WORLD CRUDE OIL AND NATURAL GAS MARKETS: BEARS, BULLS AND EVERYTHING IN BETWEEN

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1 WORLD CRUDE OIL AND NATURAL GAS MARKETS: BEARS, BULLS AND EVERYTHING IN BETWEEN Martin King Director, Institutional Research October 2, 218 Data and closing prices as of September 28, CRUDE OIL CURRENT STATE OF THE MARKET After summer lull, market is pricing in greater than expected loss of Iranian supplies. OPEC+ has reversed supplies higher, but tapped out in the short term. U.S. supply growth on the cusp of deceleration. Global oil demand holding up well in face of trade frictions, EM currency depreciations. Inventories have reset sharply lower and below 5-year averages. Setting up for price spikes? $1+ for Brent? Nymex WTI Near Month Crude Oil Prices US$/bbl $9 $8 $7 $6 $5 $4 $3 $2 Jan Mar May Jul Sep Nov Jan $9 $8 $7 $6 $5 $4 $3 $2 ICE Brent Near Month Crude Oil Prices US$/bbl $9 $8 $7 $6 $5 $4 $3 $2 Jan Mar May Jul Sep Nov Jan $9 $8 $7 $6 $5 $4 $3 $2 2 1

2 BACKWARDATION PERSISTS AND BECOMING ENTRENCHED Tighter market, driven by Iran worries, has returned with full backwardation for Brent. Forward curves may have to steepen to incentivize demand slowing and draw more barrels from inventories. WTI Forward Pricing Curves US$/bbl Mar. 28, 218 $77 $74 Jun. 28, 218 $71 Aug. 28, 218 $68 Sep. 28, 218 $65 $62 $59 $56 $53 $5 M1 M7 M13 M19 M25 M31 M37 M43 M49 M55 Nymex & Brent Contango/Backwardation US$/bbl Nymex M1 Less M12 $12 Brent M1 Less M12 $9 $6 $3 $ ($3) ($6) Jan-17 Jun-17 Nov-17 Apr-18 Sep-18 Brent Forward Pricing Curves US$/bbl Mar. 28, 218 $84 Jun. 28, 218 $8 Aug. 28, 218 $76 Sep. 28, 218 $72 $68 $64 $6 $56 M1 M7 M13 M19 M25 M31 M37 M43 M49 M55 3 MARKET POSITIONING No clear causal relationship exists between managed money and prices, but market positioning is not excessive at this stage. The positive roll yield has not driven more holdings of the USO. Options market has become very active ($1 Brent calls!). Nymex Managed Money vs. WTI Price thou. lots $2 Jan-16 Sep-16 May-17 Jan-18 Sep-18. Net Positions Front Month Price US$/bbl $8 $7 $6 $5 $4 $ USO Fund Open Interest vs. Nymex WTI Million Units USO Shares Jan-16 Sep-16 May-17 Jan-18 Sep-18 thou. lots WTI ICE Managed Money vs. Brent Price US $/bbl $8 $7 $6 $5 $4 $3 $2 $1 $ Jan-16 Sep-16 May-17 Jan-18 Sep-18 Net Positions Front Month Price $9 $8 $7 $6 $5 $4 $3 $2 $1 $ 4 2

3 THE THREE PILLARS OF SUPPLY THREATS We have been emphasizing what we think are three major supply threats that the market has to deal with, some more immediate than others: 1. Iran (U.S. sanctions take full effect on November 4). 2. Venezuela (total implosion is nearing). 3. U.S. supply growth deceleration (Permian egress, productivity issues, cost issues, etc.) 5 IRAN FACING UP TO SANCTIONS President Trump backed out of the JCPOA in May 218. Re-imposition of full economic and oil sanctions for November 4. Iran vows to move ahead with little impact. EU and Russia trying to establish an alternate payments scheme. Reality is that exports and supplies are contracting faster than expected and may drop to levels seen in prior sanctions (212-16). Losses could be well in excess of 1 million bbl/d We are assuming that Iran returns by 22; market will be too tight. Iran Crude Oil Supply 4, 3,8 3,6 3,4 3,2 3, 2,8 2,6 2,

4 VENEZUELA IS HEADED TO THE ABYSS Years of corruption, state control and lower oil prices have sealed the fate of Venezuela. The end is very near for total collapse of the government and any form of organization full para-military state emerges? Only real question is, how low will production fall when the collapse takes place? Near zero? Sharp collapse will trigger price spike. We are assuming supplies bottom out at 75 thousand bbl/d. Venezuela Crude Oil Supply 2,8 2,6 2,4 2,2 2, 1,8 1,6 1,4 1,2 1, ROLLOVER TO U.S. SUPPLY DECELERATION IS AT HAND Long talked about, but finally at hand as egress, rig productivity, costs have finally begun to bite back against the Permian machine. Egress looks to be the biggest problem to solve, with various views that late 219 to early 22 will bring relief. U.S. Oil Rig Count by Basin Rigs Permian Eagle Ford (RHS) 6 Bakken (RHS) Woodford (RHS) Jan-16 Jul-16 Jan-17Jul-17 Jan-18Jul-18 Jan-19 Source: GMP FirstEnergy, Baker Hughes YoY Changes in Permian Rig Productivity bbl/d/rig 4 Apr. 217 Release 3 Jul Release 1 Oct. 217 Release Mar. 218 (1) Release (2) Sep. 218 (3) Release Jan-15 Jan-16 Jan-17 Jan-18 Jan

