EQUITY RESEARCH

28 May 2010

AMERICAS INTEGRATED OIL ERRATUM: Major Oils Asset Value, 2010
ERRATUM: This note replaces an earlier published note which erroneously reported the NAV sensitivity table in Figures 3 and 13. We apologize for any confusion this may have caused. We are publishing the fifth edition of our Major Oils Asset Value report. We estimate that the U.S. integrated oil sector is currently trading at around a 24% discount to its net asset value (NAV) using our long-term oil price assumption of $80/barrel. After the recent selloff, we estimate that the group may now be reflecting a long-term oil price assumption of $60-$65/bl. We believe the sector offers an attractive risk/reward ratio and recommend that investors overweight the group. We raise our rating on Murphy Oil to 1-OW from 2-EW while reducing our rating on Suncor Energy to 2-EW from 1-OW. Based on our study, we think that Hess Corp. and Murphy Oil currently offer the best asset values within our coverage universe, while Suncor Energy and Marathon Oil rank as the least attractive on this metric. We upgrade MUR to 1-Overweight from 2-Equal Weight and raise our 12-month price target to $74/share from $65/share, reflecting our NAV analysis. Specifically, we think that the company’s substantial Eagle Ford acreage alone could be valued at approximately $7-10/share while its syncrude interest could easily fetch another $1013/share. Our upgrade also reflects the company’s expected strong production profile over the next several years. We estimate MUR will grow production at 8.5% p.a. between 2009 and 2014. We downgrade SU to 2-Equal weight from 1-Overweight and lower our 12-month price target to C$37/share from C$42/share. Our new price target assumes a 20% premium to our NAV estimate. Our lower NAV estimate partially reflects the strength of the Canadian dollar versus the US dollar in recent years as well as the lower-thanexpected PV 10 estimate for the company’s latest year-end filing. Over the last four years, NAV has proven to be an effective tool for stock selection – For three of the four years, the two most attractively ranked stocks significantly outperformed the two least attractive on a 12-month forward price performance basis. On average, the two most attractively ranked stocks have outperformed the two least attractively ranked stocks by more than 10%. In 2010, HES and MUR are the most attractively ranked on NAV and MRO and SU are the least attractively ranked on NAV. For a pair trade, we would recommend that investors long MUR and HES and short SU and MRO based on NAV. However, we maintain a fundamental 2-Equal Weight rating on MRO and SU.
Barclays Capital 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. PLEASE SEE ANALYST(S) CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 33.

PRICE TARGET CHANGE Americas Integrated Oil 1-POSITIVE Unchanged For a full list of our ratings, price target and earnings changes in this report, please see table on page 2. Americas Integrated Oil Paul Y. Cheng, CFA 1.212.526.1884 paul.cheng@barcap.com BCI, New York Christina Cheng 1.212.526.5580 christina.cheng@barcap.com BCI, New York Danielle Diamond 1.212.526.4060 danielle.diamond@barcap.com BCI, New York

Barclays Capital | Americas Integrated Oil

Summary of our Rating, Price Target and Earnings Changes in this Report (all changes are shown in bold)
Company Rating Old Americas Integrated Oil Chevron Corporation (CVX) ConocoPhillips (COP) Exxon Mobil Corp. (XOM) Hess Corp. (HES) Marathon Oil Corp. (MRO) Murphy Oil (MUR) Petroleo Brasileiro S.A. (PBR) Petroleo Brasileiro S.A. (PBR/A / PBRA) Suncor Energy (SU) New Price 26-May-10 Old Price Target New EPS FY1 (E) EPS FY2 (E) Old New %Chg

%Chg Old New %Chg

1-Pos 1-Pos 1-OW 1-OW 2-EW 2-EW 71.55 49.57 59.31 51.62 30.37 51.04 33.56 29.10 30.69 105.00 105.00 60.00 88.00 73.00 34.00 65.00 47.00 46.00 42.00 63.00 86.00 74.00 34.00 74.00 44.00 43.00 37.00 5 -2 1 14 -6 -7 -12 9.00 9.00 5.95 5.95 5.70 5.70 4.60 4.60 3.10 3.10 5.15 5.15 4.25 4.25 4.25 4.25 1.70 1.70 10.50 10.50 7.35 7.00 5.75 4.30 6.60 4.85 4.85 3.10 7.35 7.00 5.75 4.30 6.60 4.85 4.85 3.10 -

1-OW 1-OW 1-OW 1-OW 2-EW 2-EW

2-EW 1-OW 2-EW 2-EW

1-OW 1-OW 1-OW 2-EW

Source: Barclays Capital Share prices and target prices are shown in the primary listing currency and EPS estimates are shown in the reporting currency. FY1(E): Current fiscal year estimates by Barclays Capital. FY2(E): Next fiscal year estimates by Barclays Capital. Stock Rating: 1-OW: 1-Overweight 2-EW: 2-Equal Weight 3-UW: 3-Underweight RS: RS-Rating Suspended Sector View: 1-Pos: 1-Positive 2-Neu: 2-Neutral 3-Neg: 3-Negative

28 May 2010

2

Barclays Capital | Americas Integrated Oil

CONTENTS
What Is the Intrinsic Value of an Integrated Oil Company?.............................................................. 5 Net Asset Value Ranking .......................................................................................................................... 7 Most Attractively Ranked NAV–HES, MUR and CVX; Upgrade MUR to 1-OW ....................10 Least Attractively Ranked NAV–MRO and SU; Downgrade SU to 2-EW ...............................10 Rating and Price Target Changes .........................................................................................................11 Murphy (MUR): Upgrade to 1-Overweight; Raise Price Target to $74/share......................11 Suncor (SU): Downgrade to 2-Equal Weight; Modestly Lower Price Target to C$37/share .......................................................................................................................................11 Price Target Changes: .......................................................................................................................12 We Remain Bullish on the Medium-Term Commodity....................................................................13 Net Asset Value Methodology...............................................................................................................14 Upstream:.............................................................................................................................................14 Probable, Possible& Contingency Resources:..............................................................................15 Downstream and Chemicals: ..........................................................................................................16 Gas & Power: .......................................................................................................................................16 Other Business Segments: ...............................................................................................................16 Balance Sheet Liabilities:...................................................................................................................17 Limitations of our Analysis ..............................................................................................................18 Management Premium:....................................................................................................................18 Discount Rate:.....................................................................................................................................18 Assumed Cost Inflation:....................................................................................................................18 Commodity Price Assumptions: .....................................................................................................18 Sector Discounts Long-Term Oil Price Assumption of $60-$65 Per Barrel..........................20 SEC Changes to Oil and Gas Reserve Calculations: ....................................................................21 Commodity Prices Used to Calculate Reserves Value................................................................21 Inclusion of Non-Traditional Resources in Total Oil and Gas Producing Activities: ...........21 Other Changes:...................................................................................................................................21 Company Analysis....................................................................................................................................22 ConocoPhillips (COP): Reiterate 2-Equal Weight........................................................................22 Chevron (CVX): Reiterate 1-Overweight Rating:.........................................................................22 Hess (HES): Reiterate 1-Overweight Rating.................................................................................23 Marathon (MRO): Reiterate 2-Equal Weight ...............................................................................25 Murphy (MUR): Upgrade to 1-Overweight and Raise Price Target to $74/share...............27 Petrobras (PBR/PBRA): Reiterate Ratings, Lower Price Targets .............................................29 Suncor (SU): Downgrade to 2-Equal Weight...............................................................................30 ExxonMobil (XOM): Reiterate 1-Overweight Rating..................................................................30

28 May 2010

3

Barclays Capital | Americas Integrated Oil

FIGURES
Summary of our Rating, Price Target and Earnings Changes in this Report (all changes are shown in bold) ............................................................................................................................................ 2 Figure 1: NAV Summary ........................................................................................................................... 6 Figure 2: Price/NAV (@ $80/bl Long Run Oil Price).......................................................................... 6 Figure 3: NAV Sensitivity Table ............................................................................................................... 7 Figure 4: NAV Share Performance.......................................................................................................... 9 Figure 5: 2010 NAV Ranking .................................................................................................................10 Figure 6: Price Target Changes .............................................................................................................12 Figure 7: Rate of New Major Project Start-Ups (Based on Start-Up Years) ................................13 Figure 8: PV10 Adjustment ....................................................................................................................14 Figure 9: Detailed Upstream NAV Calculation ...................................................................................15 Figure 10: Resource Calculation ...........................................................................................................15 Figure 11: Total Company Resources..................................................................................................16 Figure 12: Gas Valuation Assumptions ...............................................................................................16 Figure 13: NAV Sensitivity Table...........................................................................................................18 Figure 14: NAV Calculation ....................................................................................................................19 Figure 15: Comparative Valuations ......................................................................................................20 Figure 16: HES Resource Value Calculation .......................................................................................23 Figure 17: HES 2P Resource Calculation .............................................................................................24 Figure 18: HES Exploration Potential ...................................................................................................24 Figure 19: MRO Resource Value Calculation .....................................................................................25 Figure 20: MRO 2P Resource Calculation ...........................................................................................26 Figure 21: MUR Resource Value Calculation......................................................................................27 Figure 22: MUR 2P Resource Calculation ...........................................................................................28 Figure 23: Petrobras Resource Calculation.........................................................................................29 Valuation Methodology and Risks........................................................................................................31

