GLOBAL E&P TRANSACTIONS H1 2012 REVIEWSlowdown continues, deal value trending four-year lowJULY 2012

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Slowdown continues, deal value at four-year low

US remains top region, Canada’s share at a record high

Corporate deals steady during H1 2012, Increased focus on Gas assets

M&A in Conventional assets falls below 50%

Chinese remain silent in H1, Asian NOCs on big ticket acquisitions

Supply of assets crosses $100 billion, BP’s stake in TNK-BP for sale

Slowdown continues, deal value trending four-year low

Global M&A deal values in H1 2012 stood at $62 billion which included only $25 billion in Q2 2012 – one of the lowest quarters since Q3 2009. The annualized deal value run rate at $124 billion, is higher only than the $117 billion seen in 2008. Number of large value deals (>$100 million) in Q2 2012 was stable at 44, in line with the previous 5 quarters.

United States with $29.2 billion or 48% of total upstream deal value, continued to be the top region during H1 2012. Canada maintained its second position with deals worth $17.1 billion or 28% of the total upstream deal value in H1 2012, surpassing its full year 2011 value.

Corporate deals and transactions involving producing fields accounted for 46% and 30%, respectively of the total deal value in H1 2012, in line with deals in 2010 and 2011. 86% of the Corporate deals weighted towards Gas assets including Oil + Gas and CBM.

In H1 2012, share of conventionals in the total deal value was 46% – dropping below 50% for the first time since 2007.

The share of acquisitions by Chinese NOCs was relatively lower at 4% of the total deal value in H1 2012, whereas the share of Asian NOCs jumped with Petronas, KNOC and PTTEP joining the acquisition spree. The Chinese are making a come back with CNOOC set to takeover Nexen for $17.9 billion and Sinopec acquiring Talisman’s North Sea assets for $1.5 billion, both in July 2012.

The total value of all oil and gas assets currently on the market (Deals in Play) was $105 billion at the beginning of July 2012, 19% higher than the supply at the beginning of April 2012 and marginally above $101 billion at the beginning of 2012.

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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q22007 2008 2009 2010 2011 2012

31 47 38 53 43 50 4724 18 35 36 42 54 59 49

6942 49 47 49 50 44

44

9285

8575

11189

7044

85 99117 101 106

90

130 167 155 145178

139

9364

9086

9096

7787

61

48

6575

82 7485

71

8696

134123

134

114

97

High Value Deals (>$100 million) Low Value Deals (<$100 million) Undisclosed deal value

Value of global E&P transactionsUSD billion

* Including the value of El Paso E&P assets

Number of transactions, split by high and low value deals

First Half of the year

Q1

Q2

Q3

Q4

To

tal

Q1

Q2

Q3

Q4

To

tal

Q1

Q2

Q3

Q4

To

tal

Q1

Q2

Q3

Q4

To

tal

Q1

Q2

Q3

Q4

To

tal

Q1

Q2

H1

2007 2008 2009 2010 2011 2012

15

61

34

37

147

23

33

43

19

117

33

32

19

66

150

50

46

44

71

211

43

32

47

48

169

36

25

62

7.2 176*

In Q2 2012, the total upstream M&A deal value reached $25 billion. This is the lowest since Q3 2009 ($19 billion) and is comparable to the slow quarters such as Q4 2008, Q1 2008 and Q1 2007. In H1 2012, the total deal value touched $62 billion, 17% lower than $74 billion in H1 2011. The annualized deal value run rate at $124 billion, is only higher than $117 billion in 2008.

Number of large value deals (>$100 million) was stable at 44 in Q2 2012 and in line with the previous 5 quarters. Of the 44 high value deals in Q2 2012, only 5 were greater than $1 billion – the lowest since 2009.

The number of low value deals (<$100 million) and deals with undisclosed values were 93 and 97, respectively, declining in line with the overall slowdown observed during this quarter.

