1. Haas Energy Team Republic Petroleum Refinery Decision 10/25/2015

2. Team Haas Andrey Gutkovsky Stephanie Moon Yuriy Pryadko Avanti Tamhane Key goal Advise Republic Petroleum on whether to invest in 500,000 barrel/day refinery in PADD 3 Introduction

3. Treat refinery as long term investment Introduction Framework

4. Introduction Summary and recommendation  Lack of crude supply advantage in the long term  Lot of existing capacity in PADD 3  Uncertain policy outcomes  Poor demand projections in the US Given our investment analysis, we do not recommend building a 500,000 bpd refinery in the PADD3 Region

5. Overview of Current Market USGC Competitive Environment Gulf coast has a lot of coking capacity

6. Overview of Current Market Supply of crude oil stocks Oversupply in the US starting in 2012 due to the tight oil revolution. It drives both domestic and worldwide prices down.

7. PADD-3 and US in general will face a non-growing consumption market Non-OECD growth is predicted to be robust Focus on growing markets makes strategic sense Overview of Current Market Demand Challenges in US Stagnant demand in US & OECD; rest of the world continues growth

8. Overview of Current Market Global Supply vs Demand

9. Investment Analysis Crude Oil Reference Forecast  Based on EIA Reference case  Price rise steadily after 2015 due to demand growth in non-OECD countries  Continued growth in U.S crude oil production contributes to downward pressure on prices  Heavy crudes trade a 25-30% differential from Brent/Crude Historically

10. Investment Analysis Framework  Largely depending on key assumptions:  Overall WTI-Brent differential  Will the Export Ban be repealed?  Will the Keystone Pipeline be built?  Feedstock price forecasting – WCS or WTI?  WTI – Brent differential anticipated to move towards parity in the long run due to minimal US demand  Coker versus Cracker Decision  Different Investment Costs  Coking Margins versus 3-2-1 Cracking Calculation Modeled forecasted returns for 4 regulation scenarios

11. Investment Analysis: Scenario Modeling IRR NPV Keystone Pipeline is Built & Export Ban Remains Coker11.5%$6.6B Keystone Pipeline is Built & Export Ban Lifted Coker9.4%$5.2B Export Ban Remains Cracker5.6%$1.7B Export Ban Lifted Cracker4.9%$1.5B

12. Keystone Pipeline Decision  Impact of Keystone Pipeline is positive for PADD-3 U.S Refineries  WCS crude at 20-35% discount to lighter crudes  Will decrease WTI in relation to Brent, thus creating advantages for U.S refineries  Due to broad support of the keystone pipeline by democrats and republicans, it is likely to be built ~75%  If Keystone pipeline is built, it is likely that the WTI-Brent differential will become greater than $10 and Export ban will be repealed

13. Export Ban Decision WTI-Brent Differential Export Ban in Place Sources: U.S. Energy Information Administration, Reference, Low Oil Price, High Oil and Gas Resource, and High Oil and Gas Resource/Low Oil Price cases, with current crude oil export restrictions. Export Ban Lifted WTI-Brent spread will be closer to the Low Oil Price Scenario forecasted by the EIA Keystone Pipeline Built in 2020 75% Keystone Pipeline not Built 25% Export Ban Repealed 80% Export Ban Remains 20%

15. USGC Conclusion NOT A SOUND LONG TERM STRATEGIC MOVE IF NOT USGC, THEN WHAT?

16. Demand Around the World 2010 2040 2010 2040

17. Nigeria Demand: 2 nd Largest Net Importer of Refined Products in Africa 180MBPD in 2012 GDP Growth of 5-6% Supply: 6 th Largest Crude Producer in the World Regulatory Environment: President Muhammadu Buhari Anti-Corruption Policies Supports Private Investment Vows to crush militant groups

18. THANK YOU! #haasome

19. Best Case Scenario: Keystone Pipeline is Built & Export Ban Restrictions

20. 2 nd Best Scenario Keystone is Built & Export Ban is Lifted

21. 3 rd Best Scenario Export Ban Restrictions & Keystone Pipeline Not Built

22. 4 th Best Scenario Export Ban is Lifted & Keystone Pipeline Not Built