Energy & Power Industry Update February 2012

Transcription

1 Member FINRA/SIPC

2 What We ve Been Reading Despite a warm embrace of the natural gas industry from President Obama in his 2012 State of the Union Address, January has been a tough month for fuel. An unusually mild winter has dampened demand, sent prices to new lows, and accelerated rig count shifts towards liquids-rich plays. Most notably, Chesapeake Energy, self-proclaimed as America s Champion of Natural Gas, announced that it would divert approximately $2 billion of capital slated for natural gas drilling to more profitable oil-directed drilling. The net effect on North American drilling activity from this shift is expected to be minimal. In fact, many of the oilfield services majors offered bullish commentary on North American activity despite some pricing headwinds in dry gas basins. We ve included some of that commentary on the following pages for reference. While natural gas may be encountering some near-term hurdles, the long-term view is certainly positive. This is made particularly clear in Black & Veatch s ( B&V ) Energy Market Perspective 2011 Fall Forecast Overview: Adapting to the New Normal, which deserves mention for the length of its title alone. The report notes that approximately 300,000 MW of natural gas capacity could be added over the next 25 years. Part of this growth is due to the fact that more than 61,500 MW of coal capacity in the continental U.S. may be retired by 2020 (28,000 MW of coal plant retirements have already been announced). B&V believes that the market share of electricity generation will accrue to natural gas and, to a lesser extent, renewables. From 2012 to 2036, B&V projects that natural gas will increase from 24% of consumption to 44%, while coal is projected to decline from its current 41% to just 16%. The Edison Foundation s Institute for Electric Efficiency ( IEE ) released its Summary of Ratepayer-Funded Electric Efficiency Impacts, Budgets, and Expenditures this past month ratepayer-funded electric efficiency budgets totaled over $6.8 billion in 2011, a 25% increase from 2010 (and in-line with the 25% average annual growth for the sector from 2007 to 2011). As a result, IEE believes that ratepayer-funded electric efficiency budgets are highly likely to exceed the Lawrence Berkeley National Laboratory s ( LBNL ) high case scenario projection of $12 billion by 2020 (See 2009 s The Shifting Landscape of Ratepayer-Funded Energy Efficiency in the U.S.). Much of this growth has been driven by state regulatory frameworks developed to support energy efficiency programs, and the report details support-mechanisms and budgets on a state-by-state level. For an overview of the energy efficiency program management sector, please also feel free to view our 2010 whitepaper. Finally, Harris Williams & Co. s Tyler Dewing, writing for GigaOm, provides an overview of opportunities in energy information technology in The Quiet but Massive Market for Energy IT. Dewing writes, Beyond the clamor and excitement surrounding traditional cleantech companies solar, wind, energy efficiency, and alternative fuels there are many attractive and growing, middle market energy technology companies quietly improving the operations and capabilities of electric utilities, oil and gas companies, government agencies, and energy market traders, among others, with software, data and analytics, and consulting and integration services. While the green aspects of these businesses aren t always obvious or essential to their marketing, the benefits they provide to businesses in the energy sector are compelling, and strategic and financial acquirers are taking notice and paying attractive prices. We encourage you to check out the full article at the link above. page 1

3 From the Transcripts 1 Last week marked the kick-off of quarterly earnings season. On the energy side, Halliburton, Schlumberger, and Baker Hughes all reported. While we ll refer you to the filings and press releases for the earnings data, we thought we d highlight some relevant commentary on the outlook for North American oilfield services in their respective earnings calls. While all acknowledge some current headwinds in dry gas basins, the long-term consensus appears to be that North America is still in the early innings of the long-term service opportunity. Halliburton David Lesar, Executive Chairman, Chief Executive Officer and President We have highlighted for some time the dramatic impact that oil-directed horizontal activities has had on the North America market. For instance, in addition to natural gas rigs targeting liquids-rich plays, the oil rig count now represents more than 60% of the total in North America, a level we have not seen in decades. Our customers' sources of revenue has [sic] also shifted dramatically toward oil, with the sale of U.S. oil and liquids representing approximately 70% of total upstream revenue today. This compares with an approximate split just 5 years ago. And our customer mix continues to shift toward IOCs, NOCs and large independents, who tend to have a more stable spending pattern and more sophisticated supply chain management and away from those customers who might be more financially challenged in the current market. We are also seeing a trend toward higher average footage drilled per well, up to approximately 7,000 feet from 5,000 feet just 5 years ago. And finally, today, reserve development demands 4x as much horsepower per rig as compared to So clearly, there's been a dramatic shift over the past several years, and all of this bodes well for a continuation of high demand in the North America unconventional markets. So what will that market look like going forward? The last time the breakeven price for oil development was so far below prevailing oil prices was back in the early '80s, when the rig count was more than double what it is today. And despite the vast amount of work we've done in North America in recent years, there's only been a modest increase in net oil production, as new supplies are barely offsetting declines for mature North America basins. As a result, we expect continued liquids-driven activity growth in the coming years, as our customers invest in their resources and optimize their development technologies, and we plan to continue to expand our capability and drive efficiency through technology and logistical improvements to enable this growth. The concern about what will happen in the dry gas basins is a real one. However, there are customers who will continue to drill in these basins, as they have a low-cost gas basis, a hedge bought before the collapse of pricing, or contracts to send their natural gas to markets where the pricing is better As we look at the market dynamics today and even apply a downside scenario to how it might play out, based on frac equipment adds as well as reduced gas drilling, which would accelerate the equilibrium in the market for pumping, it is clear to us that the strength of liquids demand will provide a cushion to equipment coming out of the dry gas basins. We also believe that there will be a net overall increase in rig count in Meaning that in our view, the increase in liquids-directed rigs will more than offset the decline in natural gas rigs. We believe a much more pessimistic scenario is currently priced into our stock, and we do not see that happening. page 2

