Deepwater E&P in a Global Context - · PDF fileBP – – xxxx – – x x COP – – xxx– – x x x CVX O – xxx– – x x x ... block NC202, and BP collected further Seismic

May 26, 2010

See Disclosure Appendix of this report for important Disclosures and Analyst Certifications

Deepwater E&P in a Global Context

Neil McMahon, Ph.D.

Senior Analyst

Sanford C. Bernstein

+44-207-170-5002

[email protected]

Global Integrated Oils2

Discussion: Deepwater E&P in a Global Context

Who is finding what and where?

Hot exploration plays and company strategies

Impact of the GoM spill on the outlook for Deepwater Exploration


Recent Exploration Success Has Been Dominated by NOCs & E&Ps

Source: Bernstein analysis, IHS, Rigzone

27 39 35 42

69

14097 111

240

243

232 211

0

50

100

150

200

250

300

350

400

450

2006 2007 2008 2009

Num

ber o

f exp

lora

tion

disc

over

ies

IOC's NOC's E&P's

Exploration success in the last few years has been dominated by NOCs & E&Ps – not IOCs

However, recently most Integrateds have talked about returning to exploration, with increased capex in that area


Companies Are Still Finding Hydrocarbons In Diverse Locations

There has been plenty of exploration success, however, with 1,500 discoveries across 86 countries since 2006

Although discoveries have been of varying sizes, even last year significant finds were made in GoM, Brazil, Iraq, Australia etc.

020406080

100120140160180

Aus

tralia

Chi

naE

gypt

Arg

entin

aIn

done

sia

Indi

aC

olom

bia

Nor

way

Uni

ted

Bra

zil

Turk

eyLi

bya

Mex

ico

Rus

sia

Alg

eria

Mal

aysi

aP

akis

tan

Gul

f of

Ang

ola

Tuni

sia

Kaz

akhs

tan

Rom

ania

Can

ada

Iran

Iraq

Gha

naP

apua

New

Isra

elS

ierra

Tota

l num

ber o

f exp

lora

tion

disc

over

ies

2006 2007 2008 2009

Source: Bernstein analysis, IHS, Rigzone


After A Drought In The Mid-Noughties Deepwater Finds Have Returned

Deepwater discoveries over 200m water depth have not correlated with the oil price

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Tota

l Dee

pwat

er D

isco

verie

s (M

boe)

0

20

40

60

80

100

120

WTI

($/b

bl)

Deepwater Discoveries (Mboe) WTI ($/bbl)

Tupi Oil

Shtokman Gas & Condensate

Troll Gas & Condensate

Gorgon/Janz Gas

Shah-Deniz Gas

Tupi-Sul OilCarioca Oil

Jupiter Gas, Iara OilBem-Te-Vi Oil, Guara Oil

Piracuca Oil, Tiber Oil,

Shenandoah Oil

Source: Company reports, World Oil and Bernstein estimates


Deepwater Discoveries are Generally Getting Deeper, and Smaller

Global Deepwater Discoveries over time

Source: Company reports, World Oil and Bernstein estimates

-

2,000

4,000

6,000

8,000

10,000

12,000

1968

1971

1973

1976

1979

1982

1984

1987

1990

1993

1995

1998

2001

2004

2006

2009

2012

Dee

pwat

er d

isco

very

wat

er d

epth

(ft)

Brazil (Tupi, Iara, Guara)

Diameter is proportional to discovery size (Mboe)

Ultra Deepwater

Deepwater







The Majors’ Have Balanced Deepwater With Areas Of Lower Geological Risk

Presence of Majors in Hot Global Exploration Plays

Source: Company reports, Bernstein analysis

U.S. Unconven-tional Gas

Initial Geological RiskHigh High High Modest High Modest Low Low Low Low

Technical ChallengeHigh Modest Low High High Low Low Modest Low Low

Socio-Economic BarriersLow Low Low Modest Low Modest High Low Low Low

IOC Presence: Negligible positions are marked "–" and exploration/appraisal activities are marked "x"BP – – x x x x – – x xCOP – – x x x – – x x xCVX O – x x x – – x x xENI x x x x x x – – x xMRO – – x – x – – x – xRDS x – – x x – – x x xTOT – – – x x x – – x xXOM x Trying x x x x – x x xHES x x x – x x – – x xPBR x – – – x x – – – –

