Marcellus Takeaway Capacity and Utilization Outlook Marcellus basis discount is here to stay; uplift must come from fixed prices.

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1 ? Marcellus Takeaway Capacity and Utilization Outlook Marcellus basis discount is here to stay; uplift must come from fixed prices. Morningstar Commodities Research 1 October 2015 Jordan Grimes Sr. Commodities Analyst, Power and Gas jordan.grimes@morningstar.com Executive Summary Natural gas producers have been fretting about price realizations in the Marcellus and Utica shales for a few years now but touting the pipeline build-out as the answer to reducing congestion and improving local differentials. While it's true that the build-out will improve Marcellus basis versus Henry Hub, the market has largely priced in this impact on the forward curve in line with marginal firm transport costs. Dominion South Point, Transcontinental Pipeline's Leidy Line, and Tennessee Gas Pipeline Zone 4 local gas has approximately $0.30-$0.50/mmBtu basis improvement priced into 2018 from current 2015 levels. This leaves local Marcellus gas still at a steep discount to Henry Hub in With marginal flows on firm transport costing $0.60-$0.80/mmBtu to get the Marcellus gas to demand zones downstream, we think the long-term Marcellus price differentials are here to stay and that higher price realizations will need to be met via higher fixed prices locally and in demand zones. Once the pipeline is built out, most major Marcellus and Utica producers will own large firm transport contracts to get the gas to market, and we believe producers could actually benefit from a widening of basis spreads a reversal of the current environment's pricing impact. In this report, we analyze pipeline utilization heading east, west, and south out of the Marcellus and Utica to determine the impact on local Marcellus and demand zone gas downstream. Key Takeaways Bullish: While we forecast basis improvement in Marcellus local gas, most of this is priced into the forward curve. We believe the local Marcellus gas discount to Henry Hub is here to stay. We see uplift coming from increases in both fixed local and demand zone prices. Bearish: Eastern winter demand zone pricing will face continued downward pressure, with pipeline build-out and gas-to-oil switching at lower price levels. Pipeline expansions moving east will see the highest utilization rates because of growing demand from residential and power generators. Bearish: Dom South has the potential for the most upside if Gulf Coast demand from liquefied natural gas exports and petrochemical plant demand increase. Western pipeline utilization will be vital to basis improvement at this hub. Bullish: In a reversal of fortunes, companies will be selling much more of their production downstream and could therefore benefit from wider basis differentials. Local pricing loses some of its importance after the build-out.

2 Page 2 of 28 Marcellus Takeaway Outlook A large pipeline expansion is underway to move cheap Marcellus and Utica shale gas to help producers achieve higher average price realizations and give power plants, local distribution companies, LNG exports, and petrochemical plants a source of cheap, abundant supply. While producers should realize higher prices, the forward market has already priced in much of the takeaway capacity coming on line, with curves in contango at depressed points like Dom South, TGP Zone 4, and Transco-Leidy. Demand zone deliveries on the receiving end of this pipeline build-out like Algonquin, Transco Z6 (non-ny), and Transco Z5 forward curves are correctly in backwardation. In the long run, the spread between Marcellus gas and demand zone gas should be equal to the average price of firm transmission between the two points, and we should therefore expect the Marcellus local discount to continue. We worry that given the current well backlog in the Marcellus, production increases will mirror the takeaway capacity step-up for the next several years. Finding new demand sources downstream tied to firm sales line LNG exports, new gas combined-cycles, and industrial demand is a positive. But displacing current supply will need to occur by offering lower prices, which could mean lower realized prices at the other end of the pipe. Marcellus gas displacing current supply is not an ideal strategy for achieving higher realized pricing. Therefore, marketing efforts to find new demand in industrial, power, and LNG exports are needed for higher realized prices. As long as producers are financing this pipeline build-out and paying for the firm service, it is likely that pipeline expansions out of the Marcellus will be met with increased production. Producers are paying for the firm services with incremental revenue from new production. Ideally, end users like combined cycles or LDCs would finance the pipeline build-out and producers would not be forced to raise production to fill pipelines. Impact of Pipeline Expansion on Local and Demand Zone Gas Prices If a producer owns the firm transport on a new pipeline expansion, the producer has a few choices to make. The producer could choose to backfill existing flows into this new pipeline exiting the Marcellus, thus eliminating some of the supply glut. But it is likely that the producer has paid for the firm transport with expected revenue on increased production, so the producer is more likely to work through well backlogs and increase production. But if the spread between the local gas price and demand zone gas price at the other end of the pipe is lower than the price paid for firm transmission, will the producer still flow the gas? Most likely yes, unless the producer can find a buyer for the firm transport. Minus a small usage charge, it is likely that in the short run, producers will view the transport as a sunk cost and flow the gas as long as a spread persists between the two regions greater than the usage charge. For this reason it is likely the gas will flow and offer into demand zones, adding bearish pressure to demand zone prices. In this scenario, the spread between local gas and market demand zone gas only compresses because the other end of the pipe is now offered.

3 Page 3 of 28 Through 2017, we believe that higher transport costs borne on producers are ultimately bearish local Marcellus basis as we expect the initial build-out of takeaway to be met primarily with increased production, tempering the bullish effect on basis. However, in the long run, increased transport costs should factor into a producer's marginal cost of production and raise fixed-price local gas prices, but not necessarily basis. We believe that a long-term discount between Marcellus basis and demand zone prices will remain, but that higher fixed local and demand zone prices will be needed to encourage production after Therefore, uplift for producers is likely to come not from further basis improvement, but from higher fixed prices locally and in demand zones. Once the pipeline expansion is complete, enough producers will own firm transport that wide basis spreads may actually encourage more production because producers will be selling a larger slice of their production downstream. Therefore, the impact of low Marcellus basis differentials will be less of a detriment to producers after the pipeline build-out, as producers are able to sell more gas downstream. We don t expect wider basis as the likely scenario, but it is a scenario that could actually result in higher realized prices for producers. The most likely scenario is that producers realize higher pricing through higher fixed local and demand zone gas prices. What's the Impact of LNG Exports on Marcellus Basis? Given its location, Cove Point will certainly have the largest effect on Marcellus gas basis of the LNG exporters. Transco Z5 and Texas Eastern Transmission Market Zone 3 can expect demand of 600 million cubic feet per day from Cove Point LNG. Once the Atlantic Sunrise pipeline is complete, Cove Point will more directly pull on Dom South gas. Sabine Pass, Cameron, and Corpus Christi will pull on Tetco M2, Dom South, and TCO via the Ohio-Louisiana expansion, Gulf Markets expansion, and ANR mainline expansion. Any downward revision to our LNG export forecast would have a significant bearish impact on Marcellus local gas prices due to lower utilization of takeaway capacity. Upward revisions to LNG exports would be bullish Gulf Coast pricing and could actually widen basis spreads. What Is Marcellus Takeaway Capacity? We define takeaway capacity as a pipeline expansion or backhaul that moves Marcellus gas beyond current constraint points. We consider pipeline expansions further downstream of constraints to be redundant in counting toward total incremental takeaway capacity, although downstream expansions will move Marcellus gas. We modeled Marcellus takeaway and production first to solve for Northeast demand, especially in winter months (November-March), then flow net length on pipeline expansions heading west and south.

