EnVantage’s Weekly Energy Report – April 2, 2014envantageinc.com/wp-content/uploads/2014/07/EnVantages... · 2019. 2. 6. · EnVantage’s Weekly Energy Report – April 2,

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En*Vantage’s Weekly Energy Report – April 2, 2014

Crude Oil and Refined Products WTI prices held above the $100 level for most of

the week before dipping to the $99 level in anticipation of more stock builds on the Gulf Coast. When the EIA announced that crude stocks dropped 2.4 MM Bbls last week, the market shrugged off the decline due to the 4 day closure of the Houston Ship Channel impeding crude imports to the Houston area refineries. Fears about sluggish demand are starting to permeate the market. This not unusual for this time of year when winter ends, the summer driving is 2 months away, and refinery turnarounds are still underway. These concerns are also being manifested in Brent prices that dropped nearly $3 this past week as Chinese and European manufacturing data was disappointing and news emerged that rebel-held Libyan ports could be reopened within days. The Brent-WTI spread which was $6.77 last week narrowed to $5.17 this week. Any differential below $5 will discourage the railing of crude to the East Coast. One positive factor is that US refinery runs are on an upswing at 15.3 MM BPD and it is very possible that refinery crude inputs could increase another 1 MM BPD by the end of May. We still expect crude prices to remain above $95 during the 2nd quarter with geopolitical tensions still supporting Brent prices despite the current fears about economic growth in Europe and China. The EIA petroleum statistics for the week ended Mar 28 indicated draws in crude

and gasoline inventories and a build in distillate stocks. US crude inventories were down by 2.379 MM Bbls, with the decrease occurring mostly in PADDs II and III. Within PADD II, Cushing inventories decreased this week by 1.2 MM Bbls to 27.3 MM Bbls, 45% below year ago levels.

• Crude continues to move to the Gulf via the southern leg of TransCanada’s

Keystone pipeline. PADD III inventories were down this week to 199 MM Bbls due to much lower imports in lieu of the Houston Ship Channel closure last week. Some market participants were concerned that we might be reaching

Inside this Edition HNatural Gas HWeather HPetroleum Statistics HCrude Oil Prices HCrack Spreads HNGL’s and Gas Processing

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tank tops on the Gulf Coast; however, the EIA shows total operating capacity for Gulf Coast storage around 273 MM Bbls (73 MM Bbls in refinery storage and 200 MM Bbls in crude tank farms). In addition, Gulf Coast crude storage capacity is expanding, so we haven’t quite reached full capacity yet.

As we approach the end of refinery turnaround season, refinery crude inputs

stand at 15.32 MM BPD, 0.307 MM BPD above year ago levels. US refinery runs should continue to come up throughout April as refineries come out of turnarounds. By the summer months crude runs could easily be between 16.0 and 16.5 MM BPD.

The EIA indicated that total products stocks increased this week by 0.17% (1.108 MM Bbls) to 656.875 MM Bbls for the week ending Mar 28. We are now 31.8 MM Bbls below 2013 levels for the corresponding week.

• Gasoline inventories fell by 1.56 MM Bbls this week as demand came in

higher than expected and the EIA reported a negative balancing item of 0.10. The EIA released in their January monthly statistics that implied gasoline demand was 12 MBPD lower than January 2013 and 72 MBPD lower than they reported in the January weekly statistics leading to concern over weak gasoline demand this year. However, the weakness in gasoline demand in January is probably due to the severe winter weather that hit much of the country east of the Rockies.

• Distillate stocks were up by 0.554 MM Bbls this week which was unexpected.

We will most likely see distillate demand pick up in the coming weeks as we enter the planting season which will be later this year due to the unusually cold winter we experienced. In addition, demand for distillates is strong in South America and the Gulf Coast to Europe distillate arb continues to widen.

In economic news this week, the Commerce Department reported that the US

economy grew by 2.6% in the last quarter of 2013 compared to an earlier estimate of 2.4% due to higher consumer spending. The Commerce Department also reported that household purchases increased by 0.3% last month and consumer purchases increased by 0.2% after accounting for inflation. The consumer purchases number was the best seen since November. While these numbers were all positive, consumer sentiment came in lower in March at 80.0 compared to 81.6 in February, and the Institute for Supply Management’s manufacturing index was 53.7 in March. While the index was up from February’s 53.2, it was still lower than analysts’ expectations of 54.0.

Federal Reserve Chair Janet Yellen announced that the economy would need continued support for “some time” until improvements are seen in the Labor Market. Equities markets and crude prices were up on Monday following this announcement.

In response to the annexation of Crimea by Russia last week, President Obama began halting the export of some products to Russia including defense items and services on Mar 24. US Secretary of State John Kerry met with Russian Foreign Minister Sergei Lavrov in Paris over the weekend and agreed to work towards a

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resolution over Ukraine. Senator Kerry voiced concern over an estimated 40,000 Russian troops that have been reported at the western border with Ukraine.

A spokesman for the National Oil Corporation in Libya reported last week that

most oilfields are still closed and that Libya produced about 170 MBPD on Mar 26. For the week, production averaged about 155 MBPD according to the NOC. They also reported that protesters blocked a pipeline which carries about 30 MBPD of oil condensate form the al-Wafa oilfield to the Mellitah export port. Early this week Libyan rebels stated that they felt like an agreement with the government was close and could be reached within a month if the government would agree to withdraw a threat made on Mar 12 to attack any ports still under rebel control. On Wednesday rebels and government leaders were preparing to meet and discuss coming to an agreement that would allow oil ports to reopen.

Both WTI and Brent remain backwardated in the forward market; however, the

front two months of the Brent contract briefly traded in contango on Wednesday signaling that supplies are now exceeding demand. The current spread between Brent and WTI has narrowed to $5.17/bbl. The LLS-WTI spread narrowed this week to $2.25 on Wednesday compared to $2.55 Mar 26. Eagle Ford light-sweet crude is now $6.74 under WTI and $9.03 under LLS.

Natural Gas Last week we had projected a withdrawal of -51 BCF (-52 degree day model

and -50 scrapes); the EIA reported -57 BCF change, much larger than our forecast and compared to consensus of -52 BCF per Bloomberg. The west was reported at -3 BCF compared to our forecast of -3 BCF, within tolerance.

This week our models were at -82 BCF (degree days) vs. -78 BCF (scrapes; our

final forecast was -80 BCF (+/- 5 BCF); our preliminary forecast was at -65 BCF; consensus was at -75 BCF; the EIA reported a net change of -74 BCF. For the west our models forecasted a -3 BCF (+/- 2 BCF) withdrawal; the EIA reported a -4 BCF change.

The EEI reported 72,716 GW-hrs vs our forecast from last week at 73,100 GW-

hrs. With storage now in the low 800 BCF with a very modest injection likely over the

next week we are not too far above the 21 year low of 642 BCF set in April, 2003 and the lowest level since then. We are starting to see analysts finally recognizing that we may have an issue with injection rates this summer in order to get back to ‘reasonable’ inventory levels barring a cool summer. Part of the issue in the typical analysis is that the calculations to figure coal displacement of natural gas (the marginal location is the southeast) is that typically presumes static coal prices from current levels. We do not share that opinion. Coal stocks are substantially lower than a year ago and the logistics have not really been tested for the last couple of years due to low natural gas prices. Our analysis continues to point to Henry prices approaching $5.00 to allow for maximum coal displacement of natural gas in the region with the expectation that coal prices are likely to rise combined with the known transportation problems that have been

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surfacing in recent months on the rail systems. Our expectation is that this reality will be somewhat slow to develop (i.e. traders figuring it out) and is contingent upon a ‘normal’ summer which of course is always in question.

Canada appears to have finally (at least temporarily) ceased storage withdrawals this week. We would not be surprised to drift either way (withdraw/inject) this week as the latest cold front moves across the northern tier of North America.

The issue of the late spring combined with Ukrainian, Libyan and Egyptian turmoil (there are some plants down due to unrest or lack of gas supply) we saw a tremendous increase in wholesale ammonia prices at Tampa for April ($120/tonne increase) thus improving the overall economics for domestic manufacturers. However, as we wrote a few months ago the likely squeeze for farmers appears to be developing with anecdotal reports coming in that many Midwestern corn growers are looking at breakeven economics for this crop season. Whether this pushes growers to cut back on corn or not could ultimately affect not only the ammonia market as we head towards summer but could affect the crop drying season (propane) next fall. Time will tell.

We have been reporting that natural gas storage levels in Europe remain well

above normal: last reports are total inventories are at 45% compared to 24% last year. The higher inventory levels and springtime weather is really taking the wind out of the sails on prices in Europe with Zeebrugge cash prices dropping below $0.77 over the last week to $8.06/MMBtu while the UK NBP was down by $1.24 to $8.01/MMBtu. The forward arbs for the next 12 months (beginning in May) relative to Henry also narrowed as European prices fell, down 81 cents to $4.72/MMBtu.

Estimates for the next three weeks for storage:

Week Ending Power Generation

Storage Change

Total Inventory

Last Year Change

Five Year Average

Chg

Y-Y Surplus

Surplus to Five Yr

Avg April 4, 2014 69,900 9 825 (25) 9 (850) (998)

April 11, 2014 69,100 27 852 25 37 (848) (1008) April 18, 2014 68,900 65 917 30 47 (813) (990)

Natural Gas Liquids January’s NGL extraction data was released last Friday by the EIA that

indicated NGLs from gas processing marginally increased 24 MBPD (0.9%) for the month. NGL extraction increased mainly in the western processing regions and dropped on the Gulf Coast, in the Mid-Continent and in the Upper Midwest. Somewhat surprising was the slight increase in ethane extraction, but ethane prices did surge briefly over 40¢/gal that may have encouraged some extraction increases. The sharp drop in ethane extraction in the Upper Midwest primarily reflects ethane rejection at the Aux Sable plant outside of Chicago. Overall, we estimated that ethane rejection in January was 245 MBPD outside the Marcellus/Utica region with 100 MBPD of rejection occurring within the Marcellus/Utica region.

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The EIA released January ethane inventories which showed a smaller than expected drop of 0.755 MM Bbls. Ethane stocks dropped by 1.19 MM Bbls on the Gulf Coast and built by 0.434 MM Bbls in the Midcontinent. The smaller than expected drop in January is somewhat puzzling, since in December ethane stocks dropped 2.56 MM Bbls. Implied demand for ethane as reported by the EIA for January was 1.028 MM BPD, an extremely low number as some analysts were estimating that actual cracking was closer to 1.1 MM BPD in January. There were several crackers that had operational problems in January; one in particular was Equistar’s Clinton, IA ethylene plant that probably contributed to the build in Midcontinent ethane stocks. The other possible cause for the lower than expected draw in ethane inventories was the likelihood of a significant withdrawal from private ethane storage held by the petrochemical companies to avoid paying for high priced ethane in January. Note, that the EIA only reports ethane in commercial storage facilities and not private storage that is mostly held by petrochemical companies.

Despite the smaller than expected draw in ethane inventories, January US

ethane inventories were at 26.015 MM Bbls, 6.5 MM Bbls below year ago levels. US Ethane stocks have declined for 5 consecutive months, the January drop was the 6th decline in the last 7 months. Gulf Coast ethane stocks were at 19.947 MM Bbls, 8.56 MM Bbls below year ago levels. Gulf Coast ethane stocks have seen a drop for 7 consecutive months. More importantly, bulk terminal (salt dome) storage for ethane on the Gulf Coast was 15.504 MM Bbls, 9.2 MM Bbls below year ago levels and the lowest levels since Feb-2012.

We are still expecting US ethane inventories to continue to drop through March,

with increases in April and May. By July, our revised balances indicate that ethane stocks should at 19.6 MM Bbls as the completion of ethylene plant expansions should push ethane cracking to at least 1.2 MM BPD, with days-of-inventory supply at 17.0. Ethane rejection will be at least 200 MBPD, mostly in transportation disadvantaged regions, with actual extraction at 1.1 MM BPD. As we stated last week, the ethylene industry will have a choice to continue to pay low prices for ethane causing ethane rejection to continue and stocks to fall further or they can pay-up for ethane to induce rejected volumes to come to the market. Either way we continue to see a short squeeze on ethane supplies by the 3rd quarter with ethane prices rising at least 20¢/gal from current price levels.

Note that the short squeeze for ethane expected in the 3rd quarter will come at a peak time when the gas markets will be attempting to refill gas storage for winter

Jan-14 Dec-13 Mo/Mo Chg Mo/Mo Chg Jan-14 Dec-13 Mo/Mo Chg Mo/Mo ChgMBPD MBPD MBPD % MBPD MBPD MBPD %

Tx Inland 1131 1107 24 2.1% 498 483 15 3.1%Tx Gulf Coast 159 161 -1 -0.8% 71 70 1 1.1%Louisiana Gulf Coast 177 185 -8 -4.2% 74 77 -3 -4.3%N. LA./Arkansas 22 23 0 -2.0% 6 5 0 2.4%New Mexico 152 148 4 2.8% 71 70 2 2.5%Rockies 327 307 20 6.4% 117 110 7 6.2%Mid-Continent 330 334 -4 -1.3% 123 125 -2 -1.8%Northern Tier (Bakken) 55 50 6 11.1% 0 0 0 -Upper Midwest 87 105 -18 -17.3% 29 47 -18 -38.0%Appalachia 134 129 5 3.8% 10 8 2 30.1%West Coast 66 67 -1 -1.7% 0 0 0 -

2639 2615 24 0.9% 999 995 4 0.4%

US and Regional NGL Extraction Data

Total NGL Month over Month Comparison Ethane Month over Month Comparison

Region

Total (MBPD)

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demand. If gas prices rise to induce more gas supplies to go into storage that will put further upward pressure on ethane prices.

Mt. Belvieu ethane prices continue to languish below 30¢/gal and at these price

levels we expect ethane rejection to be around 250 MBPD across all processing regions excluding the Marcellus/Utica where we estimate ethane rejection to be about 100 MBPD. Average ethane prices at Mt Belvieu were up to 28.8¢/gal compared to 28.5¢/gal

last week. Wednesday’s spot ethane was at 28.1¢/gal compared to 28.7¢/gal on Mar 26. Ethane’s price relationship to WTI averaged 12.0% this week compared to 12.0% last week. Ethane frac spreads remain negative at all processing regions, so ethane rejection will continue at 250 MBPD in processing areas.

This week, the weighted average feedstock margin for producing ethylene was

unchanged at 33.5¢/lb. Ethane continues to be the preferred feedstock, generating a net margin of 39.4¢/lb. N-butane has now moved into 2nd place, yielding a margin of 32.2¢/lb compared to 31.1¢/lb for propane. Light naphtha yields a margin of 0.7¢/lb and gas oil yields a negative margin of 0.3¢/lb.

We would still be a buyer of the backend of the ethane curve from July through December of this year based on our ethane balances and our forecast for tight ethane supplies for the second half of this year.

This past week’s storage build in propane was distorted by the Houston Ship

Channel being closed for four days. We anticipated the effects of the Channel closing and predicted a 1 MM Bbl increase, while other analysts were expecting a build of only 0.3 MM Bbls. With the channel operational, propane exports should return to near 400 MBPD in April. With propane exports nearly double to the levels seen last year at this time, it will be difficult to rebuild propane stocks at an average weekly rate of 1.3 MM Bbls during the spring and summer months to reach the 5-year average storage level by the end of October. We continue to believe that the Midcontinent propane markets could be very tight this fall unless Conway prices induce propane to be retained in the region rather than be transported to the Gulf Coast. Currently, there appears to be no urgency to bid Conway prices higher and it is likely that a price surge will occur during the winter months. On Wednesday, Mt Belvieu propane prices were at $1.05/gal at 44.2% of WTI.

Conway prices settled at $1.04/gal on Wednesday. We still believe the spread will need to be at least 10¢/gal to induce propane barrels to move up to Conway to replenish low stocks for next fall and winter.

The EIA reported that propane stocks for the week ending Mar 28 increased by

1.06 MM Bbls to 23.27 MM Bbls, 12.85 MM Bbls below year ago levels and 8.71 MM Bbls below the 5-year average for this time of year. We are now at a new 5-year low at 0.17 MM Bbls below the previous 5-year low for this time of year. With the ending of the winter season, propane stocks are expected to increase but at lower rate than in previous years due greater exports. By May 30, we should be somewhere near 30.0 MM Bbls of propane in inventory.

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• Midcontinent propane stocks increased 0.54 MM Bbls for the week compared to a decrease of 0.42 MM Bbls last year at this time. The 5-year average change for the same week in March is a decrease of 0.14 MM Bbls. Current Midcontinent propane inventories are at 7.91 MM Bbls, 1.54 MM Bbls below year ago levels and 3.96 MM Bbls below the 5-year average for the corresponding week. Midcontinent propane inventory levels have set a new 5-year low once again – 1.54 MM Bbls below the 5-year low for this time of year. Inventories should end up around 13.2 MM bbls by May 30.

• PADD III (Gulf Coast) propane inventories rose by 0.52 MM Bbls to 12.66 MM Bbls due to higher exports. The increase was largely influenced by the closer of the Houston Ship Channel for four days last week. Last year for the corresponding week Gulf Coast propane inventories decreased 0.82 MM Bbls with a 5-year average increase of 0.06 MM Bbls. Current Gulf Coast inventories are now 12.10 MM Bbls below year ago levels. Our PADD III forecast shows that Gulf Coast inventories should start coming back up after bottoming out in March and be at around 14.0 MM Bbls by May 30.

The EIA reported that propane exports in January dropped to 356 MBPD from 402 MBPD in December. The drop in exports was to be expected as the surge in propane prices in January closed the export arb between Mt. Belvieu and NW Europe that inhibited spot export cargoes.

The price spread between NW Europe propane prices and Mt Belvieu narrowed to 44.3¢/gal compared to 44.4¢/gal last week. NW Europe prices decreased 0.1¢/gal, while Mt. Belvieu prices were up 1.5¢/gal. Also, price spreads between Japan and Mt. Belvieu widened this week to 61¢/gal. These spreads are now inducing spot propane cargoes to be loaded on the Gulf Coast.

Normal butane prices were down slightly this week while i-butane and natural

gasoline prices were up. Average weekly Mt. Belvieu n-butane prices were unchanged at $1.26/gal, and

normal butane’s price relationship to WTI was down to 52.4% from 53.1% last week.

The average weekly spread between NW Europe and Mt. Belvieu n-butane

decreased to 51.9¢/gal from 53.3¢/gal last week. Japan-Belvieu butane spreads are at 73¢/gal versus 60¢/gal last week. We have been expecting exports of n-butane to have increased in the 1st quarter. The EIA indicated that in January, n-butane exports surged to 63 MBPD compared to 29 MBPD in December.

