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GICS Sector EnergySub-Industry Integrated Oil & Gas

Summary London-based BP is a leading international integrated crude oil and natural gascompany. It has an Arctic venture with Russia's biggest oil company Rosneft.

Key Stock Statistics (Source S&P, Vickers, company reports)

52-Wk Range $48.34– 36.25 S&P Oper. EPS 2012E 6.36 Market Capitalization(B) $133.744 Beta 1.25

Trailing 12-Month EPS $5.53 S&P Oper. EPS 2013E 6.84 Yield (%) 4.70 S&P 3-Yr. Proj. EPS CAGR(%) 1Trailing 12-Month P/E 7.6 P/E on S&P Oper. EPS 2012E 6.6 Dividend Rate/Share $1.98 S&P Credit Rating A$10K Invested 5 Yrs Ago $7,198 Common Shares Outstg. (M) 19,051.9 Institutional Ownership (%) 2

Price Performance

A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M

2009 2010 2011 2012

34

3

30-Week Mov. Avg.

12-Mo. Target Price

10-Week Mov. Avg.

Relative Strength

GAAP Earnings vs. Previous Year

Up Down No Change

Volume Above Avg.

Below Avg.

STARS

735

30

40

50

60

70

0

20

40

60

Vol.

Mil.

5

1

Options: ASE, CBOE, P, Ph

Analysis prepared by Equity Analyst C. Tiscareno on Dec 03, 2012, when the stock traded at $41.76.

Highlights

BP has extricated itself from its Russian TNK-

BP joint-venture by selling to Rosneft. BP gets two seats on Rosneft's board, $12.3 billion incash and 18.5% of Rosneft (owns 1.25% al-ready), totaling $26 billion. The deal ups re-serves 12.5%, but reduces production 9% and isearnings dilutive. Yet, we view the transactionas highly positive, given the disruptions theventure was causing. After BP's significant as-set disposals currently underway ($45 billion),BP sees upstream annual production growth of1% over the next five years (previously 2%) andwill focus on higher margin barrels, rather thanjust volume growth. BP notes that new high-margin projects coming on stream should en-able it to double cash flow by 2015.

We have seen steep deterioration in overall re-sults in 2012 due to various writedowns ($4.8billion), mostly from depressed gas prices. Inour view, downward revisions will continue af-

ter the sale of its TNK-BP venture. It is modern-izing 50% of U.S. downstream assets and sell-ing the rest. We forecast 2014 EBIT margins ataround 9.5% (9.8% in 2008; 11% in 2010).

Since the Gulf of Mexico incident, BP has rein-stated its dividend ($0.54 per ADS per quarter).

Investment Rationale/Risk

Given BP's high risk profile, our opinion is hold,

as we believe uncertainty over U.S. GOM andRussian legal claims will persist. We think BPremains financially and operationally sound,and well placed to handle the cleanup. Reservereplacement in 2011 was above 100%, and guid-ance is for 1% production growth per year until2015. BP had a September 2012 net debt-

to-asset ratio of 25% and $15 billion in cash. Italso has what we view as has a strong trackrecord of exploration success. We believe BPwill hone efficiency over the next three years,while its deal with India's Reliance has promis-ing long-term potential.

Risks to our recommendation and target priceinclude Macondo exorbitant fines and damagesresulting from criminal or civil charges, failure

to win back shareholder trust, inability to re-structure or sell its downstream business, oper-ational problems, accidents, terrorism andcrude oil prices below US$80.

Our 12-month target price of $56 reflects ourDCF model (WACC 9.1%; terminal growth 1.8%)and assumes BP will operate in the U.S. Ourearnings estimates and target price are basedon an exchange rate of US$1.57/GBP.

Qualitative Risk Assessment

LOW MEDIUM HIGH

Risk level reflects current legal uncertainties from the US Macondo incident, which could lastbeyond 2015; oil and gas relative inelastic demandover the economic cycle - with an upward futuresprice trend; BP's robust cash flow; strongexploration prospects; and asset location - 40%US, 20% Europe.

Quantitative Evaluations

S&P Quality Ranking NR

D C B- B B+ A- A A+

Relative Strength Rank MODERATE

50

LOWEST = 1 HIGHEST = 99

Revenue/Earnings Data

Revenue (Million $)

1Q 2Q 3Q 4Q Year2012 94,040 93,341 90,591 -- --2011 85,329 101,364 95,383 93,841 375,917

2010 73,071 73,725 70,608 79,703 297,1072009 47,296 54,777 66,218 70,981 239,2722008 87,745 108,747 103,174 61,477 361,1432007 61,307 71,872 71,334 79,852 284,365

Earnings Per ADS ($)

2012 1.84 -0.44 1.70 E1.66 E6.362011 2.25 1.76 1.53 E1.50 8.062010 1.92 -5.48 0.56 1.76 -1.192009 0.81 1.39 1.69 1.36 5.252008 2.40 2.95 2.55 -1.08 6.692007 1.44 2.29 1.38 1.36 6.47Fiscal year ended Dec. 31. Next earnings report expected: NA. EPSEstimates based on S&P Operating Earnings; historical GAAPearnings are as reported.

Dividend Data (Dates: mm/dd Payment Date: mm/dd/yy)

Amount($)

DateDecl.

Ex-Div.Date

Stk. ofRecord

PaymentDate

0.480 -- 02/15 02/17 03/30/120.480 -- 05/09 05/11 06/27/120.480 -- 08/08 08/10 09/25/120.540 -- 11/07 11/09 12/21/12Dividends have been paid since 1917. Source: Company reports.

Stock Report | December 22, 2012 | NYS Symbol: BP | BP is in the S&P ADR Index

BP Plc

S&P Recommendation HOLD Price$42.12 (as of Dec 21, 2012)

12-Mo. Target Price$56.00

Please read the Required Disclosures and Analyst Certification on the last page of this report.Redistribution or reproduction is prohibited without written permission. Copyright ©2012 The McGraw-Hill Companies, Inc.

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Business Summary December 03, 2012

CORPORATE OVERVIEW & STRENGTHS: Founded in 1909 as Anglo-Persian Oil Co operating in what is nowIran, British Petroleum has grown into one of the world's largest oil companies. BP plc was formed by the1998 merger of The British Petroleum Co plc and Amoco Corp. The U.S. Gulf of Mexico (GOM) Deep WaterHorizon catastrophe resulted in large fines, lawsuits and the sale of non-core assets as well as two largeU.S. refineries. The resultant, more compact BP retains its key operational strengths, with solid reserve re-placement (18 years >100%), positive hydrocarbon production growth prospects (assured for the next five

years) and an excellent supplier position within the U.S. gas markets, in our view. BP also owns 20% ofRosneft (Russia's biggest oil producer) and has two seats on its board of directors.

One ADS represents six ordinary shares.

CURRENT STRATEGY: Upstream: production growth of 1%, with a production target of around 1.5 millionbarrels of oil equivalent (MMboe) per day by 2015 and further projects on the way to assure growth

through 2020. LNG: 10% increase in LNG production by 2013. Downstream: modernize the Whiting refinery(to handle heavy crude) and close performance gap with peers. Technology: increase R&D investing in un-conventional resources, conversion and low-carbon technologies. BP announced in the third quarter of2012 the main terms of its TNK-BP 50% interest sale to Rosneft, which it will account for on an equity basis,like previously TNK-BP. The deal will increase its reserves by 12.5%, but reduces its yearly production by9% and will be earnings dilutive. Yet, we view the transaction as highly positive, given the disruptions that

the Russian venture was causing. BP will receive net $12.3 billion in cash, Rosneft shares (an illiquid, lowervalue investment, but with material long-term potential, in our view) and two seats in Rosneft's board,which, in our opinion, offers limited board influence in a quasi-National Oil Company.

