The technical signal:

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1 Tuesday, 26 th July, 2011 Buy: 463.6p Stop Loss 445p Target 550p share price Market Cap: 87.8bn Sector: Oil Ticker: Analysts: Ian Furnivall tel: e: Forecasts Yr to Dec US$bn 11(e) 12(e) Sales Pre-tax EPS ( ) Divi ( ) P/E (x) The technical signal: Source: Bloomberg The share price seems to have broken the recent downtrend, and we believe that crossing-the 200 day moving average could be a turning point. The recent drop following the announcement of Q2 figures may be an opportunity to enter long. Crossing the 500p milestone could lead to further upside within an overall recovery. The company plc is an oil and petrochemicals company. The Company explores for and produces oil and natural gas, refines, markets, and supplies petroleum products, generates solar energy, and manufactures and markets chemicals. 's chemicals include terephthalic acid, acetic acid, acrylonitrile, ethylene, and polyethylene. The fundamental view Given its discount relative to peers, a split of into separate companies for upstream and downstream could lead to a re-evaluation of the company, potentially unlocking substantial shareholder value; Yield (%) Source: Bloomberg Consensus estimates Despite missing analyst s expectations, recent results demonstrated that has turned the corner after the Macondo Oil spill, with Q2 net income of US$ 5.6bn; The ban on deep-water drilling operations in the Gulf of Mexico was lifted in October, and is again expected to play a major role in this sector. shares are still trading 29% below their level prior to the leak in the Gulf of Mexico. CEO Dudley s plan is to focus on higher-growth fields and new discoveries to compensate for the lost of opportunities of the recent past Investments in Russia, Brazil and India are the main ongoing projects.

2 Recent Company News Tuesday 26 th July 2011 Page 2 Misses Estimates on Gulf of Mexico Slowdown Plc, Europe s second-biggest oil company, reported earnings that missed analyst estimates after field maintenance in the Gulf of Mexico, Angola and the North Sea cut production. Net income of $5.6 billion in the second quarter compared with a record $17 billion loss a year earlier, the London-based company said today in a statement. Adjusted for one-time items and changes in inventory, profit was also $5.6 billion, compared with an average estimate of $5.9 billion in a Bloomberg survey of 12 analysts. Bloomberg, July 26, 2011 breakup worth 100 Billion Robert Dudley could unlock $100 billion for Plc investors by following ConocoPhillips and splitting up Europe s second-biggest oil producer., trying to recover from last year s Gulf of Mexico disaster, has lagged behind its three larger rivals this year, rising 1 percent in London even as oil peaked at $127 a barrel. Conoco s decision to split its refinery arm from its exploration and production business led analysts at banks including UBS AG, Bank of America and JPMorgan Cazenove to recommend look at a similar move. Chief Executive Officer Dudley s efforts to revive have been undermined by a failed exploration deal with Russia s OAO Rosneft and the prospect of billions of dollars of fines from the spill. JPMorgan Cazenove said s assets are worth about about 800 pence a share, equal to a total market value of about $248 billion. The company currently trades at about $147 billion. On a sum of the parts basis, is ludicrously undervalued, said one analyst. Perhaps that means they need to take as radical a route as ConocoPhillips, or articulate a better strategy. The company s 40 percent discount to the total value of its assets compares with an industry average of 27 percent, JPMorgan Cazenove said. Bloomberg, July 25, 2011 Welcomes News Of Indian Approval For Reliance Deal U.K. energy giant PLC (.LN) said Friday it welcomed the news that India's Cabinet had approved its proposed purchase of a 30% stake in 21 oil and gas blocks from Reliance Industries Ltd.( BY) and that it was awaiting formal communication to this effect. The companies have been waiting for government approval since February when Reliance agreed to sell the stake to in 23 oil and gas blocks for $7.2 billion plus another $1.8 billion linked to exploration success. Dow Jones Newswire, July Partners Renew Legal Proceedings Over Rosneft Last January, struck a landmark deal with Rosneft that would have seen the two companies swap shares in each other and jointly explore for oil in the Russian Arctic, an area long off limits to foreign oil firms. But the alliance was opposed by 's partners in TNK-, a group of Soviet-born billionaires whose holding company is called AAR. They said it violated the exclusivity provisions of their shareholder agreement and won an injunction to block it. The Wall Street Journal Europe, July

