GLOBAL OIL MARKET TRENDS

GLOBAL OIL MARKET TRENDS

Brent timeline and latest forward curve: Prompt prices recovering, back-end more stable ICE Brent crude, historical front month contract price and latest forward curve Our view is neutral USD in per the bbl short term (end of 2015) and bullish in the medium term (to 160 2020). We see insufficient oil demand growth to prevent further stockbuilding in 140 Q3 & Q4 2015. Brent front month prices have stabilized since April, settling in a 60 to 68 USD range from a low of 46 USD/bbl. 120 In the medium term, the cost Lehman of supply necessary to meet demand collapse to balance the market 100 is too high relative to where the futures marketis currently trading, making us bullish Global the back-end. Longer-dated prices recovery (five years) have 80 been more stable in this market downturn, trading above 75 USD vs. a low of 72 Credit USD/bbl. crisis 60 40 QE1 China fiscal stimulus Libya losses EU crisis Iran Arab spring Iran negotiations KSA supply surge Greece Draghi whatever it takes Libya losses US rig count starts to drop Iraq supply risk fears Weaker growth, strong supply growth (NAm shale, Libya etc.) Saudi price cuts OPEC meeting US rig count bottoming out Iran tentative agreement 20 okt07 okt08 okt09 okt10 okt11 okt12 okt13 okt14 okt15 okt16 okt17 Brent front month Forward curve Source: Bloomberg, Rystad Energy research and analysis 2

Global Purchasing Manager Indices (PMIs) The uneven economic recovery looks set to continue in 2015 Global purchasing manager indices (PMIs) for the manufacturing sector Global purchasing % manager (index) indices (PMIs) are monthly leading indicators for economic activity. 60 Based on the latest readings, the uneven global economic 58 recovery is set to continue in 2015. The US PMI 56 (ISM) has come down sharply from lofty levels, and signals a cooling from strong 54 activity levels in H2 2014. The euro area 52 PMI has continued to improve supported by QE in Europe. 50 Continued soft readings in Chinese PMI adds pressure on policy makers to 48support growth. The Global Manufacturing PMI 46 Global PMI aggregate has trended lower and US PMI is signaling only mediocre growth in the global economy currently. Euro Area PMI 44 China PMI Note on PMIs: Monthly survey of purchasing managers. 42 A level of 50 indicates unchanged overall conditions since last month. Below 50 indicates worse overall conditions, 40 above 50 signals improving overall business May-12 Aug-12 conditions Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 since last month. Source: Bloomberg, ISM, Markit 3

Global oil demand growth Tentative signs of a global demand growth recovery in 2015 World liquids demand growth y/y According to the latest Million estimates bbl/d by the IEA and EIA, world oil demand in 4,0 2015 is expected to grow by around 1.2 mmbbld y/y. Global oil demand 3,5 has tentatively recovered with cold temperatures starting in Q1 2015, an improving OECD economy, and 3,0 with further support from lower oil prices. Growth momentum 2,5 in demand is currently expected to ease over the coming quarters, with the downside stemming from structural 2,0 headwinds to the global economy and weaker economic activity in large commodity exporting countries. Nevertheless, continued lower oil 1,5 prices should stimulate demand further, providing some upside to the oil market. 1,0 2015 demand downside factors are Russia and prolonged recession in Russia, Brazil and southern 0,5 Europe. EIA 2014: +0.85 MMbbld y/y IEA 2014: +0.66 MMbbld y/y EIA and IEA 2015: +1.1 MMbbld y/y EIA 2016: +1.3 MMbbld y/y EIA STEO IEA OMR 0,0 Actual Estimates Forecast 1Q2010 2Q2010 3Q2010 4Q2010 1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 Source: EIA Short-Term Energy Outlook May 2015, IEA OMR May 2015 4