Average weekly i-butane prices were up 0.3¢/gal to $1.29/gal. The iso to normal price spread rose to 3.10¢/gal compared to 2.61¢/gal last week. One year ago the iso to normal price spread was 3.23¢/gal.

Average weekly natural gasoline prices were up 3.8¢/gal to $2.20/gal, with

natural gasoline selling at a 91.8% relationship to WTI compared to 91.3% last week and 94.0% one year ago. Natural gasoline prices should receive a boost when the Cochin pipeline reversal begins operations on June 1. It is thought that Kinder Morgan is currently commencing line fill.

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Based on netback NGL prices and field gas prices as of April 2 of $4.35/MM

Btu, the NGL uplift for all 4 streams was slightly lower by 1% on average this week. Recovering NGLs from a 3gpm gas stream would yield a total stream value of $5.08/MM Btu compared to $6.86/MM Btu for recovering NGLs from a 10 gpm stream.

Discussion of Gas Storage Last Week’s Storage Statistics

Significant comparisons this week include the following:

• U.S. LNG send outs were unchanged compared to the previous week and in line with our forecast; the current week send outs are expected to be near unchanged excluding the local deliveries at the Boston Suez terminal;

• Net imports from Canada were down 0.7 BCF compared to the previous week and in line with our forecast; net imports are running 4.1-5.1 BCFD for the current week with weekly net imports likely to be down near 2 BCF when we report next week;

• Net exports to Mexico were up 0.5 BCF compared to the previous week and in line with our forecast; we expect exports to Mexico to be up near unchanged for the current week;

• Temperature Comparisons (NWS) National Weather Week Ending Forecast Wk “Normal” Wk Week Ending

$4.35 /MM BTU

4/2/2014 3 GPM Gas 5 GPM Gas 7 GPM Gas 10 GPM GasRecovered Components $/MM BTU $/MM BTU $/MM BTU $/MM BTUEthane $0.139 $0.246 $0.291 $0.218Propane $0.537 $0.948 $0.985 $1.425I-butane $0.116 $0.117 $0.331 $0.335N-butane $0.254 $0.392 $0.408 $0.369C5+ $0.622 $0.841 $1.542 $2.184Residue Gas $3.417 $2.889 $2.506 $2.325Total Stream Value $5.085 $5.433 $6.063 $6.855NGL Contribution to Total Stream Value $1.668 $2.543 $3.557 $4.530

Producing Lean Gas With a Field Value Of Versus Processing Rich Gas With a NGL Inlet Content Of:

T&F fee: 15¢/gal ; 85% Ethane Extraction

Producer Uplift Case with Ethane Extraction$4.35 /MM BTU


Producer Uplift Case with Ethane ExtractionProducing Lean Gas With a Field Value Of

Versus Processing Rich Gas With a NGL Inlet Content Of:


Region 3/21/2014 3/14/2014Wkly Net

Chg 3/21/2013Surplus

or Deficit5-Year Avg

Wk 36Surplus

or DeficitEast 356 395 -39 720 -364 775 -419West 164 167 -3 335 -171 293 -129Producing 376 391 -15 739 -363 754 -378Total Lower 48 896 953 -57 1,794 -898 1,822 -926

Working Gas in Underground Storage (BCF)(Data Released Mar 27, 2014 for the Week Ending Mar 21, 2013)

(Source: Energy Information Administration)

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Service 3/29 End 3/29 End 3/29 3/22 HDD (Pop Wtd, Nat Gas)

167 156 128 152

CDD (Pop Wtd) 3 4 5 3

(325)

(275)

(225)

(175)

(125)

(75)

(25)

25

75

125

175

(325)

(275)

(225)

(175)

(125)

(75)

(25)

25

75

125

175

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

Strora

ge Ch

ange

BCF

Week of the Year

US Natural Gas Storage Volume Changes

201220132014 Projection2014 Actual5-yr avg

`

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

700

1,200

1,700

2,200

2,700

3,200

3,700

4,200

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

US Natural Gas Storage Survey(Actual for the week ending 3/21/14, forecasts for the week ending 3/28, 4/4, 4/11, 4/18)

201220132014 Projection2014 Actual5-Year Max5-Year Average

Storage Injection Season

BCF

(1100)(1000)(900)(800)(700)(600)(500)(400)(300)(200)(100)

0100200300400500

Defici

t / Su

rplus

--BC

F

2014 US Gas Storage Deviations from "Same Week" 2013 and 5-yr avg. Storage Levels

2014 year over year surplus(deficit)

2013 over 5-yr avg surplus(deficit)

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Gas-to-Crude Price Ratio Cash Market Gas-to-Crude Ratio on a Thermal Basis Average cash gas prices at Henry Hub relative to WTI were flat at 25.4% compared to last week at 25.4%. The average BTU discount between Henry cash gas and WTI prices for the week widened to $12.96/MM BTU compared to $12.81/MM BTU last week. A year ago, the BTU discount between cash gas and WTI was at $12.66/MM BTU. Henry gas is selling at a 24.0% ratio to Brent compared to 23.7% last week. Henry cash gas discount to Brent is currently at $14.00/MM BTU versus $14.05/MM BTU one week ago.

Futures Market: Gas-to-Crude Ratio The 12 month strip (May-14 to Apr-15) for the gas-to-WTI ratio was flat this week at 27.2% compared to last week at 27.2%. One year ago for the corresponding period the 12-month strip for the gas-to-WTI ratio was 25.3%.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Ratio of Natural Gas to WTI and to Brent(Henry Hub Cash Price to WTI and to Brent on Thermal Basis)

Gas-to-Brent Ratio Gas-to-WTI Ratio

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

BT

U S

prea

d $/

MM

BT

U

BTU Price Spread: Natural Gas to WTI and to Brent(WTI or Brent minus Henry Hub Gas)

Brent to Gas BTU Spread

WTI to Gas BTU Spread

04/02/14 WTI Nat Gas This Week's Last Week's$/Bbl $/MM BTU Ratios Ratios

May-14 $99.62 $4.36 25.4% 25.4%Jun-14 $98.90 $4.40 25.8% 25.8%Jul-14 $98.04 $4.44 26.2% 26.2%

Aug-14 $97.14 $4.44 26.5% 26.5%Sep-14 $96.24 $4.41 26.6% 26.6%Oct-14 $95.34 $4.43 26.9% 26.9%Nov-14 $94.53 $4.47 27.5% 27.5%Dec-14 $93.77 $4.59 28.4% 28.4%Jan-15 $92.93 $4.68 29.2% 29.2%Feb-15 $92.14 $4.63 29.2% 29.2%Mar-15 $91.47 $4.53 28.7% 28.8%Apr-15 $90.86 $4.07 26.0% 26.1%

May-15 $90.35 $4.04 25.9% 26.1%Jun-15 $89.87 $4.06 26.2% 26.4%Jul-15 $89.29 $4.08 26.5% 26.8%

Aug-15 $88.77 $4.07 26.6% 26.9%Sep-15 $88.34 $4.05 26.6% 26.8%Oct-15 $87.94 $4.07 26.8% 27.1%Nov-15 $87.61 $4.10 27.2% 27.5%Dec-15 $87.31 $4.24 28.2% 28.6%Jan-16 $86.84 $4.38 29.2% 29.7%Feb-16 $86.39 $4.35 29.2% 29.7%

12 mo strip $95.08 $4.45 27.2% 27.2%

Forward Gas-to-Crude Ratio

25.0%

26.0%

27.0%

28.0%

29.0%

30.0%

31.0% Forward Gas-to-Crude Ratio 3/19/14Forward Gas-to-Crude Ratio 3/26/14Forward Gas-to-Crude Ratio 4/2/14

Forward Gas-to-WTI Price Ratios

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Gas Prices and Basis

Cash prices have drifted to virtually flat line across the lower 48 with the exception of the discount to everything in the Marcellus despite the coming influx of yet one more winter storm. The pricing pattern is expected to remain very compressed across the lower 48 for the next 6-7 months with the only movement being the overall volatility of the overall market. Specifically we expect virtually all locations to trade at or below (basis wise) marginal transportation costs over the injection period with the exception of areas such as the Marcellus. The storage arb remains weak as the May-Jan spread settling at 31 cents on Wednesday. This represents the highest margin that it settled on this calendar year.

Again the 2015 strip seems to have stagnated despite the storage issues this year. The significance is that with a backwardated and a relatively weak market in the forward curve for 2015 and 2016, there is little to no incentive to drill incrementally for high deliverability lean gas production. We have seen the response by numerous producers as they handled their year-end analyst calls highlight the fact that they will generally remain focused on oil and rich gas drilling and only focus on some lean gas drilling to maintain throughputs on pipelines that they have long term commitments with demand fees.

$- $0.25 $0.50 $0.75 $1.00 $1.25 $1.50 $1.75 $2.00 $2.25 $2.50

Jan x May Spreads at Henry2009-2014

Source: NYMEX Daily settles

Series1 2010-2011 Spread Series3 Series4 Series5 Series6

$3.500

$3.700

$3.900

$4.100

$4.300

$4.500

$4.700

Bal 2014 NYMEX Calender Year Strip Natural Gas(May-Dec, 2014)

$3.500

$4.000

$4.500

$5.000

$5.500

$6.000

$6.500

2015 NYMEX Calender Year Strip Natural Gas

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The market is starting to improve from a technical perspective but we do not see any great move upward for 2-3 weeks as it is poised for a typical springtime rally in a low storage year. Funds remain very long although the net position has tailed off in the last few weeks.

This Week Technically

-200,000

-100,000

0

100,000

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Natural Gas Non-Commercial Futures & Swaps Net Open Interest-03/25/14

Net Open Interest NG Nymex Price 40 week Mov. Avg Price of Natural Gas

Current Position

`

Resistance at $4.57, $4.67, $4.89 and $5.00

Support levels at $4.39, $4.22, $4.00 and $3.85

NYMEX May 2014 Natural Gas Contract

From last week: We look for a benign contract expiration today with a decent seasonal rally potential for the May contract in 2-3 weeks.

This Week: Technical’s are attempting to turn up now while fundamental realities are beginning to sink in to traders mind for a spring rally.

13

Rig Count

For the week ended Mar 28, total US drilling activity was up 6 rigs to 1,809 rigs working compared to 1,748 rigs last year at this time, according to Baker Hughes. • The gas rig count was down 8 rigs to 318 rigs, 71 rigs below year ago levels of 389. • The oil rig count was up 14 rigs to 1,487 rigs working, 133 rigs above the previous

year’s rig count of 1,354. This is the highest level we have seen since Baker Hughes began separating the oil and gas rig counts in 1987.

• The miscellaneous rig count was unchanged at 4 rigs operating. • Land drilling operations were up 11 rigs to 1,741 rigs working compared to 1,680 rigs

working one year ago. • There were 49 rigs drilling in the Gulf of Mexico – down 4 rigs from the previous

week. Rigs drilling in inland waters were unchanged at 18 rigs operating.

Source: Baker HughesWeek Ending

3/28/14Week

ChangeWeek

Change %Last Year

Year Change

Year % Change

U.S. Total Oil & Gas 1809 6 0.3% 1748 61 3.5%US Gas Oriented 318 -8 -2.5% 389 -71 -18.3%US Oil 1487 14 1.0% 1354 133 9.8%Miscellanous 4 0 0.0% 5 -1 -20.0%Land 1741 11 0.6% 1680 61 3.6%Inland Waters 18 0 0.0% 23 -5 -21.7%US Gulf of Mexico 49 -4 -7.5% 43 6 14.0%

BAKER HUGHES US ROTARY RIG COUNT

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Total US Gas Rig CountYear over Year

2009 Gas Rig Count

2010 Gas Rig Count

2011 Gas Rig Count

2012 Gas Rig Count

2013 Gas Rig Count

2014 Gas Rig Count

2009

Source: Baker Hughes

2010

2011

20122013

2014

14

Horizontal drilling was up 5 rigs to 1,211 units working, accounting for 66.9% of the total rig count of 1,809, compared to 62.9% one year ago. Directional drilling was up 1 rig to 214 rigs working, while vertical drilling was unchanged at 384 rigs operating.

Among the major drilling states, Texas was up 8 rigs to 866 rigs operating, while Oklahoma was up 5 rigs to 188 rigs operating. Alaska and W. Virginia were each up 3 rigs to rig counts of 14 and 26. Colorado and New Mexico were up by 2 rigs each to 63 and 88 rigs operating. Pennsylvania was down by 5 rigs to 51 rigs. California was down by 4 rigs to 39 rigs, and Louisiana and Wyoming were each down 3 rigs to 105 and 50 rigs operating. North Dakota and Ohio were each down by 1 rig to 178 and 38, respectively. One state – Arkansas – remained unchanged this week.

0

500

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1,500

2,000

2,500

US Rotary Rig CountSource: Baker Hughes

Gas Oil Total

Crude Prices Collapse to near$10/Bbl by end of 1998following Russian Default;Asian Contaigion and collapseof Long Term Capital

Natural Gas prices fallto near $2.00/MMbtufollowing mild winter

Jul. 01 - Apr. 02Total Rig Count Fellby 42% peak to trough

Dec. 97 - Apr. 99

Total Rig Count Fell

by 52% peak to trough

0%

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Total versus Horizontal Rig Count

Total Rig Count Horizontal Rig Count

Total Rig Count

Horizontal Rig Count

% Horizontal to Total

2,031

1,809

1,211

66.9%

15

3/28/14Major State Variances This Week Last Week Weekly +/- Year Ago Yr/Yr +/-

Alaska 14 11 3 9 5Arkansas 12 12 0 15 (3)California 39 43 (4) 39 0Colorado 63 61 2 58 5

Louisiana 105 108 (3) 102 3New Mexico 88 86 2 80 8

North Dakota 178 179 (1) 175 3Ohio 38 39 (1) 28 10

Oklahoma 188 183 5 192 (4)Pennsylvania 51 56 (5) 69 (18)

Texas 866 858 8 823 43W. Virginia 26 23 3 22 4

Wyoming 50 53 (3) 42 8

Major State Rotary Rig Count

0

50

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250Eagle Ford Rig Count

Oil Rigs Gas Rigs


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80Granite Wash Rig Count

Oil Rigs Gas Rigs


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100Mississippian Rig Count

Oil Rigs Gas Rigs


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Oil Rigs Gas Rigs


16

Canada’s rig count was down 91 rigs to 298 rigs this week. This is 52 rigs above the rig count last year at this time. The oil rig count was down 55 rigs to 155 rigs, 8 units above year ago levels. The Canadian gas rig count was down 36 rigs to 143 rigs, 44 rigs above year ago levels.

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160Marcellus Rig Count

Oil Rigs Gas Rigs


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35Utica Rig Count

Oil Rigs Gas Rigs


Source: Baker HughesWeek Ending

3/28/14Week

ChangeWeek

Change %Last Year

Year Change

Year % Change

Canadian Oil & Gas 298 -91 -23.4% 246 52 21.1%Canadian Oil 155 -55 -26.2% 147 8 5.4%Canadian Gas 143 -36 -20.1% 99 44 44.4%Miscellaneous 0 0 0.0% 0 0 0.0%

BAKER HUGHES CANADIAN ROTARY RIG COUNT

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100

150

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300


Total Canadian Gas Rig CountYear over Year

2009 Gas Rig Count2010 Gas Rig Count2011 Gas Rig Count2012 Gas Rig Count2013 Gas Rig Count2014 Gas Rig Count

2009


2010

2011

2012

`

2013

2014

17

Gas Supply and Demand Demand (Industrial) U.S. steel mill utilization weakened a bit to 75.7% compared to 75.9% a year ago. The big news is wholesale ammonia as Tampa prices jumped $120/tonne for April for a number of reasons; the theory that with the recent consolidation within the fertilizer business causing virtually all of the Tampa volumes going towards the higher value phosphate business but also the concerns about supplies being cut off due to the Ukraine issue (a fair amount of ammonia is imported into the U.S. from that region); ammonia plants being shut down in Libya due to the political unrest and lack of production from Egypt due to a shortfall of natural gas supply. As we sated in the summary this is definitely putting the squeeze on the U.S. farmer with the weakness this year in corn.

EIA 914 – Marketed production The EIA released production data this week for January and revised some of the monthly figures for October-December, 2013 modestly higher.

30.0%

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Perc

en

tan

t U

tiliza

tio

n

U.S. Domestic Raw Steel Production(Mill Utilization)

Source: American Iron and Steel Institute

2009 2010 2011 2012 2013 2014

$0.00

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tu

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on

Est. Ammonia Manufactoring Margins U.S.Sources: Fertilizer Works; Fertilizer-Index.com; DTN; FarmFutures; Profercy; ICIS; ICE; EnVantage

Manufactoring Margin Henry Gas Price

Marketed Production of Natural Gas Units in MMCFD

Louisiana New Mexico

Oklahoma Texas

Wyoming

Other States

Fed. Gulf of Mexico

Daily Rate ex-Alaska

2012January 8,581 3,398 5,358 19,849 6,022 20,709 4,501 68,419 February 8,140 3,395 5,315 19,778 5,804 20,216 4,439 67,087 March 8,102 3,354 5,305 19,898 5,806 20,351 4,547 67,363 April 7,994 3,308 5,431 20,066 5,669 20,372 4,393 67,233 May 8,068 3,311 5,529 20,310 5,611 20,526 4,159 67,514 June 8,309 3,233 5,474 20,238 5,613 20,392 3,872 67,130 July 8,364 3,337 5,540 20,511 5,449 21,689 4,078 68,968 August 8,210 3,343 5,619 20,802 5,459 21,862 3,515 68,809 September 8,075 3,293 5,637 20,947 5,429 21,971 3,654 69,006 October 7,961 3,405 5,674 20,522 5,259 22,199 4,045 69,065 November 7,644 3,309 5,776 20,905 5,267 22,076 4,142 69,119 December 7,447 3,174 5,679 21,245 4,930 21,893 4,092 68,460 Average 8,075 3,322 5,529 20,425 5,525 21,193 4,119 68,188

2013January 7,340 3,082 5,682 19,601 5,255 22,574 4,028 67,563 February 7,283 3,290 5,639 19,830 5,323 22,996 3,953 68,314 March 6,941 3,343 5,707 19,859 5,336 22,867 3,815 67,867 April 6,771 3,437 5,816 20,013 5,308 23,299 3,883 68,526 May 6,680 3,513 5,854 20,402 5,125 23,759 3,644 68,977 June 6,582 3,541 5,875 20,176 5,261 24,229 3,404 69,066 July 6,677 3,492 5,956 20,531 5,171 24,483 3,520 69,830 August 6,367 3,499 5,950 20,601 5,111 25,169 3,306 70,004 September 6,071 3,467 5,998 20,445 4,810 25,035 3,510 69,336 October 5,848 3,508 5,986 20,630 5,195 25,641 3,277 70,084 November 5,840 3,387 6,128 20,437 5,209 26,685 3,531 71,217 December 5,619 3,259 5,885 19,950 4,984 27,243 3,291 70,231 Average 6,497 3,402 5,874 20,209 5,173 24,507 3,594 69,256

2014January 5,624 3,284 5,904 20,423 4,980 27,100 3,150 70,465

18

LNG/Foreign News/Canadian Imports LNG Prices in Europe have really been coming down the last two weeks as a result of the mild winter and high inventories. From the chart below we can see that inventories are higher than we have data for this time of year going back to 2007. The 12 month arb for the US-UK is now down to $4.72.