28 May 2010

4

Barclays Capital | Americas Integrated Oil

What Is the Intrinsic Value of an Integrated Oil Company?
While this may seem to be a trivial question, the various businesses of an integrated oil company can make valuation a tricky and imprecise exercise. In addition, the unpredictable nature of commodity prices adds to the challenge. Nevertheless, we believe that the intrinsic value of each company represents the basic principle behind value investing and that the company’s share price at any particular moment can be broken down into two components: 1.) Net asset value (NAV), or the discounted future cash flow value associated with the company’s existing asset base. 2.) Management/industry premium or discount, which reflects the conviction investors have in management’s ability to effectively invest capital and produce positive returns over the long run as well as the market’s outlook on industry fundamentals. Thus, unless investors believe that a company’s management will produce consistent negative returns on capital or the industry is in a secular downturn, it can be argued that the NAV should represent the floor for a stock price as it represents the theoretical liquidation value for a company. In addition, since the level of management/industry premium or discount is a subjective decision, we would argue that the difference between our calculated NAV and the actual share price should reflect the market’s assessment of the management/industry premium. In this report we update our NAV calculations. Based on our analysis, we estimate that the sector is currently pricing in a long-term oil price deck of $60–65/bl, compared to our longterm oil price assumption of $80/bl. At $80/bl, the integrated oil sector is currently trading at a 24% discount to NAV, compared to our long-term belief that the sector should trade at a 0-10% premium to NAV. Given the recent rapid decline in oil prices, we do not see much downside risk and believe that Brent will stabilize in the $68-70/bl range. (Because of the recent crude build at Cushing and the resulting contango market, we believe that Brent is currently a better indicator of the global oil market.) Although we think that concerns surrounding the European sovereign debt issues will likely continue through the summer, we expect the news flow from China could prove to be more positive. We think the Chinese government will likely soften its tightening policy in light of the recent development in the Eurozone. We expect the Chinese government could begin to signal the end of their tightening policy within the next several weeks, which in turn could serve as the catalyst to push oil prices and the oil shares higher from their recent declines. Nevertheless, we believe that oil prices will remain in the $65$85/bl range over the next several months, and in the narrower $70-80/bl range most of the time. In light of our NAV analysis, we upgrade MUR to 1-OW, reflecting the considerable cushion that the company’s NAV provides for the stock. We simultaneously downgrade Suncor to 2-Equal Weight, reflecting the lower-than-expected net asset value estimate in our study.

28 May 2010

5

Barclays Capital | Americas Integrated Oil

Figure 1: NAV Summary
Price MUR HES CVX XOM PBRA COP PBR MRO SU US Median Average
Source: Company Data, Barclays Capital

NAV at $80/bl oil price NAV/Price 74.8 74.9 102.5 81.7 40.5 64.2 40.5 34.8 31.0 40% 37% 38% 33% 32% 23% 14% 10% (4)% 32%

Price Price/NAV Price Target Target/NAV (29)% (27)% (27)% (25)% (24)% (19)% (12)% (9)% 5% (24)% 74.0 74.0 105.0 86.0 43.0 63.0 44.0 34.0 C$37.0 (1)% (1)% 2% 5% 6% (2)% 9% (2)% 20% 2%

53.5 54.6 74.4 61.5 30.8 52.2 35.5 31.6 C$32.4

Figure 2: Price/NAV (@ $80/bl Long Run Oil Price)
10% 5% 0% (5)% (10)% (15)% (20)% (25)% (30)% MUR HE S CVX XOM PBRA COP PBR MR O SU

Source: Company Data, Barclays Capital

28 May 2010

6

Barclays Capital | Americas Integrated Oil

Figure 3: NAV Sensitivity Table
Crude Oil Price, $/bl 50 COP CVX HES MRO MUR PBR/PBRA SU XOM 38 63 40 22 51 24 10 62 60 48 77 52 27 60 30 18 69 70 58 91 65 31 68 36 26 76 80 64 102 75 35 75 41 31 82 90 74 117 87 40 84 46 39 89 100 84 131 100 44 92 52 46 96 110 94 145 112 49 101 58 54 103

Note: in $/bl except for SU which is in C$/bl
Source: Company Data, Barclays Capital

28 May 2010

7

Barclays Capital | Americas Integrated Oil

Net Asset Value Ranking
Over the last four years, NAV analysis has proved to be a successful tool for making investment decisions over the forward 12-month period. The two companies with the most attractively ranked NAV outperformed the two least attractively ranked NAV companies by more than 11% on average. Equally important, three out of the four years, the two most attractively ranked NAV outperformed the two least attractively ranked companies by an average of 24%. The 2007 period was the only time that this pattern did not hold true, with the two most attractively ranked companies up 18% and 16%, respectively, and the two least attractively ranked companies up 73% and 16%, respectively. We believe that the deviation in the 2007 report is a result of the considerable run-up of oil prices in the first few months of 2008, up over 65% in the 12-month period after the 2007 NAV analysis was conducted. It is worth noting that our NAV analysis has a natural underlying value inclination. Not surprisingly, as a result, it was not a good indicator of future share performance in the April 2007-April 2008 period when the overall market sentiment was decisively tilted toward growth investing style in the energy space. We would also note that the two companies with the most attractive NAV in the May 2009 report, CVX and COP, were also the two best performing stocks in the forward 12-month period. From May 2009 to May 2010, COP shares were up 10%, while CVX shares were up 9%, versus the group average of down 8%. In addition, the two least attractive, XOM and PBR, were down 15% and 20%, respectively, in the 12-month forward period.

28 May 2010

8

Barclays Capital | Americas Integrated Oil

Figure 4: NAV Share Performance
2009 5/26/09 MUR HES CVX PBRA XOM COP PBR MRO SU PCA $56.7 $61.2 $65.7 $33.5 $69.8 $45.0 $41.9 $30.0 C$36.6 C$45.7 NAV $71.9 $65.2 $96.1 $43.9 $66.9 $61.2 $43.9 $36.6 C$45.2 C$57.9 Price/ NAV (21%) (6%) (32%) (24%) 4% (26%) (5%) (18%) (19%) (21%) (29%) (0%) (25%) (9%) (17%) 5/26/10 $51.0 $51.6 $71.6 $29.1 $59.3 $49.6 $33.6 $30.4 C$30.7 -% (10%) (16%) 9% (13%) (15%) 10% (20%) 1% (16%) -10% (17%) (1%) (13%) (8%) 5/7/08 $85.1 $115.0 $97.4 $53.3 $89.9 $89.5 $63.8 $52.9 C$63.1 C$55.9 NAV $80.0 $91.0 $114.0 $51.0 $86.0 $89.0 $51.0 $53.0 C$51.0 C$57.0 2008 Price/ NAV 6% 26% (15%) 5% 5% 1% 25% (0%) 24% (2%) (8%) 26% (2%) 17% 7% 5/7/09 $53.6 $60.9 $67.9 $30.4 $68.9 $43.7 $38.3 $31.7 C$34.9 C$42.9 % (37%) (47%) (30%) (43%) (23%) (51%) (40%) (40%) (45%) (23%) (27%) (44%) (38%) (38%) (38%) 4/9/07 $53.3 $55.7 $75.8 $22.8 $77.2 $68.8 $25.3 $51.3 C$44.3 $46.1 NAV $45.0 $33.0 $82.0 -$56.0 $70.0 -$46.0 C$34.0 $35.0 2007 Price/ NAV 18% 69% (8%) -38% (2%) -12% 30% 32% (5%) 53% 5% 42% 24% 4/8/08 $86.8 $96.6 $89.3 $47.2 $89.6 $79.5 $57.0 $48.3 C$52.7 $46.4 % 63% 73% 18% 107% 16% 16% 126% (6%) 19% 1% 17% 45% 23% 27% 43% 7/10/06 $56.1 $53.3 $64.3 $19.6 $63.0 $67.3 $21.8 $43.0 C$44.1 $52.7 NAV $51.0 $37.0 $81.0 $21.0 $54.0 $66.0 $21.0 $36.0 $35.0 $46.0 2006 Price/ NAV 10% 44% (21%) (7%) 17% 2% 4% 19% 26% 15% (14%) 35% (2%) 24% 11% 7/10/07 $61.6 $63.2 $89.0 $28.4 $86.5 $84.1 $32.4 $64.1 C$48.2 $58.5 % 10% 19% 38% 45% 37% 25% 49% 49% 9% 11% 42% 14% 33% 25% 29% 2006-2009 Average Price/ NAV Fwd 12 Mo. % Perf % 3% 6% 33% 7% (19%) 9% (9%) 24% 16% 4% (6%) (0%) 8% 29% 3% 1% 15% (8%) 6% (4%) (14%) 28% (6%) 19% 6% 10% (1%) 4% 0% 7%

2 Most Attractive NAV 2 Least Attractive NAV Top Half Bottom Half Group Average

Source: Company Data, Barclays Capital

28 May 2010

9

Barclays Capital | Americas Integrated Oil

Most Attractively Ranked NAV–HES, MUR and CVX; Upgrade MUR to 1-OW
Murphy (MUR) and Hess (HES) currently rank as the most attractive in our net asset value analysis, with CVX closely following behind. We estimate that Murphy is currently trading at a 29% discount to its NAV, while HES and CVX are both trading at a 27% discount to NAV compared to the group average of a 24% discount. We reiterate our 1-OW rating on Hess and Chevron and upgrade Murphy to a 1-OW.

Least Attractively Ranked NAV–MRO and SU; Downgrade SU to 2-EW
Marathon Oil (MRO) and Suncor Energy (SU) currently rank as the least attractive in our net asset value analysis. We estimate that SU is trading at a 5% premium to its NAV, while MRO is trading at only a 9% discount to NAV. Figure 5: 2010 NAV Ranking
Company MUR HES CVX XOM PBRA COP PBR MRO SU
Source: Company Data, Barclays Capital

NAV 74.8 74.9 102.5 81.7 40.5 64.2 40.5 34.8 31.0

Price/NAV (29)% (27)% (27)% (25)% (24)% (19)% (12)% (9)% 5%

28 May 2010

10

Barclays Capital | Americas Integrated Oil

Rating and Price Target Changes
Since we believe that the fair value of an integrated company’s share price should be at least linked to the company’s net asset value, we take this time to make adjustments to our price targets and corresponding changes in our ratings. Specifically, we upgrade MUR to 1-OW and downgrade SU to 2-EW, reflecting each company’s asset portfolio and our long-term commodity price assumption.

