EFTA01367335.pdf

31 May 2015 Integrated Oil US Integrated Oils Figure 26: Greenfield spending will undoubtedly be Figure 27: While a new deeper trough in Greenfield challenged through 2015; however, offshore short-cycle spending is expected this time around, it's worth noting brownfield spending is expected to be curtailed tar less that prior cycle's SUBSEA demand tell only -7% as brownfield activity replaced greenfield In. In 2009/10106sta Ice demand only Jett-°% al the shore 4 140 pkkedup 120 ICO 00 CO 40 10 20 0 • 24144044004 women. CAPtx t• tlIgNIOV. **NM E•Wpf1W11 MS UMW. Sae SURF —9ww 40,44. 0.04 Soarce Re-prate•tram at IkeconinO1Sow* comiwp•rrs Are • totleniatri Satc Frepwrecton w Etrawen ar SenfneOurirdrpnApol • pub•0001 In our view, brownfield spend is likely to benefit from local currency devaluations. If we look at Norway as a example, our FX team forecasts a NOK to USD exchange rate of 8.2 for 2015 a drop of -25% in the value of the Krone YoY. If we assume that 20% of spend in the NCS is denominated in local currency (a rough estimate used by Wood Mackenzie for offshore fields driven chiefly by labor costs) the FX tailwinds from the devalued NOK will contribute -4% of a targeted 20% (as an example) reduction in capital spend. For illustrative purposes if the NOK comprised -80% of NCS spend then the devaluation would contribute -15% of the targeted 20% reduction. For onshore fields with material local content requirements (i.e. Russia), Wood Mackenzie places the % of spend denominated in local currency closer to 80%. IFigure 28: Stronger dollar to soften spending declines - An illustrative example using the NOK (assumes target 20% $USD capex cut from 2014) •Spend reduction required (mewl FX effects) °Reduction in Spend from FX Tailwind 20% r r % Change in spend YoY ($USD) 1 i 15% 10% 5% 0% 0% 10% 20% 30% 40% % of Spend Denominated in Local Currency Sower Dash., Ark Moe hArcionno. Afar Analyse Awn.. Target Al% YOY Owe Coro Na Spred Page 16 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0058867 CONFIDENTIAL SDNY_GM_00205051 EFTA01367335