$1.50

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MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT

$/M

MBt

u

.

U.S. and U.K. Forward Gas Prices

(Sources: NYMEX, ICE, FOREX)

US Nymex Current US Nymex Last WeekUS Nymex Two Weeks Ago UK IPE CurrentU.K. IPE Nat Gas Last Week U.K. IPE Nat Gas Two Wks AgoU.S. Nymex 1 Year Previous U.K. IPE 1 Year Previous

As of April 2, 2014 Spread Month(UK-US)

3.67$ MAY3.59$ JUN3.67$ JUL3.78$ AUG3.87$ SEP4.35$ OCT5.38$ NOV5.61$ DEC5.74$ JAN5.86$ FEB5.64$ MAR5.45$ APR5.01$ MAY4.91$ JUN4.91$ JUL4.98$ AUG5.07$ SEP5.49$ OCT

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European Natural Gas StorageSource:GSE/En*Vantage

Sep 07 - Sep 08 Sep 08 - Sep 09 Sep 09 - Sep 10 Sep 10 - Sep 11 Sep 11 - Sep 12 Sep 12 - Sep 13 Sep 13 - Sep 14

19

Global LNG delivery highlights; during this last week of March we saw several late month scheduled deliveries rescheduled into the first week of April, which resulted in March average volumes ending slightly below estimate at 32.1 BCF/D. This is 2 BCF/D lower than the prior month and a BCF/D less than a year ago. Most of the decline from the prior month occurred in the Far East, which was down 1 ½ BCF/D to 24.8 BCF/D. European deliveries ended March close to average at 4.7 BCF/D and a little less than 4 BCF/D when reloads are netted out. Deliveries into the Americas, almost all of which moved into South America and Mexico, ended March at 2.6 BCF/D and very close to the average of the last 12 months. For the second month in a row we recorded no shipments into Canada and we saw only one small (2.6 BCF) cargo out of Trinidad that was unloaded in Boston area late in the month. For the month, Japan unloaded 12.5 BCF/D, a BCF/D less than the prior month, followed by South Korea (6.4 BCF/D), China (2.4 BCF/D) and with Taiwan, India and Spain all coming in close to 1.5 BCF/D. Our best guess at this point for April deliveries, considering the rescheduling into April we saw over this last week is for volumes to be down slightly in the 31.5-32 BCF/D range and flat to April, 2013. Global LNG lifting highlights; liftings volumes over the last week of the month held steady to the first three weeks and ended the month at 32.6 BCF/D and at about ½ BCF/D less than both the prior month and March, 2013. Middle East volumes end March down more than ½ BCF/D to 12.8 BCF/D, with fewer shipments from both Qatar and Oman. Pacific Basin liftings were also down close to a ½ BCF/D to 11.4 BCF/D, with slightly lower production out of both Indonesia and Russia. Thanks to a few late month shipments out of Trinidad, the Atlantic Basin ended the month about a ½ BCF/D above average at 8.4 BCF/D. For the month Qatar’s liftings averaged 10.2 BCF/D, followed by Malaysia (3.2 BCF/D), Australia (3.0 BCF/D), Trinidad (2.5 BCF/D) and Indonesia (2.2 BCF/D). As with deliveries, our best estimate for April liftings is for them to decline slightly and run in the 31.5-32 BCF/D range and remain closely balanced to deliveries. LNG re-export activity; March European re-exports ended the month at their highest level since last November at 24.6 BCF. For the month we saw seven reloads out of Spain totaling just under 21 BCF and one 3.7 BCF shipment from Belgium’s Zeebrugge terminal. All of these eight reloads are scheduled or have been already redelivered into South America or the Far East, with the volume split about equally between the two regions. LNG facility updates; in the Pacific Northwest, the Canadian government has recently approved another four LNG export licenses for proposed liquefaction facilities in the British Columbia region. This latest batch of approvals for more than 9.5 BCF/D of LNG exports brings the total export licenses to seven that have been approved thus far. Although LNG shipments from this area could have advances over US Gulf Coast cargoes due to the 7-10 day shorter travel time to the Far East, even after the expansion of the Panama Cannel, the prospects for any of these projects is still in question. British Columbia Premier, Christy Clark, didn’t sound overly confident recently when she said she hoped some of the proposed LNG projects get corporate go-head soon, but recognized some of the major road blocks still to be addressed including available skilled labor and environmentalists push back; with skilled labor identified by most as biggest concern. Scheduled/Estimated Port Dates for US/Canada/Mexico:

20

Deliveries:

Current Month US Imports:

North American LNG

Mexico-Altamira 4/1/14 LNG Lagos 2.542 Mexico-Altamira 4/7/14 Al Karaana 4.377 Mexico-Manzanillo 4/8/14 Barcelona 3.640 Mexico-Manzanillo 4/17/14 Gallina 2.800

Boston 3/29/14 Matthew 2.600

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Total AtlanticBasin

Middle East Pacific Basin

LNG Liftings thru 3/31 Source:EnVantage Models, Daily Tanker Tracking

2013 (BCF/D)

Apr-13 (BCF/D)

May-13 (BCF/D)

Jun-13 (BCF/D)

Jul-13 (BCF/D)

Aug-13 (BCF/D)

Sep-13 (BCF/D)

Oct-13 (BCF/D)

Nov-13 (BCF/D)

Dec-13 (BCF/D)

Jan-14 (BCF/D)

Feb-14 (BCF/D)

Mar-14 (BCF/D) -

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Total Europe Americas Asia MiddleEast

LNG Deliveries thru 3/31 Source: EnVantage Models, Daily Tanker Tracking

2013 (BCF/D)

Apr-13 (BCF/D)

May-13 (BCF/D)

Jun-13 (BCF/D)

Jul-13 (BCF/D)

Aug-13 (BCF/D)

Sep-13 (BCF/D)

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LNG Re-Exports thru 3/31 Source: EnVantage Models, Daily Tanker Tracking

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US LNG Trends Daily Sendouts

Sources: Pipeline Nominations, En*Vantage Models

2012 2013

Note: Everett Volumes Do Not Include Direct LDC Deliveries;

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US LNG Trends Daily Sendouts

Sources: Pipeline Nominations, En*Vantage Models

2013 2014

Note: Everett Volumes Do Not Include Direct LDC Deliveries;

21

Canadian Imports We are now drifting more consistently below last year’s net import levels.

Power Generation

The Electric Edison Institute (EEI) report for the week ending Mar 29 was down 0.2% from last week to 72,716 GWH, which was 1.2% above the comparable period last year. This latest EEI number was 0.5% below our forecast of 73,100. For the next 3 weeks

3,000,000

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US Daily Imports from Canada (Net)Sources: Pipeline Nominations. En*Vantage Models

2012 2013

Note: These volumes are higher than EIA monthlyreported levels as this chart includes all Canadian volumes imported on Alliance Pipeline including the NGL component

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US Daily Imports from Canada (Net)Sources: Pipeline Nominations. En*Vantage Models

2013 2014

Note: These volumes are higher than EIA monthlyreported levels as this chart includes all Canadian volumes imported on Alliance Pipeline including the NGL component

0100,000200,000300,000400,000500,000600,000700,000800,000900,000

1,000,000

Imports From Canada's Canaport FacitityData is from Daily Dispatches on Maritimes Northeast Pipeline

at the Brunswick Meter (MCFD) Total U.S. Imports from Canaport7/9/2009-4/1/2014 is 341 BCF; Total

2009 imports from Canaport was 34 BCF;2010 imports from Canaport was 77 BCF;

2011 imports from Canaport was 118 BCF;2012 imports from Canaport was 61 BCF;2013 imports from Canaport was 37 BCF.

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BCF

Canadian Natural Gas Storage 2009-2014

Source: Canadian Gas Association

5-Year Max 5-Year Min 5-Year Average 2012 2013 2014

22

we are forecasting power generation to be 69,900, 69,100, and 68,900 GWH. Meanwhile the nuclear fleet appears to have bottomed and starting to come out of the spring turn around season.

3/29/2014

GWH Output GWH Output

GWH Output

Week over

GWH Output Week over

Week GWH Output

GWH Output

Year over

GWH Output

Year over Year

3/29/2014 3/22/2014 Week Delta % Chg 3/29/2013 Year Delta % ChgNew England 2,473 2,463 10 0.4% 2,317 156 6.7%Mid-Atlantic 8,544 8,487 57 0.7% 7,984 560 7.0%Central Industrial 13,650 13,486 164 1.2% 12,930 720 5.6%West Central 6,282 6,100 182 3.0% 6,279 3 0.0%Southeast 17,974 18,182 (208) -1.1% 18,771 (797) -4.2%South Central 11,338 11,489 (151) -1.3% 11,338 0 0.0%Rocky Mountain 4,504 4,591 (87) -1.9% 4,326 178 4.1%Pacific Northwest 3,007 3,082 (75) -2.4% 2,874 133 4.6%Pacific Southwest 4,944 4,986 (42) -0.8% 5,020 (76) -1.5%

Total US 72,716 72,866 (150) -0.2% 71,839 877 1.2%

EEI Regional Generation Numbers -

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s

Weekly US Electric Generation(As of Mar 29, 2014)

2012201320145-yr min5-yr max

`

Source: Edison Electric Institute

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rs

Daily U.S. Nuclear GenerationSource: NRC data and En*Vantage Models

23

Weather Outlook US Weather The NWS is expecting colder than normal temperatures across the eastern half of the country for the next 6 to 10 days and warmer than normal temperatures across the West. The 8 to 14 day forecast is predicting colder than normal temperatures along the Gulf Coast as well as the north central US extending into the New England area with warmer than normal temperatures affecting the Southwest, West Coast, and Florida.

Europe/Asia Weather

http://www.cpc.ncep.noaa.gov/products/predictions/610day/610temp.new.gif

http://www.cpc.ncep.noaa.gov/products/predictions/814day/814temp.new.gif

24

Temperature forecasts from the National Centers for Environmental Prediction. Normal Temperature derived from CRU monthly climatology for 1901-2000.

Petroleum Statistics The EIA petroleum statistics for the week ending Mar 28 indicated draws in crude and gasoline inventories and a build in distillate stocks. US crude inventories were down by 2.379 MM Bbls, with the decrease occurring mostly in PADDs II and III. Within PADD II, Cushing inventories decreased this week by 1.2 MM Bbls, as crude continues to move to the Gulf via the southern leg of TransCanada’s Keystone pipeline. The closure of the Houston Ship Channel last week resulted in a much lower import number and contributed to the decrease in crude inventories this week. In addition, run levels were up, and we would expect that to continue as refiners come out of turnaround season. Gasoline inventories fell by 1.56 MM Bbls this week as demand came in higher than expected and the EIA reported a negative balancing item of 0.10. Distillate stocks were up by 0.554 MM Bbls this week which was unexpected. We will most likely see distillate demand pick up in the coming weeks as we enter the planting season which will be later this year due to the unusually cold winter we experienced.

Projections for EIA Inventory Changes for the week ending 03/28/14(million of barrels )

Industry Surveys En*Vantage Actual API Actual EIACrude Stocks +2.500 2.100 -5.800 -2.379Gasoline Stocks -2.000 -0.770 +0.018 -1.574Distillate Stocks -0.300 -0.217 -0.017 0.554

25

The EIA indicated that total products stocks increased this week by 0.17% (1.108 MM Bbls) to 656.875 MM Bbls for the week ending Mar 28. We are now 31.8 MM Bbls below 2013 levels for the corresponding week.

Implied domestic demand for total petroleum products was down this week to 18.20 MM BPD from 18.26 MM BPD the previous week. Remember implied demand is product supplied to the market from primary supply sources. On a 4-week average basis, total product implied demand was 18.57 MM BPD, which is 0.76% higher than year ago levels. On a days-of-supply basis, total products inventories were at 36.1, 0.2 days higher than last week. Last year at this time, there were 37.3 days of product inventories for the corresponding period.

3/28/2014Stocks -1000 Barrels 03/28/14 03/21/14 wkly chg 03/29/13 yr ovr yr chg 5-yr Avg 5-yr chg

Crude 380,092 382,471 -2,379 388,624 -8,532 364,461 15,631Gasoline 215,624 217,198 -1,574 220,664 -5,040 220,184 -4,560Distillate 112,955 112,401 554 112,986 -31 138,230 -25,275

Total 708,671 712,070 -3,399 722,274 -13,603 722,875 -14,204US Refining Capacity (MBPD) 17,818 17,818 0 17,703 115 17,614 204Industry Op Rate on Crude Input 86.0% 84.7% 1.3% 84.8% 1.2% 82.3% 3.6%Crude Input (MBPD) 15,315 15,092 223 15,008 307 14,504 811Days of Supply of Crude Inventories 24.8 25.3 -0.5 25.9 -1.1 25.1 -0.3Crude Imports (MBPD) 6,764 7,553 -789 7,931 -1,167 9,524 -2,760Gasoline Implied Demand (MBPD) 8,713 9,002 -289 8,523 190 8,869 -156Days of Supply of Gaso Inventories 24.7 24.1 0.6 25.9 -1.1 24.8 -0.1Distillate Implied Demand (MBPD) 3,795 3,476 319 3,881 -86 3,690 105Days of Supply of Dist Inventories 29.8 32.3 -2.6 29.1 0.7 37.5 -7.7

Key EIA Petroleum Statistics for the Week Ending

650,000

675,000

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725,000

750,000

775,000

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650,000

675,000

700,000

725,000

750,000

J F M A M J J A S O N D

Total Product Inventories - Year over Year(Thousand Barrels)

2011201220132014

26

The EIA reported net product exports (exports minus imports) for the week ending Mar 28 increased to 1,872 MBPD from 1,862 MBPD last week. One year ago at this time net product exports were 997 MBPD.

Outlook for Crude Balances The 2.38 MM Bbl decrease in crude stocks this past week put crude inventories at 380.092 MM Bbls, 8.53 MM Bbls below year ago levels and 15.63 MM Bbls above the 5-year average for this time of year. On a days-of-supply basis, crude inventories are at 24.8 days, 0.5 days lower than last year at this time. The 2.38 MM Bbl stock decrease is hard to justify based on EIA’s supply versus demand numbers for crude oil: • Domestic crude production was at 8.19 MBPD compared to 8.19 MM BPD last week.

17,000

17,500

18,000

18,500

19,000

19,500

20,000

20,500

21,000

21,500

17,000

17,500

18,000

18,500

19,000

19,500

20,000

20,500

21,000

21,500


Implied Demand for Total US Refined Products(Thousand BPD)

2011 Implied Demand 2012 Implied Demand

2013 Implied Demand 2014 Implied Demand

`

30.0

32.0

34.0

36.0

38.0

40.0

42.0

44.0

32.0

34.0

36.0

38.0

40.0

42.0

44.0


Days of Inventory Supplies of Total Products

2010 Days of Supply 2011 Days of Supply 2012 Days of Supply2013 Days of Supply 2014 Days of Supply

0

500

1,000

1,500

2,000

2,500


Net Refined Product Exports (Exports - Imports)(1000 BPD)

2012 Net Exports2013 Net Exports2014 Net Exports

27

• Crude imports were down on the week to 6.83 MM BPD compared to 7.62 MM BPD from the previous week. On a regional basis, that decrease can be attributed largely to PADD III. We mentioned last week that this was likely to happen due to a collision that resulted in a fuel oil spill and closed the Houston Ship Channel for four days last week.

• Total crude supplies (domestic production + imports +SPR release) were at 14.96 MM BPD, while refinery crude inputs were 15.32 MM BPD. This difference implies that crude inventories should have decreased 2.51 MM Bbls. A balancing item of positive 19 MBPD of supplies was needed to derive EIA’s reported inventory decrease of 2.38 MM Bbls. Year to date, the balancing item has been averaging +87 MBPD versus +39 MBPD last year for the same period.

Examining crude inventories on a regional basis indicates that the decrease in crude inventories can be attributed to PADDs II, III, and V this week. It is worth noting that within PADD II, Cushing stocks decreased 1.2 MM Bbls on the week.

Last week, PADD III inventories were at a record level at over 200 MM bbls. Gulf Coast inventories in the past have come close to 200 MM Bbls, but never rise above that mark. Please see the chart below. The EIA reports that the Gulf Coast has 72.86 MM bbls of storage for crude oil at refineries and another 200.5 MM Bbls of storage in crude tank farms. This means the operating capacity for crude storage on the Gulf Coast is somewhere around 273 MM Bbls. While 200 MM Bbls of storage is a record on the Gulf Coast, we still have some room before hitting full capacity. It is also important to remember that the capacity on the Gulf Coast is expanding.

Wk/Wk Year Ago Yr/Yr Yr/Yr3/7/2014 3/14/2014 3/21/2014 3/28/2014 Chng 3/29/2013 Chng %

7.311 7.309 7.617 6.831 (0.786) 7.931 (1.100) -13.9%0.491 0.544 0.799 0.538 (0.261) 1.004 (0.466) -46.4%1.751 1.967 1.922 1.902 (0.020) 1.748 0.154 8.8%3.759 3.453 3.397 2.978 (0.419) 3.935 (0.957) -24.3%0.252 0.269 0.358 0.269 (0.089) 0.298 (0.029) -9.7%1.059 1.076 1.141 1.144 0.003 0.944 0.200 21.2%

East Coast (PADD I)Midwest (PADD II)Gulf Coast (PADD III)Rocky Mountain (PADD IV)West Coast (PADD V)

Regional Crude Oil ImportsEIA Week Ending

U.S.

Wk/Wk Year Ago Yr/Yr Yr/Yr3/7/2014 3/14/2014 3/21/2014 3/28/2014 Chng 3/29/2013 Chng %

370.0 375.9 382.5 380.1 (2.4) 388.6 (8.5) -2.2%10.1 9.9 9.2 10.6 1.4 12.4 (1.8) -14.5%97.5 99.4 98.4 96.8 (1.6) 116.4 (19.6) -16.8%30.8 29.8 28.5 27.3 (1.2) 49.2 (21.9) -44.6%

189.5 194.3 200.3 199.0 (1.3) 186.3 12.6 6.8%21.5 21.1 21.4 21.9 0.4 18.9 3.0 15.9%51.4 51.2 53.1 51.8 (1.2) 54.7 (2.8) -5.2%

East Coast (PADD I)Midwest (PADD II)Cushing, OklahomaGulf Coast (PADD III)Rocky Mountain (PADD IV)West Coast (PADD V)

Regional Crude Oil Inventories EIA Week Ending

U.S.