4 From the Transcripts 1 Schlumberger Limited Paal Kibsgaard, Chief Executive Officer, Chief Operating Officer and Director Looking at our industry, the general feedback from our customers and the findings from the recent spending surveys indicate that E&P investment in 2012 will be up, although the predicted levels vary. The surveys also suggest that exploration spending will continue to increase. Against this backdrop, we are planning for growth in 2012, although we are building significant flexibility into our plans given the uncertainties. Overall, we remain confident that any potential reductions in activity will be short-lived due to limited spare oil capacity and to growing international demand for natural gas. Baker Hughes Martin Craighead, Chief Executive Officer, President, Chief Operating Officer and Director The underlying business in North America is very strong. Geology in the shale plays is obvious. And for that reason, we intend to continue growing Pressure Pumping capacity this year. Increasing demand for high-quality and predictable operations and leading-edge reservoir characterization and completions technologies aligns very well with the capabilities of Baker Hughes. As such, we have every reason to be bullish on the long-term prospects of this market. I -- the way we look at this is this market, I would say we're still in the very early stages of these unconventional plays. And I know that might be very hard for a lot of people to understand given how rapidly they've come on the scene. But in talking to our customers, tens of thousands of locations are coming up in these discussions to be drilled in these plays, like the Marcellus, the Eagle Ford, and even the Utica. And when you see that kind of outlook, it's that you can't but conclude that adding additional capacity, and not only in pressure pumping, but also in roofline and rental tools, is absolutely the right way to go forward. So there may be a little bit of weakness in some of these basins until things settle down and you get the right balance of supply and demand balance. But overall, collectively, there's no softness in the price. And I wouldn't expect it to be anything dramatic even if it does soften in a couple of places. page 3

5 Industry Observations Over the past 12 months, the S&P outperformed the Energy, Power, and Infrastructure and Industrial Services indices. The North American rig count remains at a five year high while natural gas prices are 44.0% off their one year high-water mark. The price of oil continues to support the growing North American rig count. Central Appalachian and Rotterdam coal prices have decreased 24.6% and 16.1% over January 2011 levels. 120 LTM Indexed Stock Performance Index % Change S&P 2.09 Energy (4.40) Power (9.67) I & IS (10.44) Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 S&P 500 Energy Power Industrial & Infrastructure Services 250 LTM EBITDA Multiples 1 Indexed LTM EBITDA Multiples 1 Index % Change Energy Power 5.25 I & IS Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Energy Power Industrial & Infrastructure Services page 4

6 Key Trading Statistics 1 Stock Price % Change TEV / LTM EBITDA Multiple as of TEV / 2011 P/E Ratio Industry Segment 1 Month 12 Month 1/31/11 7/31/11 Current EBITDA Current 2009 Energy Integrateds (1.0%) (0.7%) 5.1x 4.3x 4.1x 3.4x 8.7x 8.0x Energy Services and Equipment 5.6% (9.3%) 9.9x 9.4x 8.0x 5.6x 19.0x 10.3x Exploration and Production 0.8% (18.7%) 8.7x 9.2x 6.5x 5.6x 23.2x 12.4x Coal Producers (1.0%) (52.0%) 10.2x 9.5x 7.0x 5.0x 13.1x 9.8x Refining 10.9% 23.7% 9.0x 6.1x 3.6x 3.4x NM 6.7x Storage & Transportation (1.1%) 18.8% 14.3x 13.4x 14.8x 10.6x 20.7x 18.4x Power Diversified Power 10.4% (12.3%) 10.8x 9.2x 8.4x 7.5x 15.4x 11.6x Mid-Cap Power 15.7% 13.0% 8.9x 9.4x 10.0x 7.7x 19.3x 15.7x Independent Power Producers (12.6%) (18.6%) 6.9x 9.5x 10.0x 7.9x 19.1x 16.8x Electric Utilities (4.2%) 12.0% 8.0x 8.4x 9.1x 8.3x 13.8x 13.8x TEV / LTM Revenue 2011 Revenue Renewables 19.6% (44.0%) 1.7x 1.4x 1.0x 0.9x 14.8x 10.4x Cleantech 6.4% (38.1%) 1.4x 1.2x 0.9x 0.9x 15.3x 12.6x Industrial & Infrastructure Services Engineering & Construction 8.1% (8.9%) 10.3x 10.0x 8.1x 6.0x 17.6x 13.8x Industrial & Infrastructure Services 7.6% 3.8% 10.1x 10.1x 7.6x 7.3x 16.5x 13.4x Current Valuations Versus Historical 5-Year Average % 200.0% 180.0% 180.0% 160.0% 160.0% 140.0% 140.0% 120.0% 120.0% 100.0% 100.0% 80.0% 5-Year Average 80.0% 60.0% 60.0% 40.0% 40.0% 20.0% 20.0% 0.0% 0.0% Storage Independent and Power Transportation Producers Industrial & Engineering Electric Mid-Cap Exploration Integrateds Energy Refining Diversified Coal Cleantech Renewables Infrastructure and Utilities Power and Services and Power Producers Enegy Services Construction Production Power Equipment Industrial & Infrastructure Services Enegy Power Industrial & Infrastructure Services Note: Based upon current EV / LTM EBITDA versus 5-year historical average. For Cleantech and Renewables, valuation is based upon EV / LTM Sales. page 5

7 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 ($ per ton - Central Appalachian) ($ per ton - Rotterdam) ($ per MWg) Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 (# rigs) ($ per gallon) Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 ($ per bbl) ($ per MMBtu) Oil 1 Natural Gas $98.78 per bbl $2.71 per MMBtu North American Rig Counts 3 Gasoline and Ethanol 1 3,000 2,500 2,000 1,500 2,580 rigs 1, $2.87 per gallon $2.24 per gallon Gasoline Ethanol Coal 1 Electricity Prices CAPP: $62.60 per ton Rotterdam: $ per ton $37.01 per MWg Central Appalachian Rotterdam page 6

