Crude by Rail Jose G. Zozaya President of KCSM

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1 Crude by Rail Jose G. Zozaya President of KCSM May 2015

2 Kansas City Southern Railway Founded in 1887, KCS is 126 years old More than 6,100 miles of track US -Mexico cross border railroad Serves 12 Ports in the Gulf and one in the Pacific Serves more than 140 transload terminals and 11 intermodal ramps 181 interchange points with all Class I railroads in the US and Mexico

3 Shale Plays, Refineries, and Pipeline Infrastructure Noticeable gaps in the pipeline network. Some with significant hurdles. 3

4 Moving Crude Oil by Rail 4

5 Crude Oil Carloads on US Class I 5

6 Crude Oil Basins & Connecting Partners Canadian Heavy Oil: CPRS Kansas City CN Jackson CN Cockrell, IL Bakken Region: BNSF Kansas City CPRS Kansas City Niobrara Region: UP Kansas City BNSF Kansas City Cushing Barrels: SKOL Pittsburg, KS Permian Basin: UP Dallas TXPF/FWWR Dallas Eagle Ford Shale: KCS Direct 6

7 Canada Production Oil Sands Current Pipeline Capacity 7

8 Crude by Rail Advantage Access to areas without existing or easily accessible transportation infrastructure Faster deployment Flexibility to deliver to different end markets Comprehensive solution for refiners Faster delivery to demand markets Reduced shipper commitments 8

9 Benefits of Crude by Rail Time to Market Lower Capital Requirements Optionality Crude Quality Management Fast delivery time per train Fast construction rails in place Lower permitting hurdles Shorter investment horizon Increased market coverage Flexibility to deliver to key markets, direct to refinery, or to move where the production occurs Bi-directional movement Neat Barrel Quality In = Quality Out Heavy barrel Pure bit 9

10 KCS Investing for Growth, Asset Utilization, Safety, and Service 2015 Capital Expenditures Investing in Growth - Equipment All 85 locomotives ordered in 2014 have been delivered. 50 additional locomotives ordered for 2015 with the first 6% 4% deliveries scheduled for February. Secured options for 2016 and 2017 locomotive orders. Expansion of grain and automotive fleets. 42% Investing in Growth - Capacity Crude oil network mainline and capacity improvements. Kansas City IFG Terminal expansion to facilitate interchange. Jackson, Mississippi in year two of a three year expansion project to nearly double capacity. Wylie, Texas intermodal facility to open mid-year. Sanchez Yard three year, $60M+ expansion project. Seven new or expanded sidings to improve line of road fluidity. 48% Investing in Maintenance Velocity Benefits Track programs between Shreveport and Baton Rouge to provide increased speeds from (40 to 49MPH), benefitting crude shipments. CTC implementation on the Laredo subdivision and in Mexico to improve fluidity and increase maximum allowable speed. Continued mainline improvements between Monterrey and Nuevo Laredo, MX, allowing for speed increase to 68MPH. Maintenance Regulatory Growth / Locomotives IT / Other 10

11 2015 Capacity Related Capital Projects New R&D Track in Knoche Yard Springfield IFG Double Main Extension Vandervoort Siding Extension New Wylie Intermodal Terminal New R&D Track in Laredo Yard Double Track Sanchez to Nuevo Laredo Ft. Worth Kansas City East St. Louis Wylie Houston Port Arthur Laredo Artesia Shreveport New Siding at Trenton, LA Jackson Yard Expansion Counce Meridian Gulfport New Orleans Singer Siding Extension Artesia Yard R&D Tracks Sanchez Yard Build Out Continuation Escobedo Yard R&D Track Build Comonfort Siding Extension Saltillo Monterrey Santa Maria Siding Extension San Luis Potosi Tampico CTC Install KCS Laredo Sub CTC Install Surrounding Escobedo Ojo Seco and Salvatierra Siding Ext. Lazaro Cardenas Mexico City Veracruz Jacuaro and La Goleta Siding Ext. *Please note that this project list may change at any time. 11

12 Mexico Energy Reform is a Reality Reform could drive an increase in rail shipments in the following ways: Increased LPG and refined products could be the first growth market Movement of steel tubing for new pipelines Importation of frac sand from the United States Crude by rail from new producing regions to refineries Increased intra-mexico moves of diesel, LPG, gasoline and fuel oil Reform could reduce power generation cost, further improving Mexican competitiveness and strengthen near shoring thesis 12

13 Altamira contract area production potential 13

14 Production Constraints & Logistical Challenges Crude oil delivered to Pemex with 10% water content (Field condition) Limited gas availability in the field for heating purposes 12,000 Bbls per day transported through Cacalilao pipeline Cacalilao Pipeline is at capacity / 12,000 Bbls per day Dehydration Plant (CAB) at capacity is for 15,000 Bbls per day Currently 3000 Bbls per day moved by truck Tank located in Madero refinery is at capacity (200,000 Bbls) This tank blends Ebano, Altamira, Panuco and Arenque streams (Blend known as Altamira Index is Maya) Logistical constraints in all the supply chain impact production growth and economics 14

15 Ebano Production Area Altamira Contract Area Proposed Stations Actual pumping G-Méndez Crude analysis to be dehydrated Gross: 6,500 bbls Water: 8-12% API: Refinería Madero Pipeline Railroad Las Flores 1 Sábalo Corc. 5 Águila Escudo Nacional E-114 Méndez 2 Corc. 2 Águila G-Méndez E-112 E-M K P Paciencia Ébano 4 Chijolito Chijol-D17 E-41 Raya 5 Ébano 3 6 Internacional Oficinas Ébano A-21

16 Thank You