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U.S.

Research
Published by Raymond James & Associates

Energy
J. Marshall Adkins, (713) 789-3551, Marshall.Adkins@RaymondJames.com Collin Gerry, (713) 278-5275, Collin.Gerry@RaymondJames.com James M. Rollyson, (713) 278-5254, Jim.Rollyson@RaymondJames.com Aryan Barto, Res. Assoc., (713) 278-5243, Aryan.Barto@RaymondJames.com

June 25, 2012 Industry Brief

Energy: Stat of the Week _______________________________________________________________________________________

Rigging Down; Lowering 2012 & 2013 U.S. Rig Count Forecasts
In today’s Stat, we take a deeper look into our new rig count assumptions that drive our proprietary bottom-up production-byplay model. Recall, on April 16, we lowered our 2013 U.S. rig count forecast to a 3% average annual DECLINE (or a 10% beginning-toend-of-year decline in 2013). Following the further reduction in our oil price outlook last week, we now expect average annual onshore rig growth of only 4% in 2012 and a 13% DECLINE in 2013. In fact, we think the looming oil supply problem potentially could be so severe that WTI oil prices must fall far enough to drive the total U.S. onshore rig count down roughly 25% from now until exit 2013. Keep in mind that consensus expectations for 2013 still assume increasing drilling activity y/y. To put this into perspective, last week the total rig count reached 1,966 rigs, and we anticipate by the end of 2013 there will be roughly 1,470 active rigs.

Old vs New Rig Count Forecast
2350 2250 2150 2050
April 16 Forecast Jan 30 Forecast/Current Consensus

1950 1850 1750 1650 1550 1450
Jan 30 Forecast/Current Consensus April 16 Forecast New Forecast

New Forecast

May-12

May-13

Oct-12

Mar-12

Aug-12

Nov-12

Mar-13

Aug-13

Oct-13

Nov-13

Feb-12

Sep-12

Feb-13

Dec-11

Dec-12

Sep-13

Jan-12

Jun-12

Jan-13

Jun-13

Jul-12

Jul-13

Source: Baker Hughes; Raymond James Research

Oil Activity Starts to Slow Now; Tumbles Later We believe the oil rig count needs to drop ~300 rigs from today through exit 2013. Where are the rigs going to drop? On absolute numbers, the largest number of rigs will likely come out of the “Big 3” plays (Eagle Ford, Permian, Bakken). However, the more marginal oil plays, particularly the Midcontinent (sans the Mississippi Lime), should represent the largest percentage declines as they tend to be most cost intensive. Looking outside the 14 major basins, we suspect there should be significant decreases as these smaller, more mature reservoirs tend to have the highest breakeven points on average. While we anticipate the rig count beginning to turn over in the summer (read July 2012) as spot rigs start to rig down and as contracts are not renewed, we expect the pace to meaningfully accelerate starting in 2Q13. Overall, we expect the U.S. onshore oil rig count to fall from its current level of 1,421 rigs to roughly 1,100 rigs by the end of 2013. The charts below depict our oil rig count assumptions by basin (right) and total (left).
Please read domestic and foreign disclosure/risk information beginning on page 10 and Analyst Certification on page 10.
© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

Dec-13

Apr-12

Apr-13

Raymond James

U.S. Research

Oil Rig Count
1500 1400 1300 1200 1100 1000 900 120 100 80 60 40 20 0 -20 -40 -60 -80 -100 Eagle Ford
Source: Baker Hughes; RJ Est.

Oil Rig Growth
2011 2012 2013

Bakken

Permian

Source: Baker Hughes; RJ Est.

Granite Wash

Mississippi Lime

Other

Dry Gas Rig Count Continues to Bleed & Wet Gas Follows Oil Downward Despite the large shift out of gassy plays, there are still ~560 gas directed drilling rigs. Of these we estimate roughly one-third are drilling for “dry” gas. This component of the rig count has fallen at a dramatic pace with a >40% decrease year to date. Given the over-supplied gas market, we expect these rigs to continue to drift lower, albeit at a slower pace than we have seen thus far. By year-end 2013 we still think the dry gas rig count will fall from its current level of 182 rigs to ~100 rigs. The more important and glaring change is our expectation for decreases in the wet gas rig count. While wet gas has held up better as a result of higher oil prices, it too has taken a licking, but we don’t think it will keep on ticking. With crude oil coming down, NGL pricing should follow suit and should fall meaningfully faster as many wet gas plays are more marginally economic when compared to oil. Specifically we expect the wet gas count to fall from 359 rigs active today to roughly 270 rigs by year-end 2013. As illustrated below, the lion’s share of these rigs are dispersed in some of today’s largest plays (Eagle Ford, Marcellus, Utica, Granite Wash, etc.). Overall, we expect the U.S. gas rig count to fall about 190 rigs (or 33%) from current levels.