8 Number of Transactions Select Recently Announced Energy & Power Transactions 1,2 Date Target Business Description Acquirer 1/30/2012 RuggedCom Inc. Canada based provider of rugged communications networking solutions in harsh environments 1/30/2012 Thomas & Betts Corp. US based provider of electrical components for the industrial, construction, and utility markets 1/19/2012 RealFlex Technologies, Datac Instrumentation 1/13/2012 Southern Industrial Constructors, Inc. Ireland based provider of systems integration and realtime server software packages US based provider of industrial maintenance and construction services 1/9/2012 Xtend Energy Services Inc. Canada based provider of drilling services for longreach horizontal and directional wellbores 1/5/2012 BlueStar Energy Services, Inc. US based provider of electricity as well as energy efficiency and demand response services 1/5/2012 MRDB Holdings, LP US based provider of energy management solutions for corporate and government clients 1/4/2012 Pace Global Energy Services, LLC US based provider of integrated advisory and implementation services for energy projects 1/3/2012 Perennial Energy, Inc. US based designer and manufacturer of waste gas processing systems and equipment 1/3/2012 Go Coil, LLC US based provider of coil tubing and pumping services to the oil and gas industry 1/3/2012 Resource Solutions Group US based provider of energy efficiency consulting services 12/22/2011 N.V. KEMA Netherlands based provider of energy consulting and technology implementation services 12/16/2011 ThruBit LLC US based provider of openhole logging solutions primarily for horizontal and highly deviated wells 12/15/2011 xchange Point and Energy Projects Business US based provider of energy efficiency software and services and demand response services Siemens AG ABB Ltd. Lufkin Industries Inc. EMCOR Group, Inc. Logan International Inc. AEP Retail Energy Ecova, Inc. Siemens Building Technologies, Inc. Capital For Business Pioneer Drilling Company CLEAResult Consulting Inc. Det Norske Veritas ASA (DNV) Schlumberger Limited Ameresco, Inc Quarterly United States E&P M&A Activity Q Q Q Q Q Q Q Q Q Q Q Q Q page 7

9 Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from % of TEV / LTM EBITDA Multiple as of TEV / 2011 P/E Ratio EBITDA TEV 1/31/12 Prior Month Prior Year LTM High 1/31/11 7/31/11 Current EBITDA Current /31/2011 Integrateds Exxon Mobil Corporation $421,784.4 $83.85 (1.1%) 3.9% 95.0% 7.6x 6.0x 6.0x 4.9x 10.3x 10.3x 0.1x Chevron Corporation $196,132.4 $ (3.1%) 8.6% 92.9% 4.9x 4.5x 3.8x 3.2x 7.7x 7.6x (0.2x) ConocoPhillips $113,378.2 $68.21 (6.4%) (4.5%) 83.4% 4.6x 4.2x 3.6x 3.7x 7.7x 7.5x 0.8x Occidental Petroleum Corporation $82,701.4 $ % 3.2% 84.7% 7.5x 6.7x 5.5x 4.7x 12.2x 10.2x 0.1x Hess Corporation $24,172.6 $56.31 (0.9%) (33.1%) 64.4% 5.1x 4.0x 4.4x 2.9x 0.0x 7.1x 0.9x Marathon Oil Corporation $21,982.2 $ % (31.2%) 57.9% 5.1x 2.9x 2.6x 2.7x 9.8x 8.4x 0.0x Median (1.0% ) (0.7% ) 84.0% 5.1x 4.3x 4.1x 3.4x 8.7x 8.0x 0.1x Energy Services and Equipment Large Cap Diversified Schlumberger Limited $107,470.0 $ % (15.5%) 78.6% 17.1x 14.7x 10.8x 7.6x 21.7x 13.1x 0.6x Halliburton Company $35,732.5 $ % (18.2%) 63.7% 10.4x 10.5x 5.9x 4.2x 11.2x 7.9x 0.4x National Oilwell Varco, Inc. $28,726.0 $ % 0.2% 85.4% 9.8x 10.2x 8.8x 6.8x 17.1x 13.0x (1.1x) Baker Hughes Incorporated $24,589.1 $ % (28.3%) 92.8% 12.1x 10.2x 5.8x 4.1x 12.4x 8.1x 0.8x Weatherford International Ltd. $20,139.0 $ % (29.3%) 59.6% 13.1x 11.3x 8.6x 5.9x 47.8x 10.9x 3.5x Median 8.9% (18.2% ) 78.6% 12.1x 10.5x 8.6x 5.9x 17.1x 10.9x 0.6x Energy Mid and Small Cap Equipment and Service Providers Cameron International Corporation $13,107.7 $ % (0.1%) 84.3% 12.0x 12.9x 12.0x 9.2x 22.7x 15.2x 0.0x Oil States International Inc. $4,999.7 $ % 17.5% 91.5% 8.9x 9.8x 8.3x 5.9x 15.8x 11.1x 1.9x Complete Production Services, Inc. $3,013.0 $ % 20.8% 79.2% 7.0x 6.9x 5.1x 3.6x 12.0x 7.3x 0.9x Key Energy Services Inc. $2,938.6 $14.50 (6.3%) 8.9% 69.8% 18.6x 13.6x 8.8x 4.7x 40.7x 8.9x 3.0x Exterran Holdings, Inc. $2,547.1 $ % (62.6%) 36.5% 8.3x 8.1x 7.0x 5.7x NM NM 4.5x RPC Inc. $2,482.9 $15.25 (16.4%) (13.3%) 52.5% 7.4x 6.8x 3.8x 3.3x 7.6x 7.2x 0.4x Dril-Quip, Inc. $2,402.7 $ % (14.4%) 78.8% 16.2x 16.4x 15.9x 11.8x 30.3x 20.5x (1.6x) Basic Energy Services, Inc. $1,444.5 $18.02 (8.5%) (1.3%) 47.7% 10.0x 8.9x 5.2x 3.5x 33.5x 7.3x 3.3x Median 0.5% (0.7% ) 74.3% 9.5x 9.3x 7.7x 5.2x 22.7x 8.9x 1.4x page 8

