Deutsche Bank

Deutsche Bank Markets Research United States HY Corporate Credit Energy HY E&P Sector Update & 2015 Outlook Quarterly Updates for E&Ps under coverage including: In•Depth Relative Value Forecasts Sector Benchmarking Scenario Analysis E&P Universe Credit and Operational Metric Screen across 30 credits including: Results and Ranking Snapshot Scatter Plots by Metric Liquidity Analysis Scenario Analysis Historical Financial Summaries Selected Recommendations: BUY EXCO Resources (XCO) BUY Cimarex (XEC) BUY Halcon Resources (HK) BUY Hilcorp Energy I (HILCRP) BUY Newfield (NFX) BUY Range Resources (RRC) SELL Denbury Resources (DNR) Recommendation Changes: HOLD Chesapeake Energy (CHK) from BUY SELL Forest Oil/Sabine (FSTO) from HOLD SELL QEP Resources (QEP) from HOLD SELL SandRidge (SD) from HOLD SELL Samson Resources (SAIVST) from BUY E&P Screening and Analysis for the American Energy Permian (AEPB) Antero Resources (AR) Bonanza Creek (BCEI Chesapeake (CHK) Cimarex (XEC) Concho Resources (CXO) Danbury Resources (DNR) Diamond Back Energy (FANG) EP Energy (EPE) Exco Resources (XCO) Forest Oil/Sabine (FSTO) Halcon Resources (HK) Hilcorp Energy (HILCRP) Magnum Hunter Resources (MHR) Midstates Petroleum (MPO) following E&Ps: Newfield (NFX) Oasis Petroleum (OAS) Parsley Energy (PE) Penn Virginia (PVA) QEP Resources (QEP) Range Resources (RRC) Rosetta Resources (ROSE) Samson Resources (SAIVST) Sanchez Energy (SN) SandRidge (SD) SM Energy (SM) Triangle Petroleum (TLW) Tullow Oil (TLW) WPX Energy (WPX) Date 13 January 2015 Kathryn O'Connor Research Anent Jaloci Research Associate VA Deutsche Bank Securities Inc. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI IP) 148/04/2014. EFTA01097655 13 January 2015 HY Corporate Credit Energy 3 HY E&P Sector Overview: Sifting through the carnage E&P Credit Screens and Analysis E&P Credit & Operational Metric Screen Overall E&P Screen: Results and Ranking Snapshot Leverage Screen Current PV-10 to 2016 Debt Screen Liquidity Screen Hedging Screen Adjusted Cash Margin Screen Commodity Mix Screen Conclusion: E&P subsector weighting: Maintain Underweight DB Commodities Price Deck & Outlook E&P Industry Relative Value Sheets Quarterly Updates for E&Ps under coverage Chesapeake (CHKI Cimarex (XEC) Denbury Resources (DNRI Exco Resources IXCO) Forest Oil/Sabine (FSTO) HaIcor) Resources (HK) Hilcorp Energy (HILCRP) Newfield (NFX) QEP Resources (QEP) Range Resources (RRC) Samson Resources (SAIVSTI SandRidge (SD) Financial Summaries and Sensivities for Non-covered E&Ps American Energy Permian (AEPBI Antero Resources (AR) Bonanza Creek (BCEI Concha Resources (CXO) Diamond Back Energy (FANG) EP Energy (EPEI Lightstream Resources (LTSCN) Magnum Hunter Resources (MHRI Midstates Petroleum (MPO) Oasis Petroleum (OAS) Parsley Energy (PE) Penn Virginia (PVA) Rosetta Resources (ROSE) Sanchez Energy (SN) SM Energy (SM) Triangle Petroleum (TLW) TuIlow Oil (TLW) WPX Energy (WPX) 18 20 23 26 28 32 35 39 41 42 46 54 60 66 72 77 82 87 92 97 102 107 112 118 120 122 124 126 128 130 132 134 136 138 140 142 144 148 150 152 154 Page 2 Deutsche Bank Securities Inc. EFTA01097656 13 January 2015 HY Corporate Credit Energy HY E&P Sector: Sifting through the carnage Oil price collapse - how did we get here? Looking back, oil fundamentals at the recent peak in the June/July 2014 timeframe were seemingly decent. Despite some volatility, discussions with E&P management teams were bullish in the face of increasing service costs, and capex budgets looked to be rising as higher than anticipated oil prices drove greater than expected cash flow. On the geopolitical side, we had rising tensions in the Middle East posing a headwind for OPEC supply (driver of a majority of future OPEC supply growth). Further, M&A chatter was relatively strong after the Whiting (Will/Kodiak (KOG) acquisition announcement. In summary, there were few reasons the market had to be concerned about the sector. Fast forward six months and the world has changed, leaving investors to ask the question, "how did we get here?" Looking through the wreckage now, it does seem that there were missed signs that when taken to together pretty clearly mark how we reached our current oil destination (WTI trading at less than $50). From 2002 to 2012, global demand growth averaged over 1.1 million b/d while non-OPEC supply growth averaged only 560 Kb/d; this excess demand supported a generally increasing oil price. That trend reversed itself starting in 2013 as average global demand fell below 1.0mmb/d at the same time non-OPEC supply growth accelerated to an average of t6 million b/d. Specifically and more dramatically in 2014, the difference between incremental annual world demand growth and non-OPEC supply growth gapped out to an oversupply of 1.2 million b/d - a differential not witnessed in decades (Figure 1). This was the backdrop as OPEC met on November 27th and decided to maintain its ceiling production level of 30.0 million b/d. Figure 1: World Oil Demand and Non-Opex Supply Growth 2000 1800 1600 1400 - 1200 1000 - 800 600 - 400 • 200 - 0 1 2014E &wet BA a DB arntnAta •World demand growth (kbd) Total non-OPEC supply growth (kbd) 2015E I. [ 2019E 2020E I I Looking at the individual pieces of this story, the current outcome now seems like a reasonable one. Anecdotally, North American E&Ps had seen a relatively steady pattern of hitting production guidance if not beating - and raising - through the Q2 14 earnings season and eventually the Q3 reporting season. This came despite some tough weather to start off the year. Looking at the Deutsche Bank Securities Inc. Page 3 EFTA01097657 13 January 2015 HY Corporate Credit Energy demand side of the equation, there was a key difference in expected demand momentum as we moved through 2014 versus 2013 (Figure 2). While in 2013 there was a relatively slow but largely steady improvement in expected demand through the year, 2014 started strong but saw a marked deterioration in expected demand that started in August but declined precipitously as we moved through year-end. These two factors left a bit of a perfect storm for oil in and around the time of the OPEC meeting. While analysts were somewhat split on the expected specific outcome, a majority expected an OPEC production cut of some sort to help stem oil oversupply (9 out of 13 street analysts polled by Reuters). All of this led to a dramatic move in oil when OPEC decided to maintain the current 30.0 million b/d ceiling production without even a minor cut, which was seemingly the market's last chance to stabilize oil prices. Worse, all of this played out against an actual OPEC average production level 30.2 million b/d YTD through November 2014; the whisper production for December is 30.7 million b/d — and that includes lower Libyan production. Figure 2: Global Demand Growth Expectations Over Time mb/d 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 2013 — — 2014 2016 • I4 LL4 • • 7 7 IT 2 4 . asc • • • • • • S. • 0' ro co 7 co e) m co 7 7 # C Sane! 'EA 08 Cooly Absturcet 7 IP V, I— a RI Oil looking forward - Are we there yet? The simple answer is no. Despite the significant amount of pain inflicted already, unfortunately, we believe there is likely more to come in 2015. Excluding the 2008/2009 (which was even more extreme), the average sell-off in an oil bear market reached its nadir with an average decline of 500/0 from the peak over a 15-month period (Figure 3). Currently, we have observed —60% decline in oil prices from the peak; however, we are only 7 months into this episode. Interestingly, of the four episodes shown, the one where oil reached its low point in the shortest amount of time was in 1986 - the historical data point that sets up the most like current scenario; in that case, OPEC too played a significant role in the 1986 oil bear market. However, at that time, it was other OPEC producers that were squeezing out marginal Saudi Arabian barrels. This time the US is playing the role of Saudi/OPEC spoiler by growing its unconventional production base and squeezing out OPEC barrels. In any case, despite a significant decline in oil prices so far, we don't see any expected changes to the major drivers of oil price in the near term. Page 4 Deutsche Bank Securities Inc. EFTA01097658 13 January 2015 HY Corporate Credit Energy IFigure 3: Prior Bear Markets in Industrial Commodities Commodity Stan End Duration, mo Drawdown, % Oil 11/2211985 07/25/1986 8 -56 Oil 10/18/1992 12117)1993 14 -37 Oil 01/10/1997 12/11/1998 23 -58 Oil 11/24/2000 01/1812002 14 -48 Nat Gas 10/24/1997 08/28/1998 10 -52 Nat Gas 04)06/2001 01/25/2002 10 -61 Nat Gas 06110/2011 04/13/2012 10 -60 Aluminum 08126/1988 02/02/1990 18 -45 Aluminum 08118/1995 03/12/1999 43 -38 Copper 08121/1992 10/22/1993 14 -37 Copper 08121/1995 02/22/1999 43 -54 Iron Ore 08126/2011 09/07)2012 13 -50 Avg for oil 15 -50 Avg tor all 18 -50 Current episode Oil 06/20/2014 01/10/2015 7 -54 Aluminum 04/29/2011 01/10/2015 45 -36 Copper 07/29/2011 01/10/2015 42 -35 Iron Ore 12/062013 01/10/2015 13 -49 Sane oe Oral' $ea411Y While recent oil downturns have had a relatively quick "V" shaped recovery, we do not believe that this will be the case this time. We believe recent more episodes (97198, 08/09) were reflective of more general market improvements and a retum to functioning capital markets (post the Russian default and post the financial