ERCE Oil Price Review - 2016 Q2 · This presentation is produced solely for the benefit of ERCE’sclients to whom it is presented. It may not be copied, reproduced, transmitted or

1

ERCE Oil Price Review - 2016 Q218 April 2016

This document reports and summarises the findings of a review and assessment of recent historical and assumed future oil

prices based upon literature published in the public domain.

Jerry Ho ([email protected])

Contact a member of staff at ERC Equipoise to subscribe / unsubscribe to our quarterly update

2

ERC Equipoise Ltd (“ERCE”) has compiled the following Oil Price Review for general guidance purposes only. In

order to compile the following report, a comprehensive review of information was undertaken with the enclosed

data being obtained from sources within public domain, including energy agencies, industry publications and

market data.

ERCE has made every effort to ensure that the information and data presented herein are accurate and reliable.

ERCE does not, however, guarantee the correctness of any such information and data and shall not be liable or

responsible for any loss, costs, damages or expenses incurred or sustained by anyone resulting from any

recommendation made by any of its officers, agents or employee.

In the absence of guidance from a client in relation to oil price assumptions, ERCE would assume the oil price

scenarios presented in this slide pack. These oil price scenarios are derived in context of the information

available in the public domain and should not be construed as oil price forecasts, predictions or projections by

ERCE.

Clients should be aware that any final assumptions represented herein are based on currently available data,

which, however, due to the highly volatile characteristic of the oil market, are only temporary and subject to

change. ERCE reserves the right to modify this report at any time, and revised values may differ significantly

from previous estimates.

In the case that material is delivered in digital format, ERCE does not accept any responsibility for edits carried

out after the product has left the Company’s premises.

This presentation is produced solely for the benefit of ERCE’s clients to whom it is presented. It may not be

copied, reproduced, transmitted or otherwise made available on any network or in any other medium, in whole or

in part, without the prior consent of ERC Equipoise.

Disclaimer

Images (top left to bottom right): Deepwater Horizon semi-sub, Methane Princess (first LNG carrier launched in 1964), Piper Alpha platform, Exxon Valdez, Damman-7 well

(Saudi Arabia, 1937), a nodding donkey on the Eagleford shale (U.S.), crude storage tankers at Cushing, Oklahoma (U.S.), OPEC member states (excludes Indonesia).

3

Review of Crude Oil and Natural Gas PricesAll prices as at 15 April 2016

All dollar amounts are in U.S. dollars unless otherwise indicated

4

Brent and WTI Crude Spot Price Review

Source: Intercontinental Exchange, Federal Reserve Bank, ERCE Estimates.

Oil prices rallied in recent months on tightening supply, anticipation of a potential production freeze and US dollar

weakness. Some believe that the bottom experienced in January was the end of the nearly two-year price decline.

Others continue to warn that oil markets remain in oversupply and that further meetings between major producers will

be meaningless for global production. (The next OPEC meeting is due to take place in Vienna on 2 June).

$/bbl

%Chg vs

Current $/bbl

%Chg vs

Current

15-Apr-16 43.1 - 40.4 -

1M Ago 38.7 11% 36.3 11%

3M Ago 28.9 49% 29.4 37%

6M Ago 48.7 -12% 46.4 -13%

1Yr Ago 60.3 -29% 56.4 -28%

YTD Low 27.1 59% 26.1 55%

YTD High 44.9 -4% 42.4 -5%

2016 YTD Average 36.1 19% 34.4 17%

Brent WTIBrent and WTI Crude Oil

Spot Price:

Current Vs. Historical

Brent Crude Daily Spot Price: 6M Candlestick Chart (15-Oct-15 to 15-Apr-16)

25

30

35

40

45

50

55

Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16

Bre

nt

Cru

de

Spo

t P

rice

($

/bb

l)

YTD low 20-Jan-16: $27/b

Brent has rebounded almost 60% since it’s YTD

WTI-Brent Spot Price and Spread (Jan 2008+)

(30)

(25)

(20)

(15)

(10)

(5)

-

5

20

40

60

80

100

120

140

160

J-08

J-09

J-10

J-11

J-12

J-13

J-14

J-15

J-16

WTI

-Bre

nt

Spre

ad -

$/b

bl

Bre

nt

and

WTI

Sp

ot

-$

/bb

l

WTI-Brent Spread WTI Spot Brent Spot

Trade Weighted U.S. Dollar Index (Jan 2010 = 100)

90

95

100

105

110

115

120

125

J-10 J-11 J-12 J-13 J-14 J-15 J-16

US$

Ind

ex -

Jan

201

0 =

100

Trade Weighted U.S. Dollar Index (Jan 2010 = 100)

Jun-1 to Jan-16: up >23%

Jan-16 to Apr-16:down 4.5% as

global risk aversiondeclined and

commodity prices recovered

The trade-weighted dollar is used to determine the U.S. dollar purchasing value, and to summarize the effects of dollar appreciation and depreciation against foreign currencies.

5

Brent Crude Oil Futures Curve Review

Source: Intercontinental Exchange, ERCE Estimates

Contango in the Brent futures reduced significantly resulting in a flatter futures curve over the last 3 months following

a steady recovery in the spot price from lows earlier in the year. Oil market analysts commented on the potential

tighter market outlook reflected in the pricing structure of the Brent futures curve, following outages in Nigeria and

Iraq from sabotage, when the spot price (M1) occasionally fluctuated in to backwardation.

