Global: Energy: 280 Projects To Change The World

January 15, 2010
January 15, 2010
Global: Energy
Global: Energy
280 projects to change the world

The winners keep on winning
Services key beneficiaries of new projects
The Winners of the last six editions of this

report have outperformed their peers by 8% on an
annualized basis (2% for the Top 230 winners
since February 2009). The stocks we have
identified as winners in this analysis are: BG,
Shell, Petrobras, GALP, Tullow, and Woodside.
We believe that 2010 will see the largest number

of new project sanctions since 2006, leading to
increasing backlogs for oil services and new
capacity bottlenecks in SURF, subsea equipment
and LNG. A sharp increase in the technical risk of
new developments is likely to prove positive for
leaders in frontier developments.
Performance of company categories

Top 50
Michele della Vigna, CFA

+44(20)7552-9383 | michele.dellavigna@gs.com Goldman Sachs International
Christophor Jost
+44(20)7774-0014 | christophor.jost@gs.com Goldman Sachs International
Michael Rae
+44(20)7552-2538 | michael.rae@gs.com Goldman Sachs International
Arjun N. Murti
(212) 357-0931 | arjun.murti@gs.com Goldman Sachs & Co.
The Goldman Sachs Group, Inc.
Goldman Sachs Global Investment Research
Top 170
Top 190
Top 230
Average
-5%
-1%
Low returns,
long term
-13%
-4%
-24%
-10%
3%
7%
-1%
Low or average
exposure
Selecting Oil Services winners
5%
7%
-2%
We have screened our global Oil Services

universe to identify winners with leading
positions in high growth businesses (subsea,
LNG) and attractive geographical areas (Brazil,
ME, Asia-Pacific): Technip, Petrofac, FMC,
Schlumberger, JGC and Foster Wheeler stand out.
0%
8%
High reward,
near term
2%
3%
20%
-4%
14%
11%
-30%
OPEC at full utilization by 2011-12

We estimate that OPEC capacity will only grow
c.1%-2% pa in the coming years, mostly from
Iraq. Our analysis points towards 100% OPEC
capacity utilization by 2011/12, leading to the
need for demand rationing pricing. Even if Iraqi
redevelopments achieve their ambitious targets,
OPEC would run close to full utilization.
Top 125
-10%
Non-OPEC production likely to disappoint

On our estimates, 2009 will be the last year of
growth in non-OPEC production, as the industry
suffers from the lack of new project sanctioning in
2007-09. Recent trends of poor delivery and
increasing decline rates suggest that non-OPEC
decline could be over 1 mnbls/d pa from 2011.
Top 100
-20%
-10%
0%
10%
20%
30%
Peer-relative share price performance
Delivery will be key to value creation
Source: Datastream, Goldman Sachs Research estimates.
Increasing technical risk requires strong delivery

skills. We have back-tested the companies ability
to bring fields into production, highlighting BG
and Exxon. We have also tested the ability of
companies to add value through exploration. BG
is the only company to stand out on all metrics.
The Goldman Sachs Group, Inc. 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. For Reg AC certification, see the end of the text. Other
important disclosures follow the Reg AC certification, or go to
www.gs.com/research/hedge.html. Analysts employed by non-US
affiliates are not registered/qualified as research analysts with FINRA
in the U.S.
Global Investment Research
January 15, 2010
Global: Energy
Table of contents
Key findings from the Top 280 Projects
The Top 280 Projects
21
Non-OPEC supply will be disappointing, with fewer big projects and higher decline rates
29
All regions show a disappointing delivery of oil projects
34
Cost deflation: 2009 input cost softening creates lower breakeven opportunities
39
Oil Services to benefit from increased sanctions and complexity introducing the Winners
41
GS SUSTAIN winners continue to do well in Top 280
61
Top 280 assets likely to be a significant driver of M&A
80
Lower political risk comes at the cost of higher technical risk
83
Tracking the progress of the companies through our legacy asset analysis
89
Win zones in the Top 280
93
Company competitive positioning
120
Top 280 portfolio characteristics by company
121
A Top 280 NPV analysis shows the Russian oils as particularly attractive
122
Summary of key Top 280 Projects metrics by company
150
Disclosures
152
Americas Energy - Arjun Murti, Business
Unit Leader
Europe Energy - Michele della Vigna,

Business Unit Leader
Asia Energy - Kelvin Koh,

Energy Team Leader
Integrated Oils, Refining

Arjun Murti
Amil Mody
Joe Citarrella
Marketing analyst
Hugh Selby-Smith
Asia ex-Japan, India

Kelvin Koh
Chris Shiu
Patrick Tiah
Jason Jin
Nikhil Bhandari
Oil Services, Drillers

Daniel Boyd
Dimitry Dayen
Kyle Jenke
Kapil Chauhan
E&Ps
Brian Singer
Andre Benjamin
Pavan Hoskote
Uma M. Yanamandra
Americas E&C
Joseph Ritchie
European Integrated Oils

Michele della Vigna
Ruth Brooker
E&P
Christophor Jost
Oil Services
Henry Tarr
Michael Rae
Refiners
Henry Morris
Russian Oils
Anton Sychev
Geydar Mamedov
India
Nilesh Banerjee
Nishant Baranwal
Japan
Hiroyuki Sakaida
Kunio Sakaida (Cyclicals)
Moe Ichii
Australia (GSJBWere)
Aiden Bradley
Mark Wiseman
Chris Savage (E&C)
Nathan Reilly (E&C)
The prices in the body of this report are based on the market close of January 13, 2010 unless otherwise stated.
January 15, 2010
Global: Energy
Key findings from the Top 280 Projects
Identify the winners. Page 5
Stock picking
The Winners in the past six editions

of this report have outperformed
their peers by 8% CAGR
Global analysis
This years winners are: BG, Shell,

Petrobras, GALP, Tullow, Woodside
Top 280 is getting bigger and more material. Page 22

We have added 57 new projects in the report,
that now includes the Iraqi redevelopments, more
Russian greenfields and recent discoveries
We now model 430 bnboe of reserves that will

produce over a third of the worlds hydrocarbons by
2021E and account for 38% of the Majors capex
Non-OPEC supply decline likely to lead to demand rationing pricing. Page 29

On our estimates, 2009 will be the last year of growth in
non-OPEC production. Beyond 2009, non-OPEC
production will start to shrink (having grown 0.5% pa in
2003-09), due to few start-ups and increased decline
Recent trends of poor delivery and increasing decline

rates point towards 100% OPEC capacity utilization by
2011/12, leading to the need for demand rationing
pricing, even if the ambitious Iraqi targets were achieved
Oil services are the key beneficiaries of a new wave of technically complex projects. Page 41
We have screened for oil services companies with leading
positions in high growth businesses (subsea, LNG) and
attractive geographical areas (Brazil, ME, Asia-Pacific):
Technip, Petrofac, Schlumberger, FMC, JGC and
Foster Wheeler have been identified as winners.
We believe that 2010 will see the largest number of new

project sanctions since 2006, leading to increasing
backlogs for oil services and potential capacity
bottlenecks in SURF, subsea equipment and LNG
Delivery (page 61) and exploration success (page 13) will be key to value creation
Increasing technical risk requires strong delivery skills.
We have back-tested the companies ability to bring
fields into production, highlighting BG and Exxon
We have also tested the ability of companies to add value

through exploration. BG, Petrobras, Tullow and Galp stand
out. BG is the only company to stand out on all metrics
Risks & opportunities: Tax renegotiations (page 67) and M&A (page 80)
An average P/I of 1.6x for pre-sanction projects
is likely to lead to cost inflation and tax
changes. We have highlighted the companies
exposed to potential renegotiations.
We have identified eight potential M&A targets

that have beneficial exposure to Top 280, no
blocking shareholders and high growth
portfolios
Detailed analysis of the win zones. Page 92
Global supply
Heavy Oil, p101

Unconventional Gas, p105
Deepwater, p107
LNG, p111
Iraq, p114
Russia, p118
Other themes: PSC page 69; Risk page 83
New cost environment
Company charts, page 120
Source: Goldman Sachs Research estimates.
January 15, 2010
Global: Energy
Picking winners: New legacy asset exposure drives share price performance
Outperformance trend of winners has continued despite oil price volatility
Since publication of the Top 230 in February 2009, the Top 230 winners have outperformed their peers by 2%, while those with low
returns and long term exposure have underperformed by 5%. The outperformance of our Winners category now averages 8% pa
across our six previous publications. This contrasts with an average 10% pa underperformance by stocks with exposure to the longterm, low-return assets which we consider to be less attractive. The performance calculation for each group of companies
highlighted in the different editions of the report shows the relative performance of each company vs. its peer group in the period
from the publication of that report to the publication of the one following. The peer groups used are Europeans, US, EM,
Canadians and E&P.
Exhibit 1: Performance of core project categories between publications
Peer-relative share price performance
30%
20%
20%
14%
11%
10%
8%
3%
7%
7%
5%
2%
3%
0%
0%
-2%
-1%
-1%
-4%
-4%
-5%
-10%
-10%
-10%
-13%
-20%
-24%
-30%
High reward, near term
Top 50
Top 100
Low or average exposure
Top 125
Top 170
Top 190
Low returns, long term
Top 230
Average
The category High reward, near term includes High risk/high reward from Top 50, High reward, near term from Top 100, Near term
winners from Top 125 and Winners from Top 170, Top 190 and Top 230. The category Low or average exposure includes Muted exposure
and Little or no exposure from Top 50, Manageable exposure from Top 100, Balanced exposure and Limited exposure from Top 125,
Limited exposure and Near term exposure from Top 170, Limited exposure from Top 190 and Low or average exposure from Top 230. The
category Low returns, long term includes High exposure but low returns from Top 50, Long term, lower return from Top 100, Long term
winners from Top 125, Long term exposure from Top 170 and Top 190 and Low returns, long term from the Top 230.
Previous publications: Top 50: June 2003; Top 100: January 2005; Top 125: February 2006; Top 170: February 2007; Top 190: April 2008; Top 230:
February 2009. Note: Results presented should not and cannot be viewed as an indicator of future performance.
Source: Datastream, Goldman Sachs Research estimates.
January 15, 2010
Global: Energy
Choosing the winners: High materiality combined with production and cash flow uplift
We have based our selection of winners on a combination of three factors (Exhibit 2). The first is materiality. We require that the
NPV of a companys portfolio as a % of its EV is above 50%. The second is based on cash flow uplift, which measures how the Top
280 portfolio is likely to transform the companys cash generation: we select companies where the short-term uplift (two years) is
above 20% and the medium-term (five years) is above 40%. Finally we screen for production uplift, and only select companies
where the short-term uplift to production is above 10% and the medium-term is above 30%. The Winners therefore own material
new projects, which represent a large component of their market value and which we estimate will materially lift their future cash
flows and production in both the short and medium term. We no longer use profitability as a metric by which to judge the winners
as we expect the portfolios of all the companies to achieve an impressive P/I (profit/investment) ratio of at least 1.4x at a discount
rate of 8% an indication of the overall attractiveness of the Top 280 universe.
Exhibit 2: The Top 280 winners have high profitability, high materiality and an attractive cash uplift
Cash flow
uplift 2 & 5 yr
NPV/EV
Nexen
Chevron
Marathon
Statoil
BP
Hess
TNK-BP
INPEX
Devon Energy
Suncor
Gazprom
RDShell
Lukoil
Petrobras
Galp
Murphy
BG
Tullow
Woodside
Chesapeake
Anadarko
Apache BHP Billiton
ConocoPhillips
CNOOC EnCana
ENI
ExxonMobil
Noble Energy Occidental
ONGC
Production
uplift 2 & 5 yr
PetroChina
PTTEP
Repsol
Rosneft
Santos
Talisman
TOTAL
Source: Company data, Goldman Sachs Research estimates; Woodside and Santos are covered by GS JBWere.
January 15, 2010
Global: Energy
280 projects to change the world: Modelling an industry striving to grow

We have extended our analysis of the industrys new legacy assets to 280 projects (from 230). The Top 280 Projects now
represent 430 bnboe of oil and gas reserves and almost half the planned E&P capex for the Majors over the next three years.
In our view these projects will not only be the main driver of returns transformation for the companies under our coverage,
but will also be a key driver for the global supply of oil and gas over the next 5-10 years, a key determinant of growth and
margin transformation for the oil services industry, with implications for the refining sub-sector.
The Top 280 Projects sample set is more material for the Integrated oil companies than before
Our analysis of the industrys new legacy assets has grown from 91 bnboe in Top 50 Projects (June 2003) to 430 bnboe in Top 280
Projects. We estimate that these projects will deliver around 46.6 mnboe/d of production by 2021E (36% of current global oil and
gas production). The sample set is material for the companies: the nearly US$225 bn of expected Top 280 Projects capex by the
Majors in the next four years represents 38% of overall capex, and 49% of total upstream capex for the Majors on our estimates.
These projects represent the advantaged project slate for the industry as a whole, yet the average pre-sanctioned project requires
almost US$60/bl to meet the industrys hurdle rates and the marginal projects require more than US$90/bl. This highlights the
challenge faced by the industry in this environment.
Exhibit 3:
Exhibit 4: Top 280 capex as a percentage of Majors total capex
Top 280 Projects oil and gas production profile
50,000
50%
45,000
45%
Total production
peaks at almost 36%
of 2008 global
production in 2021E
30,000
25,000
Despite poor
delivery, the Top
280 still account
for almost 15% of
2008 global
production in
2010E
35%
30%
25%
Oil (LH)
Gas (LH)
% oil production (RH)
% gas production (RH)
Exploration
12%
Marketing
6%
Refining
7%
Other E&P
3%
Top 280 Projects
38%
Non-Top 280
development
25%
2059E
2057E
Gas
5%
% oil and gas production (RH)
Source: Company data, Goldman Sachs Research estimates, BP Statistical Review 2009.
2055E
2053E
2051E
2049E
2047E
2045E
2043E
2041E
2039E
2037E
2035E
2033E
2031E
2029E
2027E
2025E
2023E
2021E
0%
2019E
0
2017E
5%
2015E
5,000
2013E
10%
2009
10,000
2011E
15%
2007
15,000
2005
20%
2003
20,000
2001
Production (kboepd)
35,000
Chems
4%
40%
% of 2008 global production
40,000
Source: Company data, Goldman Sachs Research estimates.
January 15, 2010
Global: Energy
Global oil supply: The slate of new projects keeps growing, but is maturing very slowly
The Top 280 database of projects keeps growing thanks to new discoveries and developments (this year the largest additions are
from exploration in Brazil and GoM and redevelopments in Iraq). However this should not lead to the conclusion that we will see
strong supply growth in the coming years. These projects have been maturing very slowly, with only a handful getting FID over the
past three years and delivery has also been problematic, with major delays.
FIDs have been delayed by uncertainty on costs and tax renegotiations and Exhibit 5 shows that the level of sanctions has been
poor since 2007. The industry has effectively wasted around three years to progress a new wave of field developments. Given an
average lead time of about four years to first production, this means that production growth in the 2011-13E period is likely to be
disappointing. We assume a new wave of sanctions in 2010-12E, thanks to a more stable cost environment.
The problem of a relatively empty pipeline of projects for the next four years is likely to be compounded by poor delivery. Exhibit 6
shows the volumes that have been delivered from the forecasts in our previous six editions of this study. It should be noted that we
are always too optimistic, as we are unable to forecast field-specific problems. On average, the industry has delivered 5% less than
we expect 1 year forward, 10% less 2 years forward and 15% less three years forward.
Exhibit 5: Few new oil projects were sanctioned in the past three years ...
Exhibit 6: ... and delivery has been poor
Top 280 oil & gas reserves sanctioned each year, excluding Iraq
Oil volumes lost vs. our initial forecasts from the past six editions of this report
30,000
120
Last historical
1 yr fwd
2 yr fwd
3 yr fwd
4 yr fwd
5 yr fwd
0%
vs. Top 230, Feb 2009
100
-5%
vs. Top 190, Apr 2008
80
15,000
60
10,000
40
5,000
20
-10%
% volume lost to Top 280
20,000
Oil price (US$/bbl)
Reserves sanctioned by year (mn boe)
25,000
vs. Top 170, Feb 2007
vs. Top 125, Feb 2006
-15%
vs. Top 100, Jan 2005
-20%
-25%
vs. Top 50, Jun 2003
-30%
0
2002
2003
2004
Oil
2005
Gas
2006
2007
2008
2009
2010E 2011E 2012E
Oil price (GS estimates post 2009)
-35%
From Top 50
From Top 170
From Top 100

From Top 190
From Top 125

From Top 230
January 15, 2010
Global: Energy
Supply remains structurally supportive of oil prices; demand rationing pricing a likely necessity
On our analysis, 2009 was the last year of growth in non-OPEC production, thanks to a slate of long-awaited new projects that came
onstream (such as Thunder Horse, Agbami, Tahiti, Vankor). From 2010, the start-up of new projects will reflect the scarcity of FIDs
in the 2007-09E period. We also assume an increase of decline in the mature basins, consistent with our observations since the start
of the decade. On our estimates, non-OPEC production will shrink over the foreseeable future (having grown 0.5% pa in the 2003-09
period).
Our base case production forecast utilizes the Top 280 production forecast and a mild increase in decline rates. We can effectively
define this as a best case or perfect delivery scenario, which would lead to almost 500 kbls/d of decline from 2011E. Exhibit 7 also
shows three more realistic scenarios, where we factor in delivery in line with that observed over the past six editions of this report,
a one percentage point increase in decline rates each year (also in line with our observations), and a combination of both. The
result is a decline in non-OPEC production of up to 1.5 mnbls/d.
Exhibit 8 looks at OPEC capacity utilization, given these four scenarios and our forecast for global oil demand growth of 1.4% pa.
This shows that we expect OPEC to achieve an unsustainable 100% utilization by 2011-12 according to the scenarios. This implies
that demand rationing pricing is likely to be necessary over that timeframe.
Exhibit 7: Non-OPEC could decline by up to 1.5 mnbls/d from 2011E
Exhibit 8: OPEC likely to reach full capacity utilization in 2-3 years
Scenarios of non-OPEC production growth/(decline) based on delivery and decline
OPEC capacity utilization on our estimates on different scenarios

120%
2,500
115%
2,000
110%
1,500
OPEC capacity utilization
1,000
500
0
105%
Physical limit to demand
100%
95%
-500
90%
-1,000
-1,500
2015E
2014E
2013E
2012E
2011E
2010E
2009E
2008
2007
2006
2005
2004
2003
2002
2001
2014E
2013E
2012E
2011E
2010E
2009E
2008
2007
2006
2005
2004
2003
2002
85%
2000
non-OPEC yoy production growth / (decline) kbls/d
3,000
Perfect delivery
Delivery in line with history
Base case
Historical delivery
One percent more decline in the base
One percent decline and historical delivery
1% increase in decline rates
Historical delivery and decline increase
January 15, 2010
Global: Energy
Marginal projects require US$85-95/bl under current cost environment; 4 mnbls/d of 2018E
production could remain unsanctioned at US$60/bl
Our base case cost modelling in this report is based on the current cost environment and does not assume potential cost inflation
in the future. In assessing the breakeven price required we use commercial hurdle rates (ranging from 11% in OECD to 15% in high
risk countries; under our base case, the marginal cost of production (Canadian heavy oil) is in the US$85-95/bl range). Beyond
Canada, the next tranche of marginal projects (ultra-deepwater West Africa and lower tertiary GoM) requires a price of US$65-75/bl
while sub-salt Brazil requires c.US$45/bl, thanks to economies of scale and exceptionally high flow rates.
Although the forward curve would justify the development of almost all projects in this study, we believe that the final investment
decision of projects requiring more than US$75/bl is unlikely to be taken until there is a further increase in the oil price.
Exhibit 9: Marginal Top 280 fields require US$85-US$95/bl oil price
Breakeven of non-producing oil assets
$105
$95
Fort Hills
Joslyn
Frontier Tchikatanga
Leismer
Northern Lights
Ofon 2
Ugnu
Korchagina & Filanovskogo
Pearl GTL
Dover
Suzunskoye & Tagulskoye
Thickwood
MTPS
Kamennoye
US$/bl breakeven
$85
$75
Sunrise
Hebron
Block 31 North East Carmon Creek
MacKay River ExpansionBuckskin
Goliat
Cascade & Chinook
Point Thomson liquids
Jack31
/ StWest
Malo
Block 32 Phase 2 BS-4
Block
Kearl Lake
Block 32 Phase 1
Oryx GTL Expansion
Nabiye
Stones
Block 31 South East Umm
Firebag
al-Lulu
SAS expansion Tiber
Kaskida
Bakken Shale Papa Terra
Shenandoah
Usan
Narrows
Lake
Vito
Bonga SW Aparo Bosi
Block 18 West
Kodiak / Tubular Bells
Lucapa
Clair Freedom
Ridge
Perdido
Knotty Head
Pazflor Vankor
Block 17 CLOV
Carioca
Rosebank
Mars B
Egina
Peregrino
Abare West Kebabangan
Gumusut
El Merk
Tupi
$65
$55
$45
$35
Amal
Tempa Rossa
Kizomba Satellites Iara Guara
Pipeline
Uganda, Blocks 1, 2 & 3 Vesuvio
TGT
Caesar Tonga
Shenzi Jidong Nanpu
Miran
Upper Zakum expansion
Jubilee
$25
0
2000
4000
6000
8000
10000
12000
14000
16000
Cumulative oil peak production (kboepd)
January 15, 2010
Global: Energy
The risk profile is changing: Shying away from political risk, taking on technical challenges
We believe that from 2010E, the Top 280 investment profile will increasingly focus on areas with lower political risk (Exhibit 10). On
the gas side, this is primarily due to the large unconventional gas portfolio which adds significant US-based production, and the
large weight of capital-intensive LNG projects in Australia. The picture is similar for oil with substantial investment expected to be
made in ramping up the heavy oil sands projects in Canada, the Brazilian pre-salt plays and the Gulf of Mexico. These projects tend
to be capital intensive, which further skews the investment towards these areas. We note that Iraq acts as a counterweight to this
trend but has less of an impact due to the relatively low cost nature of the development that we assume.
While we see political risk declining, technical risk is likely to step up from 2011, as companies move into frontier areas to look for
resources in politically safe countries that are more technically challenging to develop. This step-up in technological risk is likely to
lead to an increase in development times, delays and cost overruns and is likely to benefit the oil services companies exposed to
these frontier areas.
We believe that the increasing technical risk profile is caused by three main factors: 1) a change in production mix: more traditional
and easily monetized oil and gas fields are replaced by fields with higher technological complexity and higher capital intensity (i.e.
deepwater, LNG, GTL and heavy oil); 2) the increased depth of prospects and greater proportion of pre-salt or sub-salt fields in the
deepwater win zone; and 3) the tackling of more geologically complex, HPHT and high sulfur reservoirs (i.e. Kashagan and Shah).
Exhibit 10: The industry is shying away from political risk...
Exhibit 11: ...at the expense of ever increasing technical challenges
Political risk of the Top 280 projects weighted by capex spend
Technical risk of the Top 280 projects weighted by capex

1.3
1.7
1.2
1.6
1.5
1.1
Technical risk
Political risk
1.4
1.3
1.2
1.1
0.9
1
0.9
0.8
0.8
64
64
79
104
125
137
151
162
171
186
199
208
212
211
210
205
195
185
104
125
137
151
162
171
186
199
208
212
211
210
205
195
185
177
E
20
20
20
19
20
18
20
17
20
16
20
15
20
14
20
13
E
X
20
12
Technical risk by capex (LH)
20
11
09
08
07
06
05
04
03
20
10
20
20
20
20
20
20
20
20
9E
8E
0E
20
2
20
1
6E
5E
4E
3E
7E
20
1
20
1
20
1
20
1
20
1
2E
Number of projects spending in year
20
1
0E
1E
X
20
1
20
1
20
1
20
09
20
08
20
07
20
06
20
05
20
04
Political risk by capex (LH)
02
0.7
20
03
20
02
79
177
0.7
10
January 15, 2010
Global: Energy
Oil Services companies are the main beneficiaries of the rising technical risk
We believe the global oil services companies offer some of the most compelling investment opportunities from the Top 280
analysis. We expect the service providers to continue to benefit from the new wave of infrastructure investment which began in 2H
2009 as further Top 280 investment is signed off by operators in 2010 as the oil industry looks to catch up on three years of low
investment in large new projects. We believe this will be combined with a structural need for more sophisticated development
solutions to meet the needs of producers targeting more challenging water depths and resource types. In our view, this will
increase the capital outlay required for the projects, further increasing the size of the opportunity for oil service providers.
Exhibit 12: Top 280 contract awards are growing in size as investment
shifts to more challenging areas
Exhibit 13: We expect much of the new activity to yield higher margins for
oil services companies
Technical risk of Top 280 project capex and average size of SURF contract
(US$ mn)
Technical risk of Top 280 capex and EBITDA margins of global oil services
universe
Capex weighted technical risk - LHS
10%
Capex-weighted technical risk - LHS
20
12
E
0.85
20
11
E
20
18
E
Average size of SURF contract (US$mn) - RHS
Source: Company data, Goldman Sachs Research estimates, Datastream.
20
16
E
20
17
E
20
14
E
20
15
E
20
12
E
20
13
E
20
10
E
20
11
E
20
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
0.80
0.90
20
10
E
200
0.85
15%
20
09
0.90
0.95
20
08
400
20
07
0.95
20
06
600
1.00
20
05
1.05
20%
1.00
20
04
800
Technical risk
Technical risk
1.10
25%
1.05
20
02
1000
1.15
Average size of SURF contract award (US$mn)
1.20
1.10
Weighted average EBITDA margin
1200
20
03
1.25
Weighted average EBITDA margin - global services coverage group - RHS
11
January 15, 2010
Global: Energy
Introducing the Top 280 Oil Services winners

We update our analysis to include a breakdown of which parts of the oil services chain we believe will benefit most from the
increased project sanctions shown in Exhibit 5. Based on activity growth, we highlight subsea equipment, SURF, LNG and Iraq as
positive areas of exposure for oil services companies. The FPSO construction industry screens well in terms of demand growth,
however we believe it has poor leverage to the investment cycle and therefore exclude it from our winners screen. We identify
heavy oil and Russia as areas where there is less potential for growth in the short term. We are also less positive on offshore
drilling exposure, as we see a decline in the number of wells drilled to 2012 in all areas excluding ultra deepwater (>1,500m water
depth).
Within our favoured areas of exposure, we screen across our global oil services coverage to highlight companies which we believe
can become structural winners because of their exposure to the industrys new wave of growth projects. We filter out companies
without exposure to the key growth areas of Brazil, the Middle East or Asia-Pacific, and select the companies with through-cycle
returns of greater than their peer-group median (measured as CROCI).
The winners on this basis are: JGC, Foster Wheeler, Petrofac, Schlumberger, FMC Technologies and Technip. These companies are
advantaged in either Australian LNG (JGC, Foster Wheeler), deepwater frontier developments (FMC Technologies, Technip,
Schlumberger) or onshore Middle East and potentially Iraq (Petrofac, Schlumberger).
Exhibit 14: Deepwater-related services, LNG and Iraq screen well as areas of
exposure, together with geographical exposure to LatAm and Asia-Pacific
Exhibit 15: We outline the companies best exposed to the Top 280 projects
Global Oil Services winners
Compound activity growth to 2012E by Oil Services win zone

Services win zone
FPSO
SURF
Subsea
LNG
Heavy oil
Russia
Activity growth 2009 to 2012E

12%
19%
12%
14%
6%
-4%
Drilling: traditional (50 - 100m jack-up)

Drilling: traditional (<750m)
Drilling: deepwater (<1500m)
Drilling: ultra deepwater (>1500m)
Activity growth 2009 to 2015

10%
22%
10%
11%
16%
-6%
Active in levered
win zone
Amec
Based on expected
capex
-13%
1%
-4%
18%
Based on expected
wells drilled
7%
10%
Based on production
Fluor
Africa
Asia-Pacific
Europe
Latin America
Middle East
Deepwater:
-1%
33%
16%
-
LNG:
-21%
44%
-30%
Tenaris
Hornbeck
C.A.T. Oil AG
Dresser-Rand
JGC
Worley Parsons
Subsea 7
KBR
Saipem
Deepwater:
6%
-11%
8%
-
MODEC
Acergy
Foster Wheeler
LNG:
National Oilwell Varco

Atwood Oceanics
Petrofac
Chiyoda
Maire Tecnimont
Schlumberger
Diamond Offshore
FMC Technologies
Offshore Oil Engineering
Growth region
Eurasia Drilling Company
Chicago Bridge & Iron

Jacobs Engineering
-22%
-14%
-24%
21%
Iraq
Favourable midcycle returns
ENSCO
Technip
Halliburton Cameron
Noble
Transocean
SBM Offshore
Baker Hughes
Weatherford Aker Solutions
18%
27%
0%
Based on expected
capex
China Oilfield Services

Rowan
Helmerich & Payne

Integra Group
Nabors
Patterson-UTI
Vallourec
Prosafe Production
Pride
Smith International
Tidewater
Basic Energy Services
Oil States International
Exposure to
growth regions
Schoeller-Bleckmann
12
January 15, 2010
Global: Energy
The major oil companies have not created material value through exploration in the last
10 years
We have tested the industrys ability to create value through exploration by calculating the reserves discovered by each company
since 2000 (excluding non-exploration led areas such as heavy oil, exploitation, unconventional gas, Russia and adjusting for asset
transactions) and their value at the time of discovery (before their development). We remove Russian companies from this analysis
as exploration has not been a key factor in their business models to date.
Exhibit 16 shows the value of these exploration successes as a % of EV. For only seven companies has the exploration success of
the past decade created more than 30% of the current market cap. The rest of the value of the companies comes from the older
legacy assets, from the capital invested to develop these reserves and from their time value.
If we exclude the smaller E&Ps with just one or two assets, the key winners are Petrobras, BG, Galp and Tullow, which have
consistently created value through exploration in a variety of assets.
ENI and Exxon stand out as the Major oil companies that have created the least value from exploration.
Exhibit 16: Value added through exploration since 2000
Exhibit 17: Reserves added through exploration since 2000
NPV of discovered hydrocarbon resources at the time of discovery as a % of EV
Discovered hydrocarbon resources as a % of corporate 2008 SEC reserves
80%
250%
70%
200%
60%
50%
150%
40%
100%
30%
20%
50%
10%
Devon Energy
Nexen
Encana
Petrochina
ExxonMobil
ConocoPhillips
BP
BHP Billiton
Hess
Apache
CNOOC
Statoil
RDShell
TOTAL
Chevron
Anadarko
Husky Energy
ENI
Sinopec Corp
Marathon
Noble Energy
Soco
Repsol
Petrobras
Woodside
Reliance
Cairn India
BG
Murphy
Tullow
Galp
INPEX
BHP Billiton
Sinopec Corp
Apache
Husky Energy
ENI
ExxonMobil
Devon Energy
RDShell
Petrochina
Nexen
ConocoPhillips
Statoil
Encana
CNOOC
BP
TOTAL
Hess
Reliance
Repsol
Chevron
Noble Energy
Marathon
Woodside
Anadarko
BG
Murphy
Galp
Petrobras
Tullow
Cairn India
Soco
0%
INPEX
0%
y-axis limited to 250%. Galp = 8643%, INPEX + 316%, Tullow + 336%

13
January 15, 2010
Global: Energy
M&A around Top 280 assets is a likely outcome of poor exploration success
We believe that the Top 280 assets are strategically desirable and could provide an acquirer with strategic growth prospects.
As such, we believe that smaller companies which have stakes in these assets could attract M&A attention in the future. We
have screened the Top 280 to identify attractive targets using the following criteria:
Size: We restrict our potential targets to those companies with an enterprise value below US$25 bn.
Viability: We exclude companies which are not publicly listed or have what we consider to be a blocking shareholder.
Materiality: The Top 280 portfolio should account for at least 50% of the companys EV assuming an 8% discount rate.
Growth: We exclude companies whose Top 280 net entitlement growth does not provide at least a 10% uplift to current
production between 2010E and 2020E.
On this basis, Tullow, Soco, Cairn India, OPTI (not covered), Hess, Heritage, Nexen and St Mary Land & Exploration (not covered)
screen attractively although we note that the Indian government could block NOC purchases of Cairn India. Of the companies
whose EVs are over US$25 bn, OGX and BG also screen attractively.
Exhibit 19: M&A data for companies with EV under US$25 bn
Exhibit 18: M&A screen of Top 280 companies

No blocking
shareholders
NPV > 50% of EV
Murphy
C.O.S.T.
Soco
OPTI
Dragon
INPEX
Ultra
Cairn India
St Mary
Tullow
Heritage
Oil Search Southwestern
Hess
Nexen
Galp
Range Questar
Arrow
Niko
Noble
Santos
Newfield
Quicksilver
Petrohawk
Talisman
Cenovus
OMV
10 year
production uplift
Source: Goldman Sachs Research estimates (when calculating production uplift for non-covered companies
we use annual reports / SEC filings and use 2008 reported production figures).
Company
Heritage
Soco
OPTI Canada
Dragon Oil
St Mary Land & Exploration
Arrow Energy
Niko Resources
Quicksilver Resources
Oil Search
Newfield
Ultra Petroleum
Range Resources
PetroHawk
Questar
Santos
Murphy
Cairn India
Noble Energy
Canadian Oil Sands Trust
Tullow
Nexen
OMV
Southwestern Energy
Galp
INPEX
Hess
Talisman
Cenovus
NPV of Top 280 as

% EV at 8% cost
of capital
219%
97%
199%
196%
78%
13%
31%
7%
23%
26%
27%
36%
42%
15%
34%
58%
81%
24%
30%
63%
110%
8%
27%
50%
93%
59%
16%
29%
PI of Top
280
2.94x
3.50x
1.46x
2.30x
1.98x
1.58x
2.00x
1.32x
1.59x
1.98x
1.30x
1.84x
1.62x
1.30x
1.45x
2.04x
3.37x
2.33x
1.30x
2.70x
1.83x
2.29x
1.51x
1.81x
1.59x
1.66x
1.69x
1.96x
Top 230 10 year

Net entitlement production uplift as % of
Top 280 reserves
2009 production
124
915%
84
377%
871
525%
319
20%
542
79%
152
314%
189
37%
150
33%
307
154%
574
11%
1530
128%
764
213%
846
177%
923
75%
1178
64%
399
-2%
387
298%
585
27%
419
1%
593
222%
2256
35%
86
4%
1284
64%
2420
1808%
3548
82%
1083
18%
678
29%
1536
48%
Blocking
shareholder?
No
No
No
Yes
No
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
No
No
Yes
No
Yes
Yes
No
No
No
Source: Goldman Sachs Research estimates, Bloomberg (when calculating production uplift for non-covered
companies we use annual reports / SEC filings and use 2008 reported production figures).
14
January 15, 2010
Global: Energy
Putting together exploration and delivery: BG is the clear winner

Exhibit 20 summarizes the positioning of each company which has at least five operated assets in this report on three key metrics
of success:
Exploration success measures the value added through exploration and is ordered in quartiles. BG and Petrobras are the key
winners, followed by Chevron. Exxon and ENI look poor in comparison. (Exhibits 16 & 17)
Long-term delivery measures how much of the expected volumes were delivered (or are expected to be delivered) five years
after the publication of each of the past six editions of this report. This measure mainly captures the ability of companies to
move projects forward from exploration into FID and then into production. Statoil, BG, BP and Exxon score consistently well.
TOTAL and Conoco have been disappointing, while Shell, ENI and Petrobras have recovered from a disappointing
performance.
Short-term delivery measures how much of the expected volumes were delivered (or are expected to be delivered) two years
after the publication of each of the past six editions of this report. This measure mainly captures the ability of companies to
deliver the project from FID to production. BG and Exxon score consistently well. Petrobras and Conoco have been
disappointing, while Statoil, BP and Chevron have recovered from a disappointing performance.
BG is the only company globally that scores well in all three metrics. Ranked behind BG are Chevron, Petrobras and Exxon. ENI,
Conoco and TOTAL scores tend to be on the weaker side.
Exhibit 20: Summary of positioning on delivery and exploration success
Exhibit 21: Production capture rate of operators five-year capture
Short-term delivery:
Long-term delivery:
Exploration quartile:
Poor
Improving from low base
Conoco
Statoil
Petrobras BP
Chevron
Average
Shell
TOTAL
ENI
Strong
BG
Exxon
Poor
TOTAL
Conoco
Average
Chevron
Strong
Statoil
BG
BP
Exxon
Q4
Exxon
ENI
Improving from low base

Shell
ENI
Petrobras
Q3
TOTAL
Conoco
Statoil
Shell
BP
Q2
Chevron
Q1
BG
Petrobras
% 5 year forward production capture rate vs Top 280 estimate as % of Top 280 estimate
100% of working interest operated production

10%
5%
Statoil
Statoil
Petrobras
0%
-5%
Petrobras
RDShell
-10%
BP
BG
-15%
-20%
TOTAL
Exxon Mobil
ConocoPhillips
ENI
RDShell
-25%
-30%
-35%
TOTAL
ConocoPhillips
Chevron
-40%
T125
T170
Winner
BG
ENI
Exxon
Chevron
BP
T190
T230
non-Winner
15
January 15, 2010
Global: Energy
Brazil the major driver of valuable growth among the larger players
Among the larger players, those with exposure to Brazil have seen a strong increase in profitability growth between Top 230 and
Top 280, thanks to the stronger-than-expected flow rates, with Galp, Petrobras and BG all performing well. Exploration success in
West Africa is helping Anadarko and Tullow to increase reserve size, without sacrificing profitability.
The Majors are fairly closely grouped although BP has performed well in adding reserves mainly through GoM exploration and
Russian greenfield projects, and Conoco has improved thanks to exploration success, e.g. the Poseidon discovery. ENI has seen a
large deterioration in profitability without a consequent increase in reserve size.
Exhibit 22: The change in scale and profitability of company portfolios from Top 230 to Top 280 (excluding fields at plateau)
% change in reserves from Top 230 Projects to Top 280 Projects
40%
Reserves grow at
expense of profitability
CNOOC
Anadarko
Brazilian flow rates

improve economics
30%
Profitability and
volumes increase
Tullow
Rosneft
20%
Apache
BP
BG
ConocoPhillips
Devon Energy
Husky Energy
10%
0%
-10%
Majors generally quite closely

Marathon
grouped. Iraqi contracts haveCairn India
contributed to small reserves
Occidental
Chesapeake
increase
Santos
RDShell Woodside Reliance
Talisman
ENI
Statoil
Petrobras
ExxonMobil
OPTI Canada
TOTAL
Murphy
SASOL
Canadian Natural Resources
Nexen
BHP
Billiton
Chevron
Ultra Petroleum
Sinopec Corp
Soco
INPEX
UTS Corp
Gazprom
Galp
Dragon Oil
-20%
Oil Search
-30%
-40%
-50%
-30%
Encana
Profitability and
volumes fall
-20%
-10%
0%
10%
Profitability increases at
expense of volumes
20%
30%
40%
% change in P/I ratio from Top 230 Projects to Top 280 Projects
X-axis limited to 40%. Increases off scale are: Hess (reserves +49%, P/I +1%), PetroChina (+58%, -4%), Lukoil (+60%, -23%), Suncor (+108%, +29%),
EOG (+110%, +10%), Repsol (+182%, +4%) and Noble (+388%, +61%)
16
January 15, 2010
Global: Energy
Picking winners in the Top 280 Projects

We pick the winners in this report on three key metrics that reflect the materiality of their exposure, and the cash flow and
production uplift from their Top 280 Projects in the short term (two years) and medium term (five years). In terms of
materiality we require that the NPV of the Top 280 portfolio represents more than half of the company's enterprise value.
The short-term cash flow uplift needs to be over 20% in the next two years and over 40% over the next five years while we
require a production uplift of over 10% in two years and over 30% over the next five years.
Companies grouped according to their relative exposure

We have grouped the companies from our coverage universe, relative to their respective peers, into five categories on the quality of
their new legacy asset portfolios:
Winners: Our key picks of all companies with respect to new legacy asset exposure. We believe these companies have high
return portfolios which will significantly impact corporate cash flows in the near term
Short-term exposure: Companies that have portfolios which we believe will impact corporate cash flows in the near term
Long-term exposure: Companies that have portfolios which we believe will impact corporate cash flows in the longer term
Limited exposure: Companies whose Top 280 Projects NPV accounts for less than 30% of the current enterprise value
Single asset play: Companies that own stakes in fewer than three fields, but the NPV of these stakes accounts for more than
50% of the company's EV
Exhibit 23: Top 280 Projects investable company rankings
Europeans
Winners
Long term exposure
Short term exposure
Limited exposure
RDShell, BG, Galp
Total, ENI
BP, Statoil
Repsol
Chevron, ConocoPhillips,
Marathon, Hess
Exxon, Suncor, Anadarko,