4 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20 May-20 Sep-20 bcf/day Page 4 of 28 Exhibit 1 Northeast Demand Versus Marcellus and Utica Production 40 Total Demand Total Prod Linear (Total Demand) Source: Morningstar Direct Marcellus and Utica Expansion Utilization East Marcellus Takeaway Pipe Utilization Pipelines moving gas from the Appalachian shale region to demand zones in the east will see the higher utilization rates compared with pipelines moving the gas west and south because of increased gas demand in the East from LDC and power generators. Our utilization rate is driven by production forecasts in the Marcellus offering into premium demand zones at Transco Z6 (non-ny), Algonquin, TGP Z6, and Canada once pipeline expansions are completed. This drives high utilization rates in winter for gas moving east. In summer, lower basis prices will shift marketers' preferences to move the gas west and south. Northeastern pipeline projects face the highest project delay and cancellation risk because of population density and a "not in my backyard" attitude among many residents.

5 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20 May-20 Sep-20 mmcf/day Page 5 of 28 Exhibit 2 East Takeaway Pipeline Projects and Basis Impact Pipeline Project Owner In Service Max Expansion Capacity (mmcf/d) Bearish Bullish Direction Tetco Team 2014 (East) Spectra November Tetco M3 E Rose Lake Expansion Kinder Morgan November TGP Z4-300 E Iroquois Access Dominion November Iroquois TGP Z4-300 E Tuscarora Lateral National Fuel November E Niagara Expansion Kinder Morgan November E East Side Expansion Columbia November E Transco-Leidy Southeast Williams December Transco Z6 (Non NY) Transco-Leidy E Constitution Pipeline Williams, Cabot July Algonquin\Iroquois Transco-Leidy and TGP Z4 E Algonquin Incremental Spectra November Algonquin Tetco-M3 E New Market Project Dominion November E Northern Access National Fuel and Empire November E Garden State Markets Expansion Williams November Transco Z6 (Non NY) E Iroquois SoNo Iroquois November Waddington E Connecticut Expansion Kinder Morgan November TGP Z6 E Valley Lateral Project Millennium April Millennium E NJR PennEast AGL, NJR, Spectra November ,000 Tetco M3 and Transco Z6 (Non-NY) Transco-Leidy and TGP Z4-300 E Atlantic Bridge Project Spectra November Algonquin E New York Bay Expansion Williams November Transco Z6 (NY) E Transco Diamond East Williams June Transco Z6 (NY and Non- NY) Transco-Leidy E Northeast Energy Direct TGP, Kinder Morgan November ,000 TGP Z6 TGP Z4-300 E Access Northeast Spectra November ,000 Algonquin TGP Z4-300 E Tetco A2M Spectra November ,000 Tetco M3 and Algonquin E Source: Morningstar Direct Exhibit 3 Utilization Forecast of Expansion Pipelines Moving East 10,000 9,000 8,000 7,000 East Incremental Takeaway Capacity East Takeaway Utilization 6,000 5,000 4,000 3,000 2,000 1,000 - Source: Morningstar Direct

6 Page 6 of 28 West Marcellus Takeaway Pipe Utilization Gas moving west along newly completed pipeline expansion projects and backhauls will be at highest utilization in summer months when delivering gas to power generators and storage facilities at Dawn Hub in Ontario and Michigan. Utilization rates move down in the winter as Marcellus and Utica supply is directed east for winter demand and midcontinent demand draws on Dawn and MichCon storage. Midcontinent demand encourages flows more in summer as it prices closer to Henry Hub. However, we believe that the heavy pipeline flows in April-October will pressure midcontinent basis downward from Exhibit 4 West Takeaway Pipeline Projects and Basis Impact Pipeline Project Owner In Service Max Expansion Capacity (mmcf/d) Bearish Bullish Direction ANR Lebanon Lateral ANR March W Rex Phase I Tallgrass Energy, Sempra April Midcontinent Dom South W Rex Phase II Tallgrass Energy, Sempra October Midcontinent Dom South W Team 2014 (West) Spectra October Tetco M2 W Team South Spectra October Tetco M2 W Rex Zone 3 Reversal Tallgrass August ,200 Dom South W Tetco Open Spectra September Tetco M1 W Uniontown to Gas City Spectra September Midcontinent Tetco M2 W West Side Expansion National Fuel November W ANR Sulfur Springs ANR November W TGP Backhaul Broad Run TGP November TGP Z4-200 W ANR Glen Karn TransCanada November W Gulf Markets Expansion Phase I Spectra November Tetco M2 W ETP Rover Phase 1 ETP November ,900 MichCon Dom South W Gulf Expansion Phase II Spectra November Tetco M2 W REX Zone 3 Enhancement Tallgrass Energy November ,900 Midcontinent Dom South W Leach Xpress Columbia June ,500 TCO W ETP Rover Phase 2 ETP September ,300 MichCon W Adair Southwest Spectra November Tetco M1 Tetco M2 W Access South Spectra November Tetco M1 Tetco M2 W Nexus Spectra November ,500 Dom South W ANR Utica ANR November Dom South W Susquehanna West TGP November TGP Z4-300 W Triad Expansion TGP November TGP Z4-300 W Mountaineer Xpress Columbia November ,700 TCO W Source: Morningstar Direct

