Energy & Power Industry Update November 2011

Transcription

1 Energy & Power Industry Update Member FINRA/SIPC

2 What We ve Been Reading Nancy Pfund, a Managing Partner of DBL Investors, and Ben Healey asked a question we find ourselves asking all too often in Virginia, What Would Jefferson Do?. While this general question can be applied in any number of contexts (e.g., drafting a declaration, establishing a state university, selecting the right wine with dinner), Pfund and Healey pose the question in reference to a rather specific topic, The Historical Role of Federal Subsidies in Shaping America s Energy Future. Through their research of a wide range of historical data, they attempt to tackle the challenge of comparing energy subsidies on an apples-to-apples basis by focusing on historical subsidies that had an impact as a particular energy source emerged. The results are not particularly surprising historical government subsidies for oil, gas, and nuclear far exceeded those currently (and recently) in place for renewables. Harold Hamm, the founder and CEO of Continental Resources (and the original discoverer of the Bakken oil fields), seems to offer a rebuttal to the point above in an interview with The Wall Street Journal, stating, We can t come anywhere near the scale of energy production to achieve energy independence by pouring tax dollars into green energy sources like wind and solar. It has to come from oil and gas. Interview topics range from U.S. oil and gas potential to the current regulatory landscape to the potential royalty stream the federal government could realize if federal lands were open to exploration (Hamm estimates $18 trillion, or more than the U.S. national debt). In The Fallout Seven months later: Japan s nuclear predicament (subscription required), The New Yorker s Evan Osnos explores Japan s tangled relationship with nuclear power with a detailed retelling of the events in March, their aftermath, and the potential implications for nuclear power in Japan and abroad. Osnos writes, On balance, the Fukushima disaster handed no easy victories to either side of the nuclear debate: defenders can no longer pretend to have engineered away the risks of generating a billion watts in a concrete building, and opponents cannot easily suggest that a meltdown will produce the huge number of immediate casualties that the public imagines. Even after Fukushima, several influential environmentalists have renewed their contention that nuclear power is an unavoidable part of weaning the planet from the burning of fossil fuels. The U.S. Department of Energy ( DOE ) released its first Quadrennial Technology Review ( QTR ), which was launched at the recommendation of President Obama s Council of Advisors on Science and Technology. Introducing the report, Secretary of Energy Stephen Chu writes, Traditionally, the Department s strategy has been organized along individual program lines and based on annual budgets. With this QTR, we bind together multiple energy technologies, as well as multiple DOE energy technology programs, in the common purpose of solving our energy problems. In addition, the QTR provides a multi-year framework for our planning. Energy investments are multi-year, multi-decade investments. Given this time horizon, we need to take a longer view. While the U.S. may be no closer to a formal energy policy, it at least appears to be organizing its resources more holistically and efficiently. page 1

3 Industry Observations The Energy, Power, and Infrastructure and Industrial Services indices rebounded following increased turbulence in August and September. The North American rotary rig count continued its climb, again setting a new three-year high water mark. Third quarter M&A activity experienced a slight decline as the macroeconomic circumstances added an additional element of uncertainty to many processes. Commodity prices have stabilized following late-summer declines. 150 LTM Indexed Stock Performance Index % Change S&P 5.78 Energy Power (3.83) I & IS Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 S&P 500 Energy Power Industrial & Infrastructure Services 300 LTM EBITDA Multiples 1 Indexed LTM EBITDA Multiples Index % Change Energy Power 1.51 I & IS Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Energy Power Industrial & Infrastructure Services page 2

