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IMPORTANT DISCLOSURES Opinion Key: Accumulate - The stock should be purchased consistently at current prices. The stock has above average risk/reward and is expected to outperform peer stocks over the next 12 months. Hold - Do nothing with the stock at current prices. The stock has average risk/reward and is expected to perform in line with peer stocks over the next 12 months. Trim - The stock should be sold consistently at current prices. The stock has below average risk/reward and is expected to under perform peer stocks over the next 12 months. Sell - The stock should be sold aggressively at current prices. The stock's risk/reward is skewed to the downside with possible negative company specific catalysts or excessive valuation. The stock is expected to trade lower on an absolute basis and be among the worst performers relative to peer stocks over the next 12 months. Investment Rating Distribution: (as of June 30, 2010) Coverage Universe - Tudor, Pickering, Holt & Co. has received in the past 12 months compensation for investment banking or other services from Berry Petroleum, Boardwalk Pipeline Partners, Brigham Exploration, Cobalt International, Concho Resources, Constellation Energy, Direct Drive Systems, El Paso Pipeline Partners, Enerplus Resources, Gastar Exploration, Legacy Reserves, Magellan GP, LLC, Magellan Midstream Partners, Mariner Energy, Newfield Exploration, NuStar Energy, ONEOK, Petrohawk Energy, Plains Exploration & Production, Range Resources, Regency Energy Partners, Rosetta Resources, SandRidge Energy, Inc., Stone Energy, Superior Well Services, Targa Resources, Western Gas Holdings, and Williams Companies. We intend to seek compensation for investment banking services from the companies we follow in the next 3 months. Investment Rating Distribution of Investment Banking Clients: (as of June 30, 2010) Coverage Universe - 10 Price Target Methodology: For IPPs, price targets are developed using a discounted cash flow model. The net present value of a company’s projected cash flow is added to the present value of a terminal valuation to determine our target price. Terminal values are calculated on an asset by asset basis using assumptions derived from our market equilibrium model. The market equilibrium model assumes a balanced market from a supply/demand perspective. The model calculates, and then capitalizes each asset type’s cash flow under those conditions. Validation of our target is done by examining net asset values, private market transactions and EBITDA multiples. There is a risk that the stock will never reach the price target. These risks include market conditions and unforeseen events that may affect the company's business. COMPENSATION POLICY AND DISCLOSURE OF INVESTMENT BANKING REVENUE Analysts’ compensation is not based on investment banking revenue and the analysts are not compensated by the subject companies. In the next three months we intend to seek compensation for investment banking services from the companies mentioned within its research reports. In the past 12 months, Tudor, Pickering, Holt & Co. Securities, Inc. has received investment banking or other revenue from Arena Resources Inc., Berry Petroleum, Boardwalk Pipeline Partners, Brigham Exploration, Cobalt International, Concho Resources, Inc., Constellation Energy, El Paso Pipeline Partners, Enerplus Resources (UAS) Corporation, Gastar Exploration Ltd., Global Geophysical, Goodrich Petroleum, Hercules Offshore, Legacy Reserves, Magellan GP, LLC, Mariner Energy, Newfield Exploration, Nustar Energy, Oasis Petroleum Inc., Petrohawk Energy Corp., Plains Exploration, Questar Corporation, Range Resources Corp., Regency Energy Partners, REX Energy Corp., Rosetta Resources, Sandridge, Stallion Oilfield Holdings, Stone Energy, Superior Well Services, Targa Resource Partners LP, Western Gas Holdings, Williams Partners GP LLC. BUSINESS CONTINUITY PLAN As required by securities industry regulations, Tudor, Pickering, Holt & Co. wants to make you aware that we have developed a Business Continuity Plan on how we will respond to events that disrupt our business. Since the timing and impact of disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. Our Business Continuity Plan - Significant business disruptions can vary from disrupting only our firm to the region in which we are located. Our Plan addresses various disruptions and is intended to mitigate reasonable risk so as to permit the continuation of key business operations. Our Business Continuity Plan addresses data back up and recovery, mission critical systems, safeguarding our employees and property, financial and operational assessment, alternative communications with customers, employees and regulators, alternate physical location of employees, critical supplier and bank, and counterparty impact, regulatory reporting and assuring our customers prompt access to their funds and securities and allowing our customers to transact business. Tudor, Pickering, Holt & Co maintains redundant offsite archival storage facilities in a geographically separate area. Our clearing firm, the Broadcort Correspondent Clearing Division of Merrill Lynch, Pierce, Fenner & Smith Incorporated, also backs up certain of our records. We have designated an alternate site to conduct key business operations until we are able to return to our offices. The firm's goal is to recover its critical operations within minutes or hours after the disruption. We will assure our customers prompt access to their funds and securities. Contacting Us - In the event of a business disruption Tudor, Pickering, Holt & Co. will provide information to its employees and clients via call forwarding, e-mail and other telecommunication services. Our address is: Heritage Plaza If you are unable to contact us through those means you may contact our clearing firm, the Broadcort Correspondent Clearing Division of Merrill Lynch, Pierce, Fenner & Smith Incorporated, for trade related information. Their contact information is as follows: Broadcort Correspondent Clearing Division of Merrill Lynch, Pierce, Fenner & Smith Incorporated The plan is subject to modification, an updated summary will be promptly posted on our website, www.tudorpickering.com. Customers may alternatively obtain updated summaries by requesting a written copy by mail. Trade Execution Data: Tudor, Pickering, Holt & Co. has prepared this report pursuant to a U.S. Securities and Exchange Commission rule requiring all brokerage firms to make publicly available quarterly reports on their order routing practices. The report provides information on the routing of "non-directed orders" - any order that the customer has not specifically instructed to be routed to a particular venue for execution. For these non-directed orders, Tudor, Pickering, Holt & Co. has selected the execution venue on behalf of its customers. The report is divided into four sections: one for securities listed on the New York Stock exchange, one for securities listed on The Nasdaq Stock Market, one for securities listed on the American Stock Exchange or regional exchanges, and one for exchange-listed options. For each section, this report identifies the venues most often selected by Tudor, Pickering, Holt & Co., sets forth the percentage of various types of orders routed to the venues, and discusses the material aspects of Tudor, Pickering, Holt & Co.'s relationship with the venues.
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