Energy Lender Price Survey Q3 Q3/15 Overview We are pleased to present Macquarie Tristone s Quarterly Energy Lender Price Survey, a commodity pricing poll of energy reserve-based lenders. Our survey of energy lenders price forecasts covers a broad spectrum of regional, U.S. national and international banks that engage in energy reserve-based lending ( Participating Banks ). This quarter s survey represents a collection of data from 40 Participating Banks during the time period from August 1st-15th. Base Case Results For, the Q3/15 Survey indicates a mean Base Case West Texas Intermediate ( WTI ) oil price forecast of $48.17/BBL and a mean Base Case Henry Hub ( HH ) gas price forecast of $2.82/MMBtu. Our survey of Brent-based oil price forecasts shows a mean Base Case Brent of $51.41/BBL for. The five-year trend shows an increasing forward price deck for oil and gas, with average price forecasts of $63.77/BBL (WTI), $67.29/BBL (Brent) and $3.51/MMBtu (HH). Thirty percent of respondents do not escalate prices past and prices are capped at means of $70.13/BBL (WTI), $72.83/BBL (Brent) and $4.23/MMBtu (HH). The average discount rate used by Participating Banks is 9% for Base Case WTI, Brent and HH, unchanged from last quarter s average. Operating costs on average are escalated 0.3% per year for WTI and Brent and 0.4% for HH. Participating Banks consider proved reserve categories to different extents, but lenders which only consider proved developed producing reserves average an advance rate of approximately 65%. 3rd Quarter Price Survey: Mean of 40 Participating Banks Base Case Oil ($/BBL) - WTI Oil ($/BBL) - Brent¹ Gas ($/MMBtu) - Henry Hub 48.17 51.41 2.82 54.18 58.73 3.04 58.46 62.65 3.23 61.59 65.31 3.38 63.77 67.29 3.51 2020+ Esc. 1.3% 1.3% 1.7% Cap 70.13 72.83 4.23 LOE Esc. 0.3% 0.3% 0.4% Discount Rate 9% 9% 9% Macquarie Capital PAGE 1
Current WTI Oil Pricing Base Case ($/BBL) $43.00 $48.17 $46.85 $48.17 $48.84 $50.30 $55.00 $54.18 $62.50 $58.46 $61.59 $63.77 $70.00 $75.70 $79.20 Current Brent Oil Pricing Base Case ($/BBL) 1 $46.00 $51.41 $51.00 $55.50 $58.73 $65.50 $56.00 $62.65 $68.00 $58.00 $65.31 $70.50 $61.00 $67.29 $73.00 Current HH Pricing Base Case ($/MMBtu) $1.50 $2.50 $4.50 $2.40 $2.82 $2.65 $3.04 $2.80 $2.84 $3.00 $3.23 $3.38 $3.51 $3.75 PAGE 2 Macquarie Capital
Base Case to NYMEX Trends Base Case Q3/15 vs. NYMEX as of July 15, We compared the average Base Case against NYMEX futures pricing as of July 15,, as shown below. Base Case results for WTI average 92% of NYMEX WTI futures in, and Base Case results for Brent average 98% of NYMEX WTI futures in. Base Case results for WTI average 98% of NYMEX WTI futures over the five-year strip from -, and Base Case results for Brent average 104% of NYMEX WTI futures over the five-year strip from -. $70.00 $60.00 $/BBL $50.00 $40.00 Base Case WTI 3Q/15 Base Case Brent 3Q/15 NYMEX WTI Futures as of July 15, When compared with NYMEX futures pricing, the average Base Case results for gas were 94% of NYMEX HH futures in and 97% of NYMEX HH over the five-year strip from -. $/MMBtu $3.00 $2.50 Base Case HH 3Q/15 NYMEX HH Futures as of July 15, Macquarie Capital PAGE 3
Quarter-to-Quarter Trends Quarter-over-Quarter Pricing Trends Base Case Compared to last quarter s Survey, front-year pricing decreased by 5.6%. The average change in pricing for the five years is downwards -4.9% for WTI and downwards -2.2% for HH. Q2/15 Q3/15 % Increase/ (Decrease) Q2/15 Q3/15 % Increase/ (Decrease) Q2/15 Q3/15 % Increase/ (Decrease) Front-Year 51.01 48.17-5.6% 52.66 51.41-2.4% 2.82 2.82 0.0% Second-Year 57.68 54.18-6.1% 59.98 58.73-2.1% 3.10 3.04-1.7% Third-Year 61.59 58.46-5.1% 63.90 62.65-2.0% 3.32 3.23-2.7% Fourth-Year 64.36 61.59-4.3% 66.81 65.31-2.2% 3.50 3.38-3.2% Fifth-Year 66.20 63.77-3.7% 68.79 67.29-2.2% 3.63 3.51-3.3% Sixth-Year and Beyond 1.2% 1.3% N/A 1.3% 1.3% N/A 1.5% 1.7% N/A Cap 72.40 70.13-3.1% 74.50 72.83-2.2% 4.35 4.23-2.7% in Q3/15 Oil ($/BBL) - WTI Oil ($/BBL) - Brent¹ Gas ($/MMBtu) - Henry Hub Quarter-to-Quarter Base Case Oil (WTI) and Gas (HH) Pricing Trends $85.00 $75.00 $/BBL $65.00 $55.00 $45.00 Q4/14 Q1/15 Q2/15 Q3/15 $4.50 $/MMBtu $3.00 $2.50 Q4/14 Q1/15 Q2/15 Q3/15 PAGE 4 Macquarie Capital