Gas Rig Counts
600 500 400 300 200 100 0 Wet Gas Dry Gas

Wet Gas Breakdown
June 2012

Granite Wash 14% Cana Woodford 11% Barnett 9% Marcellus 15%

Other 22%

Eagle Ford 21% Permian 8%

Source: Baker Hughes; RJ Est.

Source: Baker Hughes; RJ Est.

What Does Sub-$80 WTI Do For E&P Cash Flows? As you may suspect, our forecasted E&P cash flows will likely be coming down as we see production growth more than offset by significantly lower crude oil and NGL prices. After inserting our new price deck and adjusting for our current production forecasts given the lower rig count, E&P cash flows are expected to decline significantly both this year and in 2013. This is not surprising, however we think the proper way to view this is to look at the expectations for 2014 and 2015. With our long-term oil forecast at a reasonable $80 WTI, we suspect that the increase in production combined with the rebound in oil prices and a recovery in gas prices should leave energy companies well positioned for a 2014 and 2015 recovery. Under our forecasts, 2014 cash flows should rebound to near 2011 levels, while 2015 cash flows should be ~7% higher year over year. As such, our expectations for drilling activity follow as we suspect that the rig count should meaningfully rebound in the second half of 2014 and through 2015.

© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

2

Raymond James

U.S. Research

E&P Cash Flows Available for Drilling
$150,000 $140,000 $130,000 $120,000 $110,000

+7%

+32%
$100,000 $90,000 $80,000 2010 2011 2012E 2013E 2014E 2015E

-14% -15%

Sources: U.S. Energy Information Administration, Spears and Associates, Inc., RJ Est.

We should note that we fully recognize that looking only at E&P cash flow available for drilling to forecast drilling activity is overly simplistic. Most industry veterans would be quick to tell you that E&P companies habitually outspend cash flow. Conclusion: Our increased negativity is predicated on the belief that significantly rising U.S. oil production in the face of weaker global oil demand growth is on track to drive oil prices lower in 2013. As a result, we believe that U.S. drilling activity must eventually come down in order to rein in supply growth to help balance the market. We now believe that the 2012 rig count will average 1,944 rigs. This is down 4% from our old forecast. Perhaps more importantly, we are now expecting the 2013 rig count will average 1,693 rigs, this is down 13% from our expected 2012 average rig count assumption and down 13% from our prior forecast.

© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

3

Raymond James
To better illustrate some of our basin-by-basin assumptions:
Permian
520 510 500 490 480 470 460 450 440 430 420

U.S. Research

Marcellus
Decrease of 76 rigs or 15%
150 140 130 120 110 100 90 80 70 60

Decrease of 34 rigs or 33%

Source: Baker Hughes; RJ Research

Source: Baker Hughes; RJ Research

Eagle Ford
280 270 260 250 240 230 220

Haynesville/Bossier
Decrease of 43 rigs or 16%
120 110 100 90 80 70 60 50 40 30 20

Decrease of 29 rigs or 55%

Source: Baker Hughes; RJ Research

Source: Baker Hughes; RJ Research

Bakken
230 220 210 200 190 180 170 160

Granite Wash
Decrease of 43 rigs or 20%
90 80 70 60 50 40 30 20

Decrease of 43 rigs or 57%

Source: Baker Hughes; RJ Research

Source: Baker Hughes; RJ Research

© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

4

Raymond James
New U.S. Rig Count Forecast
Oil Gas Total Oil

U.S. Research
Q/Q Change
Gas Total Oil

YOY Change
Gas Total

Old U.S. Rig Count Forecast
Oil Gas Total Oil

Vs. Original
Gas Total

FY AVG 2007 2008 2009 2010 2011 2012E 2013E QTR AVG 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12E 3Q12E 4Q12E 1Q13E 2Q13E 3Q13E 4Q13E

