iEne062512b_072228

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U.S. ResearchPublished by Raymond James & Associates

Please read domestic and foreign disclosure/risk information beginning on page 10 and Analyst Certification on page 10.

2012 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. All rights reserved.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

Energy June 25, 2012

Industry BrieJ. Marshall Adkins, (713) 789-3551, [email protected]

Collin Gerry, (713) 278-5275, [email protected]

James M. Rollyson, (713) 278-5254, [email protected]

Aryan Barto, Res. Assoc., (713) 278-5243, [email protected]

Energy: Stat of the Week _______________________________________________________________________________________

Rigging Down; Lowering 2012 & 2013 U.S. Rig Count Forecasts

In todays Stat, we take a deeper look into our new rig count assumptions that drive our proprietary bottom-up production-by-

play model. Recall, on April 16, we lowered our 2013 U.S. rig count forecast to a 3% average annual DECLINE (or a 10% beginning-to

end-of-year decline in 2013). Following the further reduction in our oil price outlook last week, we now expect average annua

onshore rig growth of only 4% in 2012 and a 13% DECLINE in 2013. In fact,we think the looming oil supply problem potentially

could be so severe that WTI oil prices must fall far enough to drive the total U.S. onshore rig count down roughly 25% from now

until exit 2013. Keep in mind that consensus expectations for 2013 still assume increasing drilling activity y/y. To put this into

perspective, last week the total rig count reached 1,966 rigs, and we anticipate by the end of 2013 there will be roughly 1,470 active

rigs.

1450

1550

1650

1750

1850

1950

2050

2150

2250

2350

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13

Jul-13

Aug-13

Sep-13

Oct-13

Nov-13

Dec-13

Old vs New Rig Count Forecast

Jan 30 Forecast/Current

ConsensusApril 16 Forecast

New Forecast

Jan 30 Forecast/Current Consensus

April 16 Forecast

New Forecast

Source: Baker Hughes; Raymond James Research

Oil Activity Starts to Slow Now; Tumbles Later

We believe the oil rig count needs to drop ~300 rigs from today through exit 2013. Where are the rigs going to drop? On absolute

numbers, the largest number of rigs will likely come out of the Big 3 plays (Eagle Ford, Permian, Bakken). However, the more

marginal oil plays, particularly the Midcontinent (sans the Mississippi Lime), should represent the largest percentage declines as they

tend to be most cost intensive. Looking outside the 14 major basins, we suspect there should be significant decreases as these

smaller, more mature reservoirs tend to have the highest breakeven points on average. While we anticipate the rig count beginning

to turn over in the summer (read July 2012) as spot rigs start to rig down and as contracts are not renewed, we expect the pace to

meaningfully accelerate starting in 2Q13. Overall, we expect the U.S. onshore oil rig count to fall from its current level of 1,421 rigs

to roughly 1,100 rigs by the end of 2013. The charts below depict our oil rig count assumptions by basin (right) and total (left).

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Raymond James U.S. Research


International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863 2

-100

-80

-60-40

-20

0

20

40

60

80

100

120

Eagle Ford Bakken Permian Granite

Wash

Mississippi

Lime

Other

Oil Rig Growth

2011 2012 2013

Source: Baker Hughes; RJ Est.

900

1000

1100

1200

1300

1400

1500

Oil Rig Count


Dry Gas Rig Count Continues to Bleed & Wet Gas Follows Oil Downward

Despite the large shift out of gassy plays, there are still ~560 gas directed drilling rigs. Of these we estimate roughly one-third are

drilling for dry gas. This component of the rig count has fallen at a dramatic pace with a >40% decrease year to date. Given the

over-supplied gas market, we expect these rigs to continue to drift lower, albeit at a slower pace than we have seen thus far. By

year-end 2013 we still think the dry gas rig count will fall from its current level of 182 rigs to ~100 rigs. The more important and

glaring change is our expectation for decreases in the wet gas rig count. While wet gas has held up better as a result of higher oil