Brent Crude Futures Curve: Current, 1M, 3M, 6M and 1Yr Ago Brent Futures Curve Spread (12M Ago to Current)

20

30

40

50

60

70

-25

-20

-15

-10

-5

0

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec

-15

Jan

-16

Feb

-16

Mar

-16

Ap

r-1

6

36M-48M

24M-36M

12M-24M

6M-12M

0M-6M

Brent Spot(RHS)

$/bbl $/bbl

20

30

40

50

60

70

80

M1

M1

3

M2

5

M3

7

M4

9

M6

1

M7

3

$/b

bl

15-Apr-16 15-Mar-16 15-Jan-16 15-Oct-15 15-Apr-15

Brent Curve: Annual Averages - Current, 1M, 3M, 6M and 1Yr Ago

30

40

50

60

70

80

2016 2017 2018 2019 2020 2021 2022

$/b

bl

15-Apr-16 15-Mar-16 15-Jan-16 15-Oct-15 15-Apr-15

$/bbl 2016* 2017 2018 2019 2020 2021 2022

15-Apr-16 44 46 48 49 51 52 54

15-Mar-16 40 44 47 49 51 52 53

15-Jan-16 32 38 42 45 47 49 50

15-Oct-15 52 58 60 62 64 65 65

15-Apr-15 68 71 72 74 74 75

Annual Averages of Brent Futures Contracts (Current Vs 1M, 3M, 6M

and 1Yr Ago)

6

Money Managers’ (Hedge Funds, Pension Funds etc) Positions on

Oil Contracts (Combined Futures and Options)

Source: Commodity Futures Trading Commission, ICE, NYMEX, Reuters, ERCE Estimates. Note: each contract represents 1,000 bbls

Hedge funds and other big speculators increased their net long positions for crude futures and options during the lead

up to the major crude producers' meeting in Doha in mid April.

Longs are bets on higher prices while shorts are wagers on price drops. The net position squares off the two.

Money Managers Positions on Brent Crude Contracts (ICE) Money Managers Positions on WTI Crude Contracts (ICE & NYMEX)

20

40

60

80

100

120

-

100

200

300

400

500

J-14 J-15 J-16

Oil

Pri

ce (

$/b

bl)

Co

mb

ined

Fu

ture

s an

d O

pti

on

s C

on

trac

ts

(k, t

ho

usa

nd

s)

Brent Long (k) Brent Short (k) Brent Spot Price ($/bbl)

20

40

60

80

100

120

-

100

200

300

400

500

J-14 J-15 J-16

Oil

Pri

ce (

$/b

bl)

Co

mb

ined

Fu

ture

s an

d O

pti

on

s C

on

trac

ts

(k, t

ho

usa

nd

s)

WTI Long Positions WTI Short Positions WTI Spot Price ($/bbl)

Oil Long and Short Positions Week on Week Change Vs. Brent Crude Price Money Managers' Net Long Position of Brent & WTI Vs Brent Crude Oil Price

20

25

30

35

40

45

(60)

(40)

(20)

-

20

40

05-Jan-16 26-Jan-16 16-Feb-16 08-Mar-16 29-Mar-16

Bre

nt

($/b

bl)

Co

mb

ined

Fu

ture

s an

d O

pti

on

s C

on

trac

ts

(k, t

ho

usa

nd

s)

Oil Long WoW Chg Oil Short WoW Chg Brent Crude Oil Price

Weekly Decrease

Weekly increase

20

25

30

35

40

45

200

300

400

500

600

700

05

-Jan

-16

12

-Jan

-16

19

-Jan

-16

26

-Jan

-16

02

-Feb

-16

09

-Feb

-16

16

-Feb

-16

23

-Feb

-16

01

-Mar

-16

08

-Mar

-16

15

-Mar

-16

22

-Mar

-16

29

-Mar

-16

05

-Ap

r-1

6

12

-Ap

r-1

6

Bre

nt

($/b

bl)

Co

mb

ined

Fu

ture

s an

d O

pti

on

s C

on

trac

ts

(k, t

ho

usa

nd

s)

Net Long Position Brent Crude Oil Price

7

Long Term Crude Oil Price - Annual Average (1970 – 2016YTD)

• Nominal - economic value expressed in historical nominal monetary terms, also known as “money-of-the-day”.

• Real - Economic value that has been adjusted from a nominal value to remove the effects of general price level changes over time (using

the CPI from US Bureau of Labour Statistics) and is thus measured in terms of the general price level in some reference year (the base

year in this case 2016).

• 1970-1983 Arabian Light posted at Ras Tanura; 1984-2013 Brent dated; 2014+ Brent spot.

Source: Intercontinental Exchange, U.S. Energy Information Administration, BP, ERCE Estimates

Oil Price History: Long-Term Crude Oil Price (Real Vs. Nominal)

$55/bbl 1970 - 2015 Avg (Real, 2015)

$35/bbl 1970 - 2016YTD Annual Avg (Nominal)

-

20

40

60

80

100

120

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

YTD

Nom

inal

and

Rea

l (20

16) C

rude

Oil

Pric

e ($

/bbl

)

$ Nominal (money of the day) $ Real (September 2015)

1970 - 2016YTD Annual Avg (Real, 2016) 1970 - 2016YTD Annual Avg (Nominal)

1973: Arab oil embargo

1979: Iranian Revolution1980-1986: Non-OPEC production increased 6 MMb/dand OPEC attempted to set production quotas

1985: Saudis abandon swing producer role

1998: Asian FinancialCrisis

2008: Global Financial Crisis

1999 - 2008: Strong demand growth from Non-OECD Countries and lowOPEC spare capacity

1998-1999: OPEC production decreased ~3 MMb/d

2009: OPEC cuts production targets by 4.2 MMb/d

2015 - 2016: Strong supply, weakening demand, Saudis look tomaintaining market share insteadof acting as swing producer

1990: Iraq invadesKuwait

8

Global gas prices continued to fall through 1Q 2016 on rising supply, lacklustre demand and weak crude oil prices. A

mild winter across Europe pushed the UK NBP spot price to six-year lows. European gas storage facilities are at

unusually high levels contributing to downward pressure on European hub futures over the summer.