BUSINESS SEGMENTS: (1) Exploration & Production: Since 2002 BP has been the leader in hydrocarbonproduction and has the second-lowest production costs among its peers (the integrated international su-per major oil and gas companies). The division includes upstream and midstream activities in 29 countries.Upstream activities involve oil and natural gas exploration (currently focused on Algeria, Angola, Azerbai-jan, Canada, Egypt, the deepwater Gulf of Mexico, Libya, the North Sea and onshore U.S.) and field devel-opment and production. Midstream activities involve ownership and management of crude oil and naturalgas pipelines, processing facilities and export terminals, LNG processing facilities and transportation, and

the company's NGL extraction businesses in the U.S. and UK. The company's major projects that will im-pact hydrocarbon production growth in 2013 will come from start-up f ields in Angola, Gulf of Mexico (U.S.),Canada, North Sea and Trinidad & Tobago. (2) Refining and Marketing is also responsible for trading and

transportation of crude oil, petroleum, chemicals products and related services to wholesale and retailcustomers. BP markets its products in more than 100 countries. It operates primarily in Europe and N.America and also manufactures and markets products across Australia, in China and other parts of Asia,Africa and Central and S. America. It is the second largest producer of natural gas in the U.S.

CORPORATE GOVERNANCE: We v iew BP's corporate governance practices as sound compared withpeers, although we note it does not explicitly take into consideration the NYSE's tests for director indepen-dence. Carl-Henric Svanberg (previously Ericsson's CEO) became BP's non-executive chairman in Janu-ary 2010 (joined the BP Board as a non-executive director in September 2009); replacing the BP chairman,Peter Sutherland. He is also a non-executive director at Ericsson and the Stockholm Advisory Board. InDecember 2011 he accepted a non-executive role at Volvo AB. He is based in London and devotes threedays a week to BP business.

UPCOMING CATALYSTS: We believe the GOM legal outcome will dictate share price movements for theforeseeable future.

FINANCIAL TRENDS: BP has what we view as a strong balance sheet, with $16 billion cash (third quarter2012) and positive f ree cash flow. 2012 capex guidance is for $22 billion. For the new, more compact BP(which we believe renders yearly comparisons for 2011 irrelevant), after asset sales, we forecast a lower2012 EBIT margin of 7% (2009: 11%; 10% 2011); a lower EBITDA margin of 10% (15% 2009, 13% 2011), with anet profit margin of 5% (7% 2011).

Corporate Information

Investor ContactJ. Mitchell (44 (0) 207496 4000)

Office1 St James's Square, London, United KingdomSW1Y 4PD.

Telephone44 20 7496 4000.

Fax44 20 7496 4630.

Websitehttp://www.bp.com

Officers

ChrmnC. Svanberg

CEOR.W. Dudley

EVP & Chief AcctgOfficerB.E. Grote

EVP & TreasD. Sanyal

CFOB. Gilvary

Board MembersP. M. Anderson

A. Burgmans

G. David

D. A. Dowling

B. Gilvary

B. R. Nelson

A. B. Shilston

F. L. Bowman

I. C. Conn

I. E. Davis

R. W. Dudley

B. E. Grote

F. P. Nhleko

C. Svanberg

DomicileUnited Kingdom

Founded1889

Employees83,400

Stockholders121,000

Stock Report | December 22, 2012 | NYS Symbol: BP

BP Plc

Redistribution or reproduction is prohibited without written permission. Copyright ©2012 The McGraw-Hill Companies, Inc.

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Quantitative Evaluations

S&P Fair ValueRank

4 1 2 3 4 5

LOWEST HIGHESTBased on S&P's proprietary quantitative model, stocks are rankedfrom most overvalued (1) to most undervalued (5).

Fair ValueCalculation

$43.40 Analysis of the stock's current worth, based on S&P's proprietaryquantitative model suggests that BP is slightly undervalued by

$1.28 or 3.0%.

InvestabilityQuotientPercentile

86

LOWEST = 1 HIGHEST = 100

BP scored higher than 86% of all companies for which an S&PReport is available.

Volatility LOW AVERAGE HIGH

TechnicalEvaluation

BEARISH Since November, 2012, the technical indicators for BP have beenBEARISH.

Insider Activity NA UN FAVORAB LE NEUTRA L FAVO RA BLE

Expanded Ratio Analysis

2011 2010 2009 2008Price/Sales 0.36 0.47 0.76 0.41Price/EBITDA NA NA NA 3.47Price/Pretax Income 3.51 NM 7.28 4.31P/E Ratio 5.22 NM 11.04 6.99Avg. Diluted Shares Outstg (M) 3,189.4 3,166.3 3,155.9 3,162.5

Figures based on calendar year-end price

Key Growth Rates and Averages

Past Growth Rate (%) 1 Year 3 Years 5 Years 9 Years

Sales 26.53 3.43 4.19 5.39Net Income NM NM -98.00 -84.11

Ratio Analysis (Annual Avg.)Net Margin (%) 6.94 4.21 5.16 5.89Return on Equity (%) 25.29 12.90 16.95 19.59

Company Financials Fiscal Year Ended Dec. 31

Per ADS Data ($) 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002Tangible Book Value NA NA NA 22.80 29.05 19.18 18.73 17.99 16.89 14.43Cash Flow NA NA NA 10.29 9.76 1.48 1.47 1.30 5.67 0.77Earnings 8.06 -1.19 5.25 6.69 6.47 4.31 6.22 4.26 2.75 1.80Dividends 1.68 NA 4.20 3.30 2.54 2.30 2.09 1.66 1.53 1.41Payout Ratio 21% NA 80% 49% 39% 35% 34% 39% 56% 78%Prices:High 49.50 62.38 60.00 77.69 79.77 76.85 72.66 62.10 49.59 53.98Prices:Low 33.62 43.20 33.70 37.57 58.62 63.52 56.60 46.65 34.67 36.25P/E Ratio:High 6 NM 11 12 12 12 12 15 18 30P/E Ratio:Low 4 NM 6 6 9 10 9 11 13 20

Income Statement Analysis (Million $)Revenue 375,917 297,107 239,272 361,143 284,365 266,607 253,621 285,059 232,571 178,721Operating Income NA NA NA 42,538 38,196 36,787 38,387 28,208 25,133 19,044Depreciation, Depletion and Amortization 12,374 11,164 12,699 11,365 10,579 9,128 8,771 12,583 10,940 10,401

Interest Expense 788 1,170 1,110 1,157 1,433 516 761 999 851 1,279Pretax Income 38,834 -4,825 25,124 34,283 31,611 35,142 31,605 24,241 16,409 11,264Effective Tax Rate 32.8% 31.1% 33.3% 36.8% 33.0% 35.6% 29.4% 34.2% 36.4% 38.5%Net Income 26,097 -3,719 16,578 21,157 20,845 22,626 22,317 15,729 10,267 6,845