Global upstream M&A slows down considerablyKinder Morgan – El Paso E&P assets

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Value of top 20 global E&P transactions in H1 2012

USD million

Athabasca Oil Sands divests 40% in MacKay River project

ENI sells 5% stake in Galp to Amorim Energia

Harvest Natural Resources divests Venezuela assets to Pertamina

Chesapeake sells Texas Panhandle Granite Wash VPP

Marathon Oil acquires Paloma Partners II LLC

SPDC divests interest in OML 30 to Shoreline and Heritage

Three Rivers divests Permian basin assets to Concho Resources

Linn Energy acquires Wyoming property from BP

Halcon Resources acquires GeoResources

Linn Energy acquires BP's Kansas assets

SandRidge acquires Dynamic Offshore Resources

ConocoPhillips divests Vietnam assets to Perenco

PTTEP to acquire Cove Energy

Pengrowth Energy acquires NAL Energy

Mitsubishi and Mitsui acquire 14.7% in Browse LNG from Woodside

Devon and Sinopec form JV for five unconventional plays in US

Apache acquires Cordillera Energy

Mitsubishi acquires 40% in Encana's Cutbank Ridge

Petronas acquires Progress Energy Resources

Kinder Morgan divests El Paso's E&P assets

667

713#

725

745

750#

850

1,000

1,025

1,031#

1,200

1,275#

1,290

1,756#

1,909#

2,000

2,200

2,850#

2,898

5,386#

7,150#

The largest deal of H1 2012 was the divestment of El Paso’s E&P assets by Kinder Morgan to a consortium of Private Equity investors led by Apollo Global, Riverstone, Access Industries and KNOC for $7.15 billion. Overall, the top 10 deals accounted for nearly half the total deal value in H1 2012.

Other significant deals in the US included Apache acquiring Cordillera for $2.85 billion and Devon and Sinopec forming a JV across five unconventional plays in US for $2.2 billion.

Prominent deals in Canada include Petronas acquiring Progress for $5.39 billion and Mitsubishi acquiring 40% interest in EnCana's Cutbank Ridge assets for $2.9 billion.

International deal activity was seen across Australia, East Africa and Vietnam - Mitsubishi and Mitsui acquired 14.7% in Browse LNG for $2 billion, PTTEP acquired Cove Energy outbidding Shell, and ConocoPhillips divested its Vietnam assets to Perenco for $1.29 billion.

Top 20 global deals - corporate deals continue to dominate

# Corporate Deals

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Annual transaction value by regionUSD billion

Annual transaction value % by regionUSD billion

2007 2008 2009 2010 2011 H1-2012

49.6 47.561.6

75.2 82.8

29.2

35.4

15.3

34.8

35.0 16.8

17.1

9.4

9.1

7.0

7.214.8

35.7 19.9

32.1

13.07.6

6.5

15.5

9.9

9.50.7

2.5

1.6

1.9

2.9

20.6

9.4

29.0

12.6

11.8

11.5

United States Canada North Sea/ Europe South/Central America Former Soviet Union Asia Africa Australia Middle East

1.8

2.6

3.23.1

United States, with $29.2 billion or 48% of total upstream deal value, continued to be the top region during H1 2012. US was also dominant during 2011 with deals worth $82.8 billion accounting for 49% of the total deal value.

Canada maintained its second position with deals worth $17.1 billion or 28% of the total upstream deal value in H1 2012, surpassing its full year 2011 value. Overall, the share of Canadian deals is at the highest, nearly tripling from 10% during 2011.

North Sea/Europe, at the third position, totalled $3.3 billion from 28 deals with the highest contributor being Cairn’s offer for Nautical Petroleum.

Africa, Australia and Asia saw large deals such as PTTEP’s acquisition of Cove, Mitsubishi and Mitsui’s acquisition of 14.7% in Browse LNG, and Perenco’s acquisition of ConocoPhillips’ Vietnam assets, respectively.

Regional M&A activity – Canada’s share at a record high

2007 100%=$147Bn

2008 100%=$117Bn

2009 100%=$150Bn

2010100%=$211Bn

2011 100%=$169Bn

H1-2012 100%=$62Bn

34%

13%

24%

24%

41% 13% 41%

18%10%

23%

36%

16%14%

15% 49%

10%9%

48%

28%

8%

7%

6%

5%

8%

7%

6%

5%

6%5% 5%5%

5%

6%7%

0.9

3.3

6

Corporate deals and transactions involving producing fields accounted for 46% and 30%, respectively of the total deal value in H1 2012, in line with the trend observed in 2010 and 2011.

