OIL MARKET OUTLOOK AND WHAT NEXT FOR THE SOUTH …

1 OIL MARKET OUTLOOK AND OIL MARKET OUTLOOK AND OIL MARKET OUTLOOK AND OIL MARKET OUTLOOK AND WHAT NEXT FOR THE SOUTH WHAT NEXT FOR THE SOUTH WHAT NEXT FOR THE SOUTH WHAT NEXT FOR THE SOUTH east asian east asian east asian east asian offshore offshore offshore offshore MARKETMARKETMARKETMARKETVIJAY KRISHNAN rystad energyrystad energyrystad energyrystad energyintroductionOffice locations Rystad Energy is an independent databases and consulting services firm, started in 2004, headquartered in Oslo, Norway. Provides a range of upstream E&P and oilfield service business intelligence data solutions built from a bottom up perspective across every single asset A leading advisor within strategy, MARKET analysis and business development Publishing standard and customized research reports on high impact industry topics Insight and deliveries based on proprietary, fundamental research from primary sourcesCore content: 65,000 assets globally 100% of Global Supply Asset Level Economic Model Monthly Global Update 3,200 companies Time span 1900-2100 Production & Reserves Costs & Tax models Breakeven prices Asset factsheets M&A dataCore benefits: Complete Consistent Micro to Macro Best in class GUICore usage.

2 MARKET /company/asset analysis Benchmarking BD & target screening Valuationucube - the core of what we doINSIGHT THROUGH BUSINESS DATA SOLUTIONSBUILT ON SAME, CONSISTENT DATA STRUCTURE AND PLATFORMC omplete and consistent E&P business intelligence data from macro to micro level with global coverageNorth America shale analysis package with volumes, economics, well data and maps for all key plays and playersGlobal oil services MARKET analysis data by industry segments, geography and supplier companiesRegional strategy & business development tool kit incl. regional E&P database, license activity atlas, asset reports and economical modelling spreadsheetsregionale&psolutionsregional e&psolutionsglobale&psolutionsglobale&ps olutionsglobal oil servicesolutionsglobal oil servicesolutionsnorthamericashalesolutio nsnorthamericashalesolutionsRystad EnergyOil & gas knowledge houseNOCsMajorsE&PsInvestment banksInvestorsConsulting firmsOilfield serviceGovernments/OrganizationsSERVING ALL OIL & GAS CLIENT SEGMENTSJW19 Slide 5JW19 Work more on colour coding here and use company specific coloursJulia Weiss, 30/11/2016 How we got here.

3 The generic commodity cycleHigher reinvestment increases productionProduction outpaces demandDemand outpaces productionLow reinvestment hurts productionPrices drop, hurting cash flow and returnsCash flow declines, spending cuts, lay offsIncreased investment, capacity issues Higher prices improve cash flowsA commodity MARKET with no price maker endlessly repeats this cycleThe cycle begins: in 2014, a large imbalance between supply and demand was looming758085909510010520082009201020112 012201320142015201620172018 DemandDemand OUTLOOK (Jun 2014)SupplySupply OUTLOOK (Jun 2014)Global liquids supply and demandSource: Rystad Energy research and analysis, UCube, IEAF orecastHistoricalProduction outpaces demandPrices drop, hurting cash flow and returnsWe have now witnessed the biggest drop in Global E&P 0 100 200 300 400 500 600 700 800 9001 0001988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Other OnshoreShale/Tight oilOil sandsOffshore shelfOffshore midwaterOffshore deepwaterGlobal E&P investments USD billionsSource: Rystad Energy DCube- 25%- 22%Cash flow declines, spending cuts, lay offsSupply Impact affecting the medium term?

