Vous êtes sur la page 1sur 73

GSF

Investec Global Energy Fund


Mark Lacey and J M kL d Jonathan W h th Waghorn Portfolio Managers
August 2010

Important Information
Investec Global Energy Fund (the "Fund") is an equity sector mutual fund. The Fund aims to achieve capital growth b i it l th by investing i th equity i t ti in the it instruments of i t t f internationally quoted companies th ti ll t d i throughout th h t the world involved in the exploration, production or distribution of oil, gas and other energy sources. Key risks of the product: Sector risk - The Fund invests in single sector and subjects to greater volatility than a broadly diversified portfolio. The sector may decline even while broader based equity market indices are rising. Smaller company risk The Fund may invest in smaller companies and their shares may be less liquid and more volatile than the shares of larger companies due to the smaller number of shares in issue and companies, the frequently less diversified and less established nature of the business. These factors can create a greater potential for significant capital losses. In the worst case scenario, the value of the Fund may be worth substantially less than the original amount you invested and in an extreme case could be worth nothing. The investment decision is yours but you should not invest in the Fund unless the intermediary who sells it to you has explained to y that the Fund is suitable for y having regard to y y p you you g g your financial situation, , investment experience and investment objectives. Investors should not only base on this material alone to make investment decisions. Please refer to the Fund Prospectus for the details of all risk factors.
Page 2 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Target audience
This document is meant to be read only by professional investors, professional financial advisors and, at their exclusive discretion, their clients. No other person should rely on the information contained in this document. y plan to show this to y your clients, p please ensure that y comply with any applicable you py y pp If you p local marketing regulations. This document is not to be generally distributed to the public.

Page 3 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Table of contents
Introduction Team and products Investment process Funds structure Investment case for energy equities gy The macro outlook for energy Key themes for 2010 Near term supply and demand L Long t term supply and d l d demand d Gas markets pp Appendix Performance

Page 4 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

The co-portfolio managers


Background
Mark Lacey 14 Years experience Co-Portfolio Manager Investec GSF Global Energy Fund Goldman Sachs Executive Director and Sachs, joint head of the Energy Research team Ranked number 1 analyst in oil and gas industry in 2007 Thompson Extel survey Jonathan Waghorn 14 Years experience Co-Portfolio Manager Investec GSF Global Energy Fund Goldman Sachs Executive Director and Sachs, joint head of the Energy Research team Rated 5 star analyst by Starmine for stock picking and earnings estimates (2007)

Credit Suisse Asset Management, Energy Previous energy research and industry experience (Wood Mackenzie & Shell and Resources Portfolio Manager International)

Top rankings independently recognised by both oil companies and investors with a proven t ac eco d of alpha generation both o g Only and o g/S o t st ateg es track record o a p a ge e at o in bot Long O y a d Long/Short strategies
Page 5 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Global Commodities and Resources


Core team
Bradley George Portfolio Manager and Team Co ordinator Co-ordinator Global Dynamic Resources. Global Gold
LDN

George Cheveley
Co-portfolio Co portfolio Manager Global Dynamic Resources Base Metals & Bulks

LDN

Mark Lacey
Co-portfolio Manager, Global Energy

LDN

Jonathan Waghorn
Co-portfolio Manager, Global Energy

LDN

Daniel Sacks
Co-portfolio Manager Global Gold

CPT

Dawid Heyl
Investment Analyst, Soft Commodities

LDN

John Thompson
Investment Analyst, Soft Commodities

CPT

Scott Winship
Investment Analyst, Gold and Precious Metals

CPT

Kevin de Villiers
Trading

CPT

Ruchir Patel
Trading

LDN

Cumulative market and industry experience of over 100 years AUM of $4.5 billion in global commodities and resources as at 30 June 2010

An experienced team with diverse backgrounds p g


Page 6 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Global Commodities and Resources


Current propositions
Global Commodities and Resources Fund Range
OEIC Enhanced Natural Resources Fund* $294m GSF Enhanced Natural Resources Fund* $58m
OEIC launch Date: 1 May 2008 Structure: UK OEIC GSF launch date: 4 Jan 2010 Structure: Luxembourg SICAV Long/Short absolute return. Full UCITS III powers Index: MSCI World Energy (50%) and MCSI World Materials (50%)

GSF Global Dynamic Resources Fund $114m


Launch Date: 31 Jan 2008 Structure: Luxembourg SICAV Index: 50% MSCI World Materials and 50% MSCI World Energy

GSF Global Energy Fund $1,236m OEIC Global Energy Fund* $359m
GSF launch date: 25 Jan 1985 Structure: Luxembourg SICAV OEIC launch date: 29 Nov 2004 Structure: UK OEIC Index: MSCI World Energy

GSF Enhanced Global Energy Fund * $55m


GSF launch date: 4 Jan 2010 Structure: Luxembourg SICAV Index: MSCI World Energy Long/Short absolute return. Full UCITS III powers

GSF Global Gold Fund $354m OEIC Global Gold Fund* $162m
GSF launch date: 26 Nov 1990 Structure: Luxembourg SICAV OEIC launch date: 10 April 2006 Structure: UK OEIC Index: HSBC Global Gold

GSY B Global Commodities & Resources Fund* Fund $287m


Launch Date: 31 Jan 2007 Structure: Guernsey B Long/Short absolute return

GSY B Global Energy Long Short Fund* Fund $56m


Launch Date: 15 Dec 2008 Structure: Guernsey B Long/Short absolute return

SA Commodity Fund * $78.5m#

Launch Date: 1 Feb 1995 Structure: South Africa Index: INVCM Benchmark

Commitment to commodities and resources fund management business


*The funds have not been authorised by the SFC and therefore are not available to Hong Kong investors. Fund sizes as at 31.07.10. #As at 30.06.10
Page 7 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Executive summary
The Investec GSF Global Energy Fund
We seek to deliver returns that exceed those of the MSCI World Energy Index by: Using the fundamental and rigorous investment process that is being used across all Investec Asset Managements energy products Using our proprietary Energy Commodity Indicator to optimise the selection and timing of investments Leveraging our numerous high quality industry contacts to get access to the best industry and company information The Global Energy Fund has a high quality long term track record The Fund has returned 330% over ten years versus the MSCI World Energy Index (up 116%) in USD

Past performance should not be taken as a guide to the future and there is no guarantee that this investment will make profits; losses can be made. Source: Investec Asset Management, Lipper to 31 07 10 NAV based (inclusive of all annual management fees but excluding any Management 31.07.10, initial charge), gross income reinvested, in US dollars. Performance is of the A Income share class. Performance would be lower had initial charges been included.
Page 8 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

GSF

Investment process

Investment process
A structured and disciplined investment process
Commodity 1 Commodity analysis
Supply/demand and break-even price analysis indicates likely commodity price trends

Resource equity 2 Commodity Indicator


Screening process that measures the daily interplay between major resource equities and their specific commodity mix

Equity analysis
Proprietary earnings and valuation models P i t i d l ti d l for companies

Qualitative issues Q lit ti i

Market consideration forward curve volatility liquidity Sellside sentiment consideration, curve, volatility, liquidity. Sell side sentiment. Management meetings

