Petroleum Industry Litigation and Arbitration

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1 Petroleum Industry Litigation and Arbitration Economic ECONOMIC and AND Financial FINANCIAL Experts EXPERTS Energy Market Experts

2 Experience The Brattle Group and Energy Security Analysis, Inc. (ESAI) offer clients experience in crude oil and petroleum products disputes that span the range of economic and financial issues. Our engagements have encompassed: The Brattle Group has worked with ESAI since 2006 to offer our clients combined expertise, analyses, and advice on a wide range of oil and petroleum matters. t Exploration and production t LNG, marine, and pipeline transportation t Storage t Refining t Petrochemicals t Wholesale and retail distribution We provide clients with expert testimony and consulting in the context of disputes over asset values, hydrocarbon pricing terms, royalties, taxes, antitrust claims, and contract or treaty damages. Our economists have testified before the U.S. Congress, federal and state courts, national competition authorities, and in international arbitration matters before the ICSID, LCIA, SCC, ICC, and the PCA. Our expertise in litigation matters draws on our extensive business consulting experience. For example, we have developed long- and short-term strategic plans to help clients adapt to future regulatory and industry changes and to minimize financial exposure to the price volatility of crude oil, middle distillates, gasoline, and fuel oil. For national governments, we have advised on the management of strategic petroleum reserves. We also develop valuation techniques for asset management and transactions. Our team has reviewed and implemented energy price risk management strategies and evaluated discount rate and country risk issues around the world. Page 2

3 Areas of Focus Asset Valuation Contract Damages In cases alleging expropriation and other international treaty violations, we have estimated the value of oil concessions and related assets. In proceedings before national tax authorities, we have estimated the value of reserves transferred outside of market transactions. We have provided independent evaluations of appraisals for multi-billion dollar refining and marketing businesses, and evaluated future expansion projects in the sector. In contract disputes between crude oil, natural gas, and LNG suppliers and purchasers, The Brattle Group has assessed the appropriateness of pricing challenged under price re-opener provisions. Our economists have also estimated the economic damages resulting from alleged contract and treaty breaches. Competition and Antitrust Taxes and Royalties Commodity Markets and Risk Management Data Analysis and Forecasting We have advised clients and testified before legislative and regulatory bodies about the potential effects of a number of significant mergers in the petroleum industry. Brattle s economists have analyzed the effect of increased supplier concentration in petroleum markets and investigated market concentration of gasoline storage on product prices. In response to price fixing allegations, we have analyzed crude oil trading practices and the competitiveness of crude and product prices. The Brattle Group has provided testimony regarding the proper techniques for valuing both physical and intangible assets in the petroleum industry in the United States and overseas for royalty and tax purposes, including windfall profits taxes. Our engagements have included determination of the fair value of oil and gas taken from the ground, assessment of the appropriate tariff rates for transportation services, and valuation of petroleum products in end markets. ESAI has tracked tax and subsidy regulations and fuel specifications worldwide. We have provided clients with market analyses of regional, national, and international oil and gasoline markets in litigation alleging price manipulation in petroleum product and transportation markets. We have advised clients in public policy matters and evaluated the prudence and impact of corporate risk management and trading strategies. In the context of shareholder litigation, we have assessed the valuation of forward commodity positions and term contracts in accounting reports, and evaluated the impact of challenged valuation practices upon share prices. We have maintained a unique worldwide database of supply/demand and petroleum market regulatory data. ESAI s developing country data has been widely used by IOCs, NOCs, and the BP Statistical Review. With these data we have developed proprietary analytical methodologies for market analysis and forecasting. Moreover, we have advised energy companies and both producing and consuming country governments on the evolution of markets and oil-related policies and their impact on petroleum pricing. Page 3