4 Sanctioning of new fields has collapsed to Historic 0 10 20 30 40 50 60 70 802005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Other OnshoreShale/Tight oilOil sandsOffshore shelfOffshore midwaterGlobal Resource by Approval YearBillion boe Source: Rystad Energy UCubeApproval year for projectHistoryForecastLow reinvestment hurts productionSupply: Some Impact now, but 2020+ there are ~3 mmbbls/day missing due to recent underinvestment 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025201520142013201220112016 Oil production (excl. shale) by approval yearMmbbl/dSource: Rystad Energy UCubeStocks draw in 2017 on cuts, in medium term still tight Stocks draw in 2017 on cuts, in medium term still tight Stocks draw in 2017 on cuts, in medium term still tight Stocks draw in 2017 on cuts, in medium term still tight MARKET due to lack of sanctioningmarket due to lack of sanctioningmarket due to lack of sanctioningmarket due to lack of sanctioningSource.

5 Rystad Energy research and analysis Global liquids supply and demand Million bbl/d118284868890929496981001021042012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total DemandTotal RE base caseKSA Target cutKSA prepared to force compliance and we expect KSA prepared to force compliance and we expect KSA prepared to force compliance and we expect KSA prepared to force compliance and we expect production to be cut below target in 1H 17production to be cut below target in 1H 17production to be cut below target in 1H 17production to be cut below target in 1H 17 KSA base case crude production, monthly Million bbl/d12 * This is the scenario called Full 2017 Cuts + Natural Decline in the OPEC scenarios on slide 4. Source: Rystad Energy research and analysisForecastHistoricalFull compliance through maintenance, while Iran Full compliance through maintenance, while Iran Full compliance through maintenance, while Iran Full compliance through maintenance, while Iran increases production through Augincreases production through Augincreases production through Augincreases production through Aug----17171717 Source: Rystad Energy research and analysis Selected OPEC countries crude production base case vs.

6 OPEC agreement 30-Nov target production Million RE base caseIraq TargetIran RE base caseIran TargetUAE RE base caseUAE TargetKuwait RE base caseKuwait Target13 ForecastHistoricalSix OPEC members struggle to maintain production Six OPEC members struggle to maintain production Six OPEC members struggle to maintain production Six OPEC members struggle to maintain production regardless of the OPEC agreementregardless of the OPEC agreementregardless of the OPEC agreementregardless of the OPEC agreement*Rest OPEC = Qatar, Ecuador and Gabon. Source: Rystad Energy research and May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 VenezuelaVenezuela TargetAngolaAngola TargetRest OPEC*Rest OPEC* TargetAlgeriaAlgeria Target Selected OPEC countries crude production base case vs. OPEC agreement 30-Nov target production Million bbl/d14 ForecastHistoricalProduction Production Production Production to to to to drop by 260 drop by 260 drop by 260 drop by 260 kbblkbblkbblkbbl/d in 1H 17 against the /d in 1H 17 against the /d in 1H 17 against the /d in 1H 17 against the reference reference reference reference level, level, level, level, mostly through mostly through mostly through mostly through declinesdeclinesdeclinesdeclinesSource: Rystad Energy research and non-OPEC.

7 Liquids production profile for non-OPEC countries Million bbl/d15 Recent rally in rig counts positions startRecent rally in rig counts positions startRecent rally in rig counts positions startRecent rally in rig counts positions start----up activity for a up activity for a up activity for a up activity for a steep recovery in 2017steep recovery in 2017steep recovery in 2017steep recovery in 2017 Source: Rystad Energy research and analysis, Rystad Energy NASWellCube Premium US shale start-up activity scenarios Number of new wells per month16020040060080010001200140016001800 2000 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 HistoryBase CaseLow Case (50 USD/bbl)Max Case (25 USD/bbl ahead of base)Significant growth is inevitable, base production is too mature Significant growth is inevitable, base production is too mature Significant growth is inevitable, base production is too mature Significant growth is inevitable, base production is too mature given current activity levelsgiven current activity levelsgiven current activity levelsgiven current activity levelsSource.