Murphy (MUR): Upgrade to 1-Overweight; Raise Price Target to $74/share
We estimate MUR’s net asset value at $75/share. The shares are currently trading at a 29% discount to NAV, compared to the group average of a 24% discount. We upgrade MUR to 1-Overweight and raise our price target to $74/share, reflecting the company’s high asset value. We estimate that their Eagle Ford acreage alone could add approximately $710/share. Currently, MUR holds 201,000 acres in the Eagle Ford play, of which the company estimates that 65 thousand acres are located in the oil rich region, 48 thousand in the condensate heavy region and the remaining 88 thousand in a gas heavy region. Recently, Shell is estimated to have paid $10,000 per acre for a privately held 100,000 acre ranch far to the west near TXCO acreage in the Eagle Ford. In addition, TLM paid $8,100/acre in the gas condensate window for common resources (35-40k acres). Our upgrade also reflects the company’s expected strong production profile over the next several years. We estimate MUR will grow production at 8.5% p.a. between 2009 and 2014.

Suncor (SU): Downgrade to 2-Equal Weight; Modestly Lower Price Target to C$37/share
Based on a long-term oil price of $80/bl, we estimate SU’s NAV at C$31 per share, basically in line with the current share price. In light of the company’s lower than expected net asset value, we downgrade SU to 2-Equal Weight and lower our price target to C$37/share. Our new price target represents a 20% premium to our estimated net asset value. We believe that our NAV estimate for Suncor may be a bit understated as a result of our cost inflation assumptions. Currently, we estimate a cost inflation impact on each company of 15% but would agree that the hyper inflationary cost environment between 2003 and 2008 may have set the stage for a relatively lower inflation rate (versus the rest of the oil industry) over the next several years for the oil sand operations. That being said, we believe SU will likely remain a show me stock over the next several months until management can prove that they can execute effectively and safely following the poor reliability record of the last six months.

28 May 2010

11

Barclays Capital | Americas Integrated Oil

Price Target Changes:
We cross-checked our return on market capitalization (ROMC)-based price target methodology with our new NAV calculations and as a result, revised our price targets for several companies in our universe. The table below summarizes our new price targets compared to our previous targets and the changes in our underlying assumptions. Figure 6: Price Target Changes
Price, 05/27/10 52.2 74.4 54.6 31.6 53.5 30.8 35.5 C$32.4 61.5 Old Change in New Price Potential % Price Potential % Price Target upside/(downside) Target upside/(downside) Target 63 105 74 34 74 43 44 C$37 86 21% 41% 36% 7% 38% 40% 24% 14% 40% 36% 60 105 73 34 65 46 47 C$42 88 15% 41% 34% 7% 22% 49% 32% 30% 43% 32% 3 0 1 0 9 (3) (3) (5) (2) NAV at $80/bl oil 64 102 75 35 75 41 41 31 82 New Price Target/NAV (2)% 2% (1)% (2)% (1)% 6% 9% 20% 5% 2%

Rating COP CVX HES MRO MUR PBRA PBR SU XOM 2 - EW 1 - OW 1 - OW 2 - EW 1 - OW 1 - OW 2 - EW 2 - EW 1 - OW

Median Average
Source: Company Data, Barclays Capital

28 May 2010

12

Barclays Capital | Americas Integrated Oil

We Remain Bullish on the Medium-Term Commodity
We remain bullish on medium-term oil prices and believe average oil prices could exceed $100/bl in the 2012-2013 time frame. We estimate the new major oil project startup run rate will drop sharply from about 5.8 mmb/d (million b/d) a year on average in 2009 to about 3.8 mmb/d in 2010 and only close to 1.6 mmb/d in 2011 before rebounding to 2.8 mmb/d in 2012. As a result of this poor backlog outlook, we think we could face a major supply shortfall by 2012-2013, absent an extended global recession through 2012, unless we see a meaningful improvement in the stability of Iraq or Nigeria. In our opinion, it is unlikely that the political situation in Nigeria will improve enough for it to significantly increase production over the next several years. However, we do believe that Iraq poses a much larger threat to our medium-term view. Although we think that the Iraqi government’s plan to reach 12 mmb/d in the next six years is not realistic, we do think that Iraq will play a significant role in the global oil market going forward. Even assuming startup delays and sporadic downtime as a result of localized violence or attacks, we think it is feasible that the 11 recently signed Iraq oil contracts could increase production to more than 6-7 mmb/d over the next ten years, given the right circumstances. In addition to the potentially substantial increase in production, Iraq may also trigger a restack of the power balance within OPEC and may disrupt its recent cohesive behaviour. We think Iraq’s decision whether to accept a similar quota level as Iran going forward will likely determine if OPEC will fall to its “in-fighting” behaviour common in the 1980s and 1990s. Iran’s current implied quota is 3.33 mmb/d. We recently performed a regression analysis on oil prices, determining that in the last decade global real GDP, OPEC utilization and U.S. crude imports have been the driving factors of crude prices. However, our regression model assumes that OPEC is credible and cohesive and will continue to effectively manage the global supply balance. In our opinion, if OPEC is unable to maintain cohesion, not only could we see a significant decline in global oil prices but also a shift to new oil price drivers. We believe that the uncertainty surrounding the global economy and Iraq will cause oil prices to remain largely range bound in the next several months. Figure 7: Rate of New Major Project Start-Ups (Based on Start-Up Years)
Rolling 3 Year Average Oil Start-Up Year 2006 2007 2008 2009 2010 2011 2012 2013+ Total (mboe/d) mb/d 3,761 2,816 3,540 5,812 3,803 1,573 2,835 24,774 48,914 Gas mmcf/d 10,250 16,023 5,273 15,945 13,045 5,569 3,221 75,343 144,670 Oil Equivalent mboe/d 5,470 5,487 4,419 8,470 5,977 2,501 3,372 37,331 73,026 3,373 4,056 4,385 3,729 2,737 2,852 10,515 12,414 11,421 11,520 7,279 6,108 5,125 6,125 6,289 5,649 3,950 3,869 Oil mb/d Gas mmcf/d Oil Equivalent mboe/d

Note: All the numbers are estimated production volume at peak year.
Source: Company Data, Barclays Capital

28 May 2010

13

Barclays Capital | Americas Integrated Oil

Net Asset Value Methodology
In this report we use a sum-of-the-parts NAV methodology, which is based on the sum of our separate segment valuations, less net balance sheet liabilities. Our approach to valuing each business segment is as follows:

Upstream:
Proved Reserves Value:
We start from the standardized measure of discounted future cash flow from production (PV10) disclosed in annual company SEC filings. This metric is computed by applying average commodity prices for the year, costs, legislated tax rates, and a discount factor of 10% to net proved reserves. Given that the 2009 average oil price (WTI) was $61/bl, we adjusted the discounted value to reflect our long-run oil price assumption of $80/bl. We also adjust the U.S. natural gas price from an average 2009 level of $3.83/mcf to our longrun assumption of $5.25/mcf and the U.K. natural gas price assumption from an average 2009 level of $4.90/mcf to our assumption of $7.30/mcf. We show our calculation for Exxon Mobil in Figure 8 as an example of the PV10 calculation. In addition, future operating and development costs will be a function of oil prices and will most likely differ from the company’s current estimate if the oil price moves substantially away from the 2009 average price. Therefore, we assume costs to be 15% higher for a move to $80/bl from $61/bl oil. We do acknowledge that our cost inflation may be a bit too extreme for some companies, specifically SU, but overall we believe that 15% is a reasonable starting point in this exercise. Figure 8: PV10 Adjustment
PV10 Revenue Adjustment from Year-End to Our Long-Term Commodity Prices (XOM) Realizations Average 2009 Price Oil, $/bl Oil Sands, $/bl North American gas, $/mcf European gas, $/mcf Other gas, $/mcf Reserves Oil, mmbls Syncrude, mmbls North American gas, bcf European gas, bcf Other gas, bcf Total, mmboe 9,236 394 12,580 16,173 38,664 20,472 From 10K (ex equity affiliates and Imperial) 3.8 4.9 5.3 7.3 60.9 Long-Term Price Assumptions 80.0 (@ avg 2009 prices) 58.2 44.8 3.1 7.6 4.0 Realizations (@ Long-Term prices) 76.5 58.9 4.2 11.4 5.2

Revenue with old realizations, $ mm Revenue with new realizations, $ mm PV 10 Revenue, $ mm PV 10 Revenue (Adj Est)
Source: Company Data, Barclays Capital

871,677 1,170,244 747,028 1,002,899

Reserves multiplied by realization at avg 2009 prices Reserves multiplied by realization at our LT prices From 10K (ex equity affiliates and Imperial)

28 May 2010

14

Barclays Capital | Americas Integrated Oil

Figure 9: Detailed Upstream NAV Calculation
Upstream NAV Calculation XOM ($ in millions) 2009 PV10 of reserves, $ million Adjusted for year end price of $80/bl Increase Revenue by, $ million Reduce Costs by, $ million Tax rate, % Income impact of lower revenue (post-tax), $ million Discount from Net income to get PV10, % Net Addition (Reduction), $ million Proved reserves adjusted NPV @ $80/bl Total Proved Reserves, million boe Implied Proved Reserve Value, $/bl
Source: Company Data, Barclays Capital

Comments @ avg 2009 oil price of $60.9/bl

102,377

255,872 (51,429) 44% 113,610 (54%) 51,786 154,162 20,472 7.5

Detailed calculation to adjust for oil and gas prices 15% rise in operating and development costs = (255,872-51,429)*(1-44%) = (Diff between future net cash flows (undiscounted) and discounted cash flows) = (113,610) -*(1-54%) = 102,377+51,786 Ex Syncrude and Imperial

Probable, Possible& Contingency Resources:
Wherever possible, we have used the company’s estimate of its resource base. Figure 10 shows our assumptions in detail. We have assumed the value for probable and possible resources to be 10% of the PV10 unit value of reserves. For smaller companies such as MUR, MRO and HES, we have performed a detailed project-by-project analysis and assigned a separate value to each project depending on geographical location and operation start-up. It is important to note that we have not included yet-to-be discovered resources in this calculation. Figure 10: Resource Calculation
Resource Calculation Resources & Reserves mmboe Probable & Possible (A) COP CVX HES MRO MUR PBRA PBR SU XOM 34,381 52,804 4,063 5,306 1,851 29,475 19,963 60,000 7,517 Proved @ year end 2009 (B) 8,023 11,196 1,437 1,195 310 12,150 3,241 20,472 2,471 Total Resources (A+B) 42,404 64,000 5,500 6,500 2,161 41,625 23,204 80,472 9,988 Probable/Possible to Proved Ratio (A/B) 4.3 4.7 2.8 4.4 6.0 2.4 6.2 2.9 3.0 Value of Resources, $/bl Probable & Possible 0.7 1.0 1.7 1.2 2.6 2.0 0.8 C$0.8 0.7 Proved @ year end 2009 7.3 10.0 11.7 7.5 18.0 10.3 8.2 C$7.5 6.9

