1. Market Outlook February 22, 2016

2. The Big Picture  Price Volatility  NG Fundamentals, Storage, Production, Transportation, Weather etc.  Crude Oil, Economic Warfare, Equities, Global Economics, Financing, impact to NG  Strategy

3. The Big Picture VOLATILITY

4. Historical Natural Gas NYMEX

5. Daily Natural Gas Prices

6. The Big Picture NG Fundamentals

7. Today’s NG Storage

8. NG Production

9. The Shale Boom

10. Natural Gas – Expectations Demand up, Supply down  NG Production stable. Demand is growing  Crude pressure in next 12-18 months. Short lived?  Pipeline Expansions, shale supplies hit the consumer, good during summer, more risk in winter.  Less reliance on Gulf Coast, Rig Counts low, more reliance on Crude Oil production  Exports are growing, Mexico, LNG build out.  Coal to Gas Switching for Electricity Producers

11. NG Industry Transformation

12. Rig Counts

13. War on Coal

15. Natural Gas Pricing the first victims of any long-term price decrease will be high-cost producers, many of which are publicly traded, leaving investors more — not less — exposed.

16. The Big Picture Crude Oil Impact

17. Crude Oil The drop from $110 per barrel in 2014 to under $35 today is the result of a 2% change (roughly two million barrels a day) in the supply-demand balance.

18. Crude Oil - Concerns  Per Deloitte Consulting, there are 50 US producers with a high risk of bankruptcy. Siting poor Debt/Asset ratios and continued trouble below $30 per barrel  Global Oil Producers cut E&P spending by $380 Billion in 2015  US Producers set to lower 2016 production by 800,000 barrels per day. First decline since 2008.  The Banks, will lend at what price per barrel?  OPEC’s motives

19. Oil Production Rates

20. Summing it up  Market Prices are in the bottom 10th Percentile  Energy Prices need to move higher to inspire more drilling (12-18 month window)  Producer defaults will be on the rise  Economic warfare, OPEC, uncertainty It takes high prices to make low prices and vice versa!

21. Strategy February Meeting Natural Gas The Price-Dip is here Cover seasonal risk for next two years Stay out of daily markets, always! Wait for crude oil to rebalance

22. www.maverickec.com22 Speculate Price Drop What goes up must come down Buy short-term 1 month at a time Cash buying only Buy Basis Manage Short-term Risk Weather the Storm Market Peaking 1 to 7 month horizon Take advantage of basis Collars Calls (cap) Speculate Further Price Drop I’m so bearish I’ll Short the Market Stay short-term Buy seasonal to a year Float market (cash buying) Manage Long-term Risk Back-up the Truck & Get Long! 1 to 5 year fixed price (layer terms) Mixed portfolio (term & %) Collars Calls (cap) Energy Decision Matrix $/MMBtu $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50$4.00$3.50 $3.00 $2.50 Bearish--------------------------------------------------------Bullish

23. Russ Paluch 630-470-9176 Paluch@maverickec.com John Righeimer 815-498-3855 Righeimer@maverickec.com