Global Natural Gas Spot Prices

Source: Intercontinental Exchange, IMF, EIA, METI, Platts, Institute of Energy Economics (Japan), ERCE Estimates

Jan-15 Mar-16 Jan to Mar 2016

($/MMbtu) ($/MMbtu) % Chg

UK NBP 4.61 4.07 -12%

German Import 5.09 4.09 -20%

US Henry Hub 2.27 1.70 -25%

Japan LNG 7.10 6.80 -4%

Brent Crude ($/stb) 30.80 39.07 27%

Global Gas: Monthly

Average Spot Prices

Global Gas Prices (Jan 2013-2015) Monthly Average Prices

-

30

60

90

120

-

5

10

15

20

J-13 J-14 J-15 J-16

Bre

nt

Cru

de

Spo

t P

rice

$/b

bl

Glo

bal

Gas

Pri

ces

($/M

Mb

tu)

German Import Japan Spot LNG US Henry Hub

UK NBP Brent Crude Spot

UK Natural Gas NBP Daily Spot Price: 6 Month Candlestick Chart UK Natural Gas NBP Futures Curve (Current Vs 1M, 3M, 6M and 1Yr Ago)

25

30

35

40

45

50

Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22

UK

NB

P G

as P

rice

(p

/th

erm

)

15-Apr-16 15-Mar-16 15-Jan-16 15-Oct-15

25

30

35

40

45

Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16

UK

NB

P N

atu

ral G

as P

rice

(p

/th

erm

)

9

ERCE Brent Oil Price Assumptions

And Price Decks Assumed by

Petroleum Consultants and Analysts

In the absence of guidance from a client in relation to oil price assumptions, ERCE would assume the oil

price scenarios presented in the following slide. These oil price scenarios are derived in context of the

information available in the public domain and should not be construed as oil price forecasts, predictions

or projections by ERCE.

The low and high oil price paths depicted in the following slide(s) are not intended to provide lower and

upper bounds for future oil prices but rather to allow the analysis of possible future world oil market

conditions that differ significantly from those assumed in the base case.

10

ERCE Brent Oil Price Assumptions: Low, Base and High

Source: Intercontinental Exchange, ERCE Estimates

ERCE Nominal Brent Oil Price Assumptions ERCE Real (Real 2016) Brent Oil Price Assumptions

30

40

50

60

70

80

90

100

110

2016 2017 2018 2019 2020 2021 2022 2023 2024

$/b

bl

ERCE Base ERCE High ERCE Low

30

40

50

60

70

80

90

100

2016 2017 2018 2019 2020 2021 2022 2023 2024

$/b

bl

ERCE Base ERCE High ERCE Low

Low Case ERCE Brent Assumptions

($/bbl)2016 2017 2018 2019 2020 2021 2022 2023 2024 2025+

Real (Constant $, 2016) 36 40 42 44 45 45 45 45 45 45Nominal ($ of the day) 36 41 44 47 49 50 51 52 53 +2.0% paEscalation rate p.a. 2.00%

Base Case ERCE Brent Assumptions

($/bbl)2016 2017 2018 2019 2020 2021 2022 2023 2024 2025+


High Case ERCE Brent Assumptions

($/bbl)2016 2017 2018 2019 2020 2021 2022 2023 2024 2025+


Brent Futures (15-Apr-16) 44 46 48 49 51 52 54

11

Brent Oil Price Assumptions by Petroleum Consultants

Source: Sproule, GLJ, McDaniel, ERCE Estimates. Note: *publication date

Nominal (Money of the Day) Brent Oil Price Assumptions Real 2016 (Constant US$) Brent Oil Price Assumptionss

40

50

60

70

80

90

100

2016 2017 2018 2019 2020 2021 2022 2023 2024

$/b

bl

ERCE (Apr 2016*) Sproule (Apr 2016*)

GLJ (Apr 2016*) McDaniel (Apr 2016*)

40

50

60

70

80

2016 2017 2018 2019 2020 2021 2022 2023 2024

$/b

bl

ERCE (Apr 2016*) Sproule (Apr 2016*)

GLJ (Apr 2016*) McDaniel (Apr 2016*)

Petroleum Consultants Updated: 15-Apr-15

Brent Nominal ($/bbl) 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025+ERCE (Apr 2016*) 45 54 62 69 74 77 79 80 82 +2.0% paSproule (Apr 2016*) 43 60 70 80 81 82 84 85 86 +1.5% paGLJ (Apr 2016*) 44 51 56 61 66 71 75 79 83 +2.0% paMcDaniel (Apr 2016*) 43 52 61 67 72 76 80 84 86 +2.0% paAverage 44 54 62 69 73 77 79 82 84Brent Futures (15-Apr-16) 44 46 48 49 51 52 54

Brent Real ($/bbl) 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025+ERCE (Apr 2016*) 45 53 60 65 68 70 70 70 70 70Sproule (Apr 2016*) 43 59 68 77 77 77 77 77 77 77GLJ (Apr 2016*) 44 50 54 57 61 64 67 69 71 72McDaniel (Apr 2016*) 43 51 58 64 66 68 71 73 73 73Average 44 53 60 66 68 70 71 72 73 73

ERCE Sproule GLJ McDanielEscalation rate p.a. 2.00% 1.50% 2.00% 2.00%

12

Brent Oil Price Assumptions by Petroleum Consultants and

Analyst Consensus Vs. Brent Crude Futures Curve

Source: Sproule, GLJ, McDaniel, Intercontinental Exchange, ERCE Estimates. Note: *publication date

Nominal Brent Oil Price Assumptions by Petroleum Consultants, Analysts Vs. Brent Futures Curve

30

40

50

60

70

80

90

100

110

2016 2017 2018 2019 2020 2021 2022 2023 2024

Bre

nt

Cru

de

($/b

bl)

ERCE (Apr 2016*) Sproule (Apr 2016*) GLJ (Apr 2016*)

McDaniel (Apr 2016*) ERCE High ERCE Low

Brent Futures (15-Apr-16) Average Analyst Forecast

13

Brent Crude Oil Price Forecasts by Oil Analysts

Source: Bloomberg, Reuters, Intercontinental Exchange, Research Reports, ERCE Estimates

Financial analysts raised their average price forecasts for 2016 for the first time in 10 months, but cautioned that

investor sentiment may sour short-term without solid improvement in market fundamentals, according to a Reuters

poll (31 March 2016).