Source: Company Data, Barclays Capital

28 May 2010

15

Barclays Capital | Americas Integrated Oil

Figure 11: Total Company Resources
90,000 80,000 70,000 70,000 60,000 60,000 50,000 50,000 40,000 40,000 30,000 30,000 20,000 20,000 10,000 10,000 0 0

million barrels (mmbls) million barrels (mmbls)

MUR MUR

HE S MR O SU HES MRO SU P roved R eserves @ end 2009

COP P B R / B R A P COP PBR/ PBRA P ossible & P robable

CVX CVX

XOM XOM

Proved Res erves @ end 2009
Source: Company Data, Barclays Capital

Pos s ible & Probable

Downstream and Chemicals:
We apply the average multiple at which independent refiners are trading to value the downstream business of an integrated oil company. We use a 2011 estimated EV/EBITDA multiple of 7.2x, which we forecast is the current average multiple for U.S. refining companies. The only exception is Petrobras, where we use a multiple of 6.2x to reflect the lower correlation of domestic product prices in Brazil to international product prices. The chemicals business is valued similarly, and we use a 2011 estimated EV/EBITDA multiple of 6.0x

Gas & Power:
We use a discounted cash flow approach for valuing the gas and power business. The table below shows the assumptions we used to determine the value of the gas and power segment: Figure 12: Gas Valuation Assumptions
Gas Valuation Model Assumptions Terminal P/E Multiple, x Capex, $/t/y Discount rate 15.0 1,000 10% 2010 Earnings per unit of capacity, $/t/y 221 2011 261 2012 301 2013 288 2014 199 Applied to estimated LNG capacity in 2013

Source: Company Data, Barclays Capital

Other Business Segments:
For syncrude, we use the market value as implied by the share price of Canadian Oil Sands Trust, which owns 36.74% in the syncrude joint venture. We use the market price to calculate the value of ConocoPhillips’ stake in Lukoil and Exxon Mobil’s stake in Imperial. For the remaining segments, we use our estimates.

28 May 2010

16

Barclays Capital | Americas Integrated Oil

Balance Sheet Liabilities:
From the total value of the companies, we deduct the liabilities to arrive at the value of each company’s equity. We deduct long-term debt, net pension deficit, and add back net working capital (current assets – current liabilities), as well as the excess current market value of inventories versus their book value. We have used 1Q10 numbers, wherever possible, and also mark-to-market the estimated change in inventory value since the last published data. For example, CVX, MRO and XOM only report inventory market value in excess of book value at year-end, while others provide this metric on a quarterly basis.

28 May 2010

17

Barclays Capital | Americas Integrated Oil

Limitations of our Analysis
We would point out that NAV does not necessarily represent a price target but only a potential floor for the share prices at a given assumption of the long-run oil price. We believe price targets for integrated companies should be on average 0–10% higher than NAV for the following reasons:

Management Premium:
As previously noted, unless we believe that the company is earning below cost of capital returns, share prices should trade above the net asset value, reflecting potential future value creation.

Discount Rate:
Our analysis uses a 10% discount rate for all calculations to be consistent with the PV10 calculation. We believe this underestimates the value of integrated companies, as a detailed weighted average cost of capital (WACC) calculation suggests 6%–9% cost for all our companies. This is not a significant limitation in relative analysis but one to be mindful of for absolute analysis

Assumed Cost Inflation:
Within our analysis we use a 15% cost inflation going forward. We recognize that our assumption could be a bit too conservative. As previously discussed, due to the recent cost increases related to the oil sands business, we believe it is unlikely that Suncor will experience such a high cost inflation going forward. As such, we used a 20% premium to NAV to arrive at SU’s new price target of C$37.

Commodity Price Assumptions:
As we saw in 2007, a significant deviation from our long-term oil price assumption of $80/bl could result in larger swings in the industry’s performance. Below we summarize the impact of various oil prices on each company’s NAV: Figure 13: NAV Sensitivity Table
Crude Oil Price, $/bl 50 COP CVX HES MRO MUR PBR/PBRA SU XOM 38 63 40 22 51 24 10 62 60 48 77 52 27 60 30 18 69 70 58 91 65 31 68 36 26 76 80 64 102 75 35 75 41 31 82 90 74 117 87 40 84 46 39 89 100 84 131 100 44 92 52 46 96 110 94 145 112 49 101 58 54 103

Note: in $/bl except for SU which is in C$/bl
Source: Company Data, Barclays Capital

28 May 2010

18

Barclays Capital | Americas Integrated Oil

Figure 14: NAV Calculation
Average oil price (WTI Midland), $/ b Average US natural gas price (Henry Hub), $/ mcf Average UK natural gas price, $/ mcf Oil price discounted in the NAV E stimate US natural gas price discounted in the NAV estimate UK natural gas price discounted in the NAV estimate Assumed C ost Impact Value of Total R esource as % of P V10 Value of resources as % of P V10 (excl. identifiable projects) 61 3.8 4.9 80 5.3 7.3 15% 10% 2% Year E nd E xchange rates E UR / $ 0.70 C AD/ $ 1.05 Average E xchange rates E UR / $ 0.72 C AD/ $ 1.14 Discount R ate 10% PBR/ PBRA Petrobras 82,188 175,748 (46,873) 35% 83,178 77,053 (48)% 42,930 125,118 10.0 3,946 6.4 25,384 Current E xchange rates E UR / $ 0.73 C AD/ $ 1.00 E st WTI Midland, $/ bl 1Q10 83.41 C urrent 74.79

2009 P V10 of reserves, $ mms, excl Imperial and LukOil
Adjusted for year end price of $61/ b

COP ConocoPhillips 37,510 107,588 (31,271) 40% 46,011 32,983 (47)% 24,483 (3,230) 58,763 7.3 2,150 7.4 15,979 545 6.0 3,271 8,399

CVX Chevron 77,512 148,732 (31,040) 39% 71,575 83,319 (52)% 34,495 112,007 10.0 3,396 7.4 25,243 844 6.0 5,061 8,782

HE S Hes s 11,401 21,339 (4,407) 50% 8,453 6,521 (36)% 5,378 16,779 11.7 410 7.4 3,047

MRO Marathon 5,691 22,525 (6,441) 58% 6,786 6,062 (52)% 3,286 8,977 7.5 1,536 7.4 11,419

MUR Murphy 4,856 6,439 (1,459) 29% 3,524 2,606 (35)% 2,293 (1,586) 5,564 18.0 293 7.4 2,175

SU S uncor 16,554 65,857 (22,717) 26% 32,042 20,884 (56)% 14,168 (4,245) 26,477 8.2 C $1,704 7.4 C$12,664

XOM E xxon Mobil 102,377 255,872 (51,429) 44% 113,610 122,221 (54)% 51,786 154,162 7.5 6,787 7.4 50,449 10,516 6.0 63,094 48,760 5,000 24,481

R evenue Impact by, $ mm Assume C hange in C ost, $ mm Tax rate, % Inc. impact of lower revenue and costs (post-tax), $ mm Discount @ 10% annual rate Discount from Net income to get P V10, % Net addition (reduction), $ mm Less S yncrude Interest PV10 E stimate b P roved reserves adjusted NP V @ $80/ E quity Companies NP V Implied proved reserve value, $ per barrel (E xcl Lukoil, S yncrude, Imperial) Downstream 2011 E B ITDA, $ mm R efiners 2011 E V/ B ITDA, x E Downstream E V, $ mm C hemicals 2011 E B ITDA, $ mm C hemicals 2011 E V/ B ITDA, x E Chemicals E V, $ mm Midstream, Integrated G as, P ower and other operations Hong Kong P ower, C oal etc National Treasury B onds + P etro/ Alcohol account Imperial Oil Value S yncrude Interest Lukoil Interest Total Other s egments E V, $ mm Long term debt, $ mm Net pension liability, $ mm Net working capital, $ mm LIF O reserve, $ mm Mark-to-Market LIF O reserve gain/ (loss), $ mm Net B alance S heet Adjustment, $ mm Total E quity value based on P roved R eserves , $ mm share (w/ any probable res erves), $/ o share Total E q value/ Total resources, excluding syncrude & proved P roved R eserves at end 2009, excluding syncrude and Imperial Oil

127

2,775

62

26,191 3,043

C $2,000

4,650 8,625 21,674 (26,225) (3,557) (3,012) 5,752 (1,246) (28,288) 71,399 47.5 34,381 8,023

2,019 8,782 (9,793) (6,905) 13,260 5,491 (544) 1,509 152,602 76.1 52,804 11,196 127 (4,303) (559) 1,615 815 (191) (2,623) 17,329 53.0 4,063 1,437 2,775 (8,440) (2,098) 2,944 3,115 (374) (4,853) 18,318 25.8 5,306 1,195 2,081 (1,231) (247) 1,035 566 (114) 9 9,828 50.9 1,851 310 29,234 (47,855) (11,657) 7,858 (956) (52,610) 127,127 29.0 33,199 12,476

C $4,827 C$6,827 (C $13,730) (C $1,207) C $1,601 (C $252) (C$13,588) C$32,379 C$20.6 19,963 3,241 78,241 (7,024) (16,281) 4,356 16,150 (1,444) (4,243) 341,703 72.2 60,000 20,472

Total resources to Proved Ratio
Total resources value exc syncrude & proved, $/ b Total resources, excluding syncrude & Imperial, $ mm Total E quity value (including probable reserves), $ mm S hares Outstanding, year-end 2009 Total E quity value per share, $/ share C urrent share price NAV E stimate/ rice, above/ P (under)% P rice/ NAV estimate, above/ (under)%