7 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20 May-20 Sep-20 mmcf/day Page 7 of 28 Exhibit 5 Utilization Along Incremental Takeaway Moving West 20,000 18,000 16,000 14,000 West Incremental Takeaway Capacity West Takeaway Utilization 12,000 10,000 8,000 6,000 4,000 2,000 - Source: Morningstar Direct South Marcellus Takeaway Pipe Utilization Utilization of Marcellus gas moving south has the most upside if LNG export projects materialize higher than our current forecast of 7.4 billion cubic feet per day by These pipeline projects and flow reversals move gas south to LNG terminals at Cove Point, Sabine Pass, Cameron, and Corpus Christi. LNG exports will have very firm demand profiles and not as susceptible to seasonal demand fluctuations. The Ohio-Louisiana Access project, Northern Access Supply project, Leach/Rayne Xpress, Tetco Gulf Markets expansion, TGP Backhaul, and Atlantic Sunrise will help transport gas to these LNG export facilities. South Marcellus takeaway will also provide gas for multiple power projects in PJM including Dominion's large combined-cycle units at Brunswick (1,300 megawatts) and Greensville (1,600 MW) in Virginia. Utilization on south Marcellus takeaway could ramp up as more power projects and conversions materialize downstream.

8 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 mmcf/day Page 8 of 28 Exhibit 6 South Takeaway Pipeline Projects and Impact on Basis Pipeline Project Owner In Service Max Expansion Capacity (mmcf/d) Bearish Bullish Southside VA Expansion I Williams September Transco Z5 Ohio-Louisiana Access Project Texas Gas June Henry Dom South and Tetco M2 Ohio Valley Connector ETP November TCO Northern Supply Access Project Texas Gas April Henry Dom South and Tetco M2 Atlantic Coast Dominion July Transco Z6 (Non-NY and NY) Transco-Leidy Southside VA Expansion II Williams December Transco Z5 EQT Mountain Valley Nextera November Transco Z5 Dom South Appalachian Connector Williams November Transco Z5 Atlantic Sunrise Williams November Transco Z6 (Non-NY and NY) Transco-Leidy Mountain Valley Connector ETP November Transco Z5 TCO Source: Morningstar Direct Exhibit 7 Utilization Along Incremental Takeaway Moving South 9,000 8,000 7,000 6,000 Total Incremental Takeaway Capacity West Takeaway Utilization 5,000 4,000 3,000 2,000 1,000 - Source: Morningstar Direct

9 Page 9 of 28 Impact on Demand Zone Basis Tetco M3 Platts Texas Eastern Market Zone 3 is a daily and monthly survey of all deliveries from Westmoreland County, Pennsylvania, to Morris County, New Jersey, along Spectra s Texas Eastern pipeline. Current maximum capacity in zone: 2,653 in at Lambertville, New Jersey. Outlook and basis view: While the forward curve is backwardated in winters at Tetco M3, we believe winters still carry too much of a premium versus Henry Hub and expect it to come under pressure with the pipeline build-out. Also, with more gas plants being built or converted to burn dual fuels (oil and gas), we expect winter blowouts to be minimal going forward. Summer Tetco M3 forwards are in contango but increased production in this zone will add downward pressure on 2017 basis and could bleed into Exhibit 8 Tetco M3 Current Forwards $/mmbtu January February March (0.30) (0.21) (0.25) (0.27) April (0.84) (0.63) (0.41) (0.29) May (1.04) (0.85) (0.65) (0.54) June (1.03) (0.84) (0.64) (0.52) July (0.84) (0.63) (0.41) (0.28) August (0.92) (0.71) (0.49) (0.37) September (1.16) (0.98) (0.79) (0.68) October (1.28) (1.08) (0.89) (0.68) (0.57) November (0.71) (0.65) (0.68) (0.70) (0.71) December Average (0.56) (0.23) (0.08) Source: EOX Live Transco Zone 5 Platts Transco Zone 5 is a daily and monthly survey of all deliveries on the Transco mainline from the Georgia-South Carolina border to the Virginia-Maryland border. This does not include Cove Point LNG deliveries. Current max capacity in zone: 3,855 mmcf/d at Station 135 in South Carolina and 2,488 mmcf/d at Station 180 in Virginia. Outlook and basis view: Winter Transco Z5 forwards should see downward pressure to basis with the pipeline buildout. If pipeline projects like Atlantic Sunrise are completed on schedule, summer Transco Z5 in 2017 could face downward pressure until Cove Point LNG begins exporting in late Transport agreements along Atlantic Sunrise are relatively cheap at $0.25/mmcf, and we expect strong flows on this pipeline expansion offering into Transco Z5. We are bearish Transco Z5 throughout the curve April- October at current prices.

10 Page 10 of 28 Exhibit 9 Transco Zone 5 Current Forwards $/mmbtu January February March April May June July August September October November December Average Source: EOX Live Transco Zone 6 (Non-NY) Platts Transco Zone 6 (non-ny) is a daily and monthly survey of all deliveries along Williams Transcontinental pipeline beginning at the Virginia-Maryland border to Linden, New Jersey, and to Wharton, Pennsylvania. This does not include Public Service Enterprise Group deliveries. Current max capacity in zone: 2,274 mmcf/d at Station 190 in Maryland. Outlook and basis view: We are bearish winter deliveries at Transco Z6 deliveries throughout the curve. Like Algonquin, we see gas-to-oil switching limiting blowouts on winter days as well as multiple pipeline expansions bringing cheaper Leidy gas in to solve for demand. The bearish impact on winter basis should push the forward curve from contango to backwardation. Peak summer basis should continue to improve as pipelines expansions come on line, bringing gas to power demand further south in Virginia and the Carolinas. Exhibit 10 Transco Zone 6 (Non-NY) Current Forwards $/mmbtu January February March (0.07) (0.08) April (0.38) (0.31) (0.14) (0.05) May (0.66) (0.60) (0.44) (0.37) June (0.76) (0.70) (0.55) (0.48) July (0.51) (0.44) (0.27) (0.19) August (0.66) (0.60) (0.44) (0.36) September (0.79) (0.73) (0.58) (0.51) October (0.78) (0.72) (0.57) (0.49) November 0.03 (0.15) (0.29) (0.30) (0.32) December Average Source: EOX Live