prices, it too has taken a licking, but we dont think it will keep on ticking. With crude oil coming down, NGL pricing should follow suitand should fall meaningfully faster as many wet gas plays are more marginally economic when compared to oil. Specifically we

expect the wet gas count to fall from 359 rigs active today to roughly 270 rigs by year-end 2013. As illustrated below, the lions

share of these rigs are dispersed in some of todays largest plays (Eagle Ford, Marcellus, Utica, Granite Wash, etc.). Overall, we

expect the U.S. gas rig count to fall about 190 rigs (or 33%) from current levels.

Other

22%

Eagle Ford

21%

Permian

8%

Marcellus

15%

Barnett

9%

Cana

Woodford

11%

Granite Wash

14%

Wet Gas BreakdownJune 2012


0

100

200

300

400

500

600

Gas Rig Counts

Wet Gas

Dry Gas


What Does Sub-$80 WTI Do For E&P Cash Flows?

As you may suspect, our forecasted E&P cash flows will likely be coming down as we see production growth more than offset by

significantly lower crude oil and NGL prices. After inserting our new price deck and adjusting for our current production forecasts

given the lower rig count, E&P cash flows are expected to decline significantly both this year and in 2013. This is not surprising,

however we think the proper way to view this is to look at the expectations for 2014 and 2015. With our long-term oil forecast at a

reasonable $80 WTI, we suspect that the increase in production combined with the rebound in oil prices and a recovery in gas prices

should leave energy companies well positioned for a 2014 and 2015 recovery. Under our forecasts, 2014 cash flows should rebound

to near 2011 levels, while 2015 cash flows should be ~7% higher year over year. As such, our expectations for drilling activity follow

as we suspect that the rig count should meaningfully rebound in the second half of 2014 and through 2015.

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$80,000

$90,000

$100,000

$110,000

$120,000

$130,000

$140,000

$150,000

2010 2011 2012E 2013E 2014E 2015E

E&P Cash Flows Available for Drilling

Sources: U.S. Energy Information Administration, Spears and Associates, Inc., RJ Est.

-14%

+7%

+32%

-15%

We should note that we fully recognize that looking only at E&P cash flow available for drilling to forecast drilling activity is overlysimplistic. Most industry veterans would be quick to tell you that E&P companies habitually outspend cash flow.

Conclusion:

Our increased negativity is predicated on the belief that significantly rising U.S. oil production in the face of weaker global oil

demand growth is on track to drive oil prices lower in 2013. As a result, we believe that U.S. drilling activity must eventually come

down in order to rein in supply growth to help balance the market. We now believe that the 2012 rig count will average 1,944 rigs.

This is down 4% from our old forecast. Perhaps more importantly, we are now expecting the 2013 rig count will average 1,693 rigs,

this is down 13% from our expected 2012 average rig count assumption and down 13% from our prior forecast.

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To better illustrate some of our basin-by-basin assumptions:

220

230

240

250

260

270

280

Eagle Ford

Source: Baker Hughes;RJ Research

Decrease of

43 rigs or

16%

160

170

180

190

200

210

220

230

Bakken


Decrease of

43 rigs or

20%

420

430

440

450

460

470

480

490

500

510

520

Permian


Decrease of

76 rigs or

15%

60

70

80

90

100

110

120

130

140

150

Marcellus


Decrease of

34 rigs or

33%

20

30

40

50

60

70

80

90

Granite Wash


Decrease of

43 rigs or

57%

20

30

40

50

60

70

80

90

100

110

120

Haynesville/Bossier


Decrease of

29 rigs or

55%

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Oil Gas Total Oil Gas Total Oil Gas Total Oil Gas Total Oil Gas Total

