The Oil and Gas Conference 2018

1 Oil and Gas Conference 2018 Kathryn Downey Miller, Managing Director of analytics and ConsultingAugust AnalyticsBTUA nalyticsis a data -driven energy market analytics firm focused on providing clear and timely information to industry decision makers Clientele is spread across private equity, producers, service companies, power providers, midstream, traders, and marketersConsultingcapabilities include: Natural gas, oil, and NGL market analysis Infrastructure development analysis Producer strategy advisory servicesProducts: Northeast Gas Market Outlook Report Henry Hub Outlook Report Upstream Outlook Report E&P Positioning Report Oil Market Outlook Report Production Scenario Analysis Tool2 New ProductLong-Term Gas Forecast Supply, demand, and Henry Hub forecasts through 2050 Inventory drawdown across major basins Demand forecasts by fundamental Takeaways Deep inventoryof economic liquids-focused drilling locations in the US support continued US oil production growthover the long-run and supports US increasing global market share.

2 Capital discipline assisted by infrastructure constraints is limiting the pace of near term growth, with nearly 40% of cash from independent operators now being diverted for share repurchases, paying down debt, interest and dividends Permian Basin dominates US oil production growth over the next ten years. With Permian economics driven by oil prices, robust oil growth results in significant associated gas production at the expense of US gas plays. Permian gas production is putting pressureon adjacent regions until at least 2019 when pipeline projects out of Permian, Oklahoma, and Appalachia could relieve Arc of Pain constraints from Central Texas to the prices are back to exceeding the cost of development at the wellheadSource: BTU analytics , Bloomberg.

3 Available on Bloomberg terminals at BTUS <GO>. $- $ $ $ $ $ $ $/BblWTI Price vs. Shale Play Wellhead BreakevensBakkenDelaware BasinDJEastern Eagle FordMidland independents used the capital markets to fund outspending Capex > Cash Flow*Cash Flow from Operations (CFFO) is adjusted to back out settled hedges and interest impacts for chart transparencySource: BTU analytics Equities Weekly, Bloomberg2025303540455055606570 Cash12/2013 CFFO*HedgingCapexInterestDebtIssuanceShr RepurchaseDividendsOtherCash3/2014$BnUS Independent E&P Sources and Uses of Cash Q1 largest source of capital for the E&P industry is internally generated cash flow which means that modeling cash flow is one of the best ways to understand the path future production might takeSource.

4 BTU analytics Cash Flow Production Tool (July 2018) and BTU analytics Upstream Outlook(August 2018)051015202530 MMb/dUS L48 Crude Oil ProductionBTU Base CaseCash Flow ModelCash Flow Model 10% LeakageCash Flow Model 20% LeakageCash Flow Model 30% Q1 18 producers did not outspend cash flow and instead used cash to buyback shares, pay down debt, interest and dividends202530354045505560 Cash12/2017 CFFO*HedgingCapexInterestDebt RepayShrRepurchaseDividendsOtherCash3/20 18$BnUS Independent E&P Sources and Uses of Cash Q1 18 Corporate Cash LeakageCash Machine*Cash Flow from Operations (CFFO) is adjusted to back out settled hedges and interest impacts for chart transparencySource: BTU analytics Equities Weekly, of Q1 18 cash was siphoned off for other purposes before it could go back into the ground.

5 Continuing on this path could allow for tempered growth*CFFO is adjusted to back out settled hedges and interest impacts for chart transparencySource: BTU analytics Equities Weekly, Bloomberg0510152025 CFFO*Corporate Cash Leakage$BnQ1 18 Cash Flow from Operations* vs. LeakageCFFO*InterestDebt RepayShare RepurchaseDividends40% of Cash from annual average oil growth from the Permian in 2018 is more than production growth from all other US oil plays (400) - 400 8002017 - 20182018 - 20192019 - 20202020 - 2021Mb/dYear-Over-Year Growth for Major Oil PlaysEagle FordWillistonPermianPRB & DJGOMO klahomaOtherNote: Calculations are annual average production volume comparisonsSource.