4 Key Trading Statistics 1 Stock Price % Change TEV / LTM EBITDA Multiple as of TEV / 2011 P/E Ratio Industry Segment 1 Month 12 Month 10/25/10 4/25/11 Current EBITDA Current 2009 Energy Integrateds 16.1% 11.1% 4.8x 5.3x 4.3x 3.8x 9.2x 8.6x Energy Services and Equipment 13.8% 7.8% 8.9x 10.1x 7.7x 5.2x 19.7x 9.1x Exploration and Production 14.0% 0.8% 6.8x 9.6x 8.0x 5.1x 20.3x 13.1x Coal Producers 9.0% (29.0%) 9.3x 9.2x 7.3x 4.3x 11.8x 10.5x Refining 13.1% 35.2% 8.3x 7.8x 5.1x 3.2x NM 5.6x Storage & Transportation 10.1% 9.2% 13.8x 14.1x 14.6x 10.7x 21.9x 18.8x Power Diversified Power 16.4% (12.0%) 10.1x 10.3x 8.1x 7.3x 13.8x 11.2x Mid-Cap Power 18.1% 7.6% 8.3x 9.7x 7.5x 6.5x 15.6x 12.9x Independent Power Producers (1.1%) 0.7% 7.1x 11.7x 9.5x 7.7x 15.1x 21.6x Electric Utilities 1.7% 10.0% 7.9x 8.7x 9.0x 8.2x 13.1x 14.0x TEV / LTM Revenue 2011 Revenue Renewables (2.4%) (26.2%) 1.4x 1.4x 0.9x 0.7x 9.4x 6.9x Cleantech (11.0%) (53.3%) 1.7x 1.3x 0.8x 0.8x 12.5x 12.1x Industrial & Infrastructure Services Engineering & Construction 14.6% (0.0%) 7.4x 10.2x 7.8x 5.6x 16.0x 12.5x Industrial & Infrastructure Services 19.3% 8.5% 8.5x 10.5x 8.0x 6.6x 17.5x 12.4x 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% 80.0% 60.0% 60.0% 40.0% 40.0% 20.0% 20.0% 0.0% 0.0% Storage and Transportation Electric Utilities Independent Industrial & Refining Exploration Integrateds Engineering Mid-Cap Energy Coal Diversified Cleantech Renewables Power Infrastructure and and Power Services and Producers Power Enegy Producers Services Production Power Construction Equipment Industrial & Infrastructure Services 5-Year Average 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 3

5 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 ($ per ton - Central Appalachian) ($ per ton - Rotterdam) ($ per MWg) Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 (# rigs) ($ per gallon) Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 ($ per bbl) ($ per MMBtu) Energy & Power Industry Update Oil 1 Natural Gas $91.27 per bbl $3.92 per MMBtu U.S. Rig Counts 3 Gasoline and Ethanol 1 3,000 2,500 2,000 1,500 1, ,488 rigs $2.67 per gallon $2.59 per gallon Gasoline Ethanol Coal 1 Electricity Prices CAPP: $73.47 per ton Rotterdam: $ per ton $41.25 per MWg Central Appalachian Rotterdam page 4

6 Number of Transactions Energy & Power Industry Update Select Recently Announced Energy & Power Transactions 1,2 Date Target Business Description Acquirer 10/18/2011 Oil Lift Technology, Inc. Canada based manufacturer of progressive cavity pump products for the artificial lift market 10/17/2011 TEC, Inc. US based provider of environmental management consulting services 10/13/2011 Kline Oilfield Equipment, Inc. US based manufacturer of completion and workover tools used in the oil and gas industry 10/12/2011 Rising Star Services, Inc. US based provider of oilfield cementing and acidizing services 10/10/2011 Complete Production Services, Inc. US based provider of completion and production services for the development of hydrocarbon reserves 9/23/2011 First Choice, Power, L.P. US based provider of renewable energy plans and meterbased and prepaid electricity services 9/12/2011 Axis Energy Services Holdings Inc. Canada based provider of directional drilling and MWD services 9/12/2011 Global Industries, Ltd. US based provider of construction and subsea services to the offshore oil and gas industry 9/7/2011 Total Safety U.S., Inc. US based provider of integrated safety and compliance solutions to the power industry 9/6/2011 Quinn's Oilfield Supply Ltd. Canada based manufacturer and distributor of reciprocating pumps for oil and gas production 9/2/2011 Power Holdings Inc. US based manufacturer of specialized power distribution, conditioning, and monitoring systems 8/25/2011 APS Energy Services US based provider of energy conservation and renewable energy solutions 8/24/2011 Confluence Solar, Inc. US based manufacturer of single crystal silicon substrates for the solar photovoltaic industry 8/22/2011 AMES Group LLC US based provider of maintenance and engineering services to the nuclear power industry Dover Corporation Cardno Limited Logan International Inc. Complete Production Services, Inc. Superior Energy Services, Inc. Direct Energy, LP Precision Drilling Corporation Technip Warburg Pincus LLC Lufkin Industries, Inc. Smiths Interconnect Ameresco, Inc GT Advanced Technologies Inc. Bartlett Holdings, Inc. Quarterly United States E&P M&A Activity Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q page 5

