3 rd Annual Regional Energy Forum Global Coal Markets & U.S. LNG Opportunities Frostburg, Maryland November 6, 2015

Energy Demand

Global Coal Markets Overview » Coking Coal demand is declining » Thermal Coal demand is growing but at a reduced rate » Lingering oversupply » Coking Coal prices are down 26% YTD and at their lowest levels since 2004 » Supply cuts needed to balance the market » Headwinds facing U.S.A. suppliers 3

Global Coal Markets » Coal demand is declining » China’s economic slowdown is more severe than anticipated, resulting in reduced demand for imported coal » Combined with Chinese protectionism, China is no longer the clearing house for surplus coal » Unfortunately, increased demand from Non-China, mainly India, not enough to absorb reductions coming from China » Additional demand destruction coming from China in the form of increased steel and met coke exports 4

Global Coking Coal Markets

Negative 3% world apparent steel consumption growth

Global Coking Coal Markets Seaborne Coking Coal Demand Growth 2010 to first decline in Seaborne coking coal demand since financial crises and 2015 will record another decline

Global Coking Coal Markets Seaborne Coking Coal Supply 2010 to Percentage Seaborne Coking Coal Market By Region Region Australia USA Canada Other

Global Coking Coal Markets Seaborne Coking Coal Supply Growth 2010 to Between 2011 and 2015 Australia supply expected to increase by 57 MMT or 43%

Global Coking Coal Markets 6 Month 2015 Seaborne Coking Coal Supply Growth 10 USA still second largest exporter but losing market share Exports 1H 151H 14Change Australia91901 USA Canada1415 Russia761 Other871 Total

Global Coking Coal Markets 6 Month 2015 Seaborne Coking Coal Imports 11 Total imports down 5.5 MMT but Chinese imports alone down 9.5 MMT or 31%

Global Coking Coal Markets China Coking Coal Imports Chinese imports down 13 MMT

Global Coking Coal Markets 9 Month 2015 China Coking Coal Imports 13 9 month Chinese imports down 8 MMT or 18%. Annualized at -14 MMT or 22% Coking Coal Imports (Mmt) mmt Period %ΔPeriod Δt January %-1.69 February %0.42 March %-0.83 April %-2.77 May %-4.00 June %-0.64 July %1.61 August %0.31 September % M %-8.12 TotalAnnualizedDifference %

Global Coking Coal Markets Benchmark – Coking Coal 14 Oct-Dec Coking Coal Benchmark set at $89/MT, down another $4.00 and lowest price since Fiscal Year 2004.

Global Coking Coal Markets Benchmark – Coking Coal 15 In AUD$ terms, Australian suppliers achieved a price increase

Global Coking Coal Markets » Lingering oversupply » Supply continues to outpace demand » Surplus coking coal produced in the Pacific market finding its way into the Atlantic market » How are Atlantic buyers behaving Increasing spot purchases Spot inquiries increasingly non-U.S.A. sourced » U.S.A. Producers losing market share Expect export decline of MMT 16

Global Coking Coal Markets 8 Month US Coking Coal Exports 17

Global Coking Coal Markets » Met Coal prices are at their lowest levels since 2004 » October – December benchmark set $4 lower at US$89 » Market appears stabilized at current levels and expected to trade in a narrow range in the short term before gradually recovering next year » Prices also influenced by a period of “cost deflation” Productivity improvements US$ strength For Australian suppliers $89 = $124 ›Over the last 12 months AUS$ declined from US$0.88 to US$

Global Coal Pricing

U.S. Coal Exports – How prices affect volumes » U.S. coal companies respond to market prices » Seaborne coking coal currently at 2004 price levels » Seaborne thermal coal currently at 2004 price levels 20 YearTotal Exports (MT)-ex Canada million million million million million

Global Coking Coal Markets » Supply cuts needed to balance the market » Current pricing is not sustainable but regrettably needed to stimulate supply cuts » Capital expenditures undergoing significant adjustments Capex down approximately 60% from peak » million tons of coking coal production cuts announced since 2014, but market still over supplied The load of these supply cuts has largely been with USA suppliers 21