FY AVG FY AVG

2007 297 1,466 1,768 2007 297 1,466 1,768

2008 379 1,491 1,879 28% 2% 6% 2008 379 1,491 1,879

2009 278 801 1,089 -27% -46% -42% 2009 278 801 1,089

2010 591 943 1,546 113% 18% 42% 2010 591 943 1,546

2011 984 887 1,879 67% -6% 22% 2011 984 887 1,879

2012E 1,346 595 1,944 37% -33% 3% 2012E 1,392 622 2,017 -3% -4% -4%

2013E 1,257 436 1,693 -7% -27% -13% 2013E 1,458 497 1,955 -14% -12% -13%

QTR AVG QTR AVG1Q09 279 1,053 1,344 1Q09 279 1,053 1,344

2Q09 196 729 934 -30% -31% -30% 2Q09 196 729 934

3Q09 270 689 970 38% -6% 4% 3Q09 270 689 970

4Q09 359 738 1,108 33% 7% 14% 4Q09 359 738 1,108

1Q10 450 882 1,345 25% 19% 21% 61% -16% 0% 1Q10 450 882 1,345

2Q10 536 957 1,506 19% 9% 12% 174% 31% 61% 2Q10 536 957 1,506

3Q10 631 977 1,618 18% 2% 7% 133% 42% 67% 3Q10 631 977 1,618

4Q10 725 952 1,688 15% -3% 4% 102% 29% 52% 4Q10 725 952 1,688

1Q11 808 900 1,716 11% -5% 2% 79% 2% 28% 1Q11 808 900 1,716

2Q11 938 880 1,826 16% -2% 6% 75% -8% 21% 2Q11 938 880 1,826

3Q11 1,043 894 1,944 11% 1% 6% 65% -9% 20% 3Q11 1,043 894 1,944

4Q11 1,130 874 2,010 8% -2% 3% 56% -8% 19% 4Q11 1,130 874 2,010

1Q12 1,262 722 1,990 12% -17% -1% 56% -20% 16% 1Q12E 1,262 722 1,990

2Q12E 1,372 595 1,972 9% -18% -1% 46% -32% 8% 2Q12E 1,370 598 1,973 0% 0% 0%

3Q12E 1,386 547 1,932 1% -8% -2% 33% -39% -1% 3Q12E 1,433 594 2,028 -3% -8% -5%

4Q12E 1,363 518 1,882 -2% -5% -3% 21% -41% -6% 4Q12E 1,503 574 2,078 -9% -10% -9%1Q13E 1,352 492 1,844 -1% -5% -2% 7% -32% -7% 1Q13E 1,503 549 2,052 -10% -10% -10%

2Q13E 1,306 460 1,766 -3% -7% -4% -5% -23% -10% 2Q13E 1,480 518 1,998 -12% -11% -12%

3Q13E 1,232 414 1,646 -6% -10% -7% -11% -24% -15% 3Q13E 1,447 476 1,923 -15% -13% -14%

4Q13E 1,137 378 1,515 -8% -9% -8% -17% -27% -19% 4Q13E 1,401 446 1,847 -19% -15% -18%Source: Raymond James Estimates, Baker Hughes

Vs. OriginalNew U.S. Rig Count Forecast Q/Q Change YOY Change Old U.S. Rig Count Forecast

