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Long Term Energy Outlook Still Bullish

Joseph R. Dancy, SMU School of LawManager, LSGI Venture Fund LP

Dallas, Texas

September 28, 2011

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Investors Abandon The Stock Market:

How Bad is It? 45% Say They WillNeverInvest in the Market Again

Domestic Equity Funds Have Four Years of Outflows

48% of Americans Expect a Severe Recession orDepression Ahead

Market Volatility Hits Record Levels

Market Correlations Hit Record Levels

Household Stock Ownership Levels Declining

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The last few years have been the most volatile

for all of recorded historyAndrew Lo, Professor of FinanceMIT Sloan School of Management

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Market and Stock Correlations Hit Record Levels

High Frequency Traders Having a Field Day: 70% of Trading Volume!

ETFs Used as Trading Vehicles, Focus is Short Term

Several Flash Crashes in the Last Year

Stock Selection Not Effective When Correlations This High

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Europe Over A Barrel:

High Quality Crude is in Short Supply

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Brent / WTI Price Spread At Record LevelsCushing Oklahoma Crude

Oil Stocks - DOE

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Meanwhile Chinas Demand For Energy

Continues to Astound

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But Chinas Growth Has Slowed

The Question is by How Much?

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China Will Use More Crude Oil

than the U.S. Within a Decade

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Global Excess Crude Oil Production

Capacity is Declining

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Global Crude Oil Demand Forecast

to Continue to Grow

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U.S. Motorists Will Spend Record Sums forGasoline This Year While U.S. Diesel

Exports Set Records

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The Investment Theme:

The price of crude oil is being driven

by (1) stagnating global productionand (2) relentless increases indemand from emerging markets

trends that will be in place for years

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