Occidental, Noble Energy,
Apache
US
Canadians
EnCana, Talisman
Emerging
Markets
Petrobras
E&Ps
Tullow, Woodside
PTTEP, Gazprom
Single asset play
PetroChina, CNOOC, ONGC,

Rosneft
Santos
Cairn India, Dragon Oil, Soco
17
January 15, 2010
Global: Energy
Winners in more detail

We have ranked BG, RDShell, Tullow, Petrobras, Galp and Woodside as Winners for the following reasons:
BG: A high return, high impact portfolio that we believe will underpin sector-leading growth for the next decade. The
transformational story is driven by LNG in Australia (Curtis) and by pre-salt Santos basin assets in Brazil. We believe that Brazil
has scope for reserve additions and that the quality of the reservoirs in the area could make economics very attractive.
RDShell: A potentially transformational story based on large stakes in giant and technologically challenging, but generally low
decline, fields. These fields started to come onstream in 2009 and accelerate in the 2010-12E period, at a time when few other
companies offer good volume growth. We believe fiscal regimes and realizations should mean that cash flows benefit
disproportionately vs. volumes. RDShell's five largest new projects (Pearl GTL, Perdido, Sakhalin 2, Qatargas 4 and Kashagan)
could add US$8.5 bn post-tax cash flow to RDShell by 2013E on our normalized US$85/bl oil price assumption.
Petrobras: The deepwater leader with an advantaged licence position offshore Brazil, an enormous reserve base in the pre-salt
Santos basin and very large exploration upside potential. In our view Petrobras has high profitability and materiality, high oil
price exposure and a balanced portfolio of growth with visibility over the next 10-20 years; initial flow rate data from the presalt Santos basin bode well for project economics in the area.
Tullow: Exceptional exploration success, particularly in Uganda and Ghana, have provided Tullow with a transformational
growth portfolio. We also believe there is potential upside in the companys exploration portfolio in its Ugandan and West
African acreage. Development of Jubilee has been quick by global standards, effectively translating exploration success into
cash flow.
Galp: On a similar theme to Petrobras, Galp offers highly levered exposure to the world-class pre-salt Santos play. We expect
the near term cash flow uplift from Tupi to be transformational with Iara providing medium-term support and Jupiter a longer
dated story in our view. Current production and a further cash flow uptick is provided by the companys Angolan portfolio.
Woodside: A leveraged play on Australian LNG an area which we believe could be as important for global hydrocarbon
supply as Brazil will be for oil. The first train at Pluto is likely to provide transformational growth from 2011 on our estimates,
with additional assets such as Greater Sunrise, Browse and a second train at Pluto providing longer dated potential.
18
January 15, 2010
Global: Energy
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19
January 15, 2010
Global: Energy
Introducing the projects the additions
Exhibit 24: Map of the 57 new fields in the data set
New Russian
developments
Ugnu
More Canadian
heavy oil projects
Point Thomson Liquids
2 projects in
Europe
Novoportovskoye
Yurkharovskoye
Gro
Dover
Thickwood
YurubchenkoTahomskoye
Bakken Shale
13 projects in
North America
Freedom
Vito
Russkoye
Kamennoye
Laggan Tormore
Great Divide
Narrows Lake
Suzunskoye &
Tagulskoye
Korchagina &
Filanovskogo
Reggane
Mars B
Tiber
Buckskin, Shenandoah
Tamar
Satis
West Nile Delta
West Qurna
Taq Taq Majnoon, Halfaya, West Qurna 2

Miran, Zubair
Rumaila expansion
Nasr, Upper Zakum, Shah
Umm al-Lulu, SAS Expansion, Asab NGLs
Liwan
Qarn Alam
Panna Mukta Tapti
26 projects in
Asia/Middle East
Vietnam Gas Development
Perla
New GoM
discoveries
Uganda, blocks 1, 2 & 3

Kinteroni
Lucapa
Block 31 West
Margarita
Vesuvio
Pipeline
Abare West
6 projects in South
America
Block 32 Phase 2
Poseidon
Pluto LNG 2
Fishermans Landing
7 projects in
Africa
New service
contracts in the
Middle East
3 projects in Asia Pacific
Source: Company data, Goldman Sachs Research.
20
January 15, 2010
Global: Energy
The Top 280 Projects
Exhibit 25: Map of the Top 280 Projects
15 projects in
Goliat
Europe Skarv
Alaska Gas West Sak

Point Thomson Liquids
Mackenzie Gas
Ugnu
Snohvit
Shtokman
Bovanenko Bolshekhet
Russkoye
Yuzhno Khylchuya
Vankor
Rospan
Gro
Kearl Lake
Novoportovskoye Yuzhno-Russkoye
Ormen Lange
Gjoa
Yurkharovskoye
Horizon Sunrise
Kristin Tyrihans
Statfjord Late Life
Arcticgas-Urengoil
YurubchenkoGreat Divide Northern Lights, Joslyn, Frontier
Grane
Kamennoye
Rosebank
Tahomskoye
Horn River Shale
Athabasca, Leismer
Verkhnechonsk
Laggan Tormore
Montney, Jackfish
Narrows Lake, Firebag
Clair Ridge
Suzunskoye &
Buzzard
Talakan
Long Lake
Dover
Syncrude 3
Salym
Elgin Franklin
Surmont, Carmon Creek
Tagulskoye
Foster Creek & Christina Lake Primrose East, Nabiye, Mackay River
Kovykta
Fort HillsThickwood
Sakhalin 1
Uvat
Sakhalin 2
Mist Mountain CBM
Karachaganak
Tengiz
Bakken Shale
Korchagina &
Kashagan
White Rose
Pinedale
Hebron
Filanovskogo
Tempa Rossa
Cheleken
Wamsutter
Shah Deniz
Sulige South
Marcellus Shale
Simian-Sienna West Med
ACG Yadavaran
Peng Lai
Woodford Shale
Scarab-Saffron
Oudeh Taq Taq, Majnoon, Halfaya, West Quma
Fayetteville Shale
WLGP
Egypt Gas, SatisTishrine 2Dolphin
Jidong Nanpu
Miran, Zubair
Ourhoud, El Merk
San Juan CBM
Azadegan
Haynesville Shale
Changbei
Rosetta
In Salah
Darkhovin
Rumaila expansion
Holstein
Puguang
Reggane
NC 186, Amal Oryx GTL
Al Khaleej Ph 1 & 2
Longgang
Mad Dog Mars BThunder Horse
Qasr
In Amenas
Tahiti, Kaskida, Cascade & Chinook
Pars
LNG
Elephant
Qatargas
Freedom
Nasr,
Upper
Zakum,
Shah
Knotty Head, Tubular Bells
Umm al-Lulu, SAS Expansion,
Asab NGLs
Wafa Bahr EssalamBlock West Nile Barzan
Chuandongbei
Atlantis
Jack/St Malo, Kodiak &
MBA
Bibiyana
Vito
Pearl GTL
Liwan
405B Delta
RasGas
Tubular, Bells, Caesar
Perdido
Abu Butabul
Myanmar M-9
Al ShaheenPanna Mukta Tapti
Chad-Cameroon
Buckskin, Shenandoah Tonga, Stones
Qarn Alam
Shwe
Mukhaizna
Vietnam Gas Development
Yemen LNG
D6
Sincor Perla
Khazzan & Makarem Block 15 expansion TGT
Brass LNG Egina
Corocoro
Amenam Kpono
OK LNG, Nigeria LNG Trains 6 & 7
Platong
2
Petromonagas
JDA Kikeh
Agbami
Akpo, Bonga
Gumusut
Bongkot South
Erha
Jubilee
Hamaca
Kebabangan
Uganda, blocks 1, 2 & 3
Alba
Arthit
Bonga SW Aparo
Moho
Bilondo
Sisi-Nubi
Bosi, Ofon II
Guntong Hub
Natuna
MBoundi, Tchikatanga
Tangguh
Usan
EA
Gendalo
Yoho
Tombua Landana, MTPS
Cepu
Gehem
Kinteroni
Benguela Belize (BBLT)
Kizomba A, B, C & Satellites
Abadi
LNG
PNG Gas Project
Angola LNG
Ichthys
Lucapa
Camisea 2
Dalia
Evans Shoal
Peregrino
Blocks 31 NE & SE
Bayu Undan, Greater Sunrise
Greater Plutonio
Pluto LNG 2
Block 17 CLOV Block 32 Phase 2
Browse LNG
Albacora Leste
Margarita
Pluto
LNG
1,
Prelude
Golfinho
Girassol Block 18 West
Fishermans Landing
North West Shelf T5
Frade
Pazflor Block 31 West
Barracuda Caratinga
Curtis LNG
Wheatstone LNG
Jubarte Cachalote
Greater Gorgon
Mexilhao
Gladstone LNG
Papa Terra
Marlim South & East, Vesuvio, Pipeline
Roncador2
Abare West
Espadarte Sul
BS-4, BC-10,
Iara, Guara Tupi, Carioca, Jupiter
Prirazlom
80 projects in
Asia/Middle East
61 projects in
North America
62 projects in
Africa
30 projects in South
America
34 projects in Asia
- Pacific
Source: Goldman Sachs Research.
21
January 15, 2010
Global: Energy
The Top 280 Projects are key to the development of the global oil & gas industry
We define legacy assets as those which represent a material profit centre for the industry with potential for expansion and
provision of long-term reserve and production growth. We believe that the Top 280 Projects are true legacy assets for the oil
and gas industry in terms of materiality, size of investment and profitability, and offer material opportunities for future
growth.
The average project size is over 1.5 bnboe (split 55% oil and 45% gas), based on our estimates of proved plus probable (2P)
reserves with an average expected reserve life (or duration) of 33 years. In total this represents a reserve life of over nine years at
the current global rate of hydrocarbon production, meaning that we believe these projects will have lasting significance for the
industry. There are 173 companies (including state-owned, public, private and National Oil Companies) included in the study with
the average project stake being 32%, implying three partners on average per project. The average investment per company per
project now stands at c.US$3.3 bn highlighting the importance of good execution and cost control on such major investments.
The average investment per project now stands at c.US$10 bn. Despite this, unit upstream capital costs at c.US$5.4/bl (US$6.8/bl
including infrastructure) remain very attractive relative to industry non-legacy assets a reflection of the efficiencies that can be
achieved through scale and a slight drop on a unit basis from the last edition of this report.
We have kept our long-term oil price assumptions flat since the publication of Top 230 in February 2009, but the NPV per barrel has
dropped slightly on a reserves-weighted basis as we include a number of mega-projects (primarily in Iraq and UAE) with harsh
fiscal terms that result in a lower value being accorded to the stakeholders. Nevertheless, returns are impressive with an average
IRR of 21% from the Top 280 Projects as a whole, with a profit/investment (value creation) ratio of 1.8 at an 8% discount rate
implying that the industry can create significant value over the long term from these investments. It is worth bearing in mind that
relative to some smaller fields outside the scope of this report, the NPV is low a function of long duration and significant upfront
infrastructure investment which results in the average project at point of first investment being valued at only US$2.7/boe at an 8%
cost of capital.
Exhibit 26: Average Top 280 Projects statistics
Key Top 280 Projects average statistics per project
Materiality
Field size
Duration
Company stake per project
Peak Production
Investment
1524 mn boe
33 years
32%
222 kboe/d
Total capex
Infrastructure capex
Upstream F&D cost
All-in capex per barrel
Profitability
US$10,308 mn
US$2,116 mn
US$5.4/bl
US$6.8/bl
IRR
P/I
NPVlife of field
NPV2010
20.7%
1.81x
US$2.7/bl
US$4.6/bl
22
January 15, 2010
Global: Energy
Top 280 projects at peak will account for c.36% of the global oil & gas supply
Over 46 mnboe/d modelled by 2020E but peak moves back again
We expect the Top 280 Projects to deliver a peak production rate of c.46 mnboe/d of oil and gas by 2020E (up from 37 mnboe/d in
2019E in Top 230 Projects). Although there is clearly a significant quantity of oil and gas waiting to be developed (238 bnbls of oil
and 192 bnboe of gas) we believe that the challenge for the industry in the near term will be translating these reserves into
production.
Peak oil production of 28 mnb/d in 2020E would represent c.34% of current world oil production and peak gas production of
19 mnboe/d in 2023E would represent c.39% of current world gas production.
Exhibit 28: Top 280 Projects production relative to 2008 global production
45%
50,000
48,000
46,000
44,000
42,000
40,000
38,000
36,000
34,000
32,000
30,000
28,000
26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Top 280 production as a % of 2008 global production
40%
35%
30%
25%
20%
15%
10%
oil
gas
Gas
2030E
2029E
2028E
2027E
2026E
2025E
2024E
2023E
2022E
2021E
2020E
2019E
2018E
2017E
2016E
2015E
2014E
2013E
2012E
2011E
2009
Oil
2010E
2008
2007
2006
2005
2004
2003
0%
2002
2050E
2048E
2046E
2044E
2042E
2040E
2038E
2036E
2034E
2032E
2030E
2028E
2026E
2024E
2022E
2020E
2018E
2016E
2014E
2012E
2008
2010E
2006
2004
2002
5%
2000
Production (kboe/d)
Exhibit 27: Top 280 Projects oil and gas production profile
Oil and gas
Source: Goldman Sachs Research estimates, BP Statistical Review 2009.
23
January 15, 2010
Global: Energy
Top 280 is a key driver of growth: Represents almost 50% of the Majors E&P capex
We believe that the Top 280 projects will represent a major element of the Majors upcoming capital spend. We expect the Majors
to invest almost US$600 bn in the coming four years across all their businesses and believe that 77% of this will be on upstream.
Exploration accounts for 12% of the total spend with the remainder of the upstream capex dedicated to developments. On our
estimates, we believe that over these four years, US$225 bn, almost half of the total upstream capex, will be dedicated to the Top
280 projects alone. Other upstream development accounts for US$150 bn, and other E&P (infrastructure projects and any other E&P
activities excluded from FAS 69 disclosure) for US$15 bn. Spending on R&M, chemicals and gas and power accounts for the
remainder.
When maintenance capex is stripped out, the incremental importance of the Top 280 Projects becomes still more apparent. We
estimate that 44% of the groups total capex will be focused on growth projects. We estimate the spending on the Top 280 assets
that are not currently producing will account for 63% of this growth spend over the next five years and 80% of the total E&P
growth capex.
Exhibit 29: Top 280 capex as a percentage of Majors total capex
Chems
4%
Gas
5%
Exploration
12%
Marketing
6%
Exhibit 30: Top 280 spend as a percentage of growth capex
R&M
maintenance
9%
Chems
maintenance
3%
Gas
maintenance
2%
Refining
7%
Other E&P
3%
Top 280 Projects
38%
Non-Top 280
development
25%
Upstream
maintenance
42%
Growth
capex
44%
Top 280 Projects

- 80% of total E&P
growth capex
- 63% of total
corporate growth
capex
Other upstream
7%
R&M
5%
Gas
3%
Chems
1%
The Majors include BP, Chevron, ConocoPhillips, ENI, Exxon, RDShell and TOTAL.
24
January 15, 2010
Global: Energy
Top 280 projects are a very material element of the Majors portfolios and are key in prolonging
reserve lives
We estimate that the Top 280 projects will generate substantial cash inflows and outflows for the Majors. In total we believe that
cash inflows will peak at nearly c.US$145 bn in 2020E, with capex peaking at c.US$75 bn by 2014E. At their 2023E peak, we expect
these projects to contribute almost 80% of our 2013E production estimate for the Majors and 46% of the operational cash flow.
We believe that the Top 280 portfolios of the Majors have an average reserve life of just over 14 years (17 years in gas and 12 years
in oil), and in all cases (except for Exxon) the total hydrocarbon reserves are in excess of the currently booked reserves (although
we note that there is some overlap between them). Conoco has the greatest Top 280 reserve life; ENI has the shortest Top 280
reserve life at less than 12 years. Although the gas reserve lives of the Majors Top 280 portfolios are generally longer than the oil
reserve lives, in the cases of Shell, Conoco and Chevron in particular, we do not believe that this will result in a loss in oil price
leverage as many of the gas reserves are LNG which we believe will ultimately be driven by the oil price.
Exhibit 32: Majors Top 280 reserve life
160,000
150,000
140,000
130,000
120,000
110,000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
-10,000
-20,000
-30,000
-40,000
-50,000
-60,000
-70,000
-80,000
-90,000
150%
Majors Top 280 Operating cash flow
Majors Top 280 net cash flow as % of normalised corporate cash flow (RH)
Production as a % of normalised production (RH)
2025E
2024E
2023E
2022E
2021E
2020E
2019E
2018E
2017E
2016E
2015E
2014E
2013E
2012E
2011E
2009
2010E
2008
2007
2006
2005
2004
Majors Top 280 capex
Total Top 280 reserve life
Top 280 oil reserve life
ENI
0.0
-90%
Chevron
-60%
5.0
BP
-30%
10.0
ExxonMobil
0%
RDShell
30%
15.0
TOTAL
60%
20.0
ConocoPhillips
90%
Top 280 reserve life (years)
120%
As a % of normalised corporate cash flow / production
25.0
2003
US$ mn
Exhibit 31: Net cash flow for Majors from Top 280 Projects
Top 280 gas reserve life
25
January 15, 2010
Global: Energy
Companies and materiality: BG the most exposed of the larger players

Given the scope of the Top 280 projects reserves and investment, it is unsurprising that Top 280 is likely to drive reserve
replacement in the industry. We believe that these projects will ultimately be the base from which companies are able to generate
growth in the medium to long term and that exposure to these assets is beneficial. Of the larger companies, BGs success in Brazil
and Queensland Curtis LNG means that it leads the larger companies in terms of relative exposure, thereby giving confidence over
the viability of the companys long-term growth; we expect this relative lead over the other majors to begin to diminish as more
reserves from Brazil are booked. The Majors are closely grouped but Statoil is slightly advantaged. Repsol lagged last year but due
to success in Brazil and the inclusion of a number of Latin American gas projects, it is close to the other Majors in terms of its Top
280 reserves as a percentage of most recently booked reserves.
Exhibit 33:
Reserves exposure to the Top 280 Projects by company
35,000
Gazprom
30,000
ExxonMobil
Top 280 Projects oil and gas reserves
BP
25,000
RDShell
Petrobras
20,000
TOTAL
Chevron
15,000
ConocoPhillips
ENI
Petrochina
Statoil
10,000
BG
Lukoil
5,000
Suncor
Rosneft
TNK
EOG ResourcesOccidental
Devon Energy Chesapeake
Sinopec Corp
Repsol Reliance
CNOOC
Hess
Marathon
Encana BHP BillitonCenovus
Dragon Oil
Talisman
Anadarko
Murphy
SASOL
Soco
0
Apache
Noble EnergyCairn India
0%
50%
100%
150%
INPEX
Husky Energy
Tullow
200%
Woodside
Nexen
Ultra Petroleum
Santos Questar
OPTI Canada
250%
300%
UTS Corp
Southwestern Energy
350%
400%
450%
500%
Top 280 Projects reserves as a percentage of 2008 reported reserves
26
January 15, 2010
Global: Energy
Sanctioning to continue 2H09 pick-up after recent low activity; Iraq a potential step change
In 2007 and 2008 combined, only 20 project phases were sanctioned from the Top 280 fewer than the projects sanctioned
individually in 2006 (21) or 2005 (26). We believe that this sharp decline in activity was caused by a number of factors: 1) Rising
costs and volatility in costs required changes in project scope and plans or resulted in re-tenders (Block 17 CLOV and Pazflor). 2) the
increase in oil prices in regions with attractive PSCs has led to renegotiations of existing contracts, with governments delaying
approval of new projects until the existing contracts had been changed (i.e. Kazakhstan, Libya, Nigeria). 3) Administrative
difficulties in processing development plans under volatile oil prices, especially in countries with relatively small bureaucracies (i.e.
Angola). In the first half of 2009 we believe that the low oil price and tight credit markets made sanctioning hard with activity
picking up in the second half (from projects such as Gorgon, PNG, TGT) as oil prices stabilized somewhat.
Over the next few years we expect sanctioning activity to continue as: 1) the recent lack of sanctions means that companies have
completed FEED on a number of projects which provide a portfolio of ready-to-go projects; 2) the will to sanction projects has
increased as the lack of sanctions in the last three years increasingly puts pressure on production targets; 3) industry costs look to
have bottomed; and 4) a large number of projects look to be economically viable at our assumed hurdle rates and at oil prices
substantially lower than our long-term estimate of US$85/bl and the current forward curve.
We believe that Iraqi service contracts could result in a step change in terms of sanctioning, meaning that execution of these
projects becomes an important consideration in assessing medium to long term supply.
Exhibit 34: Oil and gas reserves sanctioned by year
Exhibit 35: Iraqi contracts to lead to substantial level of sanctioned reserves
Excludes expected Iraqi sanctions
Includes expected Iraqi sanctions
30,000
120
25,000
100
20,000
80
120
50,000
10,000
40
5,000
20
35,000
80
30,000
60
25,000
20,000
Oil price (US$/bbl)
60
15,000
100
40,000
Oil price (US$/bbl)
45,000
40
15,000
10,000
20
5,000
0
2002
2003
2004
Oil
2005
Gas
2006
2007
2008
2009
2010E 2011E 2012E
0
2002
2003
2004
Oil
2005
Gas
2006
2007
2008
2009
2010E 2011E 2012E
27
January 15, 2010
Global: Energy
Technical complexity set to increase, risk to future supply

Although we believe the market perception is that of increasing technological complexity in the upstream sector, we do not believe
that there has been a substantial increase in the level of technical risk to date. The capex on technically complex projects was
relatively high in the early part of the decade as money was spent in the Caspian where large pipelines, HPHT reservoirs and high
sulphur were issues. In deepwater, with a small number of exceptions, water depths have consistently been in the region of 1,500m.
To date, only Perdido, Cascade/Chinook and Tupi from our Top 280 database, have been sanctioned in water depths of greater than
2,000m. We do not believe, therefore, that the increase in technical complexity was a significant reason for the project delays in the
past five years.
Beyond 2010E, however, we expect a steep increase in technical risk. We expect the deepwater industry to move into a
substantially more technically challenging environment as fields under salt layers and in water depths well in excess of 2,000m
(such as the Lower Tertiary plays in GoM and in pre-salt Brazil) become major contributors. Individual fields with high complexity
such as Shtokman, Kashagan and the Shah gas field, will also feature heavily while the increasing trend towards production from
win zones such as LNG and unconventional assets at the expense of traditional fields will further increase the risk profile.
On our analysis, as technical risks increase, development time between sanction and first oil/gas also increases (Exhibit 37). As a
result, we believe that increasing technical risk is likely to result in longer periods between sanction and first production. Given the
lack of sanctions in the 2007 1H 2009 period, this is likely to be an additional downside risk to supply.
Exhibit 37: Technical risk influences development lead time
Exhibit 36: Technical risk of Top 280 projects weighted by capex
Excludes unconventional gas

4
3.9
1.3
Years between sanction and production start
3.8
1.2
Technical risk
1.1
0.9
0.8
79
104
125
137
151
162
171
186
199
208
212
211
210
205
195
185
3.5
3.4
3.3
177
3.1
E
20
20
19
20
18
20
17
20
16
20
20
15
14
20
13
20
12
20
11
X
20
10
20
20
0
20
0
20
0
20
0
20
0
20
0
20
0
0.7
2
3.6
3.2
64
20
0
3.7
3
under 1
1-1.5
1.5+
Technical risk
28
January 15, 2010
Global: Energy
Non-OPEC supply will be disappointing, with fewer big projects and higher decline rates
We forecast non-OPEC oil supply by modelling the decline rates of the production base by region and adding to this our forecasts
of production from the Top 280 fields. Our analysis (Exhibit 38) leads us to conclude that non-OPEC production is likely to be
declining again this year, after the 2009 uptick, and this decline is likely to get steeper in 2011-13. This increasing decline reflects a
lack of major new project start-ups in 2010-13, and an increase in decline rates consistent with recent trends in the industry (and
with 2009 capex cuts on the production base). The final outcome could be worse if the industry does not deliver its new projects in
line with our expectations that have tended to prove optimistic in the past six editions of this report.
Exhibit 38: Non-OPEC production on our estimates will decline even with no delivery problems
Production ex-Top280 growth/(decline)
Russia
US
Canada
Mexico
Western Europe
Caspian
Australasia
Africa
Middle East ex-OPEC
Latin America
Total
Top280 production (kbls/d)
Russia
US
Canada
Mexico
Western Europe
Caspian
Australasia
Africa
Middle East ex-OPEC
Latin America
Total
Total production (kbls/d)
Russia
US
Canada
Mexico
Western Europe
Caspian
Australasia
Africa
Middle East ex-OPEC
Latin America
Total processing gains
2002
10%
0%
5%
1%
-2%
6%
1%
1%
-2%
2%
2%
2003
11%
-3%
2%
6%
-4%
10%
-2%
0%
0%
1%
1%
2004
9%
-2%
1%
1%
-5%
9%
0%
5%
-5%
-3%
1%
2005
2%
-6%
-3%
-2%
-8%
6%
0%
2%
-4%
-2%
-2%
2006
1%
0%
1%
-2%
-9%
-5%
1%
2%
-4%
0%
-1%
2007
0%
1%
1%
-6%
-8%
4%
0%
1%
-5%
-2%
-1%
2008
-1%
-2%
-4%
-9%
-6%
-4%
0%
-2%
-2%
4%
-2%
2009E
-1%
2%
-8%
-6%
-7%
3%
-2%
-7%
-2%
-1%
-2%
2010E
-2%
-2%
-6%
-7%
-8%
-2%
-2%
-4%
-4%
-3%
-3%
2011E
-3%
-3%
-6%
-7%
-8%
-2%
-2%
-4%
-4%
-3%
-4%
2012E
-4%
-3%
-6%
-7%
-8%
-2%
-2%
-4%
-4%
-3%
-4%
2013E
-5%
-3%
-6%
-7%
-8%
-2%
-2%
-4%
-4%
-3%
-4%
2014E
-5%
-3%
-6%
-7%
-8%
-2%
-2%
-4%
-4%
-3%
-4%
30
2
10
0
135
504
28
2
0
105
816
61
8
83
0
148
512
54
35
0
137
1,038
107
26
160
0
251
564
99
220
1
189
1,618
161
131
200
0
307
644
157
223
2
455
2,279
238
155
309
0
402
962
154
240
16
577
3,054
497
200
403
0
551
1,203
169
260
34
716
4,032
555
351
433
0
588
1,355
265
306
59
773
4,685
885
757
538
0
576
1,597
390
351
99
980
6,172
1,184
1,010
700
0
601
1,713
566
388
152
1,200
7,514
1,295
1,167
937
0
628
1,759
706
492
201
1,490
8,675
1,460
1,278
1,087
0
639
1,790
970
534
245
1,793
9,796
1,697
1,312
1,208
0
661
1,966
1,159
574
267
2,076
10,920
1,959
1,355
1,479
0
633
2,086
1,246
667
289
2,382
12,097
7,726
8,042
2,858
3,585
6,971
1,611
7,969
2,098
2,638
3,552
1,303
48,353
2,437
5.3%
8,575
7,828
2,996
3,789
6,690
1,727
7,839
2,132
2,647
3,624
1,339
49,186
833
1.7%
9,365
7,654
3,089
3,825
6,447
1,888
7,896
2,420
2,515
3,566
1,386
50,051
865
1.8%
9,627
7,321
3,054
3,760
5,984
2,052
7,949
2,456
2,420
3,750
1,467
49,840
-211
-0.4%
9,843
7,375
3,192
3,682
5,591
2,294
8,014
2,522
2,329
3,877
1,709
50,428
588
1.2%
10,078
7,482
3,315
3,477
5,312
2,585
8,024
2,574
2,227
3,946
1,861
50,881
453
0.9%
10,005
7,523
3,224
3,164
5,066
2,677
8,097
2,563
2,210
4,131
2,032
50,692
-189
-0.4%
10,204
8,049
3,117
2,966
4,741
2,960
8,064
2,459
2,213
4,318
2,032
51,123
431
0.9%
10,316
8,157
3,124
2,758
4,434
3,049
8,117
2,412
2,182
4,438
2,032
51,018
-105
-0.2%
10,154
8,099
3,216
2,565
4,154
3,068
8,106
2,434
2,149
4,631
2,032
50,608
-410
-0.8%
9,964
8,002
3,229
2,386
3,882
3,073
8,192
2,399
2,115
4,839
2,032
50,114
-494
-1.0%
9,776
7,835
3,222
2,219
3,645
3,224
8,208
2,365
2,063
5,031
2,032
49,617
-497
-1.0%
9,634
7,682
3,372
2,063
3,379
3,318
8,126
2,386
2,013
5,248
2,032
49,253
-365
-0.7%
Source: IEA, Company data, Goldman Sachs Research estimates.
29
January 15, 2010
Global: Energy
Decline rates have increased and we estimate this trend will continue ...
Exhibit 39 shows how decline rates have changed in non-OPEC over the past seven years and our forecasts. These declines are
calculated by subtracting major new start-ups (Top 280 projects) from historical production, to estimate the base decline including
enhanced oil recovery, satellites and small field developments. This decline rate has been on an increasing trend since 2002,
reflecting the ageing of the giant legacy fields and diminishing opportunities for new tie-ins in traditional areas. We assume the
c.2.5% decline of 2008 will increase to c.4% in 2012 and stabilize at that level. The apparent improvement in decline rate trend in
2009 is due to the production recovery from a very damaging hurricane season in the US in 2008. Adjusted for that one-off, 2009
shows an increase in decline rates in line with the 2002-08 trend.
Exhibit 39: Non-OPEC decline rates have been consistently increased since the beginning of the decade
3%
2%
1%
0%
2002
2003
2004
2005
2006
2007
2008
2009E 2010E 2011E 2012E 2013E 2014E
-1%
-2%
-3%
-4%
-5%
30
January 15, 2010
Global: Energy
... while the 2009 start-ups are unlikely to be repeated

The lack of FIDs in 2007-09 (given a standard delivery period of approximately four years from FID to plateau production) suggests
that 2011-13 will see few new start-ups (Exhibit 40). A record amount of new production in 2009 (and 2010E, due to the ramp-up of
the projects) looks set to be followed by a dramatic fall. Growth in 2014 and beyond will depend on the industry maturing new
projects to FID over the coming months, something which remains a key unknown.
Exhibit 40: 2009 was an exceptional year for start-ups and is unlikely to be repeated
Top 280 oil volume additions by year in each region
1,600
1,400
1,200
1,000
800
600
400
200
0
2003
2004
2005
Latin America
2006
Russia
2007
Canada
2008
2009E
Australasia
2010E
US
2011E
2012E
Caspian
2013E
2014E
Other regions
31
January 15, 2010
Global: Energy
Delivery remains a key risk to non-OPEC supply growth...

The industry has not been successful through 2007-09 maturing projects to sanction. This will likely have a negative impact on
future production. Poor project delivery could make the situation worse, and the industrys track record is not comforting, as shown
by the oil volumes delivered by the industry vs. our expectations in each of the previous editions of this study (Exhibits 41 and 42).
Exhibit 41: Project execution: The industry has never delivered the volumes we expected
Percentage of oil volumes lost vs. our initial forecasts from the previous editions of our study
2003
2004
2005
2006
2007
2008
2009E
2010E
2011E
2012E
0%
vs Top 230, Feb 2009
-5%
% volume lost from the initial forecasts
vs Top 190, Apr 2008

-10%
-15%
vs Top 100, Jan 2005
-20%
-25%
vs Top 50, Jun 2003
-30%
-35%
From Top 50
From Top 170
From Top 100

From Top 190
From Top 125

From Top 230
32
January 15, 2010
Global: Energy
... with only 85% of the expected three-year forward oil production from new fields delivered
The industry has delivered on average 6% less oil volume than we expected one year forward in each of our previous reports; and
10%-15% less two years forward and 17% less three years forward. This was due to several issues: delays, longer time to reach
plateau, lower plateau and an array of technical failures.
Exhibit 42: The industrys delivery vs. our expectations has been consistently disappointing
Last historical
1 yr fwd
2 yr fwd
3 yr fwd
4 yr fwd
5 yr fwd
0%
-5%
vs Top 190, Apr 2008
% volume lost to Top 280
-10%
-15%
vs Top 100, Jan 2005
-20%
-25%
vs Top 50, Jun 2003
-30%
-35%
From Top 50
From Top 170
From Top 100

From Top 190
From Top 125

From Top 230
33
January 15, 2010
Global: Energy
All regions show a disappointing delivery of oil projects

All major producing areas have been disappointing. But the causes of these delays have been different and specific to each region.
The delays through disappointing delivery have emerged from North America as Canadas heavy oil production start-up was poor
and from delays in the ramp-up of Gulf of Mexico projects such as Thunder Horse and a recent lack of major sanctions in the area.
The Caspian disappointment has been driven largely by a slower ramp-up to ACG and Tengiz, and delay in production start for
Kashagan. In contrast, the poor performance from Africa has stemmed from sanction delays in Nigeria and Angola, while the rampup of production once sanctioned (as highlighted in the two-year forward production exhibit) has in fact been near initial
expectations. Developments in Europe, Asia and the Middle East have offered the best delivery globally as more stable fiscal
policies and fewer service bottlenecks allowed projects to progress without significant delay.
Exhibit 43: North America and Caspian have disappointed in delivery ...
Exhibit 44: ... African disappointment stemmed from sanction delays
Two-year forward production vs. Top 280 two-year forward production
Five-year forward production vs. Top 280 five-year forward production
200
200
100
5yr fwd production vs. Top280 (kbpd)
2yr fwd production vs. Top 280 (kbpd)
0
-100
-200
-300
-400
-200
-400
-600
-800
-500
-1000
-600
-1200
-700
Africa
Asia
Top50
AsiaPacific
Europe
Top100
Latin
America
Top125
Middle
East
Top170
North
America
Top190
Caspian
Top230
Russia
Africa
Asia
Top50
AsiaPacific
Europe
Top100
Latin
America
Top125
Middle
East
Top170
North
America
Top190
Caspian
Russia
Top230
34
January 15, 2010
Global: Energy
Production disappointment is not geological, but from sanction delays and poor execution
The industrys failure to deliver volumes has stemmed not primarily from geological disappointments, but from delays in
sanctioning and poor execution. The maximum production and recoverable volume of oil fields we have analysed since Top 50 has
not significantly changed, with the overall change better than we were expecting in Top 50 and Top 100 driven by reserve upgrades
from Blocks 15/17/18 in Angola and increased capacity at Kashagan. The disappointments in overall volumes have stemmed from
offshore Gulf of Mexico in Perdido, Holstein and Neptune and offshore Brazil at Golfinho. For the purpose of this analysis we have
only analysed oil fields and have excluded all heavy oil fields, where peak production has been driven by the number of stages
assumed in the modelling rather than a change in the accessible resources. We also exclude Venezuelan fields which have been
nationalised.
Exhibit 45: Peak production by region has marginally increased
Exhibit 46: with peak production increasing in Africa and Caspian
Peak oil production for the Top100 fields through time
Top 280 maximum oil production vs. original maximum production assumption
800
5,000
4,500
600
4,000
Peak oil production (kbpd)
3,500
CLOV, Girassol,
Pazflor and Kizomba
have all added to initial
estimates from Blocks
15/17 in Angola
400
Kashagan volumes
higher now than first
assumed
3,000
2,500
Perdido, Holstein
and Neptune have
disappointed
200
2,000
1,500
1,000
Golfinho has
disappointed in Latin
America
-200
500
0
-400
Africa
Asia
Top100
AsiaPacific
Top125
Europe
Top170
Latin
America
Top190
Middle
East
North
America
Top230
Caspian
Top280
Russia
Africa
Asia
AsiaPacific
Europe
Top280 vs Top50
Latin
Middle
North Caspian Russia
America East America
Top280 vs. Top 100
Total
Top280 vs. Top125
35
January 15, 2010
Global: Energy
Non-OPEC decline could be much steeper than expected if recent trends continue
Exhibit 47 shows our estimate of future non-OPEC supply growth, assuming perfect delivery (see Exhibit 38 for detailed base case).
It also shows projected output if delivery was in line with history (5% less than we forecast one year forward; 10% less two years
forward and 15% less three years forward) and if decline rates increased by one percentage point each year (also in line with recent
trends). These scenarios would imply an annual non-OPEC decline of around 1 mnbls/d from 2011E. A reasonable worst case
scenario of both these trends continuing (poor delivery and increased decline) could lead to 1.5 mnbls/d of production decline.
Exhibit 47: Non-OPEC output could decline by up to 1.5 mnbls/d in a worst case scenario in 2011E-14E
non-OPEC yoy production growth / (decline) kbls/d
3,000
2,500
2,000
1,500
1,000
500
0
-500
-1,000
2014E
2013E
2012E
2011E
2010E
2009E
2008
2007
2006
2005
2004
2003
2002
-1,500
Perfect delivery
Delivery in line with history
One percent more decline in the base
One percent decline and historical delivery
36
January 15, 2010
Global: Energy
OPEC capacity to increase 1%-2% in the coming years

Exhibit 48 shows our estimate of total OPEC production capacity (crude oil and NGLs), splitting out our assumptions for the
underlying decline of the production base and production from the major new fields (Top 280 fields). We use the same
methodology as for non-OPEC, with the only difference that here we focus on capacity, rather than production. For the purpose of
this analysis we do not consider the Nigerian shut-ins as spare capacity and we assume no further disruptions in the coming years,
but no major recovery in the production base either.
Unlike non-OPEC, 2010-11E show strong yoy production growth, as several important projects come onstream or ramp-up. This is
followed by a more anaemic period, in line with history (c.400 kb/d growth in 2012-15E), characterized by few new start-ups, mainly
concentrated in Iraq.
Exhibit 48: OPEC capacity will increase strongly in 2010-11, mainly thanks to Saudi, Qatar and Iraq
Total OPEC capacity (kbls/d)
Algeria
Angola
Ecuador
Indonesia
Iran
Iraq
Kuwait
Libya
Nigeria
Qatar
Saudi Arabia
United Arab Emirates
Venezuela
Total
Adj gr
ex-Iraq
as%
ex-Iraq
2002
1,680
2003
1,852
2004
1,946
2005
2,105
2006
2,141
2007
2,192
1,708
2009E
1,998
2,058
482
2010E
1,939
1,951
468
2011E
1,901
1,916
454
2012E
1,891
1,905
440
2013E
1,890
1,862
427
2014E
1,908
1,914
414
2015E
1,918
1,823
402
1,013
4,370
2,113
2,625
1,853
2,858
1,259
11,429
3,055
2,614
37,333
324
211
0.9%
0.6%
2008
2,059
1,965
497
1,028
4,350
2,408
2,650
1,873
2,659
1,428
11,413
3,183
2,620
38,133
303
8
0.8%
0.0%
1,289
3,855
2,838
2,232
1,480
2,316
754
11,281
2,600
2,895
33,219
-194
-194
-0.6%
-0.6%
1,183
3,855
2,500
2,329
1,485
2,316
879
11,386
2,600
3,000
33,385
166
504
0.5%
1.5%
1,129
3,855
2,250
2,475
1,624
2,316
992
11,744
2,703
2,907
33,941
556
806
1.7%
2.4%
1,113
4,255
2,000
2,548
1,728
2,598
1,157
11,460
2,994
2,922
34,880
939
1,189
2.8%
3.5%
1,062
4,302
2,000
2,625
1,837
2,751
1,218
11,439
3,147
2,778
35,301
422
422
1.2%
1.2%
4,351
2,356
2,575
1,852
2,948
1,536
11,730
3,108
2,493
37,487
382
434
1.0%
1.1%
4,344
2,363
2,502
1,821
3,069
1,810
12,330
3,209
2,476
38,282
795
788
2.1%
2.1%
4,307
2,608
2,457
1,802
2,995
2,121
12,719
3,256
2,468
39,004
722
477
1.9%
1.2%
4,299
2,844
2,413
1,773
3,007
2,254
12,867
3,295
2,417
39,405
402
165
1.0%
0.4%
4,279
3,204
2,497
1,756
3,035
2,270
12,752
3,304
2,362
39,639
233
-127
0.6%
-0.3%
4,226
3,641
2,472
1,699
3,040
2,249
12,796
3,356
2,302
40,018
379
-58
1.0%
-0.1%
4,218
4,118
2,530
1,637
3,194
2,254
12,847
3,422
2,241
40,604
586
109
1.5%
0.3%
Top280 new OPEC capacity