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U.S. Rig Count Breakdown

6/22/2012 6/15/2012 W/W YTD YTD % Y/Y Y/Y %

Total Count

U.S. Rig Count 1966 1971 (5) (41) -2% 84 4%

By Basin*

Permian 518 515 3 63 14% 95 22%

Eagle Ford 266 261 5 30 13% 79 42%

Bakken 218 218 0 26 14% 46 27%

Marcellus 101 103 (2) -37 -27% -27 -21%Granite Wash 72 73 (1) 1 1% -8 -10%

Mississippi Lime 64 61 3 16 33% 30 88%

Cana Woodford 55 55 0 -3 -5% -2 -4%

Haynesville 48 51 (3) -66 -58% -91 -65%

DJ Basin 39 42 (3) -3 -7% 0 0%

Barnett 39 41 (2) -20 -34% -29 -43%

Uinta 36 36 0 6 20% 12 50%

San Joaquin Basin 36 35 1 4 13% 7 24%

Utica 21 21 0 5 31% 10 91%

Powder River Basin 19 19 0 -2 -10% 8 73%

Pinedale 19 19 0 -10 -34% -6 -24%

Piceance Basin 17 17 0 -10 -37% -12 -41%

Fayetteville 16 18 (2) -10 -38% -13 -45%

Arkoma Woodford 8 8 0 -12 -60% -8 -50%

Other 374 378 (4) -19 -5% -7 -2%

Drill For

Oil 1421 1405 16 228 19% 418 42%

Dry Gas 182 191 (9) (154) -46% (180) -50%

Wet Gas 359 371 (12) (114) -24% (152) -30%

Thermal 4 4 0 (1) -20% (2) -33%

Trajectory

Horizontal Oil 792 774 18 164 26% 330 71%

Horizontal Gas 373 388 (15) (166) -31% (246) -40%

Horizontal 1165 1162 3 (2) 0% 84 8%

% Horizontal 59% 59% 0% 1% 2%

Source: Baker Hughes, Inc, Raymond James Estimates

*Includes all trajectories

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Oil Rig Count Horizontal Rig Count

This Last Beginning Last This Last Beginning Last

Week Week of Year Year Week Week of Year Year

Rig Count 1421 1405 1191 1003 Price 1165 1162 1160 1081

Percent Change 1.1% 19.3% 41.7% Percent Change 0.3% 0.4% 7.8%

Source: Baker Hughes Source: Baker Hughes

6

Wet Gas Rig Count Dry Gas Rig Count



Price 359 371 473 511 Price 182 191 338 362

Percent Change -3.3% -24.1% -29.8% Percent Change -4.7% -46.2% -49.7%

Source: Baker Hughes Source: Baker Hughes

400

600

800

1000

1200

1400

1600

2010 2011 2012

175

225

275

325

375

425

475

2010 2011 2012

350

400

450

500

550

600

2010 2011 2012

500

600

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1300

2010 2011 2012

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Raymond James Weekly Oilfield ReviewFor Week Ending: 6/22/2012

12 Month Oil Calendar Strip 12 Month Gas Calendar Strip

Brent Henry Hub

This Last Beginning Last This Last Beginning LastWeek Week of Year Year Week Week of Year Year

Price $92.15 $97.02 $111.60 $106.06 Price $3.13 $3.02 $3.38 $4.52

Percent Change -5.0% -17.4% -13.1% Percent Change 3.6% -7.3% -30.8%

Source: Bloomberg Source: Bloomberg

22-Jun-12 15-Jun-12 24-Jun-11 Change From:

This Last Last Last Last

Week Week Year Week Year

1. U.S.Rig Activity

U.S. Oil 1,421 1,405 1,003 1.1% 41.7%

U.S. Gas 541 562 873 -3.7% -38.0%

U.S. Miscellaneous 4 4 6

U.S. Total 1,966 1,971 1,882 -0.3% 4.5%

U.S. Horizontal 1,165 1,162 1,081 0.3% 7.8%

U.S. Directional 233 233 236 0.0% -1.3%

U.S. Offshore 48 51 33 -5.9% 45.5%

U.S. Offshore Gulf of Mexico

Fleet Size 115 115 122 0.0% -5.7%

# Contracted 77 76 67 1.3% 14.9%

Utilization 67.0% 66.0% 54.9% 1.5% 22.0%

U.S. Weekly Rig Permits * 0 1,337 1,351 -100.0% -100.0%

2. Canadian Activity

Rig Count 238 248 250 -4.0% -4.8%

3. Stock Prices (6/22/12)

OSX 192.7 203.3 248.7 -5.2% -22.5%S&P 500 1,335.0 1,342.8 1,268.5 -0.6% 5.2%DJIA 12,640.8 12,767.2 11,934.6 -1.0% 5.9%

S&P 1500 E&P Index 487.4 507.1 602.1 -3.9% -19.1%

Alerian MLP Index 364.0 362.2 363.5 0.5% 0.1%

4. Inventories

U.S. Gas Storage (Bcf) 3,006 2,944 2,354 2.1% 27.7%Canadian Gas Storage (Bcf) 583 575 366 1.3% 59.2%

