EFTA01385325.pdf

January 2018 HY Corporate Credit HY Multi Sector.Media. Cable & Satellite iFigure 10: Tight oil growth scenarios (kb/d yoy) —WTI 545/bbl 2000 —WTI $50/bbl Productivity WTI $55/bbl growth would 1500 — WTI 560/bbl Scaly lift longer —WTI S65/bbl term numbers 1000 - - WTI 570/lab WTI 575. 500 0 -500 -1000 2016 2017 2018 2019 2020 2021 Soon Diatch• ant 1•Pre-FID breakevens falling With upstream project economics under pressure and oil industry capex Figure 11: Changes in break-even by suppressed, it is no surprise that full-cycle breakevens of prospective type - conventional through sands projects would be coming down. liquids To quantify just how much, we look at pre-FID upstream projects where reserves 44-2016 Low High Avg (mmbbl) recoverable reserves are at least 50mboe, and where liquids reserves Cony. onshore 35 61 52 2,792 constitute at least half of the resource. We also limit the survey to projects Cony. shelf 22 102 50 2,650 outside of OPEC; we include Alaska and Gulf of Mexico but exclude US Deepwarer 28 68 49 6,998 tight oil assets. Oil Sands 63 95 70 2,466 Comparing the O4-16 dataset against O3-17, we see that breakevens on a Liquids 10% discount rate have fallen from USD 53/bbl to USD 46/bbl. We also reserves observe that deepwater reserves still contribute the most reserves by 43-2017 tow High Avg (mmbbl) Cony. onshore 26 55 45 3,047 resource theme, and that USD 65/bbl could still be considered a marginal Cony. shelf 27 70 42 3,209 cost of new supply from oil sands projects. Deepwarer 26 76 43 18,522 Oil Sands 53 67 63 3,290 IA balanced market Sane Dana* Sint —5fratenzie • Broadly speaking, oil markets look to be in relative balance after three years of oversupply. However, we expect some retracement of H2-17 strength owing to first quarter oversupply and a resurgent US tight oil Figure 12. Global supply demand sector. balance (inlaid) • The O1 surplus is modest at +541kb/d in comparison to the 2015 full-year 2 000 •Saskistaillen surplus of +1.7mb/d, but this breaks the string of two quarters of 1.500 undersupply and further progress in eliminating the last 140mbb1 of OECD 1 000 liquids surplus. I ...- ----- -, 0 500 •1 Sanwa crilete;`, • According to the relationship between cumulative quarterly supply- I ' iwoj 2019 =,/ 0 000 \ M — demand imbalances and price, this would suggest weakness of -5% on the -0.500 quarterly average price. 2014 2015 2011 2017 2016 2019 2020 Source Mt amEr McNN, 01Dou Selma CCCOnEA 2017. MAWS], cep/Mesa Isola woo Ole orgAtc. fral4ke0 to DOLISChlt Bank Page 50 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0086609 CONFIDENTIAL SDNY_GM_00232793 EFTA01385325