Legend: – = Negligible positions. x = Exploration/appraisal activity. O = CVX has some exposure including Frade & Papa Terra

Region

KurdistanOffshore

Libya

European Unconven-tional Gas

Australian Gas

Brazil Pre-Salt

Ghana & Gulf of Guinea

GoM Lower Tertiary

Offshore Arctic

New Indonesian

Basins


The Geology Is Becoming Better Understood..but Surprises Have Occurred

35%

22%

13%

7% 6%4% 4% 4%

3%1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

SubmarineFan

Channels

SubmarineFan Lobe

Turbidites Mud-richSlope

Slope Apron Pelagic SubLacustrine

Fan

SubmarineCanyon

SubmarineFan

SubmarineFan

ChannelLevee

Per

cent

age

of D

eepw

ater

Dis

cove

ries

by D

espo

sitio

nal T

ype

70% are submarine fans and turbidites

Source: CHC Reservoirs and Bernstein estimates

200 major deepwater discoveries ranked by type of depositional environment

Surprise 1:Stratigraphic traps

Surprise 2:Deepwater carbonate

reservoirs


The Industry Thought It Knew Deepwater West Africa Until 2006

Historical Congo drainage basin deepwater hydrocarbon discoveries

Source: IHS, World Oil and Bernstein estimates

0

5

10

15

20

25

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Gro

ss D

eepw

ater

Dis

cove

red

Res

erve

s (B

n bo

e)

EG, Gabon, Congo, Angola (>200M Water Depth)

Post 2006 there have been much small discoveries in Angola and very limited exploration in Nigeria


The Old School Deepwater Model Did Not Evolve From 2000-2005

Wildcat exploration 1965-2005 offshore Ghana (GH), Cote D'Ivoire (CI), Liberia (LR) and Sierra Leone (SL) which are all shallow wells

Source: IHS and Bernstein estimates Post 2005 industry deepwater focus


However The Ghana Play Could Still Extend Further West

Exploration in Sierra Leone, Liberia, Cote D’Ivoire and Ghana____________________________________

Source: Company reports and Bernstein analysis

Recent exploration wells in Sierra Leone & Cote D’Ivoire have led some to write off the region to the West, and to suggest that Ghana is an isolated event.

We believe there is still significant upside in these countries. While Anadarko’s Venus well test from September was judged a failure with only 45ft of net pay, this did not target the core of the interval, and newer seismic has shown encouraging geology

SL-0

6/07

SL-07

Sierra Leone

CoteD’Ivoire

Liberia

LB-1

7LB

-16

LB-1

5

CI-102

CI-105 CI-103100km

West CapeThree Points

Deep Water Tano

Ghana

LB-1

0LB-1

1

LB-1

2

LB-1

3

LB-1

4

Tullow interests

Anadarko, Woodside, Repsol, Tullow

Anadarko

Anadarko, Woodside, Tullow

CI-100

SL-0

6/07

SL-07

Sierra Leone

CoteD’Ivoire

Liberia

LB-1

7LB

-16

LB-1

5

CI-102

CI-105 CI-103100km100km

West CapeThree Points

Deep Water Tano

Ghana

LB-1

0LB-1

1

LB-1

2

LB-1

3

LB-1

4

Tullow interests

Anadarko, Woodside, Repsol, Tullow

Anadarko

Anadarko, Woodside, Tullow

CI-100


Surprise 2 – The Reservoirs Can Be Carbonates As Well

Offshore Brazil has the best creaming cure of any deepwater region, with a lot of life left in both the Campos and Santos Basins…as well as to the north

0

5

10

15

20

25

30

35

40

45

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Gro

ss D

eepw

ater

Dis

cove

red

Res

erve

s (B

n bo

e)

Offshore Brazil (> 200m Water Depth)


Mainly post-salt clastic reservoirs

Mainly pre-salt carbonate reservoirs


Lat Am Deepwater Exploration Appears To Being Moving North

Source: IHS and Bernstein estimates

Wildcat exploration 1965-2005 offshore Guyana (GY), Suriname (SR) and French Guiana (GF)

Along with Brazil, will this be the new focus in the 2010-2015 period

Q4 2010 French Guiana well: Tullow/Shell/TOTAL


Indonesia: Deepwater Licenses Have Led to Increased Exploration

Exploration in Indonesia __________________________

Source: Company reports, Bernstein analysis

After Indonesia became a net oil importer in 2003, the government increased deepwater licensing and increased frontier exploration