crisis, respectively). These overall market recoveries, while important to oil, particularly the demand side, were somewhat outside direct, physical oil markets. Where this bear oil market is concerned, we don't see a quick macro event outside of physical oil markets as the panacea or quick fix. Rather, we are looking for a more "U" or "L" shaped recovery for oil. In 1986, again, oil priced quickly raced to the bottom over an 8-month period, but then, excluding the first Iraq war, took about 14 years to recover. To be clear, we are not making that extended recovery call here because we do believe that there were anomalies to the 1986 case. One anomaly being the 1986 Tax Reform Act and its net effect on overall US GDP, which according to the World Trade Organization, would normally have seen a greater positive effect from lower oil. However, even looking at the more "normalized" oil recoveries listed (excluding 1986 and 2009), it took oil anywhere from 11 to 26 months to return to its previous peak, leading to an average 17-month oil "recovery" time. Importantly, we acknowledge that markets are forward looking, and therefore believe that a change in sentiment itself could likely precede the actual improvement in oil, and also energy-related securities. We focus here on those data points that could improve the market mentality around oil. Note: we discuss the expected recovery cycle for high yield energy bonds specifically later in this outlook. Deutsche Bank Securities Inc. Page 5 EFTA01097659 13 January 2015 HY Corporate Credit Energy IFigure 4: Oil Supply-Demand Forecast 2013 2014e Nov-14 2015e 2016e 2014/13 2015(14 2016/15 2015/Nov-14 Consideratations OECD 46.1 45.6 45.6 45.5 -0.5 0.0 -0.1 US vs Europe GDP outlook Non-OECD 45.7 46.8 47.8 49.3 1.1 1.0 1.4 How resilient is China demand? Oil Demand 91.7 92.4 93.4 94.8 0.7 OS 1.3 Will lower oil price prompt upgrades? US 10.2 11.7 12.7 13.3 1.5 1.0 0.7 Pace & magnitude of supply response Other non.OPEC 44.4 44.8 45.1 45.5 0.4 0.3 0.6 Risk of delays, disruption & capex cuts Non-OPEC Supply 54.6 56.5 57.8 58.8 1.8 1.3 13 OPEC NGLa 6.3 SO 6.7 6.8 0.1 0.3 0.1 Libya 0.9 0.4 0.7 0.7 0.9 -0.5 0.3 0.0 0.0 Is there further downside supply? Iran 2.7 2.8 2.8 2.8 2.8 0.t 0 0.0 0.0 Possibility of mid-15 nuclear deal Iraq 3.1 3.3 3.4 3.4 3.3 0.2 0.1 0.0 0.0 Other 24.2 23.2 23.4 22.0 22.5 -t.0 -1.2 -0.3 -1.4 Will Saudi add supply if non-OPEC falls? Cell on OPEC 309 29.5 30.3 28.9 292 -1.4 -0.6 -0.3 -1.4 1.4mb/d reduction needed vs Nov-14 &wet De teary Sanwa, Looking at this simplified supply and demand outlook for oil sums up our thoughts on a longer term recovery. Given no expectation for a call on OPEC in 2015, we believe oil prices will persist at lower levels through 2015, especially in 1H 15 as the market is currently 1.4 million b/d oversupplied. The basic levers that could improve the supply and demand dynamics in the next year are the following in our minds: (i) better than expected economic growth (ie demand), (ii) more volatile seasonal weather patterns, (iii) faster than expected Non-OPEC production declines, (iv) a sooner-than-scheduled OPEC meeting (June currently), (iv) a sooner than scheduled OPEC meeting (June currently), or (v) unexpected geopolitically-related production declines. IFigure 5 GDP Forecast & Revision (% yoy) Forecast level Dec' 14 WO 2019E 2015E 2015E Forecast change since Sep' 14 WO' 2019E 2015E 2018E G7 1.8 2.5 2.4 -0.1 0.0 0.0 US 2.4 3.5 3.1 0.1 0.1 -01 Japan 0.5 1.4 1.6 -0.6 0.1 0.2 Euro area 0.8 1.0 1.3 0.0 -0.1 -0.1 Asia (ex-Japan) 6.0 6.2 6.1 -0.3 -0.7 -0.7 China 7.3 7.0 6.7 -0.5 -1.0 -1.3 India 5.5 6.5 6.5 0.0 0.0 0.0 EEMEA 2.3 1.9 2.5 0.4 -0.8 -0.4 Russia 0.5 -0.9 -0.4 0.0 -1.9 -1.8 Latin America 0.8 1.5 2.9 -0.2 -0.6 -01 Brazil 0.1 0.7 t.9 -0.2 -0.5 0.0 Advanced economies 1.7 2.4 2.3 0.0 0.0 0.0 EM economies 4.4 4.5 4.9 -0.2 -0.7 -0.6 Global 3.2 3.6 3.8 0.0 -0.3 -0.2 Sane Oni ft:Oe &Pat tco, tvwci Noe 'Sommer( OWN Onto* losakus Are torn ma% caned lamp Orrobei nfOPPP *arts Page 6 Deutsche Bank Securities Inc. EFTA01097660 13 January 2015 HY Corporate Credit Energy First, we look at the demand side. Looking at what our economics team is expecting for 2015, it is clear that despite the drop in oil prices (and its positive follow-on effects for certain economies), expected global growth trends have seen a notable decline over the last quarter of 2014. This is evidenced by the deceleration of expected growth reflected in our estimates, especially in Asia. The main drivers of the downgrades are driven "entirely by markdowns to emerging market growth prospects, which were reduced by more than 1/2 percentage points over the next two years. These downgrades were broad- based across regions, with three of the BRICs, Russia, China, and Brazil (in that order) recording the largest and most important downward revisions. Most important is the downward revision to China, where we now see increased negative spillover from past overinvestment in property and the government focused on a more sustainable 7% rate of growth. Global growth is expected to bottom at a relatively subdued rate of 3.2% in 2014 and rise slowly over the next two years." We see little possible upside here, and in fact, believe there could be further downside to global demand. Next, we look at the seasonality of oil and the possibility for more volatile seasonal weather patterns. Historical and expected oil demand seasonality is reflected in Figure 6 on the left. In the chart on the right, we overlay DB's quarterly demand/non-OPEC supply projections holding OPEC production flat at the October 2014 level (30.6 million b/d). Looking at Figure 7, one can see that the magnitude of the expected level of oversupply (1.5 million b/d in 1H 15) is well above historical averages. While many would look to Libya as the inevitable OPEC producer most likely to decrease production given recent unrest, even assuming no production from Libya, DB estimated excess oil supply in 1H 15 would still be 0.7 million b/d. This would leave the market needing a significant and unlikely change in weather to absorb excess supply in 1H 15. For example, last year a colder-than-normal winter increased seasonal demand by —250-300K b/d. On the margin, we see the seasonal demand effects of oil as well as marginal economics (discussed below) as a key reason for sub-S50/bbl oil at least through 1H 15. Figure 6:1 H Global Crude Demand Typically 1 Million b/d less than FY LON 1400 140 0 400 4400 -1400 Seasonality typically means that III demand is —1mb/d below the FY avg. • 2011 Sauces LA Di t Etonorna 01 02 CO 01 *2012 •201.1 420W0 42010. Figure 7:2015 Will Require Market to Absorb >Normal Seasonal Excess ton 1.000 000 1)00 400 4,500 4.000 4.500 Sam* counter seasonal move In stocks/other m 2H14 to absorb over-supply If we assume NO reduction In OPEC supply Vs 4014 pressue to absorb peaks In 2Q15 with larger than normal IH stock build required Oi a to ea •201I ann 52013 salll. noise D (ecotone* Moving onto supply, we look at Non-OPEC production. For purposes of this discussion, we are talking largely about US production growth as markets (and OPEC) are now looking towards the US for a supply response (i.e. significant reduction in annual oil growth). However, we do not think that supply response will be one readily observed in 2015 largely due to (i) a significant inventory of drilled but uncompleted wells (up to 6 months of inventory per producer), (ii) a relatively high level of hedging in 2015 (less so in 2016), (iii) the ability to high grade to the most economic plays, (iv) recently achieved drilling Deutsche Bank Securities Inc. Page 7 EFTA01097661 13 January 2015 HY Corporate Credit Energy efficiency, and (v) decreasing non-productive capital spending (test wells, seismic, infrastructure, etc). As we consider 2016, our equity counterparts have looked at the issue of US growth and asked the question: "What would we need to see from the industry to normalize production growth from 2016 forward at a level more consistent with demand expectations? (i.e. reduce US YoY supply growth to 500-600 Mb/d)." They estimate "that at minimum, the industry would need to drop —160+ horizontal rigs from the "Big Three" plays (Bakken, Permian, Eagle Ford) - or -25% of the near 700 rigs currently operating in these plays. The implications for the overall oil rig count (-1,600) is much more severe, as vertical rigs and marginal plays would likely fall off first, implying a total rig cut of 500+." If this scenario plays out as expected, it suggests that US YoY supply growth would be reduced from 0.90.1.0 million boepd now to about 500-600K boepd, or a reduction of 300-400K boepd. We believe markets would view this move as significant. Looking at Figure 8, the good news is that we have seen some solid progress towards decreasing horizontal rigs by that —160 figure. Since the OPEC meeting in late November, horizontal rig count in the Big Three plays has decreased by 40 rigs or about 25% of the DB required cut - and the biggest step down came in this past week. In that same span, total US rig count has decreased by 167 rigs or about 33% of the DB required cut - again, with the best step down coming this past week. Not surprisingly, the necessary decline in less efficient rigs (both vertical rigs and rigs in marginal plays) is happening faster than for the core three