10 Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from % of TEV / LTM EBITDA Multiple as of TEV / 2011 P/E Ratio EBITDA TEV 1/31/12 Prior Month Prior Year LTM High 1/31/11 7/31/11 Current EBITDA Current /31/2011 Construction and Equipment Contractors Transocean Ltd. $24,999.6 $ % (40.9%) 55.0% 8.2x 8.3x 8.6x 6.6x NM 14.3x 2.4x Noble Corp. $13,594.6 $ % (8.9%) 74.6% 9.0x 15.0x 12.1x 5.8x 23.8x 7.9x 4.4x Nabors Industries Ltd. $9,386.0 $ % (23.6%) 57.4% 7.6x 7.0x 5.5x 4.2x 18.9x 8.2x 2.5x Diamond Offshore Drilling Inc. $8,936.1 $ % (13.1%) 76.8% 5.9x 5.9x 5.1x 6.6x 8.5x 12.9x 0.2x Technip $8,444.1 $93.82 (0.6%) (3.5%) 91.8% 8.2x 8.9x 7.6x NA 17.3x NA (1.5x) Subsea 7 SA $7,163.7 $ % (16.6%) 80.2% 16.2x 18.3x 14.2x NA 16.5x NA (0.1x) Helmerich & Payne Inc. $6,474.2 $ % 5.1% 84.1% 8.2x 8.0x 6.0x 4.6x 13.9x 10.5x (0.1x) Oceaneering International, Inc. $5,086.6 $ % 25.9% 98.7% 8.7x 10.0x 10.8x 8.8x 23.5x 18.9x (0.4x) Rowan Companies Inc. $4,523.5 $ % (0.8%) 75.9% 8.9x 14.2x 11.9x 6.4x 28.7x 10.4x 0.6x Patterson-UTI Energy Inc. $3,310.8 $18.87 (5.6%) (19.2%) 55.4% 7.0x 6.9x 3.8x 2.8x 10.2x 7.1x 0.5x Hercules Offshore, Inc. $1,361.4 $ % 36.0% 64.4% 6.6x 7.8x 7.6x 8.0x NM NM 4.1x Pioneer Drilling Co. $703.6 $8.94 (7.6%) 0.9% 49.7% 7.3x 7.4x 4.1x 2.8x NM 12.6x 1.4x Cal Dive International Inc $452.9 $ % (50.9%) 36.8% 12.0x 10.7x 15.0x 4.1x NM 12.0x 2.8x Median 7.4% (8.9% ) 74.6% 8.2x 8.3x 7.6x 5.8x 17.3x 11.2x 0.6x Exploration and Production Large Cap Anadarko Petroleum Corporation $51,176.7 $ % 4.8% 94.5% 7.6x 8.2x 7.6x 5.7x NM 24.1x 1.6x Apache Corp. $45,811.1 $ % (17.1%) 73.8% 5.7x 5.2x 3.8x 3.4x 9.6x 7.9x 0.6x EOG Resources, Inc. $32,158.7 $ % (0.1%) 87.5% 13.7x 9.9x 8.6x 5.7x 27.0x 23.6x 1.2x Chesapeake Energy Corporation $28,658.9 $21.14 (5.2%) (28.4%) 58.8% 7.8x 9.4x 6.9x 5.7x 10.9x 10.0x 3.4x Devon Energy Corporation $28,475.0 $ % (28.0%) 68.2% 6.8x 6.5x 4.3x 4.1x 13.1x 9.8x 0.4x Noble Energy, Inc. $20,381.6 $ % 10.5% 97.6% 8.8x 10.4x 9.2x 6.1x 22.8x 15.3x 1.4x Pioneer Natural Resources Co. $14,399.7 $ % 4.5% 93.7% 9.5x 11.5x 9.3x 6.9x 21.8x 19.4x 2.1x Southwestern Energy Co. $12,364.6 $31.13 (2.5%) (21.2%) 63.2% 9.3x 9.9x 7.1x 6.3x 17.8x 17.0x 0.7x Murphy Oil Corporation $11,143.2 $ % (10.0%) 76.3% 4.7x 4.5x 3.5x 3.0x 15.7x 8.6x (0.1x) Newfield Exploration Co. $8,072.4 $ % (48.3%) 48.5% 7.3x 8.4x 5.0x 4.4x 10.6x 8.3x 2.1x Ultra Petroleum Corp. $5,634.5 $24.06 (18.8%) (49.6%) 47.0% 8.4x 9.5x 6.0x 5.7x 10.7x 11.4x 2.0x Quicksilver Resources Inc. $2,965.8 $5.03 (25.0%) (66.5%) 31.5% 8.8x 8.5x 5.9x 7.0x 2.4x NM 4.0x Median 4.4% (19.1% ) 71.0% 8.1x 9.0x 6.5x 5.7x 13.1x 11.4x 1.5x page 9