Total Petroleum Inventories ('000 bbls ) 8 68, 861 861,924 887,562 0. 8% -2.1%

5. Spot Prices (US$)

Oil (W.T.I. Cushing) $79.36 $84.03 $90.83 -5.6% -12.6%

Oil (Brent) $91.33 $97.55 $105.12 -6.4% -13.1%

NGL Composite $0.00 $0.00 $55.09 #DIV/0! -100.0%

Gas (Henry Hub) $2.50 $2.44 $4.20 2.3% -40.4%

Residual Fuel Oil (New York) $13.39 $14.38 $16.21 -6.9% -17.4%

Gas (AECO) $1.95 $1.77 $3.92 10.2% -50.3%

UK Gas (ICE) $8.72 $8.71 $9.33 0.1% -6.4%

Sources: Baker Hughes, ODS-Petrodata, API, EIA, Oil Week, Bloomberg

* Note: Weekly rig permits reflect a 1 week lag

$40.00

$50.00

$60.00

$70.00

$80.00$90.00

$100.00

$110.00

$120.00

$130.00

2010 2011 2012

$2.50

$3.50

$4.50

$5.50

$6.50

2010 2011 2012

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Raymond James Weekly Coal ReviewFor Week Ending: 6/22/2012

12 Month Big Sandy Barge Prices 12 Month Powder River Basin 8800 Prices



Price $52.00 $52.65 $67.50 $67.25 Price $8.05 $6.90 $12.00 $12.60

Percent Change -1.2% -23.0% -22.7% Percent Change 16.7% -32.9% -36.1%

Source: Bloomberg Source: Bloomberg

22-Jun-12 16-Jun-12 25-Jun-11 Change From:

This Last Last Last Last

Week Week Year Week Year1. Coal Prices

Eastern U.S.

CSX 1% $52.00 $52.65 $67.25 -1.2% -22.7%

Western U.S.

Powder River 8800 $8.05 $6.90 $12.60 16.7% -36.1%

2. Production 9-Jun-12 2-Jun-12 12-Jun-11

Eastern U.S. 8,260 8,153 9,042 1.3% -8.6%

Western U.S. 9,603 10,645 11,885 -9.8% -19.2%

Total 17,863 18,798 20,927 -5.0% -14.6%

Source: Bloomberg

$30.00

$45.00

$60.00

$75.00

$90.00

2010 2011 2012

$5.00

$7.00

$9.00

$11.00

$13.00

$15.00

$17.00

2010 2011 2012

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Important Investor Disclosures

Raymond James & Associates (RJA) is a FINRA member firm and is responsible for the preparation and distribution of research created in

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Raymond James & Associates (U.S.) definitions

Strong Buy (SB1) Expected to appreciate, produce a total return of at least 15%, and outperform the S&P 500 over the next six to 12 months.

For higher yielding and more conservative equities, such as REITs and certain MLPs, a total return of at least 15% is expected to be realized

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not be relied upon.

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Raymond James Ltd. (Canada) definitions

Strong Buy (SB1) The stock is expected to appreciate and produce a total return of at least 15% and outperform the S&P/TSX Composite Index

over the next six months.

Outperform (MO2) The stock is expected to appreciate and outperform the S&P/TSX Composite Index over the next twelve months.

Market Perform (MP3) The stock is expected to perform generally in line with the S&P/TSX Composite Index over the next twelve months and

is potentially a source of funds for more highly rated securities.

Underperform (MU4) The stock is expected to underperform the S&P/TSX Composite Index or its sector over the next six to twelve months

and should be sold.

