Energy: Oil & Gas - Bahamas Petroleum Company Plc

November 5, 2010 Europe: Energy: Oil & Gas - E&P
The M&A and commodity price screens
We have also constructed screens to gain exposure to M&A and our bullish commodity price view. We highlight companies with
undervalued, concentrated resource (M&A screen), smaller companies which cannot fully monetize their large assets without a cash
injection (Unrealised potential) and companies which have assets that could be of interest to NOCs (Strategic Assets). Our
commodity leverage screens highlight those companies with high oil price sensitivity and exposure to unconventional resources.
Exhibit 9: We have constructed three M&A screens and two commodity price screens
M&A screens Commodity price screens
M&A Unrealised potential Strategic assets Oil price leverage Unconventional resource
DESCRIPTION Concentrated and sizable resource Stocks with high‐class assets that Our analysis suggests that large, We are constructive on the oil We believe that higher commodity
in core valuations are attractive have insufficient cash to fully oily assets are attractive to NOCs price with a forecast price of prices should encourage additional
value targets for potential industry develop these trade at a discount who are willing to pay premiums US$100/bl in 2011. Stocks investment in unconventional
acquirers
in our view. Attractive as M&A to equity market valuations. exposed to oily assets with higher resource technology as well as
candidates as a stronger balance Buying companies with significant operating leverage and licence making more marginal fields
sheet can unlock additional NPV value in these types of assets based fiscal regimes are the most profitable. We include companies
therefore offers exposure to an leveraged to the commodity with material exposure to
NOC / equity market discount rate
unconventional resource plays in
arbitrage
this screen
SCREENING
CRITERIA
Source: Goldman Sachs Research.
* Core value offers over 30%
upside to current valuations when
valued at the forward curve and
our costs of capital
* >95% of value concentrated in
one region
* Over 50% of company's
valuation in an asset whose value
could be increased by greater than
30% due to a significant capital
injection
* Over 100 mnboe net
recoverable in the asset
* More than 30% of company's
value sits in a "strategic" asset
(>200 mnboe)
* Net stake is greater than 50
mnboe
* Asset is oil, LNG or EM based gas
* Sensitivity to a US$10/bl move in
the oil price of greater than 20%
without inflation (15% with
inflation)
* Greater than 90% of reserves in
oil price levered barrels
* Low portfolio risk
* Greater than 70% of value lies in
either CBM, shale gas or shale oil
AV UPSIDE 80% 87% 38% 55% 72%
COMPANIES
Amerisur Igas Great Eastern Energy Noreco Igas
Global Energy Development Global Energy Development Bankers Petroleum Nautical Petroleum Norse Energy
Northern Petroleum Norse Energy Green Dragon PA Resources Great Eastern Energy
Norse Energy Nighthawk Energy Dragon Oil Igas Nighthawk Energy
Det Norske Great Eastern Energy Soco Bankers petroleum Green Dragon
Nighthawk Energy Gulf Keystone
Great Eastern Energy Heritage Oil
Bankers petroleum Rockhopper
Igas Tullow
Green Dragon Cove Energy
DNO
Goldman Sachs Global Investment Research 10