A Lower 48 Review Tight oil: past, present, future Benjamin Shattuck Strategy with substance

Trusted commercial intelligence 2 North America’s major growth plays

Trusted commercial intelligence 3 *Capital Spend is the net investment in new projects (nominal terms). It does not include investment in fields which are already onstream or newfield developments that fall under tax ring fences which are already onstream. Therefore the capital spend is less than total corporate capital spend and the average IRR may not reflect the full economic picture. Data for all Corporate Service companies. Source: Wood Mackenzie Capital flowing into tight oil, boosting returns Huge resource, superior returns and good visibility to investors Development spend by resource themeGreenfield project IRR Increasing spend Declining spend

Trusted commercial intelligence 4 How much is being spent on US Tight Oil? US spend and breakout by top plays

Trusted commercial intelligence 5 A retrenchment to core plays is inevitable - over the past three years, the largest US plays have become even more important Reserve upgrades in the top 30 plays have been substantial Lower 48 Commercial Reserves Source: Wood Mackenzie NACPAT

Trusted commercial intelligence 6 North America production outlook Oil supply growing by ~6 million b/d from

Trusted commercial intelligence 7 Value and returns concentrated in top sub-plays Value concentrated in 10 sub-plays  Over 25% of the Lower 48’s remaining NPV10 lies across just 10 sub-plays, four of which lie in the Eagle Ford.  Acreage from these 10 sub-plays only accounts for roughly 5% of total leased acreage in the U.S. Per-well NPV10 and well costs  Parshall-Sanish provides a similar NPV10 to the Utica’s Southern Wet Gas, lower well costs  Karnes Trough has the cheapest wells amongst sub-plays with the highest per-well NPV10

Trusted commercial intelligence 8 Bakken IP heat map Max month rates from the Bakken core drive value

Trusted commercial intelligence 9 Eagle Ford IP heat map Operators target the ‘Goldilocks Zone’ for high IP rates with high liquids yield

Trusted commercial intelligence 10 Type well IRRs and remaining resource by US oil sub-play Source: Wood Mackenzie Sub-plays representing more than half of the remaining resource generate 30% plus rates of return under our base-case scenario US tight oil: core of the core delivers returns

Trusted commercial intelligence 11 Tight Oil doubles L48 production by 2020 “Big 3” add almost 2 mmbbl/d by 2020 Smaller plays still add more than 500,000 b/d by 2020 Eagle Ford and Bakken drive liquids growth  Eagle Ford liquids set to grow 47% over next five years  Unconventionals will produce half of the Lower 48’s 12 mmbbl/d of liquids by 2020 Lower 48 production

Trusted commercial intelligence 12 What’s emerging: the current shift is to Unconventional 3.0 – exploiting underexplored rock volume using 1.0 and 2.0 techniques Smaller niche plays and the redevelopment of existing fields 2013 Rig Count2014 Rig Count Source: Wood Mackenzie, Baker Hughes

Trusted commercial intelligence 13 Which North American play types are the highest cost? Future oil sands mining projects and the fringes of unconventional plays potentially offer big rewards, but are under threat if oil prices fall further North American breakevens by play and theme Source: Wood Mackenzie, note US Deepwater excludes Lower Tertiary

Trusted commercial intelligence 14 Tight oil supply and oil prices Source: Wood Mackenzie Supply growth sensitive below US$80/bbl

© Wood Mackenzie 15 Disclaimer  This report has been prepared for IPAA by Wood Mackenzie Limited. The report is intended solely for its benefit and these contents and conclusions are confidential and may not be disclosed to any other persons or companies without Wood Mackenzie’s prior written permission.  The information upon which this report is based has either been supplied to us by the client or comes from our own experience, knowledge and databases. The opinions expressed in this report are those of Wood Mackenzie. They have been arrived at following careful consideration and enquiry but we do not guarantee their fairness, completeness or accuracy. The opinions, as of this date, are subject to change. We do not accept any liability for your reliance upon them.  Strictly Private & Confidential

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