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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (177668)	4/24/2013 12:00:26 PM
From: Dennis Roth	5 Recommendations Read Replies (1) \| Respond to of 206159

2012 Finding and Development Cost Study Exploration & Production (Citi) Detailed Analysis of 48 Independents and 12 Integrateds 22 April 2013 ¦ 260 pages ir.citi.com Independents’ Aggregate Fully-Loaded F&D Costs Surge 154%... – The aggregate fully-loaded F&D tab for our study group of 48 independents surged ~154% to $44.17/BOE in 2012 vs. $17.39/BOE in 2011 and the five-year average of $16.88/BOE. The increase was predominantly due to negative domestic natural gas reserve revisions and an uptick in development costs associated with oil/liquids activity. ...Driven By Negative Natural Gas Reserve Revisions... – On a worldwide basis, a fifteen-fold yr/yr rise in total reserve revisions drove the fully-loaded F&D increase. Importantly, the 4,279 MMBOE of total negative revisions consisted of 4,639 MMBOE of negative natural gas revisions due to weak domestic prices and technical revisions, offset by 360 MMBOE of positive oil & liquids revisions. Further, companies shifted drilling plans to oil and liquids-rich plays such that dry natural gas activity was removed from their five-year plans (period mandated by the SEC to book proven reserves). ...And Underscoring A Sharp Drop In Overall Economic Returns – After-tax cash flow per BOE produced by the independents declined by ~9% year-over-year to $25.36/BOE. Thus, the group's RRE ratio, our long-held measure of profitability and relative propensity for growth, fell sharply to 0.6x last year. This is significantly lower than the 1.6x ratio in 2011, 2.2x in 2010 and the 15-year average of ~1.7x. But excluding the negative natural gas revisions, the 2012 ratio rises to 1.3x. The Integrateds’ Fully-Loaded Tab Increases 45%... – The aggregate fully-loaded F&D tab for our study group of 12 integrateds rose ~45% to an all-time high of $29.72/BOE last year. The rise was driven by a drop in reserve bookings concurrent with higher total E&D spending due to a surge in domestic oil and liquids drilling activity while net reserve revisions were positive due to reserve additions outside of the U.S. ...While Drill Bit Tabs For Both The Independents And Integrateds Rose – Drill bit F&D costs (excluding acquisitions & revisions) for the independents rose ~14% yr/yr to $19.32/BOE (vs. the five-year average of $15.67/BOE), driven by the continued shift to oil & liquids-rich regions and accelerated drilling activity. Similar to the past few years, the integrateds' drill bit F&D tab was more than double that of the independents given their greater international focus and increased ~47% yr/yr to $40.67/BOE. Worldwide Drill Bit Reserve Replacement Fell In 2012... – Worldwide reserve replacement via the drill bit fell for both the independents and integrateds last year with continued disparity between the two – independents at 197% vs. 229% in 2011, and the integrateds at 68% vs. 89% in 2011. ...While U.S. Natural Gas Reserve Replacement Also Declined – U.S. natural gas reserve replacement via the drill bit in aggregate for the independents and integrateds declined slightly last year to 177%. However, both the independents and integrateds incurred significant negative domestic natural gas reserve revisions. Thus, including revisions, aggregate U.S. natural gas reserve replacement via the drill bit for the combined groups was -45% last year vs. 167% in 2011. Top Picks – At this juncture, among our top picks are APC, COG, EOG, NBL and PXD.

To: Dennis Roth who wrote (177668)	5/1/2013 9:08:20 AM
From: Dennis Roth	1 Recommendation Read Replies (1) \| Respond to of 206159

Deep Dive Into SMID Energy: Less Of A Case For Gassy E&P’s, Prefer Hybrids & Oily E&P’s For The Long Run May 1st, 2013, 20 slides doc.research-and-analytics.csfb.com Updating Our Outlook For SMID E&P’s: In this report we update our analysis on the three SMID E&P baskets – “SMID Oily”, “SMID Hybrid” and “SMID Gassy” – that we began tracking in mid November. Names were classified with the help of CS Small/Mid Cap E&P analyst, Mark Lear, and have been updated for 2012 reserves data. Our Bottom Line: We can no longer make a strong case for the SMID Gassy group over the long term as sentiment has shifted away from the trade and revisions trends have stalled. We now like SMID Hybrids and SMID Oily E&P’s best for the longer term. Seasonality trading patterns indicate that the Gassy trade could continue to work through the rest of 2Q. If this does occur, we see it as an opportunity to rotate back into Oily/Hybrid names as these groups tend to lead in 3Q and 4Q. SMID Gassy Names Are Outperforming YTD, After Strong Relative Performance In March & April: The SMID Gassy group lagged both the SMID Oily and SMID Hybrid baskets in January and February, but in March & April the Gassy names have outperformed the other two baskets significantly, and the SMID Gassy basket is now leading in 2013. SMID Hybrids outperformed in January after a strong 2H12, but have failed to lead since. We note that since 2009, Gassy names have tended to outperform in 2Q, while Hybrids and Oily E&P’s lead in 3Q and 4Q. Less Appeal For SMID Gassy Names, Sentiment Has Shifted: In mid-February we got more constructive on the SMID Gassy basket as SMID investors were interested in low quality coming into 2013 and we thought Gassy names could benefit from a low quality rally since this group has the lowest ROE’s and highest debt levels of the three baskets. SMID investors also favored Gassy names over Oily names coming into 2013 according to our December SMID investor survey. However in our latest SMID investor survey (taken March 21 st-April 2nd), sentiment shifted back towards high quality and Oily names, detracting from our positive view on the SMID Gassy basket. Additionally, revisions trends have stalled and growth has been weak for this group. The main positive that remains for Gassy names is valuations, which remain attractive on most metrics despite recent leadership. A second positive is that this group has not been highly owned by small/SMID investors in the past and SMID investors have had a greater thirst for new ideas in 2013. CS SMID E&P analyst Mark Lear is not constructive on the Gassy names in his coverage universe, with Neutrals on REXX, CRK and PVA and Underperform ratings on CRZO and FST. SMID Hybrids’ Valuations Have Improved: Along with Oily E&P’s, this is our preferred basket longer term. We like that this group has high ROE’s and ROC’s, as SMID investors were incrementally more positive on the high quality trade in our latest survey. Earnings revisions trends have also started to rise again, but are still below past peaks and have room to improve (typically good for performance). Valuations have improved since mid February and the group looks attractive again on all metrics we track. Our main concern is that SMID investors had extremely high ownership for several of these names as of 4Q12. We have been cautious on crowded names (across all sectors) due to (1) lack of incremental buyers, (2) small cap investors’ renewed thirst for new ideas (3) the seasonality of funds flows and their tendency to fade over the summer. Both of Mark Lear’s top picks, PDCE and GPOR, fall into the Hybrid group. He also has Outperform ratings on ROSE and SFY within this basket. Intrigued By SMID Oily Names, Like That This Group Is High Quality: This group is high quality (high ROE’s/ROC’s) relative to the other two baskets and earnings revisions trends have started to climb higher. Valuations are still below historical averages on most metrics and this group has had higher growth. Similar to Hybrid E&P’s, the main point against this group is that it has looked crowded. Mark Lear has Outperform ratings on BCEI and EXXI within this basket; Ed Westlake has an Outperform rating on KOS.