1. John Goik John Glankler Christian Töpfner von Schütz John Goik John Glankler Christian Töpfner von Schütz Energy Sector Stock Recommendation

2. Agenda Energy Sector – Review and Proposal BP & ConocoPhillips Transocean Ltd. (RIG) Summary

3. Energy Sector - Review Industry to overweight Oil & Gas Drilling Integrated Oil & Gas Industry to underweight Oil & Gas Storage & Transportation Refining & Manufacturing

4. Energy Sector - Review SectorS&P 500 WeightSIM Weight+/- Consumer Discretionary9.11%7.19%-1.92% Consumer Staples11.81%11.65%-0.16% Energy12.04%10.74%-1.31% Financials13.86%8.93%-4.93% Health Care13.73%13.30%-0.43% Industrials9.98%12.37%2.39% Information Technology18.72%20.41%1.69% Materials3.40%4.98%1.58% Telecommunication Services3.41%3.39%-0.02% Utilities3.94%3.61%-0.34% Cash0.00%3.38%

5. Energy Sector - Review  Short Term: High Inventories Demand down by 3.2 mb/d 2Q 2009 Demand down by 2.2 mb/d 3Q 2009 Demand expected to rise again by 1.4 mb/d 1Q 2010 to 85.9 mb/d Strong oil price reaction to signs of economic recovery  Long Term: Structural capacity issues Production capacity likely to decline (weak price environment) Utilization at 100% by 2013 Demand limited by flat supply capacity Morgan Stanley oil price predictions: $85 for 2010, $95 for 2011

6. Energy Sector - Review Increase weight of Energy sector by 131 basis points to par with S&P 500 :  Sector is undervalued and has mid to long-term growth potential  Current weakness should be used to add stock in this sector  Waiting until the next SIM trading window in Nov/Dec 09 could be too long since stocks will most likely move quickly on positive news  Positives: Economic recovery (especially in China and India) Expected rise in oil prices (mid to long-term) Structural problems on the supply side (mid to long-term)  Risks: High inventory/low demand in short term Overall uncertainty in oil price predictions

7. Energy Sector - Proposal SecurityCurrent WeightBuySellNew Weight BP plc4.09% 0.31% 0.00%4.40% ConocoPhillips3.11%0.00% 3.11% Transocean Ltd3.54% 1.00% 0.00%4.54% Hess0.00% Total10.74%1.31%0.00%12.05%

8. Agenda Energy Sector – Review and Proposal BP & ConocoPhillips Transocean Ltd. (RIG) Summary

9. BP – DCF Valuation DCF Valuation 4/24/2009 BPTerminal Discount Rate =12.0% John GlanklerTerminal FCF Growth =3.0% Forecast Year2009E2010E2011E2012E2013E2014E2015E2016E2017E2018E2019E Revenue 385,405 404,675 424,909 437,656 450,786 464,309 478,238 492,585 507,363 522,584 538,261 % Growth5.00% 3.00% Operating Income 75,291 87,996 102,846 56,895 58,602 60,360 62,171 64,036 65,957 67,936 69,974 Operating Margin19.54%21.74%24.20%13.00% Taxes 14,966 17,753 21,058 11,478 11,823 12,177 12,543 12,919 13,307 13,706 14,117 Tax Rate19.6%19.9%20.2% Minority Interest - - - - - - - - - - - Net Income 60,325 70,244 81,788 45,417 46,779 48,183 49,628 51,117 52,651 54,230 55,857 % Growth16% -44%3% Add Depreciation/Amort10,98511,53412,11112,47412,84913,23413,63114,04014,46114,89515,342 % of Sales2.85%2.9% CapEx3083232374339933501236063371453825939407405894180743061 Free Cash Flow40,47749,40459,90622,87923,56524,27225,00025,75026,52327,31828,138 YOY growth22%21%-62%3% Current Price$51.20 Implied equity value/share$94.40 Upside to DCF84.40%

10. BP – Multiples Valuation  Average Target Price for Multiples Valuation: $74.94  Final Average Target Price for BP: 80% DCF weight and 20% Multiples = $91.51 76.78% Upside Correlation to oil price: r = 0.70 Absolute Valuation HighLowMedianCurrent #Your Target Multiple *Your Target E, S, B, etc/Share Your Target Price (F x G) P/Forward E14.44.710.3 8.09.1973.52 P/S1.10.00.80.6 117.6570.59 P/B3.31.42.71.72.059.67119.34 P/EBITDA8.122.865.714.014.19.2738.01 P/CF9.73.37.65.76.012.2173.26