28

Total refinery runs increased this week to 15.32 MM BPD, 223 MBPD above the previous week’s crude run levels. The increase was seen in PADDs II and III this week. As mentioned earlier, the Houston Ship Channel was closed for four days due to a collision that resulted in a fuel oil spill last week. There were reports that ExxonMobil reduced run rates at the Baytown, TX refinery because of that closure; however, it does not appear to have affected run levels. Year-to-date, crude runs were 0.76 MM BPD higher on average than they were last year. These high run levels have kept crude inventories from exceeding last year’s levels. While crude production is higher this year, imports are lower, and the high run levels are the reason crude stocks are not building at a faster pace. As we come out of turnaround season, refiners have every incentive to keep increasing run levels, and we should see runs continue to rise in the coming weeks.

In our 5-week outlook for crude balances, we expect production to remain at the higher levels we have been seeing in the EIA statistics each week. We also expect crude runs to continue rising as we come out of turnaround season especially with total product stocks at such a low level. We expect US crude stocks to be at 385.3 MM Bbls by May 2, 10.2 MM Bbls below year ago levels for the same corresponding period, with days of supply at 24.9 days versus 26.1 days for the same time last year.

Wk/Wk Year Ago Yr/Yr3/7/2014 3/14/2014 3/21/2014 3/28/2014 Chng 3/29/2013 Chng14.987 14.951 15.092 15.315 0.223 15.008 0.3071.002 1.073 1.035 0.952 (0.083) 1.059 (0.107)3.288 3.302 3.113 3.327 0.214 3.160 0.1677.726 7.661 7.912 8.054 0.142 7.939 0.1150.58 0.59 0.561 0.520 (0.041) 0.596 (0.076)2.39 2.325 2.471 2.462 (0.009) 2.253 0.209

East Coast (PADD I)Midwest (PADD II)Gulf Coast (PADD III)Rocky Mountain (PADD IV)West Coast (PADD V)

Regional Crude Oil Refinery Inputs - MM BPDEIA Week Ending

U.S.

29

03/28/14

Actuals for Wk Ending 3/21/14


For Wk Ending 4/4/14





Crude Production (MM BPD) 8.19 8.19 8.20 8.20 8.20 8.20 8.20 8.20Net Crude Imports (MM BPD) 7.56 6.76 7.00 7.50 7.30 7.30 7.30 7.30SPR Change (MM BPD) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Total Crude Supply (MM BPD) 15.75 14.96 15.20 15.70 15.50 15.50 15.50 15.50Crude Runs (MM BPD) 15.09 15.32 14.90 15.30 15.35 15.40 15.45 15.45Balance: Surplus/Deficit (MM BPD) 0.65 -0.36 0.30 0.40 0.15 0.10 0.05 0.05Implied Wkly Inventory Chg (MM Bbls) 4.58 -2.51 2.10 2.80 1.05 0.70 0.35 0.35Balancing Item for Crude (MM BPD) 0.29 0.02 0.00 0.00 0.00 0.00 0.00 0.00Actual Stock Chg (excl. SPR) (MM Bbls) 6.62 -2.38 2.10 2.80 1.05 0.70 0.35 0.35SPR Change (MM Bbls) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Weekly Crude Balances for Week Ending and Projections for the next 5 weeks Our

Projection For Wk Ending 3/28/14

Our Projection for the next 5 weeks

13,500

14,000

14,500

15,000

15,500

16,000

16,500

13,500

14,000

14,500

15,000

15,500

16,000

16,500

1000

Bbl

s pe

r day

US Crude Runs

201220132014 Projection2014 Actual5-yr average

Our Projection

310

320

330

340

350

360

370

380

390

400

410

420

310

320

330

340

350

360

370

380

390

400

410

420


EIA Commercial Crude Inventories

201220132014 Projection2014 Actual5-Year Range5-Year Average

MM Barrels

Our Projection

21

22

23

24

25

26

27

28

21

22

23

24

25

26

27

28


Day

s of

Sup

ply

Crude Inventory Days of Supply

201220132014 Projection2014 Actual5-yr Avg5-yr Range

Our Projection

30

Outlook for Gasoline Balances The EIA reported that implied gasoline demand fell to 8.71 MM BPD for the week ending Mar 28, 3.21% lower than the previous week and a 2.23% increase to year ago levels. The EIA 4-week average for implied gasoline demand was at 8.79 MM BPD, 0.87% higher on the week and 3.85% higher than year ago implied demand levels. While the weekly gasoline demand numbers have been coming in higher than last year, the EIA just released statistics for the month of January on Friday showing that gasoline demand for January 2014 came in at 8.21 MM BPD which was 12 MBPD lower than January 2013 demand. The EIA was reported January demand in the weekly statistics at 8.279 MM BPD, 72 MBPD higher than the revised monthly number and leads to concern about weak gasoline demand this year. The decrease in gasoline inventories of 1.57 MM Bbls puts gasoline stocks at 215.624 MM Bbls, 5.04 MM Bbls below year ago levels and 4.56 MM Bbls below the 5-year average for the corresponding period. EIA’s gasoline production, net imports and implied demand would indicate that gasoline inventories should have decreased 0.89 MM Bbls; however, the balancing item was a negative 0.10 MM BPD to obtain the 1.57 MM Bbl decrease in gasoline stocks. Gasoline stocks in the Northeast fell this week after rising last week for the first time in 7 weeks. That puts PADD I stocks at 55.1 MM Bbls. We haven’t seen inventories this low in PADD I since 2004 at this time of year. For the next 5 weeks, we are expecting implied demand for gasoline to average 8.78 MM BPD, 3.4% higher than year ago levels during the corresponding period. As a point of reference implied gasoline demand year to date is running 0.5% above the same period last year.

7,800

7,900

8,000

8,100

8,200

8,300

8,400

8,500

8,600

8,700

8,800

8,900

9,000

9,100

9,200

9,300

9,400

7,800

7,900

8,000

8,100

8,200

8,300

8,400

8,500

8,600

8,700

8,800

8,900

9,000

9,100

9,200

9,300

9,400


Dem

and

MB

PD

Gasoline Supplied or Implied Demand


Our Projection

31

We expect gasoline inventories to generally decrease over the next five weeks. By May 2, gasoline inventories could be at 214.0 MM Bbls, 1.1 MM Bbls lower than the comparable period last year. Gasoline days-of-supply should average around 24.5 days, compared to 25.7 days seen last year at this time.

Outlook for Distillate Balances This week’s EIA report indicated that implied distillate demand for the week ended Mar 28 rose to 3.795 MM BPD, which was a 9.18% increase from last week and 2.22% below year ago implied demand levels for distillate. On a 4-week average basis, implied distillate demand was at 3.78 MM BPD, 1.67% higher than the previous week and 0.64% higher than year ago levels. The last several weeks we have reported that the Gulf Coast to Europe diesel arb is widening. The EIA released its monthly statistics for January which showed that distillate exports in January 2013 were 10% lower than December 2013 at 34.2 MM Bbls. The extremely cold weather in the US in January and February contributed to the arb to Europe closing; however, OPIS reported this week that January distillate exports were still 43% higher than January 2013, and the arb has been widening back out over the last month. In addition, OPIS reported this week that US distillate exports are also heading to South America where demand is particularly strong right now. The EIA reported a 0.554 MM Bbl increase in distillate inventories for the week to 112.955 MM Bbls. Distillate stocks are now 0.03 MM Bbls below year ago levels and

03/28/14








Crude Runs (MM BPD) 15.09 15.32 14.90 15.30 15.35 15.40 15.45 15.45Gasoline Yield % 59.6% 59.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0%Total Gasoline Production (MM BPD) 9.00 9.04 8.94 9.18 9.21 9.24 9.27 9.27Finished Gasoline Imports (MM BPD) 0.02 0.07 0.05 0.05 0.05 0.05 0.05 0.05Gasoline Exports (MM BPD) 0.58 0.53 0.60 0.55 0.55 0.55 0.55 0.55Total Gasoline Supply (MM BPD) 8.45 8.59 8.39 8.68 8.71 8.74 8.77 8.77Implied Gasoline Demand (MM BPD) 9.00 8.71 8.50 8.70 8.65 8.80 8.85 8.90Balance: Surplus/Deficit (MM BPD) -0.56 -0.13 -0.11 -0.02 0.06 -0.06 -0.08 -0.13Implied Wkly Stock Chg (MM Bbls) -3.89 -0.89 -0.77 -0.14 0.42 -0.42 -0.56 -0.91Balancing Item for Gasoline (MM BPD) -0.17 -0.10 0.00 0.00 0.00 0.00 0.00 0.00Actual Stock Chg Reported (MM Bbls) -5.10 -1.57 -0.77 -0.14 0.42 -0.42 -0.56 -0.91

Weekly Gasoline Balances for Week Ending and Projections for the next 5 weeks Our



185,000

190,000

195,000

200,000

205,000

210,000

215,000

220,000

225,000

230,000

235,000

240,000

245,000

250,000

185,000

190,000

195,000

200,000

205,000

210,000

215,000

220,000

225,000

230,000

235,000

240,000

245,000

250,000


EIA US Gasoline Inventories


1000 Barrels

Our Projection

20.0

21.0

22.0

23.0

24.0

25.0

26.0

27.0

28.0

29.0

30.0

20.0

21.0

22.0

23.0

24.0

25.0

26.0

27.0

28.0

29.0

30.0


Day

s of

Sup

ply

Gasoline Inventory Days of Supply

5-yr Range5-yr Average201220132014 Projection2014 Actual

Our Projection

32

25.28 MM Bbls below the 5-year average for this time of year. Distillate inventories are very low for this time of year. In PADD I, inventories decreased this week, and they are now 1.7 MM Bbls lower than they were the same week last year. We expect that implied distillate demand will average about 3.80 MM BPD over the next 5 weeks, 3.3% higher than 2013 levels over the corresponding period. For reference, year to date distillate demand is running 2.5% higher than implied demand for distillates one year ago for the comparable period. Based on this week’s distillate stock number and product supplied number, days of supply is at 29.8 days; however, if we were to add exports into product supplied, and recalculate days of supply, we would see a much lower number of 22.8. We do expect to see distillate demand pick up in April and early May due to the planting season. With the cold winter this year, it is likely that planting will take place later than usual. We will continue to monitor the planting data and report any progress.

Distillate inventories should increase over the next three weeks and decrease the following two weeks. By May 2, distillate inventories are expected to be 113.3 MM Bbls about 4.3 MM Bbls below year ago levels with days-of-inventory supplies at 29.0 days versus 32.1 days one year ago for the corresponding period.

2,900

3,100

3,300

3,500

3,700

3,900

4,100

4,300

4,500

4,700

2,900

3,100

3,300

3,500

3,700

3,900

4,100

4,300

4,500

4,700


Dema

nd M

BPD

Distillate Supplied or Implied Demand


Our Projection

03/28/14








Crude Runs (MM BPD) 15.09 15.32 14.90 15.30 15.35 15.40 15.45 15.45Distillate Yield % 31.4% 31.3% 31.0% 31.3% 31.3% 31.3% 31.3% 31.3%Total Distillate Production (MM BPD) 4.73 4.79 4.62 4.78 4.80 4.81 4.83 4.83Distillate Imports (MM BPD) 0.23 0.24 0.45 0.25 0.25 0.25 0.25 0.25Distillate Exports (MM BPD) 1.26 1.16 1.30 1.25 1.25 1.25 1.25 1.25Total Distillate Supply (MM BPD) 3.70 3.87 3.77 3.78 3.80 3.81 3.83 3.83Implied Distillate Demand (MM BPD) 3.48 3.80 3.80 3.75 3.70 3.80 3.85 3.90Supply: Surplus/Deficit (MM BPD) 0.22 0.08 -0.03 0.03 0.10 0.01 -0.02 -0.07Implied Wkly Stock Chg (MM Bbls) 1.55 0.55 -0.22 0.22 0.68 0.09 -0.15 -0.50Balancing Item for Distillate(MM BPD) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Actual Stock Chg Reported (MM Bbls) 1.56 0.55 -0.22 0.22 0.68 0.09 -0.15 -0.50

Weekly Distillate Balances for Week Ending and Projections for the next 5 weeks Our



33

Refinery Activities The table below highlights planned turnarounds that we are aware of occurring in 2014.

95,000

105,000

115,000

125,000

135,000

145,000

155,000

165,000

175,000

185,000

95,000

105,000

115,000

125,000

135,000

145,000

155,000

165,000

175,000

185,000EIA Distillate Inventories


1000 Barrels

Our Projection

22.0

24.0

26.0

28.0

30.0

32.0

34.0

36.0

38.0

40.0

42.0

44.0

46.0

48.0

50.0

52.0

Day

s of

Sup

ply

Distillate Inventory Days of Supply

5-yr Average

2012

2013

2014 Projection

2014 Actual

Our Projection

Refinery

Refinery Capacity (MBPD) Start Date Time Frame Maintenance

Phillips 66 Wood River, IL 365 26-Feb unknown

This turnaround was originally planned for March. The work will include a 182 MBPD CDU and a 100 MBPD vacuum distillation unit.

Phillips 66 Borger, TX 154 28-Feb 41 days The work will involve shutting a 30 MBPD FCC. Valero Sunray, TX 170 unknown ending 21-Mar unknownValero Benicia, CA 144 Feb 7 weeks The work will involve a coker unit.BP Whiting, IN 413 1-Mar 6 weeks The work will involve shutting an 80 MBPD FCC.

Phillips 66 Alliance, LA 247 5-Mar 47 daysThe work will include 10 units including the only crude unit. The FCC will remain in operation.

Valero Memphis, TN 180 7-Mar 6 weeksThe work will affect a crude unit and an FCC and about half of the refinery will be idled.

Husky Lima, OH 160 9-Mar 18 daysthe work will involve several process units and associated equipment and will bring refinery rates down to 60%.

Suncor Denver, CO 110 13-Mar 2-Apr unknownBP-Husky Toledo, OH 160 Mar 30 - 50 days The work will affect 30% of operating capacity.HollyFrontier Tulsa, OK 155.3 Mar unknown unknown

Irving Oil St. John, New Brunswick 300 Mar 30 days

This turnaround was pushed back from Feb and will include a 75 MBPD FCC, a 150 MBPD CDU, and a 25 MBPD reformer.

Valero Corpus Christi, TX 205 Mar 3 weeks The work will involve the crude/hydrocracker units.

United Warren, PA 70 Mar 30 daysThis will be a plant-wide turnaround and will involve adding a riser to an FCC.

Citgo Lake Charles, LA 440

1st quarter (probably in Jan

or Feb) unknown The work will include an FCC.

PBF Energy Palsboro, NJ 160end of 1st

quarter 3 weeks A small crude unit will be affected.Alon Big Spring, TX 70 May 45 days The work will involve shutting the crude unit and an FCC

Motiva Port Arthur, TX 600 Sep unknown

This work was delayed from Feb 2014 and could be pushed back to Jan 2015. The work will include a crude unit, hydrotreater, and other units.

PBF Energy Toledo, OH 126 late 2014

40 days (possibly Oct

& Nov)This shutdown will be for maintenance that occurs once every five years.

Chevron Richmond, CA 245 late 2014 unknownScope of work unknown but will include some repairs to units affected by the 2012 fire.

34

Major news on refinery activities is shown below. Also, international refinery events that could impact US product balances are noted. This does not purport to be a comprehensive list but comes from various sources (Bloomberg, Reuters and Dow Jones).

This Week’s News Last Week’s News • BP reported that the crude unit at the 405

MBPD Whiting, IN refinery was operating normally on Mar 25 after an overnight malfunction that led to a crude oil spill into Lake Michigan.

• Total reported restarting the SRU at the 233.5 MBPD Port Arthur, TX refinery on Mar 26 after an unexpected shutdown on Mar 25.

• Valero reported emissions from a crude atmospheric tower on Mar 23 at the 85 MBPD Ardmore, OK refinery.

• CVR reported emissions from an FCC regenerator at the 70 MBPD Wynnewood, OK refinery on Mar 24.

• ExxonMobil reported that operations were back to normal on Mar 28 at the 560.5 Baytown, TX refinery after the Houston Ship Channel reopened.

• Tesoro reported performing unplanned work at the 166 MBPD Martinez, CA refinery on Mar 28. The affected units were not specified, but it was reported there was no impact to operations.

• Phillips 66 shut an FCC at the 247 MBPD Old Ocean, TX refinery on Mar 28 for two weeks of repairs.

• ExxonMobil reported reducing rates to an FCC and a catalytic light ends unit on Apr 1 due to emissions at the 560.5 Baytown, TX refinery; however, they stated there was a minimal impact to production.

• Marathon reported that the FCC at the 451 MBPD Galveston, TX refinery restarted on Mar 19 after an electrical upset.

• Phillips 66 reported restarting a reformer at the 362 MBPD Wood River, IL refinery on Mar 23. A process unit upset was reported at the refinery on Mar 20.

• BP experienced an upset on Mar 24 at the 410 MBPD Whiting, IN refinery which resulted in a crude oil discharge from a cooling water outfall into Lake Michigan; however, the incident has not affected operations.

• Citgo reported that the turnaround at the 165 MBPD Corpus Christi, TX refinery which began on Feb 6 was concluded on Mar 24.

• Phillips 66 reported flaring at the 247 MBPD Sweeny refinery in Old Ocean, TX on Mar 24.

• ExxonMobil reduced rates at the 584 MBPD Baytown, TX refinery on Mar 24 due to the closing of the Houston Ship Channel.

• ExxonMobil reported flaring at the 345 MBPD Beaumont, TX refinery on Mar 20 due to a compressor which shut down.

• Valero reported shutting the 100 MBPD crude unit and the only FCC at its 195 MBPD Memphis, TN refinery on Mar 7 after an air blower failed. These units along with a hydrocracker were scheduled to be shut for maintenance on Apr 1 for six weeks but will now be shut until after repairs have been completed.

• Phillips 66 reported that several workers were injured on Mar 17 at the 154 MBPD Borger, TX refinery during planned maintenance activities.

Gasoline and Distillate Crack Spreads

NYMEX Gasoline Cracks The prompt NYMEX gasoline crack was down this week to $20.79/bbl on Wednesday compared to $21.80/bbl last week. Using Brent as the reference crude, the prompt gasoline crack spread would be cut by approximately $5.17/bbl. Last year at this time

35

the prompt NYMEX gasoline crack was at $30.52/bbl when days of supply of inventories were at 25.9 days compared to 24.7 days currently.