11 Page 11 of 28 Transco Zone 6 (NY) Platts Transco Zone 6 (New York) is a daily and monthly survey of all deliveries downstream of Linden, N.J., for all New York-area distributers. Current max capacity in zone: 1,327 mmcf/d in New York City. Outlook and basis view: We see Transco Z6 (NY) prices bucking the trend of lower winter pricing in demand zones. While there is certainly some downside given gas-to-oil switching in New York independent system operator Zone J and small pipeline expansions to get the gas in the "back door" via Transco Rockaway, Transco Z6 (NY) is an island and constraints will persist. Commercial and residential demand will increase through 2020 in Consolidated Edison and National Grid territories because of fuel switching in the region. More pipeline capacity is needed to move gas beyond constraints before we can see the bearish Marcellus effect on New York City gas, but deliveries from Public Service Enterprise Group may come under pressure. Exhibit 11 Transco Zone 6 (NY) Current Forwards $/mmbtu January February March April (0.51) (0.44) (0.26) (0.30) May (0.73) (0.67) (0.51) (0.55) June (0.82) (0.75) (0.60) (0.63) July (0.52) (0.45) (0.27) (0.31) August (0.66) (0.59) (0.42) (0.46) September (0.97) (0.91) (0.77) (0.80) October (0.86) (0.79) (0.64) (0.67) November 0.16 (0.01) (0.03) (0.03) (0.03) December Average Source: EOX Live Algonquin Citygates Platts Algonquin Gas Transmission citygates daily and monthly survey of all distribution company citygates in Connecticut, Massachusetts, and Rhode Island on Algonquin Gas transmission. Current max capacity in zone: 1,475 mmcf/d in Rockland County, New York. Outlook and basis view: As detailed in our New England Power and Gas Outlook, we are bearish winter basis and fixed price at Algonquin at current forwards because of gas-to-oil switching from ISO New England's Winter Reliability Program, cheaper LNG imports, and pipeline expansions.

12 Page 12 of 28 Exhibit 12 Algonquin Citygates Current Forwards $/mmbtu January February March April May (0.48) (0.88) (0.88) (0.81) June 0.10 (0.40) (0.40) (0.31) July (0.35) (0.78) (0.78) (0.71) August (0.48) (0.89) (0.89) (0.82) September (0.20) (0.66) (0.65) (0.58) October 0.34 (0.21) (0.21) (0.12) November December Average Source: EOX Live TGP Zone 6 Platts Tennessee Gas Pipeline on the 200 leg in Connecticut, Massachusetts, Rhode Island, and New Hampshire. Current max capacity in zone: 1,169 mmcf/d in Berkshire County, Massachusetts. Outlook and basis view: Similar to Algonquin, we are bearish winter deliveries throughout the curve at TGP Z6 because of gas-to-oil switching, LNG imports, and the Constitution pipeline. Exhibit 13 TGP Zone 6 Current Forwards $/mmbtu January February March April May (0.46) (0.86) (0.85) (0.79) June 0.13 (0.38) (0.37) (0.29) July (0.33) (0.76) (0.75) (0.68) August (0.45) (0.86) (0.86) (0.79) September (0.18) (0.63) (0.63) (0.55) October 0.37 (0.19) (0.18) (0.09) November December Average Source: EOX Live

13 Page 13 of 28 Iroquois, Waddington receipts Platt's Iroquois daily and monthly survey of receipts at the U.S.-Canada border at the Waddington interconnects with TransCanada Pipelines. Current max capacity at receipt: 1,150 mmcf/d in St. Lawrence County, New York. Outlook and basis view: Constitution pipeline combined with the SoNo reversal will add downward pressure to Waddington receipts throughout the curve. Exhibit 14 Iroquois, Waddington Current Forwards $/mmbtu January February March April May (0.23) (0.24) (0.24) (0.24) June (0.15) (0.16) (0.16) (0.16) July (0.21) (0.22) (0.22) (0.22) August (0.21) (0.22) (0.22) (0.22) September (0.30) (0.31) (0.31) (0.31) October (0.20) (0.21) (0.21) (0.21) November December Average Source: EOX Live Impact on Marcellus Local Gas Basis Transco-Leidy Platts Transco Leidy Line daily and monthly survey of deliveries downstream of the Leidy/Wharton storage facilities in Clinton and Potter counties, Pennsylvania, to Hunterdon County, N.J. Current takeaway capacity from Leidy: 250 mmcf/day in Clinton, Pa. Outlook and basis view: Transco-Leidy will see some basis improvement with the pipeline build-out, but most of this is likely priced into the forward curve. In the long term, Transco-Leidy will face continued downward pressure because of the local mismatch between production and takeaway. We are bullish seasonality in the forward curve and Transco mainline pulls more on Transco-Leidy with the pipeline buildout.