4.3
0.7 25,181 96,580 1,504 64.2 52.2 23% (19)%

4.7
1.0 52,827 205,429 2,004 102.5 74.4 38% (27)%

2.8
1.8 7,180 24,509 327 75.0 54.6 37% (27)%

4.4
1.2 6,440 24,758 711 34.8 31.6 10% (9)%

6.0
2.5 4,607 14,435 193 74.8 53.5 40% (29)%

2.7
1.5 50,750 177,877 4,387 40.5 35.5 14% (12)%

6.2
0.8 16,306 C$48,685 1,573 C$31.0 C $32.4 (4)% 5%

2.9
0.8 45,182 386,885 4,736 81.7 61.5 33% (25)%

Source: Company Data, Barclays Capital

28 May 2010

19

Barclays Capital | Americas Integrated Oil

Figure 15: Comparative Valuations
COMPARATIVE VALUATIONS Rating American Integrateds C OP C VX HE S MR O MUR PBR P BR A SU XOM American Avg 1-Positive 2 - EW 1 - OW 1 - OW 2 - EW 1 - OW 2 - EW 1 - OW 2 - EW 1 - OW Price 5/ 10 27/ Price % Potential Target Upside/ (Downside) $63 $105 $74 $34 $74 $44 $43 C $37 $86 21 41 36 7 38 24 40 14 40 29 P/ E 2010E 2011E E V/ B ITDA E 2010E 2011E E V/ B IDA E 2010E 2011E ROMC% Dividend 2010E 2011E Yield

$52.21 $74.36 $54.55 $31.64 $53.46 $35.51 $30.78 C $32.37 $61.46

8.7 x 8.3 x 11.9 x 10.2 x 10.4 x 8.4 x 7.2 x 19.0 x 10.8 x 10.5 x

7.0 x 7.0 x 9.5 x 7.4 x 8.1 x 7.3 x 6.3 x 10.8 x 8.7 x 8.0 x

3.7 x 2.9 x 3.7 x 3.5 x 4.2 x 6.6 x 6.0 x 8.8 x 4.7 x 4.9 x

3.2 x 2.6 x 3.3 x 3.1 x 3.5 x 6.1 x 5.6 x 6.5 x 4.0 x 4.2 x

5.5 x 4.7 x 5.3 x 5.2 x 5.0 x 8.2 x 7.4 x 9.3 x 7.2 x 6.4 x

4.8 x 4.3 x 4.9 x 4.9 x 4.5 x 7.5 x 6.9 x 7.3 x 6.2 x 5.7 x

9.1% 11.2% 7.5% 7.5% 8.7% 10.4% 9.2% 5.0% 8.5% 8.5%

11.4% 13.0% 9.5% 10.1% 11.1% 13.8% 11.2% 8.2% 11.0% 11.0%

4.2% 3.9% 0.7% 3.2% 1.9% 3.6% 4.1% 1.2% 2.9% 2.9%

Macro Assumptions WTI Average S pot P rice ($/ b) U.S . Natural Gas S pot P rice ($/ Mcf)

$80.00 $4.31

$90.00 $4.53

Source: Barclays Capital

Sector Discounts Long-Term Oil Price Assumption of $60-$65 Per Barrel
Based on our analysis, we estimate that the sector is currently pricing in a long-term oil price deck of $60-65/bl, compared to our price assumption of an $80 long-term price deck. At $80/bl, the integrated oil sector is currently trading at a 24% discount to NAV, compared to our long-term belief that the sector should trade at a 0-10% premium to NAV. Given the recent rapid decline in oil prices, we do not see much downside risk and believe that Brent will stabilize in the $68-70/ bl range. (Because of the recent crude build at Cushing and the resulting contango market, we believe that Brent is currently a better indicator of the global oil market.) Although we think concerns surrounding the European sovereign debt issues will likely continue through the summer, we expect the news flow from China could prove to be more positive. We think the Chinese government will likely soften its tightening policy in light of recent developments in the Eurozone. We expect the Chinese government could begin to signal the end of their tightening policy within the next several weeks, which in turn could serve as the catalyst to push oil prices and the oil shares higher from their recent declines. Nevertheless, we believe that oil prices will remain in the $65-$85/bl range over the next several months, and in a narrower range of $70-80/bl most of the time.

28 May 2010

20

Barclays Capital | Americas Integrated Oil

SEC Changes to Oil and Gas Reserve Calculations:
In December 2008, the SEC filed a new reporting standard for the oil and gas industry, which became effective in the 2009 reporting cycle. We highlight below the significant changes within the SEC’s ruling:

Commodity Prices Used to Calculate Reserves Value
The new standard requires companies to report reserve value estimates based on 12-month average commodity prices versus the prior practice of using the year-end commodity prices. The 12-month average is calculated by taking the average price from the first day of each month. We think that this is a more appropriate way to value a company’s reserves as it attempts to normalize fluctuations in commodity prices throughout the year.

Inclusion of Non-Traditional Resources in Total Oil and Gas Producing Activities:
The SEC’s new reporting standard calls for the inclusion of non-traditional resources, such as bitumen, to be included in a company’s definition of oil and gas producing activities. As such, we no longer break out the extensive analysis of the value of oil sands reserves, as they are already included in the company’s total reserves PV10 estimate.

Other Changes:
The SEC now allows companies to expand the way that they determine proved reserves by using “reliable” new technologies. “Proved Undeveloped Reserves”, which were previously established under a certainty test, are now established under “reasonable certainty”.

-

The new rule also gives companies the option to report probable and possible reserves in their financial reports.

28 May 2010

21

Barclays Capital | Americas Integrated Oil

Company Analysis
ConocoPhillips (COP): Reiterate 2-Equal Weight
ConocoPhillips (COP)
Rating

2-Equal Weight
NAV@$80/bl

US$ 64
Current Target Price

US$ 63
Previous Target Price

US$ 60

ConocoPhillips is currently trading at a 19% discount to its NAV, compared to the sector average discount of 24%. We believe this is justified given the company’s peer lagging upstream and relatively large downstream. We expect downstream valuations to remain stagnant over the next 6 to 12 months as a result of fluctuating refining margins. On the upstream, we expect the company’s production to remain flat over the 2009-2014 period; however, over the next two years we expect production declines. Upstream costs, both production and capital, have been higher than the industry on a three-year average basis and despite spending more, COP’s reserve replacement has been only 67% over the last three years compared to the peer average of 118%. In addition, while we are encouraged by the company’s new exploration efforts and the signs of early success, we think it will take at least 5-6 years for the recent successes to translate into visible improvement in the lagging indicators such as reserve replacement ratio, F&D costs and production growth rate. Accordingly, even though we think the stock may continue to enjoy near-term momentum in the next couple months as a result of further progress in its asset sales program, we think the stock may have trouble going much higher than the company’s net asset value absent concrete evidence showing an improving return on capital employed (ROCE) trend related to its peers. In light of the company’s net asset value we increase our 12-month price target to $63/share from $60/share. We think it is reasonable that COP should trade in line with its NAV, at least until we see concrete improvement in the company’s ability to generate sustainable excess returns.

Chevron (CVX): Reiterate 1-Overweight Rating:
Chevron (CVX)
Rating

1-Overweight
NAV@$80/bl

US$ 102
Current Target Price

US$ 105
Previous Target Price

We estimate CVX’s net asset value at $102 per share. The shares are currently trading at a 27% discount to the NAV, compared to the sector average of 24%, which we do not think is justified given the company’s impressive improvement in its upstream performance of the last several years. Although we believe that the recent BP oil spill in the GoM could slow down CVX’s exploration efforts in the GoM, we think that it is unlikely that the government will revoke the leases assigned during the recent bid rounds. We reiterate our 1-Overweight rating on CVX and consider the stock to be inexpensive at current prices and would be a buyer at this juncture.

US$ 105

28 May 2010

22

Barclays Capital | Americas Integrated Oil

Hess (HES): Reiterate 1-Overweight Rating
Hess (HES)
Rating

1-Overweight
NAV@$80/bl

US$ 75
Current Target Price

US$ 74
Previous Target Price

US$ 73

We estimate HES’s net asset value at $75 per share. The shares are currently trading at a 27% discount to NAV, compared to the group discount of 24%. We raise our price target to $74/share from $73/share and reiterate our 1-OW rating. We continue to like the stock’s medium-term outlook for its leverage to oil prices and exploration potential. Although we think oil prices are likely to remain in the $65-85/bl range in the near term, we are bullish on the medium-term commodity and think crude can surpass $100/bl by 2011/2012 due to the drop-off in incremental oil supply stemming from new upstream projects. This should bode well for HES as the company is one of the most oil-leveraged names within our coverage. Additionally, the company’s exploration backlog looks robust and any potential discoveries could be a catalyst for this name. Currently, HES is drilling in Northwest Shelf, Australia and plans on drilling a third well in the Santos Basin, Brazil in the latter half of the year. The company also plans to spud a well in Indonesia and Ghana by 1Q11 and conduct further appraisal drilling in Australia next year. After drilling Pony 3 by late 2010/early 2011, HES will begin discussions on the Pony/Knotty Head unitization process and begin their exploration program in GoM. More importantly, compared to other high oil beta shares such as Petrobras, we do not believe HES’ current shares have priced any premium for the further exploration successes. Therefore, we view the potential as a free option. For our base NAV calculation, we include the value for the company’s 5.5 billion bls of resources. We identify 1.2 billion bls from future projects coming onstream that the company has not booked in its SEC and value these reserves at $5.2/boe, while the remaining resources are valued at 2% of the PV10 value, or $0.2/boe. The tables below show our calculation in detail. Figure 16: HES Resource Value Calculation
HES Resource Value Calculation Total Resources Oil Sands Proved, end-2008 Resources excluding Proved Identified 2P resources Value, $/bl Value, $ mm (A) Remaining resources Value, $/bl Value, $ mm (B) Total value of 2P + 3P resources, A+B Value, $/bl
Source: Company Data, Barclays Capital

