Gas y Petróleo del Neuquén S.A.

THE DECISION TO GROW WITH ENERGY

INVESTMENT OPPORTUNITIES IN THE OIL & GAS SECTOR

IN NEUQUEN PROVINCE

V Bidding Round “Plan Nuevos Horizontes” &Quarterly open Biddings under the “Plan Exploratorio Neuquén”

April, 2017

• GyP is a Company wholly owned by the Province of Neuquén

• GyP is a corporation under the control of Argentina Stock Exchange

Market

• GyP acts as a private Company

• GyP operates directly and indirectly 9 concessions in Neuquén

• GyP in partnership with Exxon, Total, Shell and Wintershall participate in

4 unconventional oil & gas projects (currently in pilot stage)

• GyP in the last 4 years has generated to the Province US$ 214 MM

Who we are

Our Partners

• In 2016, Argentina ended its long default ofinternational debt through an agreement with the“holdouts”. This agreement enabled the Country toaccess to international capital markets.

• With this new access the Government was able to liftsome of the market restrictions:

– Exchange market controls were lifted the official exchangerate and unofficial spread dropped from 70% to around 3%.Dividends and import bans were also lifted.

– Inflation: Argentina’s Central Bank started with an inflationtargeting program. With some degree of success but hinderedby the subsidy reduction program.

– Subsidy reduction: Previous Argentina’s government Populistsubsidy to electricity, natural gas, water and transportationreached around 5% of GDP. There is a slow subsidy reductionprogram in place. Target: 2,2% by 2019.

Economic

• Argentina became a net importer of energy in 2011 (stronginternal subsidies; shortages drive costly imports of LNG, fueloil and diesel oil)

• Energy deficit and subsidies are driving fiscal deficit

Energy Balance

500

700

900

1.100

1.300

1.500

1.700

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

Production Imports

Primary Energy Balancein kboed

OIL 16 kboed

GAS -90 kboed

2016 Exports & Imports

Argentina Context

2017 2018 2019

GDP Growth 3,50% 3,50% 3,50%

Inflation (target) 12%-17% 8%-12% 3,5%-6,5%

Inflation (private forecast) 21% 16% 10,50%

Devaluation 20% 18% 11%

5

• Oil fields belong to the Province in which they arelocated.

• Province grants exploration permits and exploitationconcessions.

• Concession will be granted to GyP and transferred tocontractor after completion of the committedWorking Program

• Tax & Royalty system

− Neuquén royalty: 12% of gross commercialproduction

− G&P gets 10% equity in all new awardedcontracts Carry system for exploration

− Neuquén Provincial Tax over Gross sales : 3,5%

• All relinquished areas are transferred back to GyP

Regulatory

• Oil and Gas must be marketed internally until thecountry reaches self sufficiency. Gas exports areallowed under certain conditions (i.e. no buyers inlocal market).

• Local market prices are free but indirectly regulatedby the Government. Minimum Local Oil price is setto 55 $/bbl.

• Oil imports are heavily regulated by theGovernment. Imports are only allowed if there isnot local supply.

• Local average gas price is $4,5 mmbtu but in thecase of “new gas” the Government pays anincentive (hedge) equal to the difference betweenlocal price and 7.5$ in 2018 ; 7US$ in 2019 ; 6.5US$in 2020 and 6US$ in 2021.

• Unions: New Agreement in place providing moreefficiency to operations.

Market

Oil & Gas Argentina Context

Source: Minem

• 2016: The new administration won a legal battle to increase Natural Gas prices to homeusers which were heavily subsidized. During the last natural gas price public audience theyannounced that gas rates subsidies world be phased out

Gas Prices - Argentina Context

Low

Consumer

Mid

Consumer

High

ConsumerAverage Subsidy

Demand Price US$/MMBtu US$/MMBtu US$/MMBtu US$/MMBtu %

2015 0,52 1,37 2,55 1,29 81%

oct-16 2,17 3,82 5,29 3,42 50%

abr-17 2,62 4,21 5,52 3,78 44%

oct-17 3,17 4,63 5,75 4,2 38%

abr-18 3,83 5,09 5,99 4,69 31%

oct-18 4,63 5,6 6,25 5,27 22%

abr-19 5,6 6,16 6,51 5,95 12%

oct-19 6,77 6,78 6,79 6,78 0%

Shale exploration wells drilled at Vaca Muerta

formation by November 2016

Refined fluids assessment map

elaborated by Undersecretary

of Hydrocarbons of Neuquén of

the Province of Neuquén

7

Vaca Muerta LearningCurve

5.1MMm3/d gas produced from Vaca Muerta shale in January 2017

8

• 87.9% of shale gas output concentrated at

three concessions

• El Orejano and Aguada Pichana dry shale gas fields; Loma Campana associated gas

• Transportation constraints at Gasoducto del

Pacifico gas pipeline

• New compression plant to be added after Open Season period, apparently contracted mostly by YPF

• Expected use of idle capacity at Aguada Pichana and Sierra Chata plants

Source:

• The Province of Neuquén has outlined 165 blocks for theexploration, development and exploitation of hydrocarbons in itsterritory.

• There are various types of legal relationships over these blocks.Some come from the stage where the jurisdiction of granting rightswas Federal and others, as of 2004, governed by the Provinciallegislation.

• Concessions of Exploitation governed by Federal Law: Most of these Concessions expire in 2027. With right of extension (10-yr-periods).