Algeria
Angola
Ecuador
Indonesia
Iran
Iraq
Kuwait
Libya
Nigeria
Qatar
Saudi Arabia
Venezuela
Total
gr
ex-Iraq
as%
ex-Iraq
2002
15
246
0
0
0
0
0
0
0
0
0
0
197
458
306
306
202%
202%
2003
180
280
0
0
2
0
0
4
189
0
0
0
295
950
492
492
107%
107%
2004
230
359
0
0
7
0
0
42
320
0
0
0
359
1,317
367
367
39%
39%
2005
230
622
0
0
7
0
0
86
325
0
0
0
423
1,692
376
376
29%
29%
2006
260
821
0
0
7
0
0
234
521
20
0
0
439
2,302
610
610
36%
36%
2007
286
1,176
0
0
167
0
0
316
700
240
0
0
439
3,324
-155
-155
-7%
-7%
2008
257
1,510
0
0
205
0
0
330
694
250
290
0
441
3,977
654
654
20%
20%
2009E
229
1,644
0
0
324
20
0
351
983
382
905
5
392
5,235
1,258
1,238
32%
31%
2010E
203
1,574
0
0
432
96
0
361
1,104
679
1,795
183
449
6,876
1,641
1,565
31%
30%
2011E
196
1,571
0
0
507
408
25
381
1,030
1,013
2,465
305
514
8,415
1,539
1,227
22%
18%
2012E
216
1,589
0
0
607
709
50
391
1,042
1,169
2,885
416
532
9,607
1,192
890
14%
11%
2013E
245
1,573
0
0
692
1,133
200
411
1,070
1,206
3,035
496
543
10,604
997
574
10%
6%
2014E
291
1,649
0
0
741
1,630
240
390
1,076
1,206
3,335
616
546
11,720
1,117
619
11%
6%
2015E
330
1,580
0
0
832
2,167
360
363
1,229
1,231
3,635
749
546
13,020
1,300
763
11%
7%
Decline rates
-3%
-10%
-3%
0%
-3%
-3%
-3%
-3%
0%
-3%
-3%
-3%
-4%
37
January 15, 2010
Global: Energy
OPEC capacity to reach full utilization within two to three years

Exhibit 49 shows our estimates of OPEC capacity utilization, given our demand estimate (1.9% growth in 2010; 1.4% growth
thereafter), our OPEC capacity estimate and our four scenarios of non-OPEC supply growth. This analysis implies that 100%
capacity utilization will be reached in two to three years, according to the scenario utilized. This level of supply utilization will
prompt demand rationing pricing, in our view.
Exhibit 50 shows the Iraqi production needed to avoid OPEC capacity utilization going above 100% in our four scenarios, vs. what
we think Iraq will be able to achieve (light blue bar) and what is implied by the promised plateau of the current field
redevelopments. It is interesting to note that by 2015E the promised plateau would be needed to avoid demand rationing prices in
most scenarios, except in the case of perfect delivery (base case). This supports our bullish view on the oil price.
Exhibit 50: Current production estimates vs. expectations five years forward
Exhibit 49: Current production estimates vs. expectations two years

forward
120%
14,000
Base case
Historical delivery
Iraqi production target

Base case
2017E
0
2016E
2015E
2014E
2013E
2012E
2011E
2010E
2009E
2008
2007
2006
2005
2004
2003
2002
2001
2000
85%
2,000
2015E
90%
4,000
2014E
95%
6,000
2013E
100%
8,000
2012E
Physical limit to demand
2011E
105%
10,000
2010E
OPEC capacity utilization
110%
12,000
2009E
Iraqi production required to avoid demand rationing
115%
Top280 Iraqi production

Historical delivery
38
January 15, 2010
Global: Energy
Cost deflation: 2009 input cost softening creates lower breakeven opportunities
We update our analysis of the major cost components of the more marginal oil projects, namely deepwater and Canadian oil
sands developments, based on the movement of the underlying inputs during 2009. The major materials and input costs for
each of deepwater, integrated oil sands mines and thermal oil sands projects have generally softened in 2009, led by steel
which we note has fallen c. 40% from the full-year average 2008 to 2009. Other notable areas of cost deflation have been rig
rates, which we estimate to be down 25% in the onshore arena, and 15% in deepwater.
If the 2009 average cost environment could be locked in for the life of a new development, we believe projects would cost
16% less in deepwater, 10% less in integrated oil sands mining, and 14% less in thermal oil sands recovery, relative to the
2008 average cost environment which we used for the purposes of modelling the Top 230 projects. We note however that
such a deflationary window is likely to be short as any increased investment in areas such as the oil sands will likely, in time,
re-create the same bottlenecks which caused the cost inflation and delays of the 2006 to 2008 period. Exhibits 51 to 53 show
how we believe the cost environment has changed over the course of the last two years in each of the three areas.
Exhibit 51: Based on our cost component analysis, we believe greenfield deepwater costs have fallen 16% yoy on average
Deepwater cost index Jan 08 Dec 09
1.20
Deepwater development cost index
1.15
Input
Change ave. 08 to ave. 09
Steel
-39%
Cement
-2%
Labour
2%
Offshore rig
-15%
Electricity
-24%
1.10
1.05
1.00
0.95
0.90
0.85
Ja
nF e 08
bM 08
ar
-0
A 8
pr
M 08
ay
Ju 08
n0
Ju 8
l-0
A 8
ug
Se 08
p0
O 8
ct
-0
N 8
ov
D 08
ec
Ja 08
nF e 09
bM 09
ar
A 09
pr
M 09
ay
Ju 09
n0
Ju 9
lA 09
ug
Se 09
p0
O 9
ct
-0
N 9
ov
D -09
ec
-0
9E
0.80
39
January 15, 2010
Global: Energy
Exhibit 52: Integrated oil sands mine cost index Jan 08 Dec 09
Input
Steel
Cement
Labour
Electricity
1.15
1.10
Thermal heavy oil development cost index
1.10

-39%
-2%
-3%
-24%
1.05
1.00
0.95

-39%
-2%
2%
-25%
-24%
1.00
0.95
0.85
0.85
Ja
nFe 08
bM 08
ar
A 08
pr
M 08
ay
Ju 08
n0
Ju 8
lA 08
ug
Se 08
p0
O 8
ct
N 08
ov
D 08
ec
Ja 08
nFe 09
bM 09
ar
-0
A 9
pr
M 09
ay
-0
Ju 9
n0
Ju 9
l-0
A 9
ug
Se 09
p0
O 9
ct
-0
N 9
ov
D -09
ec
-0
9E
0.90
Input
Steel
Cement
Labour
Onshore rig rates
Electricity
1.05
0.90
Ja
n0
Fe 8
b0
M 8
ar
-0
A 8
pr
M 08
ay
-0
Ju 8
n0
Ju 8
lA 08
ug
Se 08
p0
O 8
ct
N 08
ov
D 08
ec
-0
Ja 8
n0
Fe 9
b0
M 9
ar
-0
A 9
pr
M 09
ay
-0
Ju 9
n0
Ju 9
l-0
A 9
ug
Se 09
p0
O 9
ct
-0
N 9
ov
D -09
ec
-0
9E
Integrated heavy oil mine development cost index
1.15
Exhibit 53: Thermal oil sands cost index Jan 08 Dec 09
Exhibit 54: Commercial breakeven by development type 2008 cost

environment and current
100
95
Commercial breakeven (US$/bbl)
90
85
We believe that costs for major developments have bottomed and that the
risk to current capex figures is to the upside over the coming years. We note
that large scale mining projects in the Canadian oil sands require over
US$90/bl to achieve a commercial return, despite the deflation seen in 2009.
80
75
70
65
60
Breakeven - 2008
Integrated mine
Breakeven - Current
Thermal oil sands
Deepwater
40
January 15, 2010
Global: Energy
Oil Services to benefit from increased sanctions and complexity introducing the Winners
We continue to believe that the Oil Services sector globally will be the key beneficiary of the increased industry investment
that we expect over the next few years. Following a period when few large projects were sanctioned (2007-2009), we see a
significant pick-up in new project sanctions in 2010, driven in our view by the bottoming of industry costs, an oil price which
leaves the majority of the large new projects economic at commercial hurdle rates, and oil companies looking to meet
production targets and grow volumes again.
We note also that the opportunity set of greenfield projects around the globe continues to increase in complexity. We
believe this will further benefit the leading services providers. An increasing focus on the ultra deepwater, pre-salt and
unconventional resources will result in a greater absolute size of opportunity for oil services due to the higher cost of these
development types. We note also that the EBITDA margins of our global Oil Services universe have increased over time,
meaning the oil services companies are taking a relatively larger slice of a growing pie.
Using our analysis of the key growth areas from the Top 280 Projects, we identify the following global oil services winners
for 2010: Petrofac, Foster Wheeler, JGC, Schlumberger, FMC Technologies and Technip.
Exhibit 55: Top 280 contract awards are growing in size as investment
shifts to more challenging areas
Exhibit 56: While much of the new activity will yield higher margins for oil
service companies
Technical risk of Top 280 projects capex and average size of SURF contract
(US$ mn)
Technical risk of Top 280 capex and EBITDA margins of global Oil Services
universe
Capex weighted technical risk - LHS
0.85
10%
Capex-weighted technical risk - LHS
20
12
E
20
18
E
20
16
E
20
17
E
Average size of SURF contract (US$mn) - RHS
20
14
E
20
15
E
20
12
E
20
13
E
20
10
E
20
11
E
20
09
20
08
20
07
20
06
20
05
20
04
0
20
03
20
02
0.80
20
11
E
0.85
0.90
20
10
E
200
15%
20
09
0.90
0.95
20
08
400
20
07
0.95
20
06
600
1.00
20
05
1.05
20%
1.00
20
04
800
Technical risk
Technical risk
1.10
25%
1.05
20
02
1000
1.15
Average size of SURF contract award (US$mn)
1.20
1.10
Weighted average EBITDA margin
1200
20
03
1.25
Weighted average EBITDA margin - global services coverage group - RHS
41
January 15, 2010
Global: Energy
The oil price recovered significantly through 2009 and, although weak in historical terms, project sanctions and oil services contract
awards in 2H 2009 were actually slightly ahead of expectations. We believe that 2010E will be the trough year of earnings for
backlog-driven oil services companies (i.e., the majority of the European companies), and expect overall capex to be broadly flat
across the Majors. While the major oil companies are likely to stress capital and cost discipline when they issue strategy updates
for 2010, we do expect a shift of focus towards advancing large new projects, helping them to maintain existing portfolio
production and to generate volume growth in greenfield areas. As we move through the budgeting period, and the oil price stays at
or above the US$70/bl level, the oil companies are generating sufficient cash flow to meet their dividend and other cash
requirements, and it should become easier for the oil companies to move ahead with large new developments which have been
delayed or postponed until now. We believe that the engineering for many of these large projects has continued over the last 18
months, meaning that some of these projects can move ahead quickly when the oil companies decide to move to FID, potentially
creating a significant uptick in activity levels for the oil services companies as the oil industry looks to catch up on three years of
low investment in large new projects.
We expect a significant pick-up in project sanctions in 2010 (Exhibit 57), and we also expect sanctions and investment in 2011 to be
significantly ahead of the 2007-2009 period. We believe that the increase in project sanctions will lead to significant growth in
backlog for the European oil services companies, which should enable multiple expansion through 1H 2010 as the market gains
greater visibility on revenue and earnings growth in 2011 and beyond. We then expect earnings upgrades from the middle of the
year, driving the next leg of returns.
Exhibit 58: The projects will require significant investment in infrastructure
Exhibit 57: 2010 is set to be a strong year for sanctions in our view
Top 280 oil and gas reserves and capex sanctioned by year, excluding Iraq
30,000
Top 280 capex by year (US$ mn) split by development status

300
250,000
25,000
250
200
15,000
150
10,000
100
5,000
50
Top 280 capex (US$mn)
20,000
Investment sanctioned (US$bn)
200,000
150,000
100,000
50,000
0
2002
2003
Oil
2004
2005
2006
Gas
2007
2008
2010E
2011E
2012E
Investment sanctioned (US$bn) (RHS)
2009
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
0
20 9
10
20 E
11
20 E
12
20 E
13
20 E
14
20 E
15
20 E
16
20 E
17
20 E
18
20 E
19
20 E
20
20 E
21
20 E
22
20 E
23
20 E
24
20 E
25
E
Producing
Under development
Pre-Sanction
42
January 15, 2010
Global: Energy
Deepwater frontier projects and LNG continue to look attractive from an oil services perspective
For this edition of the report, we have broken down capex by project and service type, in order to assess our expected growth rates
across the major oil service areas.
As a result, we believe deepwater frontier is the most attractive development area for oil services companies seeking to benefit
from the Top 280 growth projects. The SURF market screens as the most attractive service type from the analysis, with 19% pa
potential growth out to 2012, driven by increased activity in Brazil, the Gulf of Mexico and West Africa. We are similarly positive on
the subsea equipment market, which benefits from the same drivers; we expect 12% growth to 2012. We also expect an increasing
trend of FPSO development solutions in basins offshore Brazil and in the Gulf of Mexico, and note the strong expected growth in
this service type. In screening for services winners from the Top 280 report, however, we exclude the FPSO construction industry
due to its poor historical leverage to the investment cycle.
In the onshore arena, we identify LNG as an attractive growth area (estimated 14% pa growth to 2012) together with Iraq. The
former will be driven almost entirely by greenfield projects in Australia in our view as large, previously-stranded gas fields are
developed and coal-seam methane fields are exploited. We also highlight Iraq in this report and identify winners based on their
potential to do business in the country, following the emergence of the 2009 service contracts. Although this area looks less
attractive in terms of absolute activity growth, it remains a key win zone as we note the new activity has the potential to open up an
entirely new area of operation for some international service companies.
We are less positive on increased activity in heavy oil developments, Russia and shallower water drilling. We note the strong
growth expected in the ultra deepwater drilling market but we do not choose this as a favoured area of exposure as we do not see
an opportunity which is purely levered to the >1500m market and avoids the other weakening drilling markets. We exclude onshore
drilling from our analysis due to the typically localised nature of these markets.
Exhibit 59: We view SURF, LNG, subsea equipment and Iraq as the most attractive areas of exposure, together with Latin America and Asia-Pacific in terms of
geographical exposure
Compound activity growth to 2012E by Oil Services win zone
Services win zone
FPSO
SURF
Subsea
LNG
Heavy oil
Russia

12%
19%
12%
14%
6%
-4%
Drilling: traditional (50 - 100m jack-up)

Drilling: traditional (<750m)
Drilling: deepwater (<1500m)
Drilling: ultra deepwater (>1500m)
Activity growth 2009 to 2015

10%
22%
10%
11%
16%
-6%
Growth region
Based on expected
capex
-22%
-14%
-24%
21%
-13%
1%
-4%
18%
Based on expected
wells drilled
7%
10%
Based on production
Iraq
Africa
Asia-Pacific
Europe
Latin America
Middle East
Deepwater:
-1%
33%
16%
-
LNG:
-21%
44%
-30%
Deepwater:
6%
-11%
8%
-
LNG:
18%
27%
0%
Based on expected
capex
43
January 15, 2010
Global: Energy
Oil services company multiples expand with growing opportunity pipeline

We expect oil services company multiples to continue to expand as contract awards from the Top 280 projects emerge in 2010, and
we have already seen contract awards in the sector ahead of expectations in 2H 2009. These came first in the Middle East, but were
followed by awards in Australia, West Africa and Brazil, and were coupled with the recovery and stabilization of the oil price from
an average of US$44/bbl in 1Q 2009 to US$75/bbl in the fourth quarter. We believe the sector continues to be well placed for further
improvements in activity levels and that multiples will continue to expand as backlog grows.
Exhibit 60: Increased order flow has driven multiple expansion in the past
Backlog/12-month revenue vs. EV/EBITDA multiple (RHS) - European E&C and SURF companies
12.0x
2.0x
1.8x
11.0x
1.6x
9.0x
1.2x
EV/EBITDA
Backlog/Revenue
10.0x
1.4x
1.0x
8.0x
0.8x
7.0x
0.6x
0.4x
6.0x
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Backlog/ Revenue
EV/EBITDA
Source: Company data, Goldman Sachs Research, Datastream.
44
January 15, 2010
Global: Energy
We expect contract awards to pick up from 2010

Exhibit 61 shows the major contracts we expect to be awarded across the different activity types in 2010 from the Top 280 projects.
Exhibit 61: Expected contract awards 2010
Project
Region
Tupi - Full system 1

Block 17 CLOV
Jack / St Malo
Guara - Phase 1
Greater Gorgon - Phase 1
Tupi - EPS
Tamar
Papa Terra
Vesuvio
Latin America
Africa
North America
Latin America
Asia-Pacific
Latin America
Middle East
Latin America
Latin America
Block 17 CLOV
Guara - Phase 1
Jack / St Malo
Tamar
Papa Terra
Vesuvio
Laggan Tormore
Nasr
Umm al-Lulu
Africa
Latin America
Latin America
North America
Middle East
Latin America
Latin America
Europe
Middle East
Middle East
Block 17 CLOV
Guara - Phase 1
Iara - EPS / Iracema
Papa Terra
Africa
Latin America
Latin America
Latin America
Surmont - Phase 2
Foster Creek & Christina Lake - 1F, 1D
MacKay River Expansion
Firebag - Stage 4
North America
North America
North America
North America
Contract type
Expected award size (US$mn)
SURF
1560
1320
620
580
510
510
420
350
290
Subsea equipment
1080
1020
380
350
280
230
130
110
100
100
FPSO
1440
1400
1400
720
Heavy oil
4020
2740
2180
1370
45
January 15, 2010
Global: Energy
Introducing the global Oil Services winners

We have screened our global Oil Services and E&C coverage for companies which stand out as being well placed to benefit from
the development of the oil industry that will be driven by the Top 280 projects. In order to identify the winners, we assessed our
global Oil Services and E&C coverage against three criteria:
Active in win zone: companies active in the growth win zones indentified by the Top 280 analysis, limited to win zones that we
believe are positively levered to the investment cycle. The industrial winners are therefore those active in E&C (which will benefit
from LNG and Middle Eastern activity growth), general major oil services providers (which we view as the best way to play the
theme of increased investment in Iraq and frontier deepwater developments), and subsea (where growth will be driven by Brazil
and GoM in the near term).
Exposure to growth regions: current sales exposure of at least 15% or imminent exposure to one of Brazil, ME or Asia.
Favourable mid-cycle returns: mid-cycle CROCI greater than peer group median.
The winners on this basis are: JGC, Foster Wheeler, Petrofac, Schlumberger, FMC Technologies and Technip. These companies are
advantaged in either Australian LNG (JGC, Foster Wheeler), deep water frontier developments (FMC Technologies, Technip,
Schlumberger) or onshore Middle East and potentially Iraq (Petrofac, Schlumberger).
Exhibit 62: Global Oil Services winners
Active in levered
win zone
Favourable midcycle returns

Amec
Fluor
Jacobs Engineering
MODEC
Acergy
Hornbeck
C.A.T. Oil AG
Dresser-Rand
Foster Wheeler
JGC
Worley Parsons
Subsea 7
KBR
Petrofac
Chiyoda
Maire Tecnimont
Schlumberger
Diamond Offshore
FMC Technologies
ENSCO
Technip

Saipem
Atwood Oceanics
Halliburton Cameron
Noble
Transocean
SBM Offshore
Weatherford Aker Solutions
Baker Hughes
Tenaris
Helmerich & Payne
Rowan
Integra Group
Nabors
Patterson-UTI
Vallourec
Prosafe Production
Pride
Smith International
Tidewater
Exposure to
growth regions
Schoeller-Bleckmann
46
January 15, 2010
Global: Energy
Exhibit 63: Global Oil Services Top 280 exposure round-up

Company
Exposure to growth region

Brazil
Middle East
Asia
Atwood Oceanics
Diamond Offshore
ENSCO
Helmerich & Payne
Integra Group
Nabors
Noble
Patterson-UTI
Pride International
Rowan
Transocean
Amec
Chiyoda
Fluor
Foster Wheeler
Jacobs Engineering
JGC
KBR
Maire Tecnimont
Petrofac
Saipem
Worley Parsons
MODEC
Prosafe Production
SBM Offshore
Halliburton
Schlumberger
Weatherford
Tenaris
Vallourec
Hornbeck
Tidewater
Aker Solutions
Cameron
FMC Technologies
Acergy
Subsea 7
Technip
Baker Hughes
C.A.T oil AG
Dresser-Rand
John Wood Group
Schoeller-Bleckmann
Smith International
Geographical
winner
Service area
Drilling
E&C
FPSO
General
OCTG
OSV
Subsea equipment
SURF
Well services /
manufacture
Top280 Growth
area
Operational
leverage
Industrial
winner
Ave. CROCI
2009 - 2012E
18%
8%
27%
16%
30%
11%
11%
12%
23%
8%
13%
9%
15%
27%
25%
24%
50%
46%
17%
42%
24%
19%
22%
110%
14%
11%
13%
7%
12%
18%
21%
11%
15%
14%
12%
12%
12%
19%
35%
17%
16%
17%
14%
9%
14%
18%
14%
14%
13%
13%
9%
Returns winner
Top 280 Services

winner
Foster Wheeler
JGC
Petrofac
Schlumberger
FMC Technologies
Technip
47
January 15, 2010
Global: Energy
We overlay an operational leverage screen against our Top 280 growth win zone analysis in order to isolate those areas best
exposed to a new investment cycle both in terms of volume growth and earnings growth. We note that all sub-sectors return
positive leverage over the period 2000 to 2008, except for FPSO manufacturers and operators. We therefore exclude FPSO as a win
zone when determining the Top 280 oil services winners. In our view this lack of leverage can be explained by the low economies of
scale in the FPSO construction industry combined with oversupply in yard space. For the purposes of the screen, we calculate
operating leverage as the percentage change in EBIT divided by the percentage change in sales for the period. We then take the
median for each company and average this figure across the sub-sectors.
Exhibit 64: Sub-sector historical operational leverage (2000-2008)
SURF
OSV
Drilling
Subsea equipment
Well services/manufacture
E&C
General
OCTG
FPSO
-0.5
0.5
1.5
2.5
Sub-sector operational leverage

Source: Company data, Goldman Sachs Research estimates
48
January 15, 2010
Global: Energy
SURF strong growth ahead as investment shifts to the ultra-deepwater

We see strong growth in the SURF market over the coming three years, following a dip in 2008 and 2009, driven by strength in
Brazil, Australia, and the Gulf of Mexico, along with a pick-up in West Africa. In Brazil we see contracts for Guara and Papa Terra in
2010 and Iara and BS-4 in 2011. Petrobras may not sign full EPC contracts for these fields, preferring instead to sign up assets on
longer term contracts, but we still believe that the volume of work will require either more assets to be signed up over the coming
months or separate EPC contracts on some of these projects. In the Gulf of Mexico, we expect the Jack/St Malo contract award in
2010, followed by Kodiak, Tubular Bells and Kaskida. In Asia there is strong growth from a lower base, driven mainly by the
Australian LNG projects (Gorgon, Ichthys, Prelude, Pluto, Wheatstone). In West Africa we also see a pick-up after a period of few
major contract awards, with CLOV to be awarded in 2010, and then potentially Block 32 in 2011, both in Angola, with Bonga SW and
Egina potentially to be awarded in 2011 if projects in Nigeria begin to move forward again.
Exhibit 65: Investment in LatAm and GoM will drive strong growth
Exhibit 66: LatAm followed by Asia and North America to grow the fastest
Top 280 SURF capex by year
Regional heat-map of Top 280 SURF contract awards relative to history
9,000
Regional
SURF
contract
award
intensity
relative to
history
8,000
SURF contract revenue (US$ mn)
7,000
6,000
5,000
2010E
Africa
Asia
Asia-Pacific
Caspian
Europe
Latin America
Middle East
North America
2011E
Africa
Asia
Asia-Pacific
Caspian
Europe
Latin America
Middle East
North America
2012E
Africa
Asia
Asia-Pacific
Caspian
Europe
Latin America
Middle East
North America
4,000
3,000
2,000
1,000
2004
2005
Africa
Asia
2006
2007
Asia-Pacific
2008
Caspian
2009
Europe
2010E
Latin America
2011E
2012E
2013E
Middle East
2014E
2015E
North America
49
January 15, 2010
Global: Energy
Technip the best placed to benefit

Exhibit 68 shows the major SURF vessel supply vs. demand, where the demand is implied from the Top 280 SURF awards, using an
assumption for the movement of day rates through the period. While 2007 and 2008 saw supply grow in excess of demand, by 2010
we expect demand growth in terms of new projects to be significantly greater than the supply of large new vessels entering the
market, which should mean a return to growth in the sector from 2H 2010. The company best positioned in our view is Technip,
which derives more than half of its subsea revenues from the key growth areas of Brazil and Asia. Subsea 7 has a strong position in
Brazil also, but does not have a manufacturing position to equal that of Technip, and is also generating less revenue in Asia,
positioning it less well for an upturn in offshore work related to the Australian LNG projects. Technip also has a strong position in
the Gulf of Mexico. While not a pure play on subsea, 74% of 2008 EBIT came from its subsea business. The pure play subsea
companies (Subsea 7 and Acergy) have a greater reliance on the North Sea, which we believe will continue to be a difficult market
in 2010. Although SURF assets are largely global, and can be transferred between regions meaning that the regional split of
revenues can change dramatically, in practice local relationships and local infrastructure such as spoolbases or fabrication yards
can have an important impact on winning contracts, so existing positioning is a key indicator for future growth in our view.
Exhibit 68: SURF vessel demand will outstrip supply in 2011E
Exhibit 67: SURF companies geographic exposure
Acergy
Subsea 7
Saipem
Technip
% of SURF revenues from:

Brazil
Asia
13%
7%
26%
3%
18%
14%
42%
13%
Total high
growth
20%
29%
32%
55%
100%
80%
60%
40%
20%
0%
2006
2007
2008
2009
2010E
2011E
2012E
-20%
-40%
SURF vessel demand growth

SURF vessel supply growth
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SURF contract award size (US$mn)
January 15, 2010
1,800
Global: Energy
Exhibit 69: Top 280 SURF contract awards by year 2001 to 2012E
2,000
2001
US$1680mn
2003
US$1710mn
2002
US$750mn

2004
US$3460mn
2005
US$2610mn
2007
US$3620mn
2006
US$2490mn
2009
US$1810mn
2008
US$3580mn
2011E
US$8610mn
2010E
US$6150mn
2012E
US$9490mn
1,600
1,400
1,200
1,000
800
600
400
200
51
January 15, 2010
Global: Energy
Subsea equipment FMC Technologies well placed for growth

The subsea equipment market is driven by very similar dynamics, and the same projects, as the SURF market. We assume that
West Africa is more important for the equipment market however due to a higher cost of subsea equipment per well in the region.
The pick-up in 2011-2012E in Exhibit 70 reflects some of the West African projects (CLOV, Block 31 SE, Egina, Bonga SW) along with
the ramp-up in Brazil of the Santos basin, and some of the Australian LNG projects.
We forecast subsector growth of 12% to 2012, and the companies with the greatest exposure to this growth are FMC Technologies,
Cameron and Aker Solutions. While we consider all of these companies to be well placed to benefit from the growth in project
awards, our preferred pick in the sector is FMC Technologies, which screens most attractively, having the highest proportion of
profits from subsea equipment and related services, as well as having high through cycle returns. Roughly half of Aker Solutions
profits come from subsea equipment and related activities, although its remaining exposure does not screen as well in terms of
growth potential. Cameron has a range of services around subsea systems, but also has valve manufacture, surface, measurement
and process systems which do not fit the key growth profiles which we are highlighting. Cameron also has lower through cycle
returns.
Exhibit 70: African fields under development the growth driver short term
Exhibit 71: but Asia-Pacific will grow in importance
Top 280 subsea equipment capex by year
Regional heat-map of Top 280 subsea equipment contract awards
3,500
Regional
subsea
contract
award
intensity
relative to
history
Subsea eq. contract revenue (US$mn)
3,000
2,500
2,000
2010E
Africa
Asia
Asia-Pacific
Caspian
Europe
Latin America
Middle East
North America
2011E
Africa
Asia
Asia-Pacific
Caspian
Europe
Latin America
Middle East
North America
2012E
Africa
Asia
Asia-Pacific
Caspian
Europe
Latin America
Middle East
North America
1,500
1,000
500
2004
2005
Africa
2006
Asia
2007
Asia-Pacific
2008
Caspian
2009
Europe
2010E
2011E
Latin America
2012E
Middle East
2013E
2014E
North America
2015E
Russia
52
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Subsea equipment contract award size (US$mn)
January 15, 2010
1,400
Global: Energy
Exhibit 72: Top 280 subsea equipment contract awards by year 2002 to 2012E
2003
US$1290mn
2002
US$1340mn
2005
US$1900mn
2004
US$2280mn

2007
US$2170mn
2006
US$2650mn
2009
US$3480mn
2008
US$2870mn
2011E
US$7840mn
2010E
US$3760mn
2012E
US$9170mn
1,200
1,000
800
600
400
200
53
January 15, 2010
Global: Energy
FPSO demand increasing, but industry positioning and leverage less attractive in our view
The FPSO market has been relatively weak over the last two years in terms of large new orders, and the subsector also suffered
significantly from the cost increases in raw materials and components for FPSOs: the industrys major players (SBM Offshore,
Modec, BW Offshore, Prosafe Production) all reported significant cost overruns in 2008-2009 on fixed price contracts. Cost inflation
was very significant over 2005-2008, with costs virtually doubling. Most of the problematic units have now been delivered or
renegotiated, and the companies have capacity to take on new contracts due to the low level of large new projects over the past
two years.
Cost overruns have left balance sheets generally fairly stretched however, and cost inflation has meant that the upfront capital
requirements for new units are higher, exacerbated by the credit crisis which has meant that credit spreads have increased, as has
the amount of equity that the companies need to put into financing lease units.
We see demand for new FPSOs increasing significantly, with FPSO capex growing 12% compound until 2012, driven by
developments in Brazil and West Africa. In Brazil, lease and operate contracts for Guara and Iracema are shortly to be awarded, and
Petrobras has plans to build eight FPSOs for the Tupi full development, with the hulls being built in Brazil and the topside
integration also in Brazil by a local/international JV. There will also be FPSO awards outside of the Santos basin in our view, on
Papa Terra and BS-4. In West Africa, there are potential FPSO contracts on CLOV and Block 32 in Angola, Bonga SW, Egina and Bosi
in Nigeria, and Jubilee phase two in Ghana.
The companies most exposed to this growth are SBM Offshore and MODEC, although while we expect demand to pick up
meaningfully in the subsector over the coming two years, we do not see it as a win zone to which we would seek thematic exposure.
We believe that the major FPSO companies have the engineering capacity to take on more work, and that competition will remain
strong for contracts. Of the major FPSO companies it is only MODEC, SBM Offshore and potentially BW Offshore that we believe
have the financial capability to win a US$1 bn+ contract, but operators will usually want to own these larger FPSOs rather than
lease the units. This may encourage the large engineering and shipbuilding companies to bid on the contracts, increasing
competition, particularly given the financial constraints and size of the pure FPSO companies. The higher financing costs will also
reduce returns in our view, leaving the industry less well placed to reap the reward of the increased demand for FPSOs that we
expect.
54
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FPSO Contract award size (US$mn)
January 15, 2010

Global: Energy
Exhibit 73: Top 280 FPSO contract awards by year 2003 to 2012E
2,500
2003
US$1840mn
2004
US$1890mn

2005
US$3290mn
2006
US$1840mn
2007
US$4710mn
2008
US$4020mn
2009
US$2730mn
2010E
US$4960mn
2011E
US$10250mn
2012E
US$8300mn
2,000
1,500
1,000
500
55
January 15, 2010
Global: Energy
Offshore drilling ultra deepwater the highest growth area

We have broken down the well requirements for the Top 280 projects through time, and looked at this by region and then by rig
type. In absolute terms, we expect the number of wells drilled to fall in 2010 and 2011 from 2009 levels in these projects. This is
being driven by fewer wells being drilled in West Africa primarily, but also in Europe, outweighing a higher number of wells being
drilled in Latin America. In terms of water depth, from the Top 280 projects we see a lower level of wells being drilled in the
deepwater (750-1,500m water depth) in 2010-2011 outweighing a pick-up in drilling in the traditional semi market up to 750m water
depth, and in the ultra deepwater where we see significant growth from 2009.
Over 2009-2012, we see drilling in shallower water (50-100m) down 22% pa, in 100-750m water down 14% pa, and in deepwater
(750-1,500m) we expect a 24% pa decline, driven by drilling on several large fields halting as they hit peak production or start
producing, particularly in West Africa (Agbami, Akpo, Kizomba, Buzzard, Tombua Landana, Greater Plutonio and Tahiti). In ultra
deepwater we see strong compound growth (21% pa) from a lower base, driven by Tupi primarily, and then Block 31 in Angola, and
Jack/St Malo and Kaskida in the Gulf of Mexico.
Exhibit 74: Growth in Brazil offset by decline in Africa until 2012
Exhibit 75: Ultra deep water wells the clear area of growth
Top 280 offshore wells drilled by year, by region, excluding maintenance wells
Top 280 offshore wells drilled by year, by rig type, excluding maintenance wells
300
300
250
Number of wells
250
Number of wells
200
150
150
100
100
50
50
2003
200
2004
Africa
2005
Asia
2006
Asia-Pacific
2007
2008
Caspian
Europe
2009
Latin America
2010E
2011E
2012E
Middle East
2013E
2014E
North America
Russia
2015E
2004
2005
2006
50 - 100m jack-up
2007
2008
Up to 750m semi
2009
2010E
750m to 1500m semi
2011E
2012E
2013E
1500 m to 2250m semi
2014E
2015E
2250m+ semi
56
January 15, 2010
Global: Energy
Iraq field development contracts potentially open an exciting growth opportunity

Following the recent signing of production contracts in Iraq, there is a good opportunity for the oil services industry to be a major
beneficiary. Margins on the agreements for the oil companies were set at relatively low levels, but the scope of work planned is
very significant: the ambitious production targets look for 12 mnbls/d from a base of c.2.5 mnbls/d currently. To achieve this, we
believe the consortia will have to invest heavily in new onshore drilling, processing capacity, pipelines and other infrastructure.
All of the fields are onshore, with ramp-up likely to depend on more intensive onshore drilling programs and building out the
infrastructure required to deal with the extra volumes. If all of the fields attempt to ramp up simultaneously, we believe that there
could quickly be bottlenecks in onshore rigs and related services, potentially driving up prices in the region. Competition for the
work is likely to be intense, however it remains to be seen how much of it will go to independent oil services contractors. At
Rumaila for example, CNPC will supply the bulk of the pipes, rigs, valves and other equipment. Despite this, we believe that the US
integrated oil services providers such as Schlumberger and Weatherford will benefit from some of the more technologically
complex work. Weatherford is currently the leading service provider in the country and enjoys an early mover advantage. We also
believe that some of the European E&C companies will benefit from the infrastructure build. Saipem and Petrofac are well placed to
pick up work on pipelines and any processing facilities as Petrofac has a strong presence in the region (the main base of its
engineers is Sharjah, UAE), and Saipem has an advantage with ENI which is one of the oil companies that signed a service contract
on the Zubair field.
Our preferred way of gaining exposure to growth in Iraq would be through the higher return players, Schlumberger or Petrofac.
Exhibit 77: Iraq fields capex profile through time
Exhibit 76: Iraq fields production profile

10,000
6,000
Incremental production target
9,000
5,000
8,000
Development capex (US$mn)
Oil production (kb/d)
7,000
6,000
5,000
4,000
3,000
4,000
3,000
2,000
2,000
1,000
1,000
Majnoon
Rumaila expansion
Zubair
Halfaya
West Qurna expansion
20
25
E
20
24
E
20
23
E
20
22
E
20
21
E
20
20
E
20
19
E
20
18
E
20
17
E
20
16
E
20
15
E
20
14
E
20
13
E
20
12
E
20
11
E
20
10
E
20
09
West Qurna 2
2009
2010E
Taq Taq
Miran
2011E
2012E
Rumaila expansion
2013E
Zubair
2014E
Halfaya
2015E
2016E
2017E
West Qurna 2
2018E
Majnoon
57
January 15, 2010
Global: Energy
Heavy oil some activity expected, but driven by expansions rather than greenfield
Large scale integrated mining projects in the oil sands remain the most marginal development type among the Top 280 and despite
the softening of some input costs (such as steel), we expect only modest activity in 2010. In our view, expansions to existing
projects are more likely to progress than greenfield projects, with a particular bias towards thermal projects (using parallel
horizontal wells to recover bitumen) rather than the more labour-intensive mining projects.
Based on the Top 280 analysis, we view Canadian oil sands as one of the least attractive areas of exposure for oil services
companies in 2010 as we expect companies to focus on developing resources in the deepwater and Australian LNG. The oil sands
remain a compelling resource however and we expect large-scale activity to return to the oil sands in 2011, with the sanction of
Horizon Phase 2, followed by Athabasca Expansion 2 and Joslyn. In the short term, thermal project expansions at Firebag, Foster
Creek, and Christina Lake will continue to provide some support to demand for land rigs and construction workers, and we note in
addition that activity will begin on ExxonMobils Kearl mine, however large scale mine or upgrader construction activity is needed
to make the area attractive for global oil services companies and, as such, we prefer exposure to other areas.
Exhibit 78: Top 280 oil sands sanctions by year 2001 2015E
25,000
2001
2004
2006
2009
US$19940
US$8030m
US$16180mn
US$10210mn
2003
2005
2007
2010E
US$4580m
US$13220mn
US$2740mn
US$10310mn
2011E
US$18530mn
2013E
US$53750mn
2012E
US$21830mn
2015E
US$21500mn
2014E
US$40830mn
Oil sands capex sanctioned by year (US$mn)
20,000
15,000
10,000
5,000
Fo
st
er
C
re
ek A
& tha
C ba
hr s
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ry
58
January 15, 2010
Global: Energy
LNG strong activity growth ahead, driven by a wave of new projects in Asia Pacific
We view services providers in the LNG arena positively and forecast 14% compound activity growth (based on capex) between
2009 and 2012E in this win zone, driven almost entirely by Asia-Pacific. The region is set to become a major area of liquefaction
facility construction, as ground is broken at projects such as Greater Gorgon (off Australias North West Shelf) and at the PNG Gas
Project. This will be followed in 2010 and 2011 in our view by a gradual ramp-up of activity in Queensland as coal-bed methane
liquefaction projects such as Queensland Curtis LNG and Gladstone LNG get under way.
With an expected US$113 bn to be spent over the next decade on liquefaction facilities alone (i.e. excluding upstream costs) the
Asia-Pacific LNG prize is substantial and we expect a range of services companies to benefit. The downstream aspects of the
development will require large-scale E&C contractors for the design, fabrication, installation and commissioning of the facilities,
and the upstream portions will require complicated subsea tie-back infrastructure (in the case of Greater Gorgon) or the drilling of
many unconventional gas wells (e.g. Queensland Curtis LNG, Gladstone LNG). We analyse the SURF and subsea equipment awards
associated with these projects in the relevant sections above, while in Exhibit 79 we outline the expected spend on the downstream
aspect of the projects by region.
Exhibit 79: Top 280 liquefaction capex by region 2003 2018E
30,000
LNG facility capex (US$ mn)
25,000
20,000
15,000
10,000
5,000
2003
2004
2005
2006
2007
Africa
2008
2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E
Asia-Pacific
Europe
Latin America
Middle East
59
January 15, 2010
Global: Energy
In the case of the Australian North West Shelf and Queensland coal-bed methane projects, we expect a significant amount of work
to be awarded to domestic contractors, however we also see scope for international involvement as experienced LNG contractors
will help to avoid the bottlenecks and inefficiencies that have beset other regions of intense investment, such as the Canadian oil
sands and the Qatari gas projects. Projects such as Gorgon, for which we forecast US$56 bn of investment over the life of the
development, will be broken down and awarded in discrete packages ranging in size (e.g. the US$400 mn award to GE to provide
compression trains and CO2 sequestration equipment) and we expect many of these to go to international bidders with specific
expertise. We provide a summary of our expectations in Exhibit 80.
We highlight Foster Wheeler and JGC as being well exposed to the growing LNG theme in Asia-Pacific.
Exhibit 80: Status on key LNG projects
Cost
US$ bn
Current status
56
KBR led JV was awarded EPCM for $2.3bn on 9/14/09.
FEED Contractor
Downstream: KBR, JGC,
Hatch & Clough JV
Downstream: Bechtel &
Chiyoda
Upstream: Eos JV
(KBR+Worley Parsons)
SK Engineering &
Construction; Laing ORourke
Australia Construction
Downstream: Bechtel
Upstream: FWLT & FLR
Bechtel
FEED Award
date
Likely FID
Sep-08
4Q09
Project
Gorgon LNG
Participants
Chevron; Exxon;Shell
PNG LNG
ExxonMobil; Oil Search;

Santos; Nippon Oil ; AGL;
MRDC
16
Early works on the project have commenced. It has reached commercial terms for its initial
production capacity with four Asian buyers.
Fisherman's Landing LNG
Liquefied Natural Gas
FEED for the second train commenced recently and the first train FEED is nearing completion.
CBI was also recently appointed as the Project Management Consultant.
Gladstone LNG (GLNG)
Santos; Petronas
14
Queensland Curtis LNG