plays, where rigs are most efficient. I Figure 8: US Drilling Rig Score Card Since November OPEC Meeting Total Rigs Across All Basins Directional Horizontal Vertical Total Rigs working as of OPEC Meeting 194 1,371 352 1,917 12/5/2014 WoW change 4 (3) 2 3 12/12)2014 WoW change 121 (II (24) 127) 12719/2014 WoW Mange Ill 111l (6) 118) 12/26/2014 WoW Mange (141 161 (15) 135) 1/2)2015 wow change (61 (141 19) 129) 1/9/2015 WoW change (141 (351 (12) 161) Rigs working as Week 1/9 161 1,301 288 1,750 Total Rig Decline since OPEC Meeting (11/27) (33) (70) (64) (167) Total Rig Decline since Relative Oil Peak 16/20) (671 51 (92) (108) Horizinal Rig Decline in the Big 3 Plays Eagle Ford Permian Bakken Total Riga working ea of OPEC Meeting 207 363 189 769 12/5/2014 WoW change 131 4 (3) (2) 12712/2014 WoW change 121 171 (1) 110) 12/19/2014 WoW change 2 4 (7) (1) 12/26/2014 WoW change 121 3 (2) (1) 1/2/2015 WoW change (51 0 0 (5) 1/9/2015 WoW change 131 (101 (8) 121) Rigs working as Week 1/9 194 357 168 719 Big 3 Rig Decline since OPEC Meeting (11/27) 1131 (61 (21) (40) Big 3 Rig Decline since Relative Oil Peak (6/20) 10 (34) 7 117) Savo. Bab/ I& Page 8 Deutsche Bank Securities Inc. EFTA01097662 13 January 2015 HY Corporate Credit Energy Beyond these initially positive data points on lower rig count, there are upside supply risks in the form of high grading and drilling innovation. The natural gas playbook has shown us that producers across the board have proven to be innovative during price dislocations like the one we are currently experiencing. Over the past several years, the path of continued drilling improvement has been the norm for producers. While some plays are further along the innovation road (Bakken, Eagle Ford) than others, we believe the current environment will only incentivize producers to push for further process improvements; we should continue to see more production with less capital. That said, as producers narrow their focus and look to high grade to only the top plays (Permian), other relatively less attractive plays like the Bakken and Eagle Ford will see drilling dollars move out. One can see this above where Permian horizontal rig count has gone down by just 6 rigs since the OPEC meeting, and Bakken and Eagle Ford horizontal rig count has declined by 21 and 13 rigs, respectively. The offset to the high grading and efficiency points would be an inability to regain momentum. Producers have also done an excellent job maintaining momentum over the past several years by securing low cost capital, protecting cash flows with hedges and innovating operationally; prolonged, depressed oil prices will eliminate two of those levers for a time, limiting how and where E&Ps can allocate spending dollars most efficiently to generate an acceptable return. Moving on to OPEC, when looking at the recent non-action with our energy hat on, it clearly shows OPEC, and really Saudi Arabia's, intention to maintain market share in the long term. It plainly had two decisions - either let higher cost Non-OPEC oil growth continue to encroach and likely accelerate over time, or take a stand to undermine Non-OPEC supply now before it became a bigger threat. The OPEC decision does indeed make sense on a stand-alone basis, but there are a couple other "ancillary" benefits to OPEC/Saudi Arabia including inflicting pain directly on both Iran and Russia through lower export revenues. Pressuring Russia further benefits Saudi Arabia as Russia will be a weaker supporter of Iran, its most significant rival in the region. Given that Saudi Arabia has about twice the level of govemment assets Russia does (on an annual basis: government assets divided by budget deficit), it can afford to withstand a low-price oil environment for longer to protect its long-term market share. Figure 9: US Onshore Oil Breakeven Economics ▪ 00 a L ON 350) 3," • 410 • $(0421 $41.170 - MOS VS SO) • 20 US • S32$90 •1%599 3>1% ?MO ?MO 1270 110 5,0 i Sweet Wood illakania; DB Equey Rtrakarch 2014 1 mr in* Wood Mackenzie has done analysis to show the medium to long term breakeven economics of US unconventional crude supply (above). It clearly shows that a majority of US unconventional plays break even in the S65-70/bbl Deutsche Bank Securities Inc. Page 9 EFTA01097663 13 January 2015 HY Corporate Credit Energy area. It is important to keep those levels in mind when considering OPEC's next move. In order to inflict maximum damage to base US production, oil prices need to stay below long term breakeven levels for a sustained period of time. On the flip side, US E&Ps will do what they can in the short term to side- step a permanent momentum shift in their core plays. As we have seen, oil prices are slowly converging on this short-term, US unconventional "marginal" cost ($15-30/bbl range, discussed later). Taking all this together, we do think OPEC is prepared to maintain current supply at this level to maintain share in the long term. If it stopped short of its intended goal of slowing US supply, why embark on this path in the first place? Lastly we consider the possibility geopolitically-related and other production decreases or increases. Libya comes to mind first as recent unrest shutdown its El Sharara field, which was producing 270K b/d. This decreased November production down to 638K b/d from its previous peak of 883K b/d. As lower oil prices continue to pressure Venezuela and its stability, that will be another country to watch. Rounding out the areas of interest are West African deepwater projects and Russian Arctic projects - both of which are on the high-end of the breakeven cost spectrum. Beyond these specific areas to watch, we would point out Non-OPEC related growth does tend to underwhelm, and it would need to outperform on a larger scale in 2015 to offer any meaningful upside surprise large enough to affect oil prices. The last wild card we would point out here is China and its Strategic Petroleum Reserve (SPR). China's SPR purchases averaged —500K b/d for most of 2014. Now, Chinese SPR-related imports are thought to have peaked in December as the country took advantage of depressed oil prices with upwards of 700K b/d in estimated purchases. Despite brisk Chinese demand last month, most expect this specific demand level to moderate moving forward as the country is apparently close to filling existing reserve capacity. The combination of all of the previous five factors, seasonality in particular, is clearly reflected in investors current thinking on oil prices. DB recently surveyed equity investors with a majority of those surveyed (70%) of the belief that oil will bottom by the end of 1H 15. In particular, that same set of investors overwhelmingly believes that North American crude supply is the biggest driver of oil prices (50% ranked it the top factor). We would tend to agree more with the second observation and believe that the signs of slowing North American production are key to the recovery in oil prices after 1H 15 seasonality plays through; we believe improving oil price will require some positive oil supply data points (e.g. inventory draws coming in 2H 15, continued progress on decreasing horizontal rigs in the Big Three oil plays) to give that psychological boost needed to change oil market momentum, even if those positive data points don't immediately translate to lower observed supply growth. In the near term (1 H 15), we would expect to see sub-$50 oil persist as the market continues to be oversupplied by1.4 million b/d. Also, to put current trading levels into perspective, WTI prices would need to fall to $45 to surpass the 58% collapse in the oil price during the Jan 97/Dec 98 episode; it seems appropriate to compare recent price action to that episode since during the first half of this year global oil supply will be growing in excess of global oil demand by its largest margin since 1998. Specifically, we think this 97/98 case also speaks to the possibility of 2015 being a lost year, and thus, investors focus on 2016 as the next meaningful point in time for price recovery. Given we are approaching what could be the lows in oil, where we with HY E&P in the credit cycle now? While we have seen many episodes where oil prices have declined over 50%, none of those were prolonged enough to coincide with a restructuring of the entire E&P sector during a time when we had a fully developed and functioning HY market. For example, the 1986 episode did illustrate a Page 10 Deutsche Bank Securities Inc. EFTA01097664 13 January 2015 HY Corporate Credit Energy prolonged bear market in oil, but there is no reliable data for that period. What this table and particular analysis shows us is that we are at and beyond the average decline for an oil cycle, which is a 50% decline. That said, while finding the bottom for oil is important, the recovery story is equally important. IFigure 10: Cumulative cyclical peak default rates in HY and IRRs on energy bonds from current levels Year 1 Year 2 Year 3 Coupon Price To: Year 1 Year 2 Year 3 Cyclical Peak Cumulative Default Rates Surviving Par BBB 0.5 1.1 1.8 5.5 106.0 BBB 100 100 99 99 BB 1.7 6.6 10.1 6.0 95.8 13B 100 99 96 94 B 5.7 18.2 25.1 7.4 81.9 8 100 97 91 87 CCC 19.9 42.3 51.6 8.4 59.2 CCC 100 94 86 83 All HI 5.7 16.7 22.9 6.8 85.5 HY 100 97 91 88 Single-Bs/CCCs 32.4 Coupon BBB 5.5 5.5 5.4 BB 5.9 5.8 5.7 8 7.3 6.9 6.6 CCC 8.1 7.6 7.1 HY 6.7 6.4 6.1 Percent Downgraded BBB 20 10 5 BB 25 13 6 8 .