11 Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from % of TEV / LTM EBITDA Multiple as of TEV / 2011 P/E Ratio EBITDA TEV 1/31/12 Prior Month Prior Year LTM High 1/31/11 7/31/11 Current EBITDA Current /31/2011 Mid and Small Cap Plains Exploration & Production Company $9,116.4 $ % 6.6% 89.9% 9.2x 9.5x 7.5x 5.6x 61.8x 11.7x 4.0x Cabot Oil & Gas Corporation $7,925.8 $31.88 (16.0%) 53.2% 70.8% 10.2x 16.3x 14.4x 8.2x 47.4x 30.5x 2.1x SandRidge Energy, Inc. $6,747.8 $7.78 (4.7%) 4.6% 58.3% 12.7x 30.3x 6.5x 7.8x 13.9x 54.1x 9.6x Forest Oil Corp. $3,115.0 $13.01 (4.0%) (66.5%) 32.3% 8.0x 7.3x 4.9x 5.4x 13.3x 12.9x 2.5x Swift Energy Co. $1,873.7 $ % (22.3%) 68.8% 8.2x 6.1x 5.1x 4.2x 19.2x 19.3x 1.3x PetroQuest Energy Inc. $535.2 $6.42 (2.8%) (18.2%) 65.8% 5.1x 5.4x 5.2x 4.1x 86.7x 13.4x 1.1x Delta Petroleum Corp. $383.6 $ % (96.5%) 1.9% 19.7x 23.2x 12.4x NA NM 0.0x 15.3x Median (2.8% ) (18.2% ) 65.8% 9.2x 9.5x 6.5x 5.5x 33.3x 13.4x 2.5x Coal Producers Peabody Energy Corp. $15,460.9 $ % (46.2%) 46.1% 10.7x 8.8x 7.5x 5.4x 9.4x 7.7x 3.1x CONSOL Energy Inc. $11,044.1 $35.76 (2.6%) (28.0%) 63.5% 11.9x 10.2x 6.7x 5.7x 13.1x 11.2x 1.8x Alpha Natural Resources, Inc. $6,828.4 $20.14 (1.4%) (62.5%) 32.1% 8.3x 10.2x 5.9x 4.5x 45.2x 13.8x 2.3x Arch Coal Inc. $6,809.7 $14.42 (0.6%) (57.9%) 39.0% 10.4x 11.4x 8.1x 5.0x 19.9x 6.7x 4.5x Alliance Resource Partners LP $3,029.7 $ % 13.0% 94.4% 5.3x 5.4x 5.3x 4.6x 9.5x 9.8x 0.8x Patriot Coal Corporation $963.0 $7.59 (10.4%) (71.0%) 26.0% NM 24.6x 12.7x 3.9x NM NM 2.8x James River Coal Co. $602.2 $6.29 (9.1%) (72.0%) 24.6% 4.6x 6.2x 4.6x 5.1x 13.7x NM 2.8x Farmacol SA $201.2 $ % (37.3%) 67.1% 10.2x 7.7x 7.2x NA 9.4x NA 0.3x Median (1.0% ) (52.0% ) 42.6% 10.2x 9.5x 7.0x 5.0x 13.1x 9.8x 2.6x Refining Valero Energy Corporation $18,425.2 $ % (5.4%) 77.1% 6.1x 4.5x 3.5x 3.6x 6.6x 6.7x 1.2x Sunoco, Inc. $6,896.1 $38.37 (6.5%) (9.6%) 81.7% 6.4x 7.4x 7.1x 9.3x NM 25.9x 2.1x Tesoro Corporation $4,410.5 $ % 30.1% 84.6% 10.1x 4.2x 2.8x 3.1x 5.4x 6.8x 0.4x Hochschild Mining PLC $2,419.7 $ % 0.4% 71.8% 8.0x 5.1x 4.7x NA 11.8x NA (0.8x) Western Refining Inc. $2,160.6 $ % 35.6% 75.9% 7.6x 6.2x 3.6x 3.1x 8.6x 6.0x 1.4x CVR Energy, Inc. $1,995.1 $ % 44.1% 84.3% 10.4x 5.3x 3.2x 2.7x 7.7x 5.8x (0.6x) Alon USA Energy, Inc. $1,469.1 $ % 23.7% 62.0% NM 9.3x 5.5x 4.4x 19.1x 6.5x 5.3x Delek US Holdings Inc. $944.3 $ % 50.9% 71.8% 13.0x 6.1x 2.6x 3.4x 7.3x 7.7x 1.1x Fortune Oil plc $379.8 $0.17 (7.1%) 3.1% 74.6% 11.6x 12.3x 12.3x NA 10.8x NA (1.0x) Median 10.9% 23.7% 75.9% 9.0x 6.1x 3.6x 3.4x NM 6.7x 1.1x page 10