Portfolio construction

Selection and weighting of best commodity and equity ideas

High q g quality idea g y generation translated into various portfolios p


These internal parameters are subject to change, not necessarily with prior notification to shareholders.
Page 10 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Stage 1: Commodity analysis


Understanding of major new supply sources
Strong track record of fundamental oil and gas commodity research from Goldman Sachs Top 170 Oil and Gas Projects research was g y g y highly regarded and extensively used within the industry Presented work to: OPEC Saudi Aramco Major Oils Service companies Global energy portfolio managers

Stage 1. Commodity analysis


Supply/demand and break-even price analysis indicates likely commodity price trends

Backgrounds in fundamental co ac g ou ds u da e a commodity research od y esea c


Page 11 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Stage 2: Commodity indicator


Each company has its own mix of commodities

Stage 2. The Commodity Indicator


Screening process that measures the daily interplay between major resource equities and their specific commodity mix

Commodity Indicator: Built bespoke commodity indicators to determine the relationship between the performance of the mix of commodities that the company is exposed to (commodity indicator) vs. the performance of the companys share price g p y y price. When High correlation between a companys commodity indicator and its share p these diverge, it provides a potential investment opportunity

Canadian oils have underperformed their commodity mix by 2% over the last 3 months, while the global Majors have underperformed theirs by 21%. Potential % oe a Long Only fund action: go overweight Majors, underweight Canadians
This is not a buy or sell recommendation for any particular security. Data as of mid 2009 and is meant for illustrative purposes only
Page 12 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Statoil has underperformed its commodity mix by 17% over the last 3 months, while Repsol has outperformed its by 9%. Potential absolute return fund action: go long Statoil, short Repsol

Stage 3: Resource equity analysis


Full financial and valuation models for companies
Company models: We have built individual company models t d t d l to determine earnings and i i d valuations for around 150 companies Our models are maintained by the Fund Managers and contain our own forecasts The models have the following sections: Commodity assumptions Income statement Cash flow Balance sheet C it l structure Capital t t Margins, returns and gearing Divisional analysis Reserves and production summary Relative valuation (multiples) Absolute valuation (DCF and SOTP)
This is not a buy or sell recommendation for any particular security.
Page 13 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Stage 3. Resource Equity analysis


Proprietary earnings and valuation models for companies

Data as of mid 2009 and is meant for illustrative purposes only

Stage 3: Resource equity analysis


Summary valuation comparisons for companies
Valuation comparisons include: Target prices and expected upside Valuation multiples IAM earnings estimates and consensus Margins, returns, gearing and growth p Valuation assumptions Share price performance Benchmarking The upside /downside to each target price is a key factor in both our Buy and Sell decisions

Stage 3. Resource Equity analysis


Proprietary earnings and valuation models for companies

Data as of mid 2009 and is meant for illustrative purposes only p p y This is not a buy or sell recommendation for any particular security.
Page 14 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Stage 4: Qualitative issues


Market considerations and management meetings

Stage 4. Qualitative factors


Market considerations and management meetings

We consider all of the following factors before making an investment Meeting management. We will meet company management teams wherever possible prior to investing to discuss current operational performance and costs Trading patterns We have dedicated traders for all our equity and commodity trades patterns. Market liquidity. We monitor equity and commodity volumes, trading patterns and risk appetites S ll id sentiment. W maintain strong relationships with sell-side counterparties Sell-side ti t We i t i t l ti hi ith ll id t ti

These qualitative issues complement the quantitative analysis and co p e e our stock selection process complete ou s oc se ec o p ocess
Page 15 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Stage 5: Portfolio Construction


Integrated Risk Management
An integral part of our investment process and portfolio construction d tf li t ti Internal Risk Team is led by Richard Saldanha Risk team reports directly to Investec Asset Management CEO, Hendrik du Toit Internal EMA Risk System Daily Portfolio Risk Reports (example on right), showing Value-at-Risk (VaR) and Volatility and risk tolerances for all funds M thl risk report d Monthly i k t decomposes country, sector, valuation and asset risk factors with VaR Matrix at 99%, 95% and 90% confidence level Allows what if scenario analysis

#The

funds have not been authorised by the SFC and therefore are not available to Hong Kong investors.

Page 16 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

GSF

Funds structure

Portfolio structure and construction limitations


Investec GSF Global Energy Fund
UCITS III Long Only Fund Concentrated core portfolio, approximately 30-40 best ideas Weighting dependent on level of conviction, mindful but not driven by the benchmark Primarily a liquid portfolio Mi i Minimum market capitalisation of c.US$500 million although li idit i a more i k t it li ti f US$500 illi lth h liquidity is important f t t t factor As of 31 December 2009, 95% of the portfolio could be liquidated in one day Sector universe Integrated oils exploration & production equipment & services and downstream (refining and oils, production, marketing) Able to invest in coal and alternative energy although exposure is expected to be very limited Turnover expected to be between 100 and 150% p
Risk Profile Indicative Tracking Error Sub-sector weighting Individual stock weighting Investec GSF Global Energy Fund 6 - 10% Up to 3.0x vs. index 2% 10% (for both index and non-index)

These internal parameters are subject to change, not necessarily with prior notification to shareholders.
Page 18 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Performance attribution
Investec GSF Global Energy Fund 1H 2010 and 2009
Key +ve contributors vs the benchmark in 1H 2010 were: Underweight BP. Overweight Smith International, Baker Hughes and Marathon Key ve contributors vs the ve benchmark in 1H 2010 were: Underweight ConocoPhillips and Occidental. Overweight Sevan Marine and Weatherford Key +ve contributors vs the benchmark in 2009 were: Underweight ExxonMobil and Chevron. Chevron Overweight Petrobras Petrobras, Afren, Quicksilver, Venture and Weatherford Key ve contributors vs the benchmark in 2009 were: Underweight BG, Woodside, NOV, Tullow, Schlumberger. Overweight ConocoPhillips and Frontier
This is not a buy or sell recommendation for any particular security. Source: Investec Asset Management
Page 19 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Portfolio attributes Top ten holdings and benchmark positioning


Investec GSF Global Energy Fund
Sector weightings (%) Date Integrated E&P Oil Sands E&P E&P subtotal Equipment and Services Refining Other Total Fund 49.1 3.5 35 30.9 34.4 15.1 0.4 1.0 100.0 MSCI World Energy 57.3 3.4 34 18.9 22.3 12.9 1.7 5.8 100.0 Top ten holdings Total S.A. Exxon Mobil Corp. Ultra Petroleum Corp. ENI S.p.A. Noble Corp. Marathon Oil Corp. p BG Group PLC Baker Hughes Inc. Petrohawk Energy Corp. gy p Chevron Corp. % 9.56 9.15 6.38 5.92 4.69 4.12 3.94 3.91 3.65 3.57

The portfolio may change significantly over a short period of time time. This is not a buy or sell recommendation for any particular security. Source: Investec Asset Management, as at 31.07.10.
Page 20 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Portfolio attributes Current portfolio over/under-weights