- _ _ CCC — Dollar Prices, Adjusted for Downgrades BBB 106 102 101 100 BB 96 89 87 86 a 82 82 82 82 CCC 59 59 59 59 HY 86 82 81 81 Market Value (Credit Loss . Coupon 4 Downgrades) IRR BBB 106 107 106 105 -1.2 BB 96 94 90 87 -9.4 B 82 87 81 78 -4.8 CCC 59 64 59 56 -4.7 HY 86 87 82 79 -7.3 Sousa °anent Ban*Ove4 arraroev While we don't have a specific example of an energy sector restructuring, our counterparts in credit strategy have done work on cumulative cycle peak default rates in the overall HY sector. In Figure 10. they show average cumulative default rates in HY over the last three credit cycles (measured in 1989-1991, 2000.2002, and 2008-2010 by Moody's issuer-weighted rates). According to this data, we are looking at an average cumulative default rate of 22.9% for the whole HY spectrum and 51.6% for CCCs only. Looking at the bottom section, titled Market Value, $59 invested in an average CCC energy bond today should return $56 at the end of year 3 yielding a -4.7% IRR. Percent changes on the right are calculated between these two values, non- annualized. So how do we interpret these numbers? The good news here is that using a relatively negative set of assumptions — cyclical peak default and downgrade rates (based on broad market historical stets) and unchanged dollar prices on the exit from year three — are resulting in only single-digit negative retums from here, implying that to a good extent, the bad news has been priced in. An important bullish assumption that we are purposefully not including here - that a surviving CCC could be worth more than $59 at the end Deutsche Bank Securities Inc. Page 11 EFTA01097665 13 January 2015 HY Corporate Credit Energy of year 3 - could single-handedly result in positive IRRs. Consider: only three months after the end previous two credit cycles in 2002 and 2009, an average CCC jumped in price from low 50-ies to low 70-ies (measured in June 2003 and June 2009). If we were to plug in a $70 year 3 price assumption for surviving CCCs in Figure 10, non-annualized IRR jumps to +10%. For a more detailed explanation of assumptions to reach these conclusions, please see DB's US Credit Strategy: What is Priced in Energy Bonds Here? (December 18, 2014). Despite a dearth of examples around a crisis in HY energy, or more specifically the E&P sub-sector, we do have some examples of where other distressed HY sectors traded at crisis levels (right). If these restructured sectors hold any weight, it seems by this metric, we still have downside on a spread-basis before we reach the bottom for HY E&P bonds. Despite somewhat conflicting answers from the above two analyses, we think the takeaway for HY credit is that we are getting there but not be at the optimal entry point for bonds. Further, investors need to consider time horizons as they relate to various investing strategies and whether or not funds are locked-in. Lastly, with a significant level of default (blended rate of 30% for B/CCC), there will be clear winners and losers, outcomes will be very binary outside of buying a diversified basket of lower-quality HY E&P credits. Figure 11: Widest Levels of Each Crisis 88s 8s CCCs Real Estate 12/31/2008 1,573 2,008 4,702 Media 11/30/2008 1,128 2,029 3,508 Autos 12/31/2008 1,546 2,036 2,473 Telecoms 07/31/2002 1,398 1.014 3,966 Gaming 11/30/2008 1,895 1,870 2,485 Average 1,508 1,791 3,427 Energy 01/08/2015 465 960 1,896 % of other crisis levels 30.9%53.6% 55.3% What can we expect in terms default rates and recovery should there be a full- Sane Dooncft Bent scale restructuring of energy names? As we have not seen a full scale restructuring of the sector is hard to pinpoint exact figures here. Moodys reported that during the last two credit cycles for E&Ps (1998-1999, 2001-2002), a majority of unsecured creditors received a range of 35-50% recoveries with an average recovery of 40%. This is better than the average industrial recovery of 29%. Fitch has reported similar numbers. From 2000-2013, the average recovery rate for energy was 45%; compared to a 37% for the total market. However, the spread on recoveries in any given year was relatively wide with a low of 8% in 2001 and a high of 76% in 2011 looking at the Fitch data. Important to note that per Fitch, the comparative default rates for energy have been relatively mild at 2.0% from 1980-2012, this compares to a 4.6% default rate for the overall market during the same period. What other major catalysts need to play out to trigger defaults for HY E&Ps? As we look at maturities due in HY energy over the next couple of years (Figure 12), it is clear that most energy companies including E&Ps have termed out debt. This is not surprising given the historically low rates issuers have achieved in the HY market over the last several years. One can see that there is a little less than $4 billion in overall energy HY bonds coming due in the next two years. In Figure 13, we lay out the specific energy bonds that are coming due in 2015 and 2016. After those years, we see a relatively larger maturity wall of $18 billion in 2017. Page 12 Deutsche Bank Securities Inc. EFTA01097666 2015 2016 13 January 2015 HY Corporate Credit Energy 'Figure 12: North American HY Energy Debt Maturities Ex-Coal 32 38 45 44 22 2025. 2017 2,018 2019 2020 2021 2022 2023 2024 23 Sew& r Deundie &Mk Itibarktep Ramo. LA •BB ■B •CCC Total 'Figure 13: Specific 2015/2016 Debt Maturities Issuer Ticker Maturity Notional Currency Country Energy Sub-Sector Moodys S&P 'SIN Vermillion Energy VETCN 2016-02-10 $199 CAD CA Oil Comp-Explor&Prodtn NR 8B- CA923725AA31 Black Elk Energy BLELK 2015-12-01 $139 USD US Oil Comp-Explor&Prodtn NR B- US09203YAC57 Boardwalk Pipelines LP BWP 2016-11-15 $250 USD US Pipelines/Energy Storage 8aa3 BB+ US096630AA61 Chesapeake Energy CHK 2016-03-15 $500 USD US Nat Gas Exploration Bat BB+ US165167C.149 OEP Resources OEP 2016-09.01 $177 USD US Nat Gas Exploration Bat BB+ US74836JAD54 Quicksilver Resources KWK 2016-04-01 $350 USD US Nat Gas Exploration Ca C US74837RAC88 RAAM Global Energy RAMGEN 2015-10.01 $243 USD US Oil Comp-Explor&Prochn Caa3 CCC+ US74920AAC36 Rockies Express Pipeline ROCKIE 2015-04-15 $450 USD US Pipelines/Energy Storage Ba2 BB US77340RAH03 Sabine Pass LNG LP COP 2016-11-30 gun USD US Pipelines/Energy Storage 81 8B+ US785583AF20 $3,790 SOW* Z1/4•01010 &ink COnvhgew DMA We really see further default triggers coming down to borrowing base redeterminations. While ostensibly there is not a significant amount of debt coming due in the next two years, what simply looking at the maturity schedule misses is the way HY issuers have traditionally used their reserve based lending facilities ("RBIs"). In a nut shell, E&Ps, especially those with lower credit ratings, use these facilities as a way to fund near term drilling plans with intention of terming out these draw downs with HY bonds. Looking at Figure 14, many E&P currently have 50% or more availability on their revolvers. Looking forward two years in different oil price scenarios ($50/$60/$70 oil & $3.75 nat gas) and assuming some increases in borrowing bases as E&Ps increase PV-10, then about 15.35% of high yield E&P issuers in the broad universe we are screening have less than 50% RBL availability at FYE 16. Looking at a more conservative case, where the screened universe is afforded no borrowing base increases, then more like 20.50% of HY issuers have less than 50% RBL availability at FYE 16. Looking more closely at the figures, there are certain issuers that would actually have negative availability. In other words, they would need to raise more capital in addition to their current borrowing base as the scenario analysis shows these companies running out of cash. Further, there is a possibility that banks do in fact decrease the borrowing base of some of these E&P causing an even more draconian scenario. Deutsche Bank Securities Inc. Page 13 EFTA01097667 13 'Figure 14: HY E&P Liquidity Overview as $ milions Trek& Company Name Borrowing Base Commitment Resulting Avallablity % Available All Current as of Availability (2) 9/30/14 (2) RBL (Overdrawn)/Available in 2 years as %of starting Availability Selective Borrowing Base Increases (3) m P. RBL (Overdrawn)/Available in 2 years as %of starting Availability Borrowing Base Unchanged (31 9. 2 "8 N O $70/$3.75 at FYE 16 560/53.75 at FYE 16 $50/53.75 at NE 16 570/53.75 560/53.75 at FYE 16 at EYE 16 $50/53.75 at EYE 16 ALM American Permian Caal/CCC, $650 $1.000 $650 $550 85% -5% -21% -36% -54% -77% 100% C. MPO Midstates Petroleum 9.(Stable)/Caal(Stable) $525 $750 $525 $154 29% 18% 16% .6% -71% -113% -195% son/sr Samson Investment Caal(Neg W)/CCC(Neg W) $1,000 $2,250 $1,000 $411 41% 21% 10% -1% -70% -95% -119% SEVGEN Seven Generations 931 Pos)/CCC.(Stable) $480 $480 $480 $480 100% 15% 20% 5% -36% .66% -97% WPX WPX Energy 9a1(Stab!e)/EtB4(Negi NA $1,500 $1,500 $614 41% 77% 37% 19% 70% 24% 2% MHR Magnum Hunter 93iStable)/CCCINeg) $325 $750 $325 $175 54% 43% 33% 24% -49% -73% -99% HIE HiIcor is Energy Ela3 MEW $1,400 $1,250 $1,250 $1,249 100% 63% 44% 26% 58% 38% 17% 50 SandRidge Energy 92iStable)/B.IStablel $1,200 $900 $900 $746 81% 63% 46% 29% 42% 15% -12% ROSE Rosetta Resources 91iStable)/681Stablel $950 $800 $800 $690 86% 94% 73% 51% 91% 69% 46% XEC Cimarex Energy 9a l(Positive)/BEW(Positive) $2,500 $1,000 $1,000 $998 100% 122% 89% 55% 124% 87% 51% CXO Concho Resources 843(Ros)/BEW(Stable) $3,250 $2,500 $2,500 $2,500 100% 71% 64% 57% 65% 57% 48% SM SM Energy 9a2(Stable)/BEI(Pos) $2,400 $1,500 $1,500 $1,499 100% 84% 71% 58% 71% 50% 27% RRC Range Resources ElaT(Ros)/184(Stable) $3,000 $2,000 $2,000 $1,247 62% 86% 73% 60% 81% 67% 52% PVA Penn Virginia Caal(Stabk)/6-(Stabk) $438 5450 $438 $498 114% 81% 72% 64% 75% 63% 52% XCO EXCO Resources 93iStable)/CCC.