Activity in 2010 is led by Marathon’s exploration in Sulawesi, around the Pasangkayu block and Bone Bay, and in the slightly longer term we would expect to see increased exploration in West Papua, especially from Hess

Kutei Basin

Pasa

ngka

yuBone Bay

Tangguh LNG

Natuna

West Papua

Java

Kalimantan

Sumatra

Natuna Sea

Sulawesi

Timor

Cepu

Gunting

Bontang LNGRokan

MFK Block

Siak

NE Madura III

E AmbalatBukat

West Papua I & III

Kuma

Ketapang

S. JambiBlock BCorridor

Wiriagar, Muturi, BerauKutei Basin

Pasa

ngka

yuBone Bay

Tangguh LNG

Natuna

West Papua

Java

Kalimantan

Sumatra

Natuna Sea

Sulawesi

Timor

Cepu

Gunting

Bontang LNGRokan

MFK Block

Siak

NE Madura III

E AmbalatBukat

West Papua I & III

Kuma

Ketapang


Wiriagar, Muturi, BerauKutei Basin

Pasa

ngka

yuBone Bay

Tangguh LNG

Natuna

West Papua

Java

Kalimantan

Sumatra

Natuna Sea

Sulawesi

Timor

Cepu

Gunting

Bontang LNGRokan

MFK Block

Siak

NE Madura III

E AmbalatBukat

West Papua I & III

Kuma

Ketapang


Wiriagar, Muturi, Berau


Offshore Libya – If It Works Onshore…Some Success Offshore

Offshore Libya Acreage

Source: Libyan NOC and Bernstein analysis

The IOCs are heavily involved in offshore Libya – an area close to a proven system, and where political risks are greater than geological risks

Successful exploration to date has included Hess’ Block 54 and Repsol’s discovery in block NC202, and BP collected further Seismic data in 2009

HESS

BP

ENIXOM

XOM

Sirte Oil Co.

GazpromPBR

Woodside

WahaOil Co.

REP

Nippon

Onshore Sirte Basin

Gulf of Sirte

Libya

TOT

54

NC

202Arous Al Bahardiscovery

OildiscoveryHESS

BP

ENIXOM

XOM

Sirte Oil Co.

GazpromPBR

Woodside

WahaOil Co.

REP

Nippon

Onshore Sirte Basin

Gulf of Sirte

Libya

TOT

54

NC

202Arous Al Bahardiscovery

Oildiscovery


Deepwater South China Sea – 2010/2011 Big Increase In Activity

Deepwater South China Sea

Source: Company Reports

Although the shallow water part of the South China Sea has been actively explored since the early 1980s, it is only over the past 5 years that deep water exploration has started to become interesting, with seismic indicating deep sea fan systems extending significant distances from the shelf

Although Husky has made a number of discoveries in Block 29/26, but this is currently the only block to be drilled, and represents just 2% of the total exploration acreage

If the discovery density of 29/26 was typical, the basin could hold reserves up to 30bn boe, or 10bn boe on a risked basis, although this is still highly speculative


Lastly The GoM Was A Recent Deepwater Success Story..Until The Spill

Historical Mississippi drainage basin and Gulf of Mexico deepwater hydrocarbon discoveries


0

2

4

6

8

10

12

14

16

18

2019

69

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

Gro

ss D

eepw

ater

Dis

cove

red

Res

erve

s (B

n bo

e) US Gulf of Mexico (>200M Water Depth)

A recent resurgence in GoM discoveries suggested a bright future…up to the spill

Prior to 2008, the last wave of deepwater discoveries in the GoM occurred between 1998-2002







Macondo Blowout And Spill Not The First...But Very Much The Largest

Source: MMS and Bernstein estimates

0

20

40

60

80

100

120

140

160

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Num

ber o

f blo

wou

ts, f

ires

or e

xplo

sion

sFires & Explosions Blowouts

0

2000

4000

6000

8000

10000

12000

14000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Volu

me

of o

il sp

illed

>10 bbls 1-10 bbls <1 bbl

Number of blowoutsNumber of fires

Estimated daily flow from the Macondo well

Safety Performance in the US Deepwater GoM (1996-2008)