Investec GSF Global Energy Fund
Top Fund over-weights and under-weights versus MSCI World Energy Index
Overweights Ultra Petroleum Corp. Total S A S.A. Noble Corp. ENI S.p.A. Petrohawk Energy Corp. Marathon Oil Corp. Q Quicksilver Resources Inc. Baker Hughes Inc. Range Resources Corp. Southwestern Energy Co. % 6.08 4.60 4 60 4.30 3.44 3.43 3.02 3.02 2.95 2.79 2.61 Underweights Halliburton Co. Apache Corp Corp. Canadian Natural Resources Ltd. Occidental Petroleum Corp. Schlumberger Ltd. Chevron Corp. ConocoPhillips p Royal Dutch Shell PLC (CL B) Exxon Mobil Corp. BP PLC % -1.26 -1.61 1 61 -1.74 -2.95 -3.32 -3.56 -3.63 -4.89 -5.02 -5.56

The portfolio may change significantly over a short period of time. time This is not a buy or sell recommendation for any particular security. Source: Investec Asset Management, as at 31.07.10
Page 21 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Investment style analysis


Investments in the Global Energy Fund are likely to be impacted by many variables, including, but not limited t th global supply and d t li it d to, the l b l l d demand f th commodities d for the diti Factors influencing supply include: the actions of Organization of The Petroleum Exporting Countries (OPEC) war and terrorism weather tax regimes the price of oil itself which influences the marginal return of producing oil and natural gas itself, Factors influencing demand include: economic growth around the world, and the relative growth of less developed countries versus developed economies weather the price of the commodity itself The Funds rely on a disciplined investment and portfolio construction process which may also not work at times. Factors affecting this could include commodity price movements and broader equity market movements

Page 22 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

GSF

The macro outlook for energy

Key energy sector themes for 2010 and beyond


OPEC actions: We expect compliance to slip further as Saudi bank rolls production increases elsewhere i th world, especially R l h in the ld i ll Russia i Range bound oil prices: We expect an average $70/bl Brent in 2010 (within a range of $60-85/bl) as OPEC supply the market in the short-term Destocking: We need to see inventories decline before prices can move significantly higher Iraqi production: It is too early to tell how much production can really increase over the next 10 years Investment: We expect capital expenditure to increase slightly in 2010 and then accelerate further in 2011 and beyond Non-OPEC production: Lack of investment should see non-OPEC production slipping US gas market recovery: g y We expect supply to fall and for inventories to decline, which is supportive to prices We expect demand to show signs of a recovery, which is supportive to prices M&A activity: y We expect the IOCs and NOCs to continue to be active in acquiring strategic assets With the discovery of new low cost gas shales, we believe that this is a key focus area p g quality, delivery and exploration success will be rewarded y y p Share prices: Management q
Page 24 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Gas markets: more potential upside in gas than in oil


Gas prices appear more positively skewed than oil prices presently prices,
There is better fundamental economic support for natural gas prices than for oil prices Oil is trading well above the marginal cash cost of extraction while natural gas is trading close to it Oil prices have more downside risk while gas price offer more upside potential
8.0
7.5
Price required for marginal producer to make a 10% return on investment Price required for average cost producer to make a 10% return on new investment

160.0

6.0

6.0

120.0

Gas price ($ / mcf ) $

4.0

3.8

Current spot price


Cash cost of current supply for a marginal cost producer

80 - 85

80.0

55 35

2.0 20

40.0 40 0

0.0

Gas i G price versus gas economics i

Oil price versus oil economics i il i

0.0

Source: Bloomberg, March 2010


Page 25 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Oil price ($ / 61)

Gas markets: US gas prices are very depressed


US gas prices have not recovered with oil
US gas prices are at depressed levels, despite the recent strength in crude prices Weak industrial demand and fears of over-supply have caused this price reaction We expect the US market to correct dramatically and for gas prices to rise from here
Spot US gas price (US$/ S i (US$/mmcf) f)

Source: Bloomberg, July 2010


Page 26 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Global Gas Demand: Gas demand growth outpaces oil demand growth

Global gas demand grew 2.4% CAGR over the last 15 years Growth in LNG demand of ~7% CAGR over the last decade outpaced that of overall gas demand During 2009 growth in China India UK and US offset material year on year declines in Japan, South Korea and Taiwan 2009, China, India, year-on-year Japan LNG represents ~10% of total gas consumption, up from 6% in 2000 LNG will continue to gain its share of global energy demand as countries move away from coal and oil (on a relative basis) In contrast, non-OPEC crude oil supply has g pp y grown by only 5 mmbpd ( y y p (1% annually) during the last 10 y y) g years

Sources: Tudor Pickering Holt & Co, April 2010


Page 27 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Gas demand: industrial demand recovery is critical


Industrial demand represents 35-40% of total gas demand
Between 35 and 40% of total gas demand is for industrial use Industrial demand accounts directly for c.30% 30% of power generation demand for natural gas is also for industrial use US industrial demand is still well below the December 2007 peak Recovery is underway, although we believe there is further to go g y Gas is more leveraged to an industrial demand recovery than oil
U.S. natural gas demand, 2008
Pipeline 3%

Industrial 30%
Power Generation 26%

Commercial 14%

Residential 22%

Other 5%

Source: Simmons, March 2010


Page 28 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Gas markets: the cheapest energy source


Gas is cheaper than both oil and coal currently
Depressed prices leave gas as the cheapest energy molecule available Power producers will switch from dirtier coal into cleaner natural gas at $4.50/mcf The US gas market is likely to correct sharply as demand returns and supply falls
WTI oil vs natural gas price ratio

Source: Bloomberg, July 2010


Page 29 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Gas demand: Gas should benefit from coal displacement


Gas is cheaper and cleaner than thermal coal
Natural gas futures vs MMBtu equivalent coal futures prices

Source: Credit Suisse, April 2010


Page 30 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Gas demand: future demand from power generation


An easy option for governments to reduce carbon intensity
Gas demand from power has grown significantly since 1997 Recent shale gas discoveries give confidence in future gas production We expect further gas-powered electricity generation growth Renewable energy economics are stretched while subsidies are likely to be delayed or restrained in the weak economic environment Gas offers the cheapest, easiest route towards reducing carbon intensity
Gas consumption from power generation sector
18 16 14 12

Capacity added by fuel type

bcfd

10 8 6 4 2 0

Source: EIA, Simmons


04853

1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Source: Platts, Simmons

Page 31 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY

Gas supply: capex and drilling have reacted quickly


Cuts likely to be too drastic and should lead to higher prices drastic,
Given the cut in US drilling activity in 2009, we expect a supply response in 2010 US E&P capital expenditure fell sharply in 2009 but should rebound in 2010 The gas-directed rig count is rebounding with a larger share in horizontal rigs The US market is back into balance There is a strong possibility that it goes into deficit balance.
Baker Hughes US gas rig count E&P year-over-year change in organic capex (%)
100%

E&P Year-over-Year Change in Organic Capex (%)

