3.05% 3.05% Upside/(Downside) to DCF 32.46%Subtract Cap Ex 26,074 20,888 21,448 22,003 22,949 23,079 Capex % of sales 7.13% 7.13% 7.13% 7.13% 7.13% 7.13%

Cash 8,197 Free Cash Flow (9,106) 27,246 19,862 20,937 22,424 23,140 Debt 33,205 YOY growth -399% -27% 5% 7% 3%

EV/FCF -16.31x 6.56x 10.90x 12.23x 13.64x 16.09x

*Stock Price as of February 29, 2009 close

BP

The implied equity value per share is $64.67 Target multiples are 90% of 10-year mean values When compared to it sector and the market, BP is currently undervalued in nearly

all multiple calculations

Multiples Valuation

Your Target Price (F x G)

A. B. C. D. E. F. G. H.P/Forward E 30.1 8.2 11.5 9.2 10.35 4.17 $43.16 P/S 3.0 0.3 1.0 0.3 0.93 112.82 $104.59 P/B 5.5 1.2 2.7 1.3 2.43 29.51 $71.70 P/EBITDA 18.6 2.2 6.4 2.5 5.76 15.34 $88.38 P/CF 22.6 3.4 8.5 4.1 7.65 9.36 $71.57 P/E/G ratio 3.0 0.7 1.8 1.8 1.62 21.31 $34.52 ROE 30.1 9.0 20.0 19.8 20.00 1.94 $38.75

*Your Target E, S, B, etc/Share

Absolute Valuation

High Low Mean Current #Your Target Multiple

Stock vs. Sector Valuation

High Low Mean Current

P/Forward E 1.21 0.69 0.98 0.75P/S 1.84 0.51 0.97 0.6P/B 1.6 0.67 0.98 0.86P/EBITDA 1.66 0.69 1.11 0.75P/CF 1.38 0.67 0.96 0.89P/E/G ratio 2.61 0.68 1.23 1.37ROE 1.44 0.83 1.04 0.83

Stock vs. S&P500 Valuation

High Low Mean Current

P/Forward E 1.14 0.42 0.63 0.75P/S 1.32 0.39 0.64 0.49P/B 1.10 0.43 0.83 0.82P/EBITDA 1.70 0.41 0.75 0.50P/CF 1.34 0.45 0.68 0.62P/E/G ratio 2.22 0.54 1.30 1.58ROE 1.72 0.50 1.19 1.37

BP

12-Month Price Target Calculation 12-month price target calculated based on a weighted

average of: DCF v1: 20% DCF v2: 20% P/Forward EPS: 20% ROE: 20%

BP plans to start at least 29 different projects in 2009, all with different hurdle rates of average crude oil prices

P/EBITDA: 20% Both DCF models are trying to find the equity value of BP

12-Month Price Target: $55.82- 45.52% Upside

*Upside Calculated Based off February 29, 2009 close

BP

Business Analysis: PGH One of North America's largest

energy royalty trusts that acquires and manages working interests and royalty interests in oil and natural gas properties

The Trust owns all of the royalty units and 91% of the common shares of the Corporation

Employs over 600 people who support its operations and activities

Sector: Energy Industry: Oil and Gas

Equipment and Services

Current Price $4.87 52-Week High $21.90 52-Week Low $4.87

Market Cap $1.24B Beta 1.09 P/E 6.31

Average Volume 1,476,130 Shares Outstanding 254.94M

Pengrowth Energy Trust

Business Analysis: PGH Upsides

Longer term trade Growth through combination of

cheap acquisitions and organic development

Strong track record of meeting guidance estimates Recorded better than expected

EPS numbers for Q408 and Full-Year 2008

Generates reasonably big monthly payouts to investors

Revenue is easily quantifiable through stable and predictable production levels unlike traditional E&P companies

Expansion of oil exploration and drilling will continue even if the price of oil does not increase further

Not highly correlated with the price of oil approximately .51

Downsides Canadian government proposal to

tax energy trusts could hurt future cash flows

Possibly more cuts to their cash distributions (dividend payments)

Recession and cash strapped economy could extend longer than expected

Unattractive technical analysis Near 52-week low Broke through key support level

Pengrowth Energy Trust

Financial Analysis: PGH RECOMMENDATION = Buy 75bp Current Price: $4.87 Yield: 0.96 (17.00%) Target Value by DCF: $10.97 Potential Upside: 125.18%

Terminal Value 1,935,954$ NPV of free cash flows 1,982,962$ NPV of terminal value 681,813$ Projected Equity Value 2,664,775$ Free Cash Flow Yield 12.70%

Shares Outstanding 243,000.5

Current Price 4.87$

Implied equity value/share 10.97$

Upside/(Downside) to DCF 125.18%

Cash - Debt 6,182

Pengrowth Energy Trust

Valuation Analysis: PGH The current price related

ratios are all below the mean estimates and all have created new lows

Pengrowth GRE: 22.0% S&P 500 and SP-10 GRE:

10.0%

Pengrowth Energy Trust

Valuation Analysis: PGH Revenues numbers

continue to be very strong amidst this economic downturn

ROE hit a bottom in mid-08 and is starting to show strength as it is starting to revert back to its mean

Pengrowth Energy Trust

Transocean (RIG) The world’s largest offshore drilling

contractor, provides the most versatile fleet of mobile offshore drilling units to help clients find and develop oil and natural gas reserves

Operates 139 rigs with a presence in every major offshore market

Planning on building 10 new ultra-deepwater units

Employees approximately 21,200 employees with operations around the world

Sector: Energy Industry: Oil and Gas Drilling

& Exploration

Current Price $54.98 52-Week High $163.00 52-Week Low $41.95

Market Cap $17.55B Beta .65 P/E 4.20

Average Volume10,865,400

Shares Outstanding 319.26M

Transocean

The implied equity value per share is $115.56, an upside of 110%

DCF Valuation

($ in million) ForecastYear 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E