Blowouts and fires in the GoM do happen but we usually do not hear about them

Spills also occur but the current spill past annual averages in 3 days


Future deepwater exploration in the US has suffered a set-back

KeyLack of local support or low resource potentialNew areas open to study and explorationCurrently open areas

Newly protected areas

Alaska

Postponed public meetings for offshore Virginia sale

US Offshore Strategy from March…..with April update and moratorium

Source: DOI and Bernstein estimates


The Arctic – Melting Ice Opens A New Frontier…but An Oil Spill Closes It

Arctic Provinces

Source: Jakobsson, M., Macnab, R., Mayer, L., Anderson, R., Edwards, M., Hatzky, J., Schenke, H-W., and Johnson, P., 2008, "An improved bathymetric portrayal of the Arctic Ocean: Implications for ocean modeling and geological, geophysical and oceanographic analyses," v. 35, L07602, Geophysical Research Letters, doi:10.1029/2008GL033520. Also adapted by Bernstein.

In the past the extent of ice coverage has made it impossible to access exploration acreage in the Arctic, although recent years have seen longer “ice windows”

While Russia has not organised any licensing rounds, Canada and the US have held various lease sales in the Beaufort and Chukchi seas, with the IOCs heavily involved

Chukchi and Beaufort drilling now is not very likely until after 2012…although Shell will keep trying for a permit in 2010

West Greenland drilling seems ok this year


The Current GoM new drilling moratorium is important to the deepwater

0

500

1000

1500

2000

2500

3000

3500

4000

450020

10E

2011

E

2012

E

2013

E

2014

E

2015

E

2016

E

2017

E

2018

E

2019

E

2020

E

Oil

prod

uctio

n (K

bbl/d

)

Other

Brazil

US

Source: IEA, Wood Mackenzie, Company reports and Bernstein estimates

Forecast Oil Production From New Large Deepwater Fields (>1000m)

GoM developments are important to the deepwater…but not as important to the future production as you might think


However, Should Deepwater Fears Spread It Will Impact Global Supply

83

84

85

86

87

88

89

90

91

2010

E

2011

E

2012

E

2013

E

2014

E

2015

E

2016

E

2017

E

2018

E

2019

E

2020

E

Oil

prod

uctio

n (M

bbl/d

)

Other Supply Deepwater delayed Total Supply

1-year delay in projects from 2013 onward causes shortfall in supply

Source: IEA, Wood Mackenzie, Company reports and Bernstein estimates

Potential impact of Delays to Deepwater Projects


Disclosure Appendix


Valuation Methodology

Our target prices for the Global Integrated Oils are calculated by applying our estimates for 2011 cashflow per share (CFPS) to a forward price-to-cashflow (P/CF) multiple. This P/CF multiple is generated through the relationship, and historically strong correlation, between 12 month forward P/CF multiples and Return on Average Capital Employed (ROACE) within the Global Integrated Oils group. Our calculation utilizes this relationship and an estimated long term, through the cycle, ROACE to generate the target P/CF multiple. The price calculations for the Integrateds are summarized in exhibit below. A key assumption is that investors continue to reward companies with higher returns, as has been the case historically. We use $80 per barrel WTI and $9.00/mcf for US gas in 2010 and $102.6/bbl WTI and $8.50/mcf for US gas in 2011.

Source: Bloomberg and Bernstein Estimates

Ticker FXAdjusted P/CF

Multiple 2011 CFPS Target PriceClosing Price

(24/05/10) RatingBP (US) $ 4.2 13.16 56 41.86 OBP (UK) GBp 4.2 149.19 630 493.00 OCVX $ 4.6 19.39 88 73.44 OCOP $ 3.8 14.34 54 50.11 MENI (EUR) € 3.6 6.18 22 14.97 OENI (US) $ 3.6 16.86 60 36.52 OMRO $ 3.0 11.80 36 31.60 OTOT (EUR) € 4.5 9.52 43 37.54 MTOT (US) $ 4.5 12.97 59 45.13 MRDSA LN GBp 4.5 499 2268 1789 ORDSB LN GBp 4.5 499 2268 1714 ORDSA NA € 4.5 5.75 26 20.78 ORDSB NA € 4.5 5.75 26 19.94 ORDS/A US $ 4.5 15.67 71 51.09 ORDS/B US $ 4.5 15.67 71 49.27 OXOM $ 5.7 12.28 70 60.19 MPBR ADR (PREF) $ 5.9 7.36 39 29.11 MPETR4 SHR (PREF) $R 5.9 6.92 36 27.15 MPBR ADR (ORD) $ 5.9 7.36 45 33.14 MPETR3 SHR (ORD) $R 5.9 6.92 42 30.90 MHES $ 4.3 17.16 73 51.28 O