11. ConocoPhillips – DCF Valuation DCF Valuation 7/13/2009 Ticker: COPTerminal Discount Rate =11.5% John GlanklerTerminal FCF Growth =4.0% In Millions($) Forecast Year2009E2010E2011E2012E2013E2014E2015E2016E2017E2018E2019E Revenue 180,632 198,695 214,590 231,757 250,298 270,322 291,948 315,303 340,528 367,770 % Growth0.00%10.00%8.00% Operating Income 6,851 8,658 10,020 12,875 13,905 15,018 16,219 17,517 18,918 20,432 22,066 Operating Margin3.79%4.79%5.04%6.00% Interest and Other- net 5,740 5,603 5,470 4,292 4,635 5,006 5,406 5,839 6,306 6,811 7,355 Interest % of Sales3.18%3.10%2.75%2.00% Taxes 5,334 4,827 4,170 5,810 6,275 6,777 7,319 7,905 8,537 9,220 9,958 Tax Rate33.8% Minority Interest - - - - - - - - - - - Net Income 8,151 9,434 10,426 11,357 12,265 13,247 14,306 15,451 16,687 18,022 19,464 % Growth16%11%9%8% Add Depreciation/Amort6,759 7,4358,0308,6729,36610,11510,92411,79812,74213,761 % of Sales3.74%3.7% Plus/(minus) Changes WC1,5380(2,954)(2,682)(2,897)(3,129)(3,379)(3,649)(3,941)(4,257)(4,597) % of Sales0.85%0.00%-1.49%-1.25% Subtract Cap Ex13,084 14,39310,73011,58812,51513,51614,59715,76517,02618,388 Capex % of sales7.24%5.0% Free Cash Flow3,3643,1095145,9756,4536,9697,5268,1298,7799,48110,240 YOY growth-8%-83%1063%8% Current Price$44.22 Implied equity value/share$48.20 Upside to DCF9.00%

12. ConocoPhillips – Multiples Valuation  Average Target Price for Multiples Valuation: $52.21  Final Average Target Price for COP: 80% DCF weight and 20% Multiples = $49.00 10.81% Upside Correlation to oil price: r = 0.94 Absolute Valuation HighLowMedianCurrent #Your Target Multiple *Your Target E, S, B, etc/Share Your Target Price (F x G) P/Forward E11.35.38.09.79.03.7533.75 P/S0.90.20.60.30.7106.2574.38 P/B2.3.81.51.11.437.1952.07 P/EBITDA12.442.583.913.9857.2536.25 P/CF8.22.35.42.95.411.9664.58

13. COP - Recommendation  Hold: Some upside potential, but not enough to add to current position Should profit from increasing oil price Review position next quarter and potentially replace if upside potential has been exhausted

14. Agenda Energy Sector – Review and Proposal BP & ConocoPhillips Transocean Ltd. (RIG) Summary

15. Transocean (RIG)  Industry: Oil & Gas Drilling and Exploration  Company: Provides offshore contract drilling services for oil and gas wells worldwide  Market Cap: $24.07 Billion (08/09/2009)  Makes up 33% of SIM Energy Sector and 3.54% of Total Assets in the SIM portfolio 7,670 shares Cost Basis: $71.50 Current Price: $75.06 (08/09/2009)

16. RIG – Business Analysis

17.  Competition High cost, small number of similar companies  Diversity of Location China, India  Strong Ultra Deepwater Market Deep water is where major new oil finds are most likely Contract with Petrobras (Brazil)

18. RIG – Financial Analysis  S&P projects earnings of Oil and Gas Drillers to grow at 22% annually over the next 5 years  Strong contract backlog of $33.7B

19. RIG – Financial Analysis  $900M in cash Buyback shares or pay down debt  2Q 2009 EPS $2.79 below analyst estimates of $3.02 “Operational Incident” - $30M Swap of Legend and Sedco 703 rigs - $22m  4% drop in stock price Market overreaction?

20. RIG – DCF Valuation Current Price $75.06 Implied equity value/share $103.52 Upside to DCF37.92%

21. RIG – DCF Valuation  Average Operating Margin is 41.30% Too High?  Average Target Price for DCF Valuation: 30% Weighting towards low end margin 60% Weighting towards middle margin 10% Weighting towards continuing trend on high end  Result = Average Price $110.69

22. RIG – Multiples Valuation

24.  Average Target Price for Multiples Valuation: $156.87  Final Average Target Price for RIG: 80% DCF weight and 20% Multiples = $119.93 59.78% Upside Correlation to oil price: r = 0.93 Absolute Valuation HighLowMedianCurrent Target Multiple Target E, S, B, etc/Share Target Price P/Forward E49.03.112.36.39.312.88119.78 P/S9.41.36.81.94.537.51168.80 P/B4.70.92.81.32.057.74115.48 P/EBITDA22.292.4415.323.7310.020.12201.20 P/CF33.82.817.64.711.115.97177.27

25. RIG - Recommendation  Buy 100 bps of RIG Strong business position Favorable valuations Increase in price of oil Weakening value of dollar  Risks Decline in oil price Stronger dollar

26. Agenda Energy Sector – Review and Proposal BP & ConocoPhillips Transocean Ltd. (RIG) Summary

27. Energy Sector - Summary SecurityCurrent WeightBuySellNew Weight BP plc4.09% 0.31% 0.00%4.40% ConocoPhillips3.11%0.00% 3.11% Transocean Ltd3.54% 1.00% 0.00%4.54% Hess0.00% Total10.74%1.31%0.00%12.05%

28. What Questions Do You Have? Energy Sector - Stock Recommendation What Questions Do You Have?