(Stable) $900 NA $900 $789 88% 71% 68% 64% 66% 62% 58% BCE I Bonann Creek Energy 93iStable)/B.IStablel $450 $400 $400 5426 107% 109% 88% 65% 111% 85% 57% AR Antero Resources 91istab!e)/EtEt (stable) $4,000 $1.060 $3,000 $2,506 84% 85% 76% 68% 79% 67% 55% TPLM Triangle Petroleum Caal/CCC, $415 $500 $415 $430 104% 79% 76% 71% 60% 54% 49% PE Parsely Caal/CCC4(Stabk) $328 $750 $328 $327 100% 109% 97% 77% 111% 96% 72% TLW Tullow Oil 92/B. NA $4,750 54,750 $2,300 48% 92% 85% 78% 92% 85% 78% FANG Diamondback Energy 93i Pos)/B.(Pos) $350 5600 $150 $320 91% 127% 103% 80% 145% 106% 66% LTSCN Lightstream Resources Caa2( Neg)/CCOiNeg) NA $1,150 $1,150 5606 51% 121% 103% 85% 121% 103% 85% OAS Oasis Petroleum 92iStable)/EHStabkl $2,000 $1,500 $1,500 $1,145 76% 112% 101% 90% 114% 102% 89% ONR Denbury Resources 91iStable)/98 (Stable) $1,600 $1,600 $1,600 $1,178 74% 142% 120% 91% 142% 120% 93% EPE EP Energy 92/Et $2,500 $2,500 $2,500 $1,849 74% 99% 97% 95% 99% 95% 92% HIE Halton Resources Caa1(Stabk)/CCC.IStable) $1,050 $1,500 $1,050 $704 67% 108% 102% 97% 111% 104% 95% HOC Newfield Exploration 9a1(Stabk)/BEW.(Stable) NA $1,400 $1,400 $1,377 98% 126% 127% 99% 126% 127% 99% SN Sanchez Energy 93i Pos)/9-(Pos) $650 $300 $300 $300 100% 169% 147% 126% 238% 195% 151% QEP QEP Resources 9a1(Stabk)/BB4(Stable) NA $1,800 $1,800 $1,796 100% 161% 146% 131% 161% 146% 131% CHIC Chesapeake Energy gal (Positive)/684 (Positive) $4,000 $4,000 $4,000 $1,937 98% 188% 162% 137% 188% 162% 137% F 5 8 F son Deanne Bonk 01 Airetwo'n on*ratketelioudivn th: $6049 7.5coe, save there o no mime as me &atom., bra, thrown 2014 !?I MoVoVe wore Rees an 0 any edStonslisoWer OAR wow', A ii evatbl• "mar FEY woe penned alum me 21“, Damn' AScreenmaw ItY wet ~clomp NA, 2.µwrenack 099,41** Aottworvibokrov con bulb pone. men 100% eyeAWwyN 9/ pero0 EFTA01097668 13 January 2015 HY Corporate Credit Energy In the past what has caused the banks to decrease RBLs for HY issuers? Overall, since the mid-1990s (start of reliable data), lenders have seen par recovery on RBL facilities in all distressed and bankruptcy situations according to S&P. There are two main reason why this is the case. First, reserve engineers at the major lending banks use a lower price deck than the actual commodity strip price as a base case. And beyond that, the banks run a further sensitivity (aka downside case) that they generally rely on to give them confidence during commodity market dislocations like this one. The second reason banks haven't taken losses on these RBLs is that internal reserve engineers also take a additional discount to the already discounted (9-10%) expected cash flows coming from an E&P's proved reserves. Generally, Proved Developed Producing reserve are discounted at 25%; Proved Developed Non-Producing are discounted at 50%; Proved Undeveloped (PUDs) are discounted at 75%. This is in addition to subtracting out the expected cash flow for the next 6 months of planned production out of the RBL borrowing base. This borrowing base calculation does however give producers the benefit of hedges. Given a lack of material losses in the types of products banks are generally reluctant to materially reduce the RBLs of E&P especially during dislocations like the one we are seeing in oil right now. The general philosophy of the lending banks has been to be more conservative in both directions. When commodities (oil, nat gas) are rallying, banks are slow to move the price deck up; however, the same is true on the way down, which benefits E&Ps in today's bear oil market. That said, borrowing bases were reduced in 08/09, although these reductions were very minor compared to the over 70% decline in oil prices. There have been situations where the banks will reduce borrowing bases more meaningfully. This can happen when an E&P with an already weak financial profile enters a bear commodity market, or an E&P experiences a sudden change in its reserves or production profile (dramatic and unexpected cost increase, reserve write downs, unexpected decline in current production). Can E&Ps raise more money in the HY market today? If necessary BB-rated E&Ps can come to market to issue given average spreads in the 450.470 bps range; looking at our previous liquidity overview, one can see that most of these E&P are in good shape and don't need to issue. Moving down the credit spectrum, lower-rated single-B and triple-C companies are the ones more likely to need the capital. Given that the spreads for energy single-B and triple-C companies are currently 950-970bps and 1,880.1,900bps, respectively, we don't see more traditional unsecured HY deals as feasible today. This highlights the cost of capital problem that lower rated E&P companies now face - these are the real "have nots" in our minds. With traditional HY avenues not open to them we believe two trends will emerge. First, we will see more bilateral deals between E&Ps and providers of capital (private equity, recently-launched energy funds, special situations funds). We have already seen one recent example of this between Linn Energy (LINE) and GSO/ Blackstone (BX). LINE now has a five- year $500 million agreement whereby GSO will earn up to a 15% RoR on wells drilled by LINE in exchange for providing 100% of the upfront drilling costs. EXCO Resources (XCO) led the way on transactions like this; it struck a similar agreement with KKR & Co (KKR) in July 2013 in the Eagle Ford. Rightly so, we believe investors would rather invest in a company and make survival a self fulfilling prophecy rather than try to build sizable positions through the secondary market where ownership brings no incremental certainty around survival. The second trend will be second lien deals. E&P bond indentures are written with relatively open language around the way credit facilities are defined and the Deutsche Bank Securities Inc. Page 15 EFTA01097669 13 January 2015 HY Corporate Credit Energy around liens incurred under debt incurrence tests. We have not seen anything on this front yet, but it's only a matter of time especially with RBLs more likely to shrink in size. This is a clear negative for unsecured debt due to layering. The longer the bear oil market lasts, the more likely second lien deals will come. Will defaults help us move the overall market closer to equilibrium? Unfortunately, we believe many HY E&P companies, particularly single-B and triple-C credits, will be collateral damage rather than contributing meaningfully towards balancing global crude markets. Our equity counterparts have stress tested 2015 US supply growth; the results show that nearly 85% of crude supply growth remains manageable as those producers will remain under 2.5x net debt to EBITDA at FYE 2015 at $70/bbl WTI and $3.75/mcf gas (below). While we are well below that crude price now, it is important to note that about 50% of the 2015 US crude volumes are hedged. This ratio will decline in 2016, but the bottom line is that the larger, more highly-rated producers need to slow production in order to start to see changes to global balances - not the smaller HY players. Figure 15: Funding constraints will eventually have a material impact on supply growth, but nearly 85% of crude supply growth remains manageable at $70/bbl crude through the end of 2015 60 50 .O 40 - t Got 30 > - 0 DO 20 OO000000 O OD -111- 1 1 0 fAetteetp-olattleetel-ettettladq-i 9k9W0-0 Saeca. Deutsche Sant CmgnySw '135% of 2015 US oil growth comes from companies with less than 2.5x YE2015 Net Debt/EBITDA at $70/bbl, $3.75/mcf 00 O O • 2015 Oil Growth *2015 Net Debt/EBITDA 5.0 4.5 4.0 3.5 7..6 3.0 o 2.5 co 2.0 A 1.5 1.0 .; 0.5 0.0 What is the market currently pricing in for HY energy bonds? Given this, when should investors look to take positions in HY energy bonds? The preceding indicates that where HY and energy are concerned, we are in uncharted territory. As we mentioned before, there is no good set of energy- specific data to get an idea of an exact entry point for investors. Despite signals of being close to the bottom, there is little clarity on whether this is a "U" or "V shaped commodity (and there HY bond) recovery, which will make a significant difference in how investors with different strategies and timelines look to enter trades. Even if we had seen a significant set of restructurings in HY before, there can be vastly different triggers for those restructurings. Most likely, we see (i) weak balance sheets upon entry into the crisis, (ii) reduced liquidity, and (iii) concentrations in relatively higher cost plays as being the biggest driver of defaults in B/CCC credits -which we believe will be a more clear signal of the eventual entry point. Page 16 Deutsche Bank Securities Inc. EFTA01097670 13 January 2015 HY Corporate Credit Energy Then, who is best positioned to withstand this downturn should it be a three- year cycle? In the HY credit markets, liquidity will be a top driver of performance combined with assets in the best