Balance Sheet & Other Financial Data (Million $)Cash 14,355 20,088 8,339 8,197 3,562 2,590 2,960 1,156 1,947 1,520Current Assets NA NA NA 66,384 80,202 74,261 75,290 63,878 54,465 45,066Total Assets 293,068 272,262 235,968 228,238 236,076 217,601 206,914 191,108 177,572 159,125Current Liabilities NA NA NA 69,793 77,231 75,298 71,997 63,878 50,584 46,301Long Term Debt 34,816 30,710 25,518 17,464 15,651 11,086 10,230 12,907 12,869 11,922Common Equity 111,444 94,987 101,613 91,282 94,631 84,603 79,640 76,635 75,917 69,388Total Capital NA NA NA 125,771 129,518 114,667 106,938 105,956 105,205 95,483Capital Expenditures 17,845 18,421 20,650 22,658 17,830 15,125 12,281 13,035 12,368 12,049Cash Flow NA NA NA 32,522 31,424 31,752 31,086 28,310 21,205 17,244Current Ratio 1.2 1.2 1.1 1.0 1.0 1.0 1.0 1.0 1.1 1.0

% Long Term Debt of Capitalization 22.3 21.9 18.7 13.9 12.1 9.7 9.6 12.2 12.2 12.5% Return on Assets NA NA NA 9.1 9.2 10.7 11.1 8.7 6.1 4.5% Return on Equity 25.3 NM 17.2 22.9 23.2 27.5 28.5 21.4 14.1 10.2


BP Plc

Data as orig reptd.; bef. results of disc opers/spec. items. Per share data adj. for stk. divs.; EPS diluted. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked. UR-Under Review.

Redistribution or reproduction is prohibited without written permission. Copyright ©2012 The McGraw-Hill Companies, Inc.

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Sub-Industry Outlook Stock Performance

Our fundamental outlook for the integrated oil & gassub-industry for the next 12 months is positive. Welook for U.S.-based supermajors to benefit fromsuperior earnings, cash flow and dividend growth.S&P Capital IQ estimates that global GDP expanded3% in 2011 and will grow 2.5% in 2012 and 2.6% in

2013. We see continued, albeit slowing, M&Aactivity, notably in U.S. onshore, and we look forincreased Gulf of Mexico drilling. Also, integratedscontinue to downsize downstream operations.

The U.S. Energy Information Administration (EIA)estimates that global oil demand grew by 1.22 millionbarrels per day (MMb/d) in 2011, to 88.29 MMb/d,and, as of December 2012, sees growth of 0.75MMb/d in 2012, to 89.04 MMb/d, and 0.96 MMb/d in2013, to 90 MMb/d. The EIA estimates global oilsupply fell by 0.08 MMb/d in 2011, to 87.06 MMb/d,and forecasts supply growth of 2.03 MMb/d in 2012and 0.86 MMb/d in 2013. On supply disruptions,OPEC spare production capacity is believed to havefallen to 1.9 MMb/d in the third quarter, according to

the EIA, which sees OPEC production at 31.1MMb/d.

After global oil prices began to climb in early 2012,prices slipped in May, to below $80 per barrel, on

tempered global economic and oil demandprojections. Since July, prices have been volatile,but higher, on the belief that the EU, China and theU.S. will provide additional economic stimulus tocounteract slowing growth. Sanctions on Iran and

threats to block oil from the Strait of Hormuz, thepossibility of Israeli action against Iran's nuclearfacilities, and concerns about reduced production in

the North Sea due to turnarounds have alsobolstered prices. As of October 2012, using S&Pestimates based on data from IHS Global Insight,West Texas Intermediate (WTI) spot oil prices wereprojected to average $94.30 per barrel in 2012 and

$89.80 in 2013, versus $95.08 in 2011. The pricedifferential for WTI versus Brent has widened toover $20 per barrel.

For U.S. natural gas, we look for low prices todepress U.S. gas drilling activity. According to the

EIA, natural gas working inventories ended theweek of December 14, 2012, at an estimated 3.72 trillion cubic feet (Tcf), up about 2% from a yearearlier. As of October, based on data from IHSGlobal Insight, S&P expects Henry Hub spot prices

to average $2.61 per million Btu in 2012 and $3.72 in2013, versus $4.00 in 2011.

Year to date to December 14, the S&P Integrated Oil& Gas Sub-Industry Index was up 0.2%, versus a12.5% rise in the S&P 1500 Composite Index,reflecting weaker global demand expectations. In2011, the sub-industry index was up 11.8%, versus a0.3% decline for the 1500.

--Michael Kay

GICS Sector: EnergySub-Industry: Integrated Oil & Gas

Based on S&P 1500 IndexesMonth-end Price Performance as of 11/30/12

2008 2009 2010 2011 2012 2013

160

140

120

100

80

60

40

20

0

Sub-Industry Sector S&P 1500

NOTE: All Sector & Sub-Industry information is based on thGlobal Industry Classification Standard (GICS)


BP Plc

Sub-Industry : Integrated Oil & Gas Peer Group*: Major Integrated Oil & Gas - Europe

Peer GroupStock

Symbol

Stk.Mkt.Cap.

(Mil. $)

RecentStock

Price($)

52 Week

High/Low($) B etaYield

(%)P/E

Ratio

FairValue

Calc.($)QualityRanking

S&PIQ

%ile

Return onRevenue

(%)

LTD toCa(%

BP p.l.c. ADS BP 133,744 42.12 48.34/36.25 1.25 4.7 8 43.40 NR 86 6.9 22.

Repsol S.A. ADS REPYY 24,764 20.80 31.29/13.18 1.45 5.3 9 NA NR 16 4.1 32.Royal Dutch Shell'A'ADS RDS.A 128,734 69.29 74.52/60.62 1.02 4.2 8 71.80 NR 93 6.6 13.Royal Dutch Shell'B'ADR RDS.B 96,671 71.25 77.53/63.05 1.02 4.7 9 74.40 NR 93 8.3 7.Statoil ASA ADS STO 79,372 24.95 28.95/22.00 1.19 3.6 6 25.50 NR 92 12.2 25.Total 'B' ADS TOT 116,488 51.60 57.06/41.75 1.03 4.9 8 51.90 NR 90 7.5 23.4

NA-Not Available NM-Not Meaningful NR-Not Rated. *For Peer Groups with more than 15 companies or stocks, selection of issues is based on market capitalization.

Source: S&P.

Redistribution or reproduction is prohibited without written permission. Copyright ©2012 The McGraw-Hill Companies,Inc.

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S&P Analyst Research Notes and other Company News

November 29, 201201:40 pm ET ... S&P MAINTAINS HOLD RECOMMENDATION ON ADSS OF BP PLC(BP 41.43***): The EPA placed a temporary ban on BP obtaining new U.S.government contracts, a result of the guilty plea BP entered two weeks ago. After

talking to the EPA and BP, we think this issue will be resolved by Q1 '13. Thus, ourestimates are unchanged. BP indicated U.S. operations continue as normal and

we think an announcement on the same day as the EPA temporary ban that BPdid not participate in a Gulf of Mexico lease sale was a coincidence. In our view,

the outcome in the upcoming civil trial will not trigger another EPA ban, as webelieve these are two unrelated legal matters. /C. Tiscareno

November 26, 2012BP plc announced the appointment of Lamar McKay as Chief Executive,Upstream. He will take up the position with effect from January 1, 2013. In his newrole, McKay will lead BP's combined Upstream business, comprising theExploration, Developments and Production divisions together with the Upstreamstrategy and integration team. Their current structure and management teamswill remain unaffected by this change in segment leadership. McKay, who will bebased in London, will report to Bob Dudley and is already a member of BP'sexecutive management team. He is currently Chairman and President of BPAmerica -- a role he has held since early 2009 -- serving as BP's chiefrepresentative in the United States and also overseeing BP's Gulf Coastrestoration work.

