BOURSE SECURITIES LIMITED

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1 Price per barrel ($) Price per mmbtu ($) BOURSE SECURITIES LIMITED May 4 th, 2015 Oil prices up, Investors gain Today we at Bourse discuss the recent recovery in global oil prices and consider some of the risks and opportunities investors may encounter. We focus on several alternatives available to investors, through which they can position their portfolio to enhance wealth via energy-related investments. Oil s recent rally Oil prices have rebounded to their highest point of the year, surging to $59.63 on April 30th Exhibit 1 shows WTI Crude Oil prices for the year thus far vs Natural Gas prices. WTI Crude Oil vs Natural Gas Jan-15 Feb-15 Mar-15 Apr WTI Crude Price Natural Gas Price

2 The recovery has been driven by several factors, including a decline in US shale oil production as producers idled wells and a weaker US Dollar relative to world currencies putting upward pressure on the price of commodities, including oil. A particularly important driver has been the inability to conclude for a final agreement by parties in the Iran nuclear deal, keeping roughly million barrels of oil in storage from being released into markets. Should a final agreement be reached, the daily global supply of oil could increase by 700,000 to 1 million barrels per day. Away from supply side dynamics, colder than-expected temperatures across large oil consuming countries have also contributed to higher seasonal demand for energy A Good Entry Point? While the debate undoubtedly continues as to how sustainable the recovery in the price of oil will be, would energy-related assets offer a good entry point and value at this time for an investor s portfolio? With the start of an upward trend in oil prices over the last month, energy and energy related investments are worth considering. Several avenues exist to potentially profit from the recovery of energy prices, including but not limited to: 1. Energy corporate bonds 2. Energy commodity ETFs 3. Energy sector ETFs Energy Corporate Bonds Energy corporate bonds have risen on a year-to-date basis, more so in the last month. As an example, were investors to acquire an equally weighted portfolio of select USD energy-related bonds at the beginning of the year, they would have benefited from a year-to-date return of 6.7%.

3 COUNTRY AVERAGE LIFE YTM (%) NAME China China Oil 2020 Russia Gazprom 2019 India Indian Oil 2021 Russia Lukoil International Finance 2020 Venezuela Petrobras Global 2021 Trinidad and Tobago Petrotrin 2019 At purchase, the bond portfolio would have offered an average yield to maturity of 6.15%, with an average credit rating of BBB- (S&P). Even after the rally in energy bonds, the portfolio still offers investors an attractive yield to maturity of 5.12%, with an average life of 5.2 years with an average credit rating of BB+(S&P). Exhibit 2 shows how energy corporate bonds were impacted by the increase in crude oil and compares it to commodity and sector ETFs. An important point to note with bonds is that with a hold to maturity approach, fluctuations in market prices would not affect an investor s return. A loss or gain will only occur if the bond is sold prior to it maturing. The focus for the investor should then be on credit quality i.e. is the issuer of the bonds rated as investment grade or not and if not, how much is the additional risk? Nevertheless, energy related bonds still offer good value for the portfolio investor.

4 % Change YTD 9.00% 7.11% 7.00% 5.00% 3.00% 1.00% -1.00% -3.00% -5.00% WTI CRUDE Exhibit 2 WTI Crude vs Energy Investments (YTD) 3.97% Energy Select Sector SPDR ETF (XLE) 6.67% Sample Energy Bond Portfolio -3.73% United States Oil ETF (USO) Investing through ETF s ETFs, in similar fashion to mutual funds, provide a convenient approach to gaining broad/direct exposure to an underlying asset class. Energy commodity ETF s give investors access to energy either to the direct commodity or to companies whose performance is impacted by the commodity. Traded ETF s such as The United States Oil Fund (USO) provide good exposure through its holdings to crude oil. Energy sector ETFs, including the popular US Energy Select Sector SPDR (XLE) also give indirect but meaningful exposure to swings in energy prices. Exhibit 3 shows a comparison of the sample energy bond portfolio with both a commodity and energy sector ETF which tracks the performance of US companies. As evident from the graph, USD energy bonds provided the investor with a superior return over the investment period, with an overall lower level of price volatility when compared to underlying commodity itself or the stocks of companies within the sector. For the risk-averse investor, this presents a compelling opportunity to benefit from the changes in energy prices without the large swings experienced elsewhere in the market.

5 % Change (MoM) Exhibit 3 Energy Investment Comparison (MoM) 25.00% 20.00% 22.7% 15.00% 10.00% 6.91% 5.00% 0.00% 3.2% 4.59% 2.85% 1.47% 3.12% -5.00% -0.84% -1.82% -4.56% -4.3% % -9.4% % January February March April WTI CRUDE Energy Select Sector SPDR ETF (XLE) Sample Energy Bond Portfolio Moody s downgrades Trinidad and Tobago Last week Thursday, Moody s Investors Service downgraded T&T to Baa1 from Baa2 while changing the outlook from stable to negative. This is in contrast to Standard and Poor s (S&P) who in December affirmed T&T s rating at A. State-owned enterprises NGC and Petrotrin were also downgraded, in-line with the sovereign as is industry practice. Subsequent to the announcements, prices for the bonds of these entities have remained relatively stable. Should the recovery in oil prices continue, upward rating pressure on T&T and Petrotrin could materialize. Diversification remains Key Investing in the international energy sector can prove to be rewarding and investors should keep in mind that each investment route may have different associated risks.

6 Importantly, an investment into energy should be part of an overall diversified portfolio to balance risk while seeking attractive returns. Speak to an investment expert, such as Bourse, to help guide you through your investment decisions. For more information on these and other investment considerations, please contact Bourse Securities Limited, at , us at This document has been prepared by Bourse Securities Limited, ( Bourse ), for information purposes only. The production of this publication is not to in any way establish an offer or solicit for the subscription, purchase or sale of any of the securities stated herein to US persons or to contradict any laws of jurisdictions which would interpret our research to be an offer. Any trade in securities recommended herein is done subject to the fact that Bourse, its subsidiaries and/or affiliates have or may have specific or potential conflicts of interest in respect of the security or the issuer of the security, including those arising from (i) trading or dealing in certain securities and acting as an investment advisor; (ii) holding of securities of the issuer as beneficial owner; (iii) having benefitted, benefitting or to benefit from compensation arrangements; (iv) acting as underwriter in any distribution of securities of the issuer in the three years immediately preceding this document; or (v) having direct or indirect financial or other interest in the security or the issuer of the security. Investors are advised accordingly. Neither Bourse nor any of its subsidiaries, affiliates directors, officers, employees, representatives or agents, accepts any liability whatsoever for any direct, indirect or consequential losses arising from the use of this document or its contents or reliance on the information contained herein. Bourse does not guarantee the accuracy or completeness of the information in this document, which may have been obtained from or is based upon trade and statistical services or other third party sources. The information in this document is not intended to predict actual results and no assurances are given with respect thereto.