marginal costs plays. This will be further enhanced by better clarity of through cycle leverage. Companies starting off with reasonable leverage, moderate FCF burn, and good hedging are already ahead of the game. In addition, companies that recently termed out RBLs and are working with a high % of current availability will also be well positioned. Lastly, E&Ps that were able to execute on asset sales at pre-crisis valuations are also positioned well where liquidity is concerned. Some HY companies trying to see assets will see those plans put on hold, while others who recently bought will now look like they overpaid. If we want to invest in HY E&P today, how do we sift through the more fragment E&P credits to identify outliers? To answer this question, we developed a screen to apply across a universe of approximately 30 high yield credits - some of which we have a rating on (ie covered companies) and some of which we do not. In order to include non- covered companies in this analysis, we have used Bloomberg consensus estimates to develop sensitivity analysis. Please see the following section called "E&P Universe Screening Methodology" for the full details on our methodology for screening the HY E&P universe and creating sensitivity analysis across all 30 credits. Deutsche Bank Securities Inc. Page 17 EFTA01097671 13 January 2015 HY Corporate Credit Energy E&P Credit Screens and Analysis E&P Credit & Operational Metric Screen When looking at trying to help investors wade through the extremely fragmented E&P sector in US HY, we looked across six main credit and operational metrics including 2016 net leverage, current PV-10 to 2016 net debt, 2016 liquidity assuming a flat borrowing base, 2015 hedges, 2016 adjusted cash margin per unit, and 2016 production mix. We felt this range of metrics would give a wide and varied insight into the path that certain E&Ps might take over the medium term commodity cycle (three years). We first lay out all six of the metrics, which we have ranked into quartiles, and go through the results of the analysis. We then walk through each of the metrics and why they were chosen. E&P Universe Screening Methodology 2016: For covered companies, in our analysis, we used our updated estimates. For non-covered companies, if 2015 guidance has been provided since Q3 14 eamings, we use that. Otherwise, we used the street consensus with adjustments to both capex and production based on credit rating. With that in mind, in 2015, we assume all BB-rated credits follow the consensus estimates as given; street consensus for BBs is generally +1- 10% YoY capex growth with corresponding production growth rates in the 20-30% YoY area. For B-rated credits, we assume a decrease in capex of 25% YoY with a 5 percentage point decline in the corresponding expected consensus production growth. For CCC-rated credits, we again assume a decrease in capex of 25% YoY but this time with a 15 percentage point decline in the corresponding expected consensus production growth. The difference in the production declines in B vs CCC reflects trends we have seen between the two groups so far from companies that had provided actual 2015 guidance. If bonds are split rated, we assume the lower rating of the two ratings. For example, Midstates Petroleum (MPO) bonds are rated Caa1/8-; we therefore applied our assumption for a CCC credit. 2016: For covered companies, in our analysis, we used our newly initiated 2016 estimates. For non-covered companies, we use a similar methodology to what we did in 2015. We assume all BB-rated credits follow the consensus estimates as given. For B-rated credits, we assume a decrease in capex of 50% YoY with no production growth (ie so-called maintenance capex). For CCC-rated credits, we assume a decrease in capex of 35% YoY with no production growth (ie again maintenance capex). The difference in the expected capex declines needed to reach flat production growth YoY in 2016 favors B-rated assets that are assumed to have a relatively better asset base than CCC-rated companies, and would therefore need less capital to simply maintain production. Page 18 Deutsche Bank Securities Inc. EFTA01097672 13 January 2015 HY Corporate Credit Energy Overall E&P Screen: Results and Ranking Snapshot Looking at the aggregate results of the E&P screen across all metrics we see the following trends: Lower-rated companies in top quartile unexpected: it was not surprising to see more highly rated companies in the top quartile overall (CXO, HILCRP); however, it was surprising to see companies like Parsley (PE) and Penn Virginia (PVA) with CCC ratings there. Looking more closely at these two - they are in some of better US unconventional plays (Permian, Eagle Ford) and thus benefit from lower costs as well as having some combination of reasonable leverage and liquidity over time. The top quartile was definitely more equal opportunity across credit ratings than we expected. Lower-rated companies in bottom quartile as expected: Overall, the bottom quartile with uniformly B/CCC rated companies is largely as expected in our minds. This group of companies has on a uniform basis a combination of higher leverage out of the box, burn significant cash over the next two years and operate at a lower cash margin compared to peers. Safety in numbers: six out of nine E&Ps in the top quartile have large amounts of acreage in the Big Three unconventional plays (Bakken, Permian, Eagle Ford), which have the top cash margins. These types of names would work well for investors as each of these three plays have upwards of 10-15 HY E&Ps that participate in drilling there. This makes it easier for investors to monitor and understand relative performance. Fear of the lesser known plays: four out of seven in the bottom quartile have core positions in lesser tested or known plays like the Miss Lime (SD, MPO) or Canadian dominant portfolios (SEVGEN, LTSCN). These companies could be generally harder for investors to follow with fewer data points observable to the market; this of course could also mean opportunity for those willing to dig in and monitor less ubiquitous data. Unique business models can still screen favorably: There are two relatively unique business models as they relate to HY in the top quartile. First, we have offshore, international E&P Tullow Oil (TUN), which came up as a top name driven by its significant cash margins and solid liquidity. The second unique business model in the top quartile was Hilcorp (HILCRP), which was the only onshore conventional name in the top quartile. This name screens well due to a combination of lower leverage and higher asset coverage. Investors could look at this name and be more comfortable with lower decline rates and lower general maintenance capex, despite the company's strategy of acquiring big and small assets alike frequently. Deutsche Bank Securities Inc. Page 19 EFTA01097673 Deutsche Bank Securities Inc. 'Figure 16: E&P Credit & Operational Metrics Screen: Results and Ranking Snapshot TOP CRSWe Bottom Quart* IS Net WORMS OEP FANO XEC AR NFX HIL PE 0(0 LTSCN HK &WO XCO SD SAWST AEPB I11HR TNoLch cycle leverage Is key for peril Methodology Comments nrostors. Of paracular IMPOrtanCe where each credt started Ina cOe WMedOl0wrotimVNbns Newer ESN tn lamp mot* dearlylegs favored than mom mature ESP/ hero 111P1610 to NN Da0t DNR OEP HIL XEC FANG NFX RAC OAS AEPB TPLM HK XCO SAWST SEVGEN 41111I Oven PV.10s use IA RBI. botramng baso doomed. an01Mr tip data vial err coati investors The addbon et the eggel curl rage gaped VS. ckti ale another imp:Aare dmenson. Favors EaPs win moremak/a assets and a Naha, %ciPDP assets. IS UQUISITY BO HM 5023.7S DM LTSCN NFX OEP OAS TLW CHK EPE IOL WPX SO SEVGEN PAIR SANST AEPB Oman an evaded -30% delaull rate across BCCC HY energy. laudity gams in a reasonable meagule distance lode/ad,. Posture for ESP demi:reties that mom recently termed out RIX balances deed Ot me clavniurn M competed asset saes. Souro Peach, tbeA meow/toast (IMmboyg !mom LP fa rht Mem«, camenes not caveat Or 08 lithe »e V. M, Mmostimees mho 6•TmMg commas mmym any A MAPS EPE DNR NFX NK PVA NIL X00 /APO Ski PEPS SEVGEN CHIC OEP MM LTSCN xec HOOKS are theft terry, h nabse and most mponant in 2015. TO the extent hedger/ precove 'pude/ and °Waft momercum Ocer next year for ESP:. they roman an imp:Aare tool. Top ouarb/a ts significantly more Oly 169%) and datansive aped wowing aganst of dawned* Bottom WWII* abOut -55%0aswhere there was less lo protect to the way Crl cash tie t. 'IS Adj. Cash Yorgin TLW TINA FANO cxo PE EPE BCE/ PVA SEVGEN CHIC LTSCN SO APO RRC XCO SANST IMR LOtattoal diagrams, h major plays Orma realzaban per art Cool ineernetelea retallee COSS gum play "'Da. malLnlYol an Overall 0001010 teelCienty CiSlaSI. cap:tatocosts (GSA), & capial strums* (interest burden). Our 'aclustce cash margin skews some enemas. basic ingght re lowest cost producers. Robley Interest Wolen could be improved milk paagIbla regtrutkrIngg. NOR: no decreased saw* costs assumed. Ilb DNR let OAS PLM FANG TLW AEPB PE CEP WPX RRC CHK SANST LIHR AR XCO Dosed° boar o0 market. O1 mix cklye higher per tat cash mataln ler alter E&P. ESN/ rAllughp.dated and core nasal gas 'nerves KWh DM& here aesote dear long term viablty. PER.AA8W.Ch2rANGEPCUSCAUWVA.00ASPEAVA.ROSE.SHS6GEN2A4 MIA( Rwaw WAX Top to &Morn Overall Ranking NFX EPE ML DNA TUV PE 0(0 PVA FANG SD LTSCN IIPO SAWST SEVGEN AEPB MHR N0l SurPOSIN IOU* mae highly tab:do:mean:esin lop Queue overal but companies Ike Parslay (PE) and Penn %Monis IPVA) loth CCC ratrgs are more sumnerg. Bottom quartile wen uNICIngy SCCC rated companes is Larry as figaecled in our mIndg EFTA01097674 13 January 2015 HY Corporate Credit Energy Figure 17: E&P Credit & Operational Metric Screen: Results and Ranking by Quartile '16 Liquidity Top to Bottom '16 Net '16 PV-10 to flat BB '15 1.6 Adj. Cash 16 Overall Company Credit Rating ticker Leverage Net Debt 50/3.75 Hedging Margin Mix Ranking Newfield Bat(Stave)138B-(Stave) NFX 1 1 2 1.17 EP Energy BVB EPE 2 2 1 1.33 Hilearn Energy Ba3 /BB. HIL 1 4 2 1.67 Donato Resources BI(Stable) /B/3 (Stale) DNR 3 1 1 2 2 1.67 Tallow Oil B2)B. TLW 3 NA 1 2 2 1.80 Parsley Energy CaatiCCC.