The 12 month-strip (May-14 to Apr-15) for the gasoline crack spread increased this week to $19.51/bbl compared to $18.16/bbl one week ago.

($10)

($5)

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

($10)

($5)

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

NYMEX Gasoline (RBOB) Crack Spread(Front Month $/Bbl)

Apr 2, 2013: $30.52, 25.9 days of supply

$/Bbl


$13

$15

$17

$19

$21

$23

$25

$27

May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15

$/B

bl

NYMEX Gasoline (RBOB) Crack Spread - 12 Month Strip

NYMEX Gasoline Crack Spread 3/12/14




36

Regional spot gasoline crack spreads were down in all regions this week except the West Coast.

NYMEX Distillate Cracks The prompt NYMEX heating oil crack decreased this week to $20.78/bbl compared to $22.29/bbl one week ago. If Brent was used as the marker crude the prompt heat crack would be lower by $5.17/bbl. One year ago the prompt heating oil crack was $32.48/bbl.

Gulf Coast Mid-Cont Northeast Northeast West Coast UNLR - LLS UNLR-WTI UNLR - Brent RBOB - Brent CARBOB - ANS

$/bbl $/bbl $/bbl $/bbl $/bblWeek Ended

1/31/2014 $4.02 $9.06 $5.19 $3.31 $7.892/7/2014 $4.11 $9.04 $6.80 $4.20 $8.46

2/14/2014 $6.73 $12.19 $10.43 $7.09 $11.752/21/2014 $4.57 $13.12 $12.10 $8.88 $14.542/28/2014 $6.57 $14.07 $9.37 $7.95 $14.543/7/2014 $8.70 $16.89 $10.63 $7.17 $13.28

3/14/2014 $12.93 $20.45 $10.68 $7.02 $15.383/21/2014 $11.68 $16.88 $9.71 $5.55 $13.043/28/2014 $10.26 $15.26 $8.85 $4.21 $13.97

Month .Mar-13 $7.53 $29.40 $12.98 $11.97 $18.17Apr-13 $9.95 $22.88 $10.35 $10.98 $21.50May-13 $12.07 $34.05 $12.59 $15.80 $22.06Jun-13 $11.65 $21.39 $12.01 $14.98 $19.98Jul-13 $10.53 $18.08 $15.33 $19.97 $12.76Aug-13 $8.78 $16.45 $13.41 $15.42 $7.33Sep-13 $2.30 $8.84 $5.89 $5.71 $12.00Oct-13 $1.32 $3.42 $3.04 $1.71 $7.77Nov-13 $2.69 $3.52 $4.46 $3.50 $4.57Dec-13 $0.97 $1.10 $5.04 $3.41 $2.00Jan-14 $3.35 $10.16 $5.63 $3.66 $4.36Feb-14 $7.01 $12.06 $8.60 $7.07 $12.86Mar-14 $10.93 $17.25 $9.86 $5.85 $13.79

UNLR - unleaded regular; LLS - Louisiana Light Sweet; ANS - Alaskan North Slope

CARBOB - California Reformulated Blend for Oxgenated Blending

Regional Spot Gasoline Crack Spreads

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Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Heat

Crac

k $/B

bl

NYMEX Heat Crack Spread(Front Month)


Apr 2, 2014: $20.78,29.8 days of supply

37

The 12 month-strip (May-14 to Apr-15) for the heating oil crack was $27.21/bbl versus $26.34/bbl last week.

Regional spot diesel crack spreads were up in the Gulf Coast and Mid-Continent this week but down in the Northeast and West Coast.

22.022.523.023.524.024.525.025.526.026.527.027.528.028.529.029.530.030.531.0

Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00 Jan-00

$/Bbl

NYMEX Heating Oil Crack Spread -12 Month Strip

NYMEX Heating Oil Crack Spread 3/12/14NYMEX Heating Oil Crack Spread 3/19/14NYMEX Heating Oil Crack Spread 3/26/14NYMEX Heating Oil Crack Spread 4/2/14

Gulf Coast Mid-Cont Northeast West Coast ULS Diesel - LLS ULS Diesel - WTI ULS Diesel - Brent ULS Diesel - ANS

Wk ending $/bbl $/bbl $/bbl $/bblWeek Ended

1/31/2014 $19.99 $26.67 $32.36 $20.302/7/2014 $18.57 $25.86 $34.89 $19.552/14/2014 $18.20 $25.50 $22.54 $18.952/21/2014 $18.37 $26.05 $25.51 $19.972/28/2014 $18.33 $25.14 $23.38 $17.483/7/2014 $17.94 $25.54 $22.67 $17.213/14/2014 $18.16 $25.39 $18.12 $14.093/21/2014 $17.39 $24.10 $17.12 $13.513/28/2014 $17.98 $24.36 $16.56 $13.32

MonthMar-13 $12.54 $34.99 $17.76 $20.18Apr-13 $15.00 $31.67 $18.23 $18.89May-13 $14.64 $29.51 $17.89 $17.18Jun-13 $15.39 $26.70 $17.82 $18.38Jul-13 $13.48 $22.17 $18.97 $15.93Aug-13 $15.21 $23.57 $18.08 $19.75Sep-13 $16.69 $22.86 $16.58 $18.87Oct-13 $19.41 $23.43 $16.17 $19.92Nov-13 $22.18 $27.67 $15.07 $20.60Dec-13 $20.73 $25.88 $16.95 $17.32Jan-14 $18.37 $26.86 $23.60 $19.51Feb-14 $19.32 $25.62 $26.74 $19.50Mar-14 $17.86 $24.80 $18.50 $14.53

ULS - Ultra low sulfur; LLS - Louisiana Light Sweet; ANS - Alaskan North Slope

Regional Spot Diesel Crack Spreads

38

Crude Oil Prices WTI prices were down this week by $0.64/bbl and settled at $99.62 on Wednesday. Although in US crude inventories dropped this week, the market sentiment seemed to be that it was completely related to the closure of the Houston Ship Channel and another build is likely to occur in next week’s stats. Brent prices were down by $2.24/bbl on the week to settle at $104.79 as the market weighed the possibility of Libyan supply returning to the market in the near term. The front two months of the Brent contract briefly traded in contango on Wednesday signaling that current supply may be exceeding demand.

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Jan-06 Oct-06 Jul-07 Apr-08 Jan-09 Oct-09 Jul-10 Apr-11 Jan-12 Oct-12 Jul-13 Apr-14

$ per

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rel

Crude Oil (WTI) Prices1/1/2006 thru 4/2/2014

200 Day Moving Avg

50 Day Moving Avg

$33.87

$145.29

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WTI Prices - Year over Year2010 WTI Prices 2011 WTI Prices 2012 WTI Prices2013 WTI Prices 2014 WTI Prices

2010

2011

2012

2013

2014

39

U.S. Crude Oil Price Drivers On Wednesday, the EIA indicated that US crude oil inventories decreased by 2.38 MM Bbls, with Cushing crude stocks down 1.2 MM Bbls on the week to 27.3 MM Bbls, 21.9 MM Bbls lower than this time last year. Cushing storage is currently at 41.5% of working capacity.

Total product inventories increased this week by 1.11 MM Bbls to 656.875 MM Bbls for the week ending Mar 28. We are now 31.8 MM Bbls below 2013 levels for the corresponding week. In economic news this week, the Commerce Department reported that the US economy grew by 2.6% in the last quarter of 2013 compared to an earlier estimate of 2.4% due to higher consumer spending which gave market participants a more positive outlook on the demand for petroleum. The Commerce Department also reported that household purchases increased by 0.3% last month and consumer purchases increased by 0.2% after accounting for inflation. The consumer purchases number was the best seen since November. Household purchases account for almost 70% of the US economy. While these numbers were all positive, consumer sentiment came in lower in March at 80.0 compared to 81.6 in February. A report was released this week showing that US manufacturing rose less than expected in March. The Institute for Supply Management’s manufacturing index was 53.7 in March. While the index was up from February’s 53.2, it was still lower than analysts’ expectations of 54.0. Also affecting US prices this week was the announcement by Federal Reserve Chair Janet Yellen that the economy would need continued support for “some time” until improvements are seen in the Labor Market. Equities markets and crude prices were up on Monday following this announcement. The Commodities Futures Trading Commission reported that money managers reduced net-long positions by 3% in the week ended Mar 25 to 293,403 contracts.

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Utilization Rate Inventories

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Forward Price WTI Curve 3/12




Forward WTI Price Curve

40

International Crude Oil Price Drivers

This week Brent prices settled lower mostly on news that Libyan ports may be opening up soon and supplying more crude to the market. In response to the annexation of Crimea by Russia last week, President Obama

began halting the export of some products to Russia including defense items and services on Mar 24. This includes some products used in Russia’s oil and gas industry such as detonators for drilling. As of Mar 28, all Ukrainian troops had withdrawn from the Crimea region; however, it was reported that there were an estimated 40,000 Russian troops at the western border with Ukraine causing concern that Russia may be ready to invade. US Secretary of State John Kerry met with Russian Foreign Minister Sergei Lavrov in Paris over the weekend and agreed to work towards a resolution over Ukraine.

A spokesman for the National Oil Corporation in Libya reported last week that most

oilfields are still closed and that Libya produced about 170 MBPD on Mar 26. For the week, production averaged about 155 MBPD according to the NOC. They also reported that protesters blocked a pipeline which carries about 30 MBPD of oil condensate form the al-Wafa oilfield to the Mellitah export port. Early this week Libyan rebels stated that they felt like an agreement with the government was close and could be reached within a month if the government would agree to withdraw a threat made on Mar 12 to attack any ports still under rebel control. The Libya Herald reported earlier this week that the government agreed to release three rebels that were on board the tanker that was intercepted by the US Navy several weeks ago. On Wednesday, rebels and government leaders were preparing to talk and discuss reopening oil ports.

More discouraging economic news was reported for China this week. The

Purchasing Manager’s Index fell to 48 in March which was the lowest level since July. Readings below 50 indicate a contraction; however, a separate report issued by the government with a larger sample size showed a reading of 50.3 compared to 50.2 in February.

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Brent Front Month($/Bbl)

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Forward Brent Curve 3/12




Forward Brent Price Curve

41

With demand remaining sluggish in Europe and China, partly due to refinery turnarounds in those two regions, Brent prices in the prompt month almost went contango, which signals that demand is temporarily easing.

Last week we reported that Royal Dutch Shell declared force majeure on Nigeria’s

Forcados crude exports after a pipeline leak caused by oil theft. On Mar 26, a rebel group claimed a second attack on the pipeline, and it was reported that oil exports from Nigeria are expected to fall to the lowest level since 2009.

The second largest oilfield in Iraq, West Qurna-2, began producing oil this week.

Russian company OAO Lukoil began pumping 120 MBPD, and the field is expected to reach 1.2 MM BPD eventually which is about one third of Iraq’s current crude production. Iraq is targeting 4 MM BPD of production this year.

Two separate incidents were reported in the Strait of Hormuz this week as armed

men on a skiff attacked one oil tanker firing shots off and approached another oil tanker on Sunday. It was believed that the men were fishermen and were not attempting to hijack the tankers which eluded the attack. The EIA reported that the Strait of Hormuz is the passageway for around 17 MM BPD of crude oil.

The conflict continues in South Sudan as rebel leader and former Vice President

Riek Machar announced this week that his army known as the White Army is preparing to attack and take control of the Paloch oil fields possibly by the end of this week. If they were to succeed, this could shut down the economy of South Sudan. Oil production is currently at around 150 MBPD compared to 240 MBPD before the conflict, and the current output generates about $15 million for the government and oil companies. Rebels are aiming to force President Salva Kiir to step down. Kiir accused Machar of a coup d’etat in December, and since there have been widespread killings of the Nuer ethnic group who make up the troops of the White Army.

Crude Oil Price Differentials

The Brent-WTI price spread narrowed this week to settle at $5.17/bbl on Wednesday, down from $6.77/bbl on Mar 26.

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Brent to WTI Price Spread($/Bbl)

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Forward Spread Curve 3/12Forward Spread Curve 3/19Forward Spread Curve 3/26Forward Spread Curve 4/2

Forward Brent - WTI Price Spread

42

The LLS-WTI spread narrowed this week to $2.25 on Wednesday compared to $2.55 Mar 26. The narrowing of the LLS-WTI spread reflects the large amount crude being stored on the Gulf Coast. Another reason for the LLS-WTI spread being narrow compared to recent history is that Valero’s Memphis refinery is down for maintenance after experiencing some operational problems on Mar 7 and the refinery is a big buyer of LLS. They are expected to be down for six weeks.

Regional crude price differentials widened for the most part this week. There are still reports that the spread between Midland and WTI futures remains about $10.50 apart; however, a check of several postings for Midland and yielded no evidence to support severe discounts. Using Plains All American postings for WTI Midland it is for 40.0 - 44.9 API gravity crude, and there is a gravity adjustment such that there is a discount of $0.015/bbl for each 0.1 degree API above 44.9.

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Forward Spread Curve 3/12Forward Spread curve 3/19Forward Spread Curve 3/26Forward Spread Curve 4/2

Forward LLS - WTI Price Spread

Regional Crude Oil Postings and Differentials to WTI Cushing(As of the morning of Apr 2, 2014)

WTI Cushing (NYMEX prompt) : $99.74

Williston Basin Sweet: $86.19-$13.55

LLS (Argus): $102.03 +$2.29

Wyoming Sweet: $89.10-$10.64

WTI Midland*: $96.00-$3.74

Eagle Ford Light: $93.00-$6.74

DJ Basin Light: $83.30-$16.44

Utah Black Wax: $81.20-$18.54

Eagle Ford Condensate: $85.00-$14.74

Source: PAA, FHR, CME, Bloomberg*API Gravity: 40.0 – 40.9; Less $0.02 per barrel for each full degree API below 40.9°; less $0.015 per barrel for each 0.1 degree API above 44.9°.

West Canadian Select: $118.39-$18.65

Marker Price for Imported Lt Swt Bbl(Brent + $2): $107.62

Edmonton Sycrude: $101.74+$2.00

Regional Crude Oil Postings and Differentials to WTI Cushing(As of the morning of Mar 26, 2014)

WTI Cushing (NYMEX prompt) : $99.19

Williston Basin Sweet: $86.94-$12.25

LLS (Argus): $102.03 +$2.84

Wyoming Sweet: $89.85-$9.34

WTI Midland*: $96.75-$2.44

Eagle Ford Light: $94.38-$4.82

DJ Basin Light: $84.05-$15.14

Utah Black Wax: $81.95-$17.24

Eagle Ford Condensate: $86.75-$12.44

Source: PAA, FHR, CME, Bloomberg*API Gravity: 40.0 – 40.9; Less $0.02 per barrel for each full degree API below 40.9°; less $0.015 per barrel for each 0.1 degree API above 44.9°.

West Canadian Select: $80.44-$18.75

Marker Price for Imported Lt Swt Bbl(Brent + $2): $108.99

Edmonton Sycrude: $99.44+$0.25

43

NGLs and Gas Processing Ethylene Plant Activity • LyondellBasell’s La Porte, TX ethylene plant is down for an 80 day turnaround this

month. The company has previously said it plans to expand its current ethylene production capacity of 1.7 billion lb/year at the La Porte plant to 2.5 billion lb/year in 2014. The expanded plant will be crack about 90 MBPD of ethane if operating at capacity.

• ExxonMobil could be taking down their Beaumont ethylene plant in late March for a

60 to 90 day turnaround. The plant usually cracks an EP mix and the long turnaround may indicate they are increasing their ethane capability at the plant.

• DuPont could be taking down their ethane cracker down in Orange, TX in late April. The Chevron Evangeline Pipeline that transports ethylene from the upper Texas Gulf Coast to the Mississippi River remains down and is still being repaired. This pipeline is taking an extremely long time to repair and reliable sources indicate that Chevron is trying to sell the pipeline where the potential buyer might put the line in ethane service. If the Evangeline Pipeline is repurposed to another service Louisiana would be 1 billion lbs/yr short ethylene until William’s Geismar plant is restarted. The Williams’ Geismar plant, which has been down since last year due to an explosion, is expected to commence the start-up process in the last week of May with the hope of being fully operational by the end of June. The Geismar plant with its expansion will be able to produce 2 billion lbs/yr of ethylene and crack about 50 MBPD of ethane. Chevron Phillips broke ground today on its Cedar Bayou Petrochemicals Project, which includes a 3.3 billion lb/year ethylene plant, expected to be completed in 2017. Ethylene/Propylene Prices and Feedstock Margins Spot ethylene prices at Mt. Belvieu traded at 51.3¢/lb on Wednesday compared to 51.3¢/lb last week. In Louisiana at Choctaw spot ethylene was up 0.4¢/lb to 68.5¢/lb from 68.13¢/lb last week. The disparity in spot prices between Mt. Belvieu and Choctaw is still being influenced by the combination of the outages of the Williams Geismar plant outage and the Chevron Evangeline pipeline. Once the Geismar plant has returned to full operation in late June, the Choctaw premium should narrow. Polymer grade propylene (PGP) prices were lower this week at 68.0¢/lb, compared to 68.9¢/lb last week. Propylene inventories continue to remain below 5-year average levels for this time of year, however PetroLogistics’ PDH plant has returned to service. .

44

This week, the weighted average feedstock margin for producing ethylene was unchanged at 33.5¢/lb. Ethane continues to be the preferred feedstock, generating a net margin of 39.4¢/lb. N-butane has now moved into 2nd place, yielding a margin of 32.2¢/lb compared to 31.1¢/lb for propane. Light naphtha yields a margin of 0.7¢/lb and gas oil yields a negative margin of 0.3¢/lb.

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Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Aug-13 Oct-13 Dec-13 Feb-14

Spot Ethylene and Polymer Grade Propylene(Cents per LB)

Spot Belvieu Ethylene PricesSpot Belvieu Polymer Grade Propylene

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Apr 2, 2014

45

EIA NGL Extraction Statistics Monthly NGL statistics for January were released by the EIA on March 28th. The key points to note are as follows: • NGLs from gas processing marginally increased 24 MBPD (0.9%) for the month.

NGL extraction increased mainly in the western processing regions and dropped on the Gulf Coast, in the Mid-Continent and in the Upper Midwest.

• Somewhat surprising was the slight increase in ethane extraction, but ethane prices did surge briefly over 40¢/gal that may have encouraged some extraction increases. The sharp drop in ethane extraction in the Upper Midwest primarily reflects ethane rejection at the Aux Sable plant outside of Chicago. Overall, we estimated that ethane rejection in January was 245 MBPD outside the Marcellus/Utica region with 100 MBPD of rejection occurring within the Marcellus/Utica region.

