EFTA01385330.pdf

3 January 2018 HY Corporate Credit HY Multi Sector,Media, Cable & Satellite Looking at EIA's S/D model, net supply growth YoY is expected to be 5.20 Bcf/d - this factors in 0.31 Bcf/d YoY reduction in pipeline imports from Canada and minor additions to inventory of 0.17 Bcf/d (vs. 0.47 Bcf/d withdrawals in 2017E). On the demand side, exports is expected to lead the charge, with a YoY growth of 1.65 Bcf/d. LNG export growth momentum is expected to continue (+1.09 Bcf/d or +56% YoY) as new capacity comes online - Sabine Pass Liquefaction's Train 4 (-0.7 Bcf/d) came online in October '17 taking total operated capacity to 2.8 Bcf/d. Next up, the 0.75 Bcf/d Cove Point facility is expected to become operational by year-end taking total capacity to 3.55 Bcf/d. The LNG growth story has legs well beyond 2018, with the capacity expected to more than double by end-2019 to 9.6 Bcf/d • and would likely be key to keep the market balanced over the medium term in the face of continued supply growth. Woodmac, which is projecting much higher production (-2.8 Bcf/d higher than EIA) has a price forecast of 52.85 for 2018. The company sees the higher supply being absorbed by robust growth in power demand (+-4 Bcf/d vs. 0.91 Bcf/d for EIA) with a significant driver being coal-to-gas switching. 'Figure 18: 2018 US gas market VD YoY changes Gas prod 6.15 pipeline Small 10.31) Net Inject (0.641 Supply 5.20 Other 0.95 LNG net exports 1.09 Pipeline gross exports NMI 0.56 Industrial 0.27 Power 0.91 Res/Com 1.42 Demand 5.20 (tOO) • 140 2.00 3.00 4.00 5.00 6.00 7.00 Deutsche Bank Securities Inc. Page 55 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0086614 CONFIDENTIAL SDNY_GM_00232798 EFTA01385330