Target Price = P/CF Multiple x 2011 CFPS


Risks

Oil prices forecasts are heavily dependent on GDP expectations. As such should GDP be stronger than expected or weaker than expected it could materially change the outlook for oil demand and prices and for the cash flow generation of the peer group. In addition supply disruptions caused by weather or terrorism remain a material risk and would place further upward pressure on pricing. The greatest risk to our target prices for the Majors is a significant decline in crude oil prices, as the Majors commonly trade in line with commodity prices. Additionally, downward revisions to production volume targets could adversely impact share prices.


Disclosure AppendixSRO REQUIRED DISCLOSURES

•References to "Bernstein" relate to Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited, and Sanford C. Bernstein, a unit of AllianceBernstein Hong Kong Limited, collectively.•Bernstein analysts are compensated based on aggregate contributions to the research franchise as measured by account penetration, productivity and proactivity of investment ideas. No analysts are compensated based on performance in, or contributions to, generating investment banking revenues.•Bernstein rates stocks based on forecasts of relative performance for the next 6-12 months versus the S&P 500 for stocks listed on the U.S. and Canadian exchanges, versus the MSCI Pan Europe Index for stocks listed on the European exchanges (except for Russian companies), versus the MSCI Emerging Markets Index for Russian companies and stocks listed on emerging markets exchanges outside of the Asia Pacific region, and versus the MSCI Asia Pacific ex-Japan Index for stocks listed on the Asian (ex-Japan) exchanges - unless otherwise specified. We have three categories of ratings:Outperform: Stock will outpace the market index by more than 15 pp in the year ahead.Market-Perform: Stock will perform in line with the market index to within +/-15 pp in the year ahead.Underperform: Stock will trail the performance of the market index by more than 15 pp in the year ahead.Not Rated: The stock Rating, Target Price and estimates (if any) have been suspended temporarily.•As of 05/20/2010, Bernstein's ratings were distributed as follows: Outperform - 45.8% (1.0% banking clients) ; Market-Perform - 47.4% (1.0% banking clients); Underperform - 6.8% (0.0% banking clients); Not Rated - 0.0% (0.0% banking clients). The numbers in parentheses represent the percentage of companies in each category to whom Bernstein provided investment banking services within the last twelve (12) months.•A member of Neil McMahon's household maintains a long position in BP PLC (BP). •Accounts over which Bernstein and/or their affiliates exercise investment discretion own more than 1% of the outstanding common stock of the following companies BP / BP PLC, BP/.LN / BP PLC, COP / ConocoPhillips, CVX / ChevronTexaco Corp, MRO / Marathon Oil Corp, RDS/A / Royal Dutch Shell PLC, RDS/B / Royal Dutch Shell PLC, RDSA.LN / Royal Dutch Shell PLC, RDSA.NA / Royal Dutch Shell PLC, RDSB.LN / Royal Dutch Shell PLC, RDSB.NA / Royal Dutch Shell PLC.•The following companies are or during the past twelve (12) months were clients of Bernstein, which provided non-investment banking-securities related services and received compensation for such services BP / BP PLC, BP/.LN / BP PLC, CVX / ChevronTexaco Corp, FP.FP / TotalFinaElf SA, MRO / Marathon Oil Corp, TOT / Total SA, XOM / Exxon Mobil Corp.•An affiliate of Bernstein received compensation for non-investment banking-securities related services from the following companies COP / ConocoPhillips, CVX / ChevronTexaco Corp, XOM / Exxon Mobil Corp.•In the next three (3) months, Bernstein or an affiliate expects to receive or intends to seek compensation for investment banking services from BP / BP PLC, BP/.LN / BP PLC, COP / ConocoPhillips, CVX / ChevronTexaco Corp, E / ENI SpA, ENI.IM / ENI SpA, FP.FP / TotalFinaElf SA, HES / Hess Corp, MRO / Marathon Oil Corp, PBR / Petroleo Brasileiro SA, PBR/A / PetroleoBrasileiro SA, PETR3.BZ / Petroleo Brasileiro SA, PETR4.BZ / Petroleo Brasileiro SA, RDS/A / Royal Dutch Shell PLC, RDS/B / Royal Dutch Shell PLC, RDSA.LN / Royal Dutch Shell PLC, RDSA.NA / Royal Dutch Shell PLC, RDSB.LN / Royal Dutch Shell PLC, RDSB.NA / Royal Dutch Shell PLC, TOT / Total SA, XOM / Exxon Mobil Corp.•This research publication covers six or more companies. For price chart disclosures, please visit www.bernsteinresearch.com, you can also write to either: Sanford C. Bernstein & Co. LLC, Director of Compliance, 1345 Avenue of the Americas, New York, N.Y. 10105 or Sanford C. Bernstein Limited, Director of Compliance, Devonshire House, One Mayfair Place, London W1J 8SB, United Kingdom; or Sanford C. Bernstein, a unit of AllianceBernstein Hong Kong Limited, Director of Compliance, Suite 3401, 34th Floor, One IFC, One Harbour View Street, Central, Hong Kong.


