Energy: Oil & Gas - Bahamas Petroleum Company Plc

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November 5, 2010 Europe: Energy: Oil & Gas - E&P Ratings, target price and estimate changes for currently covered companies We adjust the 12-month target prices of the companies currently under our coverage, primarily as a result of moving to a valuation methodology using an US$85/bl flat oil price. Other specific factors that impact our target prices are: � Updating exploration pipeline and adding additional value for exploration around the Avaldsnes prospect for Lundin � Appraisal failure at the TGD prospect and a dry well at the D-Prospect in Congo for Soco � West Rochelle success for Premier Exhibit 19: 12-month target price and ratings changes for companies currently under our coverage Target price changes Current Previous Company Currency Old rating New rating New target price price Upside target price % change Risks to target price Lundin SEK Neutral Sell 64 68 -6% 62.0 2.9% Greater than expected exploration success, especially around Alvadsnes in Norway, and weak commodity prices Premier p Neutral Neutral 1932 1706 13% 2163.6 -10.7% Exploration failure at Catcher, cost overruns in developments and weak commodity prices Salamander p Buy Buy 337 210 60% 364.6 -7.7% Weakening SE Asian gas price environment, exploration failure Soco p Neutral Neutral 391 324 21% 589.8 -33.7% Development problems on TGT Tullow p Buy Neutral 1443 1214 19% 1662.2 -13.2% Greater than expected exploration failure, delays or cost overruns in development or a failure to progress Ugandan farm out Heritage p Buy Neutral 433 348 24% 466.3 -7.1% Negation / alteration of KRG oil contracts by Iraq, lower than expected recoverability rates, high CGT from Uganda Dragon p Neutral Neutral 523 452 16% 579.7 -9.7% Weaker than expected commodity prices, delays in production ramp up, poor well performance We remain Not Rated on Cairn Energy We exclude Dana (Neutral) as it is in the process of being delisted following its acquisition by KNOC Source: Goldman Sachs Research estimates, Bloomberg We also make the following adjustments to our earnings: Exhibit 20: EPS estimate changes for existing companies 2010E 2011E 2012E Old New % change Old New % change Old New % change Reasons for movements Dana p 127.07 127.07 0% 186.01 186.01 0% 229.98 229.98 0% Lundin SEK 2.95 2.33 -21% 6.10 5.04 -17% 6.79 5.60 -18% fx, removal of Salawati assets Premier USD 1.11 1.12 0% 2.98 2.98 0% 6.23 6.23 0% Salamander USD 0.01 -0.05 -596% 0.62 0.61 0% 0.73 0.73 0% Increase of exploration expense for 2010 Soco USD 0.13 0.13 0% 0.59 0.59 0% 1.18 1.18 0% Tullow USD 0.21 0.21 0% 1.07 1.07 0% 1.74 1.74 0% Heritage USD -0.01 -0.01 0% -0.01 -0.01 0% 0.08 0.07 -1% Dragon USD 0.79 0.79 0% 1.09 1.09 0% 1.21 1.21 0% Source: Goldman Sachs Research estimates. Goldman Sachs Global Investment Research 18
November 5, 2010 Europe: Energy: Oil & Gas - E&P Other industry themes Regional analysis: What, where and why We have divided the stocks in our expanded E&P universe into regions where a number of stocks have particular concentration. Based on our estimates, the market applies substantially different valuations to assets within the same country, despite making allowances for asset-specific differences. We believe Heritage Oil in Kurdistan, Nautical Petroleum in the UK and Det Norske in the Norwegian North sea offer particularly inexpensive exposure to their respective regions with IGas and Green Dragon screening as offering attractive value among their global gas-based peers. Risk assessment: Political and technical risks increasing for the subsector We analyse the technical and political risk for the companies under our coverage. We believe that as the larger, integrated companies begin to vacate areas of higher political risk, the smaller E&Ps are increasingly seeking high rewards in these areas. Although the re-rating potential in these areas can be vast, higher political risk has implications for the discount rates we use in valuing these assets. In line with the rest of the industry, we see technical risk increasing as companies ramp up expenditure in unconventional assets or increase exploration activities in deeper waters than before. Although we expect farm-outs to mitigate some of the disadvantages, this may cause a higher level of cost overruns and delays relative to that we have seen previously, increasing the importance of strong execution. We also see an increase in political risk in areas where the companies are currently exploring which may hamper the ability of the sector to farm out assets to large oil companies which appear to be becoming increasingly averse to political risk. GS SUSTAIN: Assessing corporate governance We apply our GS SUSTAIN framework to the E&P companies in our newly expanded universe. Our analysis of companies’ management of governance issues is designed to apply objective and quantifiable measures across key areas of corporate governance. We believe that these indicators provide an objective gauge of the extent to which ordinary shareholders’ interests are represented in board decisions, the degree of independent oversight of business performance and strategic decisions, as well as the alignment of management incentives with shareholder interests. Moving to US$85/bl valuation; coverage view now Attractive We previously valued the E&P coverage group using a blend of the forward curve and our front year oil price forecast. We have simplified this methodology and now use our long run oil price of US$85/bl flat to value the stocks in the universe. This is within 5% of the 2012 Brent price per the forward curve. Given the potential upside we see, despite this valuation methodology change, we upgrade our coverage view to Attractive from Neutral to reflect the potential we see in a large number of the stocks in our expanded universe. Goldman Sachs Global Investment Research 19
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