297 379 278 591 984 1,346 1,257

1,466 1,491 801 943 887 595 436

1,768 1,879 1,089 1,546 1,879 1,944 1,693

28% -27% 113% 67% 37% -7%

2% -46% 18% -6% -33% -27%

6% -42% 42% 22% 3% -13%

FY AVG 2007 2008 2009 2010 2011 2012E 2013E QTR AVG 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12E 2Q12E 3Q12E 4Q12E 1Q13E 2Q13E 3Q13E 4Q13E

297 379 278 591 984 1,392 1,458

1,466 1,491 801 943 887 622 497

1,768 1,879 1,089 1,546 1,879 2,017 1,955

-3% -14%

-4% -12%

-4% -13%

279 196 270 359

-8% Source: Raymond James Estimates, Baker Hughes

450 536 631 725 808 938 1,043 1,130 1,262 1,372 1,386 1,363 1,352 1,306 1,232 1,137

1,053 729 689 738 882 957 977 952 900 880 894 874 722 595 547 518 492 460 414 378

1,344 934 970 1,108 1,345 1,506 1,618 1,688 1,716 1,826 1,944 2,010 1,990 1,972 1,932 1,882 1,844 1,766 1,646 1,515

-30% 38% 33% 25% 19% 18% 15% 11% 16% 11% 8% 12% 9% 1% -2% -1% -3% -6%

-31% -6% 7% 19% 9% 2% -3% -5% -2% 1% -2% -17% -18% -8% -5% -5% -7% -10%
-9%

-30% 4% 14% 21% 12% 7% 4% 2% 6% 6% 3% -1% -1% -2% -3% -2% -4% -7%
-8%

279 196 270 359

61% 174% 133% 102% 79% 75% 65% 56% 56% 46% 33% 21% 7% -5% -11% -17%

-16% 31% 42% 29% 2% -8% -9% -8% -20% -32% -39% -41% -32% -23% -24% -27%

0% 61% 67% 52% 28% 21% 20% 19% 16% 8% -1% -6% -7% -10% -15% -19%

450 536 631 725 808 938 1,043 1,130 1,262 1,370 1,433 1,503 1,503 1,480 1,447 1,401

1,053 729 689 738 882 957 977 952 900 880 894 874 722 598 594 574 549 518 476 446

1,344 934 970 1,108 1,345 1,506 1,618 1,688 1,716 1,826 1,944 2,010 1,990 1,973 2,028 2,078 2,052 1,998 1,923 1,847

0% -3% -9% -10% -12% -15% -19%

0% -8% -10% -10% -11% -13% -15%

0% -5% -9% -10% -12% -14% -18%

© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

5

Raymond James

U.S. Research

U.S. Rig Count Breakdown
6/22/2012 Total Count U.S. Rig Count By Basin* Permian Eagle Ford Bakken Marcellus Granite Wash Mississippi Lime Cana Woodford Haynesville DJ Basin Barnett Uinta San Joaquin Basin Utica Powder River Basin Pinedale Piceance Basin Fayetteville Arkoma Woodford Other Drill For Oil Dry Gas Wet Gas Thermal Trajectory Horizontal Oil Horizontal Gas Horizontal % Horizontal 1966 518 266 218 101 72 64 55 48 39 39 36 36 21 19 19 17 16 8 374 1421 182 359 4 792 373 1165 59% 6/15/2012 1971 515 261 218 103 73 61 55 51 42 41 36 35 21 19 19 17 18 8 378 1405 191 371 4 774 388 1162 59% W/W ∆ (5) 3 5 0 (2) (1) 3 0 (3) (3) (2) 0 1 0 0 0 0 (2) 0 (4) 16 (9) (12) 0 18 (15) 3 0% YTD ∆ (41) 63 30 26 -37 1 16 -3 -66 -3 -20 6 4 5 -2 -10 -10 -10 -12 -19 228 (154) (114) (1) 164 (166) (2) 1% YTD % ∆ -2% 14% 13% 14% -27% 1% 33% -5% -58% -7% -34% 20% 13% 31% -10% -34% -37% -38% -60% -5% 19% -46% -24% -20% 26% -31% 0% Y/Y ∆ 84 95 79 46 -27 -8 30 -2 -91 0 -29 12 7 10 8 -6 -12 -13 -8 -7 418 (180) (152) (2) 330 (246) 84 2% Y/Y % ∆ 4% 22% 42% 27% -21% -10% 88% -4% -65% 0% -43% 50% 24% 91% 73% -24% -41% -45% -50% -2% 42% -50% -30% -33% 71% -40% 8%