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Ethane Feedstock Margins

Propane Feedstock Margins

Butane Feedstock Margins

Naphtha Feedstock Margins

Gas Oil Feedstock Margins

Jan-14 Dec-13 Mo/Mo Chg Mo/Mo Chg Jan-14 Jan-13 Yr/Yr Chg Yr/Yr Chg NGL Extracted MBPD MBPD MBPD % MBPD MBPD MBPD %

Ethane 999 995 4 0.4% 999 902 97 10.8%Propane 849 837 12 1.4% 849 741 108 14.6%N-Butane 247 218 29 13.3% 247 185 62 33.5%I-Butane 222 246 -24 -9.8% 222 231 -9 -3.9%Natural Gasoline 322 319 3 0.9% 322 302 20 6.6%Total US NGLs (MBPD) 2,639 2,615 24 0.9% 2,639 2,361 278 11.8%

US NGL Extraction By ComponentYear over Year ComparisonMonth over Month Comparison

46

Outlook for Ethane Inventories and Balances The EIA released January ethane inventories which showed a smaller than expected drop of 0.755 MM Bbls. January US ethane inventories were at 26.015 MM Bbls, 6.5 MM Bbls below year ago levels. US Ethane stocks have declined for 5 consecutive months, the January drop was the 6th decline in the last 7 months.

Gulf Coast ethane stocks dropped by 1.19 MM Bbls to 19.947 MM Bbls, 8.56 MM Bbls below year ago levels. Gulf Coast ethane stocks have seen a drop for 7 consecutive months. More importantly, bulk terminal (salt dome) storage for ethane on the Gulf Coast

Jan-14 Dec-13 Mo/Mo Chg Mo/Mo Chg Jan-14 Jan-13 Yr/Yr Chg Yr/Yr Chg MBPD MBPD MBPD % MBPD MBPD MBPD %

Tx Inland 1131 1107 24 2.1% 1131 1022 108 10.6%Tx Gulf Coast 159 161 -1 -0.8% 159 126 34 26.8%Louisiana Gulf Coast 177 185 -8 -4.2% 177 197 -20 -10.2%N. LA./Arkansas 22 23 0 -2.0% 22 19 3 15.3%New Mexico 152 148 4 2.8% 152 141 11 7.7%Rockies 327 307 20 6.4% 327 299 28 9.3%Mid-Continent (OK & KS) 330 334 -4 -1.3% 330 306 23 7.7%Northern Tier (Bakken) 55 50 6 11.1% 55 48 7 15.5%Upper Midwest 87 105 -18 -17.3% 87 75 12 15.7%Appalachia 134 129 5 3.8% 134 56 78 140.5%West Coast 66 67 -1 -1.7% 66 71 -6 -8.2%

2,639 2,615 24 0.9% 2,639 2,361 279 11.8%

Region

Total US NGLs (MBPD)

Month over Month Comparison Year over Year Comparison

US and Regional NGL Extraction Data

Jan-14 Dec-13 Mo/Mo Chg Mo/Mo Chg Jan-14 Jan-13 Yr/Yr Chg Yr/Yr Chg MBPD MBPD MBPD % MBPD MBPD MBPD %

Tx Inland 498 483 15 3.1% 498 446 52 11.7%Tx Gulf Coast 71 70 1 1.1% 71 57 14 24.4%Louisiana Gulf Coast 74 77 -3 -4.3% 74 84 -10 -11.4%N. LA./Arkansas 6 5 0 2.4% 6 5 0 8.9%New Mexico 71 70 2 2.5% 71 66 5 7.5%Rockies 117 110 7 6.2% 117 105 12 11.1%Mid-Continent 123 125 -2 -1.8% 123 113 10 8.6%Northern Tier (Bakken) 0 0 0 - 0 0 0 -Upper Midwest 29 47 -18 -38.0% 29 25 4 15.3%Appalachia 10 8 2 30.1% 10 1 10 -West Coast 0 0 0 - 0 0 0 -

Total Ethane (MBPD) 999 995 4 0.4% 999 902 97 10.8%

Region

Month over Month Comparison

US and Regional Ethane Extraction Data

Year over Year Comparison

Mo.over Mo. Yr Ago Yr over YrSource EIA Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Change Jan-13 Change

34.858 34.444 34.450 32.778 30.386 29.406 (0.980) 34.233 -4.8270.205 0.171 0.137 0.137 0.093 0.126 0.033 0.183 -0.057

26.509 25.244 24.619 22.522 19.769 19.446 (0.323) 26.766 -7.3202.345 2.942 3.454 3.448 3.616 3.391 (0.225) 1.702 1.6895.391 5.57 5.545 5.783 6.053 5.784 (0.269) 4.701 1.0830.408 0.517 0.695 0.888 0.855 0.659 (0.196) 0.871 -0.212

32.513 31.502 30.996 29.330 26.770 26.015 (0.755) 32.531 -6.516

US Ethane/Ethylene Storage (Million Bbls)

PipelineProcessing PlantTotal Ethane Stocks

Bulk Terminal (Ethane)Bulk Terminal (Ethylene)

Latest 6 Months

Total Ethane/Ethylene StocksRefinery

47

was 15.504 MM Bbls, 9.2 MM Bbls below year ago levels and the lowest levels since Feb-2012.

Midcontinent stocks built 0.434 MM Bbls to 5.636 MM Bbls in January. Midcontinent ethane stocks 2 MM Bbls above year ago levels. Equistar’s ethylene plant in Clinton, IA had operational problems in January that probably contributed to the build in ethane stocks in the Midcontinent.

We are still expecting US ethane inventories to continue to drop through March, with increases in April and May. By July, our revised balances indicate that ethane stocks should at 19.6 MM Bbls as the completion of ethylene plant expansions should push ethane cracking to at least 1.2 MM BPD, with days-of-inventory supply at 17.0. Ethane rejection will be at least 200 MBPD, mostly in transportation disadvantaged regions, with actual extraction at 1.1 MM BPD. As we stated last week, the ethylene industry will have a choice to continue to pay low prices for ethane causing ethane rejection to continue and stocks to fall further or they can pay-up for ethane to induce rejected volumes to come to the market. Either way we continue to see a short squeeze on ethane supplies by the 3rd quarter with ethane prices rising at least 20¢/gal from current price levels.


30.056 29.282 29.165 27.716 24.753 23.338 (1.415) 30.206 (6.868)0.205 0.171 0.137 0.137 0.093 0.126 0.033 0.183 (0.057)

23.788 22.204 21.366 19.510 16.329 15.504 (0.825) 24.670 (9.166)2.345 2.942 3.454 3.448 3.616 3.391 (0.225) 1.702 1.6893.514 3.638 3.613 3.962 4.065 3.837 (0.228) 3.013 0.8240.204 0.327 0.595 0.659 0.650 0.480 (0.170) 0.638 (0.158)

27.711 26.340 25.711 24.268 21.137 19.947 (1.190) 28.504 (8.557)

Refinery

Latest 6 Months

Total Ethane/Ethylene Stocks

Total Ethane Stocks

Gulf Coast Ethane/Ethylene Storage

Bulk Terminal (Ethane)Bulk Terminal (Ethylene)PipelineProcessing Plant


0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0002.721 3.04 3.253 3.012 3.44 3.942 0.502 2.096 1.8461.431 1.465 1.522 1.418 1.562 1.521 (0.041) 1.287 0.2340.203 0.189 0.099 0.219 0.2 0.173 (0.027) 0.231 (0.058)4.355 4.694 4.874 4.649 5.202 5.636 0.434 3.614 2.022

Mid-Continent Ethane StorageLatest 6 Months

Refinery

Total Ethane Stocks

Bulk TerminalPipelineProcessing Plant

Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14MBPD MBPD MBPD MBPD MBPD MBPD MBPD MBPD MBPD MBPD MBPD MBPD

C2 Extraction from Gas Processing (EIA) 970 1001 1012 1027 995 999 975 1020 1050 1060 1070 1070Refinery C2 Sold in Open Mkt (EIA) 11 8 8 7 6 5 5 5 6 7 7 7Total EIA C2 Production 981 1009 1020 1034 1001 1004 980 1025 1056 1067 1077 1077Estimated Internal Refinery C2 Production 40 30 30 20 40 45 40 40 40 40 40 40Total Estimated Ethane Production 1021 1039 1050 1054 1041 1049 1020 1065 1096 1107 1117 1117Exports to Canada 14 14 14 20 20 15 20 20 35 35 50 50Ethane Supplies Available to US Crackers 1007 1025 1036 1034 1021 1034 1000 1045 1061 1072 1067 1067Ethane Cracking to Produce Ethylene 965 1030 1033 1070 1086 1050 1100 1060 1010 1010 1070 1150Other Ethane Demand (Blending into Propane) 20 20 20 20 20 20 20 20 20 20 20 20Total Ethane Demand 985 1050 1053 1090 1106 1070 1120 1080 1030 1030 1090 1170Surplus (Deficit) C2 22 (25) (17) (56) (85) (36) (120) (35) 31 42 (23) (103)Implied Monthly Change (MM Bbls) 0.66 (0.75) (0.52) (1.68) (2.55) (1.08) (3.72) (1.09) 0.96 1.30 (0.71) (3.19)Actual EIA Inventory Change (MM Bbls) 0.68 (1.01) (0.51) (1.67) (2.56) (0.76) NA NA NA NA NA NAActual EIA Inventory Level (MM Bbls) 32.51 31.50 31.00 29.33 26.77 26.02 22.30 21.21 22.17 23.47 22.76 19.57Unnacounted for Ethane or Balancing Item (1) 9 (0) (0) 0 (10) 0 0 0 0 0 0

Estimation of Ethane Balances as of Apr 2, 2014Actual Forecast

48

Ethane Prices, Relationships and Frac Spreads Average ethane prices at Mt Belvieu were up to 28.8¢/gal compared to 28.5¢/gal last week. Wednesday’s spot ethane was at 28.1¢/gal compared to 28.7¢/gal on Mar 26. Mt. Belvieu EP mix is selling at a 0.6¢/gal premium to purity ethane. Ethane’s price relationship to WTI averaged 12.0% this week, the same as last week’s average. Ethane’s equivalent cracking value to n-butane, the next most attractive ethylene feedstock, is 43.9¢/gal this week compared to 45.4¢/gal last week due to the drop in n-butane prices this past week.

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Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13

US Ethane Inventories(Million Bbls)

5- yr Avg

Actual Forecast

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70

Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13

Day

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Ethane Days of Supply of Inventories

Actual Forecast

5- yr Avg

Date

Price $/Bbl

Ethane Price: $/gal Ethane/WTI

Mar-13 Avg $92.96 $0.279 12.6%Apr-13 Avg $92.07 $0.289 13.2%May-13 Avg $94.80 $0.282 12.5%Jun-13 Avg $95.79 $0.247 10.9%Jul-13 Avg $104.70 $0.248 10.0%Aug-13 Avg $106.54 $0.248 9.8%Sep-13 Avg $106.24 $0.249 9.8%Oct-13 Avg $100.55 $0.254 10.6%Nov-13 Avg $93.93 $0.250 11.2%Dec-13 Avg $97.89 $0.280 12.0%Jan-14 Avg $94.93 $0.330 14.6%Feb-14 Avg $100.68 $0.388 16.2%Mar-14 Avg $100.51 $0.302 12.6%3/20/2014 $99.43 $0.285 12.0%3/21/2014 $99.46 $0.284 12.0%3/24/2014 $99.60 $0.283 11.9%3/25/2014 $99.19 $0.284 12.0%3/26/2014 $100.26 $0.287 12.0%3/27/2014 $101.28 $0.292 12.1%3/28/2014 $101.67 $0.298 12.3%3/31/2014 $101.58 $0.290 12.0%4/1/2014 $99.74 $0.281 11.8%4/2/2014 $99.62 $0.281 11.8%Apr-14 Avg $99.68 $0.281 11.8%

Mt Belvieu Ethane Prices

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Ethane-to-WTI Ratio Ethane-to-Brent Ratio

49

Conway EP Mix prices were at 26.7¢/gal on Wednesday. The weekly average Belvieu-Conway ethane price differential rose this week to negative 1.2¢/gal compared to negative 2.3¢/gal last week.

Average ethane frac spreads at Mt. Belvieu were down on the week to a negative 0.4¢/gal compared to negative 0.1¢/gal last week.

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Mt. Belvieu - Conway Ethane Spread(Purity vs EP MIX)

50 Day Moving Average

($0.15)

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Mt Belvieu Ethane Frac Spread vs Gas-to-Crude Ratio

Gas to Crude RatioBelvieu Ethane Frac Spread

Gas to Crude Ratio

Ethane Frac Spread

50

Chicago City Gate gas is still at premium to Henry which is negatively impacting processing margins and ethane recoveries in the region. Rocky Mountain gas prices remain strong relative to Henry Hub but differential significantly contracted last week.

Lower regional gas prices this week caused regional ethane frac spreads to increase slightly about 1¢/gal in most processing regions. However, ethane frac spreads remain negative across all processing regions, with the Rockies, Mid-Continent and Marcellus having the most negative frac spreads due to high NGL transportation costs to Mt. Belvieu.

The forward curve continues to show that ethane frac spreads will remain negative through 2014. The 12 month strip (May-14 to Apr-15) for ethane prices on Wednesday was down to 28.7¢/gal compared to 29.6¢/gal last week. The forward curve for ethane is now in a carry through Jan-15. Ethane’s relative value to WTI was at 12.7% compared to 13.0% last week. Ethane’s frac spread for the 12 month strip fell to negative 0.87¢/gal compared to negative 0.13¢/gal last week. These forward ethane prices will not encourage ethane rejection to moderate and with ethane demand increasing the forward

Wkly Avg Wkly Avg Wkly Avg Wkly Avg Same WkGas Basis $/MMBTU 3/6-3/12 3/13-3/19 3/20-3/26 3/27-4/2 2013Opal (0.07) (0.09) 0.15 0.01 (0.15)El Paso San Juan Blanco (0.27) (0.18) (0.08) (0.09) (0.16)El Paso Permian (0.27) (0.18) (0.08) (0.11) (0.16)NGPL Midcontinent (0.13) (0.10) (0.04) (0.04) (0.12)Chicago City Gate 1.86 0.36 0.63 0.27 0.08Henry Hub 0.00 0.00 0.00 0.00 0.00South Texas (0.16) (0.15) (0.09) (0.08) (0.05)Houston Ship (0.04) (0.07) (0.07) (0.03) (0.03)Dominion South (0.24) (0.29) (0.18) (0.45) (0.20)

Weekly Average Ethane Netback Gas Price3/27/14-4/2/14 ($/MMBTU) ($/MMBTU) ($/MMBTU) (¢/Gal)Northern Rockies $1.35 $4.41 ($3.06) (20.31)San Juan Basin $2.39 $4.32 ($1.93) (12.80)Permian Basin $1.95 $4.30 ($2.35) (15.55)Mid-Continent (to Conway) $3.79 $4.36 ($0.57) (3.77)Mid-Cont (new build to MB) $1.35 $4.36 ($3.01) (19.96)Upper Midwest $2.84 $4.67 ($1.83) (12.15)Marcellus $1.63 $4.32 ($2.69) (17.83)S. Louisiana $3.61 $4.41 ($0.79) (5.26)S. Texas (new build to MB) $2.63 $4.32 ($1.69) (11.20)

Ethane Frac Spread

Weekly Average Ethane Netback Gas Price3/20/14-3/26/14 ($/MMBTU) ($/MMBTU) ($/MMBTU) (¢/Gal)Northern Rockies $1.30 $4.55 ($3.26) (21.61)San Juan Basin $2.33 $4.32 ($1.99) (13.22)Permian Basin $1.90 $4.32 ($2.42) (16.03)Mid-Continent (to Conway) $3.88 $4.36 ($0.48) (3.16)Mid-Cont (new build to MB) $1.30 $4.36 ($3.06) (20.31)Upper Midwest $2.78 $5.03 ($2.25) (14.90)Marcellus $1.58 $4.31 ($2.73) (18.13)S. Louisiana $3.56 $4.40 ($0.84) (5.60)S. Texas (new build to MB) $2.58 $4.31 ($1.73) (11.49)

Ethane Frac Spread

51

curve implies further drops in ethane inventories. We would still be a buyer of the backend of the ethane curve from June through December of this year as we feel that a short squeeze for ethane supplies will develop by mid-summer.

We want to stress that the forward curve for ethane and any other NGL is only indicative of the trades done that day. Bid and offer spreads can be very wide and anyone looking to lock-in size may have to take a significant discount off the trade values done that day. Propane Inventories The EIA reported that US propane/propylene inventories rose by 0.91 MM Bbls for the week ending Mar 28 which came as a surprise to the market. This latest weekly increase is in contrast to the decrease of 1.11 MM Bbl seen last year at this time and in contrast to the 5-year average inventory decrease of 0.003 MM Bbls for the corresponding period. Current propane/propylene inventories are at 26.57 MM Bbls (3.322 MM Bbls of that number being propylene), 13.17 MM Bbls below year ago levels and 8.30 MM Bbls below the 5-year average storage level for the corresponding week. We are now 0.95 MM Bbls above the 5-year low for this time of year.

Prices as of 4/2/14

Crude¹ $/Bbl

Natural Gas¹ $/MM BTU

Gas-to-Crude Ratio

Forward Ethane² ¢/gal

Ethane-to-Crude Ratio

Ethane Frac ¢/gal

Ethane Frac $/MM BTU

May-14 $99.62 $4.36 25.4% 28.38 12.0% (0.57) -$0.09Jun-14 $98.90 $4.40 25.8% 28.50 12.1% (0.65) -$0.10Jul-14 $98.04 $4.44 26.2% 28.63 12.3% (0.79) -$0.12Aug-14 $97.14 $4.44 26.5% 28.75 12.4% (0.66) -$0.10Sep-14 $96.24 $4.41 26.6% 28.88 12.6% (0.39) -$0.06Oct-14 $95.34 $4.43 26.9% 29.00 12.8% (0.35) -$0.05Nov-14 $94.53 $4.47 27.5% 29.13 12.9% (0.55) -$0.08Dec-14 $93.77 $4.59 28.4% 29.25 13.1% (1.20) -$0.18Jan-15 $92.93 $4.68 29.2% 29.50 13.3% (1.50) -$0.23Feb-15 $92.14 $4.63 29.2% 28.75 13.1% (1.98) -$0.30Mar-15 $91.47 $4.53 28.7% 28.00 12.9% (2.06) -$0.31Apr-15 $90.86 $4.07 26.0% 27.25 12.6% 0.25 $0.04May-15 $90.35 $4.04 25.9% 27.13 12.6% 0.36 $0.05Jun-15 $89.87 $4.06 26.2% 27.00 12.6% 0.11 $0.02Jul-15 $89.29 $4.08 26.5% 27.00 12.7% (0.07) -$0.01Aug-15 $88.77 $4.07 26.6% 27.00 12.8% (0.01) $0.00Sep-15 $88.34 $4.05 26.6% 27.00 12.8% 0.17 $0.03Oct-15 $87.94 $4.07 26.8% 27.00 12.9% 0.03 $0.01

Current 12-mo Strip

$95.08 $4.45 27.2% 28.67 12.7% (0.87) ($0.13)

12-mo Strip Last Week

$95.51 $4.48 27.2% 29.55 13.0% (0.13) ($0.02)

12-mo Strip One Year Ago

$93.98 $4.11 25.3% 29.08 13.0% 1.85 $0.28

¹ NYMEX Futures

Analysis of the Forward Price Curve for Belvieu Ethane

² The forward ethane curves are best estimates based on traded markets and PetroChem Wire's insight. PCW and En*Vantage make no guarantee for accuracy and are not responsible for any trades or forecasts based upon this data.