(QCLNG)
Ichthys LNG
BG Group
23
Inpex; Total
27
Woodside
16
Downstream:JKC JV (JGC, Jan-09

Chiyoda & KBR)
Probable winners:
KBR/FWLT/Worley Parsons
2011
Greater Sunrise LNG
GLNG Environmental Impact Statement (EIS) has been submitted to the Queensland
Government and released for public comment.
Environmental Impact Statement (EIS) has been submitted to the Queensland Government and
released for public comment.
An Environmental Impact Statement (EIS) was to be released by Christmas 2009 although this
has now been delayed and is expected in the first half of 2010.
Woodside is currently evaluating the commercial and technical aspects of the Greater Sunrise
LNG project.
Australia Pacific LNG

(APLNG)
Origin Energy;
Conoco Phillips
20
Owners recently acquired a site on Curtis island. Draft terms of reference was also released
outlining the background of the project and EIS is expected to be lodged in early 2010.
Probable winners:
1Q10
2011
Prelude FLNG
Shell
Woodside
Technip & Samsung Heavy $39,995

Industries
Probable winners:
4Q09
2011
Pluto Train 2
Environmental Impact Statement (EIS) was recently released for public comment. The project has
entered the FEED phase.
Woodside has commenced early FEED work on Pluto train 2 . Woodside is in talks with several
companies to supply additional gas for the project.
Wheatstone LNG
Chevron
20
Chevron recently awarded the FEED contract and expects to ship first gas from the plant in 2016. Bechtel
May-08
4Q09
Aug-09
2010
Dec-08
2010
Jul-08
2010
Jul-09
2011
2012
2012
60
January 15, 2010
Global: Energy
GS SUSTAIN winners continue to do well in Top 280

The value of the Top 280 assets can be severely impaired by poor project execution, both as a result of cost overruns and delays.
This is particularly true at a time when projects are becoming bigger and more complex. We have therefore attempted to assess the
track record of different companies as operators.
We find that the ESG (Environmental, Social and Governance) score compiled by the GS SUSTAIN team has a correlation with each
companys ability to deliver projects on time (Exhibit 81). This score reflects the effectiveness with which each company is
addressing a range of ESG issues including overall corporate governance.
More broadly, we find a strong correlation between the Top 280 and the GS SUSTAIN winners. GS SUSTAIN identifies long-term
industrial winners that have a strong industry positioning, high ESG scores and high return on capital. Three of the six winners in
Top 280 are GS SUSTAIN winners. RDShell scores well on management quality with respect to ESG issues and its industry
positioning but its below sector-average returns mean it is not highlighted as an overall GS SUSTAIN leader, although we note that
exposure to a profitable Top 280 portfolio could change this in the longer term. Tullow and GALP are currently not assessed under
the SUSTAIN methodology.
Exhibit 82: Global Energy GS SUSTAIN winners
Exhibit 81: ESG scores vs. delays

Some correlation between ESG scores and delays experienced on operated Top
170 projects since February 2007
Management
quality
120%
Industry
positioning
Tesoro
Santos
100%
BP
RDShell
BG
RDShell
ExxonMobil
80%
Repsol
Statoil
Petrobras
Chevron
Neste Oil
Sunoco
Suncor
EnCana
TOTAL
ESG score
Chevron
Saipem
MOL
PKN
ENI
Nexen
Cairn Energy
Noble Corporation
Reliance Industries
PTT Public
Valero Energy
Murphy Oil
StatoilHydro
Exxon Mobil
Devon Energy
Schlumberger
Talisman Energy
ConocoPhillips
TOTAL
Marathon
Petrobras
Occidental
60%
Technip
BG
BP
Cepsa
ENI
Halliburton
Thai Oil
Woodside
CNOOC
Hess
Inpex Holdings
ConocoPhillips
40%
ONGC
Management quality
ESG (based on 2006 data) in first or second quartile
Industry positioning : leaders on a combination of:
Long term reserves growth
Long term cash flow growth
Medium term volume growth
20%
-0.5
0.0
0.5
1.0
1.5
2.0
Lukoil
Rosneft
Tupras
2.5
TNK-BP
Transocean
Apache
Return on capital
Return on capital
CROCI (2009E-11E) in first or second quartile
Gazprom
0%
OMV
Integrated producers
Upstream producers
Oil services
Oil refiners
Note: Aker Solutions, Anadarko, Apache, Baker Hughes, Gazprom, National Oilwell Varco, Noble
Energy, Petrochina, Sinopec, Weatherford scored below median on all three metrics.
Average delay to operated Top 170 fields
Source: Company data, Goldman Sachs Research estimates; Santos and Woodside are covered by GS
JBWere.
61
January 15, 2010
Global: Energy
Top 280 winners have delivered on potential

We believe that an assessment of operator effectiveness should consider both the execution of sanctioned projects and also the
ability to get projects sanctioned. Although poor project delivery tends to be well flagged, the negative impact of failing to sanction
a portfolio can have a more material effect. As a result we look at capture rates for both two (operational delivery) and five years
(ability to move projects from discovery to production).
We have analysed those companies with more than five operated projects to assess how effective each company has been in
bringing production online over the past five years and two years. To do this, we have looked back to each of the six previous
iterations of the Top 280 report (starting with Top 50 in 2003). We have taken the volumes that we predicted that the fields operated
by each company would produce in five years and two years from the date of publication and we compare it with the production
that we currently expect from those fields, thereby giving an idea of the capture rate for each company. We believe that low levels
of lost production are an indication of effective operatorship, both in terms of effective development and prompt sanctioning. We
note that these data points are based on our estimates and do not necessarily reflect companies guidance at the time of writing
and that companies with a large proportion of assets already in production tend to be favoured by this analysis.
The three Top 280 winners included in this analysis ranked in the top five operators assessed on this metric in the Top 190 and in
the Top 230 (on a five-year basis), which we believe indicates a good combination of delivery and ability to sanction. On a two-year
view, BG has been a consistently strong performer, with Shell also a reasonable performer. Petrobras has been weaker on a twoyear capture rate, but this is offset by its ability to sanction projects effectively in the Brazilian offshore
10%
Statoil
5%
RDShell
0%
Statoil
ENI
BP
BG
-5%
BG
Exxon Mobil
Total
Exxon
-10%
ENI
-15%
RDShell
Petrobras
Total
Petrobras
-20%
Chevron
BP
-25%
ConocoPhillips
-30%
-35%
ConocoPhillips
T125
T170
Winner
T190
non-Winner
T230
Exhibit 84: Production capture rate of operators five-year capture

Exhibit 83: Production capture rate of operators two-year capture
10%
5%
Statoil
Statoil
Petrobras
0%
-5%
Petrobras
RDShell
-10%
-20%
Exxon
Chevron
BP
BP
BG
-15%
BG
ENI
Total
Exxon Mobil
ConocoPhillips
ENI
RDShell
-25%
-30%
-35%
Total
ConocoPhillips
Chevron
-40%
T125
T170
Winner
T190
T230
non-Winner
62
January 15, 2010
Global: Energy
Operatorship in more detail: BG consistently performs well

Among the Europeans, Statoil performs well on both the two-year and five-year view largely a result of the Norsk Hydro legacy,
with successful delivery of Ormen Lange and Grane, with Peregrino and Gjoa remaining on track. BP has also executed its projects
well in the past four years, after a disappointing performance in the earlier years on a two-year horizon (largely driven by delays at
Thunder Horse). RDShells performance has improved over time, in both time horizons, with its key projects in Qatar and the US
progressing relatively well vs. expectations after initial disappointments from Athabasca and Bonga SW. BG has been a
consistently good performer on both metrics, albeit this only involves the production in Egypt and Karachaganak, which were
delivered early in the dataset, although continuing progress at Curtis LNG has meant that performance between Top 230 and Top
280 has been reasonable. TOTAL has been adversely impacted by the decision to delay Joslyn and by the slower than expected
sanctioning in deepwater West Africa. On the longer dated assessment, ENI has suffered from delays at Kashagan vs. our
assumptions in the first years of publication but much of its portfolio is now producing or about to begin producing, thereby
minimizing the risks of delays and giving the company a good performance from the Top 230.
Overall, we note that on a two-year view there has been a trend of improving performance as more projects from the dataset are
brought online, thereby reducing the risks of production loss.
Exhibit 86: Production capture rate of European operators five-year capture
Exhibit 85: Production capture rate of European operators two-year

capture

20%
Statoil
RDShell
0%
ENI
Statoil
BG
TOTAL
BP
BG
TOTAL
-10%
RDShell
ENI
-20%
BP
-30%
-40%
-50%
T50
T100
T125
Winner
T170
non-Winner
T190
T230
% 5 year forward production estimate gained / lost vs Top 280 estimate
% 2 year forward production estimate gained / lost vs Top 280 estimate
10%
10%
Statoil
Statoil
0%
BG
ENI BG
RDShell
BP
-10%
BP
TOTAL
-20%
-30%
TOTAL
RDShell
ENI
-40%
-50%
-60%
-70%
T50
T100
T125
Winner
T170
T190
T230
non-Winner
63
January 15, 2010
Global: Energy
Operatorship in more detail: ExxonMobil scores consistently well

Petrobras has been a good performer on a five-year view, showing the companys ability to sanction new projects and keep the
development hopper full; on a two-year view, however, it has been less impressive, highlighting some of the delays and lowerthan-expected plateau rates that the company has had to contend with (from fields such as Golfinho). Although it is early days in
the development of the pre-salt Santos plays, sanctions of major phases look imminent in this area. Exxon has been a good
operator on both a two-year and five-year view relative to its peers. Chevrons five-year performance dipped since Top 100 as a
result of delays in sanctioning Greater Gorgon, Ranggas Gehem and Gendalo which slipped back vs. our original estimates. The
sanctioning of projects such as Greater Gorgon in 2009 and the imminent sanctioning at Jack/St Malo have helped the company
recover since publication of the Top 230, however, and shows the importance of effective sanctioning in securing production
growth. Disappointing production at projects such as Surmont and Block 15-1 relative to our original estimates weighs on Conocos
performance.
Exhibit 87: Production capture rate of American operators 2 year capture
Exhibit 88: Production capture rate of Americas operators 5 year capture

20%
% 5 year forward production estimate gained /lost vs Top 280 estimate
% 2 year forward production estimate gained /lost vs Top 280 estimate
20%
10%
0%
Chevron
ExxonMobil
ExxonMobil
-10%
Chevron
Petrobras
-20%
Petrobras
-30%
ConocoPhillips
-40%
ConocoPhillips
-50%
-60%
T50
T100
T125
Winner
T170
non-Winner
T190
T230
10%
Petrobras
0%
Chevron
Petrobras
ExxonMobil
-10%
Chevron
ConocoPhillips
-20%
ExxonMobil
-30%
ConocoPhillips
-40%
-50%
T50
T100
T125
Winner
T170
T190
T230
non-Winner
64
January 15, 2010
Global: Energy
Self-operatorship allows greater control of Top 280 portfolio; Petrobras leads the large players
The oil & gas industry is characterized by split ownership of fields, with one company as the operator; thus companies rarely
operate 100% of their new legacy assets, especially when they have a large portfolio.
Of the companies which have a large portfolio of projects, Petrobras stands out for the very high percentage of assets it operates
itself (95% of net entitlement reserves worth 93% of the companys Top 280 NPV). This means that its future is in its own hands an
attractive position in which to be given the good five-year production capture rate that the company has achieved in recent editions
of this report. We note, however that heavy demands will be placed on the companys own human resources and believe that
assistance in the Santos basin will be increasingly offered by partners (such as BG operating the Abare West asset).
Most of the Majors operate around half of their portfolios value, highlighting the importance that they place on being in control of
their major developments. It also illustrates the relevance of assessing each companys ability to deliver the fields according to plan.
It is notable that both BG and Repsol have relatively low exposure to self-operated fields a result of them both being heavily
exposed to Brazil, and therefore levered to the quality of Petrobras operatorship. Statoils proportion of self-operated value is also
low, indicating a reliance on partners for the development of some of its legacy assets, especially in areas outside Norway.
Exhibit 89: Company exposure to self-operated projects by reserves and value
Company
Cairn India
Dragon Oil
Heritage
Husky Energy
Woodside
Cenovus
PetroChina
Maersk
Tullow
Petrobras
Reliance
Nexen
Lukoil
Murphy
Rosneft
Gazprom
PTTEP
SASOL
BP
Apache
# projects operated
1
2
1
1
3
5
1
5
1
2
17
1
3
4
1
2
6
3
1
27
1
Reserves
operated
387
5620
319
124
1576
2891
1536
7565
457
572
19097
1702
1931
4831
234
5147
28539
703
137
9649
159
NPV of
operated
projects Total reserves
$10,383
387
$23,645
5620
$5,204
319
$3,065
124
$7,277
1576
$19,809
2891
$6,575
1536
$31,958
8148
$12,120
558
$9,574
593
$149,544
20092
$14,714
1837
$15,773
2256
$25,726
5508
$5,589
399
$21,396
5396
$121,049
32754
$5,419
833
$3,416
291
$91,655
19365
$2,451
718
Total NP
10383
23645
5204
3065
7277
19809
6575
33419
12892
10197
161482
16607
18028
30524
6792
27335
155057
7004
4464
124681
3351
% of reserves
100%
100%
100%
100%
100%
100%
100%
93%
82%
96%
95%
93%
86%
88%
59%
95%
87%
84%
47%
50%
22%
% of NPV
100%
100%
100%
100%
100%
100%
100%
96%
94%
94%
93%
89%
87%
84%
82%
78%
78%
77%
77%
74%
73%
Company
Devon Energy
RDShell
Chevron
Suncor
Santos
ExxonMobil
ConocoPhillips
Sinopec Group
INPEX
TOTAL
Statoil
ENI
Occidental
Marathon
Noble Energy
Hess
BHP Billiton
Anadarko
BG
Repsol
# projects
operated
1
19
19
4
2
22
9
2
2
20
7
10
1
1
1
1
1
3
6
4
Reserves
operated
580
7798
8040
6733
970
10107
5202
266
2403
4497
4307
2864
171
151
408
165
243
191
3028
761
NPV of
operated
projects
$10,608
$83,457
$58,616
$12,896
$2,517
$60,241
$21,337
$3,801
$8,101
$30,953
$25,211
$22,629
$2,562
$5,053
$1,315
$3,904
$6,325
$2,318
$13,143
$2,770
Total
reserves Total NPV
2252
14608
16908
121039
12823
94811
7297
20961
1178
4100
19593
112900
11312
40214
924
7217
3548
18614
12216
72032
9057
60806
7441
55849
996
6596
1652
13084
585
3588
1083
12020
1341
20214
546
7514
8391
49067
2233
15028
% of
reserves
26%
46%
63%
92%
82%
52%
46%
29%
68%
37%
48%
38%
17%
9%
70%
15%
18%
35%
36%
34%
% of NPV
73%
69%
62%
62%
61%
53%
53%
53%
44%
43%
41%
41%
39%
39%
37%
32%
31%
31%
27%
18%
65
January 15, 2010
Global: Energy
Profitability, the oil price and the Top 280; costs and fiscal regimes erode oil price returns
The fiscal regime under which a project operates is a significant element in determining the projects sensitivity to the oil price and
profitability. Typically the areas of most sensitivity are in license regimes (Brazil, UK and US), production based PSCs (Nigeria) and
fixed take PSCs (Congo). Despite an element of the tax take in Alberta in Canada being levered to the oil price, this is a relatively
small part of the overall tax take and, in any case, a large number of the projects generate relatively low returns at our US$85/bl oil
price assumption meaning that the operational leverage from the country remains high. The lower sensitivity projects are those
which have either windfall taxes at higher oil prices (Malaysia), service based contracts governed by a fixed remuneration fee (Iraq
and UAE) or a profitability based PSC regime (Angola). Oil price sensitivity in Iraq is a result of the Miran field which is governed by
a PSC while oil price leverage in UAE is a result of liquids production in gas fields operated under PSCs. We see no material
leverage from fixed remuneration services contracts in these countries aside from the impact on the pace of cost recovery.
We note that US$110/bl our oil price assumption for 2011E results in a number of jurisdictions seeing P/I ratios in excess of 2,
indicating very high returns. We believe that the risk of fiscal renegotiation tends to increase as returns go up. Although most of the
countries where returns are particularly high at high oil prices are in relatively stable political areas, we are dubious as to the level
of protection this provides given the tax changes in Canada and the UK in the last decade.
Exhibit 90:
P/Is of oil projects under different oil price scenarios by country
Excludes gas based and producing projects
Exhibit 91: Sensitivity of PI under different oil price scenarios

Excludes gas based and producing projects
3.5
0.3
3.0
0.2
2.5
0.1
2.0
PI
0
1.5
-0.1
1.0
-0.2
0.5
-0.3
PI @ US$60/bl
PI @ US$85/bl
PI @ US$110/bl
Ira
q
ria
ig
e
N
A
E
U
al
ay
si
a
la
ng
o
A
go
C
on
K
U
ad
a
Ca
n
U
S
us
si
a
R
ra
zi
l
0.0
-0.4
UK
US
Canada
Brazil
Congo
Nigeria
PI change from US$85 to US$60
Angola
Russia
Iraq
Malaysia
UAE
PI change from US$85 to US$110
66
January 15, 2010
Global: Energy
High returns and low taxation rates in production increase the risk of fiscal renegotiations
In recent years as commodity prices have increased, we have seen a number of countries adjust their fiscal regime in order to
effectively tax away outsized returns gained through access to a countrys hydrocarbons (i.e. Kazakhstan, Nigeria, Canada, UK,
Venezuela). We believe that three factors are worthy of consideration in assessing whether a country is at risk of adjusting its fiscal
terms:
High returns for producers in the country. Countries need to ensure that companies continue activities and therefore low
returns are likely to dissuade any fiscal changes
A low existing tax rate. If a governments fiscal take is already high, a relatively large proportion of profits will go to the
government in any case and the possible delta by which to move the tax take is more limited
If a countrys major oil assets are already producing, we believe there is less incentive to avoid changing the fiscal terms as oil
companies in the country will have already sunk substantial costs and will be less able to simply halt development
We note that if a country is regarded as a frontier location fiscal terms will need to be better in order to encourage drilling activity.
We believe that a number of those countries at the bottom right of Exhibit 92 meet this criterion. Although we believe that in the
short term the desire to encourage further exploration may prevent short-term fiscal changes, we expect future activity to be more
highly taxed. We believe some risk could remain to initial discoveries in the medium term due to the outsized returns generated.
Exhibit 92: High P/Is and low tax rates put outsized returns at risk
Exhibit 93: Countries with many legacy assets in production are at risk
Country tax rates vs. PIs for pre-sanction and under development projects
% of Top 280 reserves in production by country

100%
100%
Iraq
UAE
90%
Low returns and / or high

existing tax rates limit chance
of fiscal renegotiation
80%
Malaysia
Peru
80%
Kazakhstan
Venezuela
Norway
70%
Overall tax take
90%
Algeria
Russia
Myanmar
Angola
Libya
Uganda
60%
Egypt
Indonesia Congo
50%
MBA effective
tax (India) of
60% vs PI of
3.38x
Vietnam
Thailand
China
Australia
Brazil
40%
60%
50%
Ghana
UK
Canada
70%
Qatar
Nigeria
Italy
40%
Papua New Guinea

Oman
US
30%
30%
Israel
Bolivia
20%
0%
1.00x
1.20x
1.40x
1.60x
1.80x
2.00x
PI ratio
2.20x
2.40x
2.60x
2.80x
3.00x
10%
0%
U
A K
lg
er
C ia
on
C go
K an
az a
ak da
hs
ta
A n
ng
Th ola
ai
la
n
N d
ig
er
R ia
us
si
a
C
hi
n
O a
m
Vi an
et
na
m
B
ra
zi
l
U
A
us S
tr
al
ia
Ira
B q
Pa
o
pu
liv
i
a
N Gh a
ew a
G na
ui
M ne
ya a
nm
ar
Pe
ru
U
A
E
It
U aly
ga
nd
a
Is
ra
el
High returns and relatively

low existing tax rates increase
risk of fiscal renegotiation
10%
Ve Ind
ne ia
zu
el
a
Li
b
N ya
or
I n wa
do y
ne
M sia
al
ay
si
a
Eg
yp
Q t
at
ar
20%
Producing
Pre-sanction
Under development
67
January 15, 2010
Global: Energy
Companies and oil price sensitivity: BP low sensitivity; ConocoPhillips and RDShell higher
Unsurprisingly, the geographical focus of a companys Top 280 portfolio has a significant effect on the portfolios sensitivity to the
oil price. As expected, we find that the pure play Canadian oil sands producers typically have the highest levels of sensitivity to the
oil price.
When analyzing oil price sensitivity on a company level, however, location is not the only factor. Exposure to fixed price gas or gas
prices which have only a weak relationship to the commodity price (i.e. Henry Hub) will limit sensitivities regardless of the fiscal
regimes under which a company operates. Therefore, we see less sensitivity in BPs portfolio relative to other Majors, despite its
relatively high exposure to license regimes, as we assume that the companys large US gas portfolio is insensitive to changes in
crude prices. BGs portfolio is also limited in its oil price sensitivity by its exposure to Egyptian and Omani fixed price gas contracts
and the low operational leverage of its Brazilian portfolio. Statoil is also limited.
We have assessed which companies have the most exposure to those countries we believe are at risk of a fiscal renegotiation
(defined as those countries on the far right of Exhibit 92 namely, Israel, Italy, India, Ghana, Uganda, Vietnam and Brazil, or
countries with over 50% of their Top 280 reserves in production and are on the right of the line in Exhibit 92). We note that,
especially in the context of frontier locations where discoveries have only recently been made, renegotiation may take some time
and is initially likely to occur to PSCs/licences signed subsequent to the first discoveries. We continue to believe, however, that at
some point the initial discoveries in an area are exposed to some risk of fiscal renegotiation.
Exhibit 94: % of Top 280 reserves exposed to at-risk countries
Exhibit 95: Company sensitivity dependent on asset type and location
100%
40%
90%
30%
% change in PI from US$85/bl
70%
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
10%
-40%
B
G
Ex Rep
xo so
nM l
o
R bil
D
Sh
e
N ll
ex
en
TO
T
C
on Ch AL
oc ev
oP ron
hi
lli
p
St s
at
oi
l
EN
I
H
e
Su ss
nc
o
IN r
PE
X
0%
SA
SO
L
O
G
X
C So
ai
rn co
In
d
Tu ia
Pe llo
tr w
ob
ra
N
s
ob
G
le
al
En p
A erg
na
y
O da
cc rk
o
id
en
ta
l
20%

UTS Corp
SASOL
Oil Search
OPTI Canada
Santos
Cenovus
Suncor
Soco
Woodside
Cairn India
BHP Billiton
INPEX
Nexen
Rosneft
Heritage
Anadarko
RDShell
Marathon
EOG Resources
Tullow
Surgutneftegaz
OMV
Chevron
CNOOC
ENI
Husky Energy
Repsol
Dragon Oil
ConocoPhillips
Petrochina
Hess
Petrobras
TOTAL
ExxonMobil
Murphy
BP
Galp
Gazprom
ONGC
BG
Devon Energy
Noble Energy
Statoil
Occidental
Apache
TNK
Lukoil
Sinopec Corp
Reliance
Talisman
Chesapeake
Encana
Southwestern Energy
Questar
Ultra Petroleum
% of reserves in "at risk" countries
80%
PI change from US$85/bl to US$60/bl
68
January 15, 2010
Global: Energy
Tax and oil price linked through PSC taxation

In 2010E, production from PSCs accounts for 50% of total production, making the fiscal structure an important consideration in the
universe. PSCs vary greatly from country to country, but the basic mechanism is usually similar. Typically the IOC is allowed to
recover all of its costs (in the form of barrels) from a share of the projects production, and the remaining production is shared with
the NOC. This share, called profit share, typically decreases as the investment goes through certain profitability or production
thresholds.
This is generally calculated using an IRR factor, an R-factor which determines the historical ratio of operational cash flow to capex
(Angola), production (Nigeria), or a mix of the three (Kazakhstan) and triggers a higher government take at higher levels.
In a high oil price the PSC effect is more pronounced as costs are recovered and projects become more profitable earlier. Once
profitability thresholds have been breached, an extremely low oil price or very large subsequent investment is required to bring the
IRR or R-factor down to a lower profitability band. As many governments/NOCs often take their royalties and profit oil in barrels
rather than cash, this is likely to affect production growth and make it even harder for companies to achieve production targets.
Exhibit 96: Low oil prices result in higher cost oil and delayed breaching of
profitability thresholds
Exhibit 97: Higher oil prices shorten the cost recovery period and see
profitability thresholds breached earlier
Based on a generic PSC regime with 15% royalty, 50% cost recovery limit and
profit oil share to government based on IRR; modelled at US$60/bl
Based on a generic PSC regime with 15% royalty, 50% cost recovery limit and
profit oil share to government based on IRR; modelled at US$100/bl
70
70
60
60
Drop in contractor take as
profitability threshold crossed
Volumes (mn boe per annum)
50
40
30
20
30
20
10
10
Contractor's cost oil
Contractor's profit oil
Government take
20
31
E
20
32
E
20
30
E
20
29
E
20
28
E
20
27
E
20
26
E
20
24
E
20
25
E
20
23
E
20
22
E
20
21
E
20
20
E
20
19
E
20
18
E
20
17
E
20
16
E
20
15
E
20
14
E
20
13
E
20
12
E
20
11
E
20
32
E
20
31
E
20
30
E
20
29
E
20
28
E
20
27
E
20
26
E
20
25
E
20
24
E
20
23
E
20
22
E
20
21
E
20
20
E
20
19
E
20
18
E
20
17
E
20
16
E
20
15
E
20
14
E
20
13
E
20
12
E
0
20
11
E
20
10
E
40
20
10
E
Volumes (mn boe per annum)
50
Government take
69
January 15, 2010
Global: Energy
Service contracts provide even less leverage than PSCs, but do not reward efficient field
management
Since publication of the Top 230 in February 2009, we have added a number of contracts with significant reserves from the UAE and
Iraq which are governed by technical service contracts. The exact form of these will change from contract to contract, but we
would typically expect:
Cost recovery of capex spent, up to a maximum % of revenue
A fixed remuneration fee per barrel, possibly with corporation tax and/or an R-factor reducing the value of this to the company
A threshold that must be reached in order to begin recovering costs
The mechanics of this contract type mean that the projects are very insensitive to the oil price, with only the first few years being
influenced due to the speed of cost recovery being impacted by the commodity price. The other corollary of this fiscal mechanism
is that it is relatively inefficient inasmuch as we believe there is little additional incentive for companies to ramp up production
significantly once costs have been recovered, or to control costs once the field is in the cost recovery period.
Exhibit 99: 600 kb/d plateau and US$7 bn capex results in net entitlement
volumes of 122 mnboe from c.2.5 bnboe produced
Excluding opex recovery
Excluding opex recovery

1200
1000
1000
800
800
kboepd
1200
600
600
400
200
200
Government take
20
11
20 E
12
20 E
13
20 E
14
20 E
15
20 E
16
20 E
17
20 E
18
20 E
19
20 E
20
20 E
21
20 E
22
20 E
23
20 E
24
20 E
25
20 E
26
20 E
27
20 E
28
20 E
29
20 E
30
20 E
31
20 E
32
20 E
33
20 E
34
20 E
35
20 E
36
E
400
20
11
20 E
12
20 E
13
20 E
14
20 E
15
20 E
16
20 E
17
20 E
18
20 E
19
20 E
20
20 E
21
20 E
22
20 E
23
20 E
24
20 E
25
20 E
26
20 E
27
20 E
28
20 E
29
20 E
30
20 E
31
20 E
32
20 E
33
20 E
34
20 E
35
20 E
36
E
kboepd
Exhibit 98: 1000 kb/d plateau and US$7 bn capex results in net entitlement
volumes of 138 mnboe from c.4 bnboe produced
Government take
70
January 15, 2010
Global: Energy
PSC effects still relevant; technical service contracts increase the magnitude of the PSC effect
Our company analysis of the Top 280 projects is mainly based on profitability and as such it does not make much difference
whether taxes are paid in kind (barrels) or cash. However it makes a big difference for oil companies with production growth targets.
The PSC effect will continue to be driven by the oil price and the geographical location of a companys portfolio and will continue to
be relevant when analyzing company production figures. Despite a substantial increase in the PSC effect in recent years, a drop to
US$60 would see a slowing of this trend rather than a reversal as PSC effects are likely to persist as: 1) initial capex is recovered on
some assets, leaving only opex and ongoing capex to be recovered through additional barrels on our estimates thereby increasing
the PSC effect (i.e. Elephant), 2) overall production increases from other assets (such as ACG and Al Shaheen extension) and 3)
fields (such as Dalia) continuing to breach profitability thresholds.
As a result of these factors, we expect the impact of PSCs on overall production of the Top 280 to increase gradually until 2012E (at
US$85/bl and above) or 2013E (at US$60/bl), when we expect a more rapid increase in its impact. Again, to a degree this reflects the
increase in production from PSC contracts, the breaching of profitability thresholds and the ending of substantial initial cost
recovery in some assets (such as at Cepu and Dolphin). However, the other factor that increases the PSC impact from this period
onwards is our expectation of a substantial ramp-up in assets governed by technical service contracts in Iraq and the UAE. We
assume that companies receive cost oil and the remuneration fee in the form of entitlement barrels, but due to the harsh fiscal
terms we expect increasing amounts of working interest production being lost as a result of these fields ramping up.
It is important to note that PSCs do not affect the volumes produced, just the share of production to which the IOCs are entitled.
Exhibit 100: Impact of different oil price scenarios on the PSC effect of the Top 280 projects
14,000
Top 280 PSC production loss (kboepd)
12,000
Production lost at US$110/bl

10,000
8,000
6,000
4,000
2,000
0
2002
2003
2004
2005
2006
2007
2008
2009
2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
71
January 15, 2010
Global: Energy
Estimating PSC effects in Europe: BG most exposed in short term, Statoil in long term; service
contract impact will be substantial
BG stands out as having high Top 280 PSC exposure relative to current production in the short term a result of its Egyptian gas
projects and Panna Mukta Tapti in the short term and the Abu Butabul field in the longer term with the sensitivity between different
oil prices due mainly to the effect of the Karachaganak PSC. Due to the fixed price gas in the companys Egyptian assets, even at
low oil prices the impact is high relative to peers. As Brazil kicks in, however, this impact is reduced substantially leaving BG with a
high ratio of net entitlement reserves vs. working interest reserves.
Those fields with exposure to Iraq will see an increase in PSC impact from the service contracts as they begin ramping up; Statoil
(West Qurna 2), BP (Rumaila), Shell (Majnoon and West Qurna 1), ENI (Zubair) and TOTAL (Halfaya) are all likely to see upticks in
the second half of the next decade. The sensitivity of the PSC effect of these contracts to higher oil prices is, however, muted as a
result of our assumption of net entitlement being based on the cost recovery and a fixed price per barrel, meaning that the
spreading of the costs over fewer barrels is the only impact of a higher oil price. Shell experiences a fairly steep increase in the PSC
effect from its Iraqi projects and from Pearl GTL.
Repsol has the lowest impact, a result of its higher proportional exposure to licence regimes in the US and Brazil.
Exhibit 102: PSC effects become more pronounced at US$110/bl
40%
40%
35%
35%
Top 280 PSC effect as a percentage of 2009 reported production
Top 280 PSC effect as a percentage of 2009
Exhibit 101: Service contracts are the main drivers of PSC effects on
European IOCs at US$85/bl
30%
ENI
25%
BG
TOTAL
20%
Statoil
BP
15%
RDS
10%
0%
2009
2010E
2011E
2012E
2013E
2014E
ENI
25%
BP
BG
2015E
2016E
2017E
2018E
TOTAL
20%
Statoil
15%
RDS
10%
5%
Repsol
5%
30%
0%
2009
Repsol
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
72
January 15, 2010
Global: Energy
Iraq the big differentiator among the larger US companies

There is a clear divergence in the PSC impact between the larger North American names as the companies that have chosen to
expand the most geographically see the most impact. Of those companies, the two with exposure to the Iraqi service contracts
(Exxon and Occidental) see the biggest impact when the fields start ramping up faster beyond 2012E. Exxon is also impacted by its
portfolios in West Africa and other areas in the Middle East, while Occidentals participation in Dolphin is also a factor.
After these two companies, Chevron has the most exposure, due to its deepwater West African and Caspian portfolio.
The effect on ConocoPhillips production is more muted than for its US Major peers given that its Top 280 portfolio is more heavily
weighted towards Canadian heavy oil and North American gas, and as fewer of its assets operate under PSCs. Marathons nearterm impact is also muted as we believe it will be some time before its Angolan portfolio breaches profitability thresholds,
especially at lower oil prices, meaning that Alba is the main driver of its medium-term PSC impact. Suncor and Devons US bias
mean that both companies are less levered to PSC effects than other large US companies.
Exhibit 104: PSC effect on Top 280 portfolios at US$110/bl is more

pronounced
40%
40%
35%
35%
Occidental
Top 280 PSC effect as a percentage of 2009 production
Top 280 PSC effect as a percentage of 2009 production
Exhibit 103: US companies exposed to Iraq see the greatest impact from
PSC effects by far (at US$85/bl)
30%
ExxonMobil
25%
20%
Chevron
15%
10%
Occidental
30%
ExxonMobil
25%
20%
Chevron
15%
Marathon
10%
Marathon
Devon
5%
ConocoPhillips
Devon Energy
5%
ConocoPhillips
Suncor
Suncor
0%
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
0%
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
73
January 15, 2010
Global: Energy
PSC effects result in substantial loss of working interest to host governments

The impact of the government take from PSCs and service contracts can be significant, with the Majors typically losing between
10% (BG) and 40% (ENI) of their total working interest volumes to the government as a result of this offtake. Companies which lose
little in the way of production tend to be those focused on North American and Australian unconventional production and Russian
firms which operate under licence regimes. Of the Majors, ENI loses the most of its working interest reserves to the government,
with 40% of its remaining reserves being lost, primarily as a result of its exposure to contracts such as Wafa Bahr Essalam,
Elephant and Kashagan, the first two of which are especially levered as they have already recovered a large proportion of the cost
barrels to date.
Exhibit 105: PSC reserves exposure of the Top 280 companies
100%
NE reserves as % of WI reserves
90%
80%
70%
60%
50%
40%
30%
20%
10%
Woodside
BHP Billiton
TNK
Chesapeake
Encana
Southwestern Energy
OPTI Canada
Cenovus
SASOL
Ultra Petroleum
EOG Resources
Questar
Oil Search
UTS Corp
OGX
Sinopec Corp
Petrobras
Nexen
Gazprom
Suncor
Galp
Santos
Rosneft
Devon Energy
Soco
Husky Energy
Repsol
Noble Energy
BG
Marathon
Talisman
ConocoPhillips
Anadarko
Chevron
Statoil
PTTEP
Apache
RDShell
Hess
Reliance
BP
Petrochina
TOTAL
INPEX
Lukoil
ExxonMobil
CNOOC
Murphy
Cairn India
ENI
Tullow
Dragon Oil
0%
Source: Goldman Sachs Research estimates; Woodside and Santos are covered by GS JBWere.
74
January 15, 2010
Global: Energy
Profitability has improved but the overall impact of the oil price since Top 50 is limited
Since the publication of the Top 50 Projects in 2003, we have increased our oil price assumptions from US$17/bl to US$85/bl. As a
result, the profitability of the projects in this study has increased, putting an even greater premium on exposure to the assets and
good execution.
Despite this oil price increase, however, the profitability of pre-sanction projects has increased a relatively small amount (from 1.3x
to 1.6x). While projects currently in production have seen a significant increase in profitability as sunk capex protects against
inflation, leaving them more able to benefit from higher revenues driven by our increased oil price assumption, growth in
profitability of projects still to be sanctioned has been more muted as higher costs and tax takes have eroded returns. Other factors
which have put pressure on profitability for pre-sanction projects are the increase in the differential and increased tax takes at
higher oil prices (whether through renegotiations of fiscal regimes or dynamic, profitability or oil price based PSCs such as those in
Angola or Malaysia). Between the Top 230 and the Top 280 we have not adjusted our oil price assumptions. As a result, there has
not been a substantial change in forecast profitability. Although we assume a slightly lower operational cost base in 2009 as a
result of raw material costs coming down, this is largely offset by higher taxation rates in some of the larger fields that we have
added since Top 230 (such as that implied in the technical services contracts) and concerns over bottlenecking re-emerging (mainly
in Australian LNG and oil sands). We note that if oil prices remain at current levels, taxation and costs could rise, bringing down the
P/I of pre-sanction projects to the levels prevailing in earlier editions of this study.
Exhibit 106: The pre-sanctioned projects are not much more attractive than
in 2003, despite the underlying oil price assumption going up significantly
Exhibit 107: Cost breakdown of pre-sanction projects
2.3x
2.2x
2.1x
90
2.0x
85
80
70
1.7x
65
18.3
60
1.6x
55
2.19
1.5x
1.4x
2.20x
1.97x
1.3x
1.59x1.58x
1.62x
1.57x
1.25x1.28x 1.3x
1.6x
1.5x
1.5x
1.1x
1.6x
1.69x
45
30
15
10
0.8x
Top 100
Projects
7.4
Top 125
Projects
Producing
Top 170
Projects
Under development
Top 190
Projects
Top 230
Projects
Pre-sanction
Top 280
Projects
16.9
10.2
4.8
20
0.9x
Top 50
Projects
8.8
35
25
1.3x
1.3x
1.28x1.31x
23.7
12.9
50
40
1.81x
1.71x
1.2x
1.0x
19.0
75
1.8x
US$/bl
P/I ratio
1.9x
4.1
2.0
2.5
5.7
12.1
6.0
4.7
1.8
2.3
3.2
3.1
3.7
4.3
Top 50 Projects
Top 100 Projects
Top 125 Projects
Top 170
F&D (incl infrastructure)
Production cost
28.0
8.2
8.4
12.7
7.7
4.9
25.6
17.4
Taxation per barrel
7.3
5.5
7.4
6.8
Top 190
Top 230
Top 280
Differential
Net margin
75
January 15, 2010
Global: Energy
Cost deflation has increased profitability marginally but risk is for erosion of returns from here
We have seen a small increase in the profitability of most win zones between this edition and the Top 230, driven by: 1) cost
deflation in most win zones, 2) a change in realizations for some products (i.e. a narrowing in our assumed bitumen and Asian LNG
differentials), and 3) improved leading operational indicators from some areas (such as flow rates in Brazil and the Lower Tertiary).
We note, however, that despite a significant increase in our oil price forecast since the publication of Top 100, there has generally
been only a small increase in the profitability of pre-sanction projects. In this edition, however, as a result of the factors mentioned
above, returns are above average in each of the win zones. While we appreciate that part of the benefit of higher oil prices should
feed down to stakeholders, we believe that there is a risk of some mean reversion in projects that have yet to be sanctioned:
We believe that labour bottlenecks (such as those seen in Canada over the last 3-4 years) and higher demand for services as
sanctioning activity begins to increase, could result in cost inflation returning.
We believe that at higher levels of profitability, government takes will rise through profitability mechanisms in the fiscal regime
(i.e. Angola, Malaysia) or renegotiation of contracts as governments claw back excess returns (i.e. Libya, Kazakhstan)
We therefore believe that the current levels of returns could be unsustainable in those win zones where returns are substantially
ahead of the average since 2005 (i.e. deepwater, LNG and heavy oil). We believe that the traditional win zone is harder to analyse in
this way, as the projects are more independent and less linked to one another by generic trends.
Exhibit 109: P/I of pre-sanction projects by win zone is above trend
Exhibit 108: Cost increases for pre-sanction projects by win zone
Dotted line indicates average over publication

12
Some deflation
seen in deepwater
rig rates / labour
costs but offset by
inclusion of new
GoM and Brazilian
projects at higher
end of cost curve
All-in capital cost (US$/bl)
10
Addition of Laggan Tormore

and Gro increase costs.
Alaska Gas and Mackenzie
gas prevent significant
average deflation
Addition of new, low cost

traditional projects such as
Miran, Uganda Blocks 1-3
and Vesuvio / Pipeline.
Security concerns /
increased expectations of
social payments in W Africa
and activity driven labour
inflation in Australian
market offset raw material
deflation
Raw material and rig
rate deflation combine
with slight drop in
labour costs
2.00x
1.80x
1.60x
1.40x
1.20x
1.00x
0.80x
0.60x
0.40x
0.20x
0.00x
Deepwater
0
Deepwater
Gas
Traditional
Heavy Oil
Pre-sanction in Top 100
Gas
Traditional
Heavy Oil
LNG
LNG