4 Brattle Experts Darrell B. Chodorow Washington, DC Carlos Lapuerta London Donald R. Lessard Senior Advisor Cambridge Darrell B. Chodorow conducts economic and financial analysis in the oil and gas sectors. His engagements have included supply agreement disputes, valuation and damages matters, public policy analyses, and pipeline regulation. He assists clients in developing insights from the analysis of businesses and financial contracts in damages quantification, asset valuation, and the evaluation of economic substance underlying transactions. He has submitted expert reports and testified in U.S. federal and state proceedings, as well as in arbitration matters worldwide. Mr. Chodorow received his M.B.A. from the Yale University School of Management. Carlos Lapuerta is an expert in financial valuation and analyzes regulatory reform in the electricity, natural gas, and petroleum industries. He has estimated the value of businesses, contracts, and physical assets in petroleum and natural gas matters, and has provided expert testimony on valuation issues before courts and international arbitration tribunals. In addition to advising private clients, he has worked for the European Commission and the governments of several countries, advising on the liberalization in these industries. He has also assisted clients in the development of tariffs, policies towards entry and infrastructure expansion, and auctions. Mr. Lapuerta received his J.D. from Harvard Law School. Donald R. Lessard is the Epoch Foundation Professor of International Management at the MIT Sloan School of Management. His area of expertise includes international corporate strategy and finance, with an emphasis on risk and knowledge management. His research is focused on shaping and managing risks in large engineering projects, the globalization of financial services, and knowledge development within multinational firms. Dr. Lessard received his Ph.D. and M.B.A. from Stanford University. P: E: P: E: P: E: Page 4

5 brattle M. Alexis Maniatis Stewart C. Myers Gerald A. Taylor Washington, DC Cambridge Cambridge M. Alexis Maniatis leads the firm s Stewart C. Myers is the Robert C. arbitration practice. He provides consulting and expert witness testimony in commercial arbitration and advises clients on valuation issues in royalty disputes, expropriations, refining and reserve asset transactions, regulatory proceedings, and contract disputes. Merton Professor of Financial Economics at the MIT Sloan School of Management. He has testified on valuation and damages in oil-related litigation and arbitration proceedings, including before the Iran-U.S. Claims Tribunal. Gerald A. Taylor has over twenty-five years of experience providing expert testimony and litigation support in court and regulatory proceedings involving petroleum and other energy markets. He has submitted expert reports and testified on damages issues in proceedings before federal, state, and bankruptcy courts, and before international and domestic arbitration panels. He works with clients in the U.S., Europe, Latin America, and Australia. He is past president of the American Finance Association and co-author of the leading graduate-level textbook on corporate finance, The Principles of Corporate Finance. Professor Myers received his Ph.D. and M.B.A. from Stanford University. Mr. Maniatis received his M.B.A. from the Yale University School of Management. P: E: Alexis.Maniatis@brattle.com His expertise includes advising clients on liability and damages issues arising from antitrust, tax, and contract claims in the petroleum industry. He consults on market performance, asset and commodity valuation and pricing, market developments and trends, changes in the regulatory environment, and strategies for addressing and allocating risk. Mr. Taylor received his J.D. from the University of Kansas and his M.S. from the MIT Sloan School of Management. P: E: Stew.Myers@brattle.com P: E: Gary.Taylor@brattle.com Page 5