86% of the Corporate deals were weighted towards Gas assets including Oil + Gas and CBM.

Mitsubishi was involved in acquiring interests in two fields under development, EnCana's Cutbank Ridge assets and Woodside’s Browse LNG project.

Corporate deals steady during H1 2012, Increased focus on Gas assets

Deals by type of transaction

Corporate deals with transaction value >$1 billionUSD million

Halcon Resources acquires GeoResources

SandRidge acquires Dynamic Offshore Resources

PTTEP to acquire Cove Energy

Pengrowth Energy acquires NAL Energy

Apache acquires Cordillera Energy

Petronas acquires Progress Energy Resources

Kinder Morgan divests El Paso's E&P assets

1,031

1,275

1,756

1,909

2,850

5,386

7,150

Gas

Oil + Gas

2007 100%=$147Bn

2008 100%=$117Bn

2009 100%=$150Bn

2010100%=$211Bn

2011 100%=$169Bn

H1-2012 100%=$62Bn

Corporate M&A Producing fields Fields under development Discoveries (Undeveloped) Mix of asset types

37%

48%

7%7%

7%

33%

32%

26%

73%

15%

8%

42%

31%

21%47%

28%

20%46%

30%

14%

10%5%

7

2007 2008 2009 2010 2011 H1-2012

31

1415

39

18

7

3

11

6

19 19

7

Conventional

Unconventional

Share of conventional and unconventional deals

Number of deals with transaction value >$1 billion

In H1 2012, the share of conventionals in the total deal value was 46% - dropping below 50% for the first time since 2007.

During H1 2012, of the 94 deals with a transaction value >$100 million, the number of deals involving conventional assets (59 deals) was significantly higher than that of deals involving unconventional assets (35 deals). But deals >$1 billion were distributed equally, at 7 each for conventional and unconventional.

For unconventional deals >$100 million, US outpaced Canada both in terms of volume and total deal value. The number of deals in US and Canada totalled 24 and 10, respectively, and the total deal value was $21 billion and $11 billion, respectively.

M&A in Conventional assets falls below 50%

2007 100%=$147Bn

2008 100%=$117Bn

2009 100%=$150Bn

2010100%=$211Bn

2011 100%=$169Bn

H1-2012 100%=$62Bn

90%

6%

60%24%

15%

51%34%

14%

68%22%

6%

57%39% 46%50%

8

2007 2008 2009 2010 2011 H1-2012

2.6

8.5

15.2

11.2

2.2

2.7

1.1

5.41.8

5.2

1.7

0.72.8

0.8

0.8

4.34.7

4.1

3.0

1.4

0.8

3.1

7.4

3.3

2.3

1.8

2.5

Sinochem

CNPC (China)

ONGC (India)

Sinopec (Listed)

PTTEP (Thailand)

GAIL (India) Ltd

CNPC (Petro-China)

Petronas

KNOC (KOREA)

CNOOC (China)

China Investment Corp

Sinopec

Acquisitions by Chinese and other Asian NOCsUSD billion

In H1 2012, Asian NOCs, namely Petronas, KNOC and PTTEP, joined their Chinese peers in high value deals.

KNOC joined Apollo Global, Riverstone and Access Industries in acquiring El Paso’s E&P assets. Large NOC deals included Petronas’ acquisition of Progress Energy, PTTEP outbidding of Shell for Cove Energy, the formation of the Sinopec-Devon JV for five US unconventional plays and CNPC’s (Petro-China) acquisition of 40% in the MacKay River project.

The share of acquisitions by Chinese NOCs were relatively lower at 4% of the total deal value in H1 2012, whereas the share of Asian NOCs jumped. The Chinese are making a come back, with CNOOC set to takeover Nexen for $17.9 billion and Sinopec acquiring Talisman’s UK North Sea business for $1.5 billion, both in July 2012.