5 OTHER U.S. BASINS CANNOT MAKE UP FOR THE PERMIAN Producers are reallocating capital to other basins. Other basins lack the size and productivity gains of the Permian and will not be able to fully offset the Permian slowdown. Moderation in supply growth longer term on basin maturities. YoY Change in Shale Oil Supply by Basin Anadarko 1, Bakken 8 Eagle Ford 6 Niobrara 4 Permian 2 (2) (4) Jan-15 Oct-15 Jul-16 Apr-17 Jan-18 Oct-18 U.S. Lower 48 Crude Oil Production 5 Yr Hi-Lo , 11, 1,5 1,5 1, 1, 9,5 9,5 9, 9, 8,5 8,5 8, 8, 7,5 7,5 7, 7, 6,5 6,5 6, 6, Jan-5 Mar-3 Jun-22 Sep-14 Dec-7 2, 1,6 1,2 8 4 (4) (8) U.S. Petroleum Supply Growth 755 1, THE RUSSIAN (SUPPLY) BEAR IS HUNGRY Russia is looking to maximize supply gains after the green light was given in OPEC+ meetings of June 218. More supplies will be coming, but it will take time and money. OPEC+ framework has proven to be a viable experiment so far. Russia, Saudi, OPEC looking to establish new and more formal supply management framework at the meetings in December; could shape Russian oil strategy well into the next decade. Russia Crude Oil Supply Russia Crude Oil Supply 11,8 3 11, , , , ,8 5 1,

6 OPEC FACING SOME SERIOUS CHALLENGES Any immediate supply upside to offset Iran is limited. Saudi, Kuwait, UAE, Iraq have some room, but the real question mark is Saudi. Libya, Nigeria or others could all reverse suddenly. OPEC 15 Crude Oil Supply 34, 33,5 33, 32,5 32, 31,5 31, 3,5 3, 29,5 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 5, 4,75 4,5 4,25 4, 3,75 3,5 3,25 3, Iraq Crude Oil Supply , 4,75 4,5 4,25 4, 3,75 3,5 3,25 3, Jan Mar May Jul Sep Nov Long Term Saudi Arabian Supply 12, 1, 8, 6, 4, 2, OPEC SPARE CAPACITY IS LIMITED Short notice spare capacity is essentially non-existent. Market starting to price in the possibility of spare capacity going to near zero. Not a real issue until it is, as lack of capacity would force deeper inventory draws. OPEC Spare Capacity (Aug. 218) Angola Congo Ecuador E. Guinea Gabon Iran Iraq Kuwait Libya Nigeria Qatar S. Arabia UAE Venezuela Estimated total spare capacity: 2.69 million bbl/d ,62 5 1, 1,5 2, thou. b/d 4, 3,5 3, 2,5 2, 1,5 1, 5 5, 4, 3, 2, 1, OPEC Effective Spare Capacity OPEC Spare Capacity Forecast Other OPEC Saudi Arabia Jan-15 Jan-16 Jan-17 Jan-18 Jan

7 CANADA AND OTHER OPEC Aside from Canada, there are little to no ready supply gains in other parts of the world. Brazil is still facing challenges unique to that country and supply growth may disappoint again. Capex growth has been limited or reduced in other regions Canada Crude Oil Supply Growth Non-OPEC Supply Excl. Canada/U.S./Russia (12) (2) (4) (287) (6) (8) (5) Brazil Crude Oil Supply (7)(2) AS ALWAYS, CANADA FACES SOME UNIQUE CHALLENGES And those challenges are made in Canada, as usual. TMX undoing is not the end of the world (not yet), but does open big questions for pipe adds in the next decade (Bill C-69). L3R, KXL and other Enbridge will enhance throughput by 1 million bbl/d. W. Canada oil supply vs. pipeline egress million bbl/d ENB mainlines current*^ (2,313) Spectra Express (224) TransMountain current* (264) Keystone current (561) Keystone XL (789) TMX (59) ENB Line 3 replacement (352).5 AB & SK refineries & industry demand (683) W. Can current rail loading capacity (1,44) Keystone XL (789) TMX (59) ENB Southern Lights reversal (143) ENB Line 4 capacity restoration (25) ENB system station upgrades (95) ENB Bakken Express pipeline idle (1) ENB system DRA optimization (75) ENB Line 3 replacement (352) Rangeland/Milk River (17) Spectra Express (224) TransMountain current* (264) Keystone current (561) ENB mainlines current*^ (2,313) AB & SK refineries & industry demand (683) W. Can total oil supply to market W. Can blended heavy oil supply to market W. Can light/med oil supply to market * net of NGLs/refined products ^ net of Bakken Express volumes (125) (223e mb/d thruput in brackets) 14 7

8 BEEN THERE, DONE THAT: PRICE SPREADS BLOWOUT (AGAIN) Midwest refinery shutdowns gave an unpleasant August surprise and market is still struggling to recover. Could be late Oct. to Nov. before real improvement is seen. Relief for high pipe use later in 219 with L3R. Enbridge Mainline Throughput and Utilization 3, 2,8 2,6 2,4 2,2 2, Throughput 1,8 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Source: GMP FirstEnergy, National Energy Board Utilization 1% 95% 9% 85% 8% 75% 7% U.S. PADD 2 Refinery Runs mm b/d 5 Yr Hi-Lo Jan-5 Mar-3 Jun-22 Sep-14 Dec-7 WTI vs. Canadian Crude Oil Prices US$/bbl WCS Ed Light Syn. Condy $1 $5 $ ($5) ($1) ($15) ($2) ($25) ($3) ($35) ($4) Jan-17 Jul-17 Jan-18 Jul RAILING HAS TO REALLY PICK UP THE SLACK There has been some pick up in railing volumes as spreads are more than attractive enough to cover even short term deals. We see 219 railing volumes in excess of 4 thousand bbl/d before L3R kicks in. Backlog needs to be cleared. Weekly Petroleum Rail Shipments in Canada 1, , Jan-6 Mar-31 Jun-23 Sep-15 Dec-8 Source: GMP FirstEnergy, CN, CP Note: Includes all petroleum products; indicative of trends only. US$/bbl $3 $25 $2 $15 $1 $5 max min $ ENB system Keystone Imperial Oil Manifest Unit train Unit train uncommitted uncommitted uncommitted uncommitted uncommitted committed variable cost total cost total cost total cost pipeline pipeline crude-by-rail crude-by-rail crude-by-rail crude-by-rail Source: GMP FirstEnergy, Imperial Oil, NEB, FERC U.S. Rail Imports of Crude Oil from Canada Forecast U.S. Imports