7 Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from %of TEV / LTMEBITDA Multiple as of TEV / 2011 P/ERatio EBITDA TEV 10/25/11 Prior Month Prior Year LTM High 10/25/10 4/25/11 Current EBITDA Current /25/2011 Integrateds Exxon Mobil Corporation $402,526.8 $ % 20.7% 90.5% 7.1x 7.3x 6.1x 4.4x 10.6x 9.3x 0.1x Chevron Corporation $207,190.0 $ % 24.0% 95.7% 4.6x 5.1x 4.5x 3.5x 9.3x 8.1x (0.2x) ConocoPhillips $119,263.6 $ % 15.3% 86.5% 4.4x 4.9x 4.1x 4.0x 9.1x 8.6x 0.7x Occidental Petroleum Corporation $73,218.0 $ % 6.8% 72.5% 6.3x 7.4x 5.9x 4.8x 12.7x 10.4x 0.2x Hess Corporation $24,207.8 $ % (5.6%) 67.5% 3.5x 4.6x 3.4x 3.2x 7.4x 8.6x 0.5x Marathon Oil Corporation $18,733.6 $ % (28.0%) 47.6% 4.9x 5.5x 2.3x 2.4x 8.0x 7.2x 0.0x Median 16.1% 11.1% 79.5% 4.8x 5.3x 4.3x 3.8x 9.2x 8.6x 0.2x Energy Services and Equipment Large Cap Diversified Shl Schlumberger Limited i $99,712.8 $ % (0.4%) 71.4% 14.9x 15.8x 10.6x x 21.7x 14.1x x Halliburton Company $34,167.2 $ % 2.6% 60.9% 9.4x 10.6x 6.1x 4.6x 11.9x 8.6x 0.4x Baker Hughes Incorporated $27,572.5 $ % 19.3% 68.6% 10.4x 10.9x 7.8x 4.8x 18.8x 9.8x 0.8x National Oilwell Varco, Inc. $26,171.8 $ % 41.2% 78.1% 6.3x 10.6x 8.0x 6.4x 15.5x 12.2x (1.1x) Weatherford International Ltd. $18,431.6 $ % (13.3%) 52.7% 11.2x 11.4x 8.3x 5.3x 42.7x 9.3x 3.8x Median 12.1% 2.6% 68.6% 10.4x 10.9x 8.0x 5.3x 18.8x 9.8x 0.7x Mid and Small Cap Equipment and Service Providers Cameron International Corporation $12,699.3 $ % 17.7% 80.8% 10.3x 12.3x 12.1x 8.5x 22.8x 14.1x (0.1x) Oil States International Inc. $4,509.7 $ % 31.9% 77.6% 7.1x 11.0x 8.8x 5.5x 16.5x 10.2x 2.2x Complete Production Services, Inc. $3,008.7 $ % 25.3% 73.4% 8.5x 7.2x 5.9x 3.7x 15.3x 7.7x 1.1x RPC Inc. $2,804.2 $17.32 (0.8%) 11.5% 59.6% 8.8x 8.9x 5.2x 3.3x 10.9x 6.6x 0.4x Exterran Holdings, Inc. $2,559.7 $ % (63.7%) 33.8% 7.7x 8.5x 6.7x 5.4x NM NM 4.1x Dril-Quip, Inc. $2,382.6 $ % (5.8%) 76.3% 14.2x 16.9x 15.3x 11.5x 28.6x 19.4x (1.5x) Key Energy Services Inc. $2,272.0 $ % 12.5% 55.5% 16.6x 15.9x 9.2x 3.4x 258.5x 6.9x 3.3x Basic Energy Services, Inc. $1,244.9 $ % 38.4% 41.5% 11.0x 10.1x 4.6x 3.1x 30.7x 6.6x 3.5x Median 17.5% 15.1% 66.5% 9.6x 10.5x 7.7x 4.6x 22.8x 7.7x 1.6x Energy page 6

