Energy: Oil & Gas - Bahamas Petroleum Company Plc

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November 5, 2010 Europe: Energy: Oil & Gas - E&P Oil price leverage: Ways to capture medium-term value from a bullish oil price view The companies in our oil price leverage screen exhibit high sensitivity to the oil price. This is usually the result of a combination of high operating or financial leverage, exposure to oil assets and a lack of exposure to production sharing contracts (PSCs) which generally reduce sensitivity to the commodity price. We exclude companies with high levels of risk from this screen in order to provide a cleaner exposure to our assumption of a rising oil price. Noreco, Nautical, PA Resources, Bankers and IGas are the stocks in our Oil Price Leverage screen. Exhibit 16: Oil price levered stocks typically have high operating leverage and exposure to oil assets located in licence regimes Sensitivity of company valuations to an increase in oil prices from US$85 to US$95/bl (assuming no inflation) % move in valuation from US$85/bl to US$95/bl 40% 35% 30% 25% 20% 15% 10% 5% 0% Regal Max Petroleum Noreco Falkland Oil & Gas Northern Petroleum Borders and Southern Nautical Petroleum Desire Petroleum Tower Resources Igas Rockhopper PA Resources Cove Energy Valiant Petroleum Encore Melrose Resources Bankers petroleum Faroe Petroleum Dominion Global Energy … Det Norske Premier Oil Serica Aurelian Chariot Oil & Gas DNO Dana Petroleum JKX Tullow Amerisur Enquest BPC Salamander Nighthawk Energy Lundin Petroleum Maurel & Prom Great Eastern Energy Dragon Oil Gulfsands Ithaca Panoro Aminex Plc Gulf Keystone Bowleven Coastal Energy Sterling Energy Soco Heritage Oil Hardy Oil Green Dragon Norse Energy Source: Goldman Sachs Research estimates. Goldman Sachs Global Investment Research 14
November 5, 2010 Europe: Energy: Oil & Gas - E&P Introducing the expanded coverage universe We initiate coverage of 41 stocks and resume coverage of 2. The average upside on our expanded universe is now 47% using an US$85/bl oil price which is consistent with our long term oil price and within 10% of the current three-year forward oil price. We initiate coverage of Rockhopper and Panoro as Buys and add the stocks to our Conviction List. Exhibit 17: 12-month price targets and ratings for our coverage universe ranked by liquidity Region / asset Market cap # Company grouping (USDmn) 1 Tullow Mixed 17,351 2 Cairn Energy Asia 8,581 3 Bankers petroleum Middle East 1,798 4 Dana Petroleum North Sea 2,680 5 Gulf Keystone Kurdistan 2,286 6 Lundin Petroleum Norway 3,258 7 Rockhopper Falklands 1,284 8 Premier Oil Mixed 3,196 9 Desire Petroleum Falklands 574 10 Encore North Sea 579 11 PA Resources North Africa 519 12 Maurel & Prom West Africa 1,818 13 Heritage Oil Kurdistan 1,597 14 DNO Kurdistan 1,425 15 Nautical Petroleum North Sea 511 16 Soco Asia Pacific 1,775 17 Enquest North Sea 1,661 18 Ithaca North Sea 599 19 Cove Energy East Africa 438 20 Bowleven West Africa 591 21 Dragon Oil Caspian 3,747 22 Noreco Norway 692 23 Max Petroleum Caspian 133 24 Chariot Oil & Gas East Africa 424 25 Faroe Petroleum Norway 484 26 Gulfsands Middle East 663 * Upside before liquidity adjustment includes: Equity issuance, warrants, options and strategic premium ** Upside to core before any adjustments Source: Goldman Sachs Research estimates. 3m average daily liquidity (US$mn) Balanced Impact of Exploration Clean upside Upside before liquidity adjustment * Upside after liquidity adjustment liquidity adjustment on valuation Upside to core value ** upside potential (12 months) Rating 51.9 12% 19% 19% 0% ‐35% 40% x x N 42.8 NR NR NR NR NR NR NR 31.9 49% 47% 47% 0% 44% 0% x x x B 29.3 6% 6% 6% 0% ‐5% 22% N 21.7 ‐19% ‐15% ‐15% 0% ‐69% 31% x S 21.2 ‐6% ‐6% ‐6% 0% ‐28% 74% S 19.6 113% 107% 107% 0% 2% 101% x x x CB 11.3 11% 13% 13% 0% ‐1% 33% N 11.2 120% 89% 89% 0% ‐104% 366% x x x B 9.7 ‐3% ‐10% ‐10% 0% ‐41% 44% S 8.7 60% 55% 55% 0% 1% 41% x B 6.2 39% 39% 39% 0% 31% 29% N 6.1 19% 24% 24% 0% ‐17% 128% x N 5.4 ‐26% ‐19% ‐19% 0% ‐55% 79% x x S 5.4 54% 52% 52% 0% 18% 28% x B 5.3 16% 21% 21% 0% 7% 32% x N 4.7 11% 13% 13% 0% 10% 1% N 4.5 9% 5% 5% 0% 9% 0% N 4.3 43% 43% 43% 0% ‐47% 71% x x N 4.2 52% 50% 50% 0% 17% 176% x x B 3.5 9% 16% 16% 0% 9% 1% x N 2.6 37% 36% 36% 0% ‐22% 180% x x N 2.0 166% 44% 44% 0% ‐106% 304% x N 2.0 13% 5% 5% 0% ‐100% 0% x N 2.0 34% 29% 29% 0% 8% 95% x N 1.9 27% 22% 22% 0% ‐2% 61% N Goldman Sachs Global Investment Research 15 explorers Short Term explorers Medium Term explorers New basin plays Screens High binary risk M&A Unrealised potential Strategic assets Oil price leverage Unconventional Resource
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