9 IMO 22 DEADLINE IS APPROACHING IMO 22 lowers sulfur content of bunker fuel to.5% from current 3.5% on January 1, 22. Penalizes heavy sour crude in favour of low sulfur sweet. WCS has some advantages in sophisticated refineries in NA and less competition from Mex/Ven. U.S. PADD 3 Imports of Canadian Crude US$/bbl $25 $2 $15 $1 $5 $ -$5 -$1 -$15 -$2 -$25 3.5%S 3.5%S NYH ULSD (15 ppm).5%s 3.5%S 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q2 2Q2 3Q2 4Q2 1Q21 2Q21 3Q21 4Q21 historical * where noted, US$/tonne prices have been converted to US$/bbl assuming 991 kg/m^3 for HSFO, and 84 kg/m^3 for gasoil Source:Bloomberg US$/bbl $3 $25 $2 $15 $1 $5 $ WTI-WCS Price Differential $25.92 $23. $21.5 $18.5 $ GLOBAL OIL DEMAND IS HOLDING TOGETHER Global oil demand is still holding up well despite trade frictions and maturity of economic cycle. We do think slowing will arrive in 2H19. Current indicators are still positive for numerous developed and emerging economies. Global and Regional Manufacturing Activity Global Eurozone 7 United States China 65 India Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 mmb/d World Oil Demand Growth mm bbl/d Global Refinery Crude Throughput 5 Yr. Hi-Lo J F M A M J J A S O N D

10 GDP CAN OFFSET SOME CURRENCY IMPACTS GDP growth remains strong enough to offset higher crude oil prices for now. Even US$1 oil price does not look to be as burdensome for consumers as it was in 28. Emerging economics are already resorting to subsidies/price controls. Still significant proportion of EM population that are urbanizing and shifting to higher energy intensity lifestyles. 9% 8% 7% 6% 5% 4% 3% 2% 1% % Oil Burden Versus Oil Demand Source: GMP FirstEnergy, IMF, IEA Oil Demand Oil Burden mm bbls/d (1.) (2.) Oil Demand Global GDP versus Oil Demand 6.% 4.% 2.% 216.% 29-2.% % -1.% 1.% 3.% 5.% 7.%, IMF World GDP 19 EMERGING MARKET DEMAND HAS REMAINED RESILIENT Usual drivers of income and demographics remain potent in pushing forward EM oil use. China is well into a more mature phase of oil consumption, but still has long way to go. India is just getting started in terms of its ramp up of oil use. OECD and Non-OECD Petroleum Demand mm bbl/d OECD Non-OECD Forecast Q1 215 Q1 217 Q1 219 Q1 221 Q1 Oil Demand Growth: India, China, Other Other India China mm bbl/d

11 INVENTORIES HAVE RESET MUCH LOWER Inventories poised to go even lower in near term. With limited supply options, lower Iranian supplies will force more inventory use. U.S. oil stocks could be further drained by slowing supply and big jump in oil exports. OECD Oil/Product Inventories vs. 5-Yr Avg. million bbls (5) (1) (15) (2) Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Other OECD United States Global Supply/Demand/Inventory Swing (2) (2) (4) Global Supply (4) (6) Global Demand (6) (8) Inventory Swing (8) (1,) (1,) AugSep OctNovDec Jan FebMar Source: GMP FirstEnergy,IEA U.S. Crude Oil Inventories mm bbls 5 Yr Hi-Lo Jan-5 Mar-3 Jun-22 Sep-14 Dec-7 21 COMES DOWN TO BASIC SUPPLY-DEMAND PRINCIPLES Days Global Days of Inventory Cover Days of Cover 4 Q Mov. Avg. 212 Q1 215 Q1 218 Q1 221 Q1 million bbl/d Demand 1 99 Supply (1) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q (2) Implied Stock Change mm bbl/d 2, 1, (1,) Forecast Global Inventory Swing by Quarter (2,) 214 Q1 215 Q4 217 Q3 219 Q2 221 Q

12 CRUDE OIL MARKET CONCLUSIONS We remain fundamentally bullish on primary oil price markers; price spikes are a serious possibility on sudden loss of any single large supplying country. Triple supply threat that shows no signs of abating. Demand growth holding up well, but may need much higher prices to curb growth; we expect some demand slowing into late 219. Canadian oil markets looking at slow reset and headwinds well into 219; railing and steady pipe expansions post-219 will help. Bill C-69 and TMX are long shadows on the industry. US $/bbl $1 $9 $8 $7 $6 $5 $4 $3 $2 Nymex WTI Price Outlook $5.85 $74. $68.45 $ US $/bbl $12 $11 $1 $9 $8 $7 $6 $5 $4 $3 ICE Brent Price Outlook $82. $75.17 $77. $ GMP FIRSTENERGY CRUDE OIL PRICE OUTLOOK West Texas Brent US$/bbl Old NEW Old NEW 217 Average $5.85 $5.85 $54.74 $ Q1 $62.89 $62.89 $67.23 $67.23 Q2 $67.44 $67.91 $74.42 $74.97 Q3 est. $71. $69.39 $78.33 $75.85 Q4 est. $74. $73.67 $8. $82.75 Average est. $68.83 $68.47 $75. $ Q1 est. $74. $74. $79. $82.5 Q2 est. $75. $75. $8. $83. Q3 est. $75. $75. $8. $82.75 Q4 est. $72. $72. $76. $79.75 Average est. $74. $74. $78.75 $ Average est. $7. $7. $73.5 $ Average est. $7. $7. $73.5 $77. Notes: All historical averages computed using weekday data only. ; est. refers to forecasted value