80%

60%

40%

20%

0%

-20%

-40%

Source: Bloomberg, July 2010


Page 32 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

US shale gas production is an increasing source of supply


US shale gas production now represents around 17% of total US production. This compares to just 4% in 2004 We expect US shale gas production to double over the next six years Assuming well service costs remain stable gas producers will still need $6 50/MMBtu in stable, $6.50/MMBtu order to generate a cost of capital return
US Shale Production

Source: Credit Suisse, June 2010


Page 33 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Basic cost analysis provides an indication of fundamental support


We estimate that total costs for the listed exploration and production companies is around $5.75/Mmbtu $5 75/M bt We estimate that total cash costs for the listed exploration and production companies is around $3.50/Mmbtu We continue to invest in the low cost, high organic growth and high return companies E&P company total cost per Mmbtu
$10.00

E&P company total cash cost per Mmbtu


$8.00 $7.00

$8.00

$6.00 $5.00 $5 00 $4.00

$6.00 $

$4.00

$3.00 $2.00 $1.00

$2.00

$0.00

$0.00

This is not a buy or sell recommendation for any particular security. Source: Credit Suisse, June 2010
Page 34 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

SWN UPL CHK XEC DVN CRZO UNT FST NBL EOG RRC HK NFX APA OXY MUR COG CRK BBG ROSE EQT KWK APC PXD SM WTI PXP SD

SWN UPL CHK CRZO XEC CRK EOG RRC DVN COG UNT NFX BBG FST HK ROSE APC GMXR KWK PVA PETD EQT SD DPTR

Gas supply: prolific shale plays but high decline rates


Shale play decline rates are prohibitive
Average first year decline rates on the shale plays are around 70% Over the first three years, declines average around 85% At the same time, Gulf of Mexico gas production is down over 40% in the last 10 years The shale plays are needed and the resource holders will be winners winners... ... but so will the service companies
Decline rates on US gas shale plays

Source: Simmons, March 2010


Page 35 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Gas supply: LNG volumes need at least $6 mmcf


It is unlikely that significant volumes will go to the US markets
We expect around 10bcf/d of new global LNG supply by end 2011 vs end 2008 Whilst new LNG projects have started, the majority of these volumes have been contracted Current prices indicate that any excess (spot) LNG cargoes will go to Asian markets, not to the US US gas prices need to be higher to incentivise LNG supply New LNG supply coming into the market
Regasification Capacity (Bcf/d) North America Europe Total Percentage Increase Liquefaction Additions (Bcf/d) Nigeria (Train 6) Qatar (Qatargas 4, Rasgas 6) Australia A t li (NWS 5) Indonesia (Tangguh) Yemen (Yemen LNG) Russia (Sakhalin II) Qatar (Qatargas 5, Qatargas 6, Rasgas 7) Total 2006 5.1 51 8.2 13.3 2007 5.1 51 10.2 15.3 15% 1H09 2.0 0.6 06 1.0 0.9 1.3 0.5 2.6 3.2 3.0 3.0 2008 10.7 10 7 13.4 24.1 58% 2H09 2009 15.2 15 2 14.7 29.9 24%

Return Sensitivity Analysis (IRR%)


Gas Price $/mmcf $4 Without NGLs With NGLs 0% 8% $5 4% 10% $6 7% 12% $8 11% 16% $10 15% 19% $12 19% 21%

Global LNG netback prices ($/mmcf)


February Netback Table ($/mmbtu) F b N tb k T bl ($/ bt ) Destination Ports Lake Charles Spain Belgium UK $5.04 $4.80 $5.35 $5.45 4.12 4.62 4.98 5.09 3.86 4.43 4.71 4.83 3.94 4.08 4.55 4.65 3.24 3.78 4.08 4.18 4.58 4.05 4.60 4.70

Source Ports e

2H08 0.5

1H10

Algeria Egypt Nigeria Qatar Trinidad

Cove Point $5.60 4.90 4.63 4.35 4.01 5.20

Altamira $5.80 4.87 4.58 4.68 3.97 5.32

India $7.20 6.07 6.35 5.94 6.90 5.45

Japan $7.80 5.84 6.12 5.91 6.73 5.39

Korea $7.80 5.91 6.19 5.97 6.78 5.44

Source: Waterborne LNG

Source: Tudor Pickering, Investec Asset Management estimates, April 2010


Page 36 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Gas equities: M&A activity in the North American gas market


Exxon has made the boldest move We expect others to follow move.
Exxons $43 billion takeover of XTO is based on expanding their US shale gas expertise globally globally. In addition, there have been a number of other acquisitions in the North American gas sector over the last two years We cross reference our company valuations against these deal metrics On our estimates, we value companies based on the following approximate valuations: Marcellus Haynesville H Horn Ri River Fayetteville $9k/acre $20-25k/acre $7k/ $7k/acre $8-10k/acre

E&P acquisitions

Based on these valuations, at $7/mmbtu, we still see significant upsides to a number of the US E&P companies

This is not a buy or sell recommendation for any particular security. Source: Company data, Investec Asset Management estimates, April 2010
Page 37 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Gas equities: Exxon acquisition of XTO


Valuation and RoACE of XTO at different gas prices
Exxon acquired XTO at the end of 2009 for $43bn, with a takeout price of c.US$48/sh We believe Exxon paid for a long term gas price of around $5/mcf At $7/mcf gas, the RoACE on the acquisition for Exxon is around 7% Exxon acquires XTOs knowledge as well as its US acreage
XTO valuation at various gas prices RoACE for Exxons purchase of XTO at various gas prices

This is not a buy or sell recommendation for any particular security Source: Investec Asset Management, March 2010
Page 38 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Gas equities: gas equities offer potential upside even at $5/mcf


Upsides at different gas prices for US gas E&Ps
We see 60-80% upside in gas E&Ps at a $6/mcf long term gas price Even at $5/mcf, we see upside averaging over 40% We believe these names offer attractive upside and downside support All five names have some production hedged through 2010/2011
E&P sum of the parts valuation at various gas prices

This is not a buy or sell recommendation for any particular security Source: Bloomberg, March 2010
Page 39 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Oil markets: near-term oil supply/demand balance


De-stocking is required in the short-term
We expect 2010 to be a year of de-stocking with OPEC crude production gradually increasing
Mmb/d OECD demand Non-OECD demand Total demand Non-OPEC supply OPEC NGLs OPEC 12 supply (Deficit)/surplus 2008 47.6 38.7 86.3 50.6 4.7 47 31.0 2009 45.5 39.2 84.7 50.5 5.4 54 28.6 (0.2mb/d) 2010F 45.5 39.7 85.2 50.5 5.8 58 28.6 (0.3mb/d) Based on current OPEC production rates Over the next 12 months we believe we need OPEC production to increase only marginally n order to keep the market balanced Flat non-OPEC production could prove optimistic in 2010 given the slow down in investment in 2008 and 2009 Flat year on year demand growth is in line with current IEA and year-on-year OPEC forecasts for 2010 Our 2010 forecast is below current IEA forecasts (40.6mb/d) and above the current OPEC forecasts