52

Stripping out propylene inventories, actual propane stocks for the week ending Mar 28 increased by 1.06 MM Bbls to 23.27 MM Bbls, 12.85 MM Bbls below year ago levels and 8.71 MM Bbls below the 5-year average for this time of year. Analysts were expecting a build of 0.30 MM Bbls this week, but the build met our expectations. We are now at a new 5-year low at 0.17 MM Bbls below the previous 5-year low for this time of year. By May 30, we should be somewhere near 30.0 MM Bbls of propane in inventory.

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US Propane/Propylene Inventories( As of the week ending Mar 28, 2014)

2012201320145-year highs5-year lows5-year average

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US Propane Inventories(As of the week ending Mar 28, 2014)

2012201320142013 Monthly2014 Forecast5-year highs5-year lows5-year average

Forecast

53

On a regional basis, the increase in propane/propylene inventories can be attributed to PADDs II and III this week.

Stripping out propylene, Gulf Coast propane inventories rose by 0.52 MM Bbls to 12.66 MM Bbls due to higher exports. Last year for the corresponding week Gulf Coast propane inventories decreased 0.82 MM Bbls with a 5-year average increase of 0.06 MM Bbls. Current Gulf Coast inventories are now 12.10 MM Bbls below year ago levels. Our PADD III forecast shows that Gulf Coast inventories should start coming back up after bottoming out in March and be at around 14.0 MM Bbls by May 30. We adjusted our forecast for last week due to the closure of the Houston Ship Channel. A collision that resulted in a fuel oil spill caused the Channel to close for four days last week, and that likely resulted in lower propane exports out of the Gulf Coast this week. PADD III exports will most likely be higher this week after last week’s closure of the Ship Channel.

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Year over YearYear over 5-Year Avg

MM BblsUS Propane Storage Deviations

(from 2012 and 5-Year AVG Levels)

Weekly Year Ago Y/Y Y/Y

2/14/14 2/21/14 2/28/14 3/7/14 3/14/14 3/21/14 3/28/14 Change 3/29/13 Delta %26.715 26.676 27.155 26.059 26.241 25.658 26.568 0.910 39.737 (13.169) -33.1%1.600 1.682 1.965 2.029 1.882 1.735 1.719 (0.016) 1.291 0.428 33.2%0.057 0.294 0.711 0.905 0.759 0.638 0.540 (0.098) 0.041 0.499 1217.1%1.007 0.843 0.775 0.688 0.746 0.727 0.827 0.100 0.528 0.299 56.6%0.536 0.545 0.479 0.436 0.377 0.370 0.352 (0.018) 0.722 (0.370) -51.2%8.832 8.900 8.509 7.587 7.198 7.374 7.913 0.539 9.448 (1.535) -16.2%

15.083 14.978 15.609 15.495 16.255 15.582 15.979 0.397 28.367 (12.388) -43.7%1.199 1.115 1.072 0.948 0.906 0.966 0.957 (0.009) 0.632 0.325 51.4%3.499 3.311 3.424 3.458 3.376 3.445 3.322 (0.123) 3.613 (0.291) -8.1%

Midwest (PADD II)Gulf Coast (PADD III)Rocky Mtn & West Coast (PADD IV & V)Nonfuel Use

Regional Propane/Propylene Stocks -- Million Barrels

Most Recent

Source: EIAU.S.East Coast (PADD I) New England (PADD IA) Central Atlantic (PADD IB) Lower Atlantic (PADD IC)

54

Midcontinent propane stocks increased 0.54 MM Bbls for the week compared to a decrease of 0.42 MM Bbls last year at this time. The 5-year average decrease for the same week in March is 0.14 MM Bbls. Current Midcontinent propane inventories are at 7.91 MM Bbls, 1.54 MM Bbls below year ago levels and 3.96 MM Bbls below the 5-year average for the corresponding week. Midcontinent propane inventory levels have set a new 5-year low once again – 1.54 MM Bbls below the 5-year low for this time of year. Inventories should end up around 13.2 MM bbls by May 30. In order to get back to a 5-year average inventory level by Oct 31, the rate of build would need to be 0.59 MM Bbls a week between Mar 28 and Oct 31, 0.15 MM Bbls a week higher than the 5-year average weekly build of 0.44 MM Bbls.

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Gulf Coast Propane Inventories(As of the week ending Mar 28, 2014)

201220132014 Forecast5-year highs5-year lows5-year average2014

MM Bbls

0246810121416182022242628303234

02468

10121416182022242628303234


Mid-Continent Propane Inventories(As of the week ending Mar 28, 2014)

2012201320142014 Forecast5-year lows5-year average5-year highs

MM Bbls

Forecast

55

Implied US domestic demand for propane/propylene fell to 1.048 MM BPD for the ended Mar 28, down 14.9% from last week, and 26.8% lower than the corresponding week last year. On a 4-week average basis, implied US propane demand is down 20.2% (296 MBPD) over year ago levels. This drop in implied demand is due to the decrease in residential/commercial demand for propane. However, with the recent drop in propane prices we expect that petrochemical cracking will pick back up to near 400 MBPD in about a month.

On days-of-supply basis, propane inventories are 25.4 days versus 27.8 one year ago and 30.3 days for the 5-year average for the corresponding period. On a 4 week average basis, days-of-supply are 22.6 days versus 28.3 a year ago and 28.9 days for the five year average over the same corresponding period. Consequently, days-of-supply for propane still indicates a tight market for propane as the year progresses. Propane markets should not get too complacent now that propane prices have dropped.

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EIA Implied Propane/Propylene Demand (Year over Year)Thousand BPD

2014 Implied Demand

2010 Implied Propane Demand




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Propane/Propylene Inventory Days-of-Supply(As of the week ending Mar 28, 2014)

201020112012201320145-Yr Avg

56

The price spread between NW Europe propane prices and Mt Belvieu narrowed to 44.3¢/gal compared to 44.4¢/gal last week. NW Europe prices decreased 0.1¢/gal, while Mt. Belvieu prices were up 1.5¢/gal. At this price spread, spot propane cargoes are continuing, most likely to South America, the Caribbean and Central America.

The Japan-Belvieu spread is around $0.61/gal compared to $0.56/gal last week. The Japan-Belvieu spread was $0.94/gal at the end of November.

Actuals for Wk Ending




3/7/2014 3/14/2014 3/21/2014 3/28/2014Propane/Propylene Production (MM BPD) 1.322 1.361 1.395 1.412 0.017 1.373 1.380 (0.007) 1.277Propane Imports (MM BPD) 0.212 0.104 0.123 0.091 (0.032) 0.133 0.176 (0.044) 0.115Total Propane/Propylene Supply (MM BPD) 1.534 1.465 1.518 1.503 (0.015) 1.505 1.556 (0.051) 1.391Implied Propane Demand (MM BPD) 1.322 1.070 1.232 1.048 (0.184) 1.168 1.223 (0.055) 1.464Balance: Surplus/Deficit (MM BPD) 0.212 0.395 0.286 0.455 0.169 0.337 0.333 0.004 -0.073Implied Wkly Inventory Chg (MM Bbls) 1.484 2.765 2.002 3.185 1.183 2.359 2.328 0.031 -0.509Actual Stock Chg (MM Bbls) (1.096) 0.182 (0.583) 0.910 1.493 (0.147) (0.254) 0.108 (1.484)Implied Propane/Propylene Exports (MM BPD) (0.369) (0.369) (0.369) (0.325) 0.044 (0.358) (0.369) 0.011 (0.139)

Weekly Propane/Propylene Balances for the Past 4 Weeks

Latest Wk over Wk Change

Latest 4-week

Average

Prior 4-week

Average

Latest 4-Wk over

4-Wk Change

Year Ago 4-

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CIF ARA Propane vs Mt Belvieu Propane Prices($ per gallon)

NW Europe Propane Prices

NW Europe to Mt Belvieu Price Spread

Mt Belvieu Propane Prices

Estimated Shipping and Terminal Fees

57

The EIA reported that propane exports in January dropped to 356 MBPD from 402 MBPD in December. The drop in exports was to be expected as the surge in propane prices in January closed the export arb between Mt. Belvieu and NW Europe/Japan that inhibited spot export cargoes. With the current export arb re-widening, propane exports are expected to reach 400 MBPD in March.

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Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14

CIF Japan Propane vs Mt Belvieu Propane Prices($ per gallon)

Japan Propane Prices

Japan to Mt Belvieu Price Spread



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US Imports and Exports of Propane (Thousand BPD)

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58

Propylene to Propane Spread The gross spread between polymer grade propylene and propane was down this week to $0.37/lb compared to $0.39/lb last week. Estimated operating cost for a PDH plant is about $0.15/lb which includes fuel, utilities, labor, administration, insurance, property taxes and depreciation, so net margins remain strong. Lower propane prices have boosted PDH margins.

Propane Prices For the week, Belvieu propane (Non-TET) prices averaged $1.06/gal this week, up from $1.03/gal last week. Also, for the week, propane was averaging 44.0% of WTI prices compared to 43.4% last week. On Wednesday, the price hit $1.05/gal at 44.2% of WTI. At current propane prices it will be difficult to rebuild propane stocks at an average weekly rate of 1.3 MM BPD during the spring and summer months to reach the 5-year average storage levels by the end of October.

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$0.55


Polymer Grade Propylene to Propane Gross Margin($ per lb of propylene)

Approximate Operating Cost of a PDH plant

59

Conway prices settled at $1.04/gal on Wednesday. For the week they averaged $1.03/gal compared to $1.00/gal last week. In addition, the Conway-Belvieu average weekly price spread was up to a 2.1¢/gal discount, settling at a 0.7¢/gal discount on Wednesday. One year ago, the Conway propane was at a 5.4¢/gal discount to Belvieu. We still believe the spread will need to be at least 10¢/gal to induce propane barrels to move up to Conway to replenish low stocks even after the winter is over. With PADD II inventories so low, Conway will have to sell over Belvieu in order to replenish inventories. It would require an average build of 0.59 MM Bbls a week at Conway from Mar 31 to Oct 31 to reach the 5-year average inventory level by Oct 31. That would be 0.15 MM Bbls more than the 5-year average weekly build from Mar 31 to Oct 31.

Date

Price $/Bbl

Propane Price: $/gal Propane/WTI

Mar-13 Avg $92.96 $0.894 40.4%Apr-13 Avg $92.07 $0.940 42.9%May-13 Avg $94.80 $0.934 41.4%Jun-13 Avg $95.79 $0.862 37.8%Jul-13 Avg $104.70 $0.920 36.9%Aug-13 Avg $106.54 $1.062 41.9%Sep-13 Avg $106.24 $1.109 43.8%Oct-13 Avg $100.55 $1.134 47.4%Nov-13 Avg $93.93 $1.182 52.9%Dec-13 Avg $97.89 $1.274 54.7%Jan-14 Avg $94.93 $1.399 61.8%Feb-14 Avg $100.68 $1.452 60.7%Mar-14 Avg $100.51 $1.060 44.3%3/20/2014 $99.43 $1.030 43.5%3/21/2014 $99.46 $1.034 43.7%3/24/2014 $99.60 $1.024 43.2%3/25/2014 $99.19 $1.026 43.4%3/26/2014 $100.26 $1.034 43.3%3/27/2014 $101.28 $1.045 43.3%3/28/2014 $101.67 $1.060 43.8%3/31/2014 $101.58 $1.060 43.8%4/1/2014 $99.74 $1.060 44.6%4/2/2014 $99.62 $1.049 44.2%Apr-14 Avg $99.68 $1.055 44.4%


25%

30%

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14

Mt Belvieu Propane to WTI and to Brent Ratios

Propane-to-WTI Ratio Propane-to-Brent Ratio

60

Propane’s average weekly Mt. Belvieu frac spread increased to 65.2¢/gal compared to $62.7/gal last week. On Wednesday, propane’s Belvieu frac spread was at 65.2¢/gal.

($0.35)($0.30)($0.25)($0.20)($0.15)($0.10)($0.05)$0.00$0.05$0.10$0.15$0.20$0.25$0.30$0.35$0.40$0.45$0.50$0.55$0.60$0.65$0.70$0.75$0.80

($0.35)($0.30)($0.25)($0.20)($0.15)($0.10)($0.05)$0.00$0.05$0.10$0.15$0.20$0.25$0.30$0.35$0.40$0.45$0.50$0.55$0.60$0.65$0.70$0.75$0.80

Jan-06 Oct-06 Jul-07 Apr-08 Jan-09 Oct-09 Jul-10 Apr-11 Jan-12 Oct-12 Jul-13 Apr-14

Conway minus Belvieu Propane Price Spread($/Gal)

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$0.80

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Mt Belvieu Propane Frac Spread vs Gas-to-Crude Ratio

Gas-to-Crude Ratio

Propane Frac Spread at Belvieu

Propane Frac Spread

Gas-to-Crude Ratio

61

Propane frac spreads improved across all processing regions by an average of 3¢/gal.

For the 12 month strip (May-14 to Apr-15), propane’s price relationship to WTI was up to 46.9% compared to last week at 46.3%. The 12 month strip price for propane was up to 106.0¢/gal this week compared to 105.1¢/gal last week. The 12-month frac spread for propane rose to 65.3¢/gal compared to 64.2¢/gal last week. One year ago, the 12 month strip for the propane frac was 56.4¢/gal. We would still be a buyer of the back months for propane.

Weekly Average Propane Netback Gas Price3/27/14-4/2/14 ($/MMBTU) ($/MMBTU) ($/MMBTU) (¢/Gal)Northern Rockies $9.35 $4.41 $4.94 45.09San Juan Basin $10.10 $4.32 $5.79 52.81Permian Basin $9.79 $4.30 $5.49 50.11Mid-Continent (Conway) $10.54 $4.36 $6.17 56.35Mid-Cont (new build to MB) $9.35 $4.36 $4.99 45.56Upper Midwest $10.53 $4.67 $5.86 53.45Marcellus $8.85 $4.32 $4.53 41.31S. Louisiana $10.82 $4.41 $6.42 58.56S. Texas (new build to MB) $10.28 $4.32 $5.96 54.40

Propane Frac Spread

Weekly Average Propane Netback Gas Price3/20/14-3/26/14 ($/MMBTU) ($/MMBTU) ($/MMBTU) (¢/Gal)Northern Rockies $9.08 $4.55 $4.52 41.29San Juan Basin $9.83 $4.32 $5.50 50.23Permian Basin $9.52 $4.32 $5.20 47.45Mid-Continent (Conway) $10.29 $4.36 $5.93 54.13Mid-Cont (new build to MB) $9.08 $4.36 $4.72 43.07Upper Midwest $10.29 $5.03 $5.26 47.96Marcellus $8.57 $4.31 $4.26 38.90S. Louisiana $10.60 $4.40 $6.20 56.56S. Texas (new build to MB) $10.01 $4.31 $5.70 51.99

Propane Frac Spread

Prices as of 4/2/14

Crude¹ $/Bbl

Natural Gas¹ $/MM

BTU

Gas-to-Crude Ratio

Forward Propane²

¢/galPropane-to-Crude Ratio

Propane Frac ¢/gal

Propane Frac $/MM BTU

May-14 $99.62 $4.36 25.4% 105.13 44.3% 65.18 $7.12Jun-14 $98.90 $4.40 25.8% 105.25 44.7% 65.01 $7.10Jul-14 $98.04 $4.44 26.2% 105.50 45.2% 64.91 $7.09Aug-14 $97.14 $4.44 26.5% 105.88 45.8% 65.28 $7.13Sep-14 $96.24 $4.41 26.6% 106.75 46.6% 66.37 $7.25Oct-14 $95.34 $4.43 26.9% 107.25 47.2% 66.74 $7.29Nov-14 $94.53 $4.47 27.5% 107.88 47.9% 66.92 $7.31Dec-14 $93.77 $4.59 28.4% 108.50 48.6% 66.48 $7.26Jan-15 $92.93 $4.68 29.2% 109.25 49.4% 66.46 $7.26Feb-15 $92.14 $4.63 29.2% 108.13 49.3% 65.72 $7.18Mar-15 $91.47 $4.53 28.7% 103.25 47.4% 61.76 $6.75Apr-15 $90.86 $4.07 26.0% 99.50 46.0% 62.24 $6.80May-15 $90.35 $4.04 25.9% 99.25 46.1% 62.31 $6.81Jun-15 $89.87 $4.06 26.2% 99.38 46.4% 62.26 $6.80Jul-15 $89.29 $4.08 26.5% 99.63 46.9% 62.27 $6.80Aug-15 $88.77 $4.07 26.6% 100.00 47.3% 62.73 $6.85Sep-15 $88.34 $4.05 26.6% 100.75 47.9% 63.72 $6.96Oct-15 $87.94 $4.07 26.8% 101.13 48.3% 63.91 $6.98

Current 12-mo Strip

$95.08 $4.45 27.2% 106.02 46.9% 65.26 $7.13

12-mo Strip Last Week

$95.51 $4.48 27.2% 105.13 46.3% 64.16 $7.01

12-mo Strip One Year Ago

$93.98 $4.11 25.3% 93.94 42.0% 56.36 $6.16

¹ NYMEX Futures

Analysis of the Forward Price Curve for Belvieu Propane

² The forward ethane curves are best estimates based on traded markets and PetroChem Wire's insight. PCW and En*Vantage make no guarantee for accuracy and are not responsible for any trades or forecasts based upon this data.

62

Butanes and Natural Gasoline Discussion Normal butane prices were down slightly this week while i-butane and natural gasoline prices were up.