13 GMP FIRSTENERGY CANADIAN CRUDE OIL PRICE OUTLOOK Synthetic Crude Edmonton Light W. Canada Select Cdn$/bbl Old Current Old Current Old Current 217 Average $67.52 $67.52 $62.86 $62.86 $5.26 $ Q1 $79.9 $79.9 $7.65 $7.65 $46.5 $46.5 Q2 $83.12 $82.89 $78.72 $79.59 $57.73 $61.5 Q3 est. $83.79 $81.72 $78.47 $75.92 $67.39 $56.9 Q4 est. $88.84 $85.82 $83.54 $74.6 $7.28 $57.7 Average est. $83.91 $82.58 $77.85 $75.6 $6.36 $ Q1 est. $91.13 $9.3 $85.85 $81.14 $68.68 $62.82 Q2 est. $94.85 $93.99 $89.58 $87.46 $71.14 $67.88 Q3 est. $97.19 $96.6 $91.94 $91.38 $73.55 $7.49 Q4 est. $93.4 $93.4 $88.13 $88.13 $71.3 $65.77 Average est. $94.14 $93.57 $88.88 $87.3 $71.1 $ Average est. $89.2 $89.63 $84.3 $84.44 $62.7 $ Average est. $88.24 $88.33 $83.12 $83.21 $63.3 $63.36 Notes: All historical averages computed using weekday data only. ; est. refers to forecasted value. 25 NATURAL GAS CURRENT STATE OF THE MARKET Nymex natural gas prices have been largely flat over the course of 218 as demand gains have been offset by massive supply growth. Hot summer and slow storage build have had little price impact. AECO prices remain depressed, but looking to seasonal upswing as winter arrives; suffering against U.S. supply growth, TCPL Egate issues. Alberta gas storage has also been slow to rebuild, but little price worry in forward markets. Nymex is the least volatile market since 2-1. Nymex Near Month Natural Gas Prices US$/mmbtu $5. $4. $3. $2. $1. $5. $4. $3. $2. $1. $. $. Jan Mar May Jul Sep Nov Jan C$/mcf $5. $4. $3. $2. $1. $. ($1.) ($2.) ($3.) AECO Natural Gas Prices $5. $4. $3. $2. $1. $. ($1.) ($2.) ($3.) Jan Mar May Jul Sep Nov Jan Source: GMP FirstEnergy, Canadian Enerdata 26 13

14 ITS BEEN A HOT SUMMER, BUT DID IT REALLY MATTER? One of the hottest summers on record 2% hotter than last year and 3% hotter than normal. Market has yawned even as storage levels have consistently lagged over the summer on high power burn demand. Gas storage well below year ago and 5-yr. average. bcf 2,3 2, 1,7 1,4 1, (1) U.S. Weekly Cumulative Injections 5 Yr. Avg Week 1 Week 14 Week 27. 2,3 2, 1,7 1,4 1, (1) U.S. 218 Cooling Degree Days vs. Normal CDDs Mar-31 May-5 Jun-9 Jul-14 Aug-18 Sep-22 Oct-27 Source: GMP FirstEnergy, U.S. NOAA bcf 4,5 4, 3,5 3, 2,5 2, 1,5 1, Normal U.S. Working Natural Gas Storage 5 Yr. Hi-Lo ,5 4, 3,5 3, 2,5 2, 1,5 1, 5 Jan-6 Mar-31 Jun-23 Sep-15 Dec-8 27 STORAGE REMAINS LOW, BUT DOES ANYONE CARE? Traditional price/storage relationship has broken down. Big gains in power burn demand and more exports to LNG and Mexico have simply not placed a sense of urgency in prices or need to refill storage. So why no price reaction? U.S. Daily Gas Power Demand 7 day moving average Jan Mar May Jul Sep Nov Jan Source: GMP FirstEnergy, Reuters U.S. Gas Storage Surplus/Deficit bcf Year-over-Year 1,25 vs. 5-Year Average $1. 1, Nymex 75 $ (25) (5) (75) (1,) $2. $2.5 $3. $3.5 $4. Jan-16 Jan-17 Jan-18 Jan U.S. Daily LNG Liquefaction Jan Mar May Jul Sep Nov Jan Source: GMP FirstEnergy, Reuters

15 U.S. SUPPLY GROWTH HAS BEEN MASSIVE U.S. gas supply had undergone record single year expansion. Demand has been strong, but supply has been just as strong. Weather adjusted balance trending to looser market. Supply, not storage, seen as the backstop? U.S. Daily Natural Gas Supply Source: GMP FirstEnergy, Reuters U.S. Market Swing Summer 218 vs. 217 Net Available (.1) Total Demand 9. LNG Exports 1.4 Mexico Exports.4 Res/Comm 1.6 Industrial/Other 1.9 Power 3.6 Total Supply LNG Imports Net Cdn Imports Domestic Supply Source: GMP FirstEnergy, Reuters U.S. Daily Natural Gas Supply Jan Mar May Jul Sep Nov Jan Source: GMP FirstEnergy, Reuters (2) RETURN OF THE GAS PRICE BEAR We have had to face up to the huge supply gains, and well in excess of what we expected. These are forcing market to deal with lower prices more consistently. 218 will be a record year of supply expansion, followed by second largest year on record in 219 as various basins continue to expand. Lots of pipe expansions are in the works; northeast pipe expansion issues, despite delays, are resolving themselves. Enviro pushback remains fierce, but has not made significant headway in terms of slowing supplies. YoY Change in Weather-Adj. Gas Balance Weekly YoY 4 Week Mov. Avg. 8 Week Mov. Avg. "Tighter" (2) Market (4) Oct-17 Dec-17 Mar-18 Jun-18 Sep-18 Source: FirstEnergy Capital Corp., Bloomberg, US DOE/EIA, NOAA. "Looser" Market (2) (4) (2.) U.S. Natural Gas Supply Growth