Source: Baker Hughes, Inc, Raymond James Estimates *Includes all trajectories

© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

6

Raymond James
Oil Rig Count
1600 1400 1200 1000 800 600 400 1300 1200 1100 1000 900 800 700 600 500

U.S. Research
Horizontal Rig Count

2010

2011

2012

2010

2011

2012

This W eek
Rig Count Percent Change 1421

Last W eek
1405 1.1%

Beginning of Year
1191 19.3%

Last Year
1003 41.7% Price Percent Change

This W eek
1165

Last W eek
1162 0.3%

Beginning of Year
1160 0.4%

Last Year
1081 7.8%

Source: Baker Hughes 6

Source: Baker Hughes

W Gas Rig Count et
600 550 500 325 450 400 350 275 225 175 475 425 375

Dry Gas Rig Count

2010

2011

2012

2010

2011

2012

This W eek
Price Percent Change 359

Last W eek
371 -3.3%

Beginning of Year
473 -24.1%

Last Year
511 -29.8% Price Percent Change

This W eek
182

Last W eek
191 -4.7%

Beginning of Year
338 -46.2%

Last Year
362 -49.7%

Source: Baker Hughes

Source: Baker Hughes

© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

7

Raymond James

U.S. Research

Raymond James Weekly Oilfield Review
For Week Ending:
6/22/2012

12 Month Oil Calendar Strip
Brent
$130.00 $120.00 $110.00 $100.00 $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $2.50 $3.50 $4.50 $5.50 $6.50

12 Month Gas Calendar Strip
Henry Hub

2010

2011

2012

2010

2011

2012

This Week
Price Percent Change $92.15

Last Week
$97.02 -5.0%

Beginning of Year
$111.60 -17.4%

Last Year
$106.06 -13.1% Price Percent Change

This Week
$3.13

Last Beginning Week of Year
$3.02 3.6% $3.38 -7.3%

Last Year
$4.52 -30.8%

Source: Bloomberg

Source: Bloomberg

22-Jun-12 This Week
1. U.S.Rig Activity U.S. Oil U.S. Gas U.S. Miscellaneous U.S. Total U.S. Horizontal U.S. Directional U.S. Offshore U.S. Offshore Gulf of Mexico Fleet Size # Contracted Utilization U.S. Weekly Rig Permits * 2. Canadian Activity Rig Count 3. Stock Prices (6/22/12) 192.7 1,335.0 12,640.8 487.4 364.0 3,006 583 868,861 115 77 67.0% 0 238 1,421 541 4 1,966 1,165 233 48

15-Jun-12 Last Week

24-Jun-11 Last Year

Change From: Last Last Week Year

1,405 562 4 1,971 1,162 233 51 115 76 66.0% 1,337 248

1,003 873 6 1,882 1,081 236 33 122 67 54.9% 1,351 250

1.1% -3.7% -0.3% 0.3% 0.0% -5.9% 0.0% 1.3% 1.5% -100.0% -4.0%

41.7% -38.0% 4.5% 7.8% -1.3% 45.5% -5.7% 14.9% 22.0% -100.0% -4.8%

OSX S&P 500 DJIA S&P 1500 E&P Index Alerian MLP Index 4. Inventories U.S. Gas Storage (Bcf) Canadian Gas Storage (Bcf) Total Petroleum Inventories ('000 bbls)

203.3 1,342.8 12,767.2 507.1 362.2 2,944 575 861,924

248.7 1,268.5 11,934.6 602.1 363.5 2,354 366 887,562

-5.2% -0.6% -1.0% -3.9% 0.5% 2.1% 1.3% 0.8%

-22.5% 5.2% 5.9% -19.1% 0.1% 27.7% 59.2% -2.1%

5. Spot Prices (US$) Oil (W.T.I. Cushing) $79.36 Oil (Brent) $91.33 NGL Composite $0.00 Gas (Henry Hub) $2.50 Residual Fuel Oil (New York) $13.39 Gas (AECO) $1.95 UK Gas (ICE) $8.72 Sources: Bak er Hughes, ODS-Petrodata, API, EIA, Oil * Note: Week ly rig permits reflect a 1 week lag

$84.03 $90.83 $97.55 $105.12 $0.00 $55.09 $2.44 $4.20 $14.38 $16.21 $1.77 $3.92 $8.71 $9.33 Week , Bloomberg