Source: Investec Asset Management, IEA, December 2009


Page 40 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Near-term supply/demand
De-stocking is required to overcome the current inventory overhang
There is still around 61 days of forward cover in OECD stocks We need this forward cover to return to more normal levels of 52-56 days A return to these levels will allow crude prices to move sustainably higher
OECD total (crude + products) inventories, bn bbl OECD total inventories, days demand

Source: Collins Stewart Europe Limited, May 2010


Page 41 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Long term demand: Non-OECD is the key driver


Per capita oil demand and car density remain very low
Non-OECD oil demand has grown at 2.6% pa (1973-2008) versus the OECD at 0.5%pa China and India per capita oil demand is a fraction of OECD levels Car density is rapidly increasing in China and India, and still a fraction of the OECD In contrast US and western European per capita demand will likely moderate contrast,
2009 per capita oil demand (bl)
Per capita oil demand ( ) p (bl)
2009 Oil Population Oil Consumption Demand (mb) (in mil) per capita (bls) US OECD Japan Germany China C India 6,948.1 16,615.0 1,589.0 895.0 3,303.0 1,211.7 308.7 1,190.6 127.7 82.1 1330.1 1,166.0 22.5 14.0 12.4 10.9 2.5 1.0

Global oil use by sub-sector


Road Other construction 6% 4% Heating 7% Ref inery f uel 5% Industrial f uel 8% Petrochemicals 6% Transport p 64%

Source: IEA, Investec Asset Management estimates 2008 , g Source: OECD and BP
Page 42 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Long term demand: Car density and ownership growth


Whilst the growth has been strong we do not expect it to slow significantly strong,
We expect China to consume more units on an annual basis than the US by 2011 We estimate that car density in China and India will double within five years
International car sales key markets (millions of units)
1990-99 Global Sales North America Canada United States Mexico Western Europe Germany Eastern Europe Russia Asia China India South America Brazil B il 39.2 16.4 1.3 14.6 0.5 13.1 3.6 1.18 0.8 08 6.9 0.3 0.3 1.6 0.9 09 2000 46.6 19.8 1.6 17.4 0.9 14.8 3.4 2.4 1 7.9 0.6 0.6 1.9 1.2 12 2001-2007 49.5 19.4 1.6 16.7 1.0 14.6 3.3 2.5 1.4 14 10.8 2.6 0.8 2.2 1.4 14 2008 52.2 15.9 1.6 13.2 1.0 13.5 3.1 4 2.7 27 15.1 5 1.2 3.7 2.2 22 2009 50.9 12.7 1.5 10.4 0.8 13.6 3.8 3 1.5 15 17.7 7.3 1.5 3.9 2.5 25 2010F 52.7 13.9 1.5 11.5 0.9 12.5 3.2 3.2 1.6 16 18.8 8.8 1.6 4.3 2.7 27 Total W. Europe Russia Total Eastern Europe Total N. America China India Japan Korea Total Asia g Argentina Brazil Total S. America S.Africa Grand Total

Car density (cars per 1000 of population)


2000 467 140 147 359 4 5 413 171 31 140 90 76 87 109 2004 492 169 171 374 9 6 438 220 35 128 96 79 92 116 2007 495 206 199 380 16 6 451 247 40 145 107 89 107 122 2009E 499 231 221 372 24 8 452 268 43 165 119 99 105 126 2010E 500 234 225 367 29 9 450 280 46 172 124 102 104 127 2014E 508 265 252 357 47 13 452 329 54 196 147 119 112 135

Source: Scotia Capital/Investec Asset Management, February 2010


04853

Source: Global Insight, February 2010

Page 43 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY

Long term demand: Non-OECD demand growth


What if China and India follow the paths of South Korea and the USA
Industrial production growth in non-OECD countries should have a bigger impact on overall oil demand going f d d i forward d Whilst we expect OECD oil consumption per capita to reduce over time, this will be more than offset by the industrialisation of China and India alone
Non-OECD as a % of global demand
OECD Demand NonOECD Demand

Per capita oil consumption (barrels per year)


32.5 30.0 27.5 27 5 25.0 22.5 20.0 17.5 15.0 12.5 10.0 7.5 5.0 2.5 0.0 Japan USA South Korea China India

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Source: Simmons & Company; Investec Asset Management estimates estimates, February 2010

Page 44 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Source: Simmons & Company; Investec Asset Management estimates February estimates, 2010

Long term supply: declines and poor exploration


A lack of exploration success and increasing decline rates
A lack of new discoveries and increasing declines should limit long term production growth Oil resources are still abundant, they are just not as low cost and accessible as those discovered between 1920 and 1970
Average oilfield decline rate ( p ) g (% p.a.)
25%
Num mber of discoveries / reserves discover (bnbls) red 450 400 350 300 250 200 150 100 50 0 1850- 1900- 1910- 1920- 1930- 1940- 1950- 1960- 1970- 1980- 1990- 20001899 1909 1919 1929 1939 1949 1959 1969 1979 1989 1999 2006 Volume discovered (bnbls, LH axis) Number of discoveries (LH axis) Average discovery size ( g y (bnbls, RH axis) , ) 5.0 4.0 3.0 2.0

A lack of exploration success p


420bn
7.0 6.0

>20% 20% 16% 15% 11%

10% 10%

5%

4%

5%

20bn

1.0 0.0 00

0% Before 1960s 1960s 1970s 1980s 1990s 2000s

Source: Goldman Sachs and Investec Asset Management estimates, 2010


04853

Source: AAPG

Page 45 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY

Average discovery size (bnb bls)

Long term supply: Reserve additions and value creation through exploration
Aside from a few companies, exploration success has been limited
Net present value of discoveries as a % of EV
80%

Reserves added to exploration since 2000 as a % of SEC reserves


250%

70% 200%

60%

50% 150% 40%

30%

100%

20% 50% 10%

0%

Soco INPEX Cairn India Tullow Galp Petrobras BG Murphy Anadarko Marathon Woodside Chevron Noble Energy Repsol Hess Reliance BP TOTAL Encana CNOOC Statoil Nexen ConocoPhillips RDShell Petrochina Devon Energy ENI ExxonMobil Apache Husky Energy Sinopec Corp BHP Billiton

0%

This is not a buy or sell recommendation for any particular security. Source: Goldman Sachs, February 2010
Page 46 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Galp Tullow INPEX BG Murphy Reliance Cairn India Petrobras Woodside Repsol Soco Marathon Noble Energy ENI Sinopec Corp Anadarko Husky Energy TOTAL Chevron Statoil RDShell Apache CNOOC Hess BP BHP Billiton ConocoPhillips ExxonMobil Petrochina Nexen Encana Devon Energy Lukoil

Non-OPEC production: key regions are declining


North Sea Mexico and US falling fast despite capex spend Is Russia next? Sea, spend.
Mexico, North Sea and US oil production has been falling at c. 8% p.a. over the last few years. Assuming this decline rate slows to c 4% p a non OPEC production remains under pressure c. p.a., non-OPEC Given the maturity of the Russian oil fields, we believe that oil production from this region has peaked These decline rates should accelerate if oil prices were to weaken as a result of reduced capital expenditure
North Sea
7,000 6,000 5,000 4,000 3,000 2,000 1,000
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009E 2012E 2015E