76
January 15, 2010
Global: Energy
Companies and profitability: Scale advantages Top 280 projects

Despite the challenges caused by higher and more volatile oil prices, we believe that the advantages of scale that the Top 280
Projects have over other, smaller assets still make them valuable drivers of profitability, and believe that on a net entitlement basis,
most companies will see an increase in cash flow/bl as a result of their Top 280 exposure. At our assumption of US$85/bl oil, we
believe that all the included projects return at least 8%.
In 2012E we believe that Rosneft and ONGC will see the biggest advantage in their Top 280 cash flow relative to 2008 cash
generation per barrel. For Rosneft, we see this dropping back substantially once the three-year export tax relief on Vankor ends.
ONGC is advantaged because of the cash generation of Top 280 projects such as MBA, relative to a low current base. By 2015E, we
see the Majors relatively closely grouped with the exception of ConocoPhillips and Statoil which, while improving vs. their current
portfolio, are relatively less advantaged as Statoils West Qurna 2 project and unconventional gas production increases and
Conocos relatively high cost oil sands projects ramp up. INPEX also looks advantaged by 2015E. Occidentals Top 280 portfolio is
generally worse than its current, relatively high value portfolio, mainly as a result of its Iraqi service contracts which generate very
low realizations. Sinopecs Top 280 Puguang asset is more disadvantaged vs. its current, more oily portfolio, while we assume
Devon Energys unconventional gas assets realize US$6.50/mcf, putting them at a discount to the companys 2008 cash flow per
barrel.
Exhibit 111: In 2015E, INPEX and ONGC see biggest improvements
Exhibit 110: Top 280 projects provide advantaged cash flow vs. current
portfolios
2015 Top 280 cash flow/bl vs. 2008 cash flow/bl
2012E Top 280 cash flow/bl vs. 2008 cash flow/bl

50.00
50.00
ONGC
45.00
PetroChina
BP
Repsol
40.00
35.00
Gazprom
30.00
Marathon
RDShell
ENI
ExxonMobil Chevron
TOTAL
ConocoPhillips
Statoil
Petrobras
Occidental
Suncor
CNOOC
Devon Energy
BG
25.00
Lukoil
20.00
INPEX
45.00
INPEX
Sinopec corp
15.00
10.00
5.00
Top 280 cashflow per barrel (at US$85/bl oil price)
Top 280 cashflow per barrel (at US$85/bl oil price)
Rosneft
ENI
40.00
CNOOC
RDShell
ExxonMobil
Marathon
BG
TOTAL PetrobrasChevron
BP
Repsol
ONGC
35.00
Suncor
Gazprom
30.00
Statoil
ConocoPhillips
Occidental
Devon Energy
PetroChina
25.00
Lukoil
20.00
Sinopec corp
Rosneft
15.00
10.00
5.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
2008 reported cash flow per barrel (at US$98/bl oil price)
40.00
45.00
50.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
2008 reported cash flow per barrel (at US$98/bl oil price)
77
January 15, 2010
Global: Energy
Top 280 crude oil supply excluding NGLs heavier than current global production
Top 280 API gravity lifted by NGL production but heavy oil dominates in longer term
Our analysis of the API gravity of the crude and condensates coming on-stream from the Top 280 projects suggests that new
production will be on average 1.25 lighter than the gravity of current global crude and condensate production as the ramp-up of
NGLs from Qatar, ACG and Tengiz lift the overall API quality. As the decade progresses however we expect the increasing
production of heavy oil from Canada, as well as major fields such as Vankor, Talakan, Tupi and the Iraqi fields of West Qurna and
Rumaila to lower the API gravity below the current global average. The Top 280 crude API gravity excluding NGLs is marginally
lighter than the current global average and gradually turns heavier into the end of the decade to reach an average of 30.5 in 2018E.
We note that this analysis assumes no spare OPEC capacity; we believe that any cuts from OPEC would have the effect of making
the supply lighter as heavier crudes are lost first.
Exhibit 112:
Qatargas condensates lead the API rise before Canadian heavy oil takes hold
36.0
Including the impact of NGLs
the ramp up in Qatar, Saudi
NGLs, ACG and Tengiz
increase the crude quality
API degrees
35.0
34.0
33.0
32.0
Vankor, Talakan, Tupi and

Canada heavy oil fields
drive the API down
31.0
30.0
19
99
00
20
20
01
02
20
20
03
04
20
Global API
20
05
06
20
20
07
Global API ex NGLs
20
08
20
09
10
20
Top 280 API
20
11
12
20
E
20
13
14
20
E
20
15
16
20
Top 280 API ex NGLs
78
January 15, 2010
Global: Energy
The significant ramp-up of light condensates from the Qatargas and RasGas projects in the Middle East as well as ACG and Tengiz
in the Caspian offsets the near-term ramp-up of Talakan and Vankor to raise the overall API of the Top 280 projects including
condensates. This increase in gravity will be relatively short-lived however as the significant investment in Canadian heavy oil,
deepwater Brazil and Iraq drives the average API down from 2010E. Excluding the impact of NGLs the Top 280 crude projects will
become gradually heavier than the global average, in particular driven by the larger share of Canadian heavy oil production.
Excluding Canada from our analysis of Top 280 crude oil production, the average API still falls versus history as the share of
relatively heavier Iraqi production increases.
Exhibit 113: Evolution of API quality by region; Caspian and Asia-Pacific lightest regions, Latin America and Canada the heaviest
45
Caspian
40
API gravity
Asia-Pacific
35
Africa
USA
Europe
Russia
30
Middle East
25
20
2009E
Latin America
Canada
2010E
2011E
2012E
2013E
2014E
2015E
2016E
79
January 15, 2010
Global: Energy
Top 280 assets likely to be a significant driver of M&A

We believe that the Top 280 assets are strategically desirable and could provide an acquirer with strategic growth prospects.
As such, we believe that smaller companies which have stakes in these assets could attract M&A attention in the future. We
have screened the Top 280 to identify attractive targets using the following criteria:
Size: We restrict our potential targets to those companies with an enterprise value below US$25 bn as we believe a corporate
deal can be reasonably financed at such a level and a Top 280 asset sale would likely have a material impact.
Viability: We exclude companies which are not publicly listed or have what we consider to be a blocking shareholder.
Materiality: The Top 280 portfolio should account for at least 50% of the companys EV assuming an 8% discount rate
Growth: We exclude companies whose Top 280 net entitlement growth does not provide at least a 10% uplift to current
production between 2010E and 2020E.
On this basis, Tullow, Soco, Cairn India, OPTI (not covered), Hess, Heritage, Nexen and St Mary Land & Exploration (not covered)
screen attractively. Of the companies whose EVs are over US$25 bn, OGX and BG also screen attractively.
Exhibit 114: M&A screen of Top 280 companies
Exhibit 115: Data for companies with EV under US$25 bn

No blocking
shareholders
NPV > 50% of EV
Murphy
C.O.S.T.
Soco
OPTI
Dragon
INPEX
Ultra
Cairn India
St Mary
Tullow
Heritage
Oil Search Southwestern
Hess
Nexen
Galp
Range Questar
Arrow
Niko
Noble
Santos
Newfield
Quicksilver
Petrohawk
Talisman
Cenovus
OMV
10 year
production uplift
Source: Goldman Sachs Research estimates (when calculating production uplift for non-covered companies
we use annual reports/SEC filings and use 2008 reported production figures).
Company
Heritage
Soco
OPTI Canada
Dragon Oil
St Mary Land & Exploration
Arrow Energy
Niko Resources
Quicksilver Resources
Oil Search
Newfield
Ultra Petroleum
Range Resources
PetroHawk
Questar
Santos
Murphy
Cairn India
Noble Energy
Tullow
Nexen
OMV
Southwestern Energy
Galp
INPEX
Hess
Talisman
Cenovus
NPV of Top 280 as

% EV at 8% cost
of capital
219%
97%
199%
196%
78%
13%
31%
7%
23%
26%
27%
36%
42%
15%
34%
58%
81%
24%
30%
63%
110%
8%
27%
50%
93%
59%
16%
29%
PI of Top
280
2.94x
3.50x
1.46x
2.30x
1.98x
1.58x
2.00x
1.32x
1.59x
1.98x
1.30x
1.84x
1.62x
1.30x
1.45x
2.04x
3.37x
2.33x
1.30x
2.70x
1.83x
2.29x
1.51x
1.81x
1.59x
1.66x
1.69x
1.96x
Top 230 10 year

Net entitlement production uplift as % of
Top 280 reserves
2009 production
124
915%
84
377%
871
525%
319
20%
542
79%
152
314%
189
37%
150
33%
307
154%
574
11%
1530
128%
764
213%
846
177%
923
75%
1178
64%
399
-2%
387
298%
585
27%
419
1%
593
222%
2256
35%
86
4%
1284
64%
2420
1808%
3548
82%
1083
18%
678
29%
1536
48%
Blocking
shareholder?
No
No
No
Yes
No
No
No
No
No
No
No
No
No
No
No
Yes
No
No
No
No
No
Yes
No
Yes
Yes
No
No
No
Source: Goldman Sachs Research estimates, Bloomberg (when calculating production uplift for non-covered
companies we use annual reports/SEC filings and use 2008 reported production figures).
80
January 15, 2010
Global: Energy
NOC purchasers may be more price insensitive and better able to offer more upside than IOCs
We believe that the rationale for asset purchases is likely to vary by acquirer. We assume that the decisions of IOCs are made
primarily on a commercial basis rather than according to a strategic rationale, and therefore expect most deals in which the IOC is
the acquirer to be done at a WACC similar to the commercial hurdle rate for a particular asset. In our view, national oil companies
are driven less by value and more by a strategic desire to secure future reserves and supply. As a result, we believe that
acquisitions involving NOCs are likely to be more price insensitive which would likely be manifested in lower implied discount
rates for pricing acquisitions.
We have analysed deals performed on Top 280 assets in 2009 in order to assess the implied discount rates at a US$85/bl oil price
assumption (close to the back end of the forward curve at the time of each deal). Exhibit 116 shows that those deals with Chinese
NOCs as the buyer (the Athabasca Oil Sands Corporation deal and the proposed acquisition of Marathons stake in Block 32 in
Angola) imply a discount rate of c.8% based on our Top 280 analysis. Of the others, Maersks acquisition of Devons stake in Jack/St
Malo and Cascade implies an 11% discount rate on our analysis (consistent with our assumption of an 11% hurdle rate for GoM
assets), and ENIs attempted purchase of Heritages Ugandan stake implies a 12% discount rate. ENOCs bid for Dragon implied a
c.13.5% discount rate which we believe reflects ENOCs majority holding and possible capital constraints.
Exhibit 116: Discount rates implied by 2009 deals based on analysis of Top 280 Projects
Deals involving NOCs have implied a lower discount rate at US$85/bl. Tengiz excluded as deal included pipeline company
Discount rate implied by deal at US$85/bl
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
Athabasca Oil Sands
Corporation assets
Block 32 - Marathon stake
Jack/St Malo
Uganda, blocks 1 & 3
Dragon
81
January 15, 2010
Global: Energy
Higher risk exposure maximizes the potential discount rate arbitrage

If we assume that purchases by NOCs are more price insensitive and that the average 8% discount rate implied by the deals done in
2009 can be replicated in other deals, but that listed oil companies will likely attempt to perform transactions at more commercial
discount rates, a more significant valuation uplift could result from acquisitions by NOCs of those assets which are of strategic
value, and in riskier areas of the world where the potential discount rate arbitrage between a listed companys hurdle rate and a
NOCs strategic cost of capital is higher. Exhibit 117 shows the potential difference between smaller companies assets valued at
what we would regard as a commercial cost of capital and an 8% cost of capital. We believe that the type of assets likely to appeal
most to NOCs are predominantly oil based and therefore do not include gas-based assets in this analysis.
We note that we do not believe that Cairn India would be an obvious target for Chinese NOCs given the potential for opposition
from the Indian government to an acquisition by a Chinese state-owned company. We similarly rule out Dragon as a result of its
blocking majority shareholder. We note that a purchase of Heritages assets would carry high political risk even for a NOC given the
possibility of being barred from Iraq in the event of a purchase of an asset in the Kurdistan Region of Iraq.
Exhibit 117: Transactions at an 8% cost of capital could generate significant additional value for a target
Based on strategic oil-based assets
250%
200%
150%
100%
50%
Strategic assets as % of EV at commercial discount rates
m
an
Ta
lis
V
O
M
Sa
so
l
er
gy
En
D
ev
on
En
e
ky
IN
PE
X
rg
y
us
ov
H
us
C
en
G
al
n
ho
fte
tn
e
rg
u
Su
M
ar
at
ga
z
s
H
es
y
ur
ph
M
Tu
llo
X
O
G
co
So
en
N
ex
H
er
ita
ge
0%
Strategic assets as % of EV at 8% discount rate
82
January 15, 2010
Global: Energy
Lower political risk comes at the cost of higher technical risk

As mature basins such as the North Sea and the US onshore continue to decline and offer little potential for incremental
growth, IOCs are being required to take on additional risk in order to replace reserves and keep returns attractive. We split
risks into two types technical (i.e. those related to the complexity of extracting hydrocarbons from the ground) and
political (the risk of doing business in a particular location). Although the opening up of Iraq to IOCs allows companies to
produce from simple oil fields in a politically challenging location, we believe that this bucks the trend and expect political
risk to fall in future as companies both look for reserves in more stable regimes and are prevented by NOCs and
governments from developing simple assets in politically riskier countries more prone to resource nationalism. As a result,
we believe that the geographical opportunity set will be more limited for IOCs which will need increasingly to rely on their
technical competence to gain access to reserves in non-OECD countries and to enable monetization of resources in OECD
countries. This can be seen in companies increasingly focusing on unconventional resources in politically stable plays (such
as heavy oil in Canada, or LNG in Australia).
Technical risk analysis

We have identified six main areas of technical risk and ranked the projects accordingly.
Technical risk score
Exhibit 118: Summary of key technical risk criteria

Category
Description
Example fields
Water depth
Fields in greater water depths are assumed to have higher risk profiles
Jack, Stones, Tupi
Environment,
geography & climate
Fields subject to hostile operating conditions, e.g. Arctic operations,

Shtokman, US GoM,
environmentally sensitive areas or other complex geographies, e.g. subGreater Gorgon
-salt or hostile weather patterns
Technology
dependence
Geological issues
Greater than average dependency on new or complex production

technologies, e.g. subsea systems, early generation deepwater
developments, LNG, GTL, heavy oil
Risks regarding complex reservoirs, heavy oil, HPHT, sour gas or sour
liquids
% of Top 280
technical risk score
15%
19%
Kashagan, GTL,
Shtokman
28%
Kristin Tyrihans,
Kashagan, Shah
17%
OPEC quota
compliance
Fields that we believe are at a higher risk of cutting production to

comply with OPEC quotas
Venezuelan Orinoco
projects, Algeria, Libya
Nigeria
4%
Infrastructure
dependence
Technologically and politically complex issues surrounding the

development and exporting of hydrocarbons
African LNG,
Karachaganak, ACG
17%
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We believe that the riskiest projects on a purely technical basis are GTL, deepwater projects, high pressure, high sulphur projects
such as Kashagan, or large developments in new environmentally-sensitive areas such as Shtokman. GTL risking is mainly a
product of the high complexity technology which is relatively untested on a large commercial basis. For the deepwater zone, the
risks are more varied. Water depth is the most obvious, but also the complexity of subsea technology and the presence of many
fields in hurricane zones or underneath substantial salt layers (especially if these layers are active) raises the technical risk. LNG
and heavy oil present average risk, largely linked to the technological and infrastructure issues. We see the gas, exploitation and
traditional win zones as relatively low risk on a purely technical basis, with fields such as Kashagan and Shtokman as notable
exceptions.
1.6
80000
1.4
70000
1.2
60000
50000
0.8
40000
0.6
30000
0.4
20000
0.2
10000
nc
o
as
G
Tr
ad
i
tio
na
tio
n
vy
H
ea
Technical risk (LH)
Ex
pl
oi
ta
O
il
G
LN
Ru
nv
e
nt
io
ee
p
na
l
ga
s
TL
G
ss
ia
0
at
er
Reserves (mmboe)
Technical risk
Exhibit 119: Technical risks and reserves by win zone
Reserves (RH)
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Political risk analysis

Exhibit 120: Summary of political risk analysis
Very high risk
High risk
Medium risk
Low risk
Country
Norway
Italy
Canada
Australia
UK
US
Qatar
Malaysia
Oman
Algeria
Brazil
China
Thailand
Libya
Peru
Kazakhstan
Russia
Vietnam
Azerbaijan
Ghana
India
Indonesia
Egypt
Turkmenistan
Equatorial Guinea
Syria
Papua New Guinea
Syria
Bangladesh
Nigeria
Angola
Chad
Congo
Uganda
Yemen
Iran
Venezuela
Bolivia
Myanmar
Iraq
Top 280
Top 280
political
reserves
risk score (mnboe)
0.3
0.5
0.5
0.6
0.6
0.8
0.9
0.9
1.2
1.3
1.5
1.6
1.6
1.6
1.6
1.7
1.7
1.7
1.7
1.8
1.8
1.9
2.0
2.0
2.1
2.1
2.1
2.1
2.1
2.2
2.3
2.3
2.5
2.5
2.6
2.6
2.8
3.0
3.0
3.0
3.0
7323
400
52487
25555
2650
39228
6100
30075
3213
4467
3825
29833
10103
1425
4511
1237
26440
73495
1100
8355
1267
4586
6724
4762
700
580
824
1250
824
515
14975
14335
900
2055
1000
1533
35
7415
1318
1400
30638
In our political risk analysis we attempt to reflect index components from external political risk indices
(the World Bank, Governance Matters Index and the UNDP Human Development Index). As
previously published in Top 125, Top 170, Top 190 and Top 230 we select five indicators from these
indices that we believe reflect the risks of the operational environment the companies face in each
country.
The components are:
- Corruption (World Bank Index) - the extent of corruption which can distort international competitive
conditions
- Political stability (World Bank Index) - the likelihood that the government in power will not be
destabilised or overthrown by possibly unconstitutional and/or violent means, including domestic
violence and terrorism
- Rule of law (World Bank Index) - the extent to which individuals and businesses have confidence in
and abide by the rules of society
- Regulatory quality (World Bank Index) - the level of market-friendly policies such as price controls
- Human development Index (UNDP Index) - characteristics of the population such as life
expectancy
We have combined the scores from these individual components into an overall political risk index
for the Top 280 Projects and made adjustments where necessary to reflect oil and gas specific
risks. Our index has higher scores for more politically risky countries and has a weighting which
brings overall political risk scores in line with the overall technical risk scores for the Top 280
Projects as a whole
We also make specific adjustments based on our perception of the security and stability of IOCs
operating in each country. We therefore increase risks on countries such as Bolivia and Venezuela
which have previous examples of changing fiscal regimes / nationalising energy assets, or have no
prior record of oil production (e.g. Uganda). We do not adjust Russia as most of the companies
operating the Top 280 fields are of Russian origin - a factor which we believe reduces the risk
profile for the country.
Source: Goldman Sachs Research estimates, World Bank Index, UNDP Index.
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The risk profile: Political risk falling as IOCs look for more politically stable reserves and are
pushed away from non-OECD reserves
We believe that from 2010E, Top 280 investment will increasingly focus on areas with lower political risk. On the gas side, this is
primarily due to the large unconventional gas portfolio which adds significant US based production and the large weight of capital
intensive LNG projects in Australia. The picture is similar for oil: we expect substantial investment in ramping up the heavy oil
sands projects in Canada, the Brazilian pre-salt and the Gulf of Mexico. These projects tend to be capital intensive which further
skews the investment towards these areas. We note that oil company activity in Iraq acts as a counterweight to this trend but has
less of an impact due to the relatively cheap nature of the development that we assume.
We believe that this profile shows partly a conscious decision on the part of the IOCs to avoid risking capital in countries where
high political risk could result in substantial value destruction (such as Venezuela) and also their marginalization in other areas such
as parts of the Middle East.
Exhibit 121: Political risk of the Top 280 projects weighted by capex
1.7
1.6
1.5
Political risk
1.4
1.3
1.2
1.1
1
0.9
0.8
64
79
104
125
137
151
162
171
186
199
208
212
211
210
205
195
185
177
163
Political risk by capex (LH)
20
E
20
19
E
20
20
18
E
17
E
20
16
E
20
15
E
20
14
E
20
13
E
20
12
E
20
11
E
20
10
E
20
20
0
8
20
0
7
20
0
6
20
0
5
20
0
4
20
0
3
20
0
20
0
0.7
Source: Company data, Goldman Sachs Research estimates, World Bank Index.
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As political risk declines, technical risk looks set to increase

As a whole, however, we do not believe that the risk profile of the Top 280 portfolio will change substantially as a result of this
political de-risking, as we believe that technical risk is likely to increase, as companies lever balance sheets and technological
capabilities to continue replacing production, effectively replacing political risk with technical risk.
We believe that the technical risk profile is increased by three main factors: 1) a change in production mix where more traditional
and easily monetized oil and gas fields are replaced by fields with higher technological complexity and higher capital intensity (i.e.
deepwater, LNG, GTL and heavy oil); 2) the increased depth and greater proportion of pre-salt or sub-salt fields in the deepwater
win zone; and 3) the tackling of increasingly more geologically complex, HPHT and high sulfur reservoirs (i.e. Kashagan and Shah).
Exhibit 122: Technical risk of the Top 280 projects weighted by capex
1.3
1.2
Technical risk
1.1
0.9
0.8
64
79
104
125
137
151
162
171
186
199
208
212
211
210
205
195
185
177
20
E
20
19
E
20
20
18
E
17
E
20
16
E
20
15
E
20
14
E
20
13
E
20
12
E
20
20
11
E
10
E
20
9
20
0
8
20
0
7
20
0
6
20
0
5
20
0
4
20
0
3
20
0
20
0
0.7
Source: Company data, Goldman Sachs Research estimates, World Bank Index.
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Companies and risk: ENI has the highest risk profile among the Majors, Conoco the lowest
Of the Majors, ConocoPhillips has the lowest level of country risk which reflects a partial trade-off for the relatively low profitability
of its portfolio and its significant positions in Canada, the US and Australia. Exxon, BP, Statoil and Shell have a similar combination
of technical and country risk with Chevron and TOTAL having slightly higher risk profiles. Companies with a high concentration of
their assets in the Brazilian pre-salt play have high technical risk. This is particularly the case for BG, Galp and Petrobras for whom
these assets form a particularly significant part of their portfolios. Repsols risk is more muted as a result of its significant exposure
to the relatively simple Block N186 and Shenzi although its political risk remains high. ENI stands out as having the highest
combined political/technical risk primarily a result of its large exposure to Kashagan, West Africa and Perla in Venezuela.
The lower risk assets are, in our view, the heavy oil and LNG assets based in Canada and Australia. As we would expect from an
efficient market, companies with this low risk profiling also tend to have relatively low returns.
Exhibit 123: Technical versus political risk by company
2.1
Galp
1.9
Brazilian pre-salt assets
raise the technical risk of
heavily exposed players
1.7
Technical risk
1.5
1.3
1.1
0.9
0.7
ENI, has the highest

combination of high
political and high
technical risk
Petrobras
SASOL
ENI
BG
Conoco exhibits the
lowest risk profile of the
majors
BHP Billiton
Chevron
INPEX
Devon Energy
TOTAL
Statoil
RDShell
ConocoPhillips
BP
ExxonMobil Anadarko
Questar
Woodside
Ultra Petroleum
Chesapeake
EOG Resources
Southwestern Energy
Encana
Santos
Talisman
Hess
Marathon
Apache
UTS Corp
Suncor
Nexen
Canadian Oil Sands Trust Cenovus
Occidental
OPTI Canada
Husky Energy
Murphy
Gazprom
Oil Search
Rosneft
Lukoil
Repsol
TNK
CNOOC
Noble Energy
Petrochina
0.5
Tullow
Sinopec Corp
Cairn India
Reliance
PTTEP
0.3
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Country risk
Source: Goldman Sachs Research estimates, World Bank Index.
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Tracking the progress of the companies through our legacy asset analysis
We now have seven separate data series, over a period of seven years which allows us to track the change in value creation of each
of the companies with respect to their new legacy asset portfolios. The overall profitability levels for the companies are mixed
although the trend is upwards as a result of the increase in our oil price assumption. Among the European companies Repsol, BG
and Statoil are the only ones to have improved profitability since Top 230. BG and Repsol benefit mainly from the improved
economics in Brazil generated by the improved flow rates in the area while Statoils uptick is fairly marginal. RDShell has the least
profitable exposure, partly due to its presence in three Middle Eastern service contracts (West Qurna expansion, Majnoon and
Asaba NGLs) and its high exposure to unconventional projects. Our estimate of ENIs profitability has seen a sharp dip partly as a
result of the addition of new projects with a lower P/I than its Top 230 portfolio.
Among the North Americans, Suncor has seen the greatest uplift in P/I, thanks to the merger with PetroCanada which has seen
higher profitability assets brought into the portfolio. ConocoPhillips is the negative outlier, due to its longer duration, low political
risk unconventional exposure which tends to generate lower returns than more risky, shorter life ventures. Despite seeing an
increase in profitability over the past two years Chevron, ExxonMobil and Murphy have dropped, partly due to the addition of new
projects with a lower P/I than the Top 230 portfolio. Murphys profitability has also declined, as a result of the addition of the lower
profitability Point Thomson Liquids project and small revisions in our estimates of profitability for Gumusut and Syncrude 3.
Exhibit 124:
Exhibit 125: Larger North Americans: P/I development since Top 50 Projects
Europeans: PI development since Top 50 Projects
2.20x
Repsol
2.1x
2.10x
Murphy
2.00x
BG
1.9x
1.90x
BP
ENI
1.80x
Statoil
1.70x
Chevron
BG
1.7x
XOM
Suncor
BP
RDShell
TOTAL
ENI
P/I
P/I
TOTAL
1.60x
Marathon
1.50x
COP
1.5x
RDShell
Murphy
1.40x
Statoil
Suncor
1.30x
Repsol
Marathon
Chevron
1.3x
XOM
1.20x
COP
1.10x
1.1x
T50
T100
BP
BG
T125
ENI
T170
Statoil
T190
RDShell
T230
TOTAL
T280
1.00x
T50
T100
Marathon
T125
T170
T190
T230
T280
Repsol
Murphy
ExxonMobil
ConocoPhillips
Chevron
Suncor
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Similar to the Europeans, the overall profitability of the Americas E&P companies is mixed. Despite a decline in P/I on last years
levels, Anadarko remains the most profitable E&P company, with its deepwater focus and presence in highly profitable fields such
as Caesar Tonga and Jubilee. The other Americas E&Ps are fairly closely grouped, with Nexen marginally more profitable than its
peers, largely due to its stake in the producing Buzzard field.
Of the global companies, Petrobras now has the most profitable portfolio, and has improved largely as a result of the excellent flow
rate data we have seen coming out of Brazil in 2009. Lukoil remains profitable but drops from the Top 230 level as a result of our
revised assumptions surrounding the Karachaganak PSC and the addition of some new fields with lower P/Is than the majority of its
Top 230 portfolio. CNOOCs profitability has also dropped since Top 230 as a result of the addition of the lower profitability Liwan
field into a relatively small population set. Sinopec has the least profitable Top 280 portfolio of the emerging market players, with
exposure to only one asset Puguang in China.
Exhibit 127: EM: P/I development since Top 50 Projects
Exhibit 126: Smaller North Americans: P/I development since Top 50

Projects
2.60x
2.50x
2.40x
Anadarko
2.40x
2.30x
2.20x
2.20x
Lukoil
2.10x
Petrobras
2.00x
2.00x
1.80x
CNOOC
Gazprom
1.80x
Nexen
P/I
P/I
1.90x
Talisman
1.70x
Hess
1.60x
1.60x
INPEX
Devon
1.50x
1.40x
Sinopec
1.40x
1.30x
1.20x
1.20x
1.00x
T50
1.10x
T100
Devon Energy
T125
Nexen
T170
Anadarko
T190
T230
Talisman
T280
Hess
1.00x
T50
T100
Petrobras
Source: Goldman Sachs Research estimates
T125
INPEX
T170
Sinopec
T190
CNOOC
T230
Gazprom
T280
Lukoil
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Criteria and methodology for the Top 280 Projects

We have included fields in our Top 280 Projects analysis that meet the following criteria:
Estimated recoverable reserves of at least 300mnboe, as for Top 230, Top 190, Top 170 and Top 125 (vs. 500mnboe in Top 50
and 350mnboe in Top 100)
At least one equity participant that is an investable entity
For which we could find good quality data in the public domain or directly from the companies involved and have confidence
(from development plans and results of exploration/appraisal) that the reserves cross the required threshold.
We acknowledge that some projects will have been excluded due to lack of information, but we stress that we have endeavoured to
include all the fields that meet our criteria. As part of the analytical process, we have requested feedback from all companies with
material exposure and have attempted to include their commentary although we note that all the estimates in this analysis are our
own and do not necessarily reflect any specific company guidance.
Methodology unchanged from previous analysis; Brent oil price assumption stays at US$85/bl
We continue to use the same modelling methodology for the analysis although we note the following:
Oil price assumption: US$85/bl Brent oil price remains constant from the Top 230 (published February 2009). Regional gas
prices have been adjusted for local pricing dynamics and regulation, with actual historical data used.
Discount rate: For headline NPV and P/I calculations, we have used an 8% nominal cost of capital assumption.
Breakeven oil price: The oil price required for a project to generate what we consider to be a commercial rate of nominal IRR
(i.e. cost of capital). We assume geography determines this rate of return with projects in the OECD requiring 11% up to a
maximum of 15%.
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Win zones in the Top 280

Exhibit 128: Success criteria for each of the win zones
Criteria for success
Well positioned
Trends
Deepwater
High exploration risk minimised through technological advances, especially in seismic,

subsea and production technologies. First movers gain exploration advantage in new
basins. Balance sheet strength to take high risk approach and potential for expensive dry
holes and cost inflation. Advantaged access to deepwater drilling rigs increasingly important
at current inflated dayrates
Petrobras, BP, ExxonMobil,

TOTAL, Chevron, Statoil, BG,
Repsol, Tullow
Parts of West Africa and GoM now moving to more of an exploitation phase
but new deepwater basins still exist (e.g. Gulf of Guinea, Arctic and Mexico).
Brazil the greatest exploration excitement in the industry since the beginning
of the decade although Ghana and the offshore to its West is also receiving
attention. Exploration moving into increasingly deeper water and
encountering more complex assets, resulting in increasing capital intensity
for the winzone
Exploitation
Little or no exploration risk. Skills in production enhancement, project management, political

negotiation and cost control. Technical execution in terms of commercialising reserves is
key with cost control in the early phases necessary to enhance returns. Balance sheet
backing also required. Political risk often high.
Chevron, BP, Exxon, BG, ENI,

Occidental, Statoil, RDShell
Middle East the most attractive area where industry can get access to huge
reserves at low cost. Iraq has revitalised this winzone with its 2009 contract
awards. Returns on new projects being depressed with increasing
competition, poor fiscal terms and delays
Traditional
A varied win zone with varying exploration risk in typically smaller, more satellite-like plays.
Higher exploration risk generally gives higher rewards due to the use of attractive fiscal
terms to attract players to frontier locations. Access to existing infrastructure ensures
commerciality with generally little technology edge. Balance sheet backing less important.
Kashagan stands out within this Win Zone for its size.
ENI, TOTAL, Exxon, Shell and

smaller E&Ps
Redirection of capital from the Majors in search of scale leaves room for the
emergence of scaled regional players in both mature and frontier areas
Heavy Oil
Little or no exploration risk. Significant resources that require solid process technologies
and efficient operations that could make or break generally weak project economics. Project
management skills to minimise risk of cost overruns and process skills to ensure smooth
'factory style' operations. Pace has slowed vs previous expectations due to the drop in the
oil price in 2H 2008 and capacity bottlenecking especially in labour prior to this.
CNR, Exxon, Suncor, Conoco,

RDShell, TOTAL, Statoil
Intense activity levels in Canada with strong interest in new developments.

Increasing focus on GHG emissions and high capital costs impact economics
leaving projects at the marginal end of the cost curve. 2008 adjustments to
Albertan oil royalties highlight that the area is not 100% free of fiscal risk.
New activity sensitive to the oil price with delays to sanctions likely in falling
oil price environments
Gas: traditional
A nearby domestic market able to support sufficient gas prices to justify development is a
key consideration. In the absence of this, sufficient reserves required to justify and LNG
scheme. Technological risks and upfront capital requirements relatively low in most cases
although if pipelines are required, costs can escalate substantially
ExxonMobil, PetroChina, BP,

Conocophillips
Economic development in emerging markets leading to increasing

realisations has enabled development of previously fallow fields.
Technological advances has also meant that previously unviable fields can
increasingly be unlocked (i.e. Shah)
Gas:
unconventional
Exploration risk varies depending on the location of the acreage in the licence so prime
acreage position is a substantial advantage. Track record and experience with tight shallow
gas reservoirs is a bonus, as is the ability to access rig capacity to enhance returns. First
mover advantage has proved significant in capturing prime acreage spots
Chesapeake, RDShell, BP,

Questar, Encana, Ultra, XTO,
statoil,
Advances and cost reductions in horizontal drilling and fraccing has led to a
rapid increase in activity by making these marginal plays commercial. Activity
relatively dependent on gas price due to high capital and operation costs
Gas: LNG
Little exploration risk but large upfront capex combined with high commodity input costs (i.e.
steel and concrete) raises development risks. Significant single project capital commitment
requires balance sheet backing. Ability to enhance returns through trading process is also
key. Technology well tested but trains larger than c. 5 mtpa still carry some technological
risk in our view
Chevron, RDShell, ExxonMobil,

INPEX, ConocoPhillips,
Woodside, TOTAL, BG
Middle East and Australia the most attractive areas where industry can get
access to huge reserves. Few sanctions have been seen in recent years but
planned sanctioning levels in Australia in the near term are high. Multi train
projects at a significant cost advantage, meaning that resource bases in
excess of 10 mtpa are advantaged
Russia
Significant resource base now largely out of reach to non-Russian companies. In depth
political negotiations required to gain initial development, export and sales contracts and
thereafter to retain licences. Licence ownership a more important factor than technology
Gazprom, Rosneft, Lukoil, TNKBP, ENI
A new wave of significant project sanctions is needed to balance the decline

of the existing fields. Political interference increasingly slows development
timelines and raises project risk. High production potential in medium term.
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Key characteristics of each of the win zones

Exhibit 129: Key characteristics of the win zones
Deepwater: largest number of projects

with best combination of returns, growth
and value. Highest unit F&D costs reflect
technical component. Production and cash
flows are fast growth but short duration.
Brazil pre-salt fields are extending average
life
As % of
T280
Deepwater
Number of fields
Reserves (mnboe)
2010E production (kboe/d)
Duration (years)
F&D capex (US$mn)
Infr capex (as a %)
Upstream F&D (US$/boe)
IRR
P/I ratio
NPV (US$/boe) life of field
68
59,766
4,754
24
549,699
1%
9.2
26.4%
2.35x
24%
14%
25%
78%
24%
7%
171%
121%
123%
6.5
203%
Unconventional gas: High capex but

long duration assets. Returns helped by the
timing of cashflows where drilling is
undertaken throughout field life. Highly
sensitive to gas price assumptions and low
prices can lead to falling activity
As % of
T280
Unconventional Gas
Number of fields
Reserves (mnboe)
Duration (years)
F&D capex (US$mn)
Infr capex (as a %)
IRR
P/I ratio
12
23,801
1,035
36
217,000
1%
9.1
26.3%
1.84x
4%
6%
5%
115%
9%
7%
169%
120%
97%
1.6
50%
Exploitation: limited number of large

fields with low costs, decent returns and
long duration cash flows. Awards of Iraqi
service contracts have increased field
numbers and reserves substantially, but
the tough fiscal terms lower average
profitability to be in line with other
winzones
Exploitation
Number of fields
18
Reserves (mnboe)
59,636
2,831
Duration (years)
24
F&D capex (US$mn)
216,315
Infr capex (as a %)
14%
3.6
IRR
21.2%
P/I ratio
1.81x
2.1
As % of
T280
6%
14%
15%
77%
9%
70%
67%
97%
95%
67%
Heavy Oil: Increasing proportion of

fields with potential for very long duration
production and cash flows. High
infrastructure component and slow
production build-up limit returns and value
but long durations are attractive in a
balanced portfolio
Heavy Oil
Number of fields
32
Reserves (mnboe)
55,718
1,040
Duration (years)
37
F&D capex (US$mn)
287,377
Infr capex (as a %)
29%
5.2
IRR
16.7%
P/I ratio
1.58x
1.9
As % of
T280
11%
13%
5%
120%
12%
145%
96%
76%
83%
59%
Traditional gas: Large number of

relatively small fields. Low F&D costs and
are offset by some projects having
regulated gas prices which limit exposure to
increases in oil price assumptions therefore
causing the win zone to lag as we have
increased our oil price assumption
As % of
T280
Gas
Number of fields
Reserves (mnboe)
Duration (years)
F&D capex (US$mn)
Infr capex (as a %)
IRR
P/I ratio
52
56,104
3,290
28
270,986
21%
4.8
18.2%
1.59x
19%
13%
17%
89%
12%
108%
90%
83%
83%
1.7
54%
Traditional: least homogeneous Win Zone

(heavily skewed by Kashagan) but offset by
low tax rate OECD projects with high
returns and value creation. Costs and
duration are only slightly above average.
As % of
T280
Traditional
Number of fields
Reserves (mnboe)
Duration (years)
F&D capex (US$mn)
Infr capex (as a %)
IRR
P/I ratio
41
41,074
2,307
27
252,511
8%
6.1
28.4%
2.20x
15%
10%
12%
86%
11%
41%
114%
130%
116%
5.7
178%
LNG: A relatively low number of large

reserves projects with average returns. Low
F&D costs offset by highest infrastructure
capex requirements allowing the
monetisation of gas at international prices,
although little visibility is available on large
scale LNG plant costs
As % of
T280
LNG
Number of fields
Reserves (mnboe)
Duration (years)
F&D capex (US$mn)
Infr capex (as a %)
IRR
P/I ratio
33
57,247
1,683
33
250,154
46%
4.4
18.2%
1.80x
12%
13%
9%
105%
11%
229%
81%
83%
95%
3.6
111%
Russia: Predominantly gas. Characterised

by long duration, low cost projects relative
to other Win Zones. Taxation and regulated
prices for gas fields for domestic sale
reduce profitability. High political risk for
non-Russian based companies
As % of
T280
Russia
Number of fields
Reserves (mnboe)
Duration (years)
F&D capex (US$mn)
Infr capex (as a %)
IRR
P/I ratio
23
73,495
2,420
42
256,360
29%
3.5
19.8%
2.07x
8%
17%
13%
134%
11%
144%
65%
90%
109%
2.5
78%
94
January 15, 2010
Global: Energy
Company exposure to the win zones

Exhibit 130: Company reserves exposure by win zone (mnboe)
Assessed on a net entitlement basis. GTL not included due to limited number of participants and projects
4,000
3,000
1,000
2,000
2,000
500
TOTAL
BG
ConocoPhillips
INPEX
Woodside
ExxonMobil
ENI
Interros
Novatek
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Lukoil
ConocoPhillips
Kazmunaigas
RDShell
Statoil
OGX
TOTAL
Statoil
Petrochina
RDShell
ConocoPhillips
TOTAL
ExxonMobil
Suncor
Russia: Exposure is largely skewed to Russian

firms, with Gazprom dominant. BP leads the
Majors through its TNK-BP venture although
ENI's inclusion in the Articgas & Urengoil
projects gives it greater exposure in this win
zone
Rosneft
1,000
RDShell
Repsol
BG
Reliance
Sinopec Corp
BP
Petrochina
ExxonMobil
2,000
Canadian
Natural
Chevron
Southwestern
Energy
Encana
Ultra
Petroleum
SASOL
RDShell
Chesapeake
BP
ConocoPhillips
TOTAL
BP
Continental
Resources
Occidental
BG
Lukoil
ExxonMobil
3,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
RDShell
Traditional: Kashagan exposure dominates this

Win Zone. Otherwise, exposure is diverse and
limited, relative to other Win Zones
Petrochina
5,000
1,400
4,500
1,200
4,000
3,500
1,000
3,000
800
2,500
2,000
600
1,500
400
1,000
500
200
0
Heavy Oil: Exxon has the biggest exposure of

the Majors. A number of smaller companies have
significant reserves exposure. PetroChina
moves up the list with its appraoch to buy into
AOSC's Canadian assets. TOTAL also well
levered.
ENI
Unconventional gas: BP and RDShell the

obvious winners from the majors. Aside from
these majors the remaining large players are
generally gas-focused US E&P companies. The
US majors are notably absent.
ENI
Chevron
TOTAL
RDShell
ExxonMobil
Chevron
Galp
BG
BP
0
Petrobras
1,000
0
ExxonMobil
5,000
TNK-BP
10,000
5,000
4,000
1,500
15,000
LNG: Chevron, ExxonMobil and RDShell with a

lead over the other Majors due to Qatar, West
African and Australian exposure. ConocoPhillips
and BG are exposed through Australia with
TOTAL exposed through a portfolio including
Qatar, Australia, Europe and West Africa.
6,000
6,000
2,000
20,000
Gas: Conoco's Poseidon discovery in a licence

regime brings it to the top. ExxonMobil is also a
strong performenr with Alaska Gas, Barzan and
MacKenzie Gas. BP's assets in Egypt and Alaska
result in a strong position. Repsol's South
American assets lead it to feature.
Chevron
25,000
Exploitation: Iraq strengthens the positions of

ExxonMobil, BP and RDShell although the fiscal
contract limits the impact on net entitlement
volumes. Chevron continues to lead due to the
Tengiz and Karachaganak assets. Karachaganak
boosts ENI.
Gazprom
Deepwater: Petrobras dominates via Brazil. BP's

exploration success (i.e. Tiber) improves its
position. BG and Galp stay strong due to
Brazilian exposure. Chevron strong from US and
West Africa. Exxon is strong due to West Africa,
but PSC effects erode net entitlement volumes
* Gazproms reserves in the Russian win zone amount to 33 bnboe.