US rig count and the rigs that count 50% drop in US horizontal rig count, with the same drop in the Big 3 plays 1 600 US rig count by direction Number of rigs Horizontal rig count in the «Big 3» plays ( the rigs that count ) 800 1 400 700 1 200 600 1 000 500 Bakken HZ 800 Horizontal Vertical 400 Permian HZ Eagle Ford HZ Directional "BIG 3" 600 300 400 200 200 100 0 jan06 jan07 jan08 jan09 jan10 jan11 jan12 jan13 jan14 jan15 0 feb11 aug11 feb12 aug12 feb13 aug13 feb14 aug14 feb15 Source: Baker Hughes and Rystad Energy research and analysis 5

Oil inventory trends The current oversupply is primarily a US crude phenomenon (0.8m b/d into storage ytd) US Commercial crude inventories, total Million barrels 500 480 Crude oil inventories, Cushing Oklahoma (WTI delivery point) Million barrels 70 460 60 440 420 50 400 40 380 360 30 340 20 320 300 1 3 5 7 9 111315171921232527293133353739414345474951 5yr range 2015 2014 5yr avg. 10 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 5yr range 2015 2014 5yr avg. EIA storage capacity estimate Source: DOE/EIA 6

Oil inventory trends OECD commercial crude oil inventories continue to climb led by soaring US crude storage OECD commercial crude oil inventories The chart reveals the trends for Million bbls commercial crude inventories for all OECD countries combined. 1 200 Crude inventories were higher than the 5 year average during the last 6 months of 2014, but still 1 150 in the 5 year range. In April 2015 the last month with available data they rose to an alarming 1147 mmbbl 1 100 far above 5 year range. 1 050 1 000 950 5 yr range 2015 2014 2013 5 yr avg. Note: OECD oil inventories are reported monthly to the 900 IEA and are the most comprehensive and trustworthy source of data on global oil inventories, as non-oecd 850 oil inventory data are scarce. 800 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan2 Sources: IEA OMR May 2015 and Rystad Energy research and analysis 7

Oil market balance in 2015 Call-on-OPEC rises towards OPEC s collective output target in H2 2015 OPEC liquids supply and call-on-opec* The chart shows the convention Million bbls/d of oil market balances, namely the Callon-OPEC crude + stock 32,0change, ie. Call-on-OPEC crude the production rate for OPEC crude to exactly balance supply and OPEC crude production demand. 31,5 OPEC production target According to Rystad Energy s latest 31,0 UCube supply forecast for 2015, the Call-on-OPEC is 29.2 MMbbld this year, assuming global 30,5 demand growth of 1.1 MMbbld. Rystad Energy Call-on-OPEC crude 2015 avg. OPEC crude production 30,0is currently estimated at around 31 MMbbld after averaging 30.5 MMbbld in Q1 2015. 29,5 The quarterly profile in 2015, however, indicates that the Call 29,0 rises above the collective output target of 30 MMbbld in Q4 of 2015. 28,5 30,0 29,2 28,0 27,5 27,0 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 Source: Rystad Energy research and analysis, International Energy Agency OMR May 2015, UCube May 2015 8

Historical comparisons 1985, 2008 and 2014 Prompt oil price development & where we are now We are comfortable WTI in the oil price current development oil during three downturns futures price trading Index, range. 100 = month of oil price peak The market stabilized 140as data show: Continued drop in US rig counts Flattening of the US weekly oil production estimate from EIA and first weekly stock 120 draw of the year Record-high Chinese crude net imports in April 1985 2008 2014 Short term direction 100 for US shale production especially the extent of deferred completions of drilled wells is driving prompt prices. The US horizontal rig count 80 appears to have bottomed out this cycle. Middle East tensions and strong refinery margins have helped support crude prices. 60 The chart shows the relative development of WTI oil prices (monthly averages) 40 from the local peak month: In 1985-86 oil prices fell 62% in 8 months. In 2008-09 oil prices 20 fell 71% in 7 months. In this downturn, oil prices fell 55% in 7 months but now look stable. Months after oil price peak 0-5 -3-1 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 Source: Bloomberg, Rystad Energy research and analysis 9 May 2015