Source: Bloomberg 2016 2017 2018 2019

ABN AMRO Bank NV 50 60

Alliance Bernstein 50 70 80 80Bank of Nova Scotia/The 41 56 62 73Barclays PLC 37BMI Research 40 53BMO 45 55 65 70BNP Paribas SA 37 46Capital Economics 37 54Citigroup Inc 40 60 64Commerzbank AG 42 57Danske Bank A/S 41 52DNB ASA 47 65 70Emirates NBD PJSC 39 55Goldman Sachs 50 65 65 60HSBC Holdings PLC 45 60 75Investec 40 50 55 55Itau Unibanco Holding SA 46 55 55 55Jeffries 43 58 72 85LBBW 40Lloyds Bank PLC 43 66Morgan Stanley 49 72 85 85MPS Capital Services 36Natixis SA 38 48 56 70Norddeutsche Landesbank Girozentrale 38 46Prestige Economics LLC 41 51Promsvyazbank PJSC 47 45 50 54Raiffeisen Bank International AG 39 55 62RBC Capital Markets 43 60 74Santander UK PLC 40 53 60 65Societe Generale SA 38 53 65 70UniCredit Markets & Investment Banking 37 45Wells Fargo Securities LLC 41 52 57 59Westpac Banking Corp 29 35 44 40Mean 41 55 64 66Median 41 55 64 68Max 50 72 85 85

Min 29 35 44 40

Brent Curve (15-Apr-16) 44 46 48 49

Oil Price Forecasts by Financial Analysts

Historgram of Annual Brent Crude Oil Price Forecasts by Financial Analysts

20

30

40

50

60

70

80

90

2016 2017 2018 2019

Oil

Pri

ce F

ore

cast

-$

/bb

l

AverageForecast

Brent Curve(15-Apr-16)

Analyst OilPrice Forecast

Analyst Min

Analyst Max

-

2

4

6

8

10

12

14

16

18

20

$0 to $29 $30 to $39 $40 to $49 $50 to $59 $60 to $69 $70 to $79 $80 to $89

An

alys

t C

ou

nt

Brent Crude Oil Price - $/bbl

2016 2017 2018 2019

14

Brent Pricing Based on SEC Regulations (YE2015 Vs YE2014)

• Shown for reference purposes only, the data above indicates the current Brent price as Defined by SEC

Regulations.

• This is calculated by taking the 12-month unweighted arithmetic average of 1st-day-of-the-month Brent prices.

• Definition 22.V (31 December 2009): "Existing economic conditions include prices and costs at which economic

producibility from a reservoir is to be determined. The price shall be the average price during the 12-month

period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic

average of the first-day-of-the-month price for each month within such period, unless prices are defined by

contractual arrangements, excluding escalations based upon future conditions."

Source: Intercontinental Exchange, SEC, ERCE Estimates

Rolling 12M

Brent Spot

@1st of

Month 2015Rolling 12M

Brent Spot

@1st of

Month

(2014)Date ($/stb) Date ($/stb)

01-Dec-15 44 01-Dec-14 7301-Nov-15 50 01-Nov-14 8601-Oct-15 48 01-Oct-14 9401-Sep-15 50 01-Sep-14 10301-Aug-15 52 01-Aug-14 10501-Jul-15 62 01-Jul-14 11201-Jun-15 65 01-Jun-14 10901-May-15 66 01-May-14 10801-Apr-15 57 01-Apr-14 10601-Mar-15 63 01-Mar-14 10901-Feb-15 53 01-Feb-14 10601-Jan-15 57 01-Jan-14 111

12M Arith.

Avg55.57

12M Arith.

Avg101.80

Brent Pricing - SEC Regulations

56

102

40

60

80

100

J-15

F-1

5

M-1

5

A-1

5

M-1

5

J-15

J-15

A-1

5

S-1

5

O-1

5

N-1

5

D-1

5

$/b

bl

Brent Spot@1st of Month 2015

Pricing Based on SEC Rules (YE2015)

Pricing Based on SEC Rules (YE2014)

15

A Review of Global

Oil Macro Fundamentals

16

Global Oil Demand Growth Expected to Ease in 2016

Energy agencies forecast demand growth to ease considerably in 2016 due to slowdowns in the US, Europe, China and

Latin America. They have readjusted their 2016 demand growth numbers from estimates made in 2015, lowering

predicted demand growth to 1.2 MMbbl/d. The EIA’s prediction for 2017 demand growth is 1.3 MMbbl/d. In its World

Economic Outlook the IMF downgraded it’s global growth forecast for this year by 0.2%, to 3.2%.

Source: U.S. Energy Information Administration, International Energy Agency, ERCE Estimates

Global Oil Demand and YoY Change

-

1

2

3

4

5

6

84

86

88

90

92

94

96

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Global Oil Demand YoY Chg Global Oil Demand

Demand 12 MMA YoY Demand Chg 12 MMA

Seasonal OECD Oil Demand and 5 Yr Range

44

45

46

47

48

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

MM

bb

l/d

5yr range 2016 2015 2014 2013

Seasonal Non-OECD Oil Demand and 5 Yr Range

38

40

42

44

46

48

50


MM

bb

l/d

5yr range 2016 2015 2014 2013

IEA Expected 2016 Global Oil Demand Growth

0.60

0.80

1.00

1.20

1.40

95.00

95.50

96.00

96.50

J-15 A-15 S-15 O-15 N-15 D-15 J-16 F-16 M-16 A-16

MM

bb

l/d

MM

bb

l/d

Month of IEA OMR Publication

Estimated 2016 Global Oil Demand (LHS) Estimated 2016 Global Oil Demand YoY Chg (RHS)

17

Global Oil Supply: Moving Towards A Rebalanced Market

The global oil supply YoY growth continues its steady decline with losses from both OPEC and Non-OPEC countries.

OPEC output declined this quarter, resulting from violence and instability in several countries. The U.S. and North Sea

lead declines from Non-Opec producers. The IEA expects oil markets to balance by the end of 2016, whereas the EIA

forecasts oversupply to continue until mid 2017.