16 U.S. SUPPLY GROWTH HAS BEEN WIDESPREAD Unlike oil, mostly powered by the Permian, U.S. gas supply gains have been widespread. Associated gas (Permian, Eagle Ford) and dry gas (Haynesville/ Marcellus/Utica) are driving growth. United States Natural Gas Supply by Basin () Forecast Forecast Forecast 217 Change % Change 218 Change % Change 219 Change % Change 22 Change % Change Antrim.22 (.1) -5.8%.21 (.1) -4.8%.21 (.) -.8%.21..% Bakken % % % % Barnett 2.79 (.34) -1.8% 2.59 (.2) -7.3% 2.52 (.6) -2.4% 2.47 (.6) -2.2% Eagle Ford 4.6 (.23) -5.3% % % % Fayetteville 1.66 (.35) -17.3% 1.4 (.27) -16.% % 1.39 (.2) -1.4% Haynesville % % % % Marcellus % % % % Utica % % % % Woodford % % % % Permian % % % % Other Shale % % % % Total Shale % % % % Non-Shale (2.54) -8.5% 26.1 (1.31) -4.8% (1.38) -5.3% (1.56) -6.3% Total U.S. Gas % % % % Associated Gas from Oily Plays EF/Perm/Bakken % % % % 1. Primarily Permian associated gas volumes.. 31 NORTHEAST SUPPLY EGRESS IS EXPANDING Producers have proven readily able to fill pipe expansions so far, and more supply is coming. Rover final ramp up, Nexus, and Atlantic Sunrise are due up very shortly (3+ ). Some delays to other pipes, but legal reprisals and FERC are overcoming (.5) (1.) U.S. Associated Shale Gas N.E. Incremental Gas Pipe Capacity Adds U.S. Daily Northeast Gas Supply Jan Mar May Jul Sep Nov Jan Source: GMP FirstEnergy, Reuters Atlantic Coast Mount. Xpress Mountain Valley Atlantic Sunrise Nexus Rover TEAL REX Ph. 4 Leach/Rayne Panhandle REX Ph. 3 AIM Q16 2Q17 4Q17 2Q18 4Q18 2Q19 4Q19 Source: GMP FirstEnergy, Reuters 32 16

17 WILL NORTHEAST SUPPLY GROWTH SLOW DOWN? Unclear if declining DUCs will make much difference in holding back NE supply growth. Producers have been able to keep up - so far. Productivity may be flattening out. If there is a supply slowdown coming, it will be seen here first. No. of Wells DUCs in Appalachia Shale Plays 1,25 1, Jan-15 Oct-15 Jul-16 Apr-17 Jan-18 Oct-18 Rigs U.S. Gas Rig Count by Basin Haynesville Marcellus/Utica Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Source: GMP FirstEnergy, Baker Hughes YoY Change in Appalachian Rig Productivity mcf/d/rig 8, 6, 4, 2, (2,) Jan-15 Jan-16 Jan-17 Jan-18 Jan THERE IS STILL PLENTY OF GAS DEMAND GROWTH U.S. domestic gas demand growth has remained strong throughout 218 on the back of cold start to the year and then very hot summer. Industrial demand growth is expanding on the back of petchem expansion. Gas power burn will expand on low prices and phase out of more coal and nukes; low prices will help to sustain gains after weather reset of 219. Exports also provide a major demand lift. U.S. Power Gen. Gas Demand Growth (1.) (.4) (2.) (3.) (1.9) U.S. Natural Gas Demand Growth (.9) (.6) (1.) Source: GMP FirstEnergy, US DOE/EIA 34 17

18 LNG EXPORTS ARE THE SINGLE LARGEST DEMAND DRIVER LNG exports set to ramp into late 218, with big gains set for 219. This still remains an unknown in terms of market and price impact in the long run. Provides major demand cushion during the shoulder season. Can supply offset all of this? U.S. Daily LNG Liquefaction Jan Mar May Jul Sep Nov Jan Source: GMP FirstEnergy, Reuters U.S. Annual LNG Export Capacity (Year End) Corpus Christi T1&2 Sabine Pass T5 Freeport T2&3 Elba Island T7-T1 Cameron T1-3 Elba Island T1-T6 Freeport T1 Cove Point T1 Sabine Pass T3&4 Sabine Pass T1&2 Existing Re-Export Source: GMP FirstEnergy, IHS, U.S. DOE/EIA U.S. Annual LNG Exports ALL THAT DEMAND, AND YET, STILL MORE GAS IN STORAGE Despite all the numerous strong demand and export components, the supply picture looks to be more than enough to match and also refill storage sufficiently in the next two years. We expect that the existing storage deficits will be closed by the end of the next heating season and then expand in 219. Forward market pricing in return of storage surpluses. A warm winter cannot be tolerated in terms of storage gains and negative price impacts. U.S. March/October Storage Outcomes bcf End March End October 5, 3,816 3,913 4,73 4, 3,344 3, 2,63 2, 1,392 1,652,91 1, U.S. 5-Yr. Storage vs. Gas Price bcf Deficit/Surplus to 5-Yr. Avg. US$/mmbtu 1, 75 Nymex Monthly Average $ (25) (5) (75) $2. $3. $4. $5. Jan-16Jan-17Jan-18Jan-19Jan-2Jan

19 IT ALSO MEANS MORE PRESSURE ON CANADIAN GAS Rising U.S. supplies have been pressuring Canadian gas exports for years, but the pressure is about to get a lot more intense. Rising northeast supplies are starting to create more pushback on WCSB gas supplies and backing gas out of Eastern Canadian markets. Canadian gas been competing more and more on price discounts and looks to be staying that way. 219 will see sharp reduction in net exports on Rover completion and Nexus ramp up. U.S. Net Gas Imports from Canada Canadian Net Gas Exports to the U.S. mmcf/d , 9, 8, 8, 7, 7, 6, 5, 4, 3, Jan-1 Mar-25 Jun-17 Sep-9 Dec-2 Source: GMP FirstEnergy 6, 5, 4, 3, 37 THIS DOG BITES! ROVER PIPELINE APPLYING THE PRESSURE Final ramp up of Rover supplies is pressuring gas on Alliance out of Dawn and upper U.S. Midwest, more back into Chicago market. Rover Pipeline Field Receipts mmcf/d 3,25 3, 2,75 2,5 2,25 2, 1,75 1,5 1,25 1, Aug-17 Nov-17 Feb-18 May-18 Aug-18 Source: GMP FirstEnergy, Energy Transfer Partners Rover to Vector vs. Alliance to Vector mmcf/d Rover to Vector 1,2 Alliance to Vector 1, Apr-18 Jun-18 Aug-18 Oct-18 Source: GMP FirstEnergy, Energy Transfer Partners 38 19

