Oil & Gas Market Update March 11, 2017 Dan Steffens, President

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Macro View for 2017 Crude oil prices depend on what OPEC does Headlines and Storage Reports will drive oil prices Most analysts believe oil reaches $60 by year-end Lack of investment could cause shortage of oil in 2H 2018 The U.S. gas market is MUCH TIGHTER Gas in Storage is way below last year Weather will drive prices up & down in the short run Supply / Demand will get more attention this summer NGL price could double, reaching 50% of WTI Propane inventories have fallen Ethane demand to ramp up BIG TIME in 2017

EIA Crude Oil Inventory

Global Oil Market

Demand for oil is “Relentless”

Oil Trades in U.S. Dollars

U.S. Natural Gas Market ~83 Bcf per day Natural gas prices are set by regional supply/demand The U.S. gas market is MUCH TIGHTER than a year ago Supply/Demand are at least 4 Bcf per day tighter Mild Winter has masked the tightness of U.S. market Two weeks of colder than normal weather in December pushed storage below the 5-year average January & February warmer than normal Cold March will leave inventories 400+ Bcf below last year Propane inventories have already dropped BIG TIME Double check the production mix of all of your holdings

Natural Gas in Storage

Keep an eye on Chicago https://www.wunderground.com/

Natural Gas Price “Thank You Mother Nature”

U. S. Natural Gas Production per EIA Last 6 months of 2015 = 74 U.S. Natural Gas Production per EIA Last 6 months of 2015 = 74.294 Bcf per day Last 6 months of 2016 = 71.551 Bcf per day Decline of 2.74 Bcf per day is SIGNIFICANT

Natural Gas Prices Spikes When Storage Falls Below 5-yr Average

NGL Prices NGL prices up 25% to 50% in Q4 and rising

Commodity Prices Q3 to Q4

Companies who primarily produce natural gas and NGLS Antero Resources (AR) Range Resources (RRC) Gulfport Energy (GPOR) Small-Caps Comstock Resources (CRK) PetroQuest Energy (PQ) Mid-Stream MLPs that focus on gas

Central Oklahoma’s SCOOP & STACK plays will draw a lot of attention in 2017

Central Oklahoma’s SCOOP & STACK plays will draw a lot of attention in 2017 Cimarex Energy (XEC) Continental Resources (CLR) Devon Energy (DVN) Newfield Exploration (NFX) New to SCOOP / STACK Gulfport Energy (GPOR) Jones Energy (JONE)

Central Oklahoma’s SCOOP & STACK plays will draw a lot of attention in 2017

High Yield Income Portfolio

EPG Luncheons at The Hess Club March 29: Houston American Energy Permian Basin March 30: Bearing Resources Lithium Mining Company FREE for anyone here today

Sweet 16 Growth Portfolio

Sweet 16 Growth Portfolio Upside in 2017

Oil & Gas Market Update March 11, 2017 Dan Steffens, President