Revenue 16,476 22,243 30,028 36,033 43,240 51,023 60,208 69,239 79,625 91,568 105,303 % Growth 35.0% 35.0% 20.0% 20.0% 18.0% 18.0% 15.0% 15.0% 15.0% 15.0%

Operating Income 3,954 5,783 8,408 8,648 9,513 10,205 12,042 13,155 14,332 15,567 16,849 Operating Margin 24.0% 26.0% 28.0% 24.0% 22.0% 20.0% 20.0% 19.0% 18.0% 17.0% 16.0%

Interest - net 247 334 450 473 497 521 547 575 604 634 665 Interest % of Sales 1.5% 1.5% 1.5% 1.3% 1.1% 1.0% 0.9% 0.8% 0.8% 0.7% 0.6%

Taxes 556 872 1,353 1,226 1,352 1,549 1,839 2,013 2,334 2,539 2,751 Tax Rate 15.0% 15.0% 15.0% 15.0% 15.0% 16.0% 16.0% 16.0% 17.0% 17.0% 17.0%Minority Interest

Net Income 3,151 4,578 6,605 6,949 7,664 8,134 9,655 10,568 11,395 12,394 13,432 % Growth 45% 44% 5% 10% 6% 19% 9% 8% 9% 8%

Add Depreciation/Amort 1,500 2,002 2,703 3,243 3,892 4,592 5,419 6,231 7,166 8,241 9,477 % of Sales 9.1% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0%Plus/(minus) Changes WC 240 (750) (1,012) (721) (865) (1,020) (1,204) (1,385) (1,592) (1,831) (2,106) % of Sales 1% -3% -3% -2.0% -2.0% -2.0% -2.0% -2.0% -2.0% -2.0% -2.0%Subtract Cap Ex 2,200 2,400 4,804 5,765 6,918 8,164 9,633 11,078 12,740 14,651 16,849 Capex % of sales 13.4% 10.8% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% 16.0%

Free Cash Flow 2,691 3,430 3,491 3,706 3,772 3,542 4,236 4,336 4,229 4,153 3,955 YOY growth 27.4% 1.8% 6.2% 1.8% -6.1% 19.6% 2.4% -2.5% -1.8% -4.8%

Terminal 50,916.04Terminal Value 50,916 Shares Outstanding 320 P/E 3.79NPV of free cash flows 22,424 61% EV/EBITDA 2.44xNPV of terminal value 14,554 39% Current Price 54.98$ Free Cash Yield 7.77%Projected Equity Value 36,978 Free Cash Flow Yield 7% Implied equity value/share 115.56$

Upside/(Downside) to DCF 110%

The implied equity value per share is $139.57 Target multiples are 90% of 5-year mean values

Multiples Valuation

Your Target Price (F x G)

A. B. C. D. E. F. G. H.P/Forward E 93.2 3.3 10.9 4.1 13.84 9.36 $129.49 P/S 9.7 1.2 5.5 1.4 4.92 39.55 $194.72 P/B 4.2 0.9 2.7 1.1 2.43 49.98 $121.46 P/EBITDA 21.3 2.1 11.8 2.6 10.62 21.15 $224.57 P/CF 30.4 2.7 17.4 3.4 15.66 16.17 $253.23 P/E/G ratio 3.6 0.2 0.4 0.5 0.36 109.96 $39.59 ROE 30.9 1.0 8.3 29.5 7.47 1.86 $13.92

*Your Target E, S, B, etc/Share

Absolute Valuation

High Low Mean Current #Your Target Multiple

Stock vs. Sector Valuation

High Low Mean Current

P/Forward E 1.14 0.42 0.63 0.75P/S 1.32 0.39 0.64 0.49P/B 1.49 0.46 0.98 0.73P/EBITDA 1.70 0.41 0.75 0.50P/CF 1.34 0.45 0.68 0.62P/E/G ratio 1.94 0.23 0.41 0.39ROE 1.28 0.06 0.29 1.23

Stock vs. S&P500 Valuation

High Low Mean Current

P/Forward E 5.1 0.23 0.63 0.36P/S 6.31 1.46 3.62 2.11P/B 1.38 0.36 0.95 0.68P/EBITDA 2.53 0.39 1.4 0.54P/CF 2.48 0.37 1.46 0.52P/E/G ratio 2.3 0.17 0.32 0.45ROE 2.18 0.07 0.47 2.18

Transocean (RIG)Upsides High oil prices support growth

opportunities for RIG Substantial financial flexibility

from free cash flow backlog Planning a $3+ billion share

repurchase program in May 2009 About a 121% larger worldwide rig

fleet compared to closest competitor

Owns the most modern and versatile fleet of rigs in the industry

Majority of high specification fleets contracted into 2011

Downsides• Price is highly correlated with price

of commodities• Success is highly dependent on

other integrated oil and gas companies

• Political instability can lead to price fluctuations in crude oil and thus in RIG

• Weakens with strength in US Dollar

Transocean

Transocean (RIG) All current values are

well below the 5-year mean and very close to 5-year lows

Expect the values to revert back to the mean over time

Transocean

Technical Analysis: BP

Technical Analysis

Technical Analysis: RIG

Technical Analysis

Technical Analysis: PGH

Technical Analysis

Technical Analysis: COP

Technical Analysis

Buy: BP- 170 basis points Transocean- 150 basis points Pengrowth Energy Trust- 75 basis points

Hold: ConocoPhillips

Summary

Summary

Appendix: ConocoPhillips vs. BP