20 GREAT LAKES FLOWS NOT AFFECTED - YET No Rover impacts yet on Great Lakes flows into Dawn, but Nexus start up is looking to be imminent. Rover to Vector vs. Great Lakes to Dawn mmcf/d Rover to Vector 1,2 Great Lakes to Dawn 1, Apr-18 Jun-18 Aug-18 Oct-18 Source: GMP FirstEnergy, Energy Transfer Partners Vector Dawn-Nymex Differential by Calendar Year US$/mmbtu $.2 $.1 $. ($.1) ($.2) ($.3) Jan-16Jul-16 Jan-17Jul-17 Jan-18Jul-18 Source: GMP FirstEnergy, NGX Source: U.S. DOE/EIA Cal. 219 Cal. 22 Cal. 221 Nexus brings.9 and Rover brings 1.1 of NE gas supplies into the Dawn Hub. 39 AND THE PRESSURE JUST KEEPS BUILDING All that U.S. gas is creating more pushback on Western Canadian supplies; AECO market pressured by TCPL Egate IT flow maintenance changes affects primarily non-heating season prices. 4 2

21 AECO AT THE FOREFRONT OF PRICE PAIN AECO prices have been suffering the one-two punch of IT restrictions on storage injections in Alberta and renewed pushback of gas from the U.S. Market has priced in deep discounts for AECO over the next few years. C$/mcf $5. $4. $3. $2. $1. $. ($1.) ($2.) ($3.) AECO Natural Gas Prices Jan Mar May Jul Sep Nov Jan Source: GMP FirstEnergy, Canadian Enerdata $5. $4. $3. $2. $1. $. ($1.) ($2.) ($3.) C$/mcf $3. $2.75 $2.5 $2.25 $2. $1.75 $1.5 $1.25 $1. Aeco Calendar Strips Jan-17 Jul-17 Jan-18 Jul-18 Source: GMP FirstEnergy, NGX Cal. 219 Cal. 22 Cal. 221 AECO Price versus TCPL E. Gate IT Restrictions AECO IT Restriction $4. $3.5 $3. $2.5 $2. $1.5 $1. $.5 $. ($.5) Jun-17Sep-17Dec-17Mar-18Jun-18Sep-18 Source: GMP FirstEnergy, Canadian Enerdata 11% 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 41 BITING THE BULLET: LOWER CANADIAN GAS PRICE OUTLOOK With all the negative pressures, we have finally abandoned our more bullish view for AECO for 219 and 22; recovery in 221. Closer to forward markets and consensus. Winter provides the price strength, such as it is. US$/mmbtu $2. $1.75 $1.5 $1.25 $1. $.75 $.5 $.25 $. AECO-Nymex Price Differential $1.64 $1.5 $1.36 $1.29 $ , Enerdata Aeco C$/mcf Station 2 C$/mcf Alliance ATP C$/mcf Old NEW Old NEW Old NEW 217 Average $2.19 $2.19 $1.57 $1.57 $2.18 $ Q1 $2.8 $2.8 $1.92 $1.92 $2.6 $2.6 Q2 $1.25 $1.16 $1.14 $1.11 $1.63 $1.58 Q3 est. $2.11 $1.21 $1.86 $1.33 $2.51 $1.95 Q4 est. $2.81 $1.76 $2.59 $1.81 $3.7 $2.16 Average est. $2.6 $1.55 $1.88 $1.54 $2.45 $ Q1 est. $2.93 $1.83 $2.73 $1.8 $3.19 $2.6 Q2 est. $2.63 $1.37 $2.38 $1.22 $3.3 $1.67 Q3 est. $3.15 $1.37 $2.9 $1.22 $3.55 $1.67 Q4 est. $3.29 $1.71 $3.11 $1.71 $3.56 $2.6 Average est. $3. $1.57 $2.78 $1.49 $3.33 $ Average est. $3.28 $1.77 $3.6 $1.69 $3.62 $ Average est. $3.25 $2.24 $3.3 $2.16 $3.58 $2.54 Notes: All historical averages computed using weekday data only., Enerdata; est. refers to forecast 42 21