12 Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from % of TEV / LTM EBITDA Multiple as of TEV / 2011 P/E Ratio EBITDA TEV 1/31/12 Prior Month Prior Year LTM High 1/31/11 7/31/11 Current EBITDA Current /31/2011 Storage & Transportation Kinder Morgan Energy Partners LP $41,732.8 $ % 18.9% 94.5% 13.8x 13.8x 16.0x 9.6x NM 32.6x 5.2x El Paso Corp. $35,737.5 $ % 69.1% 99.0% 9.3x 12.3x 12.6x 10.4x NM 22.1x 4.7x Plains All American Pipeline, L.P. $17,770.0 $ % 19.1% 100.5% 14.9x 13.0x 12.6x 10.7x 18.3x 16.8x 4.3x Enbridge Energy Partners LP $15,335.5 $32.41 (2.4%) 2.2% 93.7% 30.6x 27.9x 17.6x 11.8x 32.9x 21.2x 10.5x Magellan Midstream Partners LP $9,511.0 $67.09 (2.6%) 18.7% 96.4% 16.0x 15.4x 15.5x 14.6x 19.3x 18.3x 3.5x Buckeye Partners LP $8,550.2 $62.25 (2.7%) (3.7%) 90.3% 21.3x 21.2x 20.0x 14.2x 86.0x 17.7x 6.9x Sunoco Logistics Partners L.P. $5,720.3 $37.28 (5.4%) 30.4% 93.2% 12.7x 10.2x 10.5x 9.6x 14.5x 14.8x 4.2x Holly Energy Partners L.P $1,880.5 $ % 1.8% 90.7% 12.8x 11.7x 14.1x 10.5x 22.1x 18.5x 4.1x Median (1.1% ) 18.8% 94.1% 14.3x 13.4x 14.8x 10.6x 20.7x 18.4x 4.5x Diversified Power General Electric Company $522,733.9 $ % (7.1%) 86.5% 21.0x 17.9x 16.5x 14.4x 15.4x 10.8x 10.0x Siemens AG $89,835.3 $94.34 (1.6%) (26.6%) 72.6% 8.2x 7.6x 7.3x 6.2x 10.0x 9.8x 0.4x ABB Ltd. $47,393.3 $ % (12.0%) 80.2% 10.8x 10.2x 8.7x 7.6x 16.1x 13.2x (0.2x) Emerson Electric Co. $41,329.5 $ % (12.7%) 82.6% 10.8x 8.4x 8.1x 7.5x 16.0x 13.0x 0.6x Schneider Electric S.A. $39,490.6 $ % (20.4%) 76.8% 10.1x 8.8x 7.6x NA 14.3x NA 1.2x Eaton Corporation $19,308.4 $ % (9.2%) 86.8% 11.9x 9.6x 8.8x 6.9x 12.6x 9.8x 1.3x Alstom SA $15,484.6 $ % (31.7%) 64.3% 6.8x 6.2x 6.0x NA 20.4x NA 1.5x Cooper Industries plc $10,207.0 $ % (3.5%) 84.5% 12.3x 10.6x 11.5x 9.1x 15.5x 12.5x 0.9x Median 10.4% (12.3% ) 81.4% 10.8x 9.2x 8.4x 7.5x 15.4x 11.6x 1.0x Mid-Cap Power Ametek Inc. $8,628.2 $ % 15.2% 98.4% 13.6x 12.0x 12.0x 9.9x 19.9x 15.7x 1.7x Thomas & Betts Corp. $3,734.2 $ % 39.0% 100.1% 8.9x 7.9x 10.0x 8.3x 19.8x 15.7x 0.1x Valmont Industries, Inc. $3,010.2 $ % 13.0% 90.5% 10.7x 9.4x 9.4x 7.7x 18.8x 15.3x 0.6x Littelfuse Inc. $1,091.1 $ % (1.1%) 76.4% 7.6x 6.8x 6.9x 7.1x 12.4x 13.2x (0.4x) Powell Industries, Inc. $289.1 $ % (8.4%) 83.4% 5.7x 11.6x 10.3x 5.4x NM 16.6x (4.1x) Median 15.7% 13.0% 90.5% 8.9x 9.4x 10.0x 7.7x 19.3x 15.7x 0.1x Independent Power Producers NRG Energy, Inc. $12,517.5 $16.90 (6.8%) (18.6%) 65.8% 5.8x 6.3x 6.3x 6.5x 14.7x 16.8x 3.8x Dynegy Inc. $4,567.6 $1.86 (32.9%) (70.4%) 26.9% 8.0x 12.7x 22.8x 11.1x NM NM 10.8x GenOn Energy, Inc. $3,707.7 $2.13 (18.4%) NA 49.7% NA NA 10.0x 7.9x NM NA 4.5x Mirrabooka Investments Limited $237.8 $ % (1.9%) 87.6% NM NM NM NA 23.6x NA NM Median (12.6% ) (18.6% ) 57.7% 6.9x 9.5x 10.0x 7.9x 19.1x 16.8x 4.5x Power page 11

13 Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from % of TEV / LTM EBITDA Multiple as of TEV / 2011 P/E Ratio EBITDA TEV 1/31/12 Prior Month Prior Year LTM High 1/31/11 7/31/11 Current EBITDA Current /31/2011 Electric Utilities Southern Company $59,169.2 $45.52 (1.7%) 21.0% 97.5% 9.2x 9.3x 9.4x 8.9x 17.5x 16.0x 3.3x NextEra Energy, Inc. $47,912.6 $59.86 (1.7%) 12.0% 97.8% 8.0x 8.9x 9.1x 8.3x 13.1x 12.1x 4.5x Dominion Resources, Inc. $47,612.6 $50.05 (5.7%) 15.0% 93.2% 8.3x 9.0x 9.5x 8.8x 18.8x 14.3x 3.8x Duke Energy Corporation $46,194.6 $21.31 (3.1%) 19.2% 96.3% 8.0x 8.4x 9.3x 8.5x 15.3x 14.8x 3.6x Exelon Corporation $39,844.9 $39.74 (8.4%) (6.5%) 87.4% 5.8x 6.3x 6.0x 7.8x 10.6x 13.8x 2.0x American Electric Power Co., Inc. $36,256.7 $39.57 (4.2%) 10.9% 94.3% 7.3x 7.3x 7.5x 7.3x 12.4x 12.0x 3.5x FirstEnergy Corp. $34,968.8 $42.25 (4.6%) 8.0% 90.8% 8.4x 11.6x 9.6x 7.9x 16.9x 12.9x 5.4x PPL Corporation $33,301.3 $27.79 (5.5%) 7.8% 91.8% 6.3x 8.0x 8.6x 8.3x 10.6x 11.4x 4.8x Progress Energy Inc. $28,953.0 $54.37 (2.9%) 21.0% 96.4% 8.1x 8.9x 10.2x 9.6x 20.4x 16.9x 4.4x Edison International $26,535.0 $41.04 (0.9%) 13.1% 97.9% 6.1x 6.5x 6.8x 6.9x 13.8x 16.2x 3.2x Entergy Corporation $24,179.7 $69.37 (5.0%) (3.9%) 93.1% 6.4x 6.4x 6.8x 7.5x 9.3x 12.0x 3.1x Median (4.2% ) 12.0% 94.3% 8.0x 8.4x 9.1x 8.3x 13.8x 13.8x 3.6x TEV / LTM Revenue Multiple as of TEV / 2011 Renewables 1/31/11 7/31/11 Current Revenue First Solar, Inc. $3,632.3 $ % (72.6%) 24.1% 4.9x 3.9x 1.3x 1.0x 7.2x 10.4x (0.2x) Vestas Wind Systems A/S $3,381.0 $ % (67.3%) 27.6% 0.9x 0.5x 0.4x NA 28.5x NA 0.8x Suntech Power Holdings Co. Ltd. $2,537.3 $ % (62.0%) 29.8% 0.8x 0.9x 0.7x 1.0x 22.4x NM 4.9x SunPower Corporation $1,328.6 $ % NA 79.5% NA NA 0.5x 0.5x NM NM 2.5x Clean Energy Fuels Corp. $1,170.9 $ % 25.9% 83.7% 4.0x 4.7x 4.2x 3.3x NM NM 7.2x GT Advanced Technologies Inc. $712.7 $ % (21.8%) 49.4% 1.7x 1.4x 0.7x 0.7x 5.6x 6.0x (1.2x) Rentech, Inc. $465.6 $ % 42.3% 88.4% 2.3x 1.5x 2.6x 2.8x NM 31.6x 3.1x Energy Conversion Devices, Inc. $205.6 $ % (75.0%) 20.1% 1.0x 0.7x 1.1x 0.8x NM NM (4.3x) FuelCell Energy Inc. $156.2 $ % (44.0%) 43.9% 3.0x 1.9x 1.3x 0.9x NM NM 0.9x Ballard Power Systems Inc. $76.9 $ % (28.7%) 48.2% 1.2x 1.1x 1.0x 0.7x NM NM 0.7x Median 19.6% (44.0% ) 46.1% 1.7x 1.4x 1.0x 0.9x 14.8x 10.4x 0.9x Cleantech Itron, Inc. $1,980.6 $ % (33.1%) 60.2% 1.3x 0.9x 0.8x 0.9x NM 10.3x 1.1x ESCO Technologies Inc. $886.9 $ % (17.0%) 69.8% 1.7x 1.5x 1.3x 1.1x 15.3x 11.2x 0.8x Ameresco, Inc. $864.2 $13.14 (4.2%) NA 75.2% 1.3x 1.1x 1.2x 1.1x 17.2x 13.9x 4.7x Echelon Corporation $188.8 $ % (43.1%) 48.3% 3.0x 2.3x 1.2x 1.1x NM NM 3.0x EnerNOC, Inc. $159.8 $9.18 (15.5%) (64.7%) 32.4% 1.8x 1.2x 0.6x 0.6x NM NM (7.4x) PowerSecure International, Inc. $103.2 $ % (13.1%) 69.6% 1.4x 1.2x 0.9x 0.7x 7.2x 24.9x 8.1x Comverge, Inc. $34.9 $ % (78.2%) 17.2% 1.1x 0.5x 0.3x 0.2x NM NM (0.2x) Median 6.4% (38.1% ) 60.2% 1.4x 1.2x 0.9x 0.9x 15.3x 12.6x 1.1x page 12

