EFTA01367370.pdf

31 May 2015 Integrated Oil US Integrated Oils Pc E111131y Growth Dricei a Near-term production is expected to be supported by the ramp of YE 14 start- ups (Tubular Bells. Jack/St Malo) and the 2015/2016 (6 and 4 projects respectively) start-up of several key deepwater projects. While the projects are expected to add an incremental 350 mbpd of crude (2016 vs. 2014), the longer-term outlook (2018+) has less visibility beyond the contribution from a few (Appomattox) deep-water projects that are largely anticipated to be sanctioned this year. Primary Risks The near-term risk to production is largely synonymous with a risk to project start-ups which we regard as generally modest relative to projects with exposure to broader geopolitical turmoil and/or a dependence on cooperation with state owned national oil companies. However, the longer-term sustainability of production from the GoM will be largely dictated by the pace of improvements in the underlying economics for deepwater projects driven by a recovery in crude prices and from significant cost concessions. In our view, tracking the progress towards improvement long-term industry sentiment toward GoM Deepwater involves • A pick-up in FID activity. Aside from Appomattox, few unsanctioned projects are considered 'locks' to proceed through to FID this year. The sanctioning (and timing of) of Shenandoah and Mad Dog Phase II will speak to progress on the lowering of the cost curve and a higher level of conviction in the sustainability of higher crude prices. • Extension of Rig Contracts: Wood Mackenzie estimates that -28 DW GoM rig contracts are set to expire over the next 3 years. About 1/3 of the rigs to expire in 2015 have already been released/cold-stacked while the nearly 20 rigs set to expire in 2016/2017 have as of yet not been released. • A uptick in M&A activity: Since 2012. GoM-focused deals have declined to 8% of US deal flow in 2014 from 13% in 2012. With the short-cycle nature of the US onshore offering accelerated cost corrections and a widening valuation gap between 'haves' & 'have nots' at what point do discounted offshore valuations incentivize a pick-up in M&A activity? [Figure 96: Production outlook robust for sanctioned (Figure 97: 28 DW GoM rig contracts set to expire over projects and for unsanctioned projects high in sunk costs next 3 years 60:0 2016 2016 2017 0000 Po•r0 ma igen MIA U614.3 Sec 40(1) Caicoverer Enterprise' Atwood Condor Atwood Advantage Mg DN ChanTion Daveloprrent Crier CW hvictus Ensco 8501' Discoverer Deep Seas CW Noutius Ensto 8502' Disco DS-3 Munk Vetng •ICOO Ensco 8505 Saco DS-4 Noble Bob Douglas Frisco 8506 Ensco C6-5 Noble SamCroft i Wank Developer Node JmDay Noble Tom Madden / 1 4 Noble Arms Runner Noble Paul Rorrano Pacdic Sande Are euveir to* iflerwrts , • .••••••••••V •• • Node Danny Adkris Rowan Rotarians Rowan Rosokio Stone ketiMX Sane Wood /Araelmnir. Belo ofonsuant 01207•••/••••• Stet* Mal Admatais* 'Ara* OW/..* a 44t r••••••4 a MOW nom Page 52 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0058903 CONFIDENTIAL SDNY_GM_00205087 EFTA01367370