1. Richard Hall Scott Honig

2. A category of stocks that relate to producing or supplying energy The sector we focused our analysis includes companies involved in: Exploration and development of oil or gas reserves Oil and gas drilling Integrated power firms Oil and Gas Equipment and Services

3. Performance in the sector is largely driven by the supply and demand for worldwide energy Energy producers will do very well during times of high oil and gas prices, but will earn less when the value of energy drops Furthermore, this sector is sensitive to political events, which historically have driven changes in the price of oil

5. Declining world wide oil production resulting in higher price for oil, threatening demand Increase in domestic energy resources Importance of new technology to reach deeper oil in the earth’s crust Increase in demand of overall energy throughout the world

6. Positive momentum over next 12 months due to higher expected oil consumptions Analysts estimate EPS will recover in 2010 growing at 104% Domestic oil to average $77-78 in 2010 Risks include unexpected decline in oil demand, extended economic downturn, OPEC production limits Oil and Gas production declined 3% in 2009, making the 7 th year in a row of decline

7. Price Performance against the S&P 1500 Well above S&P 1500 Slightly below overall sector performance

8. Neutral outlook over the next 12 months due mainly to recent decrease in oil production EPS fell 55% in 2009 and are projected to grow by 29% in 2010 making up some ground Drilling budget across the industry are expected to be cut in half over the short run outlook Future oil demands will result in more expensive exploration and drilling techniques in the long run

9. Price performance of sub-sector versus Energy Sector and S&P 1500 Sub-sector out performed both the S&P 1500 and the Energy Sector over the last 5 years

10. Neutral outlook over the next 12 months mostly attributed to recent lower demands for oil Tanker rates will continue to remain weak due to cuts in OPEC production, downturn in economy, and increase in fleet size Cost of transportation to increase in the long run due to risk factors such as piracy, distance, and taxation New opportunities for pipelines in Asia-Pacific Long run emphasis on efficient transportation

11. Price performance against sector and S&P 1500 Performed above S&P 1500 from end of 2005 to beginning of 2009 Underperformed overall sector

12. Fundamental outlook over the next 12 months is neutral due to surplus of some specific equipment and pullback in upstream spending Longer term, upstream spending will recover and surpass any levels prior, mainly for high technology services Increase demand for new instruments and techniques to reach deeper oil Sub-sector is vital to the future of the oil and gas industry as new advancements in technology are crucial for long term success

13. Price performance against the sector and the S&P 1500 Outperformed the S&P 1500 over the last 5 years Outperformed the sector from 2006 to the middle of 2008 Underperformed the sector at the end of 2008 and beginning of 2009

14. Haliburton Co Provides various products and services to the energy industry for the exploration, development, and production of oil and gas properties worldwide Schlumberger Ltd Supplies technology, integrated project management, and information solutions to the oil and gas industry worldwide National Oilwell Varco Inc Designs, constructs, manufactures, and sells systems, components, and products used in oil and gas drilling and production Provides oilfield services and supplies; and distributes products, and provides supply chain integration services to the upstream oil and gas industry worldwide.

15. Market Cap: $25.5B Trailing 12-Month P/E Ratio: 22.3 Price $30.16 Operating margins remain relatively weak compared to 2008 levels Long term HAL is positioned to take advantage of a trend toward services with higher technology content

16. Market Cap: $74.6B Trailing 12-Month P/E Ratio: 24.1 Price $64.76 More exposure to emerging markets

17. Market Cap: $17.7B Trailing 12-Month P/E Ratio: 10.6 Price $43.41 The rise of shale and deepwater well plays, tend to require premium equipment, such as drilling pipe and other NOV products Industry’s growing need for new rig equipment

18. National Oilwell Varco FCF growth of 10-15% over next 10 years $55~$62 fair value Relatively CHEAP compared to similar firms P/E Ratio: 10 v. 22 & 24 Current Price $43.41 Room to grow in market share