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130%

Mt Belvieu Heavy NGLs to WTI Ratios

N-Butane-to-WTI Ratio I-Butane-to-WTI Ratio C5+ to WTI Ratio

Date

WTI Price $/Bbl

N- Butane Price: $/gal NC4/WTI

I-Butane Price: $/gal IC4/WTI

Natural Gasoline: $/gal C5+/WTI

Dec-12 Avg $88.25 $1.765 84.0% $1.838 87.5% $2.156 102.6%Jan-13 Avg $94.83 $1.705 75.5% $1.812 80.3% $2.229 98.7%Feb-13 Avg $95.32 $1.618 71.3% $1.681 74.1% $2.340 103.1%Mar-13 Avg $92.96 $1.412 63.8% $1.449 65.5% $2.134 96.4%Apr-13 Avg $92.07 $1.317 60.1% $1.355 61.8% $2.057 93.8%May-13 Avg $94.80 $1.246 55.2% $1.259 55.8% $2.048 90.8%Jun-13 Avg $95.79 $1.166 51.1% $1.200 52.6% $2.015 88.4%Jul-13 Avg $104.70 $1.270 51.0% $1.304 52.3% $2.094 84.0%Aug-13 Avg $106.54 $1.366 53.9% $1.370 54.0% $2.189 86.3%Sep-13 Avg $106.24 $1.357 53.7% $1.364 53.9% $2.173 85.9%Oct-13 Avg $100.55 $1.481 61.9% $1.515 63.3% $2.095 87.5%Nov-13 Avg $93.93 $1.426 63.8% $1.455 65.1% $2.082 93.1%Dec-13 Avg $97.89 $1.374 59.0% $1.381 59.2% $2.137 91.7%Jan-14 Avg $94.86 $1.396 61.8% $1.520 67.3% $2.087 92.4%Feb-14 Avg $100.68 $1.419 59.2% $1.438 60.0% $2.118 88.3%Mar-14 Avg $100.51 $1.257 52.5% $1.295 54.1% $2.178 91.0%3/17/2014 $98.08 $1.246 53.4% $1.277 54.7% $2.229 95.4%3/18/2014 $99.70 $1.244 52.4% $1.269 53.5% $2.195 92.5%3/19/2014 $100.37 $1.241 51.9% $1.268 53.0% $2.173 90.9%3/20/2014 $99.43 $1.249 52.7% $1.268 53.5% $2.165 91.5%3/21/2014 $99.46 $1.265 53.4% $1.299 54.8% $2.165 91.4%3/24/2014 $99.60 $1.254 52.9% $1.282 54.1% $2.156 90.9%3/25/2014 $99.19 $1.261 53.4% $1.286 54.5% $2.152 91.1%3/26/2014 $100.26 $1.264 52.9% $1.289 54.0% $2.189 91.7%3/27/2014 $101.28 $1.270 52.7% $1.306 54.1% $2.225 92.3%3/28/2014 $101.67 $1.263 52.2% $1.303 53.8% $2.288 94.5%3/31/2014 $101.58 $1.255 51.9% $1.283 53.1% $2.193 90.7%4/1/2014 $99.74 $1.253 52.7% $1.279 53.8% $2.165 91.2%4/2/2014 $99.62 $1.243 52.4% $1.268 53.4% $2.148 90.5%Apr-14 MTD $99.68 $1.25 $0.53 $1.27 $0.54 $2.16 $0.91

Mt Belvieu Butane and Natural Gasoline Prices

63

Average weekly Mt. Belvieu n-butane prices were down 0.2¢/gal to $1.26/gal compared to $1.26/gal last week, and normal butane’s price relationship to WTI was down to 52.4% from 53.1% last week.

The average weekly spread between NW Europe and Mt. Belvieu n-butane decreased to 51.9¢/gal from 53.3¢/gal last week. Japan-Belvieu butane spreads are at 73¢/gal versus 60¢/gal last week. The EIA indicated that in January, n-butane exports surged to 63 MBPD compared to 29 MBPD in December.

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Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14

CIF ARA N-Butane vs Mt Belvieu N-Butane Prices($ per gallon)


NW Europe N-Butane Prices

Mt. Belvieu N-Butane Prices

C4 Price Spread - NW Europe to Mt Belvieu

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$1.80

$2.00

$2.20

$2.40

$2.60

$2.80

Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14

CIF Japan N-Butane vs Mt Belvieu N-Butane Prices($ per gallon)


Japan N-Butane Prices

Mt. Belvieu N-Butane Prices

C4 Price Spread - Japan to Mt Belvieu

64

Average weekly i-butane prices were up 0.3¢/gal to $1.29/gal. The iso to normal price spread rose to 3.10¢/gal compared to 2.61¢/gal last week. One year ago the iso to normal price spread was 3.23¢/gal. The iso-normal spread is staying narrow due to greater iso-butane supplies to gas processing and due to refinery turnarounds that are affecting alkylation unit operations.

Average weekly natural gasoline prices were up 3.8¢/gal to $2.20/gal, with natural gasoline selling at a 91.8% relationship to WTI compared to 91.3% last week and 94.0% one year ago. The Edmonton to Belvieu weekly average price spread for natural gasoline is currently 31.5¢/gal versus 28.9¢/gal last week. This spread should be more than enough to rail or transport natural gasoline by pipe to Alberta as a diluent.

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Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

US Imports and Exports of N-Butane (Thousand BPD)

N-Butane Exports N-Butane Imports

Exports

Imports

Exports

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Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14

Mt. Belvieu Iso-Normal Spread(Cents per gallon)

`

65

This past week, Conway n-butane prices averaged 6.3¢/gal under Belvieu, with Conway iso at 19.8¢/gal over Belvieu, and Conway natural gasoline at 8.3¢/gal under Belvieu.

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Edmonton to Mt Belvieu Natural Gasoline Price Spread($ per gallon)

Average

($0.35)

($0.25)

($0.15)

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8/30 10/30 12/30 2/28 4/30 6/30 8/31 10/31 12/31 2/28

Mt Belvieu Non-TET I. Butane vs. Conway in-well I. Butane

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9/7 11/7 1/7 3/7 5/7 7/7 9/7 11/7 1/7 3/7

Mt Belvieu Non-TET N. Butane vs. Conway in-well N. Butane

66

The forward prices for n-butane and natural gasoline, as provided by PetroChem Wire, are shown in the tables below. The 12 month strip for the n-butane frac spread decreased 1.14¢/gal for the week. The 12 month strip for the natural gasoline frac spread decreased 1.39¢/gal for the week. Forward prices for natural gasoline are backwardated through Dec-14.

Benchmark NGL Metrics The composite spot value of the benchmark NGL barrel relative to WTI prices was up to 33.8% compared to last week at 33.7%. Against Brent, the relative value of the composite NGL barrel was also down to 31.9% compared to last week at 31.5%.

($0.40)

($0.30)

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9/7 11/7 1/7 3/7 5/7 7/7 9/7 11/7 1/7 3/7

Mt Belvieu Non-TET Nat Gasoline vs. Conway in-well Nat Gasoline

($0.40)

($0.20)

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9/4 11/4 1/4 3/4 5/4 7/4 9/4 11/4 1/4 3/4

Conway in-well I. Butane vs. Conway in-well N. Butane

Prices as of 4/2/14

Crude¹ $/Bbl

Natural Gas¹ $/MM

BTU

Gas-to-Crude Ratio

Forward N-Butane²

¢/gal

N-Butane-to-Crude

Ratio

N-Butane Frac ¢/gal

N-Butane Frac $/MM

BTUMay-14 $99.62 $4.36 25.4% 125.13 52.8% 80.21 $7.79Jun-14 $98.90 $4.40 25.8% 125.38 53.2% 96.22 $9.35Jul-14 $98.04 $4.44 26.2% 125.63 53.8% 96.21 $9.35Aug-14 $97.14 $4.44 26.5% 126.00 54.5% 96.59 $9.39Sep-14 $96.24 $4.41 26.6% 126.50 55.2% 97.24 $9.45Oct-14 $95.34 $4.43 26.9% 127.13 56.0% 97.77 $9.50Nov-14 $94.53 $4.47 27.5% 127.88 56.8% 98.20 $9.54Dec-14 $93.77 $4.59 28.4% 128.63 57.6% 98.18 $9.54Jan-15 $92.93 $4.68 29.2% 128.88 58.2% 97.87 $9.51Feb-15 $92.14 $4.63 29.2% 126.88 57.8% 96.15 $9.34Mar-15 $91.47 $4.53 28.7% 123.63 56.8% 93.56 $9.09Apr-15 $90.86 $4.07 26.0% 120.63 55.8% 93.63 $9.10May-15 $90.35 $4.04 25.9% 119.63 55.6% 92.86 $9.02Jun-15 $89.87 $4.06 26.2% 119.63 55.9% 92.73 $9.01Jul-15 $89.29 $4.08 26.5% 119.88 56.4% 92.81 $9.02Aug-15 $88.77 $4.07 26.6% 120.25 56.9% 93.24 $9.06Sep-15 $88.34 $4.05 26.6% 120.75 57.4% 93.92 $9.13Oct-15 $87.94 $4.07 26.8% 121.25 57.9% 94.28 $9.16

12-mo Strip $95.08 $4.45 27.2% 126.02 55.7% 95.15 $9.2512-mo Strip One

Week Ago $95.51 $4.48 27.2% 127.31 56.0% 96.29 $9.36

12-mo Strip One Year Ago $93.98 $4.11 25.3% 140.38 62.7% 111.96 $10.88

¹ NYMEX Futures

Analysis of the Forward Price Curve for Belvieu N-Butane

² The forward n-butane curves are best estimates based on traded markets and PetroChem's insight. PetroChem and En*Vantage make no guarantee for accuracy and are not responsible for any trades or forecasts based upon this data.

Prices as of 4/2/14

Crude¹ $/Bbl

Natural Gas¹ $/MM

BTU

Gas-to-Crude Ratio

Forward C5+² ¢/gal

C5+-to-Crude Ratio

C5+ Frac ¢/gal

C5+ Frac $/MM BTU

May-14 $99.62 $4.36 25.4% 210.00 88.5% 159.81 $13.90Jun-14 $98.90 $4.40 25.8% 207.00 87.9% 156.45 $13.60Jul-14 $98.04 $4.44 26.2% 205.00 87.8% 154.00 $13.39Aug-14 $97.14 $4.44 26.5% 203.25 87.9% 152.25 $13.24Sep-14 $96.24 $4.41 26.6% 202.00 88.2% 151.26 $13.15Oct-14 $95.34 $4.43 26.9% 201.25 88.7% 150.35 $13.07Nov-14 $94.53 $4.47 27.5% 200.63 89.1% 149.17 $12.97Dec-14 $93.77 $4.59 28.4% 200.00 89.6% 147.20 $12.80Jan-15 $92.93 $4.68 29.2% 198.75 89.8% 144.99 $12.61Feb-15 $92.14 $4.63 29.2% 197.00 89.8% 143.72 $12.50Mar-15 $91.47 $4.53 28.7% 194.50 89.3% 142.37 $12.38Apr-15 $90.86 $4.07 26.0% 192.13 88.8% 145.31 $12.64May-15 $90.35 $4.04 25.9% 189.88 88.3% 143.46 $12.47Jun-15 $89.87 $4.06 26.2% 188.13 87.9% 141.49 $12.30Jul-15 $89.29 $4.08 26.5% 187.38 88.1% 140.44 $12.21Aug-15 $88.77 $4.07 26.6% 187.13 88.5% 140.30 $12.20Sep-15 $88.34 $4.05 26.6% 186.50 88.7% 139.97 $12.17Oct-15 $87.94 $4.07 26.8% 185.88 88.8% 139.12 $12.10

12-mo Strip $95.08 $4.45 27.2% 200.96 88.8% 149.74 $13.0212-mo Strip One

Week Ago $95.51 $4.48 27.2% 202.60 89.1% 151.13 $13.14

12-mo Strip One Year Ago $93.98 $4.11 25.3% 199.93 89.3% 152.71 $13.28

¹ NYMEX Futures

Analysis of the Forward Price Curve for Belvieu Natural Gasoline

² The forward natural gasoline curves are best estimates based on traded markets and PetroChem's insight. PetroChem and En*Vantage make no guarantee for accuracy and are not responsible for any trades or forecasts based upon this data.

67

The frac spread for the composite NGL barrel was at $5.32/MM Btu on Wednesday and the average for the week was $5.43/MM Btu compared to $5.34/MM BTU last week. One year ago the NGL frac spread for the composite NGL barrel was $5.76/MM BTU.

28%

33%

38%

43%

48%

53%

58%

63%

68%

73%

78%

28%

33%

38%

43%

48%

53%

58%

63%

68%

73%

78%

Composite NGL Price as % of WTI and as % of Brent(Mt. Belvieu NGL Prices to Crude on a Volume Basis)

NGLs as % of WTI NGLs as % of Brent

Ethane 50%Propane 26%Normal Butane 6%Iso Butane 8%Natural Gasoline 10%

Volume Composition of NGL Bbl

($2)

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M B

TU

Avg NGL Frac Spread(Mt Belvieu Prices vs Henry Hub Gas)

Ethane 50%Propane 26%Normal Butane 6%Iso Butane 8%Natural Gasoline 10%

Volume Composition of NGL Bbl

68

Producer NGL Uplift Below is our NGL uplift analysis which includes rich gas streams with the following NGL contents – 3 gpm, 5 gpm, 7 gpm and 10 gpm. We are assuming that each gas stream is being processed in a cryogenic plant out in the field with 2% fuel usage and a T&F fee of 15¢/gal to deliver the NGLs to Mt. Belvieu. For each gas stream, two cases were analyzed – an 85% ethane recovery case, and a full ethane rejection case with a 10% loss in propane extraction. Each case shows the total stream value for recovering NGLs for the current week and for the previous week. We also break out the NGL value contribution for the 4 different gas streams. 85% Ethane Recovery Case Based on netback NGL prices and field gas prices as of April 2 of $4.35/MM Btu, the NGL uplift for all 4 streams was slightly lower by 1% on average this week. Recovering NGLs from a 3gpm gas stream would yield a total stream value of $5.08/MM Btu compared to $6.86/MM Btu for recovering NGLs from a 10 gpm stream.

$4.35 /MM BTU


Producing Lean Gas With a Field Value Of Versus Processing Rich Gas With a NGL Inlet Content Of:


Producer Uplift Case with Ethane Extraction$4.35 /MM BTU


Producer Uplift Case with Ethane ExtractionProducing Lean Gas With a Field Value Of



$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

Dry Gas 3 GPM Gas 5 GPM Gas 7 GPM Gas 10 GPM Gas

NGL Uplifts for Processing Varying Rich Gas Qualities (Using Apr 2, 2014 prices for Natural Gas and Mt Belvieu NGLs)

Residue Gas

Natural Gasoline

Propane

N-Butane

I-Butane

Ethane

$/MM Btu

`

Inlet Gas

Assumes: - Cryogenic plant recovering 85% ethane. - T&F Fee of 15¢/gal; 2% plant fuel.- Dry Gas Value: $4.35/MM Btu.- Field condensate uplift not included.

69

Full Ethane Rejection Case With full ethane rejection and 10% propane loss, the producer receives less contribution from the NGLs for all gas categories, but a higher total stream value as ethane is netting back a negative frac spread. The NGL contribution in the full ethane rejection cases was yielding total stream values of $0.15 to $0.30/MM Btu above the ethane recovery cases. If a producer was drilling 10 gpm and recovering the NGLs with the exception of ethane, the producer would receive $7.091/MM Btu compared to $6.86/MM Btu if the producer recovered ethane.

Terry Ciliske Peter Fasullo

$4.35 /MM BTU


Producer Uplift Case with Ethane RejectionProducing Lean Gas With a Field Value Of


T&F fee: 15¢/gal ; Full Ethane Rejection; 10% Propane Loss

$4.35 /MM BTU

3/26/2014 3 GPM Gas 5 GPM Gas 7 GPM Gas 10 GPM GasRecovered Components $/MM BTU $/MM BTU $/MM BTU $/MM BTUEthane $0.000 $0.000 $0.000 $0.000Propane $0.480 $0.847 $0.880 $1.274I-butane $0.118 $0.120 $0.338 $0.342N-butane $0.259 $0.400 $0.416 $0.376C5+ $0.635 $0.858 $1.574 $2.229Residue Gas $3.786 $3.467 $3.229 $2.905Total Stream Value $5.278 $5.691 $6.437 $7.125NGL Contribution to Total Stream Value $1.492 $2.225 $3.208 $4.220T&F fee: 15¢/gal ; Full Ethane Rejection; 10% Propane Loss

Producer Uplift Case with Ethane RejectionProducing Lean Gas With a Field Value Of


$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

Dry Gas 3 GPM Gas 5 GPM Gas 7 GPM Gas 10 GPM Gas

NGL Uplifts for Processing Varying Rich Gas Qualities (Using Apr 2, 2014 prices for Natural Gas and Mt Belvieu NGLs)

Residue Gas

Natural Gasoline

Propane

N-ButaneI-Butane

$/MM Btu

`

Inlet Gas

Assumes: - Cryogenic plant at full ethane rejection.- 10% propane extraction loss. - T&F Fee of 15¢/gal; 2% plant fuel.- Dry Gas Value: $4.35/MM Btu.- Field condensate not included.

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The information contained in this report is provided for informational purposes only. This report is provided as a courtesy only and no person or entity is entitled to rely on any information or opinion set forth herein. Use of any information or opinion set forth herein is at the user's sole and exclusive risk. The opinions stated do not constitute an offer to sell, a solicitation to buy, or a recommendation to sell or buy, any good, product, investment, or other item examined. Previous performance does not guarantee future events or performance. The facts and data contained herein were obtained from resources considered to be reliable; however, En*Vantage has undertaken no obligation to verify such information and the accuracy of the same is not guaranteed. En*Vantage undertakes no obligation to update any information or opinion set forth herein under any circumstance or for any reason whatsoever. EN*VANTAGE DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONTENT OF THIS REPORT, SPECIFICALLY INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF FITNESS FOR A PARTICULAR USE OR PURPOSE. IN NO EVENT SHALL EN*VANTAGE BE LIABLE FOR ANY DAMAGES WHATSOEVER ARISING OUT OF OR RELATING TO THE USE OF OR RELIANCE ON ANY INFORMATION OR OPINION SET FORTH HERE.

Documents

En*Vantage’s Weekly Energy Report – April 2, 2014envantageinc.com/wp-content/uploads/2014/07/EnVantages... · 2019. 2. 6. · En*Vantage’s Weekly Energy Report – April 2,

EnVantage’s Weekly Energy Report – April 2, 2014envantageinc.com/wp-content/uploads/2014/07/EnVantages... · 2019. 2. 6. · EnVantage’s Weekly Energy Report – April 2,