14 Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from % of TEV / LTM EBITDA Multiple as of TEV / 2011 P/E Ratio EBITDA TEV 1/31/12 Prior Month Prior Year LTM High 1/31/11 7/31/11 Current EBITDA Current /31/2011 Industrial & Infrastructure Services Engineering & Construction Fluor Corporation $7,674.9 $ % (18.7%) 74.2% 14.0x 11.4x 7.8x 6.0x 17.8x 14.8x (2.5x) Jacobs Engineering Group Inc. $5,347.9 $ % (12.8%) 80.4% 10.7x 7.5x 7.9x 6.9x 16.1x 13.1x (0.7x) Dresser-Rand Group Inc. $4,815.3 $ % 11.5% 90.6% 11.9x 17.0x 16.6x 9.2x 40.2x 16.2x 3.4x Quanta Services, Inc. $4,331.5 $ % (8.9%) 89.4% 11.3x 10.4x 12.9x 7.5x 47.3x 19.0x (0.8x) KBR, Inc. $4,123.9 $ % 0.1% 81.6% 7.0x 8.6x 7.9x 6.0x 10.5x 12.1x (1.1x) Chicago Bridge & Iron Company N.V. $3,769.3 $ % 29.5% 94.4% 8.4x 10.0x 9.5x 7.3x 17.3x 14.1x (1.2x) URS Corporation $3,705.8 $ % (7.3%) 85.3% 6.4x 5.6x 6.1x 4.9x NM 10.6x 0.5x McDermott International Inc. $2,516.0 $ % (41.4%) 46.6% 10.3x 10.2x 7.2x 6.3x 15.7x 13.4x (1.1x) Shaw Group Inc. $1,614.3 $ % (28.2%) 65.1% 7.9x 10.2x 25.8x 4.7x NM 9.5x (1.1x) MYR Group, Inc. $407.8 $ % (8.9%) 75.5% 10.2x 9.5x 8.3x 6.0x 22.3x 14.4x 0.1x Pike Electric Corporation $405.1 $ % (3.5%) 76.1% 11.8x 7.9x 7.0x 5.4x NM 16.6x 2.7x ENGlobal Corp. $77.4 $ % (53.2%) 37.1% NM NM 38.2x 4.4x NM 6.5x (3.6x) Median 8.1% (8.9% ) 78.2% 10.3x 10.0x 8.1x 6.0x 17.6x 13.8x (0.9x) Industrial & Infrastructure Services EMCOR Group Inc. $1,590.3 $ % (4.7%) 88.1% 5.8x 5.9x 5.7x 5.1x 15.5x 12.8x (1.2x) Cape plc $863.2 $6.18 NA NA 65.3% NA NA 5.8x NA 10.1x NA 0.9x Mistras Group, Inc. $683.5 $22.52 (11.7%) 57.6% 85.8% 10.1x 10.1x 12.3x 8.6x 30.9x 21.7x 1.1x Team Inc. $634.3 $29.18 (1.9%) 14.2% 94.3% 12.0x 10.6x 9.5x 7.4x 18.9x 15.1x 1.0x Furmanite Corporation $280.8 $ % 1.3% 89.8% 10.2x 10.1x 9.3x 7.3x 17.2x 13.4x 0.0x Matrix Service Co. $257.0 $ % 3.8% 79.6% NA 7.2x 5.9x 4.2x 15.9x 10.3x NM Median 7.6% 3.8% 87.0% 10.1x 10.1x 7.6x 7.3x 16.5x 13.4x 0.9x page 13

15 Experience Focus Market Intelligence Stability Global Reach Exceptional Results Harris Williams & Co. is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. Middle market leader closed nearly 200 transactions in the last four years. Execution focus with unparalleled senior-level attention. Over 10,000 conversations with buyers and lenders each year. Unparalleled retention of senior professionals. Approximately 20% of our transactions are cross-border. Best-in-class execution produces unmatched closing rate. Locations London, UK Richmond, VA Boston, MA Cleveland, OH London, UK Minneapolis, MN Philadelphia, PA San Francisco, CA page 14