12-Month Rating History as of 05/24/2010

Ticker Rating Changes BP O (RC) 05/10/10 M (RC) 03/03/09 BP/.LN O (RC) 05/10/10 M (RC) 03/03/09 COP M (RC) 02/16/10 O (RC) 06/23/09 M (RC) 09/05/07 CVX O (RC) 02/16/10 M (RC) 05/23/07 E O (RC) 11/21/08 ENI.IM O (RC) 11/21/08 FP.FP M (RC) 02/16/10 O (IC) 05/30/03 HES O (RC) 02/16/10 M (IC) 10/15/09 MRO O (RC) 02/16/10 M (RC) 05/13/09 PBR M (RC) 04/12/10 O (IC) 10/15/09 PBR/A M (RC) 04/12/10 O (IC) 10/15/09 PETR3.BZ M (RC) 04/12/10 O (IC) 10/15/09 PETR4.BZ M (RC) 04/12/10 O (IC) 10/15/09 RDS/A O (RC) 02/16/10 M (RC) 03/16/09 RDS/B O (RC) 02/16/10 M (RC) 03/16/09 RDSA.LN O (RC) 02/16/10 M (RC) 03/16/09 RDSA.NA O (RC) 02/16/10 M (RC) 03/16/09 RDSB.LN O (RC) 02/16/10 M (RC) 03/16/09 RDSB.NA O (RC) 02/16/10 M (RC) 03/16/09 TOT M (RC) 02/16/10 O (IC) 05/30/03 XOM M (RC) 02/19/09 Rating Guide: O - Outperform, M - Market-Perform, U - Underperform, N - Not Rated Rating Actions: IC - Initiated Coverage, DC - Dropped Coverage, RC - Rating Change

OTHER DISCLOSURESA price movement of a security which may be temporary will not necessarily trigger a recommendation change. Bernstein will advise as and when coverage of securities commences and ceases. Bernstein has no policy or standard as to the frequency of any updates or changes to its coverage policies. Although the definition and application of these methods are based on generally accepted industry practices and models, please note that there is a range of reasonable variations within these models. The application of models typically depends on forecasts of a range of economic variables, which may include, but not limited to, interest rates, exchange rates, earnings, cash flows and risk factors that are subject to uncertainty and also may change over time. Any valuation is dependent upon the subjective opinion of the analysts carrying out this valuation.This document may not be passed on to any person in the United Kingdom (i) who is a retail client (ii) unless that person or entity qualifies as an authorised person or exempt person within the meaning of section 19 of the UK Financial Services and Markets Act 2000 (the "Act"), or qualifies as a person to whom the financial promotion restriction imposed by the Act does not apply by virtue of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, or is a person classified as an "professional client" for the purposes of the Conduct of Business Rules of the Financial Services Authority.To our readers in the United States: Sanford C. Bernstein & Co., LLC is distributing this publication in the United States and accepts responsibility for its contents. Any U.S. person receiving this publication and wishing to effect securities transactions in any security discussed herein should do so only through Sanford C. Bernstein & Co., LLC.To our readers in the United Kingdom: This publication has been issued or approved for issue in the United Kingdom by Sanford C. Bernstein Limited, authorised and regulated by the Financial Services Authority and located at Devonshire House, 1 Mayfair Place, London W1J 8SB, +44 (0)20-7170-5000.To our readers in member states of the EEA: This publication is being distributed in the EEA by Sanford C. Bernstein Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority and holds a passport under the Investment Services Directive.To our readers in Hong Kong: This publication is being issued in Hong Kong by Sanford C. Bernstein, a unit of AllianceBernstein Hong Kong Limited. AllianceBernstein Hong Kong Limited is