3 Tuesday 26 th July 2011 Page 3 Strengths and weaknesses Catalysts The possibility of a split into separate entities could lead to a better valuation of s assets creating value for shareholders; returned to profits and will now restart deep water drilling operations in the Gulf of Mexico. Fitch estimated will continue to meet Spill liabilities; said it was on track to meet its target of doubling its investments in exploration in Emerging Markets and to increase the number of testing wells in areas including Brazil, Trinidad and Australia; Deal to join Brazil's Solimoes Basin Project and 30% stake in Indian Reliance Project expected to be cleared by the government; The shares have upside potential relative to peers based on valuation and expected performance. The company restarted dividend payments and now offers a 3.6% yield. Risks Reported profit of US$5.6 billion in the April through June period, below the consensus average forecast of US$6billion. This was nevertheless a good performance compared to a loss of 17 billion in the same period last year; The joint venture with Russian state oil company Rosneft seems to be more problematic than initially thought, with ongoing pending legal issues; Macroeconomic concerns over the Debt Ceiling in the USA and sovereign debt crisis over Europe have a negative impact in equity markets; as one of the largest stocks in the FTSE-100, may be particularly volatile; Potential downside in oil prices if more oil is released from the IEA and the Strategic Petroleum Reserve; The shares have underperformed recently, with a gain of 14% YTD vs..a comparable gain of 31% for Royal Dutch Shell. Source: HB Markets Recent brokers' reports Date Broker name Recommendation Period Price Target (p) 22/07/2011 RBS Buy 12 months /07/2011 Jefferies Hold 12 months /07/2011 Evolution Securities Buy 12 months /07/2011 RBC Capital Markets Outperform 12 months /07/2011 Barclays Capital Equal wt/neutral 12 months /07/2011 Credit Suisse Outperform 12 months 610 Source: Bloomberg INTERNAL CIRCULATION ONLY

4 Tuesday 26 th July 2011 Page 4 Recommendations The recommendations used by HB Markets in its publications and their respective meanings are as follows: Buy The stock or other security is expected to outperform the benchmark stock market index of which it is a component by at least 10% over the twelve months following the date of the publication. Speculative Buy The stock or other security is of a speculative nature and may be issued by a smaller company. It may be illiquid, and the spreads between the bid and offer prices may be wider than those for a stock issued by a larger company. It is expected to outperform the benchmark stock market index of which it is a component by at least 12.5% over the twelve months following the date of the publication. The rationale for the recommendation may be linked to factors other than the usual determinants of share price performance, such as the possibility of development of new technology, a discovery of natural resources, or a take-over bid for the company. Hold The stock or other security is expected to perform in line with the benchmark stock market index of which it is a component or to vary by no more than plus or minus 10% over the twelve months following the date of the publication. Speculative Hold The stock or other security may be of a speculative nature and may be issued by a smaller company. It may be illiquid, and the spreads between the bid and offer prices may be wider than those for a stock issued by a larger company. It is expected to perform in line with the benchmark stock market index of which it is a component or to vary by no more than plus or minus 12.5% over the twelve months following the date of the publication. The rationale for the recommendation may be linked to factors other than the usual determinants of share price performance, such as the possibility of development of new technology, a discovery of natural resources, or a take-over bid for the company. Sell The stock or other security is expected to underperform the benchmark stock market index of which it is a component by at least 10% over the twelve months following the date of the publication. During the three months to 19 th July 2011, the number of stocks on which HB Markets has published recommendations was 17, and the recommendations were as follows: Buy 6; Speculative Buy 10; Hold nil; Speculative Hold 1; Sell nil. INTERNAL CIRCULATION ONLY

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