(Stable) PE 1 3 2 3 1.83 Concho Resources Ba3(Pos)/BENStable) CXO 1 2 2 3 2 1.83 Penn Virginia Caal(Stable)3-(StaIXe) PVA 2 3 3 2 2.00 Demand Back Energy B3(Posp8kPos) FANO 1 3 3 3 2.00 Bonanza Creek 03(StableyBiStable) BCEI 2 3 2 3 2 2.17 OEP Resources Ba1(StableyBEI.(Stable) 0EP 1 1 1 3 3 2.17 Oasis Petroleum B2(Stable)8.(StaMe) OAS 3 1 1 2 2 4 2.17 Teeing* Petroleum CaMICCC+ TPLM 3 4 3 2 2.33 Halton Resowces Caal (Stable)SCCC.,(Slable) HK 4 4 2 2 2.33 Antero Resources mots:4033B (stave) AR 1 3 3 3 3 2.33 Rosetta Resources BI(Stable)BB-(Stale) ROSE 3 2 2 2 3 2 2.33 Ornarex Energy Bal(Posttive)/88.(Poshive) XEC 1 1 a 2 4 2.50 Range Resources Ba2(Posymb(stabio RRC 2 1 2 3 4 2.50 Chesapeake Energy Bat (PositIve)/B8. (Positive) CHK 2 2 1 4 4 2.83 SM Energy Ba2(Stable)/BB(Pos) SM 2 2 3 4 3 2.83 Exec Resources Inc. B3(Stable)/CCC.i(Slable) XCO 4 4 2 4 3.00 Sanchez Energy B3(PospB-(Pos) SN 3 3 3 2 3 4 3.00 WPX Energy Bat((StableyBS.(Neg) WPX 3 2 2 3 4 3.00 SanaRiage Energy B2(StableyBiStable) SD 4 3 2 4 3.17 bghtstream Resources Caa2(NegWCCC.(Neg) LTSCN 4 2 4 4 4 3.17 Mitigates Petroleum B (StableyCaal(Stable) MPO 4 3 4 4 3.33 Samson Resources Caal (Neg WyCCO(Neg W) SAIVST 4 4 3 4 3.50 Seven Generations B3(PosyCCC.(staixe) SEVCIEN 2 4 4 4 4 3.67 American Permian Caal.tCti AEPB 4 4 4 2 4 3.67 Magner ratstableyetc(neg) MHR 4 4 4 4 4 4.00 Sante. &Vie* cwt campaig:0M enomen Seance Go Ann IaNw ng convened not cowed:we* AO »Oa the Ocveceste legivenetta Oloarbag contemn/ oweruees any aheEffltalteCaOr0WIGEPLOSMAMRAA.0.0ASPtivalt0SCSeatebteN.Stt TAM 12 Wend WPX Deutsche Bank Securities Inc. Page 21 EFTA01097675 Deutsche Bank Securities Inc. 'Figure 18: E&P Bond STW Versus Operational Screen Quartile Ranking 1.000 3.500 3.000 1.500 1.000 PVA 8 A KM% ' % '20 TPLM MPS% 22 • EPENEG 9.375%'20 • PARSLY 7.8%'22 NFX 6.878% 20 • HILCRP 7.62E%'21 FANG 7. DNR 6V%22 • BCEI 6.75%'21 OAS 6 • ROSE 5.625% 21 OEP 6.876%11 • CX05.5% • AR 5.126% 22 • ARC 5.75% 21 • XEC 6.876% SANST 9.75% 20 • MPO 10.75%'20 • LTSCN 8.625% 20 • aD 7.6% XCO 8 5%'22 MHR 9.75% 20 AMEPER 7.375%'21 • SN 6.125% 23 • SM 6.5% 21 • WPX 6%'22 • CHK 4.875% 22 • SEVGEN &2M '20 • 1 6 2 2.6 3 3.5 4 Son OCViC 0* cancerneres. Marin l'avn Pw rftt khi.wg mrpenerrot coiweci 0v O8 ntin »Oa en forocns Awn mho 6tarteT cont”,t4 esnms ot. AMLPCAAA8CELCAOWIGEPELTSGWOMA600.0ASPEWAROSESHSTWEAESAUPUNIZWonci wPX EFTA01097676 13 January 2015 HY Corporate Credit Energy Leverage Screen We chose 2016 net leverage to give investors an idea of possible through cycle leverage. This is a key data point for credit investors looking at the type of analysis discussed earlier where the default cycle takes three years to play out. The trajectory of leverage over time will be important for possible entry into a credit either before or after a credit event. Looking at the top quartile names, two stick out as being CCC rated - Parsley Energy (PE) and Diamondback Energy (FANG). These two credits have core positions in the Permian, which is presently the lowest cost play in US. This fact comes through in the leverage the longer term leverage numbers of those two producers besides aside from relatively low credit ratings. Looking across the entire top quartile, 50% of the eight E&Ps in that bucket are concentrated in the Permian (PE, FANG, XEC, CXO). Now, looking at the bottom quartile it is important to note where each credit started the cycle; seven out of eight of these companies started the cycle with 3x or greater net leverage, which is relatively high for an E&P. Drilling down further we have a combination of relatively newer E&P companies that were looking to grow into current cap structures post-ramp (AEPB, HKUS, MHR) and more mature companies that had become over- levered and were actively pursuing delivering (XCO, SAIVST, SD). Deutsche Bank Securities Inc. Page 23 EFTA01097677 Deutsche Bank Securities Inc. 'Figure 19: E&P Bond STY Versus 2016E Net Leverage ........ 630E SSW 3/200 2300 2.1200 1.500 1.000 500 SANST !LW> 20 • IWO 10.70%10 • LISA% 61,07* OP • An 7.w. 'I 1 PVA 66%10 Y).6%12 TPLM 6 • • 75%72 NEW W 5%11 CO I. MAPES 7.375%71 • FANG 0.646%'71 ALCM' 7. 62S AR 5.S5% XEC 5.06%'22 EPEN 4, '2 525% •20$M Sat TLW 0 70 RW :stOAS 22 A1 17. W SN 0. • DPW 5.5%T2 5%13 — OEP 8306%11. 72 4 4133%73 SW 1005% ' ARC ARC 126% 5.75%71 21 0.0x 1.0x 2.0x 3.0x 5.0* 6.0x 7.0x 1.06 9.06 10.06 Saircx. 00.exte fink cam", dn. Mantes, hvoce LP to, Ow (oho", cverx0nvs not coact:. Ov 08 2Agn »eV. de forocasts Awes Zhu 6tartinv tww•nwegrvrt,s0M,' A PeR.Ail8a1.0X0 fAUGIPELTSCMMHAMPOOASPLPVAROTE.SNSMENSMIPLA(RW 070 wPX 11.0x 12-0x EFTA01097678 Deutsche Bank Securities Inc. -o 0 U, Figure 20: Commodity Sensitivity Analysis - $701$60/$50 Oil - $ millions e.„ IIII:lia RMMO FY16 FY16 Lenny FY16 FY16 5663.75 3177 $60175 $703.75 $50175 $803.75 $703.75 $50075 $89175 $70175 $603.n $600.75 $72175 CHK IFJUktISI Cintp000 Enorg, 154B8 3.874 4278 4.683 3.440 4.060 4.679 154 254 2.24 'Si 324 224 214 %EC Cinarex EnvOY 0.10$. 1 / 939 1.143 1.347 EOM 1261 1.405 054 1.0x 1.4x 1.0a 113x 19x 1.0x 0(0 0:094.11Ncurcof 1.723 1936 1.948 IASI 1186 2090 1.7X 244 224 2.14 114 224 234 HILCRP Hkorp Etergi NovAloki 00104634 0.30$. 158B6 3 . 154i.B243- 1.021 1.107 1.136 1286 1.246 1.456 00 1063 1.110 1290 1.20 1.517 0.94 212‘ 2.1x 2.34 1.0x 1.94 i.s, It 26x It 22x 2.14 1.7x 1.5x OV etource4 84102. 1140 1244 1951 006 1212 1.320 00/ 1.2x 1.0x 0.0 214 1.4x 1.0x RAC Rang. Rasounxo 882/B2. 1.088 1265 1.241 1.075 1205 1.335 2.7x 3.14 2.94 It 3.4x 294 244 SPA SPA Crew B4208 1.173 1210 1.4(0 101 120(1 1.274 12x 2.4x 2.1x 1.0a 4.3x 3.0x 2.2x WP WPX EA448y igra16.5.8101 Rai/3S. 891 955 1.019 552 714 873 It En 1.54 1.4a 4.4x 3.14 234 NAPES A/11066111Kft060 CaaiODO. 29% 346 402 193 263 333 NA &Ix 7.54 6.4 17.44 1234 994 AR Moro 7101031760 0738 1.446 1471 1.711 2.021 2216 2412 3.14 21x 1.0x 1.7. 20:4 1.0x 1.7x Er..EI B0116Ii C6* EIX117/ 830. 319 377 231 261 323 39t 134 3.24 2.54 2.2a 424 294 214 DNA Dectory 0:40/0/ a 8108 856 ON 1.000 436 031 072 2.74 4.0x 3.4x 3.0a 8.2x 5.0x 3.64 FANG SPE Damnt/t6 Enorqg EP Erent 286 B313. 020 1.60) 352 1513 All 1928 22/2 1.331) 339 1.42$ 408 1.404 14* 304 214 347 1.54 2.0x 1.2a 2.4 1.14 334 12* 3.1x 0.74 10:0 EXCORaux4Nas 11/3CCC. 299 313 327 235 2S7 279 32x SU 5.34 5.0* 7.14 7.1* 6.44 FSTO Fared 01 CsatOtC 34$ 361 374 209 234 285 404 7.3x 7.0x 6.7. 14.0x 11.0* 1C/4x 1110.0 Ricca 1401044301 Coalta. 8.41 665 689 572 630 683 4.8x SU 5.54 5.1* 6.7X 6.04 SU LTSCN JAHR U91/81/earn Resotecee Maanurn Knot Csa213. CCC 2$) 103 309 125 354 146 187 105 250 $26 328 141 234 (40) 5.8x 5.0x 1414 4.0x 11.54 4.1a 9.84 8.3x 168* 60* 13.64 4.4a KU IAPO WIslales P4000n. Coat% 289 331 371 241 207 354 354 7.0x 6.0x 6.1a 0.1x 7.0x 67* OAS Oasis Poyonum Mt 766 039 853 429 558 667 2.7* 3.64 344 3.2a 6.64 4.8x 3.7x PARSLY Pane/ CealLCCO/ 216 263 201 232 209 307 2.14 3.3x 2.8x 2.3a 35x 20x 2.1x PVA 101111 Wpm lS Cool 682 697 712 314 399 455 28x 214 2.04 1.6* 46* 3.84 324 ROSE Haat RIN.O.4405 1311313 481 560 639 422 514 606 2.74 464 3.84 3.4 5.34 4.04 3.14 SAIYST Samoan Imetareni Csal/SOC 445 495 544 Me 442 620 et 0.6x 0.4x 7.8a 120x 10.1x 600 EH Sonchaz B30. 387 447 507 272 347 422 1.6x 464 3.94 3.1% 6244 St 3.114 SD Sar451098 EneIY 8213. 646 729 011 387 523 060 3.54 66* 4.0x 4.0 10.0x 7.2x 5.0x YE 501101130110611666 9.3.0DG 483 504 545 506 617 726 MA 24x 2.14 1.6* 424 104 234 TPLN Tnen2HP41/010.01 Coal.OtC/ 214 225 237 200 217 235 254 4.0x 9.847 3.8a 4.6x 4.2x 30* TLW Tut 0..01"' B213., 1.193 1273 1.354 877 1.014 1.151 1.64 174 344 3.2a St 424 164 347 105 Ila rellf $50175 $503.75 $703.75 5500 39.7754 FY16 16:3.75 $700.75 04302) 0.2191 18371 (Sae) (322/ 12201 0311 13121 (Ni) 13091 19451 1807) 1567) 122 ((girl 290 17711 437 (11:1!I 11123344 49:i ow, (78) (310)) (23t 14499 12911 1189) 11710,141) (47) 1612) 1: 31 (4411 4921 :V I 13704 110138 0 1526) (4191 61 1366) 16741 1604) 1534) 0 (474)) 18031 111 59 10 17 C222) 0741 11301 134 1105: 4 0) (101 86 102 208 274 (140) 1821 1231 il ni6 ($461 il l 3 2 1 244 203 (n12 174) ( 1 0 6 401 122 011481 „) 12170 27) 124 1057)) 20 35 50 11501 1103) (56) 171 35 1441 24 02 12621 75:1 74 rs' flrol 112): 12100 111 1951 11021 (1611 11171 (74) 6 (20) 0891 11751 (341) 2681 11961 r s ( s 4 4 0 30 ))) 00 1 491 2 1 :26 o520:21; 1581 12 121 146:1, 1., 141$). /7064,0 i188 (67) 01 4 151Vi (1.123) (1.0841 (1.0451 (202) (1021 0(121 (45) (802) (7481 (6081 (1051 (3) 99 Sawed °cyan* fink canowydrea. lIkanitag I4Npnc4. LP to. the (4040//0 cnerponys not cawed Or 061478 //440. .Pht ebrocaststsxwent.ha lAtantrg °maroon 4.,,nort.s.:4*. A PeR.ARSal.CX0 6AFIG6PCL MCA AM1YRA600.0ASPLPV4ROST.Sat$0/00/.