November 19, 2012BP is planning to spend up to GBP 3.7B buying its own stock in an attempt torevive its flagging share price. The huge buyback, which could come early nextyear, is part of a scheme to rehabilitate the oil giant in the eyes of the City after

the fatal Gulf of Mexico spill two years ago and tortuous contractual wrangles inRussia: The Sunday Times

November 16, 201204:46 pm ET ... S&P KEEPS HOLD OPINION ON ADSS OF BP PLC (BP 40.03***): BPhas reached a settlement with the U.S. federal government. The US$4.5Bpayment BP will have to make is in the mid-range of what we had estimated aspossible. Importantly, we think investors and BP will be relieved that the companywill be able to continue to operate in the U.S. BP's U.S. volumes are around 20%of its total production. The financial levies, in our view, can be covered by BP'sinternal operating cash flow, generated over the next five years, without

restricting its current exploration and development program, as well as itsgrowing dividend plans. /C. Tiscareno, Stewart Glickman, CFA

November 12, 201201:31 pm ET ... S&P MAINTAINS HOLD RECOMMENDATION ON ADSS OF BP PLC(BP 40.99***): BP posted Q3 earnings per ADS of $1.68, vs. $1.61, $0.12 above ourview. However, on a more subdued Q4 outlook, we cut our '12 earnings per ADSestimate by $0.62 to $6.36, but keep '13's at $6.84. Q3 upstream fell 31% on assetsales and maintenance, yet downstream was a record 3X higher. Production (ex.TNK-BP) fell 2.7% on asset sales (up 3.4% organically). We see higher Q4production, as fields come back on-stream, but see lower downstream revenuesas the Whiting refinery will close for pre-scheduled maintenance. BP raised itsquarterly dividend 12.5% to $0.54 per share. /C. Tiscareno, M. Kay

October 18, 2012Jim Cowei has been appointed new vice president of BP plc Azerbaijan on wells.

He previously held the similar post in the BP project in the North Sea. Cowei willsucceed Gary Christman on this post f rom November 15, who becamevice-president of the BP's Global Wells Institute. Another vice president onpipelines and terminals of BP Azerbaijan Kemp Copeland retired last week.

September 10, 2012UP 0.06 to 41.99... BP agrees to sell its interest in a number of oil and gas fields in

the deepwater U.S. Gulf of Mexico to PLAINS EXPLORATION AND PRODUCTIONCOMPANY for a total of $5.5 billion, as part of its previously-announced plan todivest the assets and position in its Gulf portfolio for long term growth.

July 31, 201202:04 pm ET ... S&P MAINTAINS HOLD RECOMMENDATION ON ADSS OF BP PLC(BP 40.17***): On Q2 results, we cut our '12 EPS estimate $0.52 to $6.98, 13's by

$1.08 to $6.84, and our target price by $2 to $56. BP posts Q2 loss due to a $4.8Bwrite-off on U.S. gas assets, an Alaskan project and some refineries. Q2 adj. EPSof $1.16, vs. $1.74, was below our $1.62 estimate. Production has not recoveredfrom Macondo and fell 7% (ex. TNK-BP). TNK-BP saw income fall 66% and itdenied BP a $1B dividend ($1.6B in '11). Management notes earnings andproduction will continue to be affected in H2, and we believe possibly into '13,until the GOM and Russian issues are resolved. /M. Kay

June 1, 2012BP says it has received unsolicited indications of interest regarding the potentialacquisition of its shareholding in TNK-BP. In light of these unsolicited approachesand consistent with its commitment to maximizing shareholder value, and itsobligations under the Shareholder Agreement, BP has notified Alfa AccessRenova of its intention to pursue a potential sale.

June 1, 201210:26 am ET ... S&P MAINTAINS HOLD RECOMMENDATION ON ADSS OF BP PLC(BP 37.05***): BP intends to pursue a potential sale of its 50% stake in TNK-BP, itsRussian JV and largest asset. We view this as positive. BP has receivedunsolicited interest and has notified partner Alfa-Access-Renova (50% stake) ofits possible intention to sell. BP would lose 26% of its reserves and 29% ofproduction, but just 1% of revenues and, in our view, would gain $32B in cash(BP's last offer for AAR's stake) or options in that amount. Long term, we think BPwould divest a business beginning to see diminished returns and gain operationaflexibility. /M. Kay

May 29, 2012Federal investigators are exploring whether BP representatives lied to Congressabout how much oil was leaking after the Deepwater Horizon accident two yearsago, a development that could lead to additional criminal charges against currentand former company employees: WSJ.

May 1, 201204:20 pm ET ... S&P MAINTAINS HOLD RECOMMENDATION ON ADSS OF BP PLC(BP 42.70***): Q1 operating cash flow rose 40%, even though EPS fell 19% (partlyon non-recurring items). Upstream profit declined 6%, despite higher prices. Q1production fell 6% and we believe this trend will continue. We see flat productionin '12, on non-core asset sales. Assets held for sale account for 11% of totalassets. As BP consolidates, so does its balance sheet; its fixed assets declined2% q/q, while total assets rose 4%. Equity per share since year-end has

increased by 6%. On Q1 results, we cut our '12 earnings per ADS estimate by$0.54 to $7.50, and '13's by $0.96 to $7.92. /M. Kay

May 1, 2012BP posts $1.52 vs. $1.76 Q1 EPADS (underlying replacement cost profit) despite9.3% revenue rise. Says Q1 '12's result was impacted adversely by a $541Mconsolidation adjustment in respect of unrealized profits in inventory held within

the downstream business.

April 17, 2012BP plc announced that Sir William Castell retired as a Non-Executive Director of

the company with effect from the conclusion of the Annual General Meeting heldon 12 April 2012.


BP Plc

Source: S&P.


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Analysts' Recommendations

Wall Street Average

S

WH

H

BH

B

Number of Analysts Following Stock

Monthly Average Trend Buy

B

Buy/Hold

BH

Hold

H

Weak Hold

WH

Sell

S

No Opinion BP Trend

J F M A M J J A S O N D J F M A M J J A S O N D

2011 2012

Stock Price ($)

35

40

45

50

16

20

24

Of the total 31 companies following BP, 17 analysts currently publish recommendations.

No. of Ratings % of Total 1 Mo. Prior 3 Mos. Prior

Buy 7 41 7 7Buy/Hold 1 6 2 2Hold 8 47 7 6Weak Hold 1 6 1 1Sell 0 0 0 0No Opinion 0 0 0 1Total 17 100 17 17

Wall Steet Consensus Opinion

BUY/HOLD

Companies Offering Coverage

Over 30 firms follow this stock; not all firms aredisplayed.