5,500 0 1,432 4,068 1,176 $5.20 $6,113 2,892 $0.23 $675 $6,788 $1.67

28 May 2010

23

Barclays Capital | Americas Integrated Oil

Figure 17: HES 2P Resource Calculation
Estimated gross reserves, mmboe % share 200 213 500 235 147 620 200 100 333 100 100 1,518 100% 20% 28% 85% 75% 50% 100% 100% 100% 100% 40% 28% Estimated net reserves, mmboe 200 43 140 200 110 310 200 100 333 12 36 425 Estimated Booked, mmboe & produced 0 0 60 100 85 210 48 55 0 0 0 375 Net unbooked resources, mmboe 200 43 80 100 25 100 152 45 333 12 36 50 1,176

Prospect Pony Tubular Bells Shenzi Okume Pangkah JDA Bakken Seminole San-Andrez Carnavon Basin (WA-Block-390-P) Area 54 Brazil BM-S-22 Valhall Total

Region GoM GoM GoM EG Indonesia Thailand Onshore US Onshore US Western Australia Libya Brazil North Sea

Value, $/bl 5-6 5-6 10 8.8 - 10.3 7-8 2-2 7-8 7-8 1.2 - 1.8 5-5 1-1 7-8 5.2

Value, $ mm 1053 - 1,263 224 - 268 814 883 - 1030 177 - 206 184 - 221 1031 - 1,288 305 - 381 400 - 600 57 - 68 35 - 35 349 - 407 6,113

Source: Company Data, Barclays Capital

Since we believe that investors no longer price in the company’s exploration potential, we think it is an interesting exercise to determine the potential risk-adjusted exploration upside to our NAV calculation. We estimate the company’s risk-adjusted net resources from future exploration at slightly over 1 billion barrels, which represents a $5.3/share exploration potential assuming a value of $1.7/bl. It is important to note that our price target does not assume any exploration premium. Figure 18: HES Exploration Potential
Estimated gross reserves, mmboe 1,050 583 3,400 1,000 Estimated net reserves, mmboe 945 583 1,224 124 2,876 Risked net resources, mmboe 236 438 306 62 1,042

Prospects not yet drilled, still drilling Cape Three Points Carnavon Basin (WA-Block-390-P) Brazil BM-S-22 Area 54 Total

Region Ghana Western Australia Brazil Libya

W.I. % 100% 100% 40% 100%

Probability of success 25% 75% 25% 50% 36%

Value, $/bl 2.0 1.5 1.0 5.0 1.7

Value, $ mm 473 656 293 311 1,734

Source: Company Data, Barclays Capital

28 May 2010

24

Barclays Capital | Americas Integrated Oil

Marathon (MRO): Reiterate 2-Equal Weight
Marathon (MRO)
Rating

2-Equal Weight
NAV@$80/bl

US$ 35
Current Target Price

We estimate MRO's net asset value at $35 per share. Currently, the shares are trading at a 9% discount to NAV, compared to the group average of a 24% discount. We think Marathon’s near-term stock performance will continue to be adversely affected by the poor refining market outlook in light of its disproportional exposure in this segment. We also think that the shares will at best perform in line with its peers because of their relatively expensive valuation compared to our net asset value estimate. In addition, we expect the company’s global oil and gas production to decline nearly 4% in 2010 and forecast production growth of only 1.2% annually in the 2009-2014 period. We maintain our current price target of $34/share, in line with the company’s net asset value, and maintain our 2-Equal Weight rating. Our NAV of $35 per share includes the value of MRO’s 6.6 billion barrels resource base. We identified 3.5 billion barrels of unbooked resources and value these resources at $1.7/bl. The remaining resources are valued at 2% of the PV10 unit value of proved reserves, or $0.2/bl. The following tables show our calculation in detail: Figure 19: MRO Resource Value Calculation
MRO Resource Value Calculation Total Resources, mmboe Oil Sands, mmboe Proved, end-2008, mmboe 2P + 3P resources, mmboe Identified 2P resources, mmboe Value, $/bl Value, $ mm (A) Remaining 3P resources, mmboe Value, $/bl Value, $ mm (B) Total value of 2P + 3P resources, A+B, $ mm Value, $/bl
Source: Company Data, Barclays Capital

US$ 34
Previous Target Price

US$ 34

6,600 0 1,195 5,406 3,460 1.7 5,852 1,946 0.2 292 6,145 1.1

28 May 2010

25

Barclays Capital | Americas Integrated Oil

Figure 20: MRO 2P Resource Calculation
Prospect Rocky Mountain Oils Bakken Shale Permian Piceance Woodford Shale Haynesville Shale Marcellus Shale Droshky Oil Sands Mining Oil Sands Insitu Block 31 and 32 Total
Source: Company Data, Barclays Capital

Region United States United States United States United States United States United States United States United States Canada Canada Angola

Est. gross reserves

W.I. %

Est. net reserves 100

Est. Booked 70 - 85 23 - 30 38 - 47 13 - 19 17 - 27 15 - 25 0 26 603 0 30 659

Net unbooked resources 15 - 30 120 - 128 8 - 17 106 - 113 153 - 243 135 - 225 175 - 250 34 1397 1000 120 - 220 3,460

Value, $/bl 9 6-8 9 - 11 2-2 9 9 9 9 - 11 1-1 0-0 7-8 1.7

Value, $ mm 139 - 318 740 - 982 77 - 175 176 - 233 254 - 503 224 - 466 290 - 518 316 - 361 1187 - 1583 212 - 283 850 - 1818 5,852

176

85%

150 55 125

60% 70% 70% 60 100%

170 - 270 150 - 250 175 - 250 60 2000 1000

10%

150 - 250

28 May 2010

26

Barclays Capital | Americas Integrated Oil

Murphy (MUR): Upgrade to 1-Overweight and Raise Price Target to $74/share
Murphy (MUR)
Rating

1-Overweight
NAV@$80/bl

US$ 75
Current Target Price

US$ 74
Previous Target Price

US$ 65

We estimate MUR’s net asset value at $75/share. The shares are currently trading at a 29% discount to NAV, compared to the group average of a 24% discount. We upgrade MUR to 1-Overweight and raise our price target to $74/share, reflecting the company’s high asset value. We estimate that their Eagle Ford acreage alone could add approximately $710/share. Currently, MUR holds 201,000 acres in the Eagle Ford play, of which the company estimates that 65 thousand acres are located in the oil rich region, 48 thousand in the condensate heavy region and the remaining 88 thousand in a gas heavy region. Recently, Shell is estimated to have paid $10,000 per acre for a privately held 100,000 acre ranch far to the west near TXCO acreage in the Eagle Ford. TLM paid $8,100/acre in the gas condensate window for common resources (35-40k acres). Our upgrade also reflects the company’s expected strong production profile over the next several years. We estimate MUR will grow production at 8.5% p.a. between 2009 and 2014. Our NAV of $75 per share includes 2.5 billion bls of resources. We identified 1,380 million bls of unbooked resources and value them at $3.4/bl. The remaining resources of 342 million bls are valued at 2% of PV10 unit value of proved reserves and we value that at $123 million, or $0.4/bl. The following tables detail our calculation: Figure 21: MUR Resource Value Calculation
MUR Resource Value Calculation Total Murphy Resources Proved Reserve Reserve Excl Syncrude Estimated Syncrude Resources Identifible Unbooked Resoures Remaining resources excl Proved Value Value, $ mm Total Resources, ExclProved and Syncrude Total Resources, ExclProved and Syncrude $/boe
Source: Company Data, Barclays Capital

2,500 310 469 1,380 342 0.4 123 4,848 $2.82

28 May 2010

27

Barclays Capital | Americas Integrated Oil

Figure 22: MUR 2P Resource Calculation
Unbooked Reserves mmboe GoM ThunderHawk Eagle Ford Canada Hibernia Terra Nova Tupper Malaysia Kikeh Sarawak gas Sarawak oil Kakap Block H Other Miscellaneous (Congo, etc) Total Mid point
Source: Company Data, Barclays Capital

Value, $/bl

Value, $ mm

4 - 14 500 - 500

20 - 23 3-4

84 - 320 1471 - 2122

12 9 396 - 513

9 - 11 9 - 11 1-1

104 - 124 76 - 91 328 - 708

100 107 6 10 - 20 125 - 167 17 - 27 1285 - 1474 1,380

10 - 12 1-3 10 - 12 10 - 12 0.7 - 1.5 10 - 12 2.5 - 4.5 3.4

1024 - 1229 160 - 320 60 - 72 100 - 231 93 - 249 170 - 312 3,671 - 5,778 4,725

28 May 2010

28

Barclays Capital | Americas Integrated Oil

Petrobras (PBR/PBRA): Reiterate Ratings, Lower Price Targets
Petrobras (PBRA)
Rating

1-Overweight
NAV@$80/bl

US$ 41
Current Target Price

US$ 43
Previous Target Price

US$ 46 Petrobras (PBR)
Rating

Based on a long-run oil price of $80/bl, we estimate Petrobras’ NAV at $41 per share. Currently, we estimate the common shares are trading at a 12% discount to NAV, while the preferred shares are trading at a 24% discount. While we agree that the preferred shares should trade at a slightly larger discount to the common shares in light of the lesser liquidity and lack of voting right, we do not think it warrants such a large discount. We believe that the preferred shares should trade at a $1/sh discount to the common shares. We believe that the preferred shares (PBRA) are undervalued, and maintain our 1-Overweight rating. However, in light of the company’s net asset value, we modestly lower our price target by $3/share for both PBR and PBRA to $44 and $43 per share, respectively. Our Petrobras resource calculation is based on ANP’s previous estimate of total Brazilian resources of 23 bn bls. Based on this estimate, we assume that PBR maintains 90% of total Brazilian resources. From there, we add 2009 proved reserves, announced pre-salt discoveries, potential upside to the pre-salt recoverable rate, international resources and other technical resources to get to a total of 29.5 bn barrels.