8 Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from %of TEV / LTMEBITDA Multiple as of TEV / 2011 P/ERatio EBITDA TEV 10/25/11 Prior Month Prior Year LTM High 10/25/10 4/25/11 Current EBITDA Current /25/2011 Construction and Equipment Contractors Transocean Ltd. $25,608.9 $ % (14.6%) 64.3% 6.1x 8.8x 7.8x 5.7x NM 9.7x 2.2x Noble Corp. $13,530.4 $ % 2.2% 74.9% 6.2x 13.3x 14.1x 6.6x 26.4x 8.8x 3.5x Diamond Offshore Drilling Inc. $9,322.8 $ % (7.5%) 79.2% 5.4x 6.7x 5.3x 6.7x 8.8x 12.9x 0.2x Technip $8,808.5 $ % 9.1% 88.0% 7.8x 9.1x 7.6x NA 17.2x NA (1.5x) Nabors Industries Ltd. $8,354.9 $ % (18.1%) 48.8% 6.6x 8.5x 5.2x 3.6x 27.9x 6.9x 2.4x Subsea 7 SA $8,065.7 $ % 11.6% 81.2% 8.4x 17.5x 16.0x NA 17.6x NA (0.1x) Helmerich & Payne Inc. $5,379.5 $ % 19.2% 67.1% 6.6x 8.8x 5.8x 4.5x 13.6x 10.5x 0.1x Rowan Companies Inc. $4,961.0 $ % 5.8% 77.0% 6.4x 12.5x 11.8x 6.4x 24.7x 9.6x 0.9x Oceaneering International, Inc. $4,639.7 $ % 59.0% 93.0% 6.0x 9.9x 10.2x 8.3x 23.3x 17.9x (0.3x) Patterson-UTI Energy Inc. $3,415.5 $ % (1.7%) 57.4% 7.4x 7.9x 4.4x 2.8x 13.1x 7.1x 0.5x Hercules Offshore, Inc. $1,283.3 $ % 69.8% 52.7% 8.8x 7.7x 7.2x 8.2x NM NM 4.1x Pioneer Drilling Co. $ $ % 46.6% 6% 51.0% x x x x NM 11.2x x Cal Dive International Inc $374.4 $ % (63.0%) 24.1% 12.6x 13.3x 5.8x 2.9x NM 5.5x 2.7x Median 12.0% 5.8% 67.1% 6.6x 8.8x 7.2x 5.7x 17.6x 9.7x 0.9x Exploration and Production Large Cap Anadarko Petroleum Corporation $50,118.5 $ % 24.3% 91.3% 6.2x 9.1x 7.9x 5.4x 47.0x 22.6x 1.8x Apache Corp. $45,316.7 $ % (6.0%) 70.9% 4.9x 5.7x 4.2x 3.4x 9.8x 8.0x 0.7x Chesapeake Energy Corporation $31,042.2 $ % 29.5% 76.2% 4.2x 12.6x 9.0x 5.5x 18.9x 10.4x 3.5x Devon Energy Corporation $27,681.7 $ % (5.0%) 66.0% 5.1x 8.1x 4.9x 3.8x 18.6x 9.1x 0.2x EOG Resources, Inc. $28,179.5 $ % (9.8%) 72.4% 12.5x 14.2x 9.0x 5.1x 57.3x 19.9x 1.6x Noble Energy, Inc. $18,468.1 $ % 11.8% 86.5% 7.5x 11.1x 8.3x 5.5x 20.4x 13.8x 1.6x Southwestern Energy Co. $15,509.2 $ % 18.8% 81.9% 8.1x 9.6x 9.2x 7.3x 23.4x 18.1x 0.8x Pioneer Natural Resources Co. $12,207.6 $ % 13.5% 78.3% 7.4x 15.3x 10.8x 6.1x 35.6x 18.1x 2.4x Murphy Oil Corporation $10,993.2 $ % (17.0%) 69.8% 4.1x 4.9x 3.7x 3.2x 11.3x 9.2x 0.1x Newfield Exploration Co. $7,876.3 $37.04 (8.1%) (38.3%) 47.5% 5.9x 9.8x 4.9x 4.1x 10.2x 8.0x 2.5x Ultra Petroleum Corp. $6,626.8 $ % (24.9%) 60.8% 6.9x 10.4x 7.2x 5.8x 13.3x 12.0x 2.0x Quicksilver Resources Inc. $3,343.8 $7.65 (6.1%) (49.6%) 47.9% 8.9x 7.7x 6.4x 6.5x 3.7x 35.7x 3.6x Median 16.0% (5.5%) 71.6% 6.5x 9.7x 7.5x 5.4x 18.7x 12.9x 1.7x page 7