Argus Research CompanyBMO Capital Markets, Canadian EquityResearchBarclaysBerenberg BankBofA Merrill LynchBofA Merrill LynchCanaccord GenuityCitigroup IncCitigroup IncCollins Stewart plcCredit SuisseCrowell, Weedon & Co.Davenport & CompanyDeutsche BankGoldman SachsHoward Weil IncorporatedISI Group Inc.JP MorganJefferies & Company, Inc.Macquarie ResearchMorningstar Inc.Natixis S.A.Nomura Securities Co. Ltd.Oppenheimer & Co. Inc.RBC Capital MarketsRaymond James & AssociatesRaymond James Euro EquitiesSanford C. Bernstein & Co., Inc.Simmons & Company InternationalThe Benchmark Company, LLC

Wall Street Consensus Estimates

2011 Actual $8.06

2011 2012

A S O N D J F M A M J J A S O N D4

6

8

10

Estimates 2011 2012 2013

Fiscal Years Avg Est. High Est. Low Est. # of Est. Est. P/E2013 5.41 6.84 2.56 13 7.82012 5.59 6.36 4.94 14 7.52013 vs. 2012 -3% 8% -48% -7% 4%

Q4'13 1.35 2.04 0.53 5 31.2Q4'12 1.35 1.66 1.06 6 31.2Q4'13 vs. Q4'12 0% 23% -50% -17% 0%

A company's earnings outlook plays a major part in any investment decision. Standard & Poor's organizes the earnings estimates of over 2,300Wall Street analysts, and provides their consensus of earnings over the next two years. This graph shows the trend in analyst estimates over

the past 15 months.

Wall Street Consensus vs. Performance

For fiscal year 2012, analysts estimate that BP willearn $5.59. For the 3rd quarter of fiscal year 2012,BP announced earnings per share of $1.70,representing 30% of the total annual estimate. Forfiscal year 2013, analysts estimate that BP'searnings per share will decline by 3% to $5.41.


BP Plc

Source: S&P, Capital IQ Estimates, Inc.


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Glossary

S&P STARSSince January 1, 1987, Standard and Poor's EquityResearch Services has ranked a universe of commonstocks based on a given stock's potential for futureperformance. Under proprietary STARS (STockAppreciation Ranking System), S&P equity analysts rankstocks according to their individual forecast of a stock'sfuture total return potential versus the expected total

return of a relevant benchmark (e.g., a regional index(S&P Asia 50 Index, S&P Europe 350 Index or S&P 500Index)), based on a 12-month time horizon. STARS wasdesigned to meet the needs of investors looking to put

their investment decisions in perspective. Data used toassist in determining the STARS ranking may be theresult of the analyst's own models as well as internalproprietary models resulting from dynamic data inputs.

S&P 12-Month Target PriceThe S&P equity analyst's projection of the market price agiven security will command 12 months hence, based ona combination of intrinsic, relative, and private marketvaluation metrics, including S&P Fair Value.

Investment Style ClassificationCharacterizes the stock as Growth or Value, andindicates its capitalization level. Growth is evaluated

along three dimensions (earnings, sales and internalgrowth), while Value is evaluated along four dimensions(book-to-price, cash flow-to-price, dividend yield andsale-to-price). Growth stocks score higher than themarket average on growth dimensions and lower onvalue dimensions. The reverse is true for Value stocks.Certain stocks are classified as Blend, indicating amixture of growth and value characteristics and cannotbe classified as purely growth or value.

S&P EPS EstimatesStandard & Poor's earnings per share (EPS) estimatesreflect analyst projections of future EPS from continuingoperations, and generally exclude various items that areviewed as special, non-recurring, or extr aordinary. Also,S&P EPS estimates reflect either forecasts of S&P equityanalysts; or, the consensus (average) EPS estimate,which are independently compiled by Capital IQ, a dataprovider to Standard & Poor's Equity Research. Among

the items typically excluded from EPS estimates areasset sale gains; impairment, restructuring ormerger-related charges; legal and insurancesettlements; in process research and developmentexpenses; gains or losses on the extinguishment of debt;

the cumulative effect of accounting changes; andearnings related to operations that have been classifiedby the company as discontinued. The inclusion of someitems, such as stock option expense and recurring typesof other charges, may vary, and depend on such factorsas industry practice, analyst judgment, and the extent towhich some types of data is disclosed by companies.

S&P Core EarningsStandard & Poor's Core Earnings is a uniformmethodology for adjusting operating earnings byfocusing on a company's after-tax earnings generatedfrom its principal businesses. Included in the Standard &Poor's definition are employee stock option grant

expenses, pension costs, restructuring charges fromongoing operations, write-downs of depreciable oramortizable operating assets, purchased research anddevelopment, M&A related expenses and unrealizedgains/losses from hedging activities. Excluded from thedefinition are pension gains, impairment of goodwillcharges, gains or losses from asset sales, reversal ofprior-year charges and provision from litigation orinsurance settlements.

Qualitative Risk AssessmentThe S&P equity analyst's view of a given company'soperational risk, or the risk of a firm's ability to continueas an ongoing concern. The Qualitative Risk Assessment

is a relative ranking to the S&P U.S. STARS universe, andshould be reflective of risk factors related to acompany's operations, as opposed to risk and volatilitymeasures associated with share prices.

Quantitative EvaluationsIn contrast to our qualitative STARS recommendations,which are assigned by S&P analysts, the quantitativeevaluations described below are derived fromproprietary arithmetic models. These computer-driven

evaluations may at times contradict an analyst'squalitative assessment of a stock. One primary reasonfor this is that different measures are used to determineeach. For instance, when designating STARS, S&Panalysts assess many factors that cannot be reflected ina model, such as risks and opportunities, managementchanges, recent competitive shifts, patent expiration,litigation risk, etc.

S&P Quality RankingGrowth and stability of earnings and dividends aredeemed key elements in establishing S&P's QualityRankings for common stocks, which are designed tocapsulize the nature of this record in a single symbol. Itshould be noted, however, that the process also takesinto consideration certain adjustments and modificationsdeemed desirable in establishing such rankings. Thefinal score for each stock is measured against a scoringmatrix determined by analysis of the scores of a large

and representative sample of stocks. The range ofscores in the array of this sample has been aligned with the following ladder of rankings:

A+AA-B+NR

HighestHighAbove AverageAverageNot Ranked

BB-CD

Below AverageLowerLowestIn Reorganization

S&P Fair Value RankUsing S&P's exclusive proprietary quantitative model,stocks are ranked in one of five groups, ranging fromGroup 5, listing the most undervalued stocks, to Group 1,

the most overvalued issues. Group 5 stocks are expected to generally outperform all others. A positive (+) ornegative (-) Timing Index is placed next to the Fair Valueranking to further aid the selection process. A stock witha (+) added to the Fair Value Rank simply means that thisstock has a somewhat better chance to outperform otherstocks with the same Fair Value Rank. A stock with a (-)has a somewhat lesser chance to outperform otherstocks with the same Fair Value Rank. The Fair Valuerankings imply the following: 5-Stock is significantlyundervalued; 4-Stock is moderately undervalued; 3-Stockis fairly valued; 2-Stock is modestly overvalued; 1-Stockis significantly overvalued.

S&P Fair Value CalculationThe price at which a stock should trade at, according toS&P's proprietary quantitative model that incorporatesboth actual and estimated variables (as opposed to onlyactual variables in the case of S&P Quality Ranking).Relying heavily on a company's actual return on equity,

the S&P Fair Value model places a value on a securitybased on placing a formula-derived price-to-bookmultiple on a company's consensus earnings per shareestimate.

Insider ActivityGives an insight as to insider sentiment by showingwhether directors, officers and key employees who haveproprietary information not available to the generalpublic, are buying or selling the company's stock during

the most recent six months.