Global Thermal Coal Markets

Global Thermal Coal Pricing

Global Coal Markets 2015 – Headwinds For U.S.A. Suppliers: » Non-U.S.A. suppliers setting the market prices » Appreciation in the US$ providing non-U.S.A. producers the opportunity to maintain or reduce prices » While Governmental policies in other countries supporting domestic coal industries, not the case in the U.S.A. » New supplies from Colombia, Mozambique and Russia entering the market 24

Coal Summary - Conclusion » Coking coal demand no longer growing » Chinese protectionism hindering demand » “Cost deflation,” driven by US$ strength, lower oil prices (lower mining and sea freight cost) and productivity improvements has lowered the cost curve » Prices and cost curve continue to move lower, looking to find equilibrium » Current stage of cycle: moving from meaningful price decline to stabilization at low levels until more supply cuts are implemented » More aggressive production cuts are needed before we see an improvement in market prices » Expecting only moderate price support in the near term 25

US Shale Gas Total Resources 26 Map: Courtesy of Schlumberger Note: ARI estimates U.S. shale oil resources at 48 billion barrels and U.S. shale gas resources at 1,161 trillion cubic feet. Source: USA: EIA and USGS; Other basins: ARI.

US Natural Gas Production Forecast 27 U.S. dry natural gas production Tcf Source: EIA, Annual Energy Outlook 2015 Associated with oil Coalbed methane Tight gas Shale gas Alaska Non-associated offshore Non-associated onshore ProjectionsHistory Bcfd 70.4 Bcf/d (’14)

28 US Northeast Gas Production Growth

29 Marcellus/Utica Shale Gas Reserves Wet Gas Dry Gas Wet Gas Dry Gas MarcellusGas Reserves Proved64.9 Tcf (EIA) Technically Recoverable 141 Tcf (USGS) Source: Consol Energy/ Energy Information Agency, U.S. DOE/ U.S. Geological Survey 1 Trillion cf Gas ≃ 20 Million ton LNG Oil Wet Gas Dry Gas UticaGas Reserves ProvedNo official EIA data. Extensive development since Technically Recoverable 38 Tcf (USGS) 782 Tcf (West Virginia Univ.) Marcellus/Utica Utica Marcellus

30 Productivity Changes in US Shale Productivity Enhancement MCF per day per Rig Marcellus Utica Source: Energy Information Agency, U.S. Department of Energy Breakeven Decrease over Years 1 MCF (1000 CF) ≃ 1.03 mmBtu

31 Breakeven Price of US Shale Eagle Ford

US Maps US Regional Breakdown Marcellus Utica Bakken Niobrara Haynesville Eagle Ford Permian US Pipelines - Marcellus/Utica to Gulf US Shale Gas Region

33 Pipeline Expansion for Marcellus/Utica To Gulf Coast for LNG Source: IHS 8.6 Bcf/d 11.1 Bcf/d 10.2 Bcf/d 2.5 Bcf/d Bcf/d Gas ≃ 7 Million ton/yr LNG

34 US Gas Hub Price Basis Spreads Sabine Pass Cove Point Henry Hub Price USD/mmBtu  Basis spread is the difference in regional gas hub prices from Henry Hub  Basis reflects pipeline capacity utilization into a gas market or from a gas supply region  Gas flow from Marcellus/Utica to Gulf Coast with pipeline expansion keeps the basis of Appalachian region below zero

35 Marcellus Basis to HH: Historical Trend Marcellus regional hub pricing locations

36 Historical US Natural Gas Prices

37 HH Price Forecast Source: JP Morgan Source: Macquarie Source: Platts

38 Global Gas Trade Flows (bcm)

39 LNG Export Capacity Growth

40 LNG Export Facilities under construction

41 LNG – Global demand forecast

42 LNG – Imports by country

43 LNG – current market demand is not sufficient to absorb new supply

44 LNG – another oversupplied market

Credits » John T. Boyd Company » BP » Financial Times » Goldman Sachs Research » IHS » International Energy Agency » International Monetary Fund » Macquarie Research » McCloskey Group » Platts » SSY Research » T. Parker Host » World Steel Dynamics 45

Contact Info Ernie Thrasher X coal Energy & Resources Phone:+1 (724) Web: 46