The interconnected North American gas market: Where do we go from here? Orlando Alvarez, President & CEO, BP Energy Company

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Natural gas prices in U.S.: A journey Source: NYMEX, ICE 5/1/2018 Cold weather leads to a record storage withdrawal Cold weather sets in, storage dips below 5-year average Warm winter, end of March storage levels at 5-year high Mild winter weather, storage levels near capacity Warmer summer increased power demand

Commodities are more interconnected than ever before… Biogas Nat gas Power C2 C3 nC4 iC4 C5 NGLs Oil LNG Naphtha Chemicals

… and regulatory and political landscape is evolving Methane restrictions roll-back Oklahoma earthquakes Water disposal Severance taxes Frac sand mining Offshore access FERC quorum Pipeline permits PHMSA regulations Tax reform Free trade agreements Solar panel / steel / aluminum tariffs EPA rollbacks (CPP, O3, coal ash, etc.) Paris rollback ITC/PTC Nuclear ZECs DOE NOPR on grid resiliency RGGI Tightening (+NJ?) Rising RPSs (CA, MA, WA, etc.) Net metering Renewable Fuel Standard (i.e. RINs) And don’t forget the financial sector… CFTC Commissioners Volcker rule Dodd Frank Federal reserve restrictions

Oil production growth important for gas, NGL Sources: EIA Drilling Productivity Report – April 2018, EIA February 2018

Billions of dollars invested in infrastructure: Unprecedented shift across all regions Demand NGLs LNG? Tariff structure Gas Rail Gas C2 LPG? Tariff structure Potential shift in balances with export terminals ~12 Bcfd pipe expansions proposed out of NE Impact on regional balances Cochin reversal (2014) LNG? Expansions east New y-grade C2 Demand C2 Rox Marcellus/Utica LPG Expansions west Demand Midcon Demand EG LNG Long haul C2 Y-grade to GC Y-grade to GC Gas pipe expansions LPG pipe or rail? Demand Demand To MEX Permian To MEX LPG Strong regional demand growth Project timing, delays are key risks LNG C2

More than 13% of coal capacity has retired since 2013… Source: Energy Velocity, April 2018

U.S. is shifting towards a net gas exporter Source: EIA Monthly, December 2016; AEO 2018

Mexican exports: Pipe expansions have facilitated more U. S Mexican exports: Pipe expansions have facilitated more U.S. exports; more infrastructure on the way Source: Sener, EIA, February 2018 3 2 1 4 5 Brownsville to Tuxpan : 2.6 Bcf/d – Nov 2018 Nueva Era: 0.5 Bcf/d: Q3 2018 Comanche Trail: 1.1 Bcf/d – Jan 2017 Trans-Pecos: 1.4 Bcf/d – April 2017 NET Mexico / Los Ramones: 2.1 Bcf/d – Dec 2014 1 2 3 4 5 Trans-Pecos: 1.4 Bcf/d – April 2017 Comanche Trail: 1.1 Bcf/d – Jan 2017 Brownsville to Tuxpan : 2.6 Bcf/d – Nov 2018 Nueva Era: 0.5 Bcf/d: Q3 2018 NET Mexico / Los Ramones: 2.1 Bcf/d – Dec 2014 1 2 3 4 5 Brownsville to Tuxpan : 2.6 Bcf/d – Nov 2018 Nueva Era: 0.5 Bcf/d: Q3 2018 Comanche Trail: 1.1 Bcf/d – Jan 2017 Trans-Pecos: 1.4 Bcf/d – April 2017 NET Mexico / Los Ramones: 2.1 Bcf/d – Dec 2014 1 2 3 4 5 Operating Pipelines Pipelines completed in 2014-2015 Pipelines under construction Awarded Pipelines CFE Planned Pipelines Compression Station

Long-term Henry Hub spot price outlooks Source: NYMEX, Various External Consultants, 5/1/2018 View of crude oil prices, competing fuels, supply costs, production growth, structural demand trends and global trade flows will influence gas price outlook

Key insights North American market works: price works to balance supply and demand Commodities more interconnected: many more variables to consider Evolving regulatory & policy landscape could impact investment risk across value chain Structural demand changes are here: significant investment in new industrial plants, generation capacity & export facilities Volatility is not dead: Risk management is critical