Source: U.S. Energy Information Administration, International Energy Agency, ERCE Estimates

Non-OPEC Crude Oil and Liquid Fuels Supply

-1

0

1

2

3

4

50

52

54

56

58

60

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Non-OPEC Oil Supply YoY Chg Non-OPEC Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

OPEC Crude Oil & Liquids Production and YoY Change

-1

0

1

2

3

4

34

35

36

37

38

39

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

OPEC Crude & Liquids Supply YoY Chg OPEC Crude & Liquids SupplySupply 12 MMA YoY Supply Chg 12 MMA

Global Oil Supply and YoY Change

-1

0

1

2

3

4

5

6

84

86

88

90

92

94

96

98

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Global Oil Supply YoY Chg Global Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

Global Oil Demand YoY Change Vs. Global Oil Supply YoY Change

0.0

1.0

2.0

3.0

4.0

Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16

MM

bb

l/d

Global Oil Demand YoY Chg Global Oil Supply YoY ChgYoY Demand Chg 12 MMA YoY Supply Chg 12 MMA

18

OECD and U.S. Commercial Oil Inventories:

The Surge Continues

Source: U.S. Energy Information Administration, IEA, Reuters, ERCE Estimates

Commercial oil inventories continue to build beyond their 5-year-range both in and out of the US. The EIA forecasts the

rise in stocks to continue until end 2017 due to oil production being un-expectedly resilient to low prices. In the US, a

seasonal drop in refined products ahead of the U.S. driving season was more than offset by a rise in crude stocks

despite the recent slowing of regional production growth.

Total OECD Excluding US Commercial Oil Stocks

1,450

1,500

1,550

1,600

1,650

1,700

1,750

1,800


Tota

l Oil

Sto

cks

-M

Mb

bl

5yr range 2016 2015 2014 2013

Mar '16 Stocks 16% above 5 yr

Max

Total OECD Commercial Oil Stocks Total OECD Commercial Oil Stocks and Demand Cover

45

50

55

60

65

70

2,500

2,600

2,700

2,800

2,900

3,000

3,100

3,200

J-07 J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16

Day

s o

f D

eman

d C

ove

r

Tota

l Oil

Sto

cks

-M

Mb

bl

OECD Comm. Oil Stocks (LHS) OECD Oil Demand Cover (RHS)

2,500

2,600

2,700

2,800

2,900

3,000

3,100

3,200


Tota

l Oil

Sto

cks

-M

Mb

bl

5yr range 2016 2015 2014 2013

Total U.S. Commercial Oil Stocks

1,000

1,100

1,200

1,300

1,400


Tota

l Oil

Sto

cks

-M

Mb

bl

5yr range 2016 2015 2014 2013

19

Top 7 Prolific U.S. Shale Regions

These seven shale regions onshore the US account for ~92% of domestic oil production growth and all natural gas

production growth during 2011 to 2014.

Source: U.S. Energy Information Administration

20

U.S. Rig Count Continues to Fall; Shale Production Shows

Steepening Decline MoM

Source: U.S. Energy Information Administration, ERCE Estimates. Note: Oil production represents both crude and condensate production from all formations (not limited to

tight formations).

The anticipated negative impact of the current downturn on US oil production outlook is taking shape. The U.S. onshore

oil rig count has fallen almost 80% from the high of Oct 14. Over 50 U.S. producers have entered bankruptcy since early

2015. Bi-annual lending reviews by banks in April are likely to leave companies without sufficient credit to finance new

drilling and therefore support falling production due to the fast natural decline of shale wells.

U.S. Onshore Active Oil Rigs U.S. Onshore Oil Production by Region

-

1

2

3

4

5

6

J-07 J-08 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

Utica Permian Niobrara Marcellus Haynesville Eagleford Bakken

Mar 2016:4.8MMbbl/d

Mar 2015:5.5 MMbbl/d

Mar 2011:1.8MMbbl/d

0

200

400

600

800

1,000

1,200

1,400

J-10

J-11

J-12

J-13

J-14

J-15

J-16

U.S

. On

sho

re O

il R

ig C

ou

nt


- 77%

Oct 2014: 1,308

Mar2016:307

US Shale Production MoM Change by Shale Region

-120

-80

-40

0

40

80

120

160

J-10

J-11

J-12

J-13

J-14

J-15

J-16

Oil

Pro

du

ctio

n M

oM

Ch

g -

Mb

bl/

d


US Crude Oil Supply

-0.8

0.0

0.8

1.6

2.4

6

7

8

9

10

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

United States Crude Oil Supply YoY Chg United States Crude Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

21

US Shale: Companies Focus on Strength in the Permian Basin

Source: Chevron, Bloomberg, IHS, Goldman Sachs

Chevron see capital allocation towards shorter-cycle base and shale

and tight assets as it brings more of its major capital projects to

completion. First among these opportunities is the Permian where

Chevron hold a large resource base with largely (~85%) no or low

royalty.

Development costs continue to be driven lower through both reduction

of well costs and through higher anticipated recoveries.

Chevron estimate around 1,300 operated well locations that offer a 10%

rate of return at $40 WTI or less (only 30% of its operated acreage

assessed so as at March 2016).

Time between permit allocation and first production for U.S. shale wells

has fallen markedly, leading to what is being referred to as a “fracklog”

of wells ready to quickly take advantage of any price rally, which could

act to cap price rises. Bloomberg Analysts estimate 4,000 wells have

been drilled and are awaiting fracking to begin production.

Num

ber

of

well

Locatio

ns

22

OPEC Crude Oil Production: Iran Returns to Market

Source: U.S. Energy Information Administration, IEA, Reuters, ERCE Estimates. Note: OPEC production includes reinstated member Indonesia.

OPEC supply has fallen in recent months due to outages in Iraq, Nigeria and the UAE. This decline could be temporary

as fixing of facilities in these countries could return ~600,000 bbl/d of supply to the oil markets. Iran exported its first oil

cargo to Europe in 4 years and aims to further raise exports to pre-sanction levels, although it may be misleading to

expect such increases in the near-term due to the time and capital required to drill new oil fields, and problems with

access to markets.