6 esai ESAI Experts Sander Cohan Energy Expert Sarah A. Emerson Richard Mueller Energy Expert Andrew Reed Energy Expert Sander Cohan is an expert Sarah A. Emerson is the founding partner and a principal of ESAI. She has developed many of the company s tools for analyzing the oil market and forecasting prices. Rick Mueller is an expert Andrew Reed is an expert on global crude oil markets, global oil demand, OPEC policies, and non-opec supplies. He frequently presents to industry conferences and is interviewed on oil issues. on CIS and European oil markets, and is the author of ESAI s monthly analyses, CIS Watch and Europe Watch. in North American and Latin American petroleum markets. He specializes in renewable fuels in terms of regulation and their supply/demand impact on petroleum markets. Prior to joining ESAI, he was a renewable energy analyst at KEMA, where he focused primarily on wind, biomass, and other renewable energy projects. He has also worked at Ameresco as a finance associate. She has testified as an expert on oil pricing issues in several international arbitrations, as well as before the U.S. Congress. In she was the Repsol-YPF Senior Industry Fellow at the Harvard Kennedy School of Government. Mr. Cohan received his M.A. from the Nitze School of Advanced International Studies at Johns Hopkins University. Ms. Emerson received her M.A. from the Nitze School of Advanced International Studies at Johns Hopkins University. P: E: scohan@esai.com P: E: semerson@esai.com Page 6 Prior to joining ESAI, he was a management consultant specializing in emerging markets at Booz Allen Hamilton and PricewaterhouseCoopers. Mr. Mueller received his M.A. from the Nitze School of Advanced International Studies at Johns Hopkins University. P: E: rmueller@esai.com Prior to joining ESAI, he was the director of research at the Trident Group, a corporate risk management firm focusing on Russia. At Trident, he managed a research team, performing due diligence, risk assessment, business intelligence, and litigation support. Mr. Reed received his M.A. from the Nitze School of Advanced International Studies at Johns Hopkins University. P: E: areed@esai.com

7 About US Our Functional Practice Areas Antitrust/Competition Commercial Damages Environmental Litigation and Regulation Forensic Economics Intellectual Property International Arbitration International Trade Product Liability Regulatory Finance and Accounting Risk Management Securities Tax Utility Regulatory Policy and Ratemaking Valuation Our Industry Practice Areas Electric Power Financial Institutions Natural Gas Petroleum Pharmaceuticals, Medical Devices, and Biotechnology Telecommunications and Media Transportation The Brattle Group The Brattle Group provides consulting and expert testimony in economics, finance, and regulation to corporations, law firms, and governments around the world. We combine in-depth industry experience, rigorous analyses, and principled techniques to help clients answer complex economic questions in litigation, develop strategies for changing markets, and make critical business decisions. Our consultants and advisors are internationally recognized experts from both the public and private sectors and have participated in numerous high profile litigation efforts over the past two decades. We are distinguished by: t Thoughtful, timely, and transparent analyses of industries and issues t Affiliations with leading international academics and highly credentialed industry specialists t Clearly presented results that withstand critical review To learn more about our practices and staff, please visit Energy Security Analysis, Inc. (ESAI) Since its inception in 1984, Energy Security Analysis, Inc. (ESAI) has been dedicated to monitoring, analyzing, and synthesizing information about worldwide energy markets. ESAI pioneered the analytical techniques that are widely used today to interpret and forecast market behavior. Our Consulting Strengths Analytical Innovation Empirical Data & Experienced Analysts Global Coverage Strong Client Focus ESAI maintains comprehensive databases on supply, demand, inventories, trade, refining, fuel specifications, and government regulation in the global oil market, including an empirical database on global oil sector fundamentals, which covers the period from 1978 to the present, with projections 25 years into the future. In addition to being a source for data, ESAI interprets these data, providing analyses of current and future market trends. ESAI s energy team provides a wide range of market analysis and forecasting services to energy companies around the world. Their combination of analytical innovation and years of carefully compiled empirical data offers clients a unique perspective. ESAI s clients include IOCs, NOCs, independent refiners, governments, and end-use consumers. To learn more about our practices and staff, please visit Page 7

8 Economic ECONOMIC and AND Financial FINANCIAL Experts EXPERTS 44 Brattle Street Cambridge, MA Phone Facsimile rue Ducale Brussels Belgium Phone Facsimile Suite Sacramento Street San Francisco, CA Phone Facsimile Suite M Street, NW Washington, DC Phone Facsimile Halton House Holborn London EC1N 2JD United Kingdom Phone Facsimile office@brattle.com Energy Market Experts 401 Edgewater Place Suite 640 Wakefield, MA Phone Facsimile esai@esai.com Copyright 2009 The Brattle Group, Inc. Content Copyright 2009 The Brattle Group, Inc. and Energy Security Analysis, Inc.