North American Crude Oil Outlook Crude Oil Marketing Conference. February 28, 2013

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1 North American Crude Oil Outlook Crude Oil Marketing Conference February 28, 2013

2 Conclusions North American Production Growth Continues to Shape Market; Breaking Traditional Flow Patterns and Pricing Relationships Pipeline, Rail, and Waterborne Options Critical to Balancing Regional Markets and Bringing Light Crude to Coastal Markets U.S. Light Crudes Will Be Discounted to World Prices Until the Development of New Refining and Export Options Occur Growing Supply Will Lead to Downward Pressure on Crude Prices 2

3 Canadian and U.S. Oil Production has Increased Over 3.1 MMb/d Since MMb/d Note: Excludes U.S. and Canadian Natural Gas Liquids Production Canada U.S. 3

4 U.S. Plays Predominantly Light Sweet Crude Non-Upgraded Bitumen Heavy Diluted Bitumen Shaunavon Syncrude Alaska North Slope Spearfish Viking Uinta Black Wax Cardium Niobrara Alberta Bakken Miss Lime Wolfcamp Marmaton / Hogshooter Cline Bakken Avalon / Bone Spring Duvernay Utica Cana woodford / SCOOP Barnett Combo Eagle Ford API Gravity Light Crude to Condensate

5 Increased Production Has Driven Out Light Sweet Waterborne Imports from U.S. Market MMb/d Heavy - Sour Heavy - Sweet Intermediate - Sour Intermediate - Sweet Light - Sour Light - Sweet Note: U.S. Waterborne imports does not include imports from Canada 5

6 U.S. Oil Production Increases Driven by Shale Oil Resource Plays: Bakken, Permian, Eagle Ford 32/+7 40/+12 5/+2 18/-12 5/+2 5/-3 Rig Increases Dry Gas Focused Areas 29/+20 Rig Increases Liquids-Rich/Oil Focused Areas Rig Declines CALIFORNIA OTHER ROCKIES 198/+117 POWDER RIVER WIND RIVER GREEN RIVER UINTA SAN JUAN 12/-11 PICEANCE 1/+0 RATON PERMIAN 439/+221 WILLISTON 36/+18 D-J ANADARKO 209/+86 96/ / /-2 ILLINOIS 7/-1 ARK FAYETTEVILLE 16/-21 ARK WOODFORD 97/+13 21/+6 MICHIGAN 9/+3 30/+26 4/-25 ARLKA 58/-51 43/-50 25/ /+2 FT WORTH OTHER MIDCONTINENT EAST TX TX GULF EAGLE FORD AL-MS-FL LA GULF TX GULF UTICA OFFSHORE 57/-19 38/+20 1/-11 OTHER APPALACHIAN MARCELLUS DRY MARCELLUS WET TOTAL 1824 CHANGE +466 Source: BENTEK, January 2013 Active rig count: January 4, 2013 / Change in rig count from January 1, 2010

7 U.S. Oil Plays Begin to Generate Attractive Rates of Return Above $60/Barrel Field Prices IRR 80% 70% 60% 50% 40% 30% 20% 10% 0% -10% Note: NG at $3/MMbtu and NGLs 30% of Crude, No Basis Differentials $60 $80 7

8 N.A. Oil Production Growth Will Reshape Crude Flows Pushing Out Imports Alberta +1, Saskatchewan Alaska (136) Bakken +938 Growth MMb/d California (16) +307 Rockies +147 Anadarko Utica +137 Permian ,183 Source: BENTEK Crude Oil PADD Balances as of December 21, 2012

9 New Pipelines To Flow Canadian and U.S. Production to Coastal Markets Bakken Niobrara Anadarko Permian Source: Petroleum Project Tracker Not All Projects Shown Eagle Ford

10 Debottlenecking Will Allow More Canadian Crude to Flow Through PADD II to Eastern Canada and Gulf Coast 4,000 3,500 3,000 2,500 Mb/d 2,000 1,500 1, Keystone Enbridge Imports Forecasted Canadian Imports Import Corridor Capacity Source: BENTEK Crude Oil PADD Balances as of December 21, 2012

11 Combination of Rail and Pipeline Capacity Have Given Producers Flexibility in Choosing Route out of Williston Mb/d ND Oil Production Pipeline Takeaway Capacity MT Oil Production Total Capacity (Includes Non-traditional Options*) Source: BENTEK Crude Oil PADD Balances as of January 1, 2012

12 Flood of Production To Gulf Coast Will Prompt Producers in Bakken to Rely on Rail To East & West Coast Mb/d East Coast PADD 2 PADD 3 PADD 5 Rail Capacity Source: BENTEK Crude Oil PADD Balances as of November 1, 2012

13 Rail Offers Access to the Entire North American Market But at Higher Cost $6.55 $6.76 Loading and Unloading Fees Excluded $1.50-$3.00 Note: Estimated Rates from BNSF as of 12/18/2012 Rail Transport Rate $/Barrel

14 New Pipeline Capacity To Gulf From Cushing Will Tighten WTI-LLS Spread 1,800 1,600 1,400 1,200 Mb/d 1, PADD II to PADD III Flows Pipeline Capacity Source: BENTEK Crude Oil PADD Balances as of December 21, 2012

15 Gulf Coast Waterborne Imports Under Pressure from U.S. Shale and Canadian Heavy MMb/d U.S. light sweet pushes out heavy imports 0.0 Heavy Intermediate Light Import Forecast Source: BENTEK Crude Oil PADD Balances as of December 13, 2012

16 West and East Markets to Feel Production Growth Pressure Due to Pipeline and Rail Developments MMb/d PADD I PADD III PADD V Source: BENTEK Crude Oil PADD Balances as of December 21, 2012

17 Current Lack of Crude Export Market Will Continue to Leave WTI and Brent Separated ($20) ($14) ($0) ($3) ($12) ($5) $16 $15 $16 $19 $93 $72 ($3) ($2) Avg Avg $15 $4 Brent Premium Source: BENTEK Crude Oil PADD Balances as of January 2013 $16 $19

18 Chris Micsak Senior Energy Analyst Bentek Energy

19 May 13-15, 2013 Houston, TX The Houstonian Hotel Presented by BENTEK analysts Two days of breakout sessions In-depth sessions on North American Natural Gas, Crude Oil, NGLs & LNG Special training event: Introduction to the North American Energy Market Benposium 2012: 700 attendees over four days 19