OPEC Other Liquids Production and YoY Change

0.0

0.2

0.4

0.6

0.8

1.0

1.2

2

3

4

5

6

7

8

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

OPEC Other Liquids Supply YoY Chg OPEC Other Liquids SupplySupply 12 MMA YoY Supply Chg 12 MMA

Iran Crude Oil Supply and YoY Change

-1.0

-0.5

0.0

0.5

2.5

3.0

3.5

4.0

J-10 J-11 J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Iran Crude Oil Supply YoY Chg Iran Crude Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

0.4 MMbbl/dincrease post

sanctions

OPEC Crude Oil Production and YoY Change

-1

0

1

2

3

4

27

28

29

30

31

32

33

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

OPEC Crude Oil Production YoY Chg OPEC Crude Oil ProductionSupply 12 MMA YoY Supply Chg 12 MMA

OPEC Oil Supply YoY Change (Select OPEC Members)

(2)

(1)

-

1

2

3

J-11 J-12 J-13 J-14 J-15 J-16

Oil

Sup

ply

Yo

Y C

han

ge (

MM

bb

l/d

)

SaudiArabia

Nigeria

Libya

Kuwait

Iraq

Iran

Iran faces a struggle to increase oil exports – many of its tankers

are tied up storing crude, some are not seaworthy and, and foreign

shipowners remain reluctant to carry its cargoes

23

OPEC Gulf States Crude Oil Production: Saudis Keep Output at

Record Levels


Saudi Arabia continues output at near record levels to defend their market share, recent statements from officials

suggests no change to this strategy in the immediate future. Gulf states such as Saudi Arabia, Kuwait, Qatar and the

United Arab Emirates all have relatively high ratings from debt rating agencies and can dip further into reserves or

borrow internationally to continue production in a low-price climate.

Saudi Arabia Crude Oil Supply and YoY Change

-1.0

-0.5

0.0

0.5

1.0

1.5

6

7

8

9

10

11

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Saudi Arabia Crude Oil Supply YoY Chg Saudi Arabia Crude Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

Qatar Crude Oil Supply and YoY Change

-0.2

-0.1

0.0

0.1

0.2

0.2

0.4

0.6

0.8

1.0

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Qatar Crude Oil Supply YoY Chg Qatar Crude Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

Kuwait Crude Oil Supply and YoY Change

-0.2

0.0

0.2

0.4

0.6

1.0

1.5

2.0

2.5

3.0

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Kuwait Crude Oil Supply YoY Chg Kuwait Crude Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

UAE Crude Oil Supply and YoY Change

0.0

0.1

0.2

0.3

0.4

2.0

2.2

2.4

2.6

2.8

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

UAE Crude Oil Supply YoY Chg UAE Crude Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

24

OPEC Crude Oil Production: The Fragile Five


Instability persists in Algeria, Iraq, Libya, Nigeria and Venezuela causing volatility in supply. Nigeria and Iraq are

experiencing pipeline outages due to sabotage and political disputes. Iraq continues to up production to record levels,

seeking to maximise market share. Political division in Libya continues to suppress exports. Venezuela is approaching

economic and possibly political collapse with service companies pulling out of projects due to defaulted payments.

Algeria’s energy earnings fell 50% in 2015 leading to cuts in social spending which could provoke social unrest.

Algeria Crude Oil Supply and YoY Change

-0.10

-0.05

0.00

0.05

0.10

0.15

0.4

0.6

0.8

1.0

1.2

1.4

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Algeria Crude Oil Supply YoY Chg Algeria Crude Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

Nigeria Crude Oil Supply and YoY Change

-0.4

-0.2

0.0

0.2

0.4

0.6

0.0

0.5

1.0

1.5

2.0

2.5

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Nigeria Crude Oil Supply YoY Chg Nigeria Crude Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

Venezuela Crude Oil Supply and YoY Change

-0.3

-0.2

-0.1

0.0

0.1

0.2

0.3

0.4

1.8

1.9

2.0

2.1

2.2

2.3

2.4

2.5

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Venezuela Crude Oil Supply YoY Chg Venezuela Crude Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

Iraq Crude Oil Supply and YoY Change

-0.5

0.0

0.5

1.0

1.5

2.0

2.0

2.5

3.0

3.5

4.0

4.5

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Iraq Crude Oil Supply YoY Chg Iraq Crude Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

Kirkuk-Ceyhanpipeline outage

Record productionlevels in Jan 2016

25

OPEC Crude Oil Production: Libya

Source: U.S. Energy Information Administration, IEA, Reuters, Stratfor, ERCE Estimates

2014’s renewed civil war in Libya collapsed the country’s oil production from a brief recovery post-revolution. Recent

announcement of cooperation between Libya’s NOC and the UN-backed unity government over the coordination of

future oil sales is promising for a near-term return to ~1 MMbbl/d, although raises concern for curbing global

oversupply. The Petroleum Facilities Guard is prepared to re-open ports for oil exports by the unity government, but the

rival eastern government with its parallel NOC continues to fight over rights to sell oil independently.

Libya Crude Oil Supply and YoY Change

-2

-1

0

1

2

0.0

0.4

0.8

1.2

1.6

J-10 J-11 J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Libya Crude Oil Supply YoY Chg Libya Crude Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

26

Unplanned Outages and OPEC Production Spare Capacity

Source: U.S. Energy Information Administration, ERCE Estimates

The level of unplanned crude oil production outages, how quickly it occurs, and the uncertainty of restoring the output

have considerable influence on oil prices. Unplanned supply disruptions could still affect crude oil prices and OPEC

surplus crude oil production capacity is at low levels (as a % of demand). However, the threshold that the market can

bear has risen in light of robust global production and strong increases in inventory levels.

• OPEC spare capacity is the volume of production

that can be brought on within 30 days and

sustained for at least 90 days.

• OPEC spare capacity provides an indicator of the

world oil market’s ability to respond to supply

shocks

• From 2003 through 2008, OPEC's total spare

capacity remained near or below 2 MMbbl/d, which

provided very little cushion for fluctuations in

supply in a context of rapidly rising demand.