16 Harris Williams & Co. s Energy & Power Group has a broad range of experience including products, services, and technologies that support or enhance the overall energy and power infrastructure. Key Niches: Cleantech, Energy Efficiency, and Renewables Power Products, Services, and Technologies Oil & Gas Products, Services, and Technologies Industrial & Infrastructure Services Engineering & Construction For more information on Harris Williams & Co. s Energy & Power Group as well as archived copies of the, please visit our website. Archived copies of the Group s industry whitepapers, including Transmission & Distribution Infrastructure and ESCOs Enabling Energy Efficiency, can also be found on the site. page 15

17 Tiff B. Armstrong Managing Director +1 (804) Mr. Armstrong co-leads the Energy & Power Group and was Harris Williams & Co. s second employee, joining the firm in In 1999, Mr. Armstrong founded the San Francisco office and has over 19 years of transactional experience focused in middle market mergers and acquisitions assignments. Having directed over 125 mergers and acquisitions transactions during his career, Mr. Armstrong has worked across industries including energy and power, consumer products, building products, business services, distribution, retailing, specialty chemicals, and technology. As Co-Head of the Energy & Power Group, Mr. Armstrong specializes on the Power segment. Prior to joining Harris Williams & Co., Mr. Armstrong was with Wheat First Butcher Singer (now Wells Fargo). He earned a B.S. with a concentration in Finance from the University of Virginia's McIntire School of Commerce and is also a Chartered Financial Analyst. Mr. Armstrong was past president and director of the San Francisco Chapter of ACG and is currently a director of the Greater Richmond YMCA. Andrew G. Spitzer Managing Director aspitzer@harriswilliams.com +1 (804) Mr. Spitzer founded and co-leads the Energy & Power Group at Harris Williams & Co. Over his investment banking career, Mr. Spitzer has advised clients on a variety of merger and acquisition and strategic advisory assignments, as well as corporate financings. Mr. Spitzer has advised a diverse range of manufacturing and service businesses in the energy and power industries. Key niche focus areas have included demand response solutions, power quality equipment, infrastructure and industrial services, and oilfield products and services. Prior to focusing on energy and power companies, Mr. Spitzer developed experience in numerous industries including industrial manufacturing, chemicals, automotive, aerospace and defense, business services, and consumer products. Prior to joining Harris Williams & Co., Mr. Spitzer worked in the General Industrial Group at Banc of America Securities, LLC and in the Investment Banking Group at Goldman Sachs & Co. Mr. Spitzer earned an M.B.A. with Honors from Columbia Business School, where he served as the Caplan Fellow. Mr. Spitzer earned a B.A. in Economics from the University of Virginia. Brian S. Lucas Director blucas@harriswilliams.com +1 (804) Mr. Lucas re-joined Harris Williams & Co. following the completion of an M.B.A. from The Wharton School at the University of Pennsylvania. Prior to business school, Mr. Lucas served as an Associate with Harris Williams & Co., working on mergers and acquisitions transactions in a broad range of industries, including general industrial, consumer products, plastics, and waste equipment/services. Before re-joining Harris Williams & Co., Mr. Lucas worked as an Associate with Graham Partners, a private equity group in Philadelphia. Previous experience also includes work as an Investment Banking Analyst with JP Morgan. Mr. Lucas earned a B.S. in Commerce, with a concentration in Finance from The McIntire School of Commerce at the University of Virginia. Matthew G. White Vice President mwhite@harriswilliams.com +1 (804) Prior to joining Harris Williams & Co., Mr. White worked as an Associate in the Equity Capital Markets Group at SunTrust Robinson Humphrey. Previous experience also includes work in the Capital Finance Group at Wachovia Securities (now Wells Fargo) where he focused on acquisition financing, growth capital, and workout situations. Mr. White earned an M.B.A. from the Goizueta Business School at Emory University and a B.S. in Business Administration from the University of North Carolina at Chapel Hill. Luke R. Semple Vice President lsemple@harriswilliams.com +1 (804) Prior to joining Harris Williams & Co., Mr. Semple worked as a Global Banking Associate at Deutsche Bank. Within energy and power, Mr. Semple has advised a diverse range of businesses, including providers of energy efficiency and clean technology products and services, oilfield products and services, transmission distribution products and services, and power generation equipment. He earned an M.B.A. from the Darden School of Business at the University of Virginia and a B.A. from Trinity College in Hartford, Connecticut. page 16

18 1001 Haxall Point 9 th Floor Richmond, VA Phone: +1 (804) Fax: +1 (804) Market Street 31st Floor San Francisco, CA Phone: +1 (415) Fax: +1 (415) Two International Place 24th Floor Boston, MA Phone: +1 (617) Fax: +1 (617) Brook Street London, W1K 4HS Phone: Fax: South Ninth Street Suite 3350 Minneapolis, MN Phone: +1 (612) Fax: +1 (612) East 9th Street 20th Floor Cleveland, OH Phone: +1 (216) Fax: +1 (216) Market Street 21st Floor Philadelphia, PA Phone: +1 (267) Fax: +1 (267) Sources: 1. Capital IQ. 2. MergerMarket. 3. Baker Hughes. Harris Williams & Co. ( a member of The PNC Financial Services Group, Inc. (NYSE:PNC), is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firm has deep industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements, and capital markets advisory services. Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorized and regulated by the Financial Services Authority (FRN #540892). Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business in the U.S. and Europe, respectively. THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BY THIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE SECURITIES, FINANCIAL INSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITY OR RESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS OR OTHER FINANCIAL INFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MORE INFORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRD PARTIES, PLEASE CONTACT US AT The information and views contained in this report were prepared by Harris Williams & Co. ( Harris Williams ). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams judgment and are subject to change without notice. The financial instruments discussed in this report may not be suitable for all investors, and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams prior written consent. Copyright 2012 Harris Williams & Co., all rights reserved Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorized and regulated by the FSA. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business in the U.S. and Europe, respectively. page 17