Raymond James Latin American rating definitionsStrong Buy (SB1) Expected to appreciate and produce a total return of at least 25.0% over the next twelve months.

Outperform (MO2) Expected to appreciate and produce a total return of between 15.0% and 25.0% over the next twelve months.

Market Perform (MP3) Expected to perform in line with the underlying country index.

Underperform (MU4) Expected to underperform the underlying country index.

Suspended (S) The rating and price target have been suspended temporarily. This action may be due to market events that made coverage


providing investment banking services to the company. The previous rating and price target are no longer in effect for this security and should

not be relied upon.

Raymond James Euro Equities, SAS rating definitions

Strong Buy (1) Expected to appreciate, produce a total return of at least 15%, and outperform the Stoxx 600 over the next 6 to 12 months.

Outperform (2) Expected to appreciate and outperform the Stoxx 600 over the next 12 months.

Market Perform (3) Expected to perform generally in line with the Stoxx 600 over the next 12 months.Underperform (4) Expected to underperform the Stoxx 600 or its sector over the next 6 to 12 months.

Suspended (S) The rating and target price have been suspended temporarily. This action may be due to market events that made coverage


providing investment banking services to the company. The previous rating and target price are no longer in effect for this security and should

not be relied upon.

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higher or lower rating. Investors should feel free to contact their Financial Advisor to discuss the merits of other available investments.

Rating Distributions

Coverage Universe Rating Distribution Investment Banking Distribution

RJA RJL RJ LatAm RJEE RJA RJL RJ LatAm RJEE

Strong Buy and Outperform (Buy) 54% 70% 34% 54% 14% 34% 7% 0%

Market Perform (Hold) 38% 28% 56% 30% 9% 29% 0% 0%

Underperform (Sell) 8% 2% 10% 16% 0% 50% 0% 0%

Suitability Categories (SR)

For stocks rated by Raymond James & Associates only, the following Suitability Categories provide an assessment of potential risk factors for

investors. Suitability ratings are not assigned to stocks rated Underperform (Sell). Projected 12-month price targets are assigned only to

stocks rated Strong Buy or Outperform.

Total Return (TR) Lower risk equities possessing dividend yields above that of the S&P 500 and greater stability of principal.

Growth (G) Low to average risk equities with sound financials, more consistent earnings growth, possibly a small dividend, and the potential

for long-term price appreciation.

Aggressive Growth (AG) Medium or higher risk equities of companies in fast growing and competitive industries, with less predictable earningsand acceptable, but possibly more leveraged balance sheets.

High Risk (HR) Companies with less predictable earnings (or losses), rapidly changing market dynamics, financial and competitive issues,

higher price volatility (beta), and risk of principal.

Venture Risk (VR) Companies with a short or unprofitable operating history, limited or less predictable revenues, very high risk associated

with success, and a substantial risk of principal.

Raymond James Relationship Disclosures

Raymond James expects to receive or intends to seek compensation for investment banking services from the subject companies in the

next three months.

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Stock Charts, Target Prices, and Valuation Methodologies

Valuation Methodology: The Raymond James methodology for assigning ratings and target prices includes a number of qualitative and

quantitative factors including an assessment of industry size, structure, business trends and overall attractiveness; management effectiveness

competition; visibility; financial condition, and expected total return, among other factors. These factors are subject to change depending on

overall economic conditions or industry- or company-specific occurrences. Only stocks rated Strong Buy (SB1) or Outperform (MO2) have

target prices and thus valuation methodologies.

Risk Factors

General Risk Factors: Following are some general risk factors that pertain to the projected target prices included on Raymond James research:

(1) Industry fundamentals with respect to customer demand or product / service pricing could change and adversely impact expected

revenues and earnings; (2) Issues relating to major competitors or market shares or new product expectations could change investor attitudes

toward the sector or this stock; (3) Unforeseen developments with respect to the management, financial condition or accounting policies or

practices could alter the prospective valuation; or (4) External factors that affect the U.S. economy, interest rates, the U.S. dollar or major

segments of the economy could alter investor confidence and investment prospects. International investments involve additional risks such as

currency fluctuations, differing financial accounting standards, and possible political and economic instability.

Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability

categories, is available at rjcapitalmarkets.com/SearchForDisclosures_main.asp. Copies of research or Raymond James summary

policies relating to research analyst independence can be obtained by contacting any Raymond James & Associates or Raymond James

Financial Services office (please see raymondjames.comfor office locations) or by calling 727-567-1000, toll free 800-237-5643 or

sending a written request to the Equity Research Library, Raymond James & Associates, Inc., Tower 3, 6

th

Floor, 880 Carillon Parkway,St. Petersburg, FL 33716.

For clients in the United Kingdom:

For clients of Raymond James & Associates (London Branch) and Raymond James Financial International Limited (RJFI): This document

and any investment to which this document relates is intended for the sole use of the persons to whom it is addressed, being persons

who are Eligible Counterparties or Professional Clients as described in the FSA rules or persons described in Articles 19(5) (Investment

professionals) or 49(2) (High net worth companies, unincorporated associations etc) of the Financial Services and Markets Act 2000

(Financial Promotion) Order 2005 (as amended) or any other person to whom this promotion may lawfully be directed. It is not intended

to be distributed or passed on, directly or indirectly, to any other class of persons and may not be relied upon by such persons and is

therefore not intended for private individuals or those who would be classified as Retail Clients.

For clients of Raymond James Investment Services, Ltd.: This report is for the use of professional investment advisers and managers and

is not intended for use by clients.

For purposes of the Financial Services Authority requirements, this research report is classified as independent with respect to conflict ofinterest management. RJA, RJFI, and Raymond James Investment Services, Ltd. are authorised and regulated by the Financial Services

Authority in the United Kingdom.

For clients in France:

This document and any investment to which this document relates is intended for the sole use of the persons to whom it is addressed,

being persons who are Eligible Counterparties or Professional Clients as described in Code Montaire et Financier and Rglement

Gnral de lAutorit des Marchs Financiers. It is not intended to be distributed or passed on, directly or indirectly, to any other class of

persons and may not be relied upon by such persons and is therefore not intended for private individuals or those who would be

classified as Retail Clients.

For institutional clients in the European Economic Area (EEA) outside of the United Kingdom:

This document (and any attachments or exhibits hereto) is intended only for EEA institutional clients or others to whom it may lawfully be

submitted.

For Canadian clients:Review of Material Operations: The Analyst and/or Associate is required to conduct due diligence on, and where deemed appropriate

visit, the material operations of a subject company before initiating research coverage. The scope of the review may vary depending on

the complexity of the subject companys business operations.

This report is not prepared subject to Canadian disclosure requirements.

For Latin American clients:

Registration of Brazil-based Analysts: In accordance with Regulation #483 issued by the Brazil Securities and Exchange Commission (CVM) in

October 2010, all lead Brazil-based Research Analysts writing and distributing research are CNPI certified as required by Art. 1 of APIMECs

Code of Conduct (www.apimec.com.br/supervisao/codigodeconduta). They abide by the practices and procedures of this regulation as well as
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internal procedures in place at Raymond James Brasil S.A. A list of research analysts accredited with the APIMEC can be found on the webpage

(www.apimec.com.br/ certificacao/Profissionais Certificados).

Non-Brazil-based analysts writing Brazil research and or making sales efforts with the same are released from these APIMEC requirements as

stated in Art. 20 of CVM Instruction #483, but abide by recognized Codes of Conduct, Ethics and Practices that comply with Articles 17, 18, and

19 of CVM Instruction #483.

Proprietary Rights Notice: By accepting a copy of this report, you acknowledge and agree as follows:

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criminal penalties for copyright infringement.

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