2-Equal Weight
NAV@$80/bl

US$ 41
Current Target Price

US$ 44
Previous Target Price

US$ 47 Figure 23: Petrobras Resource Calculation
Brazil ANP Total Reserve Estimate PBR share End-2008 PBR proved reserves Implied PBR probable and possible resources Announced Pre-Salt Discoveries Upside in Recoverable rate from Pre-Salt Discoveries Other Assumed Technical Resources Total Brazil Resources million boe 23,033 20,730 11,562 9,167 11,750 5,000 2,500 28,417

International End-2008 PBR proved reserves Assumed probable and possible resources 529 1,058

Total PBR Resources
Source: Company Data, Barclays Capital

29,475

28 May 2010

29

Barclays Capital | Americas Integrated Oil

Suncor (SU): Downgrade to 2-Equal Weight
Suncor (SU)
Rating

2-Equal Weight
NAV@$80/bl

C$31
Current Target Price

C$ 37
Previous Target Price

Based on a long-term oil price of $80/bl, we estimate SU’s NAV at C$31 per share, basically in line with the current share price. In light of the company’s lower than expected net asset value, we downgrade SU to 2-Equal Weight and lower our price target to C$37/share. Our new price target represents a 20% premium to our estimated net asset value. We believe that our NAV estimate for Suncor may be a bit understated as a result of our cost inflation assumptions. Currently, we estimate a cost inflation impact on each company of 15% but would argue that the recent surge in oil sands costs will result in much lower cost inflation going forward. We think SU will be somewhat of a “show me” stock over the next several months. We think the stock will continue to trade at or just slightly above its net asset value until management can prove that they can execute effectively and safely.

C$ 42

ExxonMobil (XOM): Reiterate 1-Overweight Rating
ExxonMobil (XOM)
Rating

1-Overweight
NAV@$80/bl

US$ 82
Current Target Price

US$ 86
Previous Target Price

US$ 88

We calculate XOM’s net asset value at $82 per share. Currently, the shares are trading at a 25% discount to NAV, compared to the group average of a 24% discount. We slightly reduce our price target to $86/share, previously $88/share, which represents a slight premium to the company’s NAV. We think this premium is warranted in light of the company’s historically impressive execution record, which is reflected in its industry-leading ROCE. Although we believe XOM deserves a premium for its superior execution, we do not think the market will assign a higher premium in the near term given the scepticism of the XTO deal. That being said, we maintain our 1-Overweight rating and believe that Exxon Mobil presents the most attractive near to medium term production profile among the Super Majors, growing at an average of 2.5% per year over the next several years, while its peers may be closer to only 1% per annum. We believe that XOM has entered a new production growth cycle and think that XOM is attractive at current prices, especially after the last 18 months of underperformance. Since the end of 2008, XOM has dropped 26% versus a gain of 9% for XLE, 46% for OSX, 48% for EPX and 18% for SPX.

28 May 2010

30

Barclays Capital | Americas Integrated Oil

Valuation Methodology and Risks
Americas Integrated Oil Chevron Corporation (CVX) Valuation Methodology: Our near term (12 month) price target implies a 7.3% return on market capitalization (ROMC) under a mid-cycle market assumption of $80 per barrel flat real from 2013, representing an equity risk premium of 2.8% based on our current estimated 10-year Treasury yield of 7.0%, or 4.5% after-tax, compared to our target risk premium of 2.5% for XOM, 3.2% for ConocoPhillips, Marathon, and Petrobras, and 3.5% for Murphy and Hess. Risks which May Impede the Achievement of the Price Target: Our earnings estimates are based on Barclays Capital's current commodity price assumption on oil & gas, refining and marketing margins as well as chemical product margins. Thus, results could be subject to changes due to fluctuations in the macro commodity market environment. ConocoPhillips (COP) Valuation Methodology: Our near term (12 month) price target implies a 7.7% return on market capitalization (ROMC) under a mid-cycle market assumption of $80 per barrel flat real from 2013, representing an equity risk premium of 3.2% based on our current estimated 10-year Treasury yield of 7.0%, or 4.5% after-tax, compared to our target risk premium of 2.5% for XOM, 2.8% for Chevron, 3.2% for Marathon and Petrobras, and 3.5% for Murphy and Hess. Risks which May Impede the Achievement of the Price Target: Our earnings estimates are based on Barclay Capital's current commodity price assumption on oil & gas, refining and marketing margins as well as chemical product margins. Thus, results could be subject to changes due to fluctuations in the macro commodity market environment. Exxon Mobil Corp. (XOM) Valuation Methodology: Our near term (12-month) price target implies a 7.0% ROMC under a mid-cycle market assumption of $80 per barrel from 2013, representing an equity risk premium of 2.5% based on our current estimated 10-year Treasury yield of 7.0%, or 4.5% after-tax, compared with our target risk premium of 2.8% for Chevron, 3.2% for Marathon, ConocoPhillips, and Petrobras and 3.5% for Hess and Murphy. Risks which May Impede the Achievement of the Price Target: Our earnings estimates are based on Barclays Capital's current commodity price assumption on oil & gas, refining and marketing margins, as well as chemical product margins. Thus, results could be subject to changes due to fluctuations in the macro commodity market environment. Hess Corp. (HES) Valuation Methodology: Our near term (12 month) price target implies a 8.0% return on market capitalization (ROMC) under a mid-cycle market assumption of $80 per barrel flat real from 2013, representing an equity risk premium of 3.5% based on our current estimated 10-year Treasury yield of 7.0%, or 4.5% after-tax, compared to our target risk premium of 2.5% for XOM, 2.8% for Chevron, 3.2% for ConocoPhillips, Marathon, and Petrobras, and 3.5% for Murphy. We also add $29/share for its exploration potential and long cycle discovered hidden reserves. Risks which May Impede the Achievement of the Price Target: Our earnings estimates are based on Barclays Capital's current commodity price assumption on oil & gas, refining and marketing margins as well as chemical product margins. Thus, results could be subject to changes due to fluctuations in the macro commodity market environment. Marathon Oil Corp. (MRO) Valuation Methodology: Our near term (12 month) price target implies a 7.7% return on market capitalization (ROMC) under a mid-cycle market assumption of $80 per barrel flat real from 2013, representing an equity risk premium of 3.2% based on our current estimated 10-year Treasury yield of 7.0%, or 4.5% after-tax, compared to our target risk premium of 2.5% for XOM, 2.8% for Chevron, 3.2% for ConocoPhillips and Petrobras, and 3.5% for Murphy and Hess. We also add $3/share for MRO's long cycle discovered hidden reserves. Risks which May Impede the Achievement of the Price Target: Our earnings estimates are based on Barclays Capital's current commodity price assumption on oil & gas, refining and marketing margins as well as chemical product margins. Thus, results could be subject to changes due to fluctuations in the macro commodity market environment. Murphy Oil (MUR) Valuation Methodology: Our near term (12 month) price target implies a 8.0% return on market capitalization (ROMC) under a mid-cycle market assumption of $80 per barrel flat real from 2013, representing an equity risk premium of 3.5% based on our current estimated 10-year Treasury yield of 7.0%, or 4.5% after-tax, compared to our target risk premium of 2.5% for XOM, 2.8% for Chevron, 3.2% for ConocoPhillips, Marathon, and Petrobras, and 3.5% for Hess. We also add $24 per share for the long cycle discovered hidden resource value and exploration potential. Risks which May Impede the Achievement of the Price Target: Our earnings estimates are based on Barclays Capital's current commodity price assumption on oil & gas, refining and marketing margins as well as chemical product margins. Thus, results could be subject to changes due to fluctuations in the macro commodity market environment. Petroleo Brasileiro S.A. (PBR) Valuation Methodology: Our near term (12 month) price target implies a 7.7% return on market capitalization (ROMC) under a mid-cycle market assumption of $80/bl flat real from 2013, representing an equity risk premium of 3.2% based on our current estimated 10-year Treasury yield of 7.0%, or 4.5% after-tax, compared to our target risk premium of 2.5% for XOM, 2.8% for Chevron, 3.2% for ConocoPhillips and Marathon, and 3.5% for Hess and Murphy. Risks which May Impede the Achievement of the Price Target: Our earnings estimates are based on Barclays Capital's current commodity price 28 May 2010 31

Barclays Capital | Americas Integrated Oil

Valuation Methodology and Risks
assumption on oil & gas, refining and marketing margins as well as chemical product margins. Thus, results could be subject to changes due to fluctuations in the macro commodity market environment. Petroleo Brasileiro S.A. (PBR/A / PBRA) Valuation Methodology: Our near term (12 month) price target implies a 7.7% return on market capitalization (ROMC) under a mid-cycle market assumption of $80 per barrel flat real from 2013, representing an equity risk premium of 3.2% based on our current estimated 10-year Treasury yield of 7.0%, or 4.5% after-tax, compared to our target risk premium of 2.5% for XOM, 2.8% for Chevron, 3.2% for ConocoPhillips and Marathon, and 3.5% for Hess and Murphy. We then add $9/ADS for the long lead cycle known resource and future exploration potential. We take a $1/ADS discount to PBR.A PT to reflect the lesser share liquidity and the lack of voting right. Risks which May Impede the Achievement of the Price Target: Our earnings estimates are based on Barclays Capital's current commodity price assumption on oil & gas, refining and marketing margins as well as chemical product margins. Thus, results could be subject to changes due to fluctuations in the macro commodity market environment. Suncor Energy (SU) Valuation Methodology: Our near term (12 month) price target is based on a 20% premium to our NAV using a long term $80/bl oil price deck and a 10% discount rate. Risks which May Impede the Achievement of the Price Target: Our earnings estimates are based on Barclays Capital's current commodity price assumption on oil and gas, refining and marketing margins, and chemical product margins. Thus, results could be subject to changes due to fluctuations in the macro commodity market environment.
Source: Barclays Capital

28 May 2010

32

Barclays Capital | Americas Integrated Oil

ANALYST(S) CERTIFICATION(S)
I, Paul Y. Cheng, CFA, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.