9 Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from %of TEV / LTMEBITDA Multiple as of TEV / 2011 P/ERatio EBITDA TEV 10/25/11 Prior Month Prior Year LTM High 10/25/10 4/25/11 Current EBITDA Current /25/2011 Mid and Small Cap Cabot Oil & Gas Corporation $8,434.7 $ % 114.5% 84.0% 7.9x 13.0x 15.6x 8.0x 62.0x 27.1x 2.1x Plains Exploration & Production Company $7,890.3 $ % 7.1% 70.3% 7.0x 9.4x 8.4x 4.7x 21.9x 10.3x 4.1x SandRidge Energy, Inc. $6,401.2 $ % 1% 26.2% 2% 54.6% 89x 8.9x NM 24.5x 66x 6.6x NM 23.1x 35.2x Forest Oil Corp. $3,090.8 $11.48 (23.0%) (63.0%) 28.5% 6.5x 9.6x 5.0x 4.6x 11.4x 9.0x 2.9x Swift Energy Co. $1,732.6 $ % (10.7%) 59.9% 5.9x 7.0x 5.1x 3.8x 19.0x 14.4x 1.5x PetroQuest Energy Inc. $579.2 $ % 25.6% 74.6% 3.6x 5.5x 5.2x 4.1x 213.3x 12.0x 0.9x Delta Petroleum Corp. $432.7 $2.25 (11.1%) (69.9%) 16.9% 39.5x NM 15.6x 20.6x NM NM 27.5x Median 12.0% 7.1% 59.9% 7.0x 9.4x 8.4x 4.7x 21.9x 13.2x 2.9x Coal Producers CONSOL Energy Inc. $13,224.9 $ % 6.4% 72.8% 10.1x 10.9x 8.6x 6.0x 21.7x 10.5x 2.5x Peabody Energy Corp. $12,377.5 $ % (24.0%) 53.9% 9.4x 10.5x 6.7x 4.4x 11.8x 7.3x 0.6x Arch Coal Inc. $7,883.6 $ % (33.9%) 44.8% 9.2x 9.5x 9.5x 5.0x 18.4x 6.0x 5.5x Alpha Natural Resources, Inc. $7,538.5 $ % (51.3%) 32.8% 6.8x 8.6x 8.0x 4.2x 83.6x 11.6x 2.7x Alliance Resource Partners LP $2,728.0 $ % 14.7% 83.2% 5.3x 5.4x 5.0x 4.3x 9.8x 8.6x 0.7x Patriot Coal Corporation $1,216.8 $ % (21.3%) 36.5% 14.8x 39.2x 12.6x 3.5x NM 13.6x 3.3x James River Coal Co. $707.1 $ % (45.0%) 33.5% 3.7x 5.8x 5.3x 3.6x 10.1x 32.3x 2.9x Farmacol SA $205.3 $ % (53.2%) 52.7% 10.8x 9.0x 6.0x NA 8.0x NA 1.1x Median 9.0% (29.0%) 48.7% 9.3x 9.2x 7.3x 4.3x 11.8x 10.5x 2.6x Refining Valero Energy Corporation $16,828.1 $ % 23.0% 70.2% 5.5x 6.0x 4.2x 2.8x 10.0x 5.6x 1.0x Sunoco, Inc. $5,714.6 $ % (9.3%) 76.3% 7.2x 6.4x 6.5x 6.9x NM 17.0x 0.9x Tesoro Corporation $5,097.3 $ % 81.3% 83.8% 14.5x 6.4x 4.6x 3.5x 9.6x 6.5x 1.3x Western Refining Inc. $2,360.2 $ % 120.7% 67.6% 8.3x 7.4x 5.1x 3.0x 13.5x 5.2x 2.4x CVR Energy, Inc. $2,204.7 $ % 141.6% 78.7% 7.6x 8.3x 4.7x 2.8x 11.5x 5.5x (0.6x) Hochschild Mining PLC $2,164.9 $7.05 (2.0%) (7.7%) 64.2% 8.3x 7.8x 4.2x NA 10.5x NA (0.9x) Alon USA Energy, Inc. $1,429.9 $ % 27.9% 46.5% NM 17.5x 8.6x 3.3x NM 3.4x 10.0x Delek US Holdings Inc. $1,206.0 $ % 94.3% 81.6% 23.0x 9.5x 6.5x 3.2x NM 5.6x 3.0x Fortune Oil plc $346.7 $0.16 (1.9%) 35.2% 66.1% 8.6x 14.2x 11.2x NA 9.6x NA (1.0x) Median 13.1% 35.2% 70.2% 8.3x 7.8x 5.1x 3.2x NM 5.6x 1.0x page 8