95
January 15, 2010
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Production by win zone: Exploitation gains; technology not exploration the big driver
The most notable change in the make-up of the Top 280 Projects win zones relative to last year has been the addition of a large
number of working interest reserves from the exploitation win zone in Iraq and the UAE as both countries attempt to substantially
ramp up their existing production. The incremental exploitation reserves added from these two countries alone amount to 46 bnbls
and exploitation now accounts for 14% of Top 280 assets (vs. 8% in Top 230). We take a conservative view of the possible ramp-up
of these fields, especially in Iraq, relative to the targeted production, but still see these fields as being major contributors to global
supply over the next 10 years.
The addition of a number of new Russian fields means that this win zone maintains its importance, while additions of recent gas
discoveries such as Perla and Poseidon have meant that the gas win zone has also remained relatively constant. Despite a number
of new discoveries (Tiber, Vesuvio etc.) the deepwater win zone has shrunk to represent only 14% of the total (vs. 15% last year).
LNG has also shrunk.
We believe that reserves are increasingly being added as a result of technological or political developments rather than as a result
of exploration. We regard the exploitation, LNG, heavy oil, unconventional gas and Russian win zones as having relatively low
exploration risk and believe that additions in these win zones are driven by technology and commodity prices making previously
discovered reserves commercial or (as in the case of Iraq) changes in geo-political conditions allowing development of known
reserves rather than success with the drillbit. Of the reserves added between Top 230 and Top 280, only 37% were from the more
exploration-led win zones. Overall 64% of reserves are from what we regard as non-exploration based win zones.
Exhibit 132: Production split by win zone
Gas
Deepwater
Traditional
Heavy Oil
LNG
GTL
Exploitation
Unconventional Gas
2050E
2048E
2046E
2044E
2042E
2040E
2038E
2036E
2034E
2032E
2030E
2028E
2026E
2024E
2022E
2020E
2018E
2016E
2014E
Heavy Oil
13%
2012E
LNG
13%
2008
GTL
1%
Traditional
10%
2010E
Exploitation
14%
2006
Deepwater
14%
Unconventional Gas
6%
2004
Gas
13%
2000
Russia
16%
50,000
48,000
46,000
44,000
42,000
40,000
38,000
36,000
34,000
32,000
30,000
28,000
26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2002
Reserves split by win zone
Production (kboe/d)
Exhibit 131:
Russia
96
January 15, 2010
Global: Energy
Production by area: Middle East becoming the key focus for producers in the medium term
In the short term, the largest volumes from the Top 280 look set to come from African projects but we expect the importance of this
region to fall for producers, with only 12% of total production coming from this area by 2020E (vs. 24% in 2010E). We expect the big
relative increases to come from the Middle East as a result of the ramping up of Iraqi, UAE and Qatari production (to 21% of the
total production in 2020E vs. 12% in 2010E) and Asia Pacific mainly due to the large number of LNG projects looking to be
sanctioned in Australia over the next few years. The US should also increase its relative share of production over this period as a
result of exploration success in the Gulf of Mexico and its large unconventional gas reserves. We expect Europe to decline to
contribute only 3% of total production by 2020E, reflecting its status as a mature basin.
In the longer term, we expect the key producers to be North America, Asia-Pacific and Russia, reflecting more than anything, the
long-duration, low-decline nature of the assets that are found in these areas. In North America heavy oil and unconventional gas
provides a strong, low-decline base, whereas in Asia-Pacific, the Australian LNG schemes should also provide long asset lives.
Africa becomes less relevant in the longer term, and contributes less than 10% of the total by 2022E a reflection of the regions
shorter duration, deepwater bias. The Middle East retains its importance until c.2030E when we expect the service contracts on Iraqi
fields to end. However, we note that if the IOCs are successful in ramping up production in Iraq, further deals may be signed
beyond this timeframe and that, from a supply point of view, these projects will continue to produce beyond the end of the contract.
Exhibit 134: Production split by region
Asia
Caspian
Russia
Asia-Pacific
Latin America
North America
Europe
Africa
2050E
2048E
2046E
2044E
2042E
2040E
2038E
2036E
2034E
2032E
2030E
2028E
2026E
2024E
2022E
2020E
2018E
2016E
2014E
Latin America
9%
2000
North America
22%
2012E
Asia-Pacific
9%
2008
Europe
2%
2010E
Russia
18%
Africa
11%
2006
Caspian
8%
50,000
48,000
46,000
44,000
42,000
40,000
38,000
36,000
34,000
32,000
30,000
28,000
26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2004
Middle East
17%
Production (kboe/d)
Asia
4%
2002
Exhibit 133: Reserves split by region
Middle East
97
January 15, 2010
Global: Energy
Weak production from new developments in the short term, healthier picture in mid term
The lack of sanctions between 2007 and 2009 has resulted in a low expected level of new production coming online in the near
term; we believe only 8% of 2010E production is likely to come from projects that are currently under development. We are more
bullish on the potential for projects to be sanctioned over the next few years, however, and believe that projects currently in the
pre-sanction phase will contribute almost 15% of production by 2015E. There were more sanctions in 2009 than we anticipated in
the Top 230 (projects such as Kearl Lake, PNG and Greater Gorgon added substantial reserves to the Under development group)
meaning that the reserves under development increased from 28% in the previous edition of this study to 30% now. We regard this
as an important development as a lack of sanctions can be as damaging for global supply as project delays and overruns.
Note that for the purposes of Exhibits 135 and 136 we aggregate reserves on a project-by-project basis, meaning that additional
reserves to be sanctioned in assets where production is already online will show under the producing category. This split therefore
overestimates the reserves in production, meaning that the back end of the development pipeline should be healthier still.
Producing
Under development
2050E
2048E
2046E
2044E
2042E
2040E
2038E
2036E
2034E
2032E
2030E
2028E
2026E
2024E
2022E
2020E
2018E
2016E
2014E
2012E
2008
2010E
2006
2000
Producing
37%
Pre-Sanction
33%
50,000
48,000
46,000
44,000
42,000
40,000
38,000
36,000
34,000
32,000
30,000
28,000
26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2004
Under development
30%
Exhibit 136: Production split by development status
2002
Reserves split by development type
Production (kboe/d)
Exhibit 135:
Pre-Sanction
98
January 15, 2010
Global: Energy
PSCs and service contracts important in short term; oil sees a medium-term spike from Iraq
The long duration of typical projects in licenced areas such as Canada, Australia and Russia means that in the long term we expect
licences to dominate the Top 280 production. As a large number of the shorter duration deepwater and traditional projects are
located in countries operating a PSC regime however, the relative importance of these contracts remains high in the near term: 50%
of production will come from PSC-based contracts in 2010E, and over one third by 2020E. We believe that the technical service
contracts that are being awarded in the UAE and Iraq will also have a substantial medium-term impact on oil production, although
we note that these contracts typically have a limited duration and are likely to be largely finished by the mid-2030s.
The Middle Eastern service contracts have also resulted in the proportion of oil vs. gas going up substantially: oil reserves now
account for 55% of the Top 280 reserves (vs. 50% in the Top 230). Gas retains its importance in the long term, accounting for over
50% of the volumes when the Iraqi service contracts end (although we note that from a hydrocarbon supply perspective, the Iraqi
fields will continue producing beyond the end of the contract date). Prior to this, gas accounts for less than 45% of the
hydrocarbons produced by oil companies from their Top 280 portfolios.
Exhibit 138: Production split by oil/gas
PSC
Licence
Buyback
Service contract
oil
2050E
2048E
2046E
2044E
2042E
2040E
2038E
2036E
2034E
2032E
2030E
2028E
2026E
2024E
2022E
2020E
2018E
2016E
2014E
2012E
2008
2010E
2006
2004
2002
50,000
48,000
46,000
44,000
42,000
40,000
38,000
36,000
34,000
32,000
30,000
28,000
26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2000
2050E
2048E
2046E
2044E
2042E
2040E
2038E
2036E
2034E
2032E
2030E
2028E
2026E
2024E
2022E
2020E
2018E
2016E
2014E
2012E
2008
2010E
2006
2004
2002
Production (kboe/d)
50,000
48,000
46,000
44,000
42,000
40,000
38,000
36,000
34,000
32,000
30,000
28,000
26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2000
Production (kboe/d)
Exhibit 137: Production split by contract type
gas
99
January 15, 2010
Global: Energy
Win zones: Market should normalize risk-adjusted returns

The different win zones into which we divide the Top 280 projects are diverse and have differentiated drivers and risks associated
with them. Exhibit 139 shows that there is generally a trade-off between profitability and risk in the different win zones. Win zones
in more secure political environments with longer durations, such as unconventional gas and heavy oil, tend to have returns
eroded by the market as either an oversupply of capacity (as in US unconventional gas) or higher cost (as in Canadian heavy oil)
bring returns back in line with a risk-adjusted trend. Gas and exploitation are two notable laggards. In the case of gas, market forces
have less ability to impact returns as many projects are reliant on fixed price contracts which do not therefore profit in the event of
rising commodity prices as do some of the other win zones. Iraq skews the risk/profit profile of the exploitation win zone with low
returns relative to political risk in our view a partial result of the fact that service contracts are often seen by oil companies as a
low value contract to be entered into in order to gain future access to Iraqi resources. The traditional win zone is, as ever,
advantaged, mainly due to its exploration-led bias, where risk is taken early in the project and rewarded with higher returns
thereafter. The deepwater win zone has improved vs. other win zones since the last edition as cost deflation combines with
excellent flow rate data from Brazil and the Lower Tertiary to support a higher returns profile. We believe that if this persists, fiscal
renegotiations could bring future deepwater projects back in line with other win zones.
Exhibit 139: Profitability vs. risk for the Top 280 win zones
Includes technical and political risks
2.20
2.10
2.00
Advantaged projects
Better than anticipated

operational data from Brazil and
Lower Tertiary improve
profitability. Potential risk of
fiscal renegotiation
Traditional
Russia
Deepwater
1.90
PI
1.80
Iraqi projects increase risk

and reduce profit
Low returns are also

offset by longer durations
1.70
LNG
GTL
Exploitation
1.60
Unconventional gas
1.50
Heavy Oil
Gas
Fixed price nature of some gas
assets and higher political risk
due to location of fields leaves
gas as a laggard vs more oil
levered winzones
1.40
1.30
1.50
1.70
1.90
2.10
2.30
2.50
2.70
2.90
Risk score
100
January 15, 2010
Global: Energy
Heavy oil a year of little progress, however consolidation may ease some bottlenecks
As expected, 2009 was a year of few developments in the Canadian oil sands as operators followed through on their
announcements of late-2008 that they would delay any further investment until a more stable cost environment emerged. This has
led us to trim further our production forecast from the oil sands basin, which makes up 86% of our global heavy oil win zone in
terms of reserves. When viewed next to the equivalent forecast from Top 190 (2008) it becomes clear just how radically the
unstable cost environment in Alberta has impacted expectations. Our 2008 oil sands production forecast was for 2.5mnb/d by
2015E; we now expect only 1.6mnb/d by that year, despite adding nine new developments to the data set since then (equivalent to
8.7 bnbls of resource).
ExxonMobil took FID on its Kearl oil sands mining project in early 2009 following a lengthy environmental assessment and
regulatory process. This may prove opportunistic given the retrenchment of other major oil sands players, which we believe has
eased demand on the labour pool and the materials supply chain in the region, although how much of this is ultimately realized in
the cost to start-up of Kearl is yet to be seen. The project will be a standalone mining project, with no bitumen upgrader attached.
Exhibit 140 gives our expectations for oil sands project sanctions out to 2015E. In our view, the next major mine sanctions following
Kearl are unlikely to emerge until Horizon Phase 2, in 2011E, and Athabasca Expansion 2, in 2012E.
Suncor increased its reach in the oil sands by merging with Petro-Canada during the year, supplementing its existing Millennium,
Steepbank and Firebag projects with further proposed projects at Mackay River and Fort Hills, as well as a stake in the existing
Syncrude project. Although we have delayed our expected start-up for the Fort Hills development (from 2014E to 2018E), we believe
that the merger may improve the prospects for the oil sands ramp-up in general, as it may allow a more rational approach to largescale projects, potentially avoiding the dangers of having several large-scale projects under construction at the same time (e.g.
Voyageur Upgrader, Firebag 4 and Fort Hills).
Large-scale integrated mining projects in the oil sands remain the marginal cost area of supply in the Top 280 database. We have
analysed the movement of the underlying cost components of heavy oil developments and believe that if projects could be
executed at current cost levels, this would represent a 10% fall compared to 2008 levels for integrated mines, and 14% for thermal
recovery projects. We therefore believe that this, combined with a lower normalized gas price assumption (US$6.50/mcf down from
US$7.00/mcf), will drive investment towards small-scale thermal projects, rather than large-scale mines in the near term.
Specifically, we believe additional phases will be sanctioned at Surmont, Firebag, Mackay River and Foster Creek & Christina Lake
in 2010E.
We note that the most favourable oil sands portfolios are held by those companies with exposure only to thermal production
(Devon Energy, ConocoPhillips, Cenovus) or to legacy assets (RDShell, Marathon, Chevron). The least favourable positioning lies
with the greenfield operators, particularly those with pure mining exposure: INPEX, Occidental, UTS, Teck Cominco.
101
January 15, 2010
Global: Energy
Exhibit 140: Our estimated Canadian oil sands ramp-up has changed dramatically since 2008
Top Projects Canadian heavy oil production (kb/d) Top 190, Top 230, Top 280
3,000
Canadian oil sands production (kb/d)
2,500
2,000
1,500
1,000
500
0
2010E
2011E
Top 280 Heavy oil production (kb/d)
2012E
New Top 280 Heavy oil fields (kb/d)
2013E
'Lost' production from Top 230
2014E
2015E
'Lost' production from Top 190
102
January 15, 2010
Global: Energy
Exhibit 141: Integrated mine development remains the marginal cost area
Exhibit 142: Therefore thermal exposure makes for the cheapest portfolio
Top 280 Canadian oil sands breakeven and production
Top 280 company portfolio breakeven and production
100
95
90
Dover
80
Carmon Creek
West Sak Firebag
Tishrine
Primrose East
Narrows Lake
60
INPEX
90
Ugnu Tchikatanga
Northern Lights
Frontier
Leismer
Thickwood
Surmont Syncrude 3
Great Divide
Long Lake
Sunrise
Thermal recovery projects have

benefited from lower gas prices
and lower land rig rates
70
Horizon
Joslyn
Fort Hills
Large scale integrated mining projects remain the

most marginal heavy oil developments
MacKay River Expansion
Nabiye
Kearl Lake
Jackfish
Athabasca
Foster Creek & Christina Lake

Oudeh
50
Selected international heavy oil

projects have escaped labour
Tempa Rossa
bottlenecks similar to Canada's
Petrocedeno (Sincor)
Hamaca (Ayacucho)
Petromonagas (Cerro Negro)
40
1000
2000
3000
4000
Cumulative peak production (kbbl/d)

5000
6000
Occidental
Teck Cominco
Sinopec Group
85
Statoil
AOSC
PetroChina
Murphy
Connacher
Nexen
OPTI Canada
Suncor
80
TOTAL
Mocal Energy
75
BP
Husky Energy
70
65
Chevron
RDShell
Devon Energy
Marathon
60
55
30
0
UTS Corp
ExxonMobil
ConocoPhillips
Cenovus
50
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Cumulative peak production (kbbl/d)

103
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Oil sands capex sanctioned by year (US$mn)
January 15, 2010

Global: Energy
Exhibit 143: Top 280 oil sands capex sanctions by year
25,000
2009
2006
2004
2001
US$10210mn
US$16180mn
US$8030m
US$19940
2010E
2007
2005
2003
US$10310mn
US$2740mn
US$13220mn
US$4580m

2011E
US$18530mn
2013E
US$53750mn
2012E
US$21830mn
2015E
US$21500mn
2014E
US$40830mn
20,000
15,000
10,000
5,000
104
January 15, 2010
Global: Energy
Unconventional gas: A growing slice of the global gas balance, at competitively low cost
We believe gas from unconventional reservoirs will make up an increasing proportion of the global gas balance in the coming
decade, forming 16% of total Top 280 gas production by 2020E, driven primarily by low-risk shale, coal-bed methane and tight gas
reservoirs in North America.
Exhibit 144: Change in mix of Top 280 gas production 2005 to 2020E
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
% conventional gas
E
20
20
20
19
20
18
% unconventional gas
20
17
20
16
20
15
20
14
20
13
20
12
09
20
10
E
20
11
E
20
08
20
07
20
06
20
20
05
0%
% LNG
The unconventional gas developments themselves typically consist of several thousands wells tied back to simple gas processing
infrastructure, linked to market hubs. The processing facilities are often owned by third parties, meaning the only significant capital
outlay is on drilling, completing, and fracturing the wells. We believe the major plays have benefitted from a fall in land rig-rates
across North America in 2009, which we estimate to be down 25% yoy. Based on the current cost environment, we calculate a
reserves-weighted breakeven for our North American unconventional gas coverage to be US$4.82/mcf, versus US$5.76/mcf in
February 2008, and versus US$5.38/mcf for the pre-sanction gas developments in aggregate.
105
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Global: Energy
Exhibit 145: Unconventional gas projects vary in competitiveness vs. conventional, but are virtually all economic under US$6mcf
Gas project commercial breakeven and cumulative production Unconventional fields in bold
18.0
Abadi LNG
16.0
Evans Shoal
14.0
Greater Sunrise LNG

Prelude
Camisea 2 Nigeria
LNG Train 7
Pluto LNG 1
Greater Gorgon
Angola LNG
Browse LNG
PNG Gas Project
Wheatstone LNG
APLNG
Gladstone LNG
Snohvit
Fisherman's Landing
Ichthys
12.0
Breakeven (US$/mcf)
OK LNG
Brass LNG
10.0
Nigeria LNG Train 6

Gro
MacKenzie Gas
Pluto LNG 2
North West Shelf Train 5
Alaska Gas Laggan Tormore
Yemen LNG
Reggane
Qatargas 2 train 5
Liwan
Qatargas 3
Qatargas 2 train 4
Qatargas 4
Mist Mountain CBM
RasGas 3 trains 6 and 7
RasGas 2 train 5
Bayu Undan Shwe
Horn River Shale
Fayetteville Shale Myanmar M-9 San
Juan CBM
West Nile Delta domestic
Montney Tight Gas
Bongkot South
Gehem
Pinedale Tight Gas
Kebabangan Gas Cluster
Longgang
Haynesville
Shale
Satis
Sulige South
Wamsutter
Marcellus Shale
Barzan Phase 1 PerlaSkarv Mexilhao
Woodford
Shale
Block 405B
Abu Butabul
Tamar
Khazzan & Makarem
Poseidon
Margarita
8.0
6.0
4.0
2.0
Kinteroni
Shah
0.0
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
Cumulative peak production (mmcfd)
106
January 15, 2010
Global: Energy
Deepwater: More confidence in Brazil and Lower Tertiary flow rate assumptions
Flow-rates a key element in determining costs
Since publication of the Top 230, data has become available on the pre-salt Santos Basin and, to a lesser degree, on the Lower
Tertiary in the Gulf of Mexico, suggesting higher flow rates than we had previously assumed. We assume a relationship between
the flow rates that can be achieved from a well and the ultimate reserves to be recovered from a well meaning that higher flow
rates result in lower numbers of wells that need to be drilled both to reach plateau and over the life of the field which therefore
lowers capital cost assumptions. Given the large proportion of costs spent on drilling in deepwater assets, we believe that a
significant change in flow rates can have a major impact on the capital cost assumptions surrounding a field, with a movement
from 20 kb/d (the same as the impressive rates achieved at Jubilee) to 60 kb/d reducing capital costs per barrel by US$6.12/bl
assuming a 90 day drilling period.
Context is important in judging flow rates and we view flow rate estimates of 50 kb/d from pre-salt Santos plays as exceptional
when set against other regions (Exhibit 147). We believe that flow rates of c.12 kb/d will make the Lower Tertiary economic even
assuming a drill time of c.6 months due to the depth of the reservoirs and the difficulty in drilling into sub-salt reservoirs.
Exhibit 146: Flow rates and drilling times drive value per barrel
Exhibit 147: Santos flow rates are world class
F&D costs based on a generic Santos pre-salt asset with 1.5 bnbls reserves and
US$1.5 bn gas infrastructure cost, together with implied NPV/boe at 8% WACC
Tupi and Guara flow rates could be higher
Flow rate (kb/d)

10
20
30
40
50
60
NPV/boe
Drill time (days)
30
60
7.71
6.27
9.33
8.69
9.66
9.46
9.91
9.69
10.05
9.85
10.15
9.97
60
90
22.14
12.95
9.89
8.36
7.44
6.83
120
26.08
14.92
11.2
9.34
8.23
7.48
50
40
Flow rates (kboepd)
Flow rate (kb/d)

10
20
30
40
50
60
F&D/boe
Drill time (days)
30
60
14.27
18.2
9.01
10.98
7.26
8.58
6.39
7.37
5.86
6.65
5.51
6.17
30
20
90
4.64
8.19
9.18
9.52
9.68
9.78
120
2.86
7.57
8.74
9.25
9.55
9.68
10
0
West Africa generic
assumption
Gulf of
Mexico generic
assumption
Lower
Tertiary
Jubilee
Tupi
Thunder
Horse
Guara
107
January 15, 2010
Global: Energy
Flow rates confirm the Santos Basins status as a world-class play

Petrobras started up an extended well test on the Tupi field in May and subsequently revealed in September that the Guara
reservoir had responded extremely well to flow testing and that initial well rates of 50,000 b/d could be expected from the
development. Little data was available up until this point on how the reservoirs would perform and the Guara data, combined with
similar indications of high potential flow rates at the Iracema section of Tupi, confirms the play as an attractive resource both in
terms of size and cost of extraction. The impact of these flow rates on our assumed capital costs has therefore led us to improve
economics in the basin dramatically.
Exhibit 148: Key metrics Santos Basin Brazil developments
F&D
Field
Tupi
Iara
Guara
Carioca
Abare West
Reserves
(mnboe)
6500
3500
1500
765
500
Start-up
2009
2013
2012
2016
2019
Flow rate
(kboe/d)
35
35
50
25
25
New
(US$/boe)
8.68
8.36
7.46
11.31
10.91
Old
(US$/boe)
13.14
14.15
14.50
15.85
NA
Reserves-weighted average NPV/boe:
NPV/boe
New
Old
(US$/boe) (US$/boe)
6.83
5.15
6.76
5.80
9.68
7.95
7.32
5.96
6.31
NA
7.15
5.73
These changes have the result of moving the fields down the marginal cost curve, to the extent that they approach the upper
quartile of our pre-sanction dataset in terms of the oil price required for a commercial return (in the case of Brazil, we assume a
commercial hurdle rate of 13%). In our view, the flow rate data provides clarity on the attractive economics of these enormous
developments, which, when combined with an almost unblemished exploration record in the basin, confirms its position as a
world-class play.
108
January 15, 2010
Global: Energy
Exhibit 149: In February 2009 we estimated Santos breakeven at c.US$60/bl
Exhibit 150: Recent flow rate data lowers this to US$43/bl av in our view
Top 230 pre-sanction commercial breakeven (US$/boe)
Top 280 pre-sanction commercial breakeven (US$/boe)
100
100
90
Top 280 commercial breakeven (US$/boe)
Top 230 commercial breakeven (US$/boe)
90
80
70
60
50
40
30
20
80
70
60
50
40
30
20
10
10
I
G ara
ua
ra
Tu
re pi
W
es
t
A
ba
C
ar
io
ca
p
Ia i
ra
Tu
ua
ra
G
C
ar
io
ca
Over 2 mnb/d expected from Santos by 2020E

We split out by phase our oil production profile from the Santos Basin in Exhibit 151. We estimate the basin will produce over
1 mnb/d by 2016E, rising to over 2 mnb/d by 2020E following the addition of the final vessels at Iara, Abare West and Jupiter
(liquids). Although resource development on this scale has typically disappointed in terms of actual delivery of new barrels (e.g.
Kashagan and the Canadian oil sands), the operator has made notable progress on Tupi to date, bringing the field into commercial
production within three years of discovery with the extended well test. Petrobras is aiming to bulk-order equipment for the projects
and to use a design one, build many approach for the production units in order to control costs. However the Santos Basin
remains a frontier development for the industry, due to extreme water and reservoir depths. Following the discussions that took
place in 2009 on the topic of how to tax the newly-discovered resource, there appears to be relatively low risk around already
licensed acreage, and we would highlight that the most significant risk to the value of Santos barrels remains actual execution of
the development.
109
January 15, 2010
Global: Energy
Exhibit 151: Top 280 Santos Basin oil production by phase 2008 to 2030E
Exhibit 152: Top 280 Santos Basin reserves by company (mnboe)
2,500
Repsol, 691 , 4%
Galp, 2,300 , 12%
2,000
1,500
1,000
BG, 3,330 , 17%
500
Petrobras, 12,945 , 67%
20
09
20
10
E
20
11
E
20
12
E
20
13
E
20
14
E
20
15
E
20
16
E
20
17
E
20
18
E
20
19
E
20
20
E
20
21
E
20
22
E
20
23
E
20
24
E
20
25
E
20
26
E
20
27
E
20
28
E
20
29
E
20
30
E
20
08
Tupi - EPS
Guara - Phase 2
Iara - Full system 2

Carioca
Abare West
Guara - Phase 1
Jupiter - Liquids
Iara - EPS

110
January 15, 2010
Global: Energy
Liquefied Natural Gas (LNG) Medium-term supply tightness

The impact of few sanctions between 2006 and 2008 will be felt between 2011E and 2015E
Our combined LNG models indicate that we are in a period of steep ramp-up that is primarily coming out of the Qatargas and
RasGas projects in Qatar and Sakhalin 2 in Russia; beyond this however, we expect Camisea (Peru) and Pluto (Australia) to start
production in 2010E and 2011E respectively, but very little else, leading to a relatively flat period of LNG growth. We expect to see a
surge in production post-2014E, by which time the Eastern Australian LNG projects, which will use Queenslands coal-bed methane
as feedstock, should be underway, along with a number of Australian north west shelf projects.
2009 surpassed our expectations in terms of sanctioning both PNG and Gorgon were sanctioned. In 2010E we expect Queensland
Curtis, Gladstone and Fishermans Landing (all in Queensland) to be sanctioned, and another three in 2011E.
Exhibit 154: LNG gas reserves sanctioned by year
Exhibit 153: Top 280 LNG production profile

5000
12000
4500
4000
10000
Australian
contributions
(expected)
3000
8000
Gas reserves (mnboe)
Production (kboe/d)
3500
Lower sanctions 2006 2008 leads to lower

growth rates
2500
2000
1500
Qatari
production
6000
4000
1000
2000
500
0
2005
2007
2009
2011E
Producing
2013E
2015E
Under development
2017E
Pre-sanction
2019E
2021E
2023E
2025E
0
2002
2003
2004
2005
2006
2007
2008
2009
2010E 2011E 2012E 2013E
111
January 15, 2010
Global: Energy
Global LNG supply highly levered to rapid ramp-up in Australia

The significant ramp up in our production forecasts is mainly as a result of activity in Australia. Between 2014E and 2020E we
expect the Top 280 LNG supply to grow from 2.2 mnboe/d to 4.3 mnboe/d. Of this 2.1 mnboe/d increase, we expect almost two
thirds from Australian LNG projects and the majority of the remainder from Nigeria from 2017E onwards. Between 2012E and 2016E
the picture is even starker: 75% of the expected 929 kboe/d increase is from Australia.
We believe that in total, capex spent on Australian LNG projects will increase by 700% from the 2009 base to the peak of activity in
2014E, with infrastructure spend increasing by 950%. We note that not all of this spend will be in the country as many units will be
built abroad and shipped to Australia for assembly. Nevertheless, we believe that this level of increase is likely to result in cost
inflation especially regarding labour and believe that some bottlenecks may occur. As a result, we take a cautious view on
sanctioning relative to corporate guidance, and assume that no more than three projects can be sanctioned a year an assumption
which still leaves 14 projects being developed concurrently.
Exhibit 156: Australia accounts for 64% of the increase in global LNG
production from 2014E to 2020E
Exhibit 155: Step change in Australian activity on the horizon

30000
5000
4500
25000
4000
3500
Production (kboepd)
capex US$mn
20000
15000
10000
3000
2500
2000
1500
1000
5000
500
9E
8E
0E
20
2
20
1
7E
Upstream spend
20
1
5E
4E
6E
20
1
20
1
20
1
3E
2E
1E
0E
09
08
20
1
20
1
20
1
20
1
20
1
20
20
06
05
04
07
20
20
20
20
Infrastructure spend
20
04
20
05
20
06
20
07
20
08
20
09
20
10
E
20
11
E
20
12
E
20
13
E
20
14
E
20
15
E
20
16
E
20
17
E
20
18
E
20
19
E
20
20
E
20
21
E
20
22
E
20
23
E
20
24
E
20
25
E
Non-Australian production
Australian production
112
January 15, 2010
Global: Energy
Security and labour costs offset raw material deflation; most new projects require over US$70/bl
Although we believe that LNG projects have benefitted from the drop in raw material prices (primarily steel), we believe that to a
large extent, this has been offset by the likely increase in labour costs as a result of the high levels of activity that are being planned
in the next few years. We now estimate that an LNG plant in Australia will require US$1-1.1bn/mtpa, with plants in West Africa
costing more due to the likely increased costs of security and social payments.
We analyse breakevens for LNG projects using the oil price to take into account the sometimes substantial liquids volumes and the
link between many LNG contracts and crude. In addition, we believe that going forward, contract pricing is likely to reference the
crude price. We believe that the majority of new Australian projects require an oil price of between US$70/bl and US$80/bl in order
to break even at an 11% cost of capital. In Africa we look for a higher return and, as a result, believe that a minimum of US$80/bl is
required for most of these projects to achieve hurdle rate returns. Floating LNG projects are also towards the top of the cost curve
in our view, as a result of the cost per mtpa and the lack of synergies available for additional liquefaction capacity. Nevertheless, we
believe these projects have additional option value in allowing the stakeholders the opportunity to pursue a cookie cutter approach
to additional vessels which may bring down costs and allow monetization of other stranded gas assets.
Exhibit 158: Liquefaction cost assumptions
Exhibit 157: LNG breakeven vs. liquefaction capacity
1600
110.0
FLNG liquefaction
capacity carries a
technological
premium
1400
100.0
Abadi LNG
OK LNG
Evans Shoal
Brass LNG
Snohvit
Prelude
Nigeria LNG Train 7
Camisea 2
Greater Gorgon
Greater Sunrise LNG
Pluto
LNG
1
Angola LNG
Browse LNG
Wheatstone LNG PNG Gas Project
APLNG
Snohvit
Fisherman's Landing
Gladstone LNG
80.0
70.0
Ichthys
60.0
1000
800
Yemen LNG
40.0
Qatargas
2 train 5
Qatargas
3
Qatargas 2 train 4
Qatargas 4
40
60
80
Operational issues
caused by new
technology increase
cost
Angola LNG
Brass LNG
OK LNG
Browse LNG
Ichthys
Wheatstone LNG
PNG Gas Project
Nigeria LNG Train 7
APLNG
Gladstone LNG
Pluto LNG 2
Greater Gorgon
Evans Shoal
Camisea 2
Tangguh
600
400
Bayu Undan
Fisherman's Landing
Lower quality plant likely to have lower

utilisation rate
Nigeria LNG Train 6

Qatargas 4
Qatargas 2 train 5
Qatargas 3
RasGas 2 train 5
Qatargas 2 train 4
200
30.0
20
Assumed cost of
US$1bn - US$1.1bn
in Australia - raw
material deflation
offset by labour
Yemen LNG
Nigeria LNG Train 6

Pluto LNG 2
50.0
Security and social

payments increase
cost in Nigeria to c.
US$1.3bn/mtpa
Pluto LNG 1
1200
US$/mtpa
Breakeven (US$/bl)
90.0
Abadi LNG
Prelude
Greater Sunrise LNG
100
120
140
160
180
200
220
0
1998
2000
2002
2004
2006
2008
Sanction date
Peak capacity (mtpa)
2010
2012
2014
2016
2018
Estimates
113
January 15, 2010
Global: Energy
Iraqi contracts: Gigantic resource, but hitting targets will be challenging

We add eight new projects to the database with this publication to account for the new development contracts signed with IOCs in
Iraq during the year, and to capture the start-up of two fields in Kurdistan. The Iraqi fields increase the resource captured by the
database by 30 bnbls although we believe that with perfect execution this figure could increase.
We believe it is unlikely that the contractors will hit the production targets implied in their contracts. Although the scale of the
resource is enormous, and could allow a ramp-up to the 9+ mnb/d level of incremental production implied by the production
targets of the contracts, we believe that a number of problems exist that will likely limit ultimate production including, security,
water supply, political risks and the structure of the contract which we believe encourages firms to bid to high production targets
without substantial economic penalty in the event of failure. We note, however, that the scale of the proposals is significant. A
ramp-up of the proportions targeted, even assuming some shortfalls in delivery, will require thousands of wells to be drilled
together with significant investment in new gathering, processing and power generation infrastructure.
Exhibit 159: Rumaila, Majnoon & West Qurna will underpin the new wave of
developments
Exhibit 160: ExxonMobil, Statoil & RDShell will be the largest IOC producers
Top 280 Iraqi oil production by company 2009 to 2025E (kb/d)
Top 280 Iraqi oil production by field 2009 to 2025E (kb/d)

10,000
10,000
9,000
9,000
8,000
8,000
7,000
7,000
Incremental production target
6,000
5,000
4,000
6,000
5,000
4,000
3,000
3,000
2,000
2,000
1,000
1,000
Rumaila expansion
Zubair
Halfaya
West Qurna 2
ExxonMobil
KOGAS
TOTAL
Statoil
Lukoil
Occidental
CNPC
20
25
E
20
24
E
20
23
E
20
22
E
BP
20
21
E
South Oil Company
ENI
20
20
E
20
19
E
20
18
E
20
17
E
20
16
E
RDShell
20
15
E
20
14
E
20
13
E
20
12
E
Petronas
20
11
E
20
10
E
20
25
E
20
24
E
20
23
E
20
22
E
20
21
E
20
20
E
20
19
E
20
18
E
20
17
E
20
16
E
20
15
E
20
14
E
20
13
E
20
12
E
20
11
E
20
10
E
20
09
Majnoon
20
09
0
0
PetroChina
114
January 15, 2010
Global: Energy
Contracts offer incentive for initial uptick, but little subsequent reason to ramp up
We believe that each contract will be asset-specific, but we would typically expect:
Cost recovery of capex spent, up to a maximum % of revenue
A fixed remuneration fee per barrel, possibly with corporation tax and/or an R-factor reducing the value of this to the company
A production uplift threshold that must be reached in order to begin recovering costs
We believe that this arrangement, results in a format which provides reasonable returns (typically in excess of 15%) if the
production uplift threshold is achieved within two years, but that offers little additional profitability beyond this. We have modelled
a generic field under different production scenarios (Exhibit 161) to indicate where the sensitivities lie. Due to the small
remuneration fee for barrels, we believe that the material differences in returns and NPV/bl are a result of how quickly a company is
able to breach the production threshold required to recover costs, not the production profile once the contractor has recovered
initial costs. As a result, the major advantage in bringing additional barrels into production is to generate a higher NPV through
volume, despite the relatively low value of the individual barrels.
Exhibit 161: Returns do not increase substantially with greater production; achieving production threshold is more important
18%
Achieve 1/2 plateau target - 10%
production threshold by 2012
Achieve 1/4 plateau target - 10%
16%
Achieve plateau target - 10%

14%
12%
Achieve plateau target - 1 year delay

to 10% threshold
IRR
10%
to 10% threshold
8%

to 10% threshold
6%
4%
2%
0%
-400
-200
200
400
600
800
1000
NPV (US$mn)
115
January 15, 2010
Global: Energy
Economics suggest that capital is better employed elsewhere

Although the returns are reasonable, if the threshold can be crossed within two years, we do not believe they are outsized given the
political risks we assume in operating in Iraq. We understand that there is a penalty in the event that production targets are not
reached but do not believe that this alone is punitive enough to encourage a materially larger application of capital to the fields
than we have modelled.
We have assessed the NPV/bl that of the Iraqi projects relative to the other fields in the Top 280 and believe that on a unit basis,
they are in the bottom quartile when assessed on this metric. Although we appreciate that there are other considerations to be
taken into account when investing in fields (i.e. time until payback, optionality of initial development), we believe that greater NPV
on a unit basis can be gained from investment in other fields rather than ramping up Iraqi fields governed by a service contract.
Exhibit 162: Iraqi fields are among the least attractive in the database when assessed on NPV per entitlement barrel
NPV2010/ barrel pre-sanction and under development PSC and Service Contract fields
14.0
12.0
Field
IOC remuneration fee (US$/bl)
Rumaila expansion
2.00
Zubair
2.00
1.90
Halfaya
1.40
Majnoon
1.39
West Qurna 2
1.15
NPV/boe (US$/boe)
10.0
8.0
6.0
4.0
2.0
W R
es um
tQ a
urila
na ex Z
expa uba
pans ir
n io
W Ma sion
es Hjno n
t Q al o
ur fayn
na a
2
0.0
116
January 15, 2010
Global: Energy
Supply/demand still tight by 2012E if targets are achieved

As a result of our concerns over the political, security and infrastructure issues likely to be faced in ramping up the fields to their
targeted production in the official timeline, combined with our belief that the service contracts do not provide sufficient economic
motivation to achieve this, we model a conservative production plateau which only sees the fields achieve c.20% of their targeted
volumes by 2015E. As a result, we believe that supply is likely to remain tight and that OPEC spare capacity will be totally utilized by
2013E.
Although we believe it is unlikely, we have also constructed a blue sky scenario in which we assume that ramp-up begins in
earnest in 2013E that allows companies to achieve their target production levels by 2017E. Under this scenario, and using our
demand forecasts, we believe that this still results in a tight supply/demand balance from 2012E onwards, leaving c.1 mnb/d of
spare OPEC capacity. Given we believe that a portion of mothballed OPEC capacity is unlikely to be reused in the future, we
continue to regard this as a positive for the oil price. Even under this scenario, we see excess demand by 2015E probably too early
for new discoveries to impact this significantly. If we assume 2% demand growth from 2009 onwards, excess demand returns by
2013E even under the more bullish Iraqi production scenario. In the event of the most bullish production scenario, we still believe
that even fields with a breakeven oil price in excess of US$80/bl could be sanctioned with a view to first oil in 2015.
Exhibit 164: Excess demand by 2015E if fields stay on track to reach targets
Exhibit 163: Supply shortage by 2013E under our assumptions
94,000
94,000
2% demand growth
2% demand growth
92,000
92,000
GS forecast demand
GS forecast demand
1% demand growth
88,000
kboepd
kboepd
88,000
86,000
86,000
84,000
84,000
82,000
82,000
80,000
2008
1% demand growth
90,000
90,000
2009
2010E
2011E
2012E
2013E
2014E
Base, Producing and under development
Pre-sanction liquids produced from gas projects
Iraqi production
Pre-sanction - breakeven below US$60
Pre-sanction - breakeven above US$80
2015E
80,000
2008
2009
2010E
2011E
2012E
2013E
2014E
Base
Pre-sanction liquids produced from gas projects
Iraqi production
Pre-sanction - breakeven above US$80
2015E
117
January 15, 2010
Global: Energy
Russia greenfield boom has started but foreign participation is limited