14 Page 14 of 28 Exhibit 15 Transco-Leidy Current Forwards $/mmbtu January (1.12) (1.06) (0.94) (0.90) February (1.05) (1.03) (0.91) (0.88) March (1.20) (1.04) (0.93) (0.89) April (1.28) (1.19) (1.00) (0.82) May (1.38) (1.30) (1.12) (0.95) June (1.37) (1.29) (1.10) (0.93) July (1.19) (1.10) (0.89) (0.68) August (1.22) (1.13) (0.92) (0.72) September (1.40) (1.31) (1.12) (0.95) October (1.33) (1.24) (1.05) (0.86) November (1.40) (1.14) (1.04) (1.00) (0.98) December (1.27) (1.09) (0.97) (0.94) (0.92) Average (1.34) (1.23) (1.14) (0.99) (0.87) Source: EOX Live Tetco M2 Platts Tetco Market Zone 2 daily and monthly survey of all receipts from the Illinois-Indiana state line to Lewisville, Ohio, and from the Tennessee-Kentucky state line Westmoreland County, Pa., on Texas Eastern Pipeline. Current takeaway capacity from Leidy: N/A Outlook and basis view: We hold a neutral view on Tetco M2 forwards given worries about pipeline utilization further downstream. We view this as bearish Tetco M2, but increased Gulf Coast LNG export or petrochemical demand would add significant upside to basis prices. Exhibit 16 Tetco M2 Current Forwards $/mmbtu January (0.63) (0.57) (0.49) (0.51) February (0.59) (0.55) (0.47) (0.49) March (0.80) (0.56) (0.48) (0.50) April (1.09) (0.89) (0.70) (0.56) May (1.18) (0.99) (0.81) (0.67) June (1.17) (0.98) (0.79) (0.66) July (1.00) (0.79) (0.58) (0.42) August (1.02) (0.81) (0.60) (0.45) September (1.19) (1.00) (0.81) (0.67) October (1.14) (0.93) (0.73) (0.59) November (1.02) (0.66) (0.59) (0.61) (0.58) December (0.68) (0.61) (0.53) (0.55) (0.52) Average (0.85) (0.92) (0.77) (0.63) (0.55) Source: EOX Live

15 Page 15 of 28 Dominion South Platts Dominion South daily and monthly survey of deliveries into Dominion Transmission mainlines. One line from Warren County, Ohio, merging with the second line northeast of Pittsburgh. The second line from Buchanan County, Virginia, on the Virginia/West Virginia border north to Armstrong County, Pennsylvania. Current max takeaway capacity in zone: 800 mmcf/d in Greene County, Pa. Outlook and Basis View: Dom South will be the most important basis point to watch given the approximately 10 bcf/d increase in takeaway capacity at the hub by At the same time, much of the 11 bcf/d increase in Marcellus and Utica production will be dumped into Dom South. Therefore, downstream demand and the utilization of pipeline capacity out of Dom South will be important for basis improvement. We agree with the forward curve and do see some basis improvement but worry about downstream demand. Much of the pipeline build-out out of Dom South was financed by producers and not downstream demand; therefore, producers still need to find a home for a lot of this gas. Exhibit 17 Dominion South Current Forwards $/mmbtu January (0.84) (0.71) (0.61) (0.57) February (0.77) (0.69) (0.58) (0.54) March (0.92) (0.70) (0.60) (0.56) April (1.08) (0.94) (0.74) (0.57) May (1.19) (1.05) (0.86) (0.71) June (1.16) (1.02) (0.82) (0.66) July (1.00) (0.85) (0.63) (0.45) August (1.03) (0.88) (0.66) (0.49) September (1.21) (1.07) (0.87) (0.72) October (1.15) (1.00) (0.79) (0.63) November (1.15) (0.80) (0.71) (0.68) (0.64) December (0.87) (0.74) (0.64) (0.61) (0.57) Average (1.01) (0.99) (0.86) (0.70) (0.59) Source: EOX Live TGP Zone 4, 300 Leg Platts Tennessee Gas Transmission Zone 4, 300 leg daily and monthly survey of all deliveries from Tioga to Susquehanna counties in Pennsylvania. Current max takeaway capacity in zone: 1,420 mmcf/d in Bradford County, Pennsylvania. Outlook and basis view: Prices at this basis delivery are bullish given the many pipeline projects in the queue pulling on this zone, but these projects moving gas into New England face the highest cancellation risk. Northeast Energy Direct, Access Northeast, and New Jersey Resources' PennEast delays or cancellation would be bearish for this zone.

16 Page 16 of 28 Exhibit 18 TGP Zone 4, 300 Leg Current Forwards $/mmbtu January (1.04) (0.81) (0.71) (0.67) February (0.96) (0.72) (0.61) (0.58) March (1.09) (0.86) (0.77) (0.73) April (0.99) (0.83) (0.62) (0.47) May (1.12) (0.97) (0.78) (0.64) June (1.10) (0.94) (0.74) (0.60) July (0.95) (0.78) (0.55) (0.39) August (0.99) (0.82) (0.60) (0.44) September (1.15) (0.99) (0.79) (0.65) October (1.29) (1.09) (0.92) (0.71) (0.56) November (1.31) (1.15) (1.07) (1.05) (1.01) December (1.04) (0.82) (0.72) (0.69) (0.65) Average (1.21) (1.04) (0.87) (0.72) (0.62) Source: EOX Live TGP Zone 4, 200 Leg Deliveries into Tennessee Gas Pipeline on the 200 line in Pennsylvania and Ohio. Current max takeaway capacity in zone: 1,156 mmcf/d at Station 254. Outlook and basis view: The TGP backhaul projects to move TGP Z4, 200 leg gas south should help put a small bid on basis, but the forward curve has already priced in $0.30-$0.50/mmBtu improvement by We see bearish risks here from backhaul utilization. Exhibit 19 TGP Zone 4, 200 Leg Current Forwards $/mmbtu January (0.59) (0.36) (0.26) (0.22) February (0.51) (0.27) (0.16) (0.13) March (0.64) (0.41) (0.32) (0.28) April (0.74) (0.57) (0.36) (0.22) May (0.87) (0.72) (0.52) (0.39) June (0.84) (0.69) (0.48) (0.34) July (0.70) (0.52) (0.29) (0.14) August (0.74) (0.56) (0.34) (0.19) September (0.89) (0.74) (0.53) (0.39) October (1.03) (0.83) (0.67) (0.45) (0.31) November (0.86) (0.70) (0.62) (0.60) (0.56) December (0.59) (0.37) (0.27) (0.24) (0.20) Average (0.83) (0.70) (0.53) (0.38) (0.28) Source: EOX Live