22 PRICING DISLOCATIONS ARE ABUNDANT US$/mmbtu $4. Huntingdon/Sumas & Stn. 2 Gas Prices US$/mmbtu $6. $5. $4. $3. $2. $1. $. Aeco & Nymex Prices Nymex AECO $3. $2. $1. $. ($1.) Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19 Huntingdon Stn. 2 Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19 Source: GMP FirstEnergy, Canadian Enerdata US$/mmbtu Aeco & Dawn Hub Prices $8. Dawn AECO $7. $6. $5. $4. $3. $2. $1. $. ($1.) Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19 Alliance ATP & Chicago Citygate Prices US$/mmbtu $5. Chicago Alliance ATP $4.5 $4. $3.5 $3. $2.5 $2. $1.5 $1. $.5 $. Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19 Source: GMP FirstEnergy, Canadian Enerdata, Bloomberg 43 DIVERSIFY PRICING EXPOSURE Dawn-Nymex Huntingdon-Nymex Chicago-Nymex Malin-Nymex Algonquin-Nymex Ventura-Nymex Leidy-Nymex TCO Pool-Nymex Old NEW Old NEW Old NEW Old NEW US$/mmbtu Old NEW Old NEW ($.12) ($.28) ($.12) ($.28) $1.37 $.32 $1.37 $.32 ($.76) ($.76) ($.22) ($.22) 217 Average $.2 $.2 ($.42) ($.42) $.17 ($.41) $.17 ($.41) $5.5 $.1 $5.5 $.1 ($.26) ($.26) $.1 $ Q1 $.24 $.24 ($.49) ($.49) ($.17) ($.75) ($.16) ($.78) $.68 ($.28) $.69 ($.26) ($.91) ($.96) ($.18) ($.18) Q2 ($.7) ($.5) ($1.26) ($1.19) ($.23) ($.54) ($.12) ($.34) ($.29) ($.34) $.21 ($.19) ($.64) ($.39) ($.19) ($.13) Q3 est. ($.19) $.5 ($.88) ($.55) ($.22) ($.58) ($.8) ($.53) $1.67 ($.22) $1.85 ($.7) ($.52) ($.39) ($.22) ($.24) Q4 est. ($.2) $.3 ($.52) ($.46) ($.11) ($.57) ($.5) ($.51) $1.78 ($.19) $1.95 ($.1) ($.58) ($.5) ($.15) ($.13) Average est. ($.5) $.7 ($.79) ($.67) ($.9) ($.6) $.1 ($.5) $5.68 $.9 $6.51 $.34 ($.42) ($.39) ($.25) ($.25) 219 Q1 est. ($.7) $.16 ($.58) ($.48) ($.35) ($.86) ($.29) ($.8) ($.1) ($.49) ($.2) ($.44) ($.46) ($.44) ($.32) ($.35) Q2 est. ($.29) ($.2) ($1.29) ($1.23) ($.39) ($.81) ($.33) ($.55) ($.29) ($.53) ($.18) ($.43) ($.6) ($.55) ($.45) ($.49) Q3 est. ($.37) ($.3) ($1.1) ($.88) ($.23) ($.75) ($.16) ($.56) $1.54 ($.24) $1.83 ($.15) ($.57) ($.5) ($.37) ($.4) Q4 est. ($.2) ($.11) ($.56) ($.46) ($.27) ($.75) ($.17) ($.6) $1.71 ($.29) $2.3 ($.17) ($.51) ($.47) ($.35) ($.37) Average est. ($.23) ($.11) ($.86) ($.76) ($.26) ($.77) ($.19) ($.57) $1.83 ($.32) $2.3 ($.19) ($.55) ($.51) ($.43) ($.46) 22 Average est. ($.25) ($.15) ($.87) ($.72) ($.26) ($.77) ($.19) ($.57) $1.83 ($.32) $2.3 ($.19) ($.55) ($.51) ($.43) ($.46) 221 Average est. ($.25) ($.15) ($.87) ($.72) Notes: All historical averages computed using weekday data only., Enerdata; est. refers to forecasted value. uted using weekday data only., Enerdata; est. refers to forecasted value. If you can get your gas out, preferably on firm service, try to hedge appropriately at other price locations. Has become increasingly used by WCSB producers. Physical swaps rising in popularity. Source: GMP FirstEnergy, Google 44 22

23 ARE THERE ANY FIXES FOR THE WCSB GAS MARKET? Demand growth for gas is taking place in Alberta. Coal phase out, oilsands supply growth and petchem use are all creating more gas demand. Growth is just not fast enough to offset the immediate large impacts of U.S. export pushback. Alberta Natural Gas Demand Jan Mar May Jul Sep Nov Jan Source: GMP FirstEnergy Alberta Natural Gas Demand TA Conversions AER Power Oilsands Other Sectors Source: GMP FirstEnergy, AER 45 WHAT ABOUT SLOWING SUPPLIES NOW? Near term capacity upgrades are now very limited until more late in 22; will also slow the supply expansion after huge gain of 218. We see some wellhead shut-ins as being inevitable on price impacts and lack of access to IT capacity. Westcoast expansion is limited and Alliance open season withdrawn WCSB Daily Natural Gas Supply Jan Feb Apr May Jul Sep Oct Dec Source: GMP FirstEnergy mmcf/d 1,2 1, (2) (4) (6) (8) WCSB Natural Gas Supply Growth Source: GMP FirstEnergy

24 WILL LOW ALBERTA STORAGE MAKE A DIFFERENCE? Low Alberta storage has been driven by IT restrictions on injections. U.S. gas pushback makes lower storage a moot point for prices. More IT restrictions in 219/22 will likely result in even lower storage, but gas is not needed? Reset back to 5-yr. averages? Alberta Mar./Oct. Storage Outcomes bcf 6 End March End October Source: GMP FirstEnergy, Canadian Enerdata Alberta Cumulative Storage Injections bcf 5 yr avg (5) Apr-1 May-13 Jun-24 Aug-5 Sep-16 Oct-28 Source: GMP FirstEnergy, TransCanada PipeLines Alberta Working Natural Gas Storage bcf Notional Capacity= 48 bcf Yr. Hi-Lo Jan-1 Mar-25 Jun-17 Sep-9 Dec-2 Source: GMP FirstEnergy OKAY, SO IS THERE ANY GOOD NEWS? WINTER IS COMING Could a cold winter simply reset the market and prices higher? El Nino is threatening, but precise impacts are unclear. Cold winter will merely delay ample storage refill by a few months

25 OKAY, SO IS THERE ANY GOOD NEWS? LNG LNG Canada is a longer term fix, but appears to be within hours to days of being announced (Oct. 5?). LNG Canada has chosen two construction contractors (Flour/JGC). Media reports are that an exemption has been granted to the federal counter vailing duties on modular steel imports. 1% of FN bands onside for pipeline corridor. Will need more supplies in long run to satisfy LNG plants and local demand. Supply Sensitivties Related to LNG Canada (223) Source: GMP FirstEnergy, CEAA 2 Trains 3 Trains 4 Trains Loss of Net Exports AB Demand Canada Demand LNG Canada Total Demand WCSB Supply Supply Shortfall (.1) Source: GMP FirstEnergy 49 GLOBAL LNG IS A MAJOR PRICE POSITIVE Global LNG prices have been ramping up in line with oil prices and significant demand gains. Market is facing up to additional tightness for 219 as demand growth is likely to outstrip supply growth. Market much tighter by 22? UK could be in real trouble. China Monthly LNG Imports Jan Mar May Jul Sep Nov Source: GMP FirstEnergy, IHS Energy US $/mmbtu $13 $12 $11 $1 $9 $8 $7 $6 $5 $4 $3 Global LNG Netbacks India Spain Japan UK Jan-16Jul-16Jan-17Jul-17Jan-18Jul-18Jan-19 Source: GMP FirstEnergy, IHS Energy US $/mmbtu UK NBP Near Month Futures Price $13 $12 $11 $1 $9 $8 $7 $6 $5 $4 $ $14 $14 $12 $12 $1 $1 $8 $8 $6 $6 $4 $4 $2 $2 Jan Mar May Jul Sep Nov Jan 5 25