10 Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from %of TEV / LTMEBITDA Multiple as of TEV / 2011 P/ERatio EBITDA TEV 10/25/11 Prior Month Prior Year LTM High 10/25/10 4/25/11 Current EBITDA Current /25/2011 Storage & Transportation Kinder Morgan Energy Partners LP $38,801.4 $ % 8.9% 98.4% 14.2x 13.5x 15.3x 10.4x NM 33.9x 4.9x El Paso Corp. $37,058.5 $ % 95.2% 100.4% 7.7x 12.7x 13.9x 10.7x 36.4x 20.7x 5.6x Plains All American Pipeline, L.P. $15,972.2 $ % 1.0% 97.3% 14.7x 14.6x 13.4x 11.3x 21.6x 16.3x 5.1x Enbridge Energy Partners LP $14,016.2 $ % (3.3%) 85.0% 23.0x 30.2x 28.5x 10.7x NM 18.9x 11.2x Magellan Midstream Partners LP $9,197.7 $ % 20.9% 98.9% 15.4x 16.2x 16.5x 14.3x 21.2x 17.9x 3.7x Buckeye Partners LP $8,722.5 $ % 6.3% 93.1% 13.4x 21.0x 21.9x 14.4x 22.7x 18.6x 6.6x Sunoco Logistics Partners L.P. $4,932.9 $ % 19.0% 95.1% 12.4x 11.7x 11.6x 10.2x 9.4x 15.1x 4.0x Holly Energy Partners L.P $1,589.8 $ % 9.6% 90.1% 13.3x 12.5x 12.0x 9.3x 22.2x 19.0x 4.1x Median 10.1% 9.2% 96.2% 13.8x 14.1x 14.6x 10.7x 21.9x 18.8x 5.0x Diversified Power General Electric Co. $504,975.5 $ % 0.7% 74.7% 21.1x 19.5x 15.9x 16.5x 13.3x 10.5x 11.6x Siemens AG $96,096.2 $ % (10.1%) 75.9% 8.0x 8.0x 6.1x 6.0x 12.3x 10.2x 0.3x ABB Ltd. $44,003.9 $ % (13.8%) 71.8% 9.8x 10.4x 8.2x 6.9x 15.5x 11.9x (0.3x) Emerson Electric Co. $39,081.6 $ % (15.2%) 74.9% 10.4x 10.2x 8.0x 7.7x 15.8x 13.0x 0.7x Schneider Electric S.A. $38,409.4 $ % (16.5%) 69.2% 9.5x 10.0x 7.3x NA 12.9x NA 1.3x Eaton Corporation $18,070.9 $ % (1.9%) 76.7% 10.5x 11.1x 8.4x 6.9x 12.0x 9.9x 1.6x Alstom SA $13,619.5 $ % (28.3%) 59.6% 4.6x 7.2x 4.5x NA 17.3x NA 0.8x Cooper Industries plc $9,780.9 $ % (1.3%) 74.7% 11.3x 13.2x 11.2x 9.5x 14.3x 12.5x 1.2x Median 16.4% (12.0%) 74.7% 10.1x 10.3x 8.1x 7.3x 13.8x 11.2x 1.0x Mid-Cap Power Ametek Inc. $7,457.3 $ % 16.4% 83.0% 12.1x 13.9x 10.8x 9.7x 17.8x 15.3x 1.5x Thomas & Betts Corp. $2,679.1 $ % 7.6% 77.1% 8.3x 9.7x 7.5x 6.5x 15.2x 12.5x 0.3x Valmont Industries, Inc. $2,480.1 $ % 6.4% 73.5% 9.9x 10.5x 7.3x 6.6x 15.6x 12.9x 0.6x Littelfuse Inc. $1,016.2 $ % 10.1% 70.7% 6.3x 8.3x 6.3x 6.0x 12.0x 11.3x (0.6x) Powell llindustries, Inc. $263.7 $ % 4.2% (3.0%) 77.0% x x x x 218.9x 15.7x (2.8x) Median 18.1% 7.6% 77.0% 8.3x 9.7x 7.5x 6.5x 15.6x 12.9x 0.3x Independent Power Producers NRG Energy, Inc. $14,023.1 $21.02 (3.4%) 4.2% 81.9% 5.3x 5.9x 6.5x 7.4x 9.6x 21.6x 3.7x Dynegy Inc. $5,006.8 $3.56 (24.4%) (25.7%) 51.4% 9.0x 17.5x 12.5x 11.5x NM NM 15.7x GenOn Energy, Inc. $4,234.3 $ % NA 64.9% NA NA 9.5x 7.7x NM NA 8.8x Mirrabooka Investments Limited $214.6 $ % 0.7% 83.1% NM NM NM NA 20.7x NA NM Median (1.1%) 0.7% 73.4% 7.1x 11.7x 9.5x 7.7x 15.1x 21.6x 8.8x Power page 9