17 Page 17 of 28 TCO (Columbia Gas), Appalachia Platts Columbia Gas Transmission daily and monthly survey of deliveries in eastern Kentucky, eastern Ohio, West Virginia, Pennsylvania, northern Virginia, and western New York. Current max takeaway capacity in zone: 2,162 mmcf/d in Wayne County, West Virginia. Outlook and basis view: The forward curve is correctly in contango at the TCO pool. We see a downside risk to TCO as Dom South and TCO pool move closer to pricing parity with the pipeline build-out. Exhibit 20 TCO Columbia Gas, Appalachia, Current Forwards $/mmbtu January (0.18) (0.28) (0.32) (0.34) February (0.17) (0.28) (0.32) (0.34) March (0.22) (0.28) (0.32) (0.34) April (0.14) (0.26) (0.31) (0.29) May (0.15) (0.26) (0.31) (0.29) June (0.15) (0.27) (0.32) (0.30) July (0.16) (0.27) (0.32) (0.31) August (0.18) (0.29) (0.35) (0.33) September (0.27) (0.38) (0.43) (0.41) October (0.26) (0.38) (0.42) (0.41) November (0.17) (0.23) (0.26) (0.28) (0.28) December (0.17) (0.23) (0.27) (0.29) (0.29) Average (0.17) (0.19) (0.29) (0.33) (0.33) Source: EOX Live

18 Page 18 of 28 Marcellus Pipeline Projects Exhibit 21 Major Eastern Pipeline Projects Source: Morningstar Marcellus Pipeline Projects: East Tuscarora Lateral (in service November 2015) This National Fuel pipeline expansion will help move 63 mmcf/d from existing Empire pipeline infrastructure in the dry gas region of Susquehanna County in Pennsylvania northwest to the Tuscarora Compressor Station in New York. The gas will then move southwest to Ellisburg, Pennsylvania. Niagara Expansion (November 2015) TGP signed a 15-year firm transport agreement with National Fuel to ship 158 mmcf/d of current gas supply along TGP's infrastructure in Marcellus to the TransCanada Pipeline in Niagara County, New York. Eastside Expansion (November 2015) Columbia's Eastside Expansion Project will move gas from Chester County, Pennsylvania, to Gloucester, New Jersey, and have a maximum capacity of 312 mmcf/d. This project is an example of an expansion,

19 Page 19 of 28 similar to Transco Rockaway, that doesn t necessarily improve takeaway capacity out of the market and mostly helps redistribute gas that s already made it past important constraints. Transco Leidy Southeast (December 2015) We believe that this expansion along the Transcontinental Gas Pipeline in Pennsylvania and New Jersey will place bearish pressure on Transco Z6 (non-ny) basis prices along the curve in The project will add 30 miles of pipe segments, or loops, to the Transcontinental Gas Pipeline network, increasing transmission capacity 525 mmcf/d. The loops and modifications will be installed along the segment of Transco from Luzerne County, Pennsylvania, to Mercer County, New Jersey. The Transco-Leidy line transports only 250 mmcf/d into Transco Z6, so this expansion will triple capacity and dump the much cheaper Leidy gas into Transco Z6 (non-ny) in New Jersey. Constitution Pipeline (July 2016) This 120-mile project is bullish on TGP Z4 and Leidy basis and bearish on Iroquois and AGT basis. Algonquin still has not expanded takeaway capacity on its system, but we believe this project should put significant bearish pressure on basis because of the extreme premium on the AGT forward curve. Constitution will connect the Iroquois and Tennessee Gas pipeline system. The pipeline will transport 500 mmcf/d of Marcellus production northeast to Canada and New England. This project, along with the completed Laser northeast gathering system and Springville pipeline, will form a large interstate pipeline system known as the Susquehanna Supply Hub that will be capable of transporting more than 3 bcf/d to demand in the Northeast. The Wright Interconnect will connect the Iroquois and Algonquin systems to the cheaper Leidy and TGP Z4-300 leg gas and will put downward pressure on Iroquois and Algonquin basis. Although the interconnect is bearish Algonquin, it will not solve the physical deliverability problem in New England. Northern Access (November 2016) This project will be bullish on the TGP Z4-300 leg in the Marcellus and bearish on the TGP Z4-200 leg. Empire and National Fuel Gas Supply will lay greenfield and brownfield pipeline to bring 140 mmcf/d of Marcellus supply in McKean County, Pennsylvania, north to connect with the TransCanada pipeline system. The pipeline will also connect with the Tennessee Gas Pipeline on the 200 leg and make its way to New England. Capacity along the current Empire pipeline is 350 mmcf/d in Pennsylvania and 655 mmcf/d from Ontario to New York. Algonquin Incremental Market (November 2016) AIM will certainly be bearish for Algonquin. Current capacity on Algonquin ranges from 705 mmcf/day in New England to 1,475 mmcf/d in New Jersey. This expansion will increase flows by as much as 342 mmcf/d at certain constraint points. Construction has already begun. New Market Project (November 2016) Dominion's $159 million project will simply add 33,000 horsepower of compression to current infrastructure in New York. The project will allow 84 mmcf/d of Marcellus gas to flow upstate toward Syracuse.

