1. Illustrative Hedging Example 1 LNG Supplier Small Scale LNG End-buyer BAML Scenario Description BAML purchases 1 cargo per month from our LNG supplier to sell to our Small Scale LNG End-buyer starting in 2015, assuming each cargo is 100,000 MMBtu. The Purchase Price from our Supplier is linked to NBP=> 100% x NBP The client wants to buy LNG on a fixed price basis, say we charge 10.00 $/mmbtu (The forward price to buy this LNG, ignoring our profit margin). 10.00 $/mmbtu 100% NBP Sales Price of LNG10.00+10 LessPurchase Price of LNG100% NBP-10 Profit0 Today’s Forward Price of NBP = 10 $/MMBtu BAML is neutral, We are neither losing or making money Physical LNG flow Fixed cash flow Floating cash flow

2. Illustrative Hedging Example 1 LNG Supplier Small Scale LNG End-buyer BAML Scenario Description BAML purchases 1 cargo per month from our LNG supplier to sell to our Small Scale LNG End-buyer starting in 2015, assuming each cargo is 100,000 MMBtu. The Purchase Price from our Supplier is linked to NBP=> 100% x NBP The client wants to buy LNG on a fixed price basis, say we charge 10.00 $/mmbtu (The forward price to buy this LNG, ignoring our profit margin). 10.00 $/mmbtu 100% NBP Sales Price of LNG10.00+10 LessPurchase Price of LNG100% NBP-7 Profit+3 But what if NBP falls down to 7 $/MMBtu ? BAML is now making 3 $/Mmbtu per cargo Physical LNG flow Fixed cash flow Floating cash flow

3. Illustrative Hedging Example 1 LNG Supplier Small Scale LNG End-buyer BAML Scenario Description BAML purchases 1 cargo per month from our LNG supplier to sell to our Small Scale LNG End-buyer starting in 2015, assuming each cargo is 100,000 MMBtu. The Purchase Price from our Supplier is linked to NBP=> 100% x NBP The client wants to buy LNG on a fixed price basis, say we charge 10.00 $/mmbtu (The forward price to buy this LNG, ignoring our profit margin). 10.00 $/mmbtu 100% NBP Sales Price of LNG10.00+10 LessPurchase Price of LNG100% NBP-15 Profit-5 Or alternatively what if NBP rises to 15 $/MMBtu BAML is now losing $5/Mmbtu per cargo The Small Scale LNG End-buyer is protected against any price movements in NBP, but to cover ourselves BAML will need to hedge the position in the financial markets, by entering into an NBP swap. Physical LNG flow Fixed cash flow Floating cash flow

4. Illustrative Hedging Example 1 LNG Supplier Small Scale LNG End-buyer BAML Financial Market Hedging Scenario Description: BAML purchases 1 cargo per month from our LNG supplier to sell to our Small Scale LNG End-buyer starting in 2015, assuming each cargo is 100,000 MMBtu. The Purchase Price from our Supplier is linked to NBP=> 100% x NBP The client wants to buy LNG on a fixed price basis, say we charge 10.00 $/mmbtu (The forward price to buy this LNG, ignoring our profit margin). Physical LNG flow Fixed cash flow Floating cash flow 10.00 $/mmbtu 100% NBP Fixed Leg Floating Leg NBP Price ($/MMBtu)10715 Sales Price of LNG10 LessPurchase Price of LNG-10-7-15 Profit on Physical Trade03-5 BAML pays fixed leg on Swap-10 BAML receives floating leg on Swap 10715 Profit on Financial Trade0-35 Net Profit000 BAML is now hedged and in any NBP scenario => BAML sells 100,000 MMBtu of a fixed price NBP swap in the market

5. Illustrative Hedging Example 2 LNG Supplier Small Scale LNG End-buyer BAML Scenario Description Consider the same scenario as before, but this time our client, the Small Scale LNG End- buyer, would like to purchase on a Brent-linked formula as his alternative is to purchase oil products. What percentage of Brent does the forward curve imply and how to hedge this position? [P] % x Brent100% NBP Physical LNG flow Fixed cash flow Floating cash flow Forward curve for NBP in 2015 = 10 $ /mmbtu Forward curve for Brent in 2015 = 103 $/bbl 100% NBP = P% x Brent  100% x 10 = P% x 103  P % = 100% x 10 / 103 = 9.7% Given the current prices, we can convert the Sales price to the client into a Brent-linked formula at 9.7 % x Brent, which means if => Brent = 90 $/bbl, the price the Small Scale End-buyer will pay for the LNG is 8.7 $/MMBtu => Brent = 110 $/bbl, the price the Small Scale End-buyer will pay for the LNG is 10.7 $/MMBtu The Small Scale LNG End-buyer now has exposure to the price of Brent, the higher Brent is the more the LNG will cost but the lower Brent is, the less he/she will have to pay. BAML now has 2 sources of price risk: (1) from NBP price to the Supplier and (2) Brent price from the End-Buyer

6. Illustrative Hedging Example 2 LNG Supplier Small Scale LNG End-buyer BAML Scenario Description Consider the same scenario as before, but this time our client, the Small Scale LNG End- buyer, would like to purchase on a Brent-linked formula as his alternative is to purchase oil products. What percentage of Brent does the forward curve imply and how to hedge this position? 9.7 % x Brent100% NBP Physical LNG flow Fixed cash flow Floating cash flow Financial NBP Hedging Fixed Brent Leg Floating NBP Leg Financial Brent Hedging Floating Brent Leg Fixed NBP Leg BAML sells 100,000 MMBtu of a fixed price NBP swap in the gas market BAML buys 97,000 bbl of a fixed price Brent swap in the oil market