regulated by the Hong Kong Securities and Futures Commission.To our readers in Australia: Sanford C. Bernstein & Co., LLC and Sanford C. Bernstein Limited are exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 in respect of the provision of the following financial services to wholesale clients:•providing financial product advice;•dealing in a financial product;•making a market for a financial product; and•providing a custodial or depository service.Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited and AllianceBernstein Hong Kong Limited are regulated by, respectively, the Securities and Exchange Commission under U.S. laws, by the Financial Services Authority under U.K. laws, and by the Hong Kong Securities and Futures Commission under Hong Kong laws, all of which differ from Australian laws.One or more of the officers, directors, or employees of Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited, Sanford C. Bernstein, a unit of AllianceBernstein Hong Kong Limited, and/or their affiliates may at any time hold, increase or decrease positions in securities of any company mentioned herein.Bernstein or its affiliates may provide investment management or other services to the pension or profit sharing plans, or employees of any company mentioned herein, and may give advice to others as to investments in such companies. These entities may effect transactions that are similar to or different from those recommended herein.Bernstein Research Publications are disseminated to our customers through posting on the firm's password protected website, www.bernsteinresearch.com. Additionally, Bernstein Research Publications are available through email, postal mail and commercial research portals. If you wish to alter your current distribution method, please contact your salesperson for details.Bernstein and/or its affiliates do and seek to do business with companies covered in its research publications. As a result, investors should be aware that Bernstein and/or its affiliates may have a conflict of interest that could affect the objectivity of this publication. Investors should consider this publication as only a single factor in making their investment decisions.This publication has been published and distributed in accordance with Bernstein's policy for management of conflicts of interest in investment research, a copy of which is available from Sanford C. Bernstein & Co., LLC, Director of Compliance, 1345 Avenue of the Americas, New York, N.Y. 10105, Sanford C. Bernstein Limited, Director of Compliance, Devonshire House, One Mayfair Place, LondonW1J 8SB, United Kingdom, or Sanford C. Bernstein, a unit of AllianceBernstein Hong Kong Limited, Director of Compliance, Suite 3401, 34th Floor, One IFC, One Harbour View Street, Central, Hong Kong.

CERTIFICATIONS•I/(we), Neil McMahon, Ph.D., Senior Analyst(s), certify that all of the views expressed in this publication accurately reflect my/(our) personal views about any and all of the subject securities or issuers and that no part of my/(our) compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views in this publication.

Copyright 2010, Sanford C. Bernstein & Co., LLC, Sanford C. Bernstein Limited, and AllianceBernstein Hong Kong Limited, subsidiaries of AllianceBernstein L.P. ~ 1345 Avenue of the Americas ~ NY, NY 10105 ~ 212/756-4400. All rights reserved.This publication is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of, or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Bernstein or any of their subsidiaries or affiliates to any registration or licensing requirement within such jurisdiction. This publication is based upon public sources we believe to be reliable, but no representation is made by us that the publication is accurate or complete. We do not undertake to advise you of any change in the reported information or in the opinions herein. This publication was prepared and issued by Bernstein for distribution to eligible counterparties or professional clients. This publication is not an offer to buy or sell any security, and it does not constitute investment, legal or tax advice. The investments referred to herein may not be suitable for you. Investors must make their own investment decisions in consultation with their professional advisors in light of their specific circumstances. The value of investments may fluctuate, and investments that are denominated in foreign currencies may fluctuate in value as a result of exposure to exchange rate movements. Information about past performance of an investment is not necessarily a guide to, indicator of, or assurance of, future performance.

Documents

Deepwater E&P in a Global Context - · PDF fileBP – – xxxx – – x x COP – – xxx– – x x x CVX O – xxx– – x x x ... block NC202, and BP collected further Seismic