Energy: Oil & Gas - Bahamas Petroleum Company Plc

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November 5, 2010 Europe: Energy: Oil & Gas - E&P M&A: Companies with cheap, concentrated core value are attractive M&A candidates We believe that acquirers are most interested in buying discovered resources, with recent transactions seemingly not focusing on exploration assets. The last three corporate transactions in our E&P coverage universe (Burren, Venture and Dana) had an average of c.86% of their value in core assets at the time of the transaction. As a result we believe that assets which exhibit high upside to core valuations are of particular interest in any M&A screen. We would regard those companies with more than 30% potential upside as being particularly attractive as we believe that this level of upside is sufficient to justify a control premium and to begin providing an acquirer with upside to their purchase while still giving exploration for free. We have analysed the companies in our universe for upside to core value using what we regard as being a commercial cost of capital (typically 10%-15%) in Exhibit 56. Exhibit 56: Upside to core value is a key determinant of attractiveness to industry buyers in our view Upsides excluding adjustments Upside to core value 300% 250% 200% 150% 100% 50% 0% ‐50% ‐100% ‐150% Global Energy Development Igas Nighthawk Energy Panoro Northern Petroleum Norse Energy Det Norske Amerisur Great Eastern Energy Bankers petroleum Green Dragon Maurel & Prom Valiant Petroleum Aminex Plc Nautical Petroleum Bowleven Enquest Ithaca Dragon Oil Faroe Petroleum Soco Coastal Energy Rockhopper PA Resources Regal Premier Oil Gulfsands Salamander Dana Petroleum Melrose Resources Aurelian Serica Heritage Oil JKX Noreco Lundin Petroleum Tullow Encore Cove Energy Hardy Oil DNO Sterling Energy Dominion Gulf Keystone Borders and Southern Falkland Oil & Gas Tower Resources BPC Chariot Oil & Gas Desire Petroleum Max Petroleum Source: Goldman Sachs Research estimates. Goldman Sachs Global Investment Research 46
November 5, 2010 Europe: Energy: Oil & Gas - E&P Exhibit 57: Cross-continent deals are rare Corporate deals since 2006 by regional spread Source: Herold HIS. CORPORATE CROSS COUNTRY 2% M&A: Geographical concentration also a positive in our view We also believe that a geographical concentration is a positive when assessing M&A candidates. We have analysed corporate deals performed since the beginning of 2006 and found only 5% that have involved assets in more than a single continent. We therefore believe that a geographical focus results in a more attractive acquisition candidate as it provides a simpler portfolio, and enhanced ability to exploit any fiscal or operational synergies. As a result, we screen the companies in our coverage universe to determine the concentration of the largest area of value, viewing high concentration of discovered value in a single region as a positive indicator for potential M&A. CORPORATE CROSS CONTINENT 5% CORPORATE SINGLE COUNTRY 93% Exhibit 58: We therefore favour regional concentration in our M&A analysis % of discovered resource value in a single region Source: Goldman Sachs Research estimates. Goldman Sachs Global Investment Research 47 % value in a single region 120% 100% 80% 60% 40% 20% 0% Faroe Petroleum Rockhopper Max Petroleum Noreco Bowleven Coastal Energy Green Dragon Bankers petroleum Hardy Oil Chariot Oil & Gas Global Energy Development Norse Energy Enquest Nighthawk Energy Ithaca Great Eastern Energy Igas Dragon Oil Amerisur Salamander Valiant Petroleum Aurelian Borders and Southern Desire Petroleum Falkland Oil & Gas Dominion BPC Nautical Petroleum Det Norske Encore Gulf Keystone Cove Energy Northern Petroleum JKX Soco Regal Maurel & Prom DNO Tower Resources Gulfsands Lundin Petroleum Dana Petroleum Tullow Sterling Energy Heritage Oil Panoro Serica Aminex Plc Premier Oil PA Resources Melrose Resources
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Energy: Oil & Gas - Bahamas Petroleum Company Plc

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