26 WE KNOW THE LNG COMPETITION IS COMING Global LNG market could be close to exhaustion of available supply by 22/21, even given current build out LNG plants. A lot more supply is going to be needed from the U.S. and elsewhere. U.S. is setting the stage for intense competition and ramp up with the FERC attempting to fast track as many LNG export applications as possible in 219. China tariffs look to be having little impact so far; cheap U.S. gas may keep its supplies still attractive to China. Global LNG Capacity vs. Demand (assumes some capacity adds beyond current projects) 7 65 Capacity 6 Demand Source: GMP FirstEnergy, IHS Energy Potential U.S. LNG Site Approvals before the FERC Project Capacity (million tons/yr) FERC Decision Current Developer Deadline Calcasieu Pass 1. Venture Global Jan FreeportTrain Freeport LNG Jan Driftwood 27. Tellurian Apr Port Arthur 11. Sempra May 1 19 Corpus Christi Cheniere May 9 19 Texas LNG 4. Texas LNG Jun Gulf LNG 11. Kinder Morgan Jul Annova 6.95 Exelon Jul Rio Grande 27. NextDecade Jul Plaquemines 2. Venture Global Aug 1 19 Jordan Cove 7.8 Veresen Nov Alaska LNG 2. AGDC Feb 6 2 Total Source: GMP FirstEnergy, Nartural Gas Week (Sep. 1, 218) 51 WILL MORE LNG FROM NORTH AMERICA BE A GOOD THING? U.S could end up being the largest LNG supplier in the world by 225; will its spot driven gas prices subdue or enhance price levels and volatility for the LNG market. Canada could well have LNG exports on both coasts if Pieridae (or others) are able to FID. North America will be much more integrated with the global gas market and the global gas market integrated with North America by late next decade. U.S. Share of Global LNG Production 3% 25% 2% 16% 18%18%19%22% 15% 12% 1% 8% 5% 5% 1% % Source: GMP FirstEnergy, IHS Markit 24% 52 26

27 NORTH AMERICAN GAS MARKET CONCLUSIONS We have become more price bearish in the near and medium term as U.S. gas supply looks set to expand sharply until at least 22. Demand and LNG exports growing, but supplies look able to keep up and adequately refill storage. Real test of bullish supply story could come by early 219 if the presumed expansion of Northeast supplies does slow sharply. Canada will face increasing pressures on gas prices well into late 219. Long term fix via LNG Canada, but near term fix will be slow. US$/mmbtu $5. $4. $3. $2. $1. $. Nymex Natural Gas $3.2 $2.85 $2.7 $2.65 $ C$/mcf $5. $4. $3. $2. $1. $. AECO Natural Gas $2.16 $1.77 $2.24 $1.57 $ GMP FIRSTENERGY NATURAL GAS PRICE OUTLOOK Nymex US$/mmbtu Aeco C$/mcf UK NBP US$/mmbtu Old NEW Old NEW Old NEW 217 Average $3.2 $3.2 $2.19 $2.19 $5.8 $ Q1 $2.85 $2.85 $2.8 $2.8 $8.2 $8.2 Q2 $2.82 $2.83 $1.25 $1.16 $7.18 $7.32 Q3 est. $3.1 $2.85 $2.11 $1.21 $7.18 $8. Q4 est. $3.25 $2.87 $2.81 $1.76 $7.75 $9.87 Average est. $3. $2.85 $2.6 $1.55 $7.53 $ Q1 est. $3.25 $2.8 $2.93 $1.83 $8.25 $9.88 Q2 est. $3.15 $2.7 $2.63 $1.37 $6.73 $7.95 Q3 est. $3.5 $2.7 $3.15 $1.37 $6.75 $7.87 Q4 est. $3.5 $2.6 $3.29 $1.71 $7.5 $9.2 Average est. $3.35 $2.7 $3. $1.57 $7.31 $ Average est. $3.5 $2.65 $3.28 $1.77 $7.1 $ Average est. $3.5 $2.75 $3.25 $2.24 $7.1 $8.6 Notes: All historical averages computed using weekday data only., Enerdata; est. refers to forecasted value

28 GMP FIRSTENERGY NATURAL GAS PRICE DIFFS OUTLOOK Nymex-AECO US$/mmbtu AECO-Stn 2 C$/mcf AECO-ATP C$/mcf Old NEW Old NEW Old NEW 217 Average $1.36 $1.36 ($.62) ($.62) ($.2) ($.2) 218 Q1 $1.21 $1.21 ($.18) ($.18) $.5 $.5 Q2 $1.86 $1.94 ($.11) ($.11) $.38 $.36 Q3 est. $1.52 $1.91 ($.25) $.8 $.4 $.7 Q4 est. $1.13 $1.52 ($.22) $.5 $.27 $.4 Average est. $1.43 $1.64 ($.19) ($.4) $.39 $ Q1 est. $1.3 $1.4 ($.2) ($.3) $.27 $.23 Q2 est. $1.15 $1.65 ($.25) ($.15) $.4 $.3 Q3 est. $1.1 $1.65 ($.25) ($.15) $.4 $.3 Q4 est. $1. $1.3 ($.18) $. $.27 $.35 Average est. $1.7 $1.5 ($.22) ($.8) $.33 $.3 22 Average est. $.96 $1.29 ($.22) ($.8) $.33 $ Average est. $.96 $1. ($.22) ($.8) $.33 $.3 Notes: All historical averages computed using weekday data only., Enerdata; est. refers to forecasted value. 55 Thank You and Questions?? 56 28