Historical comparisons 1985, 2008 and 2014 US rig count bottoming out now The chart shows US the total relative rig count development during three downturns Index, 100 = month of oil price peak development of total US rig count (monthly averages) from 140 the local peak month for WTI oil prices. In 1985-86 US rig count peaked 1 month after oil prices 120 and dropped 65% in 8 months. 1985 2008 2014 In 2008-09 US rig count peaked 2 month after oil prices 100 and dropped 55% in 9 months. In this downturn, US rig count peaked 3 months after oil 80prices and has not yet bottomed. May 2015 60 40 20 0 Months after oil price peak -5-3 -1 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 Source: Bloomberg 10

Global oil supply to 2025 by life cycle If no new fields are sanctioned, liquids production will be in decline from 2018 The chart shows Global historical liquids and production from 1990-2025 split by life cycle Million bbl/d forecasted (UCube base case) liquids production split 120by life cycle as of 2015. History Forecast The producing fields are in decline going forward, but the decline would be even steeper if 100 continuous infill drilling was not included. Sanctioned fields currently under development are expected to help 80 increase global production towards 2018, but after that, decline is inevitable unless new fields are sanctioned. 60 Undiscovered Discoveries 40 Producing 20 Abandoned as of 2015 0 Other liquids 1990 1995 2000 2005 2010 2015 2020 2025 Source: Rystad Energy UCube May 2015 11

North America shale Temporary slowdown in NAS liquids supply growth in 2015-16 expected in base case Liquids production from North American shale plays split by liquids type, 2009-2020 Shale/tight liquids production Million bbl/d in North America is expected to reach 11.2 MMbbl/d in 2020 and 12 12.1 MMbbl/d in 2025. The current base case implies a temporary slowdown in NAm shale liquids additions in 10 2016. In the following years higher oil prices in our base case scenario will increase drilling activity, and as a result, production again during 8 2016 and thereafter. Around 40% of North American shale/tight liquids output is NGLs and condensate from wet 6gas wells. The crude oil percentage of total output stays roughly constant towards 2020, while crude production increases year on year in 2014-2020E. 4 NGL Condensate Crude Oil 2 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Rystad Energy UCube May 2015 12

Average shale WTI breakeven price might fall below 50 $/bbl in 2015 Average NA shale WTI breakeven price for different spud year The chart the average USD/bbl breakeven even for US shale oil*. This historical numbers are based 90 on actual well results and reported well costs. For 2015 the breakeven even is estimated based on 80a expected cost deflation of 15% and efficiency gains of 5% 70 On average the breakeven price has gone down with 8% per year since 2011, with 2014 60 with the largest improvements. Going forward, it 50 could be arguing that the efficiency will continue, with will reduce the breakeven even further. 40?? Ask us! Three scenarios: No efficiency gains 30 until 2020 5% yearly efficiency gains until 2020 10% yearly efficiency 20 gains until 2020 10 0 2011 2012 2013 2014 2015E *Based on horizontal wells in Bakken, Eagle Ford, Permian Midland, Delaware and Niobrara Source: NASWellData; Rystad Energy research and analyses

Global Oil Market Expertise Per Magnus Nysveen Head of Analysis at Rystad Energy Expert on upstream portfolio and transaction advisory, experience with financial and fiscal regimes; unconventionals Bjørnar Tonhaugen VP oil and gas markets at Rystad Energy Expert on oil market fundamentals Previously senior commodities strategist Nordea Markets Nadia Martin Senior analyst at Rystad Energy Expert on short-term oil and products markets analysis and trading Previously at Phibro and Morgan Stanley Global Oil Market Trends Report (OMT) Description Recent developments in supply & demand, oil prices and forward curve with explanations Views on oil price direction & forward curve development short and medium terms Global cost of supply curves based on data collected at field level Forecasts of global supply, demand and supply-demand balances at short and medium-term Benefits Macro analysis: Analyses the global demand and supply picture; the impact of endogenous and exogenous influences Strategy: Develops individual market views in order to make the right decisions Benchmarking: Compares country and company research; analyses break-even prices Contact products@rystadenergy.com