• Concessions of Exploitation governed by Provincial Law: theProvince granted concessions to several IOC’s and GyP

• Areas reserved to GYP: As a general principle, under the ArgentineConstitution, the Province has been granted the authority to grantconcessions to third party. Thus, the Province of Neuquen createda provincial company: GyP, to hold exploratory and productionrights over a significant portion of the Province. GyP has theauthority to enter into contracts to promote the exploration andlater exploitation of these blocks.

Current Situation

Contracts Number

Exploration 17

Exploration & Exploitation 2

Exploit. Unconventional 6

Exploit. Conventional 4

Valid 29

AREAS Number

TOTAL 97

AVAILABLE 56

GyP Blocks

° Some Contracts have multiple blocks

Map of GyP Available Blocks

• V Bidding Round (6)

• Parva Negra Oeste

• Cerro Arena Sur

• Aguada de Castro Oeste I y II

• Las Tacanas Norte

• Bajo del Toro Este

• La Tropilla I

• Available for quarterly offers

under “Plan Exploratorio

Neuquén” (50)

• Offers must be presented in two envelopes :• Envelope “A”: Qualifications of the Company• Envelope “B”: Work Commitment and Economic Terms

• All valid offers shall be submitted, without distinction, to the evaluation to be made through theweighting of the amount of investment and the amount offered for access to the block.

• The formula to be used to determine each offer's score will be the following:

𝑃𝑖 = 0.3𝑥𝐴𝑖 + 𝐵𝑖

5000

Where: 𝑃𝑖: Score in WORK UNITs𝐴𝑖: Investment in WORK UNITs 𝐵𝑖: Access Fee to the BLOCK

• Procedure: GyP will select the offer with the highest 𝑷𝒊 value.

V Round - Bidding Terms

Plan Exploratorio Neuquén

• Quarterly open bidding

• Companies could submit offers every quarter for any block under certain conditions to be defined

• First opening :October 2017

V Round Contract Proposed Terms

• Working Interest:– Contractor/s: 90 %– G&P: 10 %

• Exploration Period: 7 years– 1st Sub-period: 3/4 years : Minimum work commitment: 1/2 horizontal Wells depending on the block– 2nd Sub-Period: 4 years : Pre-developpment project – G&P investments during the Exploration Period to be covered in full by Contractor with no make up payment

• Exploitation period: 35 years + 10 year optional extension.• Development and Exploitation cost: each Company pays their Participating Interest share. • After a Commercial Discovery, G&P will have the right to either (i) retain the G&P Interest in the Exploitation

Block, or (ii) convert the G&P Interest to a production fee equal to two and one-half percent (2.5%), of all Hydrocarbons produced from the Exploitation Block ( “Production Sharing Payment”).

• Access to the Exploitation Period: Within thirty (30) Days after Company’s declaration of a Commercial Discovery, Company will submit a proposed Exploitation Work Program for the development of the Exploitation Block during the Exploitation Period. A proposed Exploitation Work Program must include:

– a schedule setting forth for each year of the Exploitation Period the number of Horizontal Wells Company will drill and Complete within the Exploitation Block during such year;

– (b) Company’s commitment to drill and Complete multiple Horizontal Wells in each year beginning with the first year of the Exploitation Period and continuing each year thereafter until full development of the Exploitation Block; and

– (c) details of all other activities to be performed by Company and investments to be made by Company during the Exploitation Period.

• Once the Exploitation Work Program is completed all Concession rights over the Exploitation block surfaces will be transferred to Contractor.

• Property of producing wells belong to each Party up to depletion of wells.• Applicable Law: Argentina.• Jurisdiction and Venue: Neuquén Province.

Logistics and Services

• Argentina Oil industry has 100 years of existence.

• All main service companies are already installed in Argentina

• Neuquén based Services Companies are mainly focused in conventional techniques but in a process of transformation.

• The development of unconventional techniques for the exploration and exploitation will require new players in the market.

• Concerning logistics and facilities everything is concentrated in the east of the province as the map shows but the new challenges are to develop the west of the province where the new blocks are located.

Source: Professional Logistics Group

Inputs WellheadDirectOutput

Thermal FuelsRaw

MaterialsDownstream

Products

Proppants

OCTG

Chemicals

Water

Cement

Gas

NGLs

Crude

Generation

Home Heating (Propane)

Other Fuels

Other Fuels

Gasoline

Process Feedstocks

Feedstock (Ethane)

Byproduct (Condensate)

Manufacturing

Steel

Fertilizer

Methanol

Chemicals

PetroleumProducts

Petrochemicals

Supply chain

Supply chain

Local Input of purchases

0

20

40

60

80

100

Complementary drillingequipment

Compressors, expanders,blowers and accessories

Turbines

Heat generation andtransmission equipment

Tanks, containers,columns

Electrical equipment

Fuel Pumps & Spares

Instrumentation andcommunication control

equipment

Pipes, hoses, accessories

Valves

Chemical products

Medical, environmentalsafety and fire

equipment

% Local Input

Source: Universidad Nacional de General Sarmiento

Source: Universidad Nacional de General Sarmiento

Local Input of services

75

80

85

90

95

100Engineering

Industrial maintenance

Maintenance of E & Pequipment

Drilling, workover, productionand maintenance

Drilling, workover and repair

Management consultancyTransport

Inspection, control and testing

Decommissioning

Environmental Protection

Ducts

% Local Input

Supply chain

THANKS