Sensitivity Case Results The Q3/15 Survey also includes a Sensitivity Case, which represents the lenders low or conservative price decks. Of the 40 Participating Banks, 40 banks provided a Sensitivity Case for WTI and 39 banks provided a sensitivity case for HH, which averages a 18% discount to Base Case lending policies for WTI and 17% discount to Base Case lending policies for HH over the five-year strip. Four banks provided a Sensitivity Case for Brent, which averages a 16% discount to the Base Case pricing over the five-year strip. 3rd Quarter Price Survey: Mean of Participating Banks Sensitivity Case Oil ($/BBL) - WTI Oil ($/BBL) - Brent¹ Gas ($/MMBtu) - Henry Hub 39.63 43.56 2.32 44.30 49.93 2.51 47.53 52.35 2.67 50.11 55.06 2.81 51.76 56.09 2.90 2020+ Esc. 1.4% 1.8% 1.5% Cap 56.26 64.18 3.44 LOE Esc. 0.4% 0.4% 0.5% Discount Rate 9% 9% 9% Macquarie Capital PAGE 5
Current Oil (WTI) Pricing Sensitivity Case ($/BBL) $32.00 $39.63 $55.00 $37.12 $44.30 $64.00 $37.80 $47.53 $68.00 $37.80 $50.11 $72.00 $37.80 $51.76 $75.00 Current Oil (Brent) Pricing Sensitivity Case ($/MMBtu) 1 $36.00 $43.56 $47.18 $41.00 $43.00 $49.93 $52.35 $55.68 $57.80 $46.00 $46.00 $55.06 $56.09 $59.93 $62.05 Current Gas Pricing Sensitivity Case ($/MMBtu) $1.50 $2.50 $4.50 $1.82 $2.32 $2.51 $2.67 $2.81 $2.90 $3.75 PAGE 6 Macquarie Capital
Participating Banks Macquarie Tristone thanks the following banks for their participation in this quarter s survey. Amegy Bank of Texas Capital One, N.A. FirstCapital Bank of Texas, N.A. Regions Bank BancFirst CIT Frost Bank Santander Bank Bank of Texas Citi IBERIABANK Société Générale Bank SNB Citibank Independent Bank SunTrust Bank BB&T Comerica Bank ING Capital LLC Texas Capital Bank BBVA Compass Community National Bank Mizuho Bank, Ltd. TD Securities BDC Crédit Agricole Natixis US Bank BMO Capital Markets DNB Bank ASA NBH Bank, N.A. Wells Fargo Cadence Bank First Interstate Bank Platinum Bank West Texas National Bank Canadian Western Bank First Tennessee Bank RBC Capital Markets Whitney Bank About Macquarie Tristone Macquarie Tristone has completed more than 300 energy asset packages valued at over US$28 billion since 2001. As a leading A&D team, we provide advisory services in energy asset transactions worldwide to a range of clients in the oil and gas energy industry. With a sophisticated suite of asset divestiture processes, coupled with superior senior-level industry relationships, Macquarie Tristone brings together an unparalleled combination of disciplines in engineering, geoscience and economics. Macquarie Tristone s expertise extends across all phases of the divestiture process, including, deal strategy, financial and value analysis, technical evaluations, buyer identification and qualification, and other dealrelated logistics. Combined with Macquarie's global resources activities, the result is a seamless, integrated offering, providing top-tier financial and execution experience with superior, specialized technical expertise. Contact Information www.macquarietristone.com Rob Bilger Vice Chairman Rob.Bilger@macquarie.com 713-651-4222 Krishna Desai Associate Krishna.Desai@macquarie.com 713-651-4215 Disclaimer "Macquarie Capital" refers to Macquarie Corporate Holdings Limited, its worldwide subsidiaries and the funds or other investment vehicles that they manage. Macquarie Corporate Holdings Limited is an indirect, wholly-owned subsidiary of Macquarie Group Limited. This document and its contents are confidential to the person(s) to whom it is delivered and should not be copied or distributed, in whole or in part, or its contents disclosed by such person(s) to any other person. 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