6 BTU analytics Oil Market Outlook(August 2018)9 Oil TakeawayGas TakeawayNGL TakeawayGas ProcessingPermianBakkenDJ BasinOklahomaEagle FordPowder River BasinNear-term Constraints(2018 2020)No constraintDeveloping constraintExisting oil constraints are occurring not only on long-haul pipelines, but also within the basin, driving the need to analyze capacity moving from west to east across the basin to fully understand differentialsDelaware BasinMidland Oil vs Regional Demand and PipelinesExistingExpansionsProduction ProjectionAugust 2018 BTU analytics ' ForecastSource: BTU analytics Oil Market Outlook (August 2018) buildup of Permian DUCs could allow for accelerated growth once infrastructure arrives - 1,000 2,000 3,000 4,000 5,000 6,000 7,00020132014201520162017201820192020202 120222023# Horizontal WellsPermian Wells Drilled vs Wells to SaleDUCs & COBsWells DrilledWells Turned to SaleNote: DUC = Drilled Uncompleted.

7 COB = Completed on BacklogSource: BTU analytics Upstream Outlook (August 2018) Lower 48 Gross Gas Production by TypePDPA ssociated GasShale WetShale DryOther12 Associated gas from the Permian and other oil-focused plays will reduce the call for production growth from gas playsNote: Gross Gas Source: BTU analytics Upstream OutlookAugust natural gas demand growth finally arriving. LNG & Mexican exports represent 75% of growth through 2023020406080100 Bcf/dUS Average Daily Demand by SectorResComPower BurnIndustrialMex ExLNG ExportsPPL - 2 4 6 8 10 12 14 16201820192020202120222023 Bcf/dIncremental Demand Forecast from 2017 Incremental Domestic DemandIncremental Demand ExportsSource: BTU analytics (Updated 2023 the Permian is expected to capture half of incremental demand growth in our base case, with that growing towards 70% by 2028 Source:BTUA nalyticsAugust201802468101214 Bcf/dDemand Growth vs.)

8 Incremental Permian Dry Gas ProductionPermian GrowthIncremental Demand - Base CasePermian growth constrained by and Permian production ramp enabled by new pipeline projects, with the Permian eventually outpacing Northeast &UticaPermianNorthernLouisianaOklahomaEa gle FordPowderRiver & DJBasinsWillistonBasinGulf ofMexicoOtherLower 48 Bcf/dUS Dry Gas Production Incremental to 2017201820212023 Note: Dry or Residue Gas Production EstimatesSource: BTU analytics Upstream Outlook(August Appalachian infrastructure comes online and Permian production continues to grow, constraints between growing supply and growing demand, in the Gulf, will be exacerbatedLegendExisting RoutesConstraint New ProjectsSource.)

9 BTU analytics Upstream Outlook(February 2018)16 Arc of Pain Dry Gas Production vs TakeawayLocal DemandTranswesternEl PasoNNGNGPLE astbound*Mexico **Old Ocean & N TX ExpansionONEOK W TX ReversalGCXP ermian HighwayWhistler PipelineP2 KBluebonnetPermian Global AccessDry Gas Production sans Shut-ins/Flaring17 Plenty of Permian pipe has been proposed, and it will be necessaryNote: * Eastbound capacity is based on pipeline diameters and maximum daily flows. ** Mexico pipeline capacity is risked by timing of downstream pipeline bottlenecks in Mexico to connect inbound US supply to demand centers and based on expected inbound Permian flowsSource: BTU analytics Upstream Outlook CompanyPipelinesCapacity (Bcf/d)Official ISDA ssumed ISDETP & EPDOld Ocean Pipeline & N.

10 Texas 20187/2018 OneokOneokWest Texas Coast / SempraPermian to Katy (P2K) 20207/2020 Targa/NexEra/White Water/MPLX LPWhistler24Q 202012/2020 WilliamsBluebonnet Market 20201/2021 TellurianPermian Global Access from constraints between supply areas and Gulf Coast not expected until late 2019 LegendExisting RoutesConstraint New ProjectsGulf Coast Express (2019)Source: BTU analytics Upstream Outlook(February 2018). Date represent current official in-service dates, not BTU assumed Takeaways Deep inventoryof economic liquids-focused drilling locations in the US support continued US oil production growthover the long-run and supports US increasing global market share.