The greenfield boom has started after three years of investments
2009 marked a visible shift in Russia crude output structure. After the gradual boost of investments in greenfield upstream projects
over the past three years, several large fields finally came onstream helping overall Russian crude production to grow yoy despite
weakness in oil prices. The Yuzhno Khylchuyu field that started production in 2H2008 and the 3.1 bnboe Vankor project, whose
start-up was delayed from autumn 2008, were the key contributors to the crude output growth in 2009. The first stage of the Eastern
Siberia-Pacific Ocean pipeline became fully operational late in 2009 making development of East Siberian fields materially more
attractive due to lower crude transportation costs (vs. railroad that was used before). This is good news for the owners of the more
than 8 bnboe of Top 280 projects reserves located in the region including Verkhnechonsk and Talakan projects that started to ramp
up deliveries of crude in 2009.
We expect that greenfield projects will continue to make a material contribution to Russian crude output in the mid term. In 2010E
continued growth of output at Rosnefts Vankor field alone may add up to 200 kb/d. Beyond that several smaller start-ups in the
Caspian region, West Siberia and Yamal peninsula fields should help Russia to offset brownfield production decline. We estimate
that aggregate crude output from the Top 280 projects could allow total Russian crude output to remain flat assuming a 12% base
output decline between 2009 and 2015.
Exhibit 165:
Exhibit 166: If we assume -2% CAGR in brownfield production, greenfield

output would allow total Russian output to remain flat 2009-2015E
Greenfield projects contribution became material in 2009
2009 monthly Russian rude output, mtpa: greenfield right axis, brownfield left
Russian crude output, in mnt

600
2.5
42.0
41.0
500
mnt p.m.
40.0
39.0
1.5
38.0
1.0
37.0
mnt p.m.
2.0
400
At -2% brownfield production CAGR,
Russian greenfield output will fully offset
brownfield production decline allowing
total Russian production to remain flat
b/w 2009 and 2015
300
200
36.0
0.5
35.0
100
34.0
Jan-08 Apr-08 Jul-08
Oct-08 Jan-09 Apr-09 Jul-09
brownfield
Source: Interfax, Goldman Sachs Research estimates.
Oct-09
0
2009E
2010E
2011E
greenfield
2012E
Brownfield
2013E
2014E
2015E
Greenfield
118
January 15, 2010
Global: Energy
Key Russian themes limited foreign participation, lack of systemic fiscal support, higher gas
profitability
We believe that the key trends observed in Russian greenfield projects remain unchanged.
The ability of global oils to gain exposure to Russian oil and gas projects, in particular large-scale, remains limited. TOTALs JV with
Novatek for development of a mid-size Termokarst gas field was the only meaningful example of foreign participation in a
greenfield project during the year.
Developments in Russian oil tax legislation in 2009 have highlighted the states selective and non-systemic approach towards
support of upstream investments. The Russian oil tax burden is among the highest in the world with a 90% upstream marginal tax
rate, and certain amendments to the tax code became effective from 2009 introducing mineral extraction tax (MET) breaks for the
important greenfield regions to provide support to investors. At year-end the government also introduced a crude export duty break
for a limited list of oilfields in Eastern Siberia that has significantly improved the economics of the fields relative to other upstream
investments. To illustrate, the break that is expected to last three years allows c.US$34/bbl higher cash flows per barrel for
qualifying projects vs. the standard tax regime under US$85/bbl oil price assumptions. The state-owned Rosneft, operator of the
Vankor field in the region, is set to gain most of the related benefits. Gas projects continue to be more profitable relative to
development of oil fields, driven by a lower tax burden for the gas sector and the gradual increase in regulated domestic gas prices.
It is important however to differentiate between development of gas fields in the conventional gas production regions of Russia
(such as Nadym-Pur-Taz) and Gazproms large-scale projects such as Bovanenko (in Yamal region) and Shtokman (Barents sea)
whose profitability is materially depressed by the need for significant upfront investments in infrastructure that will be utilized not
only by these but also by future projects in the regions.
Exhibit 167: Share of foreign ownership in Russian Top 280 remains low
Share of Russian and foreign companies in Russian Top 280 reserves
Exhibit 168: Per barrel cash flow may vary significantly depending on the tax
regime approved by the government
Upstream economics under normalised oil price assumption of US$85/bbl
Foreign
companies,
14%
Export duty
90
MET
Profit tax
Cash Costs
+127%
Cash profit
+156%
80
70
60
50
40
Brownfield
profitability
remains low
at US$
10$/bbl
cash profit
East Siberian
export duty and
MET exempt
fields provide
56$/bbl cash
profit
Russian MET
exempt fields
(almost all
greenfield)
provide 22$/bbl
cash profit
30
20
Russian
companies,
86%
10
Base regime
MET holiday
Export duty and MET holiday
119
January 15, 2010
Global: Energy
Company competitive positioning

We have ranked the companies on six key metrics to reflect the exposure, reward and risk undertaken in their Top 280 Projects
portfolios:
Exposure measured as Top 280 net entitlement oil and gas reserves as a percentage of corporate proved 2009 oil and gas
reserves and additional metrics to reflect the balance of that portfolio
Profitability primarily measured as the profit/investment ratio (the ratio between the present value of the post tax operating
cash flow from Top 280 and the present value of the investment) and the IRR of the Top 280 portfolios on a life of field basis
Cash flow measured as the timing and size of uplift from the Top 280 Projects operational cash flow as a percentage of
corporate normalised cash flow and the capex as a percentage of the corporate normalized capex
Risk measured as the combination of technical risk and political risk (as measured by our proprietary risk indices) and the level
of this risk relative to project profitability
Quality of delivery measured as a combination of project delays, cost increases and production delivery relative to our
previous estimates
Oil price sensitivity measured as the upside and downside to profitability and asset value between our base case US$85/bl
Brent oil price assumption and our other price scenarios of US$110/bl and US$60/bl and impacts of price changes on
production
Exhibit 169: Top 280 Projects company rankings for our covered companies
Europeans
Winners
Long term exposure
Short term exposure
Limited exposure
RDShell, BG, Galp
Total, ENI
BP, Statoil
Repsol
Chevron, ConocoPhillips,
Marathon, Hess
Exxon, Suncor, Anadarko,

Occidental, Noble Energy,
Apache
US
Canadians
EnCana, Talisman
Emerging
Markets
Petrobras
E&Ps
Tullow, Woodside
PTTEP, Gazprom
Single asset play
PetroChina, CNOOC, ONGC,

Rosneft
Santos
Cairn India, Dragon Oil, Soco
120
January 15, 2010
Global: Energy
Top 280 portfolio characteristics by company

Exhibit 170: In search of the winners: Portfolio screening
Top 280 NPV as a %
of current EV
2 yrs DACF uplift as

a % of 2009 DACF
5 yrs DACF uplift as

a % of 2009 DACF
2 yrs prod. uplift as a

% of 2009 production
5 yrs prod. uplift as a

% of 2009 production
BG
Tullo w
Tullow
Galp
Galp
Tullow
RDShell
Galp
Tullo w
Tullo w
Statoil
Galp
BG
RDShell
BG
BP
BG
RDShell
Stato il
RDShell
RDShell
Stato il
Statoil
BG
Stato il
Galp
BP
BP
BP
ENI
TOTA L
TOTA L
Repsol
TOTA L
BP
ENI
Repso l
TOTAL
Repso l
TOTA L
Repso l
ENI
ENI
ENI
Repsol
Nexen
Nexen
Nexen
Chesapeake
Chesapeake
Chevro n
Chesapeake
Chesapeake
M urphy
M urphy
Hess
Devo n Energy
Suncor
Devon Energy
Sunco r
M urphy
Sunco r
Devon Energy
Nexen
Devo n Energy
M aratho n
M urphy
Murphy
Encana
Nexen
Chesapeake
Hess
Anadarko
Suncor
ExxonM obil
Talisman
Devon Energy
M arathon
ExxonMobil
Hess
Co no co P hillips
Chevro n
Hess
Co no coP hillips
Encana
Exxo nM o bil
Conoco P hillips
ConocoPhillips
Chevro n
Chevro n
Conoco P hillips
Sunco r
Exxo nM obil
Chevron
M aratho n
Noble Energy
A nadarko
Marathon
Exxo nM o bil
A nadarko
Encana
Encana
Encana
Talisman
Occidental
A nadarko
Occidental
Talisman
Occidental
Hess
Talisman
Talisman
Noble Energy
A nadarko
No ble Energy
Occidental
No ble Energy
Occidental
A pache
M aratho n
A pache
A pache
Apache
No ble Energy
A pache
TNK
Wo o dside
Woodside
Woo dside
Wo o dside
INP EX
Ro sneft
Petrobras
CNOOC
P etrobras
Gazprom
TNK
TNK
P etro bras
P TTEP
P etro bras
P etrobras
PTTEP
Rosneft
TNK
Luko il
INP EX
Santos
B HP B illito n
Ro sneft
Wo odside
Luko il
INPEX
INP EX
CNOOC
P TTEP
ONGC
Gazprom
P TTEP
P etro china
INP EX
Santo s
CNOOC
Lukoil
TNK
Ro sneft
P TTEP
Rosneft
Luko il
Luko il
ONGC
Gazpro m
Petrochina
ONGC
Santo s
CNOOC
B HP B illiton
ONGC
P etro china
B HP B illito n
P etrochina
P etro china
CNOOC
Gazprom
Gazpro m
B HP B illito n
Santos
BHP Billiton
Santo s
0%
20% 40% 60% 80% 100%
0%
10%
20%
30%
40%
0%
20%
40%
60%
80%
ONGC
0%
10%
20%
30%
40%
0%
10%
20%
30%
40%
Source: Company data, Goldman Sachs Research estimates, Woodside and Santos are covered by GS JBWere.
121
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A Top 280 NPV analysis shows the Russian oils as particularly attractive
Our modelling of the Top 280 fields allows us to calculate the Net Present Value (NPV) of each companys portfolio. We do this at an
8% cost of capital, discounting the free cash flow of the portfolio to the year 2010.
Exhibit 171 shows the NPV of each companys portfolio as a % of the EV. We have included in this analysis only companies with at
least three Top 280 assets, as we believe that the greatest value of this report is in analyzing portfolios of assets, rather than single
asset plays. Nexen, INPEX, Gazprom, Petrobras, BG and Tullow stand out for having the largest part of their EV in the Top 280
portfolio.
Exhibit 172 takes this analysis one step further, showing the cash flow multiple of the rump business. This is calculated by
subtracting the Top 280 NPV from the companys EV and subtracting the Top 280 cash flow from the companys EV/DACF. This
effectively shows how much the market is paying for the rest of the assets. Nexen, Gazprom, INPEX, TNK-BP and LUKOIL stand out
as being particularly attractive on this metric.
Exhibit 171: Top 280 accounts for a large % of the oil companies value...
Exhibit 172: ... and the valuation is dramatically different
NPV of Top 280 portfolio as a % of EV at 8% cost of capital
Implied 2010E EV/DACF of the non-Top 280 business
100%
9.0x
90%
8.0x
80%
7.0x
70%
6.0x
60%
5.0x
50%
4.0x
40%
Nexen
INPEX
Gazprom
Lukoil
TNK-BP
Hess
Marathon
Murphy
Petrobras
Chevron
ConocoPhillips
BP
Shell
ENI
Statoil
Devon
Repsol
Talisman
Apache
Chesapeake
Exxon
TOTAL
PTTEP
BG
Suncor
Anadarko
Occidental
ONGC
PetroChina
EnCana
Noble Energy
Galp
Rosneft
Tullow
Apache
Occidental
Talisman
PetroChina
EnCana
Anadarko
CNOOC
ONGC
Noble Energy
Repsol
Rosneft
Exxon
Suncor
ENI
ConocoPhillips
Devon
TOTAL
PTTEP
Galp
Chesapeake
Shell
Marathon
BP
Lukoil
Hess
Murphy
TNK-BP
Statoil
Chevron
BG
0.0x
Tullow
0%
Gazprom
1.0x
Petrobras
10%
Nexen
2.0x
INPEX
20%
CNOOC
3.0x
30%
122
January 15, 2010
Global: Energy
We believe exposure to new legacy assets provides visibility on future growth and is a positive
On our estimates, ExxonMobil leads the Majors in the absolute level of new legacy asset reserves (although Gazprom lies ahead in
absolute size) but relative to existing reserves, the winner among the Integrateds is BG. Aside from BG, Statoil is the winner in a
relatively compact ranking. ExxonMobil is a slight laggard in terms of relative exposure.
BG stands out from other integrated companies by a wide margin, thanks to its giant discoveries in the pre-salt Santos play in Brazil.
This lead is likely to consolidate in coming years in our view, as further appraisal and exploration is done in the area although
booking of these reserves could erode the lead relative to existing reserves. Most of the other companies with such high exposure
tend to be single asset plays which have not booked what we consider to be all recoverable reserves in the relevant asset. We
believe that these companies will experience transformational production growth in the medium term if delivery is effective.
Exhibit 173: Reserves exposure to the Top 280 Projects by company (for all companies with Top 230 reserves greater than 40% of reported 2007 reserves)
35,000
Gazprom
30,000
ExxonMobil
Top 280 Projects oil and gas reserves
BP
25,000
RDShell
Petrobras
20,000
TOTAL
Chevron
15,000
ConocoPhillips
ENI
Petrochina
Statoil
10,000
BG
Lukoil
5,000
Suncor
Rosneft
TNK
EOG ResourcesOccidental
Devon Energy Chesapeake
Sinopec Corp
Repsol Reliance
CNOOC
Hess
Marathon
Encana BHP BillitonCenovus
Dragon Oil
Talisman
Anadarko
Murphy
SASOL
Soco
0
Apache
Noble EnergyCairn India
0%
50%
100%
150%
INPEX
Husky Energy
Tullow
200%
Woodside
Nexen
Ultra Petroleum
Santos Questar
OPTI Canada
250%
300%
UTS Corp
Southwestern Energy
350%
400%
450%
500%
Top 280 Projects reserves as a percentage of 2008 reported reserves
Throughout the company analysis, in order to avoid double counting of BPs Russian assets, we analyse TNK as a separate entity rather than the TNK-BP JV that it shares with BP,
assuming it holds 50% of TNK-BPs assets
123
January 15, 2010
Global: Energy
Exposure: Increase of scope and exploration success have been the key drivers
The net addition of a further 50 fields in this edition has led to a net increase in reserves in the companies that we analyse. The
addition of further fields in Russia has been a boost while exploration has also driven reserve additions with major discoveries
coming from the US (Tiber, Shenandoah), Australia (Poseidon) and Venezuela (Perla). Brazil has continued its impressive run of
exploration success with additional discoveries being made at the Pipeline, Vesuvio and Abare West assets.
Substantial working interest reserves have been added in the UAE and Iraq as the countries offer companies technical service
contracts based on remuneration fees in order to boost existing production. As we look at reserves on a net entitlement basis,
however, the effect of this increase on the companies is muted, due to the relatively tough fiscal terms on offer.
The addition of some of Repsols Latin American assets, combined with impressive exploration success in the Gulf of Mexico, Brazil
and Latin America has meant Repsol has improved most of the integrated firms. Aside from Repsol, BG and BP have added the
most reserves of the Integrateds since Top 230. For BG, exploration and appraisal within Brazil has been a positive contributor as
has the addition of the Panna Mukta Tapti asset. BP has benefited from further exploration success in the Gulf of Mexico (with
Tiber) and from the inclusion of some relatively material Russian fields (such as Russkoye, Suzunskoye and Tagulskoye). Conocos
exploration success at Poseidon and Shenandoah has helped improve its position.
Exhibit 174: Percentage increase in Top 280 Projects net entitlement reserves relative to Top 230 Projects
Buckskin, Abare West,
Perla, Reggane,
Kinteroni
Bakken Shale
PetroCanada merger
100%
80%
60%
40%
Abadi LNG farm out
20%
0%
Sinopec Corp
Soco
INPEX
Chevron
Ultra Petroleum
BHP Billiton
Nexen
SASOL
TOTAL
Murphy
PTTEP
OPTI Canada
Petrobras
ExxonMobil
ENI
Statoil
Galp
Questar
Talisman
RDShell
Woodside
Santos
Reliance
Gazprom
Chesapeake
Cairn India
Marathon
Occidental
Husky Energy
ConocoPhillips
BP
Southwestern Energy
BG
Devon Energy
Apache
Tullow
Rosneft
Anadarko
TNK
CNOOC
Hess
Lukoil
Petrochina
Suncor
Repsol
EOG Resources
-20%
Noble Energy
Percentage increase in reserves from Top 280 to Top 230
Tamar
Scale limited to 100%. Noble is actually 388%, Repsol 182%, EOG 110% and Suncor 108%,
124
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Global: Energy
Brazilian flow rates improve economics. Iraq provides reserves but lowers average profitability
Among the larger players, those with exposure to Brazil have seen the greatest profitability growth between Top 230 and Top 280
as the recent flow rate data (up to 50 kb/d for Guara) have lowered our capex estimates on the pre-salt Santos play substantially,
resulting in increases in the P/I ratio of Galp, Petrobras and BG. BP, Shell, Exxon, ENI and Statoil have all seen an increase in
reserves, but with the exception of Statoil, have also seen a drop in profitability. Although a number of factors are at work here, one
theme is the inclusion of the Iraqi service contracts which we believe will generate sizable reserves (even at a net entitlement level)
but relatively low P/I. As we have not changed our oil price assumption since the last publication, the impact of changes in
commodity prices on companies portfolios should be minimal.
Exhibit 175: The change in scale and profitability of company portfolios from Top 230 to Top 280
% change in reserves from Top 230 Projects to Top 280 Projects
40%
Reserves grow at
expense of profitability
CNOOC
Anadarko
Brazilian flow rates

improve economics
30%
Tullow
Rosneft
20%
Apache
BP
Husky Energy
10%
0%
-10%
Profitability and
volumes increase
BG
ConocoPhillips
Devon Energy
Majors generally quite closely

Marathon
grouped. Iraqi contracts haveCairn India
contributed to small reserves
Occidental
Chesapeake
increase
Santos
RDShell Woodside Reliance
Talisman
ENI
Statoil
Petrobras
ExxonMobil
OPTI Canada
TOTAL
Murphy
SASOL
Nexen
BHP Billiton
Chevron
Ultra Petroleum
Sinopec Corp
Soco
INPEX
UTS Corp
Gazprom
Galp
Dragon Oil
-20%
Oil Search
-30%
-40%
-50%
-30%
Encana
Profitability and
volumes fall
-20%
-10%
0%
10%
Profitability increases at
expense of volumes
20%
30%
40%
% change in P/I ratio from Top 230 Projects to Top 280 Projects
X-axis limited to 40%. Increases off scale are: Hess (reserves +49%, P/I +1%), PetroChina (+58%, -4%), Lukoil (+60%, -23%), Suncor (+108%, +29%),
EOG (+110%, +10%), Repsol (182%, +4%) and Noble (+388%, +61%)
125
January 15, 2010
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Profitability: Exploration risk paying off

On our analysis the smaller E&Ps lead the industry on pure portfolio profitability. In large part, this is driven by these companies
taking greater exploration risks by drilling in countries with little or no historical exploration success a strategy that is typically
encouraged by the more favourable fiscal terms available in frontier regions, designed to attract such activity and resulting in better
returns in the event of success. The companies are also generally helped by the fact that they have only a small number of assets in
the Top 280 universe, meaning that they are more likely to be at the extremes.
BP performs well partly due to its high exposure to unconventional gas (which has a high IRR but a low P/I due to the timing of the
cash flows) and higher risk, higher return deepwater projects (which also tend to carry higher exploration risk). Repsol is well
positioned vs. the integrated companies due to its profitable fields in deepwater Brazil and GoM. BG is well placed due in part to the
level of producing assets in its portfolio and its high-return pre-salt Brazilian portfolio, while Statoil also screens well.
ConocoPhillips lags the other Majors, reflecting the companys higher reliance on oil sands and Alaskan/North Canadian gas
projects (Alaska Gas and Mackenzie Gas).
The heavy oil and LNG-orientated companies suffer lower rates of return at our assumption of US$85/bl oil. We note, however, that
to a degree the low profitability of these portfolios is partly offset by low political and exploration risk and long duration.
Exhibit 176: Top 280 Projects IRR by company (excluding fields at plateau)
50%
45%
40%
35%
IRR
30%
25%
20%
15%
10%
5%
Dragon Oil
Heritage
Cairn India
OGX
Soco
Anadarko
Chesapeake
Reliance
Tullow
Noble Energy
EOG Resources
Encana
Southwestern Energy
Husky Energy
SASOL
Petrobras
Rosneft
Talisman
BHP Billiton
Repsol
Devon Energy
BP
Murphy
PTTEP
CNOOC
Statoil
Occidental
Galp
ExxonMobil
BG
Nexen
Questar
Ultra Petroleum
Cenovus
Chevron
Hess
Suncor
TOTAL
Lukoil
ENI
Marathon
Petrochina
TNK
Gazprom
RDShell
Apache
INPEX
ConocoPhillips
Santos
Oil Search
Woodside
OPTI Canada
Sinopec Corp
0%
126
January 15, 2010
Global: Energy
Profitability: Majors closely grouped on duration vs. profitability, but BG and Conoco stand out
We view high value creation over a long duration asset base as being the optimal mix. However, investment decisions usually offer
a trade-off between these two qualities, with longer duration projects typically sacrificing some profitability.
On this metric of profitability vs. duration, the Majors are closely grouped with three exceptions. Repsol remains on the same
(logarithmic) trend line as the rest of the population but sacrifices some duration for a higher profitability. BG and Conoco, however,
are distinct from the rest of the majors and attractive inasmuch as their portfolios are above the trend. For BG, the Brazilian
portfolios excellent flow rates mean that the large reserves and durations continue to have good profitability (with BGs Brazilian
assets generating an average P/I of 2.3x). ConocoPhillips also screens well, with its longer duration oil sands and LNG assets not
sacrificing substantial levels of profitability.
Companies with a lower P/I ratio are generally heavily involved either in oil sands projects or LNG projects both types of projects
in which the longer duration provides compensation for a lower return. The other obvious outliers on the other side of the chart,
Cairn, Soco, Heritage and SASOL, are single asset players in India, Vietnam, the Kurdistan Region of Iraq and Qatar and benefit on
this metric due to the risk taken on at some point in the life of the project. For Soco and Cairn India, the favourable showing on this
metric is a reward for the higher level of risk taken in the exploration phase in drilling a wildcat exploration programme. SASOL
was exposed to substantial technical risk in the early stages of its GTL project; for Heritage the risk is political, with little visibility on
how PSCs signed with the Kurdistan Regional Government will be treated by the central Iraqi administration.
Exhibit 177: Top 280 Projects value creation vs. duration (excluding fields at plateau)
50.0
45.0
Questar
Ultra Petroleum
OPTI Canada
Southwestern Energy
40.0
Duration (years)
Gazprom
Rosneft
TNK
Conoco
has
a
longer
Suncor

INPEX
EOG Resources
Canadian Natural Resources ConocoPhillips
35.0
UTS Corp
30.0
Majors generally
closely grouped
25.0
duration portfolio with

a small trade off vs.
profitability
Cenovus
Brazil gives BG
duration and
profitability
Dragon Oil
Galp
Repsol is on trend
Nexen
but with higher
BG
Talisman
profitability and
BP
Chesapeake Chevron
lower duration
Petrobras
Woodside
ExxonMobil
Encana TOTAL
Petrochina
Apache RDShell
ENI
Statoil
Husky Energy
Marathon
BHP Billiton
Repsol
Devon Energy
Lukoil
Santos
Hess
CNOOC
PTTEPNoble Energy
Oil Search
Heritage
Sinopec Corp
Tullow
Occidental
Murphy
Reliance
Cairn India
SASOL
OGX
Anadarko
20.0
Soco
15.0
1.0
1.5
2.0
2.5
3.0
3.5
Profit/Investment ratio
127
January 15, 2010
Global: Energy
Quality of delivery: Failure to sanction can damage companies production targets

We have attempted to measure each companys success in delivering its own new legacy asset portfolio, by reviewing the cost
changes, timing changes and production delivery of those projects that we included in Top 170 Projects (February 2007) that were
not already under production. We have performed the analysis on the basis of equity ownership in order to display the companies
total exposure to these effects. We note that this analysis reflects the success or failure of each company in delivery of its new
legacy assets, relative to our own expectations of the projects in our previous Top 170 Projects report (and may potentially differ
from company guidance).
TOTAL performs worst of the Majors on this metric, a result primarily of its large West African portfolio, which has been slower to
sanction than we originally anticipated. Chevron is the next worst performer, again driven to a large degree by sanctioning projects
later than we anticipated (primarily Gehem, Gendalo, Hebron and Gorgon), although we note that the recent sanctioning of Gorgon
and the apparently imminent sanction of Jack/St Malo should help mitigate the risk of delays going forward. These case studies
highlight the importance of sanctioning projects in a timely fashion. BP fares well among the Majors on this metric, partly a result
of its Top 170 portfolio having been well advanced in the development process.
Exhibit 178: Average change in expected project start-up for the original Top 170 projects (from February 2007 to January 2010))
Fields producing in February 2009 excluded
100
1
1
2
60
1
5
40
26 20
24
10
11
20
17
19
22
0
1
-20
3
6
Gazprom
Repsol
Reliance
Cairn India
Noble Energy
Cenovus
Sinopec Corp
Murphy
Devon Energy
Petrobras
BP
Rosneft
Talisman
Marathon
OPTI Canada
Nexen
Statoil
RDShell
Petrochina
BHP Billiton
Galp
CNOOC
ENI
ConocoPhillips
Occidental
Hess
ExxonMobil
Woodside
TOTAL
Chevron
Suncor
INPEX
Oil Search
Husky Energy
Santos
SASOL
UTS Corp
-40
TNK
Weighted average delay (months)
80
Boxed number indicates number of operated, non producing projects in the Top 170 database
128
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Quality of delivery: Costs still elevated vs. Top 170

We have also analysed cost inflation on the same project sample set. At first glance, quality of execution with regard to cost control
is poor. It should be remembered, however, that cost inflation has been a fact of life in the upstream industry in recent years and
that despite the recent deflationary environment, we believe current costs are still higher than those prevalent in 2007, when Top
170 was published.
ENI performs the worst of the Majors on this basis, primarily a result of the increase in costs experienced at its Kashagan project.
Shell has also experienced relatively high cost inflation largely a function of our previous underestimation of costs at Pearl,
Kashagan and Perdido. Repsol benefits from having had the majority of its Top 170 portfolio well under construction by the time
the Top 170 was published (primarily Camisea and Shenzi) meaning that costs were locked in to a greater extent than for
companies with a higher proportion of assets in the pre-sanction phase.
350%
300%
250%
200%
150%
10
17
100%
20
24
11 26
22 19
50%
0%
Husky Energy
Cenovus
Noble Energy
Sinopec Corp
Repsol
Reliance
BHP Billiton
Hess
Murphy
Gazprom
Petrobras
Talisman
UTS Corp
Devon Energy
CNOOC
BP
Statoil
TNK
TOTAL
ConocoPhillips
Nexen
Petrochina
ExxonMobil
OPTI Canada
Cairn India
Chevron
Marathon
Galp
Woodside
INPEX
RDShell
ENI
Santos
Rosneft
SASOL
1
Suncor
3
Occidental
1
-50%
Oil Search
% cost increase per barrel from Top 170 to Top 280
Exhibit 179: Average change in our expected unit capital costs for the original Top 170 Projects (from February 2007 to January
2009)
Boxed number indicates number of operated, non producing projects in the Top 170 database
129
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Global: Energy
Oil price sensitivity: Shell has the most levered Top 280 portfolio of the majors
Companies with the most leverage to the oil price tend to be those in relatively marginal, oil based assets with exposure to a
license regime. As a result, it is no surprise that many of the more sensitive company portfolios tend to be those with exposure to
the Canadian oil sands, such as CNRL, UTS, Suncor and Cenovus. As we assume a direct link between GTL and LNG production
and oil price, SASOL, Oil Search, Woodside and Santos also display high leverage. Finally, single asset plays with oil based assets
in generous PSCs, or those that reach the threshold of profitability very quickly are also well levered (Cairn India/Soco).
Of the Majors, RDShell is the most levered due to the high levels of liquids/LNG in its portfolio and its relatively low exposure to
fiscal regimes in which the tax rate is determined by the oil price. At the lower end of the sensitivity chart are BG (due to its
portfolio of fixed price gas in Oman and Egypt), BP (due to the high proportion of its assets being gas, linked to Henry Hub where
we do not assume a relationship with crude) and Exxon Mobil (due mainly to its participation in both Mackenzie Gas and Alaska
gas and its Middle Eastern gas portfolio (e.g. Al Khaleej and Barzan) where we assume a fixed price and its presence in a number of
oil-levered PSCs).
At high oil prices, Soco shows the highest profitability, followed by Cairn India and SASOL a result of projects with favourable
fiscal regimes. We note, however, that exceptionally high returns under high oil prices are likely to be eroded by windfall taxes or
changes to fiscal structure putting these portfolios at greater risk of such governmental interference.
Exhibit 180: Company P/Is under different oil price sensitivities
Exhibit 181: Sensitivity of companies portfolios to oil price
All projects included
All projects included

40%
5.00x
30%
4.50x
% change in PI from US$85/bl
4.00x
PI
3.00x
2.50x
2.00x
1.50x
1.00x
0.00x
Soco
Cairn India
SASOL
Heritage
Tullow
BHP Billiton
Anadarko
Dragon Oil
OMV
Noble Energy
Petrobras
Surgutneftegaz
Repsol
ONGC
Gazprom
Cenovus
Murphy
Husky Energy
Petrochina
Rosneft
Nexen
Reliance
CNOOC
BP
Suncor
BG
ENI
Lukoil
Chevron
Oil Search
Galp
TNK
TOTAL
Hess
ExxonMobil
INPEX
Marathon
Devon Energy
RDShell
Santos
Woodside
Statoil
OPTI Canada
EOG Resources
ConocoPhillips
Talisman
Occidental
Chesapeake
Apache
Sinopec Corp
Encana
UTS Corp
Southwestern Energy
Questar
Ultra Petroleum
0.50x
PI @ US$60/bl
PI @ US$85/bl
PI @ US$110/bl
20%
10%
0%
-10%
-20%
-30%
-40%

UTS Corp
SASOL
Oil Search
OPTI Canada
Santos
Cenovus
Suncor
Soco
Woodside
Cairn India
BHP Billiton
INPEX
Nexen
Rosneft
Heritage
Anadarko
RDShell
Marathon
EOG Resources
Tullow
Surgutneftegaz
OMV
Chevron
CNOOC
ENI
Husky Energy
Repsol
Dragon Oil
ConocoPhillips
Petrochina
Hess
Petrobras
TOTAL
ExxonMobil
Murphy
BP
Galp
Gazprom
ONGC
BG
Devon Energy
Noble Energy
Statoil
Occidental
Apache
TNK
Lukoil
Sinopec Corp
Reliance
Talisman
Chesapeake
Encana
Southwestern Energy
Questar
Ultra Petroleum
3.50x
130
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Global: Energy
Oil price sensitivity: Exposure to licences and oil based assets provides greater leverage
We have assessed the fiscal terms of each of the fields in our analysis and classified them depending on whether the tax rate is
influenced by the impact of the oil price on the projects profitability. This typically happens in Production Sharing Contracts, but
not in all of them. An obvious comparison is between Nigeria and Angola. Nigerian PSCs are driven by volume, not profitability,
and therefore offer good leverage to the oil price for the companies involved in the projects. Angolan PSCs are instead profitability
based and offer limited exposure to commodity price increases. Of the Majors, ENI stands out for having a substantial proportion of
its reserves in contracts levered to the oil price, while the next nearest Majors are ExxonMobil and TOTAL. BP screens as having
little exposure to oil price based tax regimes primarily a result of its exposure to the Gulf of Mexico and large US gas projects,
although this is offset by the fact that a large proportion of its assets are linked to Henry Hub, which limits its oil price leverage.
RDShell is not far behind in its limited PSC exposure, and is also helped by the fact that almost 80% of its net entitlement reserves
are levered to the oil price. ConocoPhillips has the lowest profitability based fiscal exposure (as a result of its heavy oil and
Australian LNG projects).
Exhibit 182: Proportion of reserves governed by oil-based PSCs
Exhibit 183: Proportion of reserves levered to crude price
Net entitlement reserves

120%
100%
Oil price levered net entitlement reserves
100%
% reserves in PSCs levered to oil price
90%
80%
70%
60%
50%
40%
30%
20%
80%
60%
40%
20%
Canadian Natural
Chesapeake
Noble Energy
BHP Billiton
Cenovus
EOG Resources
SASOL
Nexen
Woodside
0%
Heritage
Cairn India
Tullow
Murphy
Anadarko
ENI
Occidental
Hess
TOTAL
ExxonMobil
INPEX
Chevron
BG
RDShell
Statoil
BP
Lukoil
CNOOC
Marathon
Reliance
Talisman
Rosneft
ConocoPhillips
Galp
Gazprom
Devon Energy
Repsol
Encana
Oil Search
TNK
Apache
UTS Corp
Dragon Oil
Soco
Southwestern Energy
Husky Energy
Petrobras
Questar
Ultra Petroleum
Petrochina
Suncor
Santos
Sinopec Corp
OPTI Canada
0%
Woodside
SASOL
Cenovus
Santos
OPTI Canada
Cairn India
Dragon Oil
Heritage
Soco
Suncor
Canadian Natural
UTS Corp
Oil Search
INPEX
Tullow
BHP Billiton
Marathon
Rosneft
Nexen
Anadarko
Chevron
Murphy
Husky Energy
TOTAL
RDShell
Statoil
ExxonMobil
CNOOC
Petrobras
BG
ConocoPhillips
EOG Resources
TNK
ENI
Hess
Galp
Occidental
Petrochina
BP
Repsol
Lukoil
Apache
Devon Energy
Noble Energy
Gazprom
Reliance
Talisman
Sinopec Corp
Chesapeake
Ultra Petroleum
Encana
Southwestern Energy
Questar
10%
131
January 15, 2010
Global: Energy
Risk: ENI has the highest risk profile among the Majors, Conoco is the least risky
Of the Majors, ConocoPhillips has the lowest level of country risk which reflects a partial trade-off for the relatively low profitability
of its portfolio as a result of its significant positions in Canada, the US and Australia. Exxon, BP, Statoil and Shell have a similar
combination of technical and country risk with Chevron and TOTAL experiencing a slightly higher risk profile. Companies with a
high concentration of their assets in the Brazilian pre-salt play have a high technical risk. This is particularly the case for BG, Galp
and Petrobras for whom these assets form a particularly significant part of their portfolio. Repsols risk is more muted as a result of
its significant exposure to the relatively simple Block N186 and Shenzi, although it is highly levered to country risk. ENI has the
highest combined political/technical risk primarily a result of its large exposure to Kashagan, West Africa and Perla in Venezuela.
The lower risk assets are, in our view, the heavy oil and LNG assets based in Canada and Australia. As we would expect from an
efficient market, companies with this low risk profiling also tend to have relatively low returns.
Exhibit 184: Technical versus political risk by company (excluding fields at plateau)
2.1
Galp
1.9
Brazilian pre-salt assets
raise the technical risk of
heavily exposed players
1.7
Technical risk
1.5
1.3
1.1
0.9
0.7
ENI, has the highest

combination of high
political and high
technical risk
Petrobras
SASOL
ENI
BG
Conoco exhibits the
lowest risk profile of the
majors
BHP Billiton
Chevron
INPEX
Devon Energy
TOTAL
Statoil
RDShell
ConocoPhillips
BP
ExxonMobil Anadarko
Questar
Woodside
Ultra Petroleum
Chesapeake
EOG Resources
Southwestern Energy
Encana
Santos
Talisman
Hess
Marathon
Apache
UTS Corp
Suncor
Canadian Oil Sands Trust Cenovus Nexen
Occidental
OPTI Canada
Husky Energy
Murphy
Gazprom
Oil Search
Rosneft
Lukoil
Repsol
TNK
CNOOC
Noble Energy
Petrochina
0.5
Tullow
Sinopec Corp
Cairn India
Reliance
PTTEP
0.3
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Country risk
Source: Goldman Sachs Research estimates, World Bank Index.
132
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Global: Energy
Risk: Exploration and technological first movers rewarded with outsized risk-adjusted returns
As a rule we believe that companies are rewarded for the extra risk that they may take on through higher profitability. Although the
relationship is muddied by the timing of project starts (with projects near to production generally being more profitable) and
duration, there is a correlation between risk and returns.
Canadian oil sands producers and OECD-based LNG producers take on much lower political and exploration risks and, as may be
expected, generate lower returns. Outliers on the right of Exhibit 185 are generally single asset plays that have taken on significant
exploration or technological risk at the start of the project and are now being compensated for this with a combination of relatively
low risks and high profitability. The Majors are generally grouped together, with the exception of ENI (skewed by Kashagan and its
heavy West African exposure which leaves it with lower risk-adjusted profitability) and ConocoPhillips which is lower down the risk
scale due to the relatively higher weighting of its assets in the US and Australia.
Exhibit 185: Overall risk versus profit/investment ratio by company (excluding fields at plateau)
4.0
Galp
Single asset plays in

technologically or
politically challenging
environments can
experience a high
risk relative to
profitability
3.5
Majors are generally

quite closely group in
terms of risk / reward
ENI
Oil Search
Petrobras
Overall risk
3.0
Heritage
Repsol
Gazprom
Rosneft
Chevron Lukoil
CNOOC
TNK
BP
INPEXExxonMobil
RDShell Statoil
Tullow
TOTAL
2.5
Unconventional plays
in the US are
typically low risk / low
profitability
Noble Energy
Dragon Oil
Cairn India
Sinopec Corp
2.0
Devon Energy
ConocoPhillipsHess
Marathon
Occidental
Ultra Petroleum
Chesapeake Petrochina
Southwestern Energy
Questar Santos
EOG Resources
Murphy
Woodside
Talisman
1.5
1.1x
1.2x
1.3x
1.4x
1.5x
1.6x
1.7x
Suncor
1.8x
Nexen
1.9x
Husky Energy
Cenovus
2.0x
2.1x
2.2x
Soco
1st mover advantage in either

wildcat exploration or technology.
Technological / exploration risk
taken early in the project and
stakeholders now reaping the
rewards
Encana
OPTI Canada
UTS Corp
1.0
1.0x
SASOL
PTTEP
Reliance
2.3x
2.4x
2.5x
2.6x
2.7x
2.8x
2.9x
3.0x
3.1x
OGX
3.2x
3.3x
3.4x
3.5x
3.6x
3.7x
Profit/investment ratio
133
January 15, 2010
Global: Energy
Exposure: Differentiation of strategies for the Majors in win zone choice