IMPORTANT DISCLOSURES CONTINUED
For current important disclosures regarding companies that are the subject of this research report, please send a written request to: Barclays Capital Research Compliance, 745 Seventh Avenue, 17th Floor, New York, NY 10019 or refer to http://publicresearch.barcap.com or call 1-212526-1072. The analysts responsible for preparing this research report have received compensation based upon various factors including the firm's total revenues, a portion of which is generated by investment banking activities. On September 20, 2008, Barclays Capital acquired Lehman Brothers' North American investment banking, capital markets, and private investment management businesses. All ratings and price targets prior to this date relate to coverage under Lehman Brothers Inc. Barclays Capital produces a variety of research products including, but not limited to, fundamental analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or otherwise. Primary Stocks (Ticker, Date, Price) Chevron Corporation (CVX, 27-May-2010, USD 74.36), 1-Overweight/1-Positive ConocoPhillips (COP, 27-May-2010, USD 52.21), 2-Equal Weight/1-Positive Exxon Mobil Corp. (XOM, 27-May-2010, USD 61.46), 1-Overweight/1-Positive Hess Corp. (HES, 27-May-2010, USD 54.55), 1-Overweight/1-Positive Marathon Oil Corp. (MRO, 27-May-2010, USD 31.64), 2-Equal Weight/1-Positive Murphy Oil (MUR, 27-May-2010, USD 53.46), 1-Overweight/1-Positive Petroleo Brasileiro S.A. (PBR, 27-May-2010, USD 35.51), 2-Equal Weight/1-Positive Petroleo Brasileiro S.A. (PBRA, 27-May-2010, USD 30.78), 1-Overweight/1-Positive Suncor Energy (SU, 27-May-2010, CAD 32.37), 2-Equal Weight/1-Positive Other Material Conflicts XOM: Barclays Capital is acting as financial advisor to XTO Energy Inc. on the potential sale of the company to ExxonMobil Corporation. Barclays Capital also provided a fairness opinion in connection with this potential transaction. The rating, price target and estimates on XTO Energy have been temporarily suspended due to Barclays Capital's role. The rating, price target and estimates on ExxonMobil do not incorporate this potential transaction. Guide to the Barclays Capital Fundamental Equity Research Rating System: Our coverage analysts use a relative rating system in which they rate stocks as 1-Overweight, 2-Equal Weight or 3-Underweight (see definitions below) relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry sector (the “sector coverage universe”). In addition to the stock rating, we provide sector views which rate the outlook for the sector coverage universe as 1-Positive, 2-Neutral or 3Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investors should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone. Stock Rating 1-Overweight - The stock is expected to outperform the unweighted expected total return of the sector coverage universe over a 12-month investment horizon. 2-Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the sector coverage universe over a 12month investment horizon. 3-Underweight - The stock is expected to underperform the unweighted expected total return of the sector coverage universe over a 12-month investment horizon. RS-Rating Suspended - The rating and target price have been suspended temporarily due to market events that made coverage impracticable or to comply with applicable regulations and/or firm policies in certain circumstances including when Barclays Capital is acting in an advisory capacity in a merger or strategic transaction involving the company. Sector View 1-Positive - sector coverage universe fundamentals/valuations are improving. 2-Neutral - sector coverage universe fundamentals/valuations are steady, neither improving nor deteriorating. 3-Negative - sector coverage universe fundamentals/valuations are deteriorating. 28 May 2010 33

Barclays Capital | Americas Integrated Oil

IMPORTANT DISCLOSURES CONTINUED
Below is the list of companies that constitute the "sector coverage universe": Americas Integrated Oil Chevron Corporation (CVX) Hess Corp. (HES) Petroleo Brasileiro S.A. (PBR) Distribution of Ratings: Barclays Capital Inc. Equity Research has 1459 companies under coverage. 43% have been assigned a 1-Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 49% of companies with this rating are investment banking clients of the Firm. 44% have been assigned a 2-Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 44% of companies with this rating are investment banking clients of the Firm. 11% have been assigned a 3-Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 33% of companies with this rating are investment banking clients of the Firm. Barclays Capital offices involved in the production of equity research: London Barclays Capital, the investment banking division of Barclays Bank PLC (Barclays Capital, London) New York Barclays Capital Inc. (BCI, New York) Tokyo Barclays Capital Japan Limited (BCJL, Tokyo) São Paulo Banco Barclays S.A. (BBSA, São Paulo) Hong Kong Barclays Bank PLC, Hong Kong branch (BB, Hong Kong) Toronto Barclays Capital Canada Inc. (BCC, Toronto) ConocoPhillips (COP) Marathon Oil Corp. (MRO) Petroleo Brasileiro S.A. (PBRA) Exxon Mobil Corp. (XOM) Murphy Oil (MUR) Suncor Energy (SU)

28 May 2010

34

This publication has been prepared by Barclays Capital; the investment banking division of Barclays Bank PLC, and/or one or more of its affiliates as provided below. This publication is provided to you for information purposes only. Prices shown in this publication are indicative and Barclays Capital is not offering to buy or sell or soliciting offers to buy or sell any financial instrument. Other than disclosures relating to Barclays Capital, the information contained in this publication has been obtained from sources that Barclays Capital believes to be reliable, but Barclays Capital does not represent or warrant that it is accurate or complete. The views in this publication are those of Barclays Capital and are subject to change, and Barclays Capital has no obligation to update its opinions or the information in this publication. Barclays Capital and its affiliates and their respective officers, directors, partners and employees, including persons involved in the preparation or issuance of this document, may from time to time act as manager, co-manager or underwriter of a public offering or otherwise, in the capacity of principal or agent, deal in, hold or act as market-makers or advisors, brokers or commercial and/or investment bankers in relation to the securities or related derivatives which are the subject of this publication. The analyst recommendations in this report reflect solely and exclusively those of the author(s), and such opinions were prepared independently of any other interests, including those of Barclays Capital and/or its affiliates. Neither Barclays Capital, nor any affiliate, nor any of their respective officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents. The securities discussed in this publication may not be suitable for all investors. Barclays Capital recommends that investors independently evaluate each issuer, security or instrument discussed in this publication and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information in this publication is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results. This communication is being made available in the UK and Europe to persons who are investment professionals as that term is defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion Order) 2005. It is directed at, and therefore should only be relied upon by, persons who have professional experience in matters relating to investments. The investments to which it relates are available only to such persons and will be entered into only with such persons. Barclays Capital is authorized and regulated by the Financial Services Authority (‘FSA’) and member of the London Stock Exchange. Barclays Capital Inc., US registered broker/dealer and member of FINRA (www.finra.org), is distributing this material in the United States and, in connection therewith accepts responsibility for its contents. Any U.S. person wishing to effect a transaction in any security discussed herein should do so only by contacting a representative of Barclays Capital Inc. in the U.S. at 745 Seventh Avenue, New York, New York 10019. This material is distributed in Canada by Barclays Capital Canada Inc., a registered investment dealer and member of IIROC (www.iiroc.ca). Subject to the conditions of this publication as set out above, Absa Capital, the Investment Banking Division of Absa Bank Limited, an authorised financial services provider (Registration No.: 1986/004794/06), is distributing this material in South Africa. Absa Bank Limited is regulated by the South African Reserve Bank. This publication is not, nor is it intended to be, advice as defined and/or contemplated in the (South African) Financial Advisory and Intermediary Services Act, 37 of 2002, or any other financial, investment, trading, tax, legal, accounting, retirement, actuarial or other professional advice or service whatsoever. Any South African person or entity wishing to effect a transaction in any security discussed herein should do so only by contacting a representative of Absa Capital in South Africa, 15 Alice Lane, Sandton, Johannesburg, Gauteng 2196. Absa Capital is an affiliate of Barclays Capital. Non-U.S. persons should contact and execute transactions through a Barclays Bank PLC branch or affiliate in their home jurisdiction unless local regulations permit otherwise. In Japan, foreign exchange research reports are prepared and distributed by Barclays Bank PLC Tokyo Branch. Other research reports are distributed to institutional investors in Japan by Barclays Capital Japan Limited. Barclays Capital Japan Limited is a joint-stock company incorporated in Japan with registered office of 6-10-1 Roppongi, Minato-ku, Tokyo 106-6131, Japan. It is a subsidiary of Barclays Bank PLC and a registered financial instruments firm regulated by the Financial Services Agency of Japan. Registered Number: Kanto Zaimukyokucho (kinsho) No. 143. Barclays Bank PLC Frankfurt Branch is distributing this material in Germany under the supervision of Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). This material is distributed in Malaysia by Barclays Capital Markets Malaysia Sdn Bhd. Barclays Bank PLC in the Dubai International Financial Centre (Registered No. 0060) is regulated by the Dubai Financial Services Authority. Barclays Bank PLC-DIFC Branch, may only undertake the financial services activities that fall within the scope of its existing DFSA licence. Barclays Bank PLC in the UAE is regulated by the Central Bank of the UAE and is licensed to conduct business activities as a branch of a commercial bank incorporated outside the UAE in Dubai (Licence No.: 13/1844/2008, Registered Office: Building No. 6, Burj Dubai Business Hub, Sheikh Zayed Road, Dubai City) and Abu Dhabi (Licence No.: 13/952/2008, Registered Office: Al Jazira Towers, Hamdan Street, PO Box 2734, Abu Dhabi). Barclays Bank PLC in the Qatar Financial Centre (Registered No. 00018) is authorised by the Qatar Financial Centre Regulatory Authority. Barclays Bank PLC-QFC Branch may only undertake the regulated activities that fall within the scope of its existing QFCRA licence. Principal place of business in Qatar: Qatar Financial Centre, Office 1002, 10th Floor, QFC Tower, Diplomatic Area, West Bay, PO Box 15891, Doha, Qatar. This information has been distributed by Barclays Bank PLC. Related financial products or services are only available to Professional Clients as defined by the DFSA, and Business Customers as defined by the QFCRA. IRS Circular 230 Prepared Materials Disclaimer: Barclays Capital and its affiliates do not provide tax advice and nothing contained herein should be construed to be tax advice. Please be advised that any discussion of U.S. tax matters contained herein (including any attachments) (i) is not intended or written to be used, and cannot be used, by you for the purpose of avoiding U.S. tax-related penalties; and (ii) was written to support the promotion or marketing of the transactions or other matters addressed herein. Accordingly, you should seek advice based on your particular circumstances from an independent tax advisor. © Copyright Barclays Bank PLC (2010). All rights reserved. No part of this publication may be reproduced in any manner without the prior written permission of Barclays Capital or any of its affiliates. Barclays Bank PLC is registered in England No. 1026167. Registered office 1 Churchill Place, London, E14 5HP. Additional information regarding this publication will be furnished upon request.

Sign up to vote on this title
UsefulNot useful