EFTA01385328.pdf

3 January 2018 HY Corporate Credit HY Multi Sector,Media, Cable & Satellite production growth (discussed below), winter demand plays a big role in maintaining balance in the market. Consequently, in early December, the 2018 gas strip broke down below the $2.90 floor maintained throughout the year. touching a low of $2.69 in mid-December. Since then, winter has revived and has been especially strong in the Northeast and Midwest, leading to a bounce back in gas prices to $2.86 by the end of the year. However, with another three months to go for end of the withdrawal season, the volatility underlines the downside risks to the 2018 gas market driven by an unpredictable heating demand. Figure 15: Nynex natural gas 2018 strip breakdown below the $2.90 • ne01 .n tarty Dttembfr 52 20 52 40 it 4 01 4*- 4 scent Bloirattnt Frew* LP NE takeaway capacity expansion sets 2018 production growth surge A key reason for subdued production in the last two years has been the slowing momentum in the prolific Appalachian basin as takeaway capacity in the region failed to keep pace with production growth. With over 12 Bcf/d of additional takeaway capacity potentially coming online during 2018, the base case thesis for 2018 had always been one of renewed momentum in the basin. However, this has also been accompanied by uncertainty over what the pace of growth would be, considering execution risks that come with infrastructure buildouts. As we move into 2018, these concerns are steadily being addressed - as per EIA, -4 Bcf/d of new capacity has come online between July and mid- November and another -4 Bcf/d of additional capacity is expected to be operational by the end of 01-18 (see chart below), including the 1.5 Bcf/d Leach Xpress and Phase 1B (1.40 Bcf/d) and Phase 2 (1.15 Bcf/d) of Rover. Deutsche Bank Securities Inc. Page 53 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0086612 CONFIDENTIAL SDNY_GM_00232796 EFTA01385328