Unplanned Crude Oil Production Outages

0

1

2

3

4

Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

MM

bb

l/d

Non-OPEC OPEC

Unplanned OPEC Crude Oil Production Outages

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

MM

bb

l/d

Saudi Arabia Kuwait Iraq Nigeria Indonesia Libya Iran

OPEC Crude Oil Production Spare Capacity

0%

1%

2%

3%

4%

5%

6%

0

1

2

3

4

5

J-10 J-11 J-12 J-13 J-14 J-15 J-16

OP

EC S

par

e P

rod

uct

ion

as

% o

f G

lob

al

Dem

and

OP

EC C

rud

e O

il P

rod

uct

ion

Sp

are

Cap

acit

y

OPEC Crude Oil Production Spare CapacityOPEC Spare Production as % of Global Demand

27

Baker Hughes International Rig Count 1982 – 2016 YTD

Source: Baker Hughes, ERCE Estimates

Global Rig Count by Region (1982 - 2015)

-

1,000

2,000

3,000

4,000

5,000

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

U.S.

Canada

Asia Pacific

Middle East

Africa

Europe

Latin America

Saudi Arabia Rig Count: Onshore Vs. Offshore (Monthly 1982 - 2016 YTD)

-

20

40

60

80

100

120

140

J-82

J-84

J-86

J-88

J-90

J-92

J-94

J-96

J-98

J-00

J-02

J-04

J-06

J-08

J-10

J-12

J-14

J-16

Saudi Arabia Offshore Saudi Arabia Onshore

Global Rig Count YoY Chg: Onshore Vs. Offshore (1982 - 2016 YTD)

(400)

(300)

(200)

(100)

-

100

200

J-82

J-84

J-86

J-88

J-90

J-92

J-94

J-96

J-98

J-00

J-02

J-04

J-06

J-08

J-10

J-12

J-14

J-16

World YoY Chg: Offshore World YoY Chg: Onshore

Global Rig Count: Onshore Vs. Offshore Excluding North America (1982 - 2016 YTD)

-

200

400

600

800

1,000

1,200

1,400

1,600

J-82

J-84

J-86

J-88

J-90

J-92

J-94

J-96

J-98

J-00

J-02

J-04

J-06

J-08

J-10

J-12

J-14

J-16

World Onshore World Offshore

28

Non-OPEC Oil Production Starting to Decline YoY; Russian Output

at Record Levels


Non-OPEC Crude Oil and Liquid Fuels Supply

-1

0

1

2

3

4

50

52

54

56

58

60

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Non-OPEC Oil Supply YoY Chg Non-OPEC Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

Non-OPEC Crude Oil and Liquid Fuels Supply Excluding US

-2

-1

0

1

2

36

38

40

42

44

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Oil Supply: Non-OPEC Excluding U.S. YoY ChgOil Supply: Non-OPEC Excluding U.S.

North America Crude Oil and Liquid Fuels Supply

-1

0

1

2

3

4

14

16

18

20

22

24

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

North America Oil Supply YoY Chg North America Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

FSU Crude Oil & Liquid Fuels Supply

-0.2

0.0

0.2

0.4

0.6

0.8

10

11

12

13

14

15

J-10 J-11 J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

FSU Oil Supply YoY Chg FSU Oil SupplySupply 12 MMA YoY Supply Chg 12 MMA

29

Global Oil Demand Growth Driven by Asia-Pacific


Asia-Pacific Oil Demand YoY Change

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

20

22

24

26

28

30

32

34

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Asia-Pacific Oil Demand YoY Chg Asia-Pacific Oil Demand


North America Oil Demand YoY Change

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

20.5

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

North America Oil Demand YoY Chg North America Oil DemandDemand 12 MMA YoY Demand Chg 12 MMA

Europe Oil Demand YoY Change

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

9

10

11

12

13

14

15

16

17

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Europe Oil Demand YoY Chg Europe Oil Demand


-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

9

10

11

12

13

14

15

16

17

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Europe Oil Demand YoY Chg Europe Oil Demand


Middle East Oil Demand YoY Change

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

4

5

6

7

8

9

10

J-12 J-13 J-14 J-15 J-16

MM

bb

l/d

MM

bb

l/d

Middle East Oil Demand YoY Chg Middle East Oil DemandDemand 12 MMA YoY Demand Chg 12 MMA

30

Summary of Sector Activity

31

A Buyers Market without Buyers: M&A Activity Remains Low

Source: Analyst Reports, Reuters, Bloomberg, Evaluate Energy, Deloitte LLP (numbers are approximate guidance only sourced from industry)

Russia &

Caspian

$5bn

USA

$80bn

Africa &

M. East

$60bn

Europe

$40bn

Asia

Pacific

$30bn

Latin

America

$25bn

CAN

$20bn

Upstream O&G M&A activity dropped significantly in 2015 from 2014, and in Q1 2016 was the lowest since the start of

the price downturn. The sudden oil price crash combined with high volatility has created a gap between seller and

buyer expectations leaving many assets on the market. Wood Mackenzie’s predict M&A activity to increase in 2016

regardless of oil price; with sustained low prices, smaller players will be forced into asset sales and if prices rise,

buyers will jump to beat competitors.

Shell to sell off $30bn of

assets globally, many in

the North Sea

Chevron seeking

buyers for $1.3bn

Myanmar gas assets

Estimated value of upstream O&G assets on the market

Petrobras looking to sell $1.2bn of

assets to Pampa which include 30

upstream blocks

Eni to dispose of $7.9bn

worth of assets by 2019,

mainly through sale of stakes

in new discoveries

Encana eyeing $1bn asset

sale

32

E&P Under Stress and Pricing Expectations

Source: London Stock Exchange, Bloomberg, Intercontinental Exchnage, ERCE Estimates

Oil sector equity valuations have experienced a significant drop in the current downturn but market value of integrated

oil and gas has held up better and less volatile vs. oil price due to their financial strength. Analysis of LSE listed

companies shows the significant drop in the sector market value that has occurred. Despite falling costs, Deloitte

estimates that a third of oil producers are at risk of bankruptcy in 2016.

