Oil & Gas Macro Views - Scotia Howard Weil

1. Scotia Howard Weil Oil & Gas Macro ViewsNew Orleans Blake Fernandez 504-582-2528 blakef@howardweil.com Peter Kissel 504-582-2881 peterk@howardweil.com April 16, 2015 Scotia Howard Weil is a division of Scotia Capital (USA) Inc., a member of the Scotiabank group, and represents Scotiabank’s energy equities business in the United States. For all relevant disclosures and certifications see Appendix A Important Disclosures of this report.

2. Oil Macro OutlookNew Orleans Blake Fernandez 504-582-2528 blakef@howardweil.com Peter Kissel 504-582-2881 peterk@howardweil.com April 16, 2015 Scotia Howard Weil is a division of Scotia Capital (USA) Inc., a member of the Scotiabank group, and represents Scotiabank’s energy equities business in the United States. For all relevant disclosures and certifications see Appendix A Important Disclosures of this report.

3. SHW Price Deck / Historical Crude Price

4. Supply/Demand Fundamentals Source: IEA and Scotia Howard Weil Source: IEA and Scotia Howard Weil

5. Global Oil Inventories Source: Scotia Howard Weil and EIG

6. Spending Curtailments Source: CVX Company Reports

7. U.S. Rig Count / Production Rollover Source: Baker Hughes and Scotia Howard Weil Source: EIA and Scotia Howard Weil

8. Future M&A Wave? Source: Scotia Howard Weil Source: CVX Company Reports

9. Industry Cost Recalibration Source: BP Company Reports

10. Medium-Term Outlook IEA Medium-Term Outlook Source: IEA and Scotia Howard Weil

11. Gas Macro OutlookNew Orleans Blake Fernandez 504-582-2528 blakef@howardweil.com Peter Kissel 504-582-2881 peterk@howardweil.com April 16, 2015 Scotia Howard Weil is a division of Scotia Capital (USA) Inc., a member of the Scotiabank group, and represents Scotiabank’s energy equities business in the United States. For all relevant disclosures and certifications see Appendix A Important Disclosures of this report.

12. SHW Price Deck / Historical Gas Price Source: Howard Weil, FactSet

13. Natural Gas Supply and Demand Source: EIA

14. Natural Gas Marketed Production Source: EIA

15. Natural Gas Storage Levels Source: EIA

16. Natural Gas Supply and Demand

17. U.S. Natural Gas Production

18. Howard Weil Estimated E&P Cash Flows

19. Annual Oil & Gas Capital Expenditures

20. Independent E&P Observations/Themes • Capital prudency being rewarded • Cash flow levels dictating activity levels • Rate of return secondary • Cost reductions improving level of economic inventory at ~$50 crude • Capital markets have been open for business • M&A likely, but a bit too soon; E&P looking for long term inventory more than near term growth (assets not companies)

21. Appendix A: Important Disclosures Important Disclosures I, Blake Fernandez and Peter Kissel, certify that the views expressed in this research report accurately reflect our personal views about the subject securities or issuers; and I, Blake Fernandez and Peter Kissel, certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views contained in this research report Important Disclosures This report was prepared by a Scotia Howard Weil Research analyst. Scotia Howard Weil is a Division of Scotia Capital (USA) Inc., a US Registered broker-dealer and a member of the New York Stock Exchange and FINRA. Scotia Howard Weil Research analysts focus primarily on the US Energy Sector. Scotia Capital (USA) Inc. is a wholly owned subsidiary of Scotia Capital Inc., a Canadian registered investment dealer, and indirectly owned by The Bank of Nova Scotia. Scotiabank, together with “Global Banking and Markets”, is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including Scotia Capital Inc. and Scotia Capital (USA) Inc. In addition to Scotia Howard Weil Research, Scotiabank publishes and distributes Scotiabank Global Banking and Markets Equity Research (“Scotiabank Research”), which is a separate research publication. Scotia Howard Weil Research Analysts and Scotiabank Research Analysts are independent from one another and their respective coverage of issuers are different. In addition, because they are independent from one another, Scotia Howard Weil Research Analysts and Scotiabank Research Analysts may have different opinions on the short-term and long-term outlooks of local and global markets and economies. This report was prepared for general circulation and does not provide investment recommendations specific to individual investors. As such, the financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider Scotia Howard Weil’s research and/or ratings as only a single factor in making their investment decisions. Past performance of the financial instruments recommended in this report should not be taken as an indication or guarantee of future results. All pricing of securities in reports is based on the closing price of the securities’ principal marketplace on the night before the publication date, unless otherwise explicitly stated. Any prices that are stated in this report are for informational purposes only. Scotiabank, Global Banking and Markets makes no representation that any transaction may be or could have been effected at those prices. The compensation of the research analyst who prepared this report is based on several factors, including but not limited to, the overall profitability of Scotiabank, Global Banking and Markets and the revenues generated from its various departments, including investment banking. Furthermore, the research analyst’s compensation is charged as an expense to various Scotiabank, Global Banking and Markets departments, including investment banking. Research Analysts may not receive compensation from the companies they cover. For Scotia Howard Weil Research analyst standards and disclosure policies, please visit http://www.howardweil.com/equity-research/ Equity research reports published by Scotia Howard Weil, Scotiabank, Global Banking and Markets are available electronically via: Bloomberg, Thomson Financial/First Call - Research Direct, Reuters, Capital IQ, and FactSet. Institutional clients with questions regarding distribution of equity research should contact us at 1-800-322-3005. Scotia Capital (USA) Inc. is a multidisciplined financial services firm that regularly intends to seek investment banking business with companies covered in its research reports, and thereby seeks to receive compensation from these companies for services including, but not limited to, acting as an underwriter in an offering or financial advisor in a merger or acquisition, or serving as a placement agent for private transactions. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. For applicable current disclosures for all covered companies, please write to the Scotia Howard Weil Research Department at the following address: Scotia Howard Weil Research Department 1100 Poydras Street, Suite 3500 New Orleans, Louisiana 70163 Additional Disclaimers and Disclosures Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors. Employees of Scotia Capital (USA) Inc. or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed within. This report/email may be considered advertising under federal law. If you decide not to receive Scotia Howard Weil Research via email, please reply to howardweil@howardweil.com and ask to be removed. Additional information is available upon request: 1100 Poydras Street, Suite 3500, New Orleans, LA 70163 – 1.800.322.3005