NOC acquisitions continue, Petronas and PTTEP join

2007 100%=$147Bn

2008 100%=$117Bn

2009 100%=$150Bn

2010100%=$211Bn

2011 100%=$169Bn

H1-2012 100%=$62Bn

99%

1%

90%

6%5%

85%

3%

12%

82%

3%

15%

86%

3%

11%

82%

14%4%

Asian NOC Chinese NOC Others

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Chesapeake seeks JV partner for Mississippian play and Bakken/Three Forks acreageChesapeake to sell acreage in Utica and MichiganChesapeake to divest Permian basin assetsEOG Resources to sell non-core assets Marathon to sell minority stake in GoM Newfield Exploration to divest GoM assets EnCana seeks JV partner to develop four unconventional plays EnerVest and EV Energy seek JV partner for Utica acreage

ExxonMobil to exit Block 31 in AngolaBP to sell certain UK and Norway North Sea assets including 18.36% in Draugen fieldConocoPhillips to divest assets worth $5-10 billionEni to sell interest in Mamba gas discovery offshore MozambiqueLukoil seeks partner for West Qurna-2 projectMaurel & Prom, Svenska Petroleum andCalvalley Petroleum put up for saleMarathon to divest 10% interest inBlock 32, offshore AngolaItera to divest strategic stakeTullow Oil to divest AsianassetsRWE to sell Egypt assets

BP to sell 60% stake inPan American EnergyEcopetrol to sell certain Colombian assetsBPZ to farm-out interestin Peru and Ecuador assets

Shell to divest remaining stake in WoodsideOrigin Energy and ConocoPhillips to sell additional stake in Queensland’s APLNG project

Beach Energy seeks partners for Cooper Basin shale gas project

Dart Energy seeks partners for Australian CBM assetsInterOil seeks partners for Gulf LNG project in PNG

Cenovus Energy seeks JV partner to develop Alberta oilsands assets Koch Industries seeks partners for Alberta oilsands properties Shell to divest Orion oilsands project Talisman to sell non-core assets Apache to divest certain Canadian conventional assets ConocoPhillips to divest certain assets in Alberta and British Columbia Connacher Oil and Gas, WestFire Energy and Fairborne Energy consider strategic alternativesEnCana seeks JV partner for unconventional gas

The total value of all oil and gas assets currently on the market (Deals in Play) was $105 billion at the beginning of July 2012, 19% higher than the supply at the beginning of April 2012 and marginally above $101 billion at the beginning of 2012.

The higher value of Deals in Play in Q2 2012 is on the back of BP’s plan to divest its 50% stake in TNK-BP, estimated to fetch a mammoth $20 billion.

Regionally, US offers the largest value of Deals in Play followed by Russia, Canada, Australia, Argentina and Angola.

Notable deals in play announced during the last quarter included Petrobras’ interests in deepwater GoM blocks and ConocoPhillips planning to exit Nigeria.

Supply of assets back at $100 billion+, BP’s stake in TNK-BP for sale

Rosneft seeks partner to develop Carabobo oil blockVale to divest oil and gas assets

United States23%

Others19%

BP's stake in TNK-BP18%

Canada16%

Australia11%

Argentina7%

Angola6%

100% = $105 billion

CONTACT DETAILS

Derrick Petroleum Services is an independent oil and gas research and consulting firm based in Bangalore, India. The Company’s research and databases have worldwide coverage, with special emphasis on emerging plays and international transactions.

PLS, Inc. is a leading industry research, transactions and advisory firm based in Houston, Texas. PLS publishes various information reports on mergers, acquisitions, divestments, capital markets, exploration, drilling and midstream services and manages a multiple listing service for assets on the market.

Contact personRonyld Wiserwise@plsx.com +1 713 658 9421

Contact person (Europe)Anders Wittemannanders.wittemann@derrickpetroleum.com +47 9160 6475

Contact person (Asia)Yashodeep Deodhar yashodeep@derrickpetroleum.com +91 98 456 55034