11 Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from %of TEV / LTMEBITDA Multiple as of TEV / 2011 P/ERatio EBITDA TEV 10/25/11 Prior Month Prior Year LTM High 10/25/10 4/25/11 Current EBITDA Current /25/2011 Electric Utilities Southern Company $58,610.0 $ % 13.0% 98.2% 9.4x 9.6x 9.9x 9.4x 18.5x 16.1x 3.6x Dominion Resources, Inc. $48,527.3 $ % 14.3% 97.6% 10.5x 8.8x 9.3x 9.5x 17.7x 15.8x 3.9x NextEra Energy, Inc. $44,895.5 $ % 0.7% 93.6% 7.8x 9.3x 9.0x 8.2x 12.7x 11.8x 4.5x Duke Energy Corporation $44,844.9 $ % 13.7% 98.2% 7.9x 8.3x 9.0x 8.0x 13.2x 14.4x 3.5x Exelon Corporation $41,537.7 $42.39 (0.1%) 2.6% 93.6% 5.5x 5.7x 6.2x 8.0x 10.7x 14.0x 2.0x FirstEnergy Corp. $37,743.3 $45.04 (0.2%) 21.3% 96.8% 8.4x 9.9x 11.9x 8.5x 26.1x 13.7x 6.2x American Electric Power Co., Inc. $36,650.8 $ % 6.5% 98.7% 7.5x 7.4x 7.6x 7.5x 13.1x 12.1x 3.7x PPL Corporation $34,316.9 $ % 7.6% 97.7% 8.1x 9.2x 9.6x 8.3x 12.0x 11.8x 5.7x Progress Energy Inc. $28,135.6 $ % 14.9% 98.3% 8.5x 8.7x 9.6x 9.2x 18.0x 16.2x 4.2x Edison International $26,372.1 $ % 10.0% 98.8% 6.3x 6.5x 6.8x 6.8x 12.3x 15.0x 3.3x Entergy Corporation $24,310.5 $ % (7.2%) 88.7% 6.6x 6.2x 6.6x 7.5x 9.8x 11.3x 3.2x Mdi Median 17% 1.7% 10.0% 0% 97.7% 7% x x x x 13.1x1 14.0x x TEV / LTM Revenue Multiple as of TEV / 2011 Renewables 10/25/10 4/25/11 Current Revenue Vestas Wind Systems A/S $5,504.6 $ % (47.3%) 45.6% 1.4x 0.8x 0.5x NA 9.4x NA 1.7x First Solar, Inc. $4,898.4 $43.43 (38.2%) (70.5%) 24.8% 4.6x 4.3x 2.0x 1.1x 9.9x 6.0x (0.1x) Suntech Power Holdings Co. Ltd. $2,233.9 $2.30 (12.9%) (73.8%) 21.2% 1.0x 0.9x 0.7x 0.7x 2.5x 28.0x 4.7x SunPower Corporation $1,549.0 $ % (33.3%) 39.1% 1.1x 0.8x 0.6x 0.5x 43.0x 7.9x 2.0x Clean Energy Fuels Corp. $899.8 $11.36 (0.9%) (19.0%) 63.6% 4.8x 4.9x 3.4x 2.4x NM NM 1.6x GT Advanced Technologies Inc. $562.7 $7.17 (8.1%) (13.7%) 41.0% 1.3x 1.1x 0.6x 0.5x 4.8x 4.5x (1.3x) Rentech, Inc. $365.0 $ % 0.8% 80.4% 2.4x 2.0x 2.1x 1.9x NM NM 17.6x FuelCell Energy Inc. $168.3 $0.97 (3.9%) (14.1%) 40.3% 2.2x 2.7x 1.6x 1.0x NM NM 0.5x Energy Conversion Devices, Inc. $156.7 $0.44 (46.5%) (90.3%) 8.3% 1.1x 0.8x 0.7x 0.6x NM NM (6.0x) Ballard Power Systems Inc. $79.0 $ % (18.5%) 58.4% 1.4x 1.6x 1.1x 0.7x NM NM 0.9x Median (2.4%) (26.2%) 40.6% 1.4x 1.4x 0.9x 0.7x 9.4x 6.9x 1.3x Cleantech Itron, Inc. $1, $ (2.6%) (48.5%) 47.7% 7% 1.5x 1.1x1x 0.8x 0.8x 12.0x 8.6x 1.2x ESCO Technologies Inc. $892.2 $ % (16.1%) 67.4% 1.7x 1.5x 1.3x 1.2x 13.0x 13.0x 0.9x Ameresco, Inc. $676.5 $ % NA 60.0% 1.2x 1.3x 1.0x 0.8x 14.3x 11.2x 3.4x Echelon Corporation $257.0 $6.57 (13.1%) (23.8%) 61.3% 2.8x 2.9x 1.9x 1.4x NM NM 1.7x EnerNOC, Inc. $132.0 $8.08 (22.0%) (73.4%) 25.7% 2.2x 1.0x 0.5x 0.5x NM NM (4.6x) PowerSecure International, Inc. $59.5 $4.11 (11.0%) (58.0%) 41.5% 2.0x 1.4x 0.6x 0.4x 5.2x 15.8x 17.1x Comverge, Inc. $46.9 $1.60 (22.7%) (80.3%) 19.7% 1.4x 0.7x 0.3x 0.3x NM NM (0.2x) Median (11.0%) (53.3%) 47.7% 1.7x 1.3x 0.8x 0.8x 12.5x 12.1x 1.2x page 10