Mexico
( )
4000 3500 3000 2500 2000 1500 1000 500 0
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009E 2012E
2 2012E

Russia Oil Production (mbl/d)


13,000 11,000 9,000 7,000 7 000 5,000 3,000 1,000
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2 2009E 2 2012E 2 2015E

United States
10,000 9,000 8,000 7,000

6,000 5,000 4,000 3,000


1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006
2 2009E 2 2015E

Source: Investec Asset Management / Tudor Pickering, February 2010


Page 47 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

2015E

Long term supply: lack of project sanctions recently


The industry faces technical and resource-based challenges
Lack of project sanctions since 2006 is likely to make post 2010 volume growth difficult Water depth is getting deeper. This will impact both extraction costs per barrel and production delays

Source: Goldman Sachs, September 2009


Page 48 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Non-OPEC production change year-on-year


Production from Brazil is unlikely to offset declines
Early indications are that Brazils sub-salt discoveries could contain as much as 60 billion barrels of oil i place il in l Significant first production is not expected until 2014, but significant investment is needed to achieve this target
3,000 ,

ecline) kbls/d No n-OPEC yoy prod uction growth / (de

2,500 2,000 1,500 1,000 500 0 -500

1 000 -1,000 -1,500

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Perf ect delivery One percent more decline in the base

Delivery in line with history One percent decline and historical delivery

Source: Goldman Sachs, February 2010


Page 49 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

2014

OPEC: We need OPECs spare capacity


Based on a conservative demand outlook we see a need for investment in the industry outlook,
If demand grows from current levels, then OPEC spare capacity will be needed and could be fully utilised b 2012 tili d by In addition to non-OPEC producers, the OPEC member countries also need to invest heavily
Call on OPEC crude (mmb/d)
35 34 $120 33 32 31
mmbpd
115.0%

OPEC spare capacity (% utilised)


$140
120.0%

$100
OPEC capacity utilisation C

110.0% 110 0%

$80
$/bbl

105.0% Physical limit to demand

30 29 28 27 $20 26 25 $0 $60

100.0%

$40

95.0%

90.0%

85.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E 2014E 2015E

Call on OPEC Crude

WTI

Base case

Historical delivery

1% increase in decline rates

Historical delivery and decline increase

p y, y Source: Simmons & Company, February 2010

Source: Goldman Sachs, February 2010 , y

Page 50 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

OPEC: Iraq is the real wild card


A significant amount of investment is needed
OPEC available spare capacity (50% of Iraq plans)
10% 8% 6%

Oil reserves of 115 billion barrels Projects announced so far are targeted to add 6.1mmb/d of additional capacity by 2017! Over $12 billion p.a. of capital expenditure is needed over this period

4% 2% 0% 06 07 08 09E 10E 11E 12E 13E 14E 15E 16E 17E 18E

OPEC available spare capacity (Iraq plans fulfilled)


12% 10% 8% 6% 4% 2% 0% 06 07 08 09E 10E 11E 12E 13E 14E 15E 16E 17E 18E

Source: Collins Stewart, Investec Asset Management estimates, February 2010


Page 51 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Long term supply: marginal cost likely to remain high


Canadian tar sands projects are the marginal future producers
The industry will have to develop Canadian tar sands projects to satisfy global demand These projects require, on average, around $80/bl to make a cost of capital return These projects will set long term crude prices
Oil price required to make a Cost-of-Capital break even ($/bl) for potential new projects

Canadian tar sands projects

Source: Goldman Sachs, January 2010


Page 52 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Long term supply: higher marginal cost of supply


We estimate that the marginal cost for oil in 2009 is around $80/bl
The development of marginal projects is currently in question, whilst spare capacity exists Once the spare capacity is exhausted, more marginal fields will be needed, thus supporting higher crude prices
Industry marginal cost curve (US$/boe)

Source: Goldman Sachs


Page 53 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Refining not as bad as the 1980s


Spare capacity is still quite high though
Global refining capacity versus demand (kb/d) Global refining excess capacity by product

40% 100,000 35% 30% 25% kb b/d 60,000 20% 15% 10% 20,000 5% 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 0 20 8 10 20 e 12 20 e 14 e
Wor Excess Capacity as % of Product Capacity rld s

50% MS Estimates 40%

80,000

30%

20%

40,000

10%

0%

0%

-10%

Global MD capacity Global FO capacity World Tot Pdts Consumption (kb/d)

Global LD capacity Global 'others' capacity Global excess cap as % total capacity

Source: Morgan Stanley, June 2010


Page 54 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 e 20 12 e 20 14 e
Light Distillates Middle Distillates Fuel Oil

Refining Product margins and capacity differ by region


Europe Excess Capacity less diesel, more fuel oil
60% Europe Excess Capacity as % of Product Capacity y 50% 40% 30% 20% 10% 0% -10% -20% -30%
19 96 20 00 20 06 10 e 19 92 19 86 19 88 19 84 19 90 19 94 19 98 20 02 20 04 20 08 12 e 14 e 20 20 20

N.America Excess Capacity lots more fuel oil, still short gasoline
N North America Excess Capa acity as % of Product Capac city 60% 40% 20% 0% -20% -40% -60% -80% -100%
19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 e 20 12 e 20 14 e

MS Estimates

MS Estimates

Light Distillates

Middle Distillates

Fuel Oil

Light Distillates

Middle Distillates

Fuel Oil

APAC Excess Capacity longer fuel oil, balanced light and middle distillate capacity
60% APAC Excess Capacity as % of Product Capacity y MS Estimates 40%

Middle East Excess Capacity not the export threat that is widely perceived
Middle East Excess Capac as % of Product Capacit city ty 70% MS Estimates 60% 50% 40% 30% 20% 10% 0% -10%
84 86 88 90 92 94 96 98 00 02 04 06 08 e e 12 20 20 10 19 20 19 19 19 19 19 19 19 20 20 20 20 20 14 e

20%

0%

-20%

-40%

-60%

-80%
19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 e 20 12 e 20 14 e

Source: Morgan Stanley, June 2010


04853

Light Distillates

Middle Distillates

Fuel Oil

Light Distillates

Middle Distillates

Fuel Oil

Page 55 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY

GSF

Investment case for energy equities

Investment: Energy equities relative to energy commodities


Energy equities provide more leverage than the crude price
The GSF Global Energy Fund has outperformed the crude oil price since 1994 t f d th d il i i We believe energy equities are likely to outperform the commodity long term as a result of: Operational leverage: if the crude price doubles, the operating profit of a company with a 50% margin will treble G Growth: most energy companies can grow th t i while commodity investments have no ability to grow Exploration success: most energy companies deliver value through exploration which is not available directly through the commodity Long term performance in USD
(From D (F December 1994 t J l 2010) b to July
2,000
Investec GSF Global Energy A Inc (MF)