ExxonMobil has a well balanced exposure, having material exposure to all win zones except GTL (following its withdrawal from its
planned Qatari project). RDShell is also well balanced, with exposure to all eight win zones, but exhibits a clear skew towards less
conventional reserves; two thirds of its Top 280 reserves are in GTL, heavy oil, unconventional gas and LNG more than any other
Major and a composition that partly explains the high capital intensity of the companys portfolio in the near term. ENI, meanwhile,
is least exposed to the unconventional win zones among the Majors with most of its assets in the traditional win zone (a result
skewed somewhat by the presence of Kashagan in its portfolio). BP has a balanced portfolio but is weighted to deepwater and gas
(both conventional and unconventional). BG and Repsol are more concentrated deepwater plays among the Integrateds, however,
primarily as a result of their exposure to Brazil and (in the case of Repsol) the Gulf of Mexico). Chevron is relatively strong in
deepwater but has its most significant position in LNG while Conoco is the least exposed to deepwater among the Majors, focusing
instead on heavy oil, gas and LNG. TOTAL is skewed towards heavy oil with Statoil also having a lot of exposure to this win zone
through Leismer. ENI, BP and Statoil all have relatively high exposure to Russia a region which carries significant levels of
political risk for foreign investors.
As the portfolio sizes decline, so does diversification, meaning that a significant number of players are highly levered to only one
win zone making them a clear play on either short-term returns or longer duration. The exceptions to this rule are Gazprom which
is focused on Russia and Petrobras which is the most levered way to play deepwater among the largest, global companies.
100%
80%
60%
40%
20%
Deepwater
Gas
LNG
Traditional
Exploitation
GTL
Heavy Oil
Russia
SASOL
Heritage
Soco
Murphy
Dragon Oil
Oil Search
EOG Resources
Anadarko
Cairn India
Tullow
Noble Energy
Apache
Talisman
Questar
OPTI Canada
Occidental
Hess
BHP Billiton
CNOOC
Southwestern Energy
Santos
UTS Corp
Cenovus
Ultra Petroleum
Encana
Marathon
Husky Energy
Nexen
Devon Energy
Reliance
Galp
Sinopec Corp
Repsol
Chesapeake
TNK
INPEX
Woodside
Lukoil
Rosneft
Suncor
BG
Petrochina
ENI
ConocoPhillips
Statoil
RDShell
Chevron
TOTAL
ExxonMobil
BP
Gazprom
0%
Petrobras
Percentage of Top 280 Projects reserves (mnboe)
Exhibit 186: Top 280 Projects reserves split by win zone (in order of reserve size)
Unconventional Gas
134
January 15, 2010
Global: Energy
Exposure: Producing assets vs. new developments balancing risk and growth
We see most risk to reserves and economics at the pre-sanction stage of a project when less is known about the reserves size,
development plan and final costs. We therefore view a portfolio that is weighted towards assets under development and production
as more secure and less susceptible to development issues or reserves downgrades. We also see difficulties in sanctioning projects
as one of the key reasons for project delays, and as such believe that a high proportion of pre-sanction assets can mean lower
visibility on medium-term growth prospects. As sanctioning tends to lock in at least a portion of costs, sanctioned projects will
benefit under a rising oil price relative to pre-sanction projects, which are likely to experience more cost inflation as prices rise
although pre-sanction assets, have greater flexibility sanction can be delayed to take advantage of cost deflation in falling oil
prices or to conserve capital when liquidity is stretched.
Of the Majors, Chevron and TOTAL have experienced the biggest change since the publication of the Top 230. For Chevron a
significant proportion of its pre-sanction assets have now moved into the development phase (primarily as a result of the
sanctioning of Greater Gorgon and Caesar Tonga), meaning that 30% of its reserves are now under development (vs. c.4% in Top
230). We believe that the visibility of Chevrons Top 280 portfolio could be further enhanced as we expect Jack/St Malo to be
sanctioned in 2010E. TOTALs portfolio has become much more weighted to the producing category since the start-up of assets
such as Tombua Landana, Tahiti, Qataragas 2 train 5, Yemen LNG and Akpo, leaving the company with little in the under
development hopper. BP, BG and ConocoPhillips have the highest proportion of pre-sanctioned assets, although we note that the
majority of BGs assets in this class relate to projects for which we believe there is a good degree of visibility such as QCLNG and
the development of pre-salt Brazilian assets which reduces the risk of the portfolio in our view. Statoil, Exxon, Shell and ENI have
the fewest assets in the pre-sanction phase.
Exhibit 187: Top 280 Projects reserves split by development status
Decreasing risk, decreased chance of material
reserve upgrade
80%
60%
40%
Producing
Under development
Galp
INPEX
Repsol
Woodside
ConocoPhillips
BP
BG
TOTAL
SASOL
TNK
CNOOC
Petrobras
Apache
BHP Billiton
Suncor
Occidental
Chevron
Petrochina
ENI
Anadarko
RDShell
Gazprom
ExxonMobil
Hess
Cenovus
Statoil
Tullow
Marathon
Lukoil
Devon Energy
Soco
Nexen
Questar
Oil Search
Ultra Petroleum
EOG Resources
Encana
Southwestern Energy
Talisman
Chesapeake
Murphy
Rosneft
Dragon Oil
OPTI Canada
Cairn India
Reliance
0%
Sinopec Corp
20%
Status of Top 280 reserves (mmboe)
100%
Pre-Sanction
135
January 15, 2010
Global: Energy
Timing of operating cash flows: BG and Shell the long-term Major winners; BP strong in near term
BG and Shell are the medium- to long-term winners of the Integrateds, with BGs expected outperformance being driven by
contributions from Curtis and Brazil, and Shell benefiting primarily from its Qatari and Australian assets. BP performs well in the
near term, helped by the leverage of its Gulf of Mexico and ACG assets to the increase in oil price from a relatively low 2009 base.
In the medium term, we see BPs incremental cash flow growth slowing, despite cost oil at Rumaila and it is not until 2015E that we
see a new period of growth, driven primarily by its GoM exposure. TOTAL sees an initially strong uptick in value over 2009-2010E,
due to the oil price and the ramp-up of assets such as Akpo, Qatargas 2, Tahiti, Pazflor and Yemen LNG. Although we expect Top
280 growth to return in 2013E, however, we expect the companys cash flow growth from Top 280 projects to be more muted
between 2010E and 2012E. Statoil has consistent, if not sector-leading growth to 2014E, from projects such as Peregrino, and
Pazflor but as we have delayed Leismers expected ramp-up vs. the Top 230, growth beyond this point is less impressive than some
of its peers. ENIs profile is more muted than its peers in most parts of the cycle, although the company does enter a period of
growth between 2012E and 2016E as Kashagan, Goliat, Articgas and Urengoil and its Latin American gas assets ramp up. Repsols
growth is muted but fairly consistent, driven by Shenzi in the short term and Latin America further out (Guara, Margarita etc.).
Tullow and Galps Top 280 portfolios are transformational in the short term.
Top 280 operating cash flow as a percentage of corporate 2009 DACF (rebased to zero)
Exhibit 188: Operating cash flow from Top 280 projects as a percentage of 2009E corporate cash flow (rebased to zero)
90%
80%
70%
Galp
Tullow
BG
60%
RDS
TOTAL
50%
BP
Statoil
40%
Repsol
30%
BP
20%
Statoil
TOTAL
Repsol
10%
ENI
0%
-10%
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
Scale limited to 90%. BG reaches 150% by 2018E

136
January 15, 2010
Global: Energy
Capex timing: Shell drops from current high base; BG investing for outsized growth
We believe that Shells capex spend from the Top 280 projects is likely to drop off as the companys current spend on megaprojects such as Pearl ends. We believe that Shells investment is likely to pick up for a time from 2012E, as the company spends on
projects such as Prelude, its share of Gorgon and its Iraqi portfolio. BGs capex spend on the Top 280 will increase by a far greater
extent than its peers, as the company funds its outsized growth prospects in Brazil and Australia. Totals spend increases
progressively to support its post-2012E growth with Kashagan and Ichthys being the biggest single sources of expenditure, and
spend in West Africa also remaining consistently high. BPs spend is fairly muted at first vs. 2009, but begins to increase from
2013E as expected spending on its GoM and West African portfolios begins in earnest. ENIs Top 280 spend increases mainly due to
Kashagan and Zubair but does not increase markedly from its relatively low base (25% of total 2009 capex) which tallies with the
companys relatively muted Top 280 production growth relative to peers. Statoils spend remains relatively constant until the
middle of the decade when we expect expansions at Leismer to be sanctioned and spending on Block 31 West and Vito to begin.
Galp and Tullow are both investing for outsized growth, although Tullows spend drops once the assumed Ugandan pipeline and
second phase of Jubilee are completed.
Exhibit 189: BG spending for transformational growth
Exhibit 190: ENI and Repsol are the lowest Top 280 spenders
Top 280 capex as a percentage of corporate 2009E capex (rebased to zero)
Top 280 capex as a percentage of 2009E capex (absolute)

120%
Top 2830 capex as a percentage of corporate 2009E capex
Top 280 capex as a percentage of corporate 2009 capex (rebased to zero)
40%
BG
30%
TOTAL
20%
Galp
BP
Tullow
Statoil
10%
ENI
Repsol
0%
-10%
-20%
2009
100%
Galp
BG
80%
Tullow
60%
BP
TOTAL
Statoil
RDS
40%
ENI
Repsol
20%
RDS
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
0%
2002
2003
2004
2005
2006
2007
2008
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
137
January 15, 2010
Global: Energy
Production: BG the clear winner from Brazil and Australia

Although we prefer cash flow as a metric to judge a companys potential, we note that production is still an important metric to the
market and therefore look at the likely net entitlement production growth from each companys Top 280 portfolio. Of the Europeans,
we believe that, unsurprisingly given its investment, BG is the company set to generate the most transformational production
growth in the medium term. Shell is also advantaged due to its Qatari portfolio and other projects such as Athabasca and Perdido.
Statoil is also set for strong production growth in the medium term from relatively low cash flow projects such as Marcellus Shale
and Peregrino. The other companies tend to close the gap between themselves and Statoil by c.2015E, although Shell continues to
grow thanks to further assumed expansions of Athabasca and other diverse projects such as Mars B and Prelude.
We also assess the proportion of production that comes from low decline fields in each companys Top 280 portfolio an indication
of longevity. We define a low decline project as one in which the plateau lasts for 10 years or more. A clear bifurcation exists
between the European Majors on this metric with BG (Curtis LNG), Shell (Pearl, Kashagan, Gorgon etc.), TOTAL (Kashagan, Ichthys)
and ENI (Kashagan and African LNG) all developing projects which provide substantial levels of low decline production which
should support production growth in the future. Repsol, BP and Statoils focus on deepwater projects mean that these low decline
projects represent a smaller proportion of their respective portfolios, although we note that beyond this timeframe, Statoils
Leismer project has the potential to provide substantial low decline growth.
Exhibit 192: BG, Shell, TOTAL and ENI see low decline portfolios
Exhibit 191: BG a winner; Statoil and Shell see medium-term growth
40%
50%
35%
30%
Top 280 low decline production as a percentage of 2009 production
Top 280 net entitlement production as a percentage of 2009 reported production (rebased to zero)
% of production coming from low decline Top 280 projects
BG
25%
RDS
20%
Statoil
15%
10%
BP
Repsol
TOTAL
5%
0%
2009
ENI
2010E
2011E
2012E
45%
40%
35%
30%
BG
RDS
TOTAL
ENI
25%
20%
BP
Repsol
15%
Statoil
10%
5%
2013E
2014E
2015E
0%
2002
2003
2004
2005
2006
2007
2008
2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
138
January 15, 2010
Global: Energy
BG, Statoil, Total and Shell getting oilier

We believe that the Top 280 portfolio is material enough for many companies that it will substantially alter the outlook for future
production. We believe that one of the major impacts will be on the oil/gas mix of reserves and production.
We have assessed the net entitlement reserve life vs. the overall 2009 production to determine how this mix could change in the
future (Exhibit 193). In doing this, we have split reserves not according to hydrocarbon type, but according to what we believe is the
driver of the price. We assume that liquids, LNG and European gas is ultimately driven by the oil price, with locally priced gas
(including Henry Hub) trading on a more independent basis. We also assume that service contracts with a fixed remuneration fee
are not oil-levered. Finally we strip out pre-sanction oil sands projects on the back of concerns that sanctioning may be delayed,
meaning that the reserves have little immediate impact on a companys cash flows. On our estimates, most of the European
Integrateds have a greater weighting of oil levered reserves in their Top 280 portfolio, suggesting that the oil price will have an
increasing impact on future earnings; BG, TOTAL, Shell and Statoil have oil-based reserve lives that are more than twice their gas
levered reserve lives. For ENI, BP and Repsol, the impact of oil-levered reserves is less, with Repsols Latin American gas exposure,
BPs North American gas exposure and ENIs exposure to Latin American and Egyptian gas muting the impact of the companies oil
assets on a relative basis.
Exhibit 193:
Exhibit 194: European Top 280 oil and gas reserve lives
Reserve life of oil levered and gas levered reserves
Based on remaining net entitlement volumes vs. overall 2009 production; excludes
pre-sanction oil sands phases
Based on net entitlement volumes and 2009 production; excludes pre-sanction oil
sands phases
40.0
60.0
35.0
50.0
40.0
25.0
20.0
Years
Reserve life (years)
30.0
30.0
15.0
20.0
10.0
10.0
5.0
0.0
BG
RDShell
BP
Oil levered reserves

Total
ENI
Statoil
Non-oil levered reserves
Repsol
0.0
BG
RDShell
BP
Top 280 hydrocarbon reserve life
Total
ENI
Statoil
Repsol
139
January 15, 2010
Global: Energy
Timing of operating cash flows: Chevron long-term winner; Devon and Suncor in medium term
Chevron is a reasonable performer in the short term (due to projects such as Perdido, Shenzi and Tombua Landana) but ramps up
impressively beyond 2015E, primarily due to contributions from its LNG portfolio (Gorgon, Wheatstone) and its Gulf of Mexico
portfolio (such as Jack and Buckskin). Exxon has a consistent incremental cash flow growth profile with its Middle Eastern portfolio
(Qatargas, Rasgas, Al Khaleej etc.) contributing strong growth in the short term, and diverse projects such as Gorgon, Kashagan
and West Qurna (especially through the cost recovery phase) contributing in the medium term. ConocoPhillips sees a significant
increase in its cash flow growth rate from 2015E, largely as a result of cash flows from APLNG and Shah, although Kashagan
provides the company with some nearer term growth. We expect Devons Top 280 cash flows also to grow over time, mainly as a
result of its unconventional gas position in the US, although we note that the continuing ramp up of Cascade and Chinook will also
benefit the company. We expect to see a steady expansion in Suncors Canadian heavy oil assets (such as Firebag and Mackay
River) which should provide continued growth, although we expect a downturn in cash flows from Firebag in 2017E as the tax
shield from initial costs ends. Fort Hills is too late to provide a substantial uptick in the time frame we look at (with production
beginning during 2018E). Occidental benefits from its stake in Zubair and our assumed second stage at Dolphin, that helps maintain
cash flow after the cost recovery period from Dolphin phase 1 ends. Marathons growth from 2015E onwards is a result of its
deepwater GoM and Angolan portfolios.
Top 280 operating cash flow as a percentage of corporate 2009E DACF (rebased to zero)
Exhibit 195: Operating cash flow from Top 230 projects as a percentage of normalised corporate cash flow (rebased to zero)
70%
60%
50%
Suncor
40%
Chevron
ConocoPhillips
Devon
30%
ExxonMobil
Marathon
20%
10%
Occidental
0%
-10%
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
140
January 15, 2010
Global: Energy
Capex timing: The Integrateds and Suncor are the big spenders in the US
As expected, those companies benefiting most from high operational cash flows are also those which look set to invest the most in
the short to medium term. Exxon is the big near-term spender with Kashagan, Kearl Lake and West Qurna the sources of
particularly significant spend. Even by 2018E, spend remains high on the long dated West Qurna, Kearl Lake and Kashagan projects.
Chevrons spend is muted in the short term but ramps up significantly in the medium term as the company spends on its LNG
portfolio before dropping off after 2015E as Wheatstone starts production. Conocos incremental spend in the short term is muted
as we expect spending to slow at the Foster Creek/Christina Lake and Peng Lai assets. From 2013E onwards, however, Conocos
Top 280 capex grows significantly, primarily due to its spend at APLNG, Shah and Greater Sunrise highlighting further the
companys strong gas/LNG portfolio. Suncors Fort Hills and Firebag assets should see significant expenditure, despite Fort Hills
not beginning production on our estimates until 2018E, but this is reflected in the duration of the portfolio (42 years vs. average of
33 years for the Top 230 overall). Occidentals capex spend grows from 2013E as a result of its investment in long-dated assets such
as Zubair and Joslyn while we expect Devons spend on its unconventional gas acreage and GoM to remain fairly constant until
Kaskida is fully ramped up at which point we see the companys visible deepwater spend begin to drop.
Exhibit 197: US Integrateds have largest proportion of spend on legacy

projects
Exhibit 196: Exxon top 280 capex to grow most rapidly in the short term
Top 280 capex as a percentage of 2009E capex (rebased to zero)

120%
40%
Chevron
Suncor
50%
ConocoPhillips
30%
ExxonMobil
20%
Occidental
10%
Devon
0%
Marathon
-10%
-20%
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
100%
Suncor
80%
Chevron
60%
ExxonMobil
ConocoPhilliips
40%
Marathon
Devon
Occidental
20%
0%
2002
2003
2004
2005
2006
2007
2008
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
141
January 15, 2010
Global: Energy
Production: Chevron the long-term winner of the majors, Occidental lags on net entitlement
We see Occidental lagging the group in incremental growth as a result of its relatively limited portfolio (consisting of only four
projects) combined with the fact that it gets hit relatively hard by the PSC effect on projects such as Dolphin and Zubair, especially
once costs have been recovered. Chevron, on the other hand, is the best performer of the Majors, with projects such as Bonga SW,
Jack/St Malo and Gorgon providing significant growth from 2014E. Suncor and Devon grow substantially from a relatively smaller
base.
After Suncor Conoco and Exxon end the next decade with the largest proportion of low decline production from their Top 280
portfolios on our estimates. Conocos is primarily a result of its Canadian portfolio and Kashagan, while Exxon benefits from its
Middle Eastern portfolio, Kashagan and Gorgon. It is worth noting, however, that with the exception of Hess, which lags, the
companies are relatively closely grouped in terms of how great a proportion low decline Top 280 assets are as a percentage of
production. Suncor benefits from its heavy exposure to the heavy oil win zone.
Exhibit 199: Suncor shows the lowest decline

% of production coming from low decline Top 280 projects
30%
30%
Chevron
25%
Marathon
ConocoPhillips
Devon
20%
Suncor
ExxonMobil
15%
Hess
10%
5%
Occidental
0%
-5%
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
Top 280 low decline production as a percentage of overall 2009 production
Top 280 net entitlement production as a percentage of 2009 reported production (rebased to zero)
Exhibit 198: Suncor and Devon see transformation al growth; Chevron is the
longer term integrated winner
ConocoPhillips
25%
Chevron
Suncor
Marathon
Exxon
20%
Occidental
15%
Devon
10%
5%
0%
2002
2003
2004
2005
2006
2007
2008
2009
2010E
2011E 2012E 2013E 2014E 2015E
2016E
2017E
2018E 2019E 2020E
142
January 15, 2010
Global: Energy
US Integrateds gaining oil leverage through LNG

All three US Integrateds have reserves that are relatively geared to the oil price, despite both ConocoPhillips and Chevron having a
greater proportion of gas and a lower proportion of oil in their portfolios relative to their currently booked reserves. To a large
degree, this is a result of the US integrated firms typically being more levered to the LNG market than their European counterparts
with all three seeing over 20% of their reserves in the LNG win zone (vs. the Europeans where only Shell crosses this threshold).
The relative lack of exposure to US unconventional gas relative to European peers is also highlighted in the lower reserve lives of
gas levered reserves.
Of the smaller companies, Suncors heavy oil assets make it very heavily exposed to oil. Its exposure would be greater, but we strip
out much of its heavy oil reserve on the basis that it has yet to be sanctioned. Occidentals position in the oil-rich Mukhaizna and
Joslyn assets is offset by the gas from Dolphin and the service contract exposure in Iraq (which we do not count as being oil
levered due to the fixed remuneration fee), while Marathons exposure to the Bakken Shale and Athabasca makes the company
more oil-levered.
Exhibit 200:
Exhibit 201: US Top 280 oil and gas reserve lives
16.0
sands phases
25.0
14.0
20.0
12.0
10.0
15.0
8.0
6.0
10.0
4.0
5.0
2.0
0.0

cc
id
en
ta
l
O
ar
at
ho
n
En
er
g
n
ev
o
D
r
nc
o
Su
ob
il
Ex
xo
nM
vr
on
on
oc
o
cc
i
O
C
he
Ph
ill
ip
s
al
de
nt
on
at
h
En
on
D
ev
M
ar
er
gy
r
Su
nc
o
il
nM
ob
Ex
xo
on
C
he
vr
on
o
co
Ph
ill
i
ps
0.0
Series3
Top 280 oil reserves vs Booked oil reserves
Top 280 gas reserves vs booked gas reserves
143
January 15, 2010
Global: Energy
Timing of operating cash flow: Rosneft short term, Petrobras medium term and INPEX/Gazprom
long term; Sinopec starts from a low base
The material expected ramp-up of Vankor, combined with first oil from Verkhnechonsk means that Rosneft is the clear near-term
winner in terms of incremental Top 280 cash flow growth. In the medium term Petrobras growth is substantial, coming mainly
from the companys pre-salt Santos assets. Although we expect Petrobras production to grow until 2020E, we expect the pace of
growth to steady from 2015E as production growth is offset by cost recovery ending and fields breaching thresholds for Special
Participation Tax in Brazil. We expect a substantial uptick in Top 280 production from INPEX from 2016E onwards as Ichthys begins
producing, with Frade and Kashagan providing near-term growth. Gazproms cash flow growth is also very strong in the back end,
with Kovykta and Bovanenko the main contributors (Bovanenko accounts for almost two thirds of 2018E incremental Top 280 cash
flow. ONGC sees a short-term uplift in 2011E as a result of the ramp-up of MBA, although this comes off over time as costs are
recovered, profitability thresholds breached and as the corporate tax rate increases from the minimum applicable level. while Lukoil
is a consistent grower as a result of its Russian portfolio (primarily Korchagina and Filanovskogo). Sinopec Corp is more muted
with the only contribution coming from Puguang, with the other assets being held by the parent. Woodsides transformational
growth comes from its Pluto LNG asset.
Exhibit 202: Operating cash flow from Top 280 Projects as a percentage of normalised operating cash flow (excl fields at plateau)
70%
Woodside
60%
50%
Petrobras
Rosneft
INPEX
Gazprom
40%
Lukoil
30%
CNOOC
20%
10%
Sinopec
ONGC
0%
-10%
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
144
January 15, 2010
Global: Energy
Capex timing: We expect a big relative uptick in Top 280 spend from Petrobras and INPEX
We expect Petrobras Top 280 spend to increase steadily as activity ramps up in the pre-salt Santos basin discoveries, making
Petrobras one of the largest proportional Top 280 spenders vs. its EM peers in the long term. INPEX sees the most significant uptick
in Top 280 capex, however, with substantial expenditure coming from its participation in Ichthys, Joslyn, Kashagan and Abadi. In
line with its production profile, Rosnefts spend is very high over the next few years as it ramps up Vankor and Verkhnechonsk,
before dropping to relatively low levels vs. its peers. Gazproms incremental Top 280 spend actually reduces in the long term, but
given the high base that it is starting from, with substantial amounts currently being spent at Bovanenko and Yuzhno-Russkoye, it
remains a high spender in Top 280 legacy projects relative to its overall corporate spend. We expect CNOOCs medium-term spend
to increase due to its Egina and Liwan assets. ONGC and Lukoil both have relatively muted Top 280 spends vs. the rest of their
portfolios compared to the rest of the EM group. Woodsides capex drops sharply in 2011E as Pluto comes online but then ramps
up once again to its relatively high base as other projects are developed (such as Pluto 2 and Greater Sunrise).
Exhibit 203: INPEX and Petrobras the big incremental long-term spenders
Exhibit 204: Gazprom still a significant investor from a relatively high base

60%
INPEX
25%
30%
20%
15%
CNOOC
Inpex
10%
Petrobras
Rosneft
5%
0%
Gazprom
-5%
Lukoil
-10%
Woodside
-15%
-20%
2009
Sinopec
2010E
2011E
ONGC
Rosneft
2012E
2013E
2014E
2015E
2016E
2017E
2018E
Rosneft
50%
Gazprom
Woodside
40%
Petrobras
30%
Lukoil
CNOOC
20%
Rosneft
ONGC
10%
0%
2002
2003
2004
2005
2006
2007
2008
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
145
January 15, 2010
Global: Energy
Santos basin gives Petrobras long dated oil reserve life; LNG projects result in oil leverage for
Woodside
There is significant divergence among the other global players in terms of how levered their future Top 280 portfolio is to either oil
or gas. Petrobas is, understandably, much more levered to oil due to the deepwater nature of its operations, although it is worth
noting that associated gas in these prospects along with more gas-levered plays such as Mexilhao and Jupiter also provide a
reasonable gas reserve life vs. current production. Woodsides LNG projects give it a substantial gas reserve life but, as we believe
that LNG will continue to trade in relation to the crude price, we believe that the companys Top 280 portfolio remains highly
levered to oil. Similarly INPEXs exposure to LNG via Abadi and Ichthys along with its stakes in the Kashagan and Joslyn projects
give the company a substantial level of reserves levered to the oil price. In Russia it is no surprise that Gazprom is more weighted
to gas and Rosneft more levered to oil (although Gazproms relatively low current oil production still results in a relatively high oil
reserve life for the company). Lukoil and PetroChina are relatively balanced while Sinopec Corps Puguang asset means its Top 280
portfolio is exclusively gas, with many of the oilier assets sitting in the parent company.
Exhibit 205: Reserve life of oil levered and gas levered reserves
Exhibit 206:
sands phases
40.0
Global Top 280 oil and gas reserve lives
60.0
35.0
50.0
40.0
25.0
30.0
20.0
15.0
30.0
20.0
10.0
10.0
5.0
0.0

Total Top 280 reserve life
hi
na
C
Pe
CN
tr
oc
Si
no
p
ec
co
r
ft
os
ne
il
Lu
ko
az
pr
om
s
br
a
Pe
tr
o
id
e
PE
IN
tro
c
Pe
W
oo
ds
hi
na
C
O
N
O
C
co
rp
Si
no
pe
c
os
ne
ft
R
ko
il
Lu
ro
m
az
p
G
Pe
tr
ob
ra
s
PE
X
IN
W
oo
ds
id
e
0.0
146
January 15, 2010
Global: Energy
Timing of operating cash flows: Nexen the winner from the smaller Americas companies
Despite our expectation that Nexens cash flows from Buzzard will begin to drop from 2010E, we believe that increasing
contributions from Long Lake and Usan will more than offset this effect, and result in a growing Top 280 base for the company.
Murphy experiences an initial uptick as a result of the continuing ramp-up of Kikeh which we believe should generate a full years
capacity production in 2010E but believe that the start-up of Gumusut and a ramp-up of production from the companys Montney
Tight Gas asset will be insufficient to offset the decline in cash flows from Kikeh that we expect from 2015E. Cenovus sees more
muted cash flow growth than its peers with Foster Creek/Christina Lake providing fairly stable cash flows. Hess benefits from
Shenzi and Bakken Shale in the near term, and, with the Shenzi plateau now longer than we had previously modelled, these cash
flows remain relatively strong in the medium term. Anadarkos growth is muted until 2011E, after which it sees growth from Jubilee
and Caesar Tonga and, later, Shenandoah and Vito.
Exhibit 207: Operating cash flow from Top 280 projects as a percentage of normalised corporate cash flow (excl fields at plateau)
120%
100%
Nexen
80%
60%
40%
Murphy
Anadarko
Hess
20%
Cenovus
0%
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
147
January 15, 2010
Global: Energy
Capex timing: Nexens heavy oil portfolio to create high expenditure in return for long duration
We expect Suncor and Nexen to be the big spenders of the smaller Americas companies, reflecting the size and capital intensity of
their heavy oil assets. Nexens Long Lake asset takes up the majority of the companys spend. While capital intensive at the
beginning, we believe that this expenditure in heavy oil should allow for a greater duration of portfolio Nexen seeing a Top 280
duration of reserve life of 36 years vs. 33 years for the average Top 280 portfolio of the 58 companies analysed in this report. In
contrast, Anadarkos capex spend is largely focused on high return, but shorter dated deepwater assets such as Jubilee,
Shenandoah and Caesar Tonga. We expect Talisman to spend primarily on its unconventional gas assets in the US, with Marathon
spending on its Angolan and GoM deepwater portfolios, and its share of Athabasca. The peaking of Kikehs production should see
Murphys Top 280 capex begin to drop.
Exhibit 209: Committed capex from Top 280 projects as a % of 2009E capex
Exhibit 208: Nexen and Suncor heavy oil expenditure leads them to be
biggest spenders
80%
Top 280 operating cash flow as a percentage of corporate 2009E capex(rebased to zero)
140%
60%
40%
Nexen
20%
Hess
Anadarko
0%
Murphy
-20%
Cenovus
120%
100%
80%
Nexen
60%
40%
Hess
20%
Anadarko
Cenovus
Murphy
-40%
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
0%
2002
2003
2004
2005
2006
2007
2008
2009
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
148
January 15, 2010
Global: Energy
Oil leverage more apparent in smaller Americas firms

The smaller Americas companies are generally more levered to oil. Cenovus exposure is the result of its participation in Foster
Creek & Christina Lake and Narrows Lake while Nexens reserves are skewed by its exposure to Long Lake, although the oily
Buzzard field also makes a large contribution. Murphys portfolio is also biased towards oil and is mainly the result of its Kikeh
asset.
Hess, Anadarko and Talisman show much lower reserve lives that Cenovus and Nexen and all have lower Top 280 reserves than
they have booked in both oil and gas. This is simply an indication of the fact that their portfolio is more diverse than that simply
captured in our Top 280 universe. Anadarkos deepwater exploration success leaves its Top 280 portfolio far more levered to oil
than gas, while Talismans acreage positions in Marcellus and Montney result in a far higher gas-levered exposure. Hess is
reasonably well balanced. Hess is the most balanced of this group, holding both oil assets (such as Bakken Shale acreage and GoM
assets) and more gassy assets such as JDA and Snohvit.
Exhibit 210:
Exhibit 211: Smaller Americas Top 280 oil and gas reserve lives
sands phases
25.0
16.0
14.0
20.0
12.0
10.0
15.0
8.0
10.0
6.0
4.0
5.0
2.0
0.0
0.0
Nexen
Cenovus
Hess

Murphy
Talisman
Anadarko
Nexen
Cenovus
Hess
Murphy
Overall Top 280 reserve life
Talisman
Anadarko
Top 280 gas reservelife
149
January 15, 2010
Global: Energy
Summary of key Top 280 Projects metrics by company
Exhibit 212: Summary of key Top 280 Projects metrics by company
Duration
(yrs)
Total capex
(incl infr)
Total capex
(US$/bl)
Upstream
F&D (US$/bl)
IRR
NPV 2010 / bl
(US$/bl)
NPV as % of
current EV
% change in
P/I vs Top
230
Technical
Political
Overall
11,406
9,024
8,623
6,056
7,898
5,337
3,917
8,187
10,342
8,284
6,768
4,318
5,975
3,525
19,593
19,365
16,908
12,823
12,216
11,312
7,441
85%
108%
146%
115%
121%
113%
115%
32
33
31
33
32
36
31
156,333
144,606
152,027
111,387
101,322
90,134
60,230
5.3
5.4
6.7
7.0
5.9
6.9
4.8
4.1
4.5
4.1
4.8
4.5
4.8
3.7
23%
26%
18%
22%
22%
16%
21%
1.72
1.86
1.59
1.76
1.69
1.50
1.77
3.8
4.6
5.3
6.0
4.2
3.1
4.5
39%
58%
56%
62%
43%
40%
43%
-5%
-1%
-5%
-6%
-3%
2%
-12%
1.1
1.1
1.1
1.3
1.2
1.1
1.4
1.1
1.3
1.1
1.4
1.5
0.8
1.9
2.2
2.4
2.2
2.6
2.7
1.9
3.3
5,457
3,683
1,505
1,038
566
319
124
86
84
3,600
4,708
915
1,195
27
0
0
0
0
9,057
8,391
2,420
2,233
593
319
124
86
84
173%
341%
8641%
105%
189%
49%
536%
8%
53%
30
34
36
30
26
36
27
27
16
70,136
65,358
21,794
12,634
5,279
4,720
2,098
945
412
6.2
6.9
8.8
5.1
5.0
7.6
2.3
4.2
4.5
4.5
5.6
8.4
4.5
3.9
7.6
2.2
4.2
4.5
24%
23%
24%
28%
34%
61%
46%
29%
37%
1.71
1.90
1.81
2.16
2.70
2.30
2.94
2.29
3.50
5.4
5.2
3.9
6.1
9.7
8.3
3.3
6.4
16.9
62%
67%
50%
28%
63%
196%
547%
8%
97%
1%
3%
19%
4%
3%
10%
na
7%
1%
1.2
1.4
2.1
0.8
0.6
0.3
0.0
0.7
0.0
1.0
1.5
1.6
2.1
2.0
2.1
3.0
1.0
1.7
2.2
0.2
3.7
2.9
2.6
2.3
3.0
1.8
1.7
2,630
2,252
1,652
1,083
996
718
585
574
546
545
399
131%
93%
138%
76%
33%
32%
68%
102%
24%
38%
147%
32
29
30
28
25
31
27
42
23
37
23
23,901
18,767
18,858
13,512
10,550
6,792
3,002
3,462
5,707
10,424
2,621
9.1
7.7
10.1
9.3
3.6
7.1
4.6
6.0
8.8
19.1
4.1
9.1
7.6
7.3
7.7
2.7
4.6
4.6
6.0
8.7
16.4
3.6
36%
26%
21%
22%
24%
17%
33%
44%
37%
32%
25%
1.70
1.69
1.60
1.66
1.60
1.44
2.33
1.98
2.36
1.48
2.04
4.8
6.0
7.0
8.3
2.2
3.5
5.5
4.1
11.6
7.3
10.6
44%
43%
53%
59%
11%
9%
24%
28%
18%
15%
58%
7%
10%
7%
2%
-6%
10%
61%
27%
-2%
11%
-4%
1.0
1.2
0.8
0.8
0.7
0.8
0.6
1.0
1.0
1.0
0.6
0.8
0.7
1.0
1.1
1.1
1.0
1.7
0.7
1.4
0.7
1.0
1.8
1.9
1.8
1.9
1.8
1.8
2.3
1.7
2.4
1.7
1.7
P/I ratio
As % of 2008
proved
reserves
Risk
Total
(mnboe)
Profitability
Gas (mnboe)
Capex (US$mn) **
Oil (mnbls)
Top 280 Projects reserves *
Major
ExxonMobil
BP
RDShell
Chevron
TOTAL
ConocoPhillips
ENI
EUR Regional / E&P
Statoil
BG
GALP
Repsol
Tullow
Dragon Oil
Heritage
OMV
Soco
US Regional
Chesapeake
0
2,630
Devon Energy
990
1,262
Marathon
1,560
92
Hess
648
435
Occidental
668
328
Apache
26
692
Noble Energy
127
458
Newfield
0
574
Anadarko
508
38
EOG Resources
359
186
Murphy
335
64
* reserves displayed on a net entitlement basis
** per barrel figures displayed on a working interest basis
150
January 15, 2010
Global: Energy
Exhibit 212 cont'd: Summary of key Top 280 Projects metrics by company
Duration
(yrs)
Total capex
(incl infr)
Total capex
(US$/bl)
Upstream
F&D (US$/bl)
IRR
NPV 2010 / bl
(US$/bl)
NPV as % of
current EV
% change in
P/I vs Top
230
Technical
Political
Overall
7,297
5,620
2,101
1,322
1,536
0
16
0
0
155
254
0
1,478
662
7,297
5,620
2,256
1,576
1,536
1,478
678
331%
287%
244%
176%
128%
72%
56%
42
37
36
30
37
31
33
39,817
49,999
19,223
10,391
5,782
13,865
6,113
5.4
8.9
8.5
6.0
3.8
9.4
7.9
3.9
2.9
4.3
5.9
3.8
9.4
7.6
22%
12%
23%
31%
22%
32%
28%
1.72
1.29
1.83
1.97
1.96
1.53
1.69
2.8
4.2
7.9
4.2
4.3
4.1
4.3
31%
52%
110%
na
29%
20%
16%
29%
-7%
10%
-12%
na
10%
0%
0.8
0.8
0.8
0.7
0.8
0.9
0.9
0.5
0.5
0.6
0.7
0.5
0.6
0.8
1.3
1.3
1.4
1.4
1.3
1.5
1.6
14,770
4,756
1,328
0
169
710
415
149
5,322
3,392
2,220
2,088
1,667
635
512
685
20,092
8,148
3,548
2,088
1,837
1,345
927
833
137%
38%
216%
52%
132%
39%
17%
88%
32
31
38
26
22
29
39
27
135,188
38,520
38,991
3,245
8,643
12,489
5,308
3,957
6.7
3.4
7.7
1.6
3.4
5.9
3.4
3.6
6.5
3.4
5.1
0.8
3.4
5.2
3.2
3.4
29%
21%
16%
12%
35%
24%
29%
24%
2.22
1.93
1.59
1.39
2.06
1.84
2.21
2.22
8.0
2.9
3.7
5.4
6.5
7.2
7.8
6.4
74%
12%
93%
10%
20%
21%
25%
43%
12%
-4%
0%
-4%
4%
-9%
-26%
5%
1.5
0.6
1.3
0.5
0.4
0.7
0.5
0.3
1.6
1.2
1.1
1.6
1.9
1.9
1.9
2.1
3.1
1.8
2.3
2.1
2.3
2.6
2.4
2.4
4,566
2,861
5,092
2,659
569
28,188
2,647
304
1,481
0
32,754
5,508
5,396
4,140
569
29%
28%
24%
101%
7%
45
29
43
43
29
133,693
23,551
25,235
15,930
1,428
4.0
2.9
4.4
3.8
2.5
2.0
2.6
3.0
3.3
0.4
18%
21%
28%
20%
30%
2.14
1.89
1.79
1.82
2.19
4.7
3.8
4.8
3.5
11.9
82%
57%
27%
118%
27%
18%
-23%
-14%
-3%
0%
1.1
0.9
1.0
0.7
1.0
1.7
1.8
1.7
1.7
1.7
2.8
2.7
2.7
2.4
2.7
536
1,450
705
48
0
871
554
387
43
291
0
11
2,355
0
636
1,129
1,042
0
4
0
264
0
273
217
2,891
1,450
1,341
1,178
1,042
871
558
387
307
291
273
228
218%
460%
98%
227%
141%
288%
na
56%
620%
101%
na
na
32
31
29
28
45
40
30
33
27
27
25
41
27,029
13,456
8,543
15,813
10,052
7,707
4,004
2,022
3,832
1,715
2,708
1,981
9.3
9.3
6.4
12.8
9.6
8.8
2.1
3.1
12.5
8.1
5.3
4.5
3.6
7.1
4.1
6.5
6.4
3.8
2.1
2.2
5.6
0.0
5.1
1.9
13%
10%
28%
15%
14%
13%
23%
44%
15%
29%
11%
16%
1.47
1.19
2.48
1.45
1.52
1.46
1.86
3.37
1.59
3.16
1.22
1.71
6.9
0.8
15.1
3.3
2.3
5.5
6.6
16.1
5.8
15.4
1.5
5.7
53%
na
10%
39%
14%
na
23%
81%
26%
17%
na
na
-1%
-3%
5%
-10%
-9%
8%
-4%
-13%
-12%
-1%
-14%
-9%
1.0
0.8
1.3
0.9
1.1
0.8
0.5
0.4
1.0
1.5
0.3
0.6
0.6
0.5
0.7
0.9
0.6
0.5
0.9
1.9
2.1
0.9
3.0
2.0
1.7
1.3
0.2
1.8
1.7
1.3
1.3
2.3
3.1
2.4
3.3
2.5
P/I ratio
As % of 2008
proved
reserves
Risk
Total
(mnboe)
Profitability
Gas (mnboe)
Capex (US$mn) **
Oil (mnbls)
Top 280 Projects reserves *
Canada Regional
Suncor
Nexen
Husky Energy
Cenovus
Encana
Talisman
EM Regional
Petrobras
Petrochina
INPEX
Sinopec Corp
Reliance
CNOOC
ONGC
PTTEP
Russian
Gazprom
Lukoil
Rosneft
TNK
Surgutneftegaz
Other
Woodside
UTS Corp
BHP Billiton
Santos
Origin Energy
OPTI Canada
Maersk
Cairn India
Oil Search
SASOL
Daewoo
Nippon
* reserves displayed on a net entitlement basis

** per barrel figures displayed on a working interest basis
151
January 15, 2010
Global: Energy
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January 15, 2010

280 projects to change the world

Services key beneficiaries of new projects

The Winners of the last six editions of this

We believe that 2010 will see the largest number

Performance of company categories

Michele della Vigna, CFA

The Goldman Sachs Group, Inc.

Goldman Sachs Global Investment Research

Selecting Oil Services winners

We have screened our global Oil Services

OPEC at full utilization by 2011-12

Non-OPEC production likely to disappoint

Peer-relative share price performance

Delivery will be key to value creation

Source: Datastream, Goldman Sachs Research estimates.

Increasing technical risk requires strong delivery

Global Investment Research

January 15, 2010

The Top 280 Projects

All regions show a disappointing delivery of oil projects

GS SUSTAIN winners continue to do well in Top 280

Top 280 assets likely to be a significant driver of M&A

Lower political risk comes at the cost of higher technical risk

Win zones in the Top 280

Company competitive positioning

Top 280 portfolio characteristics by company

Summary of key Top 280 Projects metrics by company

Europe Energy - Michele della Vigna,

Asia Energy - Kelvin Koh,

Integrated Oils, Refining

Asia ex-Japan, India

Oil Services, Drillers

European Integrated Oils

Goldman Sachs Global Investment Research

January 15, 2010

Key findings from the Top 280 Projects

Identify the winners. Page 5

The Winners in the past six editions

This years winners are: BG, Shell,

Top 280 is getting bigger and more material. Page 22

We now model 430 bnboe of reserves that will

Non-OPEC supply decline likely to lead to demand rationing pricing. Page 29

Recent trends of poor delivery and increasing decline

We believe that 2010 will see the largest number of new

We have also tested the ability of companies to add value

We have identified eight potential M&A targets

Detailed analysis of the win zones. Page 92

Heavy Oil, p101

Other themes: PSC page 69; Risk page 83

New cost environment

Company charts, page 120

Source: Goldman Sachs Research estimates.

Goldman Sachs Global Investment Research

January 15, 2010

Peer-relative share price performance

High reward, near term

Low or average exposure

Low returns, long term

Goldman Sachs Global Investment Research

January 15, 2010

Goldman Sachs Global Investment Research