20 Page 20 of 28 Garden State Expansion (November 2016, August 2017) This Williams' interconnection project will pull on Transco Mainline and will be bullish Transco Z6 (non- NY). The project will provide firm capacity from Station 210 Pooling Point in Somerset County, New Jersey, and flow gas south to Burlington County, N.J. This project increases flows to Public Service Enterprise Group, which will be bearish Transco Z6 (NY) deliveries. This project will be completed in two phases. Connecticut Expansion (November 2016) Kinder Morgan will upgrade its system in New England to flow an incremental 72 mmcf/d to Tennessee Gas Pipeline. The expansion is set to be completed before winter , adding loops in New York, Massachusetts, and Connecticut. Valley Lateral (April 2017) This expansion is bullish Millennium pipeline deliveries as it delivers the Marcellus gas to new power demand at CPV Valley Energy Center in Wawayanda, New York. The 650 MW plant is scheduled to be on line by summer 2017 and will burn 130 mmcf/d. Iroquois SoNo (November 2017) Iroquois will not open firm bidding on this project until Constitution gains all approvals and moves forward, since bidders need firm Constitution gas to flow on this reversal. This project is neutral Iroquois basis because the pipeline sits between two extremely constrained regions. Either way the gas flows, north or south, the pipeline will be at full capacity in the winter. However, the bearish flows from Constitution and Dominion pipelines will put downward pressure on basis in the region. The project will reverse the flow of the current pipeline to move gas north toward Waddington, New York, and into Ottawa, Ontario, Canada. As Canadian supplies have fallen and Marcellus gas has ramped up during the past five years, Iroquois made the logical move to reverse the flow on this pipeline. Now that Iroquois will have direct and indirect interconnects to the Marcellus Shale through Dominion and Constitution pipelines, cheaper gas should be able to flow north to more supplyconstrained Ottawa. However, the SoNo reversal will be able to move only 350 mmcf/d north to Ottawa of the 1,350 mmcf/d that other pipeline expansions will connect with Iroquois. The Constitution pipeline will carry 650 mmcf/d to the Wright, New York, interconnects; the Dominion pipeline will carry 250 mmcf/d to the Canajoharie, New York, interconnects; and the existing interconnect at Algonquin will provide 450 mmcf/d after the AIM expansion. Current capacity on the pipeline flowing south is 866 mmcf/d in New York and 520 mmcf/d in Connecticut. NJR PennEast (November 2017) PennEast is one of the more important pipeline projects coming on line to help find Marcellus gas new markets farther south. The joint project is being financed by AGL Resources, New Jersey Resources, Public Service Enterprise Group, South Jersey Industries, Spectra, and UGI. This 30-inch, 1,000 mmcf/d greenfield pipeline originates in Luzern County, Pennsylvania, and ends at Transco s Trenton-Woodbury interconnection in New Jersey. This project will improve takeaway capacities near the Leidy hub and improve pricing power for suppliers in the region, supporting Transco-Leidy and TGP Z4 basis. Most

21 Page 21 of 28 importantly, this project will add significant bearish pressure to winter Tetco M3 and Transco Z6 (non- NY). Atlantic Bridge Project (November 2017) Spectra has ratcheted down this expansion project to 132 mmcf/d along Algonquin and Maritimes & Northeast pipeline because of insufficient firm gas demand in New England. Because New England is short gas, this project (although small) should have a large impact on winter gas pricing in the region. Although the forward Algonquin curve is steeply backwardated in future winters, we still expect bearish pressure to continue due to AIM and Atlantic Bridge pipelines as well as bearish global LNG prices. This project is scheduled to be completed before winter New York Bay Expansion (November 2017) This Williams' expansion project will send 115 mmcf/d of incremental supply to National Grid in Transco Z6 (NY). Although bearish New York deliveries, we expect this project to further increase oil-to-gas switching in the region and some of the increased supply will be met with increased demand. Transco Rockaway Lateral should see higher utilization once this project is complete. Transco Diamond East (June 2018) This large 1,000 mmcf/d project is designed to bring more Transco-Leidy gas south to the market pool at Station 2010 in New Jersey. The expansion will include 50 miles of pipeline loops to add capacity farther south to power plant projects and LDC. If completed in 2018, the project would be bullish Transco-Leidy gas deliveries and bearish downstream markets. Northeast Energy Direct (November 2018) Kinder Morgan has proposed a large expansion project in New England that will be between 600 mmcf/d and 2,200 mmcf/d. Open seasons were completed March 28, and the project generated significant interest from local gas distribution companies, generators, producers, and industrial end users. While we expect the project to be financed on the lower end of the estimates, a 600 mmcf/d expansion of the current pipeline would still be very bearish for Tennessee Z6 basis and bullish for Tennessee Z4 basis. The proposal is a 117-mile greenfield pipeline constructed into Wright, New York, where it would connect with the existing TGP pipeline. Another greenfield pipeline would cut across from New York into Dracut, Massachusetts, adding a new route for supplies into the constrained Boston region. Brownfield projects would expand the current pipeline by adding loops and laterals along the TGP 200 and TGP 300 lines. This project faces high cancellation risk given its viability and environmental and residential concerns. Access Northeast (November 2018) The joint expansion by Spectra, National Grid, and Eversource Energy will provide up to 1,000 mmcf/d to New England gas generators. This project has large financing risk as it is the first project in New England designed specifically for power generators and will therefore be financed by electric distribution companies. Current proposals allow for costs to be rolled into electric distribution rates, an effective

22 Page 22 of 28 subsidy for the pipeline developers. Massachusetts and Connecticut legislatures have not favored these types of rate schemes historically. Tetco A2M (November 2018) Spectra's Appalachia-to-Market expansion is scalable up to 1 bcf/d. This should be bearish Tetco M3 and Algonquin deliveries. Shippers will flow the gas from Berne, Ohio, to Tetco M3 and Algonquin. Marcellus Projects: South Southside VA Expansion I (in service September 2015) Williams' recently completed expansion from the Transco pipeline will increase flows east in Virginia by 270 mmcf/d and supply Dominion's new 1,300 MW Brunswick combined-cycle plant scheduled to come on line in The increased supply will also service Piedmont Natural Gas in North Carolina. The project is bullish Transco Z5 because of the increased demand in the market zone. Ohio-Louisiana Access Project (June 2016) Texas Gas will reverse flow along current transmission to allow for 626 mmcf/d of Marcellus gas to flow south toward LNG export facilities. It likely will be bullish Dom South and Tetco M2 deliveries. Sabine Pass LNG owns 300 mmcf/d of the firm service, so we expect strong utilization of this pipeline once it's on line. Northern Access Supply Project (April 2017) This is another Texas Gas project scheduled to bring Marcellus and Utica gas south toward new market demand as well as southern power projects. The successful binding open season secured bids for another 225 mmcf/d of firm capacity moving gas south from Ohio to Texas Gas Zone 1 and SL. Atlantic Sunrise (July 2017) The Atlantic Sunrise project will move dry Leidy gas directly south via a new greenfield pipeline to the existing Transco mainline in Zone 6. After the gas connects with the mainline, it will move south toward Atlanta or north toward heating demand in New York City. This project will be bullish Leidy gas and bearish Transco Z6 (non-ny). The proposed pipeline will have a maximum capacity of 1,700 mmcf/d. Southside VA Expansion II (December 2017) Like the first Southside expansion, Southside VA Expansion II will provide firm gas supply to a new, 1,580 MW combined-cycle power plant in Greensville County, Virginia. The project will be bullish Transco Z5 deliveries as it pulls on the Transco mainline. The project is scheduled to come on line before the power plant comes on line in June EQT Mountain Valley (November 2018) EQT will construct the Mountain Valley Pipeline to run from northwestern West Virginia to southern Virginia as a joint venture with NextEra, WGL Midstream, and Vega Midstream. The pipeline will extend the Equitrans transmission system down to Transco Z5 in Pittsylvania County, Virginia. The project has a proposed capacity of 2,000 mmcf/d, and the gas will probably flow farther south along Transco as well as along the two Virginia Southside Expansions. Flows should be bullish Dom South and bearish Transco