1,800 1,600 1 600

MSCI World/Energy TR (IN) WTI crude oil

Performa ance growth

1,400 1,200 1,000 800 600 400 200 0

Past performance should not be taken as a guide to the future and there is no guarantee that this investment will make profits; losses can be made. Source: Lipper to 31 07 10 NAV based gross income reinvested annualised and gross of annual management 31.07.10, based, reinvested, fees in US dollars. The performance is shown since inception of MSCI World Energy index at 30.12.94. Source: Bloomberg to 31.07.10 for WTI crude oil
Page 57 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Dec-94 Jun-95 Dec-95 Jun-96 Dec-96 Jun-97 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10

Investment: Energy equities versus a crude ETF


Energy equities have strongly outperformed crude oil ETFs
The Investec Global Energy fund has delivered a b tt i d li d better investment return than the t t t th th ETF Securities crude oil ETF (CRUD LN), since its inception (October 2006) The Investec Global Energy Fund has delivered strong correlation with the crude price over this period Performance in USD
(From October 2006 to July 2010)

Past performance should not be taken as a guide to the future and there is no guarantee that this investment will make profits; losses can be made. Source: Bloomberg, July 2010, based on A Income Share.
Page 58 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Investment: A valuation opportunity in energy equities


Energy equities are not pricing in our long term commodity assumptions
We believe we are in the middle of an investment cycle in the energy industry Energy equities generally outperform markets during investment phases Energy equities have historically outperformed the crude price While the near term commodity may be uncertain energy equities seem to be discounting a more bearish long term outlook than we expect Th M j The Majors and E&P h d E&Ps have d de-rated and are not pricing i f t d d t i i in forward oil prices d il i The E&P companies are trading at asset-backed valuation discounts e believe s still cheaper o oil and on a Street a o explore o We be e e it is s c eape to buy o a d gas o Wall S ee than to e p o e for it The Service companies have de-rated as if the investment cycle is over

Page 59 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Energy equities: a long investment phase ahead


The investment phase is continuing
We still need to build more oil and gas production capacity to satisfy long term demand growth We expect the current investment phase to last for another 10+ years
Energy stocks and net investment, long term gy , g
Exploitation phase Investment phase Exploitation phase Investment phase Exploitation phase Investment phase Exploitation phase

11.5 13.4 Net Energy investment (right axis) 11.0 11 0 10.5 10.0 9.5 Net Energy Capital Stock (left axis) 9.0 8.5 11.9 11 9 8.0 11.6 7.5 7.0 1908 8 1915 5 1929 9 1936 6 1943 3 1950 0 1957 7 1964 4 8 1978 1985 5 9 1999 2006 6 1901 1922 1971 1992

13.1

12.8

12.5

12.2

11.3

Source: Goldman Sachs


Page 60 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Investment: Energy equities sector relative performance


The energy sector historically outperforms during investment phases
Energy equities generally outperform during investment phases
Energy stocks vs S&P 500, recent
2.5

Energy stocks outperform


2.0
Reb based to 100, Nove ember 1973

Energy stocks underperform

Energy stocks outperform

12 years

18 years
18 years

+20 years

1.5

1.0

0.5

Investment phase
0.0 00
Nov-73 Nov-75 Nov-77 Nov-79 Nov-81 Nov-83 Nov-85 Nov-87

Consolidation Consolidation phase Phase


Nov-89 Nov-91 Nov-93 Nov-95 Nov-97 Nov-99 Nov-01

Investment phase

Nov-03

Nov-05

Nov-07

We e pec this investment p ase to be s g ca y longer than the 1970s e expect s es e phase o significantly o ge a e 9 0s
Source: Datastream, January 2010
Page 61 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

US oils relative to US markets

Nov-09

2030

Oil company valuations are still below historic levels


Despite crude prices being significantly higher than historic levels
The super-majors have de-rated significantly over the last ten years. The emergence of new competition h d i titi has driven thi this Super-majors have not priced in the rise in commodity prices
22x 20x 18x EV / debt adjusted cash fl a low 16x 14x 12x 10x 8x 6x 4x 2x 0x 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2 2009E 2 2010E 2 2011E BP Chevron Ch ExxonMobil E M bil RDShell RDSh ll TOTAL

Independent E&P companies are trading below the long term marginal cost of extraction

This is not a buy or sell recommendation for any particular security. Source: Investec Asset Management, March 2010
Page 62 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Company Exposure: It is more difficult to differentiate between integrated oil companies


All the companies below have strong free cash generation, but the European companies tend to pay a hi h di id d higher dividend The European Majors offer around 6% dividend yields
8.0% BP 7.0% RDShell Chevron TOTAL ExxonMobil

The global Majors offer around 6% free cash flow yields BP


10.0% 8.0% 6.0% Chevron ExxonMobil RDShell TOTAL

6.0%

Divide yield end

5.0% 4.0% 3.0% 2.0% 1.0% 0%

Free csh f low yield h 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

4.0% 2.0% 0%

-2.0-% -4.0-% -6.0-%

E E2010

This is not a buy or sell recommendation for any particular security. Source: Investec Asset Management, March 2010
Page 63 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

E E2011

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Company Exposure: Differentiating between E&P companies globally


Companies with strong reserve growth tend to have strong organic production growth and therefore the highest t th hi h t returns A number of E&P companies offer very high production growth outlooks
1100 1000 900
Prod duction (rebased to 100, 2003) d
Ultra Petroleum Anadarko Apache Chesapeake Quicksilver Range Resources

These production growth outlooks are backed by solid reserve growth and reserve backing
700
Oil an gas reserves (rebased to 100 2003) nd 0,
Ultra Petroleum

600
500 400 300 200 100 0
2 2003

Anadarko
Apache Chesapeake Quicksilver Range Resources

800 700 600 500 400 300 200 100 0


2 2003

2 2004

2 2005

2 2006

2 2007

2 2008

2 2009

2 2010

2 2011

2 2004

2 2005

2 2006

2 2007

2 2008

2 2009

2 2010

2 2011

This is not a buy or sell recommendation for any particular security. Source: Investec Asset Management, March 2010
Page 64 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

2 2012

2 2012

Oilfield Service companies have de-rated


They are discounting a slowdown in investment going forward
Strong investment from OPEC and non-OPEC producers should lead to increasing revenues for the t h l th technology l d leaders i th oilfield services sector in the ilfi ld i t

US Oilfield Services EV/DACF


26 22

US Oilfield Services Price/Book


7.5 6.5

5.5 18 4.5 3.5 2.5 10 1.5 0.5 05 2010E 2010E 2011E 2011E 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009

14

Baker Hughes Smith International

Halliburton Weatherford

Schlumberger Average

Baker Hughes Smith International

Halliburton Weatherford

Schlumberger Average

This is not a buy or sell recommendation for any particular security. Source: Investec Asset Management, March 2010
Page 65 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

An investment opportunity in the energy sector


We see an average of nearly 40% upside to target prices
We believe our universe of c.150 modelled companies have an average upside potential of nearly 40% The Top 20 upsides may average around 140%, with the bottom 20 may average around -40%

Source: Investec Asset Management, June 2010


Page 66 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

GSF

Appendix

Investec GSF Global Energy Fund performance


Percentage growth, Total return $ gross
120 100 80 Percentage gro owth 60 40 5 year cumulative performance of Investec GSF Global Energy Fund versus MSCI World Energy Index & S&P 500 Investec GSF Global Energy A Inc (MF) MSCI World/Energy TR (IN:IN) S&P 500 TR (IN)

31.6%
20 0 -20 -40 Jul-05

16.8% -0.9%

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

5 years from 31/07/05 to 31/07/10 Past performance figures shown are not indicative of future performance. Source: Lipper to 31 07 10 NAV based (inclusive of all annual management fees but excluding any initial charge) gross 31.07.10, charge), income reinvested, in US dollars. Performance would be lower had any initial charge been included and will vary between different share classes dependant upon their applicable charges.
Page 68 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Investec GSF Global Energy Fund


Cumulative performance vs Indices vs.