8 Rystad Energy research and analysis, Rystad Energy NASWellCube Premium US shale oil production scenarios Thousand bbl/d17010002000300040005000600070008000 9000 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Incremental New Production (MaxCase)Incremental New Production (BaseCase)New Production (Low Case)Base 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16 3Q-16 4Q-16 1Q-17 2Q-17 3Q-17 4Q-17 RoWSaudi ArabiaRussiaIndiaBrazilChinaUSJapanSouth KoreaIranWorldWorld (previous)ForecastHistoryWeaker 1Q and stronger remainder of the year demand Weaker 1Q and stronger remainder of the year demand Weaker 1Q and stronger remainder of the year demand Weaker 1Q and stronger remainder of the year demand result in overall higher 2017 growthresult in overall higher 2017 growthresult in overall higher 2017 growthresult in overall higher 2017 growthSource: Rystad Energy research and analysis World liquids demand growth y/y Million bbl/d18 ICE Brent crude historical front month price, latest five ICE Brent crude historical front month price, latest five ICE Brent crude historical front month price, latest five ICE Brent crude historical front month price, latest five year futures curve and UCube base caseyear futures curve and UCube base caseyear futures curve and UCube base caseyear futures curve and UCube base case4560675962020406080100120140 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Nov-17 UCube base caseFutures curveBrent front monthSource.

9 Bloomberg, Rystad Energy research and analysis E&P companies to keep investment flat E&P companies to keep investment flat E&P companies to keep investment flat E&P companies to keep investment flat in 2017 with some positive in 2017 with some positive in 2017 with some positive in 2017 with some positive upside riskupside riskupside riskupside riskSource: Rystad Energy DCube02004006008001,00020102011201220132 014201520162017201820192020-24%-22%10%E& P InvestmentsUSD BillionIn the November 2016 release ofDCube we see some downwardrevision of the short and long termservice MARKET . This is the effect ofmore clarity around oil supply andE&Pcompaniesbeingcautiousbefore the OPEC short term service segmentpurchases from 2015-2017 is now , down from term we still see an averagegrowth of 10%.Source: Rystad Energy DCubePurchases of oilfield servicesUSD BillionAverage 62 USD/Average 62 USD/Average 62 USD/Average 62 USD/bblbblbblbbl oil price in 2017 suggests broadly flat growth oil price in 2017 suggests broadly flat growth oil price in 2017 suggests broadly flat growth oil price in 2017 suggests broadly flat growth for the OFS marketfor the OFS marketfor the OFS marketfor the OFS market201520172021 Short termLong 2016 2018 2020 Brent Oil Price with Rystad Forward CurveUSD/bblFloater fixture volumes and rig rates have been trending Floater fixture volumes and rig rates have been trending Floater fixture volumes and rig rates have been trending Floater fixture volumes and rig rates have been trending downwardsdownwardsdownwardsdownwards1412 3816294533543750783912358101572939172872 8142771110131311602040608010012014016018 0200 0 100 200 300 400 500 6001Q091Q101Q111Q121Q131Q141Q151Q16 Rig Supply Years (rhs)Rig Rate USD (lhs)

10 Rig rates (kUSD/day)# fixed rig yearsThe same situation for The same situation for The same situation for The same situation for jackupsjackupsjackupsjackups but lower activitybut lower activitybut lower activitybut lower activity*As of : RigCube September 2016- 30- 20- 10 0 10 20 30 40 50 60 70 80 90 1001975198019851990199520002005201020152 020 ConstructionRetiredJackup construction and retirementNumber of units19 units retired in 201520 units retired in 2016*Jackups2015 & 2016 with largest number of retired rigs in more than 40 years2015 & 2016 with largest number of retired rigs in more than 40 years2015 & 2016 with largest number of retired rigs in more than 40 years2015 & 2016 with largest number of retired rigs in more than 40 years*As : RigCubeSeptember 2016 FloatersFloater construction and retirementNumber of units- 30- 25- 20- 15- 10- 5 0 5 10 15 20 25 30 3519751980198519901995200020052010201520 20 SemisubmersibleDrillshipsRetired SemisubmersibleRetired Drillship28 units retired in 201522 units retired in 2016*Utilization will start to recover during 2018 assuming no further Utilization will start to recover during 2018 assuming no further Utilization will start to recover during 2018 assuming no further Utilization will start to recover during 2018 assuming no further retirementsretirementsretirementsretirem ents* Total supply is gross supply for the fleet and includes all rigs, including ready stacked and cold.