23 Page 23 of 28 Z5. The Ohio Valley Connector will connect with the Mountain Valley pipeline to bring the shale gas farther downstream to the Transco mainline. Appalachian Connector (November 2018) Williams is in the planning stages of the Appalachian Connector project that would move western Marcellus to the Transco mainline for southern and northern flow. The connector will move up to 2,000 mmcf/d directly from the western Marcellus and would be bullish Dom South and bearish Transco Z5. Atlantic Coast (November 2018) Dominion's Atlantic Coast pipeline will move 1,500 mmcf/d of Marcellus and Utica gas from current infrastructure in Harrison County, West Virginia, southeast to new demand markets in Virginia and North Carolina. The 550-mile pipeline is being financed by Duke Energy, Piedmont Natural Gas, AGL Resources, and Dominion to encourage new combined-cycle generation as well as gas use for industrial and home consumption. Marcellus Projects: West Rex Zone 3 Reversal (in service August 2015) Tallgrass Energy reversed the flow on the Rex pipeline, adding up to 1.2 bcf/d of incremental takeaway capacity from the Utica and Marcellus shales. However, this pipe will take time to fill as a result of upstream and downstream constraints and testing. Rex Z3 firm shippers include American Energy (550 mmcf/d), Rice Drilling (175 mmcf/d), EQT Energy (300 mmcf/d), Gulfport Energy (175 mmcf/d) for a total of 1.2 bcf/d. This project, once fully utilized, will be bullish Dom South and bearish midcontinent deliveries like Chicago Citygates. Tetco Open (September 2015) Spectra has brought on line the Ohio pipeline earlier than scheduled. This backhaul project will deliver 550 mmcf/d of wet Utica gas to states south from Ohio to Louisiana. This project is specifically capitalizing on new incremental gas coming from the Utica Shale. Chesapeake Energy, Total Gas, Consol Energy, and Rice Energy own the firm capacity to move the gas to market downstream flowing on Texas Eastern mainline. This project will add more bearish pressure to Henry Hub, as flows will be met by new production out of the Utica. Uniontown to Gas City (September 2015) This Tetco project will move gas from the Uniontown midcontinent supply as it adds 425 mmcf/d of increased supply onto the Texas Eastern system. The flows out of Uniontown should be bullish Tetco M2 gas prices. Binding shippers are EQT, Consol Energy, Rice Energy, Range Resources, and East Resources. Firm service along this route was relatively cheap at around $6.35/dekatherm-month. Line N West Side Expansion (November 2015) National Fuel Gas will expand its existing Line N to move gas north from Washington County, Pennsylvania, to Beaver County, Pennsylvania. This 175 mmcf/d expansion will likely move the gas farther north along National Fuel's current system toward the TransCanada pipeline.

24 Page 24 of 28 ANR Sulfur Springs (November 2015) This is a simple compressor upgrade at ANR's compressor station in Sulfur Springs that provides an additional 133 mmcf/d of firm capacity for reserves upstream of the lateral already completed. Gas will flow to ANR's Southeast mainline to market. Consol and Rice Drilling own the firm transmission. TGP Backhaul Broad Run (November 2015) The TGP expansion project moving gas from Broad Run south into Gulf Coast pricing was 100% subscribed by Antero Resources. This gives Antero the option of marketing the gas at more favorable Henry Hub pricing or transact with an LNG exporter. This expansion will move 352 mmcf/d of wet gas south along TGP current transmission and is likely to be fully utilized on inception. ANR Glen Karn (November 2015) This expansion project will increase flows from the interconnect at Glen Karn, Ohio, to delivery points along ANR's system to the west. Glen Karn-to-ANR flows will increase by as much as 133 mmcf/d along this route. Gulf Markets Expansion Phase I (November 2016) Spectra's Gulf Markets Expansion will come in two phases, with the first scheduled to come on line in November Expansion capacity in the first phase will be 250 mmcf/d. This project is important because it is has firm commitments from the Cameron LNG export facility on the Gulf Coast. Flows south along Texas Eastern M2 will be bullish Tetco M2. ETP Rover (November 2016) ETP Rover project will move 3,000 mmcf/d of eastern Ohio supply across the state for delivery to Michigan markets and Dawn Hub in Canada. The balance of the gas will interconnect with other interstate pipelines to move southwest to market along the Panhandle and Trunkline pipelines. This phase of the project is fully subscribed. The 20-year firm capacity did not come cheap: It will cost $0.80/dekatherm-day to move the gas to Dawn Hub and $0.82/dekatherm-day to get the gas to Trunkline. The three largest shippers on this project are American Energy, Antero Resources, and Range Resources. Rex Zone 3 Capacity Enhancement EQT, Dominion, ETC Rover Receipts (November 2016) After Tallgrass Energy east-to-west flows began in June 2015, market access will step up as more marketers gain access to western flows on the pipeline. Anticipated design capacity at the new receipt points will be 1,200 mmcf/d (EQT) in Monroe County, Ohio, beginning in March 2016; 300 mmcf/d (Dominion) also at Monroe County; and 400 mmcf/d (ETC Rover) in November Flows should be bullish Dom South as it looks like much of this capacity could be backfilled. ANR Southline expansion will fill as this project is completed to help fill Cameron LNG export trains. Leach Xpress (June 2017) Columbia's construction of the 160-mile Leach Xpress pipeline will move 1,500 mmcf/d of Marcellus and Utica supply to Gulf Coast markets. The goal for firm shippers Range Resources, Noble Energy, and American Energy is eventually to find firm sales from LNG export facilities. Leach Xpress will connect