YTD $ Investec GSF Global Energy Fund A Inc MSCI World/Energy TR Relative R l ti performance f Fund v MSCI World Energy 2.6 % -6.5 -9.1

1 year % 7.4 3.7

3 years % -11.4 -19.8

5 years % 31.6 16.8

10 years % 330.0 115.6

3.7

8.3

14.9

214.4

Past performance figures shown are not indicative of future performance. Source: Lipper to 31 07 10 NAV based (inclusive of all annual management fees but excluding any initial charge) gross income 31.07.10, charge), reinvested, in US dollars. Performance would be lower had any initial charge been included and will vary between different share classes dependant upon their applicable charges.
Page 69 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Investec GSF Global Energy Fund performance


Performance
$ Investec GSF Global Energy A Inc MSCI World/Energy TR Equity Natural Resource sector average* % Chg -6.9 9.5 8.3 Returns in USD 1 month Q 4 1 year % Chg 7.4 3.7 6.7 Q 2 3 years % Chg -4.0 -7.1 -8.5 Q 1 Annualised 5 years % Chg 5.6 3.1 4.8 Q 1 10 years % Chg 15.7 8.0 11.2 Q 1

Calendar year performance


$ Investec GSF Global Energy A Inc MSCI World/Energy TR Equity Natural Resource sector average*

YTD % Chg -6.5 -9.1 -8.8

2009 % Chg 48.4 27.0 51.0

2008 % Chg -45.0 -37.7 -50.0

2007 % Chg 37.6 30.4 41.0

2006 % Chg 10.1 18.4 22.6

2005 % Chg 62.3 29.4 42.5

Past performance figures shown are not indicative of future performance. Source: Lipper to 31.07.10, NAV based (inclusive of all annual management fees but excluding any initial charge), gross income reinvested, reinvested in US dollars. Performance would have been lower had any initial charge been included and will vary between different dollars share classes dependant upon their applicable charges. * Unweighted average of the offshore funds in Lipper Global Equity Sector Natural Resource.
Page 70 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Biographies
Mark Lacey
Portfolio Manager and Sector Specialist Energy Specialist, 2 years with the firm 14 years experience

Jonathan Waghorn
Portfolio Manager and Sector Specialist Energy Specialist, 2 years with the firm 14 years experience

Mark joined Investec Asset Management in February 2008 as a portfolio manager and energy specialist in the global commodities and resources team. Mark was previously employed at Goldman Sachs where he was an Executive Director and joint head of the highly ranked energy research team. In 2007, Mark was the number one rated oil and gas analyst in the leading investment survey Thompson Extel Extel. Prior to Goldman Sachs Mark spent three years at JP Morgan as a European Sachs, oil and gas analyst. Mark was also a commodities portfolio manager at Credit Suisse Asset Management for six years. Mark graduated from Nottingham Trent University with a BA Honours degree in Business Studies.

Jonathan joined Investec Asset Management in February 2008 as a portfolio manager and energy specialist in the global commodities and resources team. Previously, Jonathan spent eight years at Goldman Sachs where he was an Executive Director and joint head of the highly ranked energy research team. Jonathan was rated a 5 star analyst by Starmine for his stock-picking and earnings estimates in the oil and gas sector Prior to working at Goldman Sachs Jonathan spent two years sector. working for Wood Mackenzie as a UK oil and gas analyst, which involved detailed economic modelling of oil and gas facilities and companies. Jonathan began his career as a drilling engineer for Shell International in the Netherlands, where he spent three years. Jonathan graduated from Bristol University in 1994 with an Honours degree in Physics and in 1995 was awarded an MSc in Semiconductor Physics from Bristol University.

Page 71 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Important information
This document is not for general public distribution. If you are a private investor and receive it as part of a general circulation, please contact us at + 852 2861 6888. The value of this investment and any income generated from it will be affected by changes in interest rates general market conditions investment, it, rates, and other political, social and economic developments, as well as by specific matters relating to the assets in which it invests. Investors are not certain to make profits; losses may be made. All the information contained in this document is believed to be reliable but may be inaccurate or incomplete. A full explanation of the characteristics of the investment is given in the prospectus Any opinions stated are honestly held but are not guaranteed and should not prospectus. be relied upon. Past performance figures shown are not indicative of future performance. Investment involves risks. Investors should read the Prospectus for details, including the risk factors. This is not a buy or sell recommendation for any particular stock The portfolio may change significantly over a short period of time stock. time. THIS DOCUMENT IS PROVIDED FOR GENERAL INFORMATION ONLY. IT IS NOT AN INVITATION TO MAKE AN INVESTMENT NOR DOES IT CONSTITUTE AN OFFER FOR SALE. THE FULL DOCUMENTATION THAT SHOULD BE CONSIDERED BEFORE MAKING AN INVESTMENT, INCLUDING THE PROSPECTUS AND SIMPLIFIED PROSPECTUS OR OFFERING MEMORANDUM, WHICH SET OU U OUT FUND S C C RISKS, IS AVAILABLE FROM INVESTEC ASSET MANAGEMENT. SPECIFIC S S, S O S C SS G This document should not be distributed to private customers who are resident in countries where the Fund is not registered for sale or in any other circumstances where its distribution is not authorised or is unlawful. Please visit www.investecassetmanagement.com/registrations to check registrations by country. THIS INVESTMENT IS NOT FOR SALE TO US PERSONS. PERSONS Telephone calls may be recorded to confirm your instructions This document has not been reviewed by the SFC. Issuer: Investec Asset Management Asia Limited.

Page 72 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853

Contact details
KK Cheung Director, Regional Business Development Tel: +852 2861 6881 Email: kk.cheung@investecmail.com Noel Mak Manager, Business Development Tel: +852 2861 6887 Email: noel.mak@investecmail.com Sandy Chan Senior Manager, Business Development Tel: + 852 2861 6885 Email: sandy.chan@investecmail.com

Investec Asset Management Asia Limited Suites 2604-06, Tower 2 The Gateway, Harbour City Tsimshatsui, Kowloon Hong Kong www.investecfunds.com.hk

Telephone calls may be recorded for training and quality assurance purposes. Issued by Investec Asset Management, August 2010
Page 73 | Investec GSF Global Energy Fund | FOR PROFESSIONAL ADVISORS USE ONLY
04853