Brent Futures Curve: Jun-14 (peak), Jan-15, Jul-15, Jan-16 and current Apr-16

20

40

60

80

100

120

M1

M1

3

M2

5

M3

7

M4

9

M6

1

M7

3

$/b

bl

15-Apr-16 15-Jan-16 15-Jul-15 15-Jan-15 20-Jun-14

Brent Vs O&G Indices (Market Valuation of O&G Equities)

20

40

60

80

100

120

Jul-14 Jan-15 Jul-15 Jan-16

Ind

exed

Ju

ly 2

01

4 =

10

0

Brent Integrated O&G US Small-Cap O&G

AIM O&G US S&P O&G

See below for

corresponding

Brent futures

curves at dashed

time intervals

Price assumptions dropped drastically in a short period of time (first 6 months of

the downturn Jun-14 to Jan-15) resulting in a wide upstream M&A bid/ask spread

and many rejected bids for assets and companies

LSE Listed Oil and Gas Producers: Market Cap Distribution by Year

0

10

20

30

40

50

60

70

80

90

100

0 to 50 50 to 200 200 to 500 500 to 1000 1000 to5000

5000 to10000

>10000

No

. of

Co

mp

anie

s

Market Cap (£ MM)

Feb 2006 Feb 2011 Mar 2016

LSE Listed Oil and Gas Producers and Total Market Cap

80

100

120

140

160

400

500

600

700

800

Feb 2006 Feb 2011 Mar 2016

No

. of

LSE

List

ed C

om

pan

ies

Tota

l Mar

ket

Cap

(£

MM

M)

Year

Total Market Cap Number of LSE Listed Companies

Strong(er) balance (buyers)

Weak financial position / distressed (sellers)

33

Cost Curve For Remaining Recoverable Liquid Resources

Discovered

Source: Rystad Energy

Future exploration to take place in areas where development makes economic sense.

(Break-even is Brent crude oil price at which NPV equals zero at read discount rate of 7.50%)

34

In response to the decline in global oil and LNG prices, larger project planning originally to take FID in 2015 are

delayed, struggling to find buyers or reengineering to smaller scale.

Expected reduction in Asian growth, price uncertainty and market sentiment of oversupply add to the woes for LNG

projects.

Global LNG Response in 2015 to Sharp Decline in LNG Prices

Source: Ophir Energy, ERCE Estimates

35

Global Summary: Activity this Quarter

Economic crisis in

Venezuela which

relies on oil exports

for over 50% of

GDP. Service

companies exit.

Cushing crude

inventories at

record levels.

Nigeria’s Forcados

pipeline bombed.

Fuel shortages.

Libya’s NOC

sides with UN

government on

future exports.

Rocket attack

on Algerian

processing

plant.

Saudi Arabian

production at

steady high.

Deficit at 15% of

GDP last year.

First Iranian exports

in 4 years to Europe.

Struggling with

access to markets.

Russian supply at

record levels.

China growth

slowdown to

6.7%, lowest

since financial

crisis.

Shell joins other

Majors looking to sell

off selected North

Sea assets.

Record production in

Iraq. Tension with

Kurdish government

keeps key fields offline.

New,

expensive

regulations

for offshore

drilling.

80% drop

in U.S. rig

count since

Oct 2014.

India allows state

owned refineries to

set their own crude

import policies.

Petrobras

corruption

scandal.

Open-ended

strike in Kuwait –

crude production

down ~1.7

MMbbl/d to 1.1

MMbbl/d

36

$ All dollar amounts are in U.S. dollars unless otherwise

indicated.

bbl barrels

bbl/d barrels per day

Brent A blended crude stream produced in the North Sea region

which serves as a reference or "marker" for pricing a number of

other crude streams.

btu British thermal unit

chg Change.

EIA U.S. Energy Information Agency

ERCE ERC Equipoise Ltd.

FSU Former Soviet Union and includes Armenia, Azerbaijan,

Belarus, Estonia, Georgia, Kazakhstan, Kyrgyzstan, Latvia,

Lithuania, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and

Uzbekistan.

IEA International Energy Agency

M Month (e.g. 1M Ago = one month ago).

MMbbl million stock tank barrels.

MMbbl/d Million stock tank barrels per day.

MMA Month Moving average (12MMA = twelve month moving

average).

MMbtu Million british thermal units

MoM Month-on-month (e.g. MoM Chg = month-on-month change).

Nominal Economic value expressed in historical nominal monetary

terms, also known as “money-of-the-day”.

Therm a unit of heat equal to 100,000 British thermal units and

approximately the energy equivalent of burning 100 cubic

feet of natural gas.

OECD The Organisation for Economic Co-operation and Development

- an international economic organisation of 34 countries and

include many of the world’s most advanced countries but also

emerging countries like Mexico, Chile and Turkey.

OPEC Organisation of the Petroleum Exporting Countries. Its

mandate is to "coordinate and unify the petroleum policies"

of its members and to "ensure the stabilization of oil markets

in order to secure an efficient, economic and regular supply

of petroleum to consumers, a steady income to producers,

and a fair return on capital for those investing in the petroleum

industry. It’s current members are Algeria, Angola, Ecuador, Iran,

Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the UAE, and

Venezuela.

p pence (GBp)

Real Economic value that has been adjusted from a nominal

value to remove the effects of general price level changes over

time and is thus measured in terms of the general price level in

some reference year (the base year e.g. 2013).

Spot Price The price for a one-time open market transaction for immediate

delivery of a specific quantity of product at a specific location where

the commodity is purchased "on the spot" at current market rates.

stb stock tank barrels.

WTI West Texas Intermediate – a crude stream produced in Texas and

southern Oklahoma which serves as a reference or "marker" for

pricing a number of other crude streams and which is traded in the

U.S. domestic spot market at Cushing, Oklahoma.

YoY Year-on-year (e.g. YoY Chg = year-on-year percentage

change).

YTD Year-to-date.

ERCE Oil Price Review: Glossary

37

About ERC Equipoise

An independent consultancy specialising in geoscience,

engineering and economics evaluation

38

Advising the Petroleum Industry Since 1977

39

40

ERC Equipoise Contact Details

Mark HollidayBusiness Development Directore: [email protected]

Adam LawManaging Director

e: [email protected]

Simon McDonaldEngineering Director


Paul ChernikChief Operating Officer


Jerry HoStaff Economist


London (t): +44 (0) 208 256 1150 Singapore (t): +65 6332 5161

Documents

ERCE Oil Price Review - 2016 Q2 · This presentation is produced solely for the benefit of ERCE’sclients to whom it is presented. It may not be copied, reproduced, transmitted or