Funds From Operations FFOFFO is Funds from Operations and equal to a REIT's netincome, excluding gains or losses from sales of property,plus real estate depreciation.

Investability Quotient (IQ)The IQ is a measure of investment desirability. It serves

as an indicator of potential medium-to-long term returnand as a caution against downside risk. The measure

takes into account variables such as technicalindicators, earnings estimates, liquidity, financial ratiosand selected S&P proprietary measures.

S&P's IQ Rationale:BP p.l.c. ADS

Proprietary S&P Measures

Technical IndicatorsLiquidity/Volatility MeasuresQuantitative Measures

Raw Score17

141356

Max Value115

402075

IQ Total 100 250

VolatilityRates the volatility of the stock's price over the past year.

Technical EvaluationIn researching the past market history of prices and

trading volume for each company, S&P's computermodels apply special technical methods and formulas toidentify and project price trends for the stock.

Relative Strength RankShows, on a scale of 1 to 99, how the stock hasperformed versus all other companies in S&P's universeon a rolling 13-week basis.

Global Industry Classification Standard (GICS)An industry classification standard, developed byStandard & Poor's in collaboration with Morgan StanleyCapital International (MSCI). GICS is currently comprisedof 10 Sectors, 24 Industry Groups, 68 Industries, and 154Sub-Industries.

S&P Issuer Credit RatingA Standard & Poor's Issuer Credit Rating is a currentopinion of an obligor's overall financial capacity (itscreditworthiness) to pay its financial obligations. Thisopinion focuses on the obligor's capacity and willingness

to meet its financial commitments as they come due. Itdoes not apply to any specific financial obligation, as itdoes not take into account the nature of and provisionsof the obligation, its standing in bankruptcy or liquidation,statutory preferences, or the legality and enforceabilityof the obligation. In addition, it does not take intoaccount the creditworthiness of the guarantors, insurers,

or other forms of credit enhancement on the obligation.The Issuer Credit Rating is not a recommendation topurchase, sell, or hold a financial obligation issued by anobligor, as it does not comment on market price orsuitability for a particular investor. Issuer Credit Ratingsare based on current information furnished by obligors orobtained by Standard & Poor's from other sources itconsiders reliable. Standard & Poor's does not performan audit in connection with any Issuer Credit Rating andmay, on occasion, rely on unaudited f inancialinformation. Issuer Credit Ratings may be changed,suspended, or withdrawn as a result of changes in, orunavailability of, such information, or based on othercircumstances.

Exchange TypeASE - American Stock Exchange; AU - Australia StockExchange; BB - Bulletin Board; NGM - Nasdaq GlobalMarket; NNM - Nasdaq Global Select Market; NSC -

Nasdaq Capital Market; NYS - New York StockExchange; OTN - Other OTC (Over the Counter); OTC -Over the Counter; QB - OTCQB; QX - OTCQX; TS - TorontoStock Exchange; TXV - TSX Venture Exchange; NEX -NEX Exchange.

S&P Equity Research ServicesStandard & Poor's Equity Research Services U.S.includes Standard & Poor's Investment AdvisoryServices LLC; Standard & Poor's Equity ResearchServices Europe includes McGraw-Hill FinancialResearch Europe Limited trading as Standard & Poor's;Standard & Poor's Equity Research Services Asiaincludes McGraw-Hill Financial Singapore Pte. Limited's

Stock Report | October 20, 2012 | NYS Symbol: BP

BP Plc

Redistribution or reproduction is prohibited without written permission. Copyright © 2012 Standard & Poor's Financial Services LLC.STANDARD & POOR'S, S&P, S&P 500, S&P Europe 350 a nd STARS are registered trademarks of Standard & Poor's Financial Services LLC.

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offices in Singapore, Standard & Poor's InvestmentAdvisory Services (HK) Limited in Hong Kong, Standard &Poor's Malaysia Sdn Bhd, and Standard & Poor'sInformation Services (Australia) Pty Ltd.

Abbreviations Used in S&P Equity Research ReportsCAGR- Compound Annual Growth Rate; CAPEX- CapitalExpenditures; CY- Calendar Year; DCF- Discounted CashFlow; EBIT- Earnings Before Interest and Taxes; EBITDA-Earnings Before Interest, Taxes, Depreciation andAmortization; EPS- Earnings Per Share; EV- Enterprise

Value; FCF- Free Cash Flow; FFO- Funds From Operations;FY- Fiscal Year; P/E- Price/Earnings ; PEG Ratio-P/E-to-Growth Ratio; PV- Present Value; R&D- Research& Development; ROE- Return on Equity; ROI- Return onInvestment; ROIC- Return on Invested Capital; ROA-Return on Assets; SG&A- Selling, General &Administrative Expenses; WACC- Weighted AverageCost of Capital

Dividends on American Depository Receipts (ADRs) andAmerican Depository Shares (ADSs) are net of taxes(paid in the country of origin).

Required Disclosures

In contrast to the qualitative STARS recommendationscovered in this report, which are determined andassigned by S&P equity analysts, S&P’s quantitativeevaluations are derived from S&P’s proprietary FairValue quantitative model. In particular, the Fair ValueRanking methodology is a relative ranking methodology,whereas the STARS methodology is not. Because theFair Value model and the STARS methodology reflectdifferent criteria, assumptions and analytical methods,quantitative evaluations may at times differ from (or evencontradict) an equity analyst’s STARS recommendations.As a quantitative model, Fair Value relies on history andconsensus estimates and does not introduce an elementof subjectivity as can be the case with equity analysts inassigning STARS recommendations.

S&P Global STARS Distribution

In North America: As of September 28, 2012, researchanalysts at Standard & Poor's Equity Research ServicesNorth America recommended 37.9% of issuers with buyrecommendations, 55.9% with hold recommendationsand 6.2% with sell recommendations.

In Europe: As of September 28, 2012, research analystsat Standard & Poor's Equity Research Services Europerecommended 31.8% of issuers with buyrecommendations, 50.8% with hold recommendationsand 17.4% with sell recommendations.

In Asia: As of September 28, 2012, research analysts atStandard & Poor's Equity Research Services Asiarecommended 38.3% of issuers with buyrecommendations, 52.3% with hold recommendationsand 9.4% with sell recommendations.

Globally: As of September 28, 2012, research analysts atStandard & Poor's Equity Research Services globallyrecommended 37.0% of issuers with buyrecommendations, 54.8% with hold recommendationsand 8.2% with sell recommendations.

5-STARS (Strong Buy): Total return isexpected to outperform the total return of a relevant

benchmark, by a wide margin over the coming 12months, with shares rising in price on an absolute basis.

4-STARS (Buy): Total return is expected tooutperform the total return of a relevant benchmark over

the coming 12 months, with shares rising in price on anabsolute basis.

3-STARS (Hold): Total return is expected toclosely approximate the total return of a relevantbenchmark over the coming 12 months, with sharesgenerally rising in price on an absolute basis.

2-STARS (Sell): Total return is expected to

underperform the total return of a relevant benchmarkover the coming 12 months, and the share price notanticipated to show a gain.

1-STARS (Strong Sell): Total return isexpected to underperform the total return of a relevantbenchmark by a wide margin over the coming 12 months,with shares falling in price on an absolute basis.

Relevant benchmarks: In North America the relevantbenchmark is the S&P 500 Index, in Europe and in Asia,

the relevant benchmarks are generally the S&P Europe350 Index and the S&P Asia 50 Index.