-5.6% -6.4% #DIV/0! 2.3% -6.9% 10.2% 0.1%

-12.6% -13.1% -100.0% -40.4% -17.4% -50.3% -6.4%

© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

8

Raymond James

U.S. Research

Raymond James Weekly Coal Review
For Week Ending:
6/22/2012

12 Month Big Sandy Barge Prices
$90.00 $17.00

12 Month Powder River Basin 8800 Prices

$75.00

$15.00

$13.00 $60.00 $11.00

$9.00 $45.00 $7.00

$30.00

$5.00

2010

2011

2012

2010

2011

2012

This Week
Price Percent Change $52.00

Last Week
$52.65 -1.2%

Beginning of Year
$67.50 -23.0%

Last Year
$67.25 -22.7% Price Percent Change

This Week
$8.05

Last Beginning Week of Year
$6.90 16.7% $12.00 -32.9%

Last Year
$12.60 -36.1%

Source: Bloomberg

Source: Bloomberg

22-Jun-12 This Week
1. Coal Prices Eastern U.S. CSX 1% Western U.S. Powder River 8800 2. Production Eastern U.S. Western U.S. Total Source: Bloomberg

16-Jun-12 Last Week

25-Jun-11 Last Year

Change From: Last Last Week Year

$52.00 $8.05 9-Jun-12 8,260 9,603 17,863

$52.65 $6.90 2-Jun-12 8,153 10,645 18,798

$67.25 $12.60 12-Jun-11 9,042 11,885 20,927

-1.2% 16.7%

-22.7% -36.1%

1.3% -9.8% -5.0%

-8.6% -19.2% -14.6%

© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

9

Raymond James

U.S. Research

Important Investor Disclosures
Raymond James & Associates (RJA) is a FINRA member firm and is responsible for the preparation and distribution of research created in the United States. Raymond James & Associates is located at The Raymond James Financial Center, 880 Carillon Parkway, St. Petersburg, FL 33716, (727) 567-1000. Non-U.S. affiliates, which are not FINRA member firms, include the following entities which are responsible for the creation and distribution of research in their respective areas; In Canada, Raymond James Ltd., Suite 2200, 925 West Georgia Street, Vancouver, BC V6C 3L2, (604) 659-8200; In Latin America, Raymond James Latin America, Ruta 8, km 17, 500, 91600 Montevideo, Uruguay, 00598 2 518 2033; In Europe, Raymond James Euro Equities, SAS, 40, rue La Boetie, 75008, Paris, France, +33 1 45 61 64 90. This document is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. The securities discussed in this document may not be eligible for sale in some jurisdictions. This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Investors should consider this report as only a single factor in making their investment decision. Investing in securities of issuers organized outside of the U.S., including ADRs, may entail certain risks. The securities of non-U.S. issuers may not be registered with, nor be subject to the reporting requirements of, the U.S. Securities and Exchange Commission. There may be limited information available on such securities. Investors who have received this report may be prohibited in certain states or other jurisdictions from purchasing the securities mentioned in this report. Please ask your Financial Advisor for additional details. The information provided is as of the date above and subject to change, and it should not be deemed a recommendation to buy or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. Persons within the Raymond James family of companies may have information that is not available to the contributors of the information contained in this publication. Raymond James, including affiliates and employees, may execute transactions in the securities listed in this publication that may not be consistent with the ratings appearing in this publication. Additional information is available on request.

Analyst Information
Registration of Non-U.S. Analysts: The analysts listed on the front of this report who are not employees of Raymond James & Associates, Inc., are not registered/qualified as research analysts under FINRA rules, are not associated persons of Raymond James & Associates, Inc., and are not subject to NASD Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public companies, and trading securities held by a research analyst account. Analyst Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination including quality and performance of research product, the analyst's success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.

The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.

Ratings and Definitions
Raymond James & Associates (U.S.) definitions Strong Buy (SB1) Expected to appreciate, produce a total return of at least 15%, and outperform the S&P 500 over the next six to 12 months. For higher yielding and more conservative equities, such as REITs and certain MLPs, a total return of at least 15% is expected to be realized over the next 12 months. Outperform (MO2) Expected to appreciate and outperform the S&P 500 over the next 12-18 months. For higher yielding and more conservative equities, such as REITs and certain MLPs, an Outperform rating is used for securities where we are comfortable with the relative safety of the dividend and expect a total return modestly exceeding the dividend yield over the next 12-18 months. Market Perform (MP3) Expected to perform generally in line with the S&P 500 over the next 12 months. Underperform (MU4) Expected to underperform the S&P 500 or its sector over the next six to 12 months and should be sold. Suspended (S) The rating and price target have been suspended temporarily. This action may be due to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances, including when Raymond James may be providing investment banking services to the company. The previous rating and price target are no longer in effect for this security and should not be relied upon.

© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

10

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Raymond James Ltd. (Canada) definitions

U.S. Research

Strong Buy (SB1) The stock is expected to appreciate and produce a total return of at least 15% and outperform the S&P/TSX Composite Index over the next six months. Outperform (MO2) The stock is expected to appreciate and outperform the S&P/TSX Composite Index over the next twelve months. Market Perform (MP3) The stock is expected to perform generally in line with the S&P/TSX Composite Index over the next twelve months and is potentially a source of funds for more highly rated securities. Underperform (MU4) The stock is expected to underperform the S&P/TSX Composite Index or its sector over the next six to twelve months and should be sold. Raymond James Latin American rating definitions Strong Buy (SB1) Expected to appreciate and produce a total return of at least 25.0% over the next twelve months. Outperform (MO2) Expected to appreciate and produce a total return of between 15.0% and 25.0% over the next twelve months. Market Perform (MP3) Expected to perform in line with the underlying country index. Underperform (MU4) Expected to underperform the underlying country index. Suspended (S) The rating and price target have been suspended temporarily. This action may be due to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances, including when Raymond James may be providing investment banking services to the company. The previous rating and price target are no longer in effect for this security and should not be relied upon. Raymond James Euro Equities, SAS rating definitions Strong Buy (1) Expected to appreciate, produce a total return of at least 15%, and outperform the Stoxx 600 over the next 6 to 12 months. Outperform (2) Expected to appreciate and outperform the Stoxx 600 over the next 12 months. Market Perform (3) Expected to perform generally in line with the Stoxx 600 over the next 12 months. Underperform (4) Expected to underperform the Stoxx 600 or its sector over the next 6 to 12 months. Suspended (S) The rating and target price have been suspended temporarily. This action may be due to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances, including when Raymond James may be providing investment banking services to the company. The previous rating and target price are no longer in effect for this security and should not be relied upon. In transacting in any security, investors should be aware that other securities in the Raymond James research coverage universe might carry a higher or lower rating. Investors should feel free to contact their Financial Advisor to discuss the merits of other available investments. Rating Distributions Coverage Universe Rating Distribution RJA Strong Buy and Outperform (Buy) Market Perform (Hold) Underperform (Sell) Suitability Categories (SR) For stocks rated by Raymond James & Associates only, the following Suitability Categories provide an assessment of potential risk factors for investors. Suitability ratings are not assigned to stocks rated Underperform (Sell). Projected 12-month price targets are assigned only to stocks rated Strong Buy or Outperform. Total Return (TR) Lower risk equities possessing dividend yields above that of the S&P 500 and greater stability of principal. Growth (G) Low to average risk equities with sound financials, more consistent earnings growth, possibly a small dividend, and the potential for long-term price appreciation. Aggressive Growth (AG) Medium or higher risk equities of companies in fast growing and competitive industries, with less predictable earnings and acceptable, but possibly more leveraged balance sheets. High Risk (HR) Companies with less predictable earnings (or losses), rapidly changing market dynamics, financial and competitive issues, higher price volatility (beta), and risk of principal. Venture Risk (VR) Companies with a short or unprofitable operating history, limited or less predictable revenues, very high risk associated with success, and a substantial risk of principal. 54% 38% 8% RJL 70% 28% 2% RJ LatAm 34% 56% 10% RJEE 54% 30% 16% Investment Banking Distribution RJA 14% 9% 0% RJL 34% 29% 50% RJ LatAm 7% 0% 0% RJEE 0% 0% 0%

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Raymond James expects to receive or intends to seek compensation for investment banking services from the subject companies in the next three months.
© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

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Raymond James Stock Charts, Target Prices, and Valuation Methodologies

U.S. Research

Valuation Methodology: The Raymond James methodology for assigning ratings and target prices includes a number of qualitative and quantitative factors including an assessment of industry size, structure, business trends and overall attractiveness; management effectiveness; competition; visibility; financial condition, and expected total return, among other factors. These factors are subject to change depending on overall economic conditions or industry- or company-specific occurrences. Only stocks rated Strong Buy (SB1) or Outperform (MO2) have target prices and thus valuation methodologies.