12 Member FINRA/SIPC Stock Performance Net Debt / Current Price Change from Change from %of TEV / LTMEBITDA Multiple as of TEV / 2011 P/ERatio EBITDA TEV 10/25/11 Prior Month Prior Year LTM High 10/25/10 4/25/11 Current EBITDA Current /25/2011 Industrial & Infrastructure Services Engineering & Construction Fluor Corporation $7,746.1 $ % 12.8% 73.8% 7.6x 13.4x 10.0x 5.8x 27.6x 14.0x (2.9x) Dresser-Rand Group Inc. $4,967.0 $ % 31.5% 88.9% x 15.8x 18.5x x 41.8x 16.2x x Jacobs Engineering Group Inc. $4,745.4 $ % (2.5%) 68.3% 7.4x 10.1x 7.3x 6.9x 15.7x 12.9x (0.4x) Quanta Services, Inc. $4,039.9 $ % 2.5% 84.2% 8.4x 11.4x 11.9x 7.1x 40.3x 17.8x (1.1x) KBR, Inc. $3,754.6 $ % 15.2% 72.9% 5.0x 8.8x 6.9x 5.0x 11.8x 10.6x (1.1x) Chicago Bridge & Iron Company N.V. $3,312.0 $ % 32.2% 75.5% 6.8x 10.2x 8.7x 6.2x 16.0x 12.0x (0.8x) URS Corporation $3,262.0 $ % (12.3%) 71.3% 5.6x 6.0x 5.2x 4.4x 10.9x 9.1x 0.5x McDermott International Inc. $3,145.9 $ % (9.0%) 54.0% 7.3x 11.3x 7.3x 5.7x 14.8x 9.8x (0.9x) Shaw Group Inc. $1,506.3 $20.80 (0.2%) (34.6%) 50.0% 5.4x 8.1x 8.2x 4.5x NM 9.5x (0.3x) MYR Group, Inc. $376.1 $ % 19.9% 9% 72.2% 2% 83x 8.3x 10.0x0x 78x 7.8x 54x 5.4x 22.6x 13.9x (0.5x) Pike Electric Corporation $347.0 $6.89 (0.6%) (7.6%) 65.7% 11.1x 10.5x 7.2x 4.7x NM 15.1x 2.7x ENGlobal Corp. $78.0 $2.48 (14.5%) (17.1%) 43.7% NM NM NM 2.8x NM 4.9x (1.0x) Median 14.6% (0.0%) 71.8% 7.4x 10.2x 7.8x 5.6x 16.0x 12.5x (0.7x) Industrial & Infrastructure Services EMCOR Group Inc. $1,314.2 $ % (17.0%) 68.6% 5.1x 5.5x 4.9x 4.2x NM 10.4x (0.9x) Cape plc $1,052.3 $7.77 NA NA 81.1% NA NA 7.1x NA 12.6x NA 0.8x Mistras Group, Inc. $650.7 $ % 102.3% 94.8% 83x 8.3x 11.6x 12.7x 87x 8.7x 34.2x 21.9x 06x 0.6x Team Inc. $553.7 $ % 30.3% 84.8% 8.6x 10.5x 8.9x 6.7x 17.6x 13.8x 1.0x Furmanite Corporation $264.4 $ % 2.9% 75.2% 13.5x 10.5x 9.1x 6.6x 17.5x 12.4x 0.2x Matrix Service Co. $230.4 $ % 8.5% 70.3% NA 8.5x 5.5x 3.8x 15.4x 9.9x NM Median 19.3% 8.5% 78.1% 8.5x 10.5x 8.0x 6.6x 17.5x 12.4x 0.6x page 11

13 Experience Focus Market Intelligence Stability Global Reach Exceptional Results Harris Williams & Co. is the premier middle market advisor with a two-decade legacy of sell side excellence serving 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 12

14 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 Energy & Power Industry Update, 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 13

15 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 14

16 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 the premier middle market advisor with a two-decade legacy of sell side excellence serving clients worldwide. The firm is focused exclusively on the middle market providing 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, an Appointed Representative of Sturgeon Ventures LLP, which is Authorised and Regulated by the Financial Services Authority. 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 2011 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, an Appointed Representative of Sturgeon Ventures LLP, which is authorised 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 15