For All Regions: All of the views expressed in thisresearch report accurately reflect the research analyst'spersonal views regarding any and all of the subjectsecurities or issuers. No part of analyst compensationwas, is, or will be directly or indirectly, related to thespecific recommendations or views expressed in thisresearch report.

S&P Global Quantitative Recommendations Distribution

In North America: As of September 28, 2012, Standard &Poor's Quantitative Services North Americarecommended 39.9% of issuers with buyrecommendations, 20.1% with hold recommendationsand 40.0% with sell recommendations.

In Europe: As of September 28, 2012, Standard & Poor's

Quantitative Services Europe recommended 43.0% ofissuers with buy recommendations, 20.1% with holdrecommendations and 36.9% with sell recommendations.

In Asia: As of September 28, 2012, Standard & Poor'sQuantitative Services Asia recommended 51.6% ofissuers with buy recommendations, 20.0% with holdrecommendations and 28.4% with sell recommendations.

Globally: As of September 28, 2012, Standard & Poor'sQuantitative Services globally recommended 45.8% ofissuers with buy recommendations, 20.0% with holdrecommendations and 34.2% with sell recommendations.

Additional information is available upon request.

Other Disclosures

This report has been prepared and issued by Standard &Poor's and/or one of its affiliates. In the United States,research reports are prepared by Standard & Poor'sInvestment Advisory Services LLC ("SPIAS"). In theUnited States, research reports are issued by Standard& Poor's ("S&P"); in the United Kingdom by McGraw-HillFinancial Research Europe Limited, which is authorizedand regulated by the Financial Services Authority and

trades as Standard & Poor's; in Hong Kong by Standard& Poor's Investment Advisory Services (HK) Limited,which is regulated by the Hong Kong Securities FuturesCommission; in Singapore by McGraw-Hill FinancialSingapore Pte. Limited (MHFSPL), which is regulated by

the Monetary Authority of Singapore; in Malaysia byStandard & Poor's Malaysia Sdn Bhd ("S&PM"), which isregulated by the Securities Commission; in Australia byStandard & Poor's Information Services (Australia) PtyLtd ("SPIS"), which is regulated by the AustralianSecurities & Investments Commission; and in Korea by

SPIAS, which is also registered in Korea as across-border investment advisory company.

The research and analytical services performed bySPIAS, McGraw-Hill Financial Research Europe Limited,MHFSPL, S&PM, and SPIS are each conductedseparately from any other analytical activity of Standard& Poor's.

Standard & Poor's or an affiliate may license certainintellectual property or provide pricing or other services

to, or otherwise have a financial interest in, certainissuers of securities, including exchange-tradedinvestments whose investment objective is tosubstantially replicate the returns of a proprietary

Standard & Poor's index, such as the S&P 500. In caseswhere Standard & Poor's or an affiliate is paid fees thatare tied to the amount of assets that are invested in thefund or the volume of trading activity in the fund,investment in the fund will generally result in Standard &Poor's or an affiliate earning compensation in addition to

the subscription fees or other compensation for servicesrendered by Standard & Poor's. A reference to aparticular investment or security by Standard & Poor'sand one of its affiliates is not a recommendation to buy,

sell, or hold such investment or security, nor is itconsidered to be investment advice.

Indexes are unmanaged, statistical composites and theirreturns do not include payment of any sales charges orfees an investor would pay to purchase the securities

they represent. Such costs would lower performance. Itis not possible to invest directly in an index.

Standard & Poor's and its affiliates provide a wide rangeof services to, or relating to, many organizations,including issuers of securities, investment advisers,broker-dealers, investment banks, other financialinstitutions and financial intermediaries, and accordinglymay receive fees or other economic benefits from thoseorganizations, including organizations whose securitiesor services they may recommend, rate, include in modelportfolios, evaluate or otherwise address.

S&P Capital IQ and/or one of its affiliates has performedservices for and received compensation from thiscompany during the past twelve months.

Disclaimers

With respect to reports issued to clients in Japan and in the case of inconsistencies between the English andJapanese version of a report, the English versionprevails. With respect to reports issued to clients inGerman and in the case of inconsistencies between theEnglish and German version of a report, the Englishversion prevails. Neither S&P nor its affiliates guarantee

the accuracy of the translation. Assumptions, opinionsand estimates constitute our judgment as of the date of

this material and are subject to change without notice.Past performance is not necessarily indicative of futureresults.

Standard & Poor's, its affiliates, and any third-partyproviders, as well as their directors, officers,shareholders, employees, or agents (collectively S&PParties) do not guarantee the accuracy, completeness oradequacy of this material, and S&P Parties shall have noliability for any errors, omissions, or interruptions therein,regardless of the cause, or for the results obtained from

the use of the information provided by the S&P Parties.S&P PARTIES DISCLAIM ANY AND ALL EXPRESS ORIMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITEDTO, ANY WARRANTIES OF MERCHANTABILITY,SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSEOR USE. In no event shall S&P Parties be liable to anyparty for any direct, indirect, incidental, exemplary,compensatory, punitive, special or consequentialdamages, costs, expenses, legal fees, or losses(including, without limitation, lost income or lost profitsand opportunity costs) in connection with any use of theinformation contained in this document even if advised of

the possibility of such damages. Capital IQ is a businessof Standard & Poor's.

Ratings from Standard & Poor's Ratings Services arestatements of opinion as of the date they are expressedand not statements of fact or recommendations topurchase, hold, or sell any securities or to make anyinvestment decisions. Standard & Poor's assumes noobligation to update its opinions following publication inany form or format. Standard & Poor's ratings should notbe relied on and are not substitutes for the skill,judgment and experience of t he user, its management,employees, advisors and/or clients when making


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investment and other business decisions. Standard &Poor's rating opinions do not address the suitability ofany security. Standard & Poor's does not act as afiduciary. While Standard & Poor's has obtainedinformation from sources it believes to be reliable,Standard & Poor's does not perform an audit andundertakes no duty of due diligence or independentverification of any information it receives.

Standard & Poor's keeps certain activities of its businessunits separate from each other in order to preserve theindependence and objectivity of their respectiveactivities. As a result, certain business units of Standard& Poor's may have information that is not available toother Standard & Poor's business units. Standard &Poor's has established policies and procedures tomaintain the confidentiality of certain non-publicinformation received in connection with each analyticalprocess.

Standard & Poor's Ratings Services did not participate in the development of this report. Standard & Poor's mayreceive compensation for its ratings and certaincredit-related analyses, normally from issuers orunderwriters of securities or from obligors. Standard &

Poor's reserves the right to disseminate its opinions andanalyses. Standard & Poor's public ratings and analysesare made available on its Web sites,www.standardandpoors.com (free of charge), andwww.ratingsdirect.com and www.globalcreditportal.com(subscription), and may be distributed through othermeans, including via Standard & Poor's publications and

third-party redistributors. Additional information aboutour ratings fees is available atwww.standardandpoors.com/usratingsfees.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financialinstrument. Securities, financial instruments orstrategies mentioned herein may not be suitable for allinvestors. Any opinions expressed herein are given ingood faith, are subject to change without notice, and areonly current as of the stated date of their issue. Prices,

values, or income from any securities or investmentsmentioned in this report may fall against the interests of the investor and the investor may get back less than theamount invested. Where an investment is described asbeing likely to yield income, please note that the amountof income that the investor will receive from such aninvestment may fluctuate. Where an investment orsecurity is denominated in a different currency to theinvestor's currency of reference, changes in rates ofexchange may have an adverse effect on the value, priceor income of or from that investment to the investor. Theinformation contained in this report does not constituteadvice on the tax consequences of making any particularinvestment decision. This material is not intended for anyspecific investor and does not take into account yourparticular investment objectives, financial situations orneeds and is not intended as a recommendation ofparticular securities, financial instruments or strat egies

to you. Before acting on any recommendation in thismaterial, you should consider whether it is suitable for

your particular circumstances and, if necessary, seekprofessional advice.