Risk Factors
General Risk Factors: Following are some general risk factors that pertain to the projected target prices included on Raymond James research: (1) Industry fundamentals with respect to customer demand or product / service pricing could change and adversely impact expected revenues and earnings; (2) Issues relating to major competitors or market shares or new product expectations could change investor attitudes toward the sector or this stock; (3) Unforeseen developments with respect to the management, financial condition or accounting policies or practices could alter the prospective valuation; or (4) External factors that affect the U.S. economy, interest rates, the U.S. dollar or major segments of the economy could alter investor confidence and investment prospects. International investments involve additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability.

Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability categories, is available at rjcapitalmarkets.com/SearchForDisclosures_main.asp. Copies of research or Raymond James’ summary policies relating to research analyst independence can be obtained by contacting any Raymond James & Associates or Raymond James Financial Services office (please see raymondjames.com for office locations) or by calling 727-567-1000, toll free 800-237-5643 or sending a written request to the Equity Research Library, Raymond James & Associates, Inc., Tower 3, 6th Floor, 880 Carillon Parkway, St. Petersburg, FL 33716. For clients in the United Kingdom: For clients of Raymond James & Associates (London Branch) and Raymond James Financial International Limited (RJFI): This document and any investment to which this document relates is intended for the sole use of the persons to whom it is addressed, being persons who are Eligible Counterparties or Professional Clients as described in the FSA rules or persons described in Articles 19(5) (Investment professionals) or 49(2) (High net worth companies, unincorporated associations etc) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) or any other person to whom this promotion may lawfully be directed. It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons and may not be relied upon by such persons and is therefore not intended for private individuals or those who would be classified as Retail Clients. For clients of Raymond James Investment Services, Ltd.: This report is for the use of professional investment advisers and managers and is not intended for use by clients. For purposes of the Financial Services Authority requirements, this research report is classified as independent with respect to conflict of interest management. RJA, RJFI, and Raymond James Investment Services, Ltd. are authorised and regulated by the Financial Services Authority in the United Kingdom. For clients in France: This document and any investment to which this document relates is intended for the sole use of the persons to whom it is addressed, being persons who are Eligible Counterparties or Professional Clients as described in “Code Monétaire et Financier” and Règlement Général de l’Autorité des Marchés Financiers. It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons and may not be relied upon by such persons and is therefore not intended for private individuals or those who would be classified as Retail Clients. For institutional clients in the European Economic Area (EEA) outside of the United Kingdom: This document (and any attachments or exhibits hereto) is intended only for EEA institutional clients or others to whom it may lawfully be submitted. For Canadian clients: Review of Material Operations: The Analyst and/or Associate is required to conduct due diligence on, and where deemed appropriate visit, the material operations of a subject company before initiating research coverage. The scope of the review may vary depending on the complexity of the subject company’s business operations. This report is not prepared subject to Canadian disclosure requirements. For Latin American clients: Registration of Brazil-based Analysts: In accordance with Regulation #483 issued by the Brazil Securities and Exchange Commission (CVM) in October 2010, all lead Brazil-based Research Analysts writing and distributing research are CNPI certified as required by Art. 1 of APIMEC’s Code of Conduct (www.apimec.com.br/supervisao/codigodeconduta). They abide by the practices and procedures of this regulation as well as
© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

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Raymond James

U.S. Research

internal procedures in place at Raymond James Brasil S.A. A list of research analysts accredited with the APIMEC can be found on the webpage (www.apimec.com.br/ certificacao/Profissionais Certificados). Non-Brazil-based analysts writing Brazil research and or making sales efforts with the same are released from these APIMEC requirements as stated in Art. 20 of CVM Instruction #483, but abide by recognized Codes of Conduct, Ethics and Practices that comply with Articles 17, 18, and 19 of CVM Instruction #483. Proprietary Rights Notice: By accepting a copy of this report, you acknowledge and agree as follows: This report is provided to clients of Raymond James only for your personal, noncommercial use. Except as expressly authorized by Raymond James, you may not copy, reproduce, transmit, sell, display, distribute, publish, broadcast, circulate, modify, disseminate or commercially exploit the information contained in this report, in printed, electronic or any other form, in any manner, without the prior express written consent of Raymond James. You also agree not to use the information provided in this report for any unlawful purpose.
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© 2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

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