This document does not constitute an offer of services injurisdictions where Standard & Poor's or its affiliates donot have the necessary licenses.

For residents of the U.K. - This report is only directed atand should only be relied on by persons outside of theUnited Kingdom or persons who are inside the UnitedKingdom and who have professional experience inmatters relating to investments or who are high networth persons, as defined in Article 19(5) or Article 49(2)

(a) to (d) of the Financial Services and Markets Act 2000(Financial Promotion) Order 2005, respectively.

For residents of Singapore - Anything herein that may beconstrued as a recommendation is intended for generalcirculation and does not take into account the specificinvestment objectives, financial situation or particularneeds of any particular person. Advice should be soughtfrom a financial adviser regarding the suitability of aninvestment, taking into account the specific investment

objectives, financial situation or particular needs of anyperson in receipt of the recommendation, before theperson makes a commitment to purchase the investmentproduct.

For residents of Malaysia - All queries in relation to thisreport should be referred to Ching Wah Tam.

For residents of Indonesia - This research report doesnot constitute an offering document and it should not beconstrued as an offer of securities in Indonesia, and thatany such securities will only be offered or sold through afinancial institution.

For residents of the Philippines - The securities beingoffered or sold have not been registered with theSecurities and Exchange Commission under theSecurities Regulation Code of the Philippines. Any futureoffer or sale thereof is subject to registrationrequirements under the Code unless such offer or salequalifies as an exempt transaction.

U.S. STARS Cumulative Model PerformanceHypothetical Growth Due to Price Appreciation of $100For the Period 12/31/1986 through 09/30/2012

S&P 500 5 STARS 4 STARS 3 STARS 2 STARS 1 STARS

$0

$800

$1,600

$2,400

'92 '94 '96 '98 '00 '02 '04 '06 '08 '10

The performance above represents only the results ofStandard & Poor's model portfolios. Model performancehas inherent limitations. Standard & Poor's maintains themodels and calculates the model perf ormance shown,but does not manage actual assets. The U.S. STARSmodel performance chart is only an illustration ofStandard & Poor's (S&P) research; it shows how U.S.common stocks, ADRs (American Depositary Receipts)and ADSs (American Depositary Shares), collectively“equities”, that received particular STARS rankingsperformed. STARS categories are models only; they arenot collective investment funds. The STARS performancedoes not show how any actual portfolio has performed.STARS model performance does not represent theresults of actual trading of investor assets. Thus, the

model performance shown does not reflect the impact that material economic and market factors might havehad on decision-making if actual investor money hadbeen managed. Performance is calculated using a

time-weighted rate of return. While model performancefor some or all STARS categories performed better than

the S&P 500 for the period shown, the performanceduring any shorter period may not have, and there is noassurance that they will perform better than the S&P 500in the future. STARS does not take into account anyparticular investment objective, financial situation orneed and is not intended as an investmentrecommendation or strategy. Investments based on theSTARS methodology may lose money. High returns are

not necessarily the norm and there is no assurance that they can be sustained. Past model performance ofSTARS is no guarantee of future performance.

For model performance calculation purposes, theequities within each STARS category at December 31,1986 were equally weighted. Thereafter, additions to thecomposition of the equities in each STARS category aremade at the average value of the STARS category at thepreceding month end with no rebalancing. Deletions are

made at the closing price of the day that the deletion ismade. Performance was calculated from inception

through March 31, 2003 on a monthly basis. Thereafter,performance is calculated daily. Equities in each STARScategory will change over time, and some or all of theequities that received STARS rankings during the timeperiod shown may not have maintained their STARSranking during the entire period.

The model performance does not consider taxes andbrokerage commissions, nor does it reflect the deductionof any advisory or other fees charged by advisors orother parties that investors will incur when theiraccounts are managed in accordance with the models.The imposition of these fees and charges would causeactual performance to be lower than the performanceshown. For example, if a model returned 10 percent on a$100,000 investment for a 12-month period (or $10,000)and an annual asset-based fee of 1.5 percent wereimposed at the end of the period (or $1,650), the netreturn would be 8.35 percent (or $8,350) for the year.Over 3 years, an annual 1.5% fee taken at year end withan assumed 10% return per year would result in acumulative gross return of 33.1%, a total fee of $5,375and a cumulative net return of 27.2% (or $27,200). Feesdeducted on a frequency other than annual would resultin a different cumulative net return in the precedingexample.

The Standard & Poor's 500 index is the benchmark forU.S. STARS. The S&P 500 index is calculated in U.S.dollars and does not take into account the reinvestmentof dividends. Indexes are unmanaged, statisticalcomposites and their returns do not include payment ofany sales charges or fees an investor would pay topurchase the securities they represent. Such costswould lower performance. It is not possible to investdirectly in an index. The S&P 500 index includes adifferent number of constituents and has different risk

characteristics than the STARS equities. Some of theSTARS equities may have been included in the S&P 500index for some (but not necessarily all) of the periodcovered in the chart, and some such equities may nothave been included at all. The S&P 500 excludes ADRsand ADSs. The methodology for calculating the return of

the S&P 500 index differs from the methodology ofcalculating the return for STARS. Past performance of

the S&P 500 index is no guarantee of futureperformance.

An investment based upon the models should only bemade after consulting with a financial advisor and withan understanding of the risks associated with anyinvestment in securities, including, but not limited to,market risk, currency risk, political and credit risks, therisk of economic recession and the risk that issuers ofsecurities or general stock market conditions mayworsen, over time. Foreign investing involves certain

risks, including currency fluctuations and controls,restrictions on foreign investments, less governmentalsupervision and regulation, less liquidity and thepotential for market volatility and political instability. Aswith any investment, investment returns and principalvalue will fluctuate, so that when redeemed, aninvestor's shares may be worth more or less than theiroriginal cost.

For residents of Australia – This report is distributed byStandard & Poor’s Information Services (Australia) PtyLtd ("SPIS") in Australia. The entirety of this report isapproved by Charles Baumann, who has reviewed andauthorised its content as at the date of publication.


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Any express or implied opinion contained in this report islimited to "General Advice" and based solely onconsideration of the investment merits of the financialproduct(s) alone. The information in this report has notbeen prepared for use by retail investors and has beenprepared without taking account of any particularperson's financial or investment objectives, financialsituation or needs. Before acting on any advice, anyperson using the advice should consider itsappropriateness having regard to their own or their

clients' objectives, financial situation and needs. Youshould obtain a Product Disclosure Statement relating to

the product and consider the statement before makingany decision or recommendation about whether toacquire the product. Each opinion must be weighedsolely as one factor in any investment decision made byor on behalf of any adviser and any such adviser mustaccordingly make their own assessment taking intoaccount an individual's particular circumstances.

SPIS holds an Australian Financial Services LicenceNumber 258896. Please refer to the SPIS FinancialServices Guide for more information atwww.fundsinsights.com.au.


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