$4( TAM 72W end WAX EFTA01097679 13 January 2015 HY Corporate Credit Energy Current PV-10 to 2016 Debt Screen Given that derivations of PV-10s are use by the banks to determine the ultimate level of commitment or borrowing base for E&Ps, measuring PV-10 is a relevant data point as it relates to credit investors. Taking it one step forward to compare PV-10 to debt essentially shows investors asset coverage on the current face value of expected debt in 2016. Overall, an analysis like this will favor E&Ps with more mature assets and a higher percentage of PDP assets (higher PV-10); the top quartile reserves average 59% PD while the bottom quartile are just 44% PD. Also, looking at the debt portion of this equation, in the bottom quartile, five out of the seven credits were also in the bottom quartile for our leverage screen illustrating the difficulty of attaining reasonable asset coverage with a levered balance sheet. Page 26 Deutsche Bank Securities Inc. EFTA01097680 Deutsche Bank Securities Inc. 'Figure 21: E&P Bond STW Versus Current PV-10 to 2016E Debt (Asset Coverage) 0,000 3,500 3.000 2,500 2,000 1,500 1,000 500 0 0.0x amino I ...run. Zu • MPG 10 • 35%20 LTSCN 8.025%'20 SD 7.5%'21 • V AgriFt3.70% AMEPER 7 HICUS XCO 8.5% 375% '21• • • 6.875%'21 ♦TPLM PVA 8.5%10 675% SEVG EN 8.25% '20 . SN 6.125% '26 lifIRSLY BCEI 6.75% 21 7.5% '22 tIOSE 5. • AR 5.125% G 6.375% % 2f M 83% 21 rxots% 71 20 22 FANG . 7.625%'21 HILCRP 540 7.625%'21 • DNR 5.5%Y2 ♦• DEP 6.875% 21 • ViP 6% '22 . CHK Atte% HHC . '22 • AEC '22 • • 0.5x tox 1.5x 2.0x 23x 3.0x &NOY 0017101, S$* cam", dot Marren Innce LP ➢7.P.e (000irrev paerponvs not coiwecl Ov 08 1474 VW. Vn towns *row mecca 6tomtwg COrtrAkleMMITAIOW A PER.A It8a4CX0rAFIG(PCUSCAtinWROMPO.OASPE.PVAROSE.SMSIVOCAtSt(lPthtlOn or. WPX 3.5x 4.0x EFTA01097681 13 January 2015 HY Corporate Credit Energy Liquidity Screen Given an expected —30% default rate across B/CCC HY energy per DB's strategist, liquidity gives us a reasonable measure of distance to default. Looking at 2016, allows for a reasonable analysis of how credits would perform FCF-wise though roughly 2/3 of the cycle. This analysis clearly favors E&Ps that have recently termed out RBL balances ahead of the oil downturn or have cash on the balance sheet from recently completed asset sales. Looking at the top quartile, three out of seven top ranking E&Ps in the liquidity screen have recently completed asset sales, namely Chesapeake (CHK), Newfield (NFX) and QEP Resources (QEP). Interestingly, looking at the bottom quartile, there are several credits that have recently completed liquidity enhancing activities relatively recently like asset sales (SD, MHR, SAIVST), IPOs (SEVGEN) and capital raises (MHR). Despite this, these companies remain in the lower quartile on a liquidity-basis due to significant FCF bum over the next two years at current crude prices ($50-60/bbl cases). Page 28 Deutsche Bank Securities Inc. EFTA01097682 'Figure 22: Liquidity and Borrowing Base Analysis at $70 Oil & $3.75 Natural Gas - $ millions 0.44•111~~0.41% 119•14,45404515•41145 242112014 14werng 30.1409~344•33/5(2016 0414444.14111•5414044~1.954 14,44141•451411•444114404 as Ws WO Y.vta" 4:4944411494 art.44.45.440 %%4 0.54415/4 lady <10.1(14/ I /11945%<(51114140 5.4444M0 •••• 1410 5/40 Conffinal %SW >40 51/2 17 Sar 5/11 en% .14042441411) $5Y) ra , 041 Sae suss howewcal DC bird 555 55» ilm WM 154711 .511/11 RC I& Si ~saw 151% H<6 %AMP %snot n 11% 49 14% % /draws/ far X% 13% urro... ',nil Min 19/ IMO% a 9414454~ .S4 3" 441941404.4 44% dIN ei 8 14451 4.4.4455.04 Canoe, 44%)4444401414/41,19.3471 51.4(0 44710 000 4411 31 1100 15/111 51% 21% IA% K1.41 42% 21% 40% Win Wen% %et% 445 0,44% 5405 9%1 5111 1743 5323 5115 3112 UN 154731 5154 20% 43% 11451 43% 40% WOK VIZ1tftqs 1.59414541450 0 ss sues 0140 1441 3111 1420 111.1171 5139 Wig 11% 1431 25% 17% X% 100 44151•49454.44%. 4,54514 5C 445.540.9 5571 567 5615 5154 526 5275 112%1 51% )541 10% 151101 2106 .71% 10 5041141415444 019.50090400 31.1(0 3933 5910 V. 1110 5121 151.0131 5/33 42% 14% 3314 14% 60% 41% MI 4404154.0 f.I.iu 31.401 51.250 51.60 51.2% 1119 5154 %1141 54» 51% 3% 37% Ulf 63% SI% 4/10 4.%01.44944 11140%/014450491 5140 Mn 109 5793 541 $132 151341 WO CM 14% 5331 13% 11% 44% N. ~Wilts <4457•2451.514/141 5413 1433 5.139 5.0 3114 1141 153141 5514 OD% 21% 5371 47% 10% 35% P PO 1944 C.04.450440 760141/19000% 1.1144491•05440 4, , 31230 42100 WV 52501 5415 1..%1 %A 593 553 5320 501 01141 113111 SLIII 5442 40% In IN 44% 51/121 361 1.2% Of II% 194 le% (01 114/ TO44191 NA 54110 $4,50 1LW 5411 % O1Ni 52117 19% 0% 12.117 04% 31% 901 WI 13/149494 %).144414 %NO 14403 51342 11910 $11123 St% 51.300 0031 111% a% Ma $11331 Mt int% 11% AR 494444144auta 450.44.4549/400 $1403 53.414 11433 WOG 53% 51.030 151541 52.0% 704 21% $1.071 LW 05% All %I 0~0 61019 I •Wesn *095.1, 1,11.41 14.303 SLOW 5102) 209 SW 31011 111331 515139 81% 6% 512» 6% 122% 124% It 040% 0 en <44,1.0,131alit 112% 5150 Us Snr Ss» 5% 0111 540 0% 14% 3161 49% 107% Ill% (141 04.54%** New 1.)Pt.r,n1,1.• revive, %LOCO 51540 %AO 51917 31.011 Ks 151.1511 RIM 1121% 0% 534(11 4/14 1240% NM% 111 lanhu tin) a )i$:.•.»., MO $103 $.1:0 $.1:0 Mt 1100 151121 51.014 93% 35% 5714 03% 1(4% 2304 PAC Pap Ill•Went $.)11/4 <,124.7,4.0 14.1:03 54.414 S3033 51.30 % 3250 11310 51.123 901 17% 51/331 014 nt% En WM %LOUP VennwOrk 9 3.1Y4J i IIS1),Scl 5410 WO $9,) WA 52% 3100 15/11 5/41 91% 12% 3621 09% 94% 301 14/1 0954.004%.000 sto,oin (non 5110 50) 140 1.26 303 MOO 11.il 51Y1 30% Ka sus 13% 10% 111% 00 0.1400444.1 IONA% 54.4114Yel NA 41.402 53»50 51.236 31.40 K. 151111 UAW. 9» 0% 521111 1/%4 163% 1(4% III %3v%1 12% 14.303 51100 334% 51143 517 515010 14111 rip or 351% $1131 44% 94% 904 411 4. %.44v1 <4.252•146KCC411/3•11 31450 515%4 SISZO 5704 WI 3450 htl 51.141 /ON X% 1771 43% 144% 113% COS Oa% Prnaun 1)14.21. Vigkette I 14403 5000 $1920 $1.145 547 3150 HI 51.491 107% 11% 51.221 Mt 113% 114% 14116 (4%.<4.411445gy Sfin444,951 51$0 >403 5950 SRO In 3211 31*1 MO 11^ %a 900 6% 11% 143% 11101 ILO ibbearnIMaela Cubnkti,VCC Vail NA 54354 31110 50% 54 50 5121 SIM 121% (54 3132 UM LIM Ill% MX ~Ail tapkniCe• 4)l vi JO iSnefol er SLIM SIC $1.177 % 10 5140 515111 Iii Lea SIM) LIM 1344 IX% CM Cuarrfwneuu. 1414.210 .40 04~1 31403 51.402 3160 51.175 510 10 5472 51.410 120% Lea SIP) Le% 14.1% RN &saw Dware err 4s:rows/ors 8~9 ~re 0 5 for Sr Mown' MerliTint4 are COVrall Oa MO »eel kb fawns &guns reek« 6bcvnteT co.~ <1,4,110/F1Ot A PER.A A8W.CA12 WICIPEUSCM MOIR 46.0.0ASKPWIROStSMSOICEN.SM 7PlAt 72W end WPX (II Inaxles ~Sty dorm Ras ~my alintonol Inteons m aggregate EFTA01097683 'Figure 23: Liquidity and Borrowing Base Analysis at $60 Oil $3.75 Natural Gas- $ millions m Tklar AEPB MAMA Comm Bono•Ant COMBER Fimmang3srpim/Shallal OW 2015/2016 Inducing Additions to Sono•Ing Base Anantim SwpWSItortlall over 2015(2016 Na A6Stior4 to 04,roalat Dam R ns '8 a a7n rn CompayNeme NOW MANNA, NONNI CoaliECC4 Sv.AnCAral.10044 831PlWCCCN%a0ly 144.44.1% Nit 5650 $480 Commlumni 51.000 $480 MAIL $650 $410 MI Comet AvolobOlty II) $550 $480 Cosh $50 5085 raernaNii 115 End $255 $520 FCC Bum 13/16 151023 1$1,884 FTE 16 Net UguRIRY '5163) $201 FTE 2016 Ug06ty %Want 10% ityamee4.4 68 as %d Tong UquitIN 30% 25% En 16 NM D944644 ay 55 wren, 042EI ($3191 FYI 2016 Lipidity % of Stifling .49% .15% SANST StAmon 3-.venneolCompsCallIND3WM414)/CCEINes Wad' SUMO 52.250 53.000 5431 Si 5500 (5842 592 10% 54% (54051 .44% MPO NILluat43 P4314304144 0.034614)X4411Dabal 5525 5750 $525 $154 526 $275 ($386 $69 15% 60% ($2061 -45% WM rAZOnAn144nter 9•404/CIPS IBISiatieWC/CiNigi 532$ $760 $325 $175 $212 $280 ($511 $152 23% 42% ($1281 .19% WPX WPB Inert Bal(Suble1/69.(N.34) NA 53.500 53.500 5931 5614 520) 151,321 5424 24% 11% 5224 13% SO SAMRicia Emig, (321SiatieWII.Diablol 51300 $900 $900 5746 5590 53E 151)21 $538 31% 24% $113 6% Ill NI4pO Emmet ae1/88. 54400 51.250 51.250 $1.249 $336 5150 161,116 5619 36% 9% 5469 27% XEC Omwe4 [Bern 031(Prave)/854(Posilivel 52300 51.000 51.000 5998 5564 5100 (5689 $972 59% 6% 5872 52% NA Nan MoDni4 CaallSiatial/B.1$140141 5438 5.450 5436 $498 $124 5163 ($306 5478 61% 21% 5316 40% Cx0 02.4.00 Rfipta(sE 4333(P43343831Sutoll 53)50 5200 52.607 52.600 599 5500 151,185 $1014 62% 16% 54414 46% XCO EXCO Reourtes 11311taNclICEC•014ble) 5500 NA $900 $789 563 5137 (5363 5627 63% 14% 5490 50% Ls SM ErAnce 632(.54313141,633(1774) 52,400 53.500 51.600 $1,499 $195 51.100 (9141 $1.1150 66% 39% $750 27% AA 4410,0441.0cfC(4 819001044.91.4444) $4000 59000 51,000 52.93.6 $256 51000 151,091 52.672 71% 2715 $1472 44% ROSE RovetteR44.3.4,44 OII$tatreV0O15ta041 5930 Saco $803 5490 524 5100 (5236 $5715 71% 12% 5478 39% 7P1A1 TriaNORP464.334m CailICCC• 5415 5500 $415 $430 $53 5325 ($249 5620 71% 44% $235 27% OD Chosege4134 Ervev, Gal 04.34i0.0884(400,w) $441300 54,000 54,000 $1,937 55.021 50 152.562 54397 71% 0% 56.397 71% TOW T61104406 52/10 NA 54.750 54.750 52.300 5411 50 (5750 5;961 72% 0% 51861 72% PE Panels C441/CCC•1534164) 5318 $750 $328 5327 $131 573 (5146 $386 73% 14% $314 59% RRC 44444 961.3414.1 1447(Po414513•Dutoil $3400 52.000 52.000 51)47 $0 $250 ($406 $1.031 73% 17% $141 56% $9 94449,4I 440TE 6399999(444) MOO 5300 $300 5300 5596 530) (5312 $554 74% 25% 5384 49% BCD 904.1.124 Crook rowel 831Siatia1/04D49131 $450 $400 $400 $426 $93 $100 (6158 $461 74% 16% $361 58% DIP CEP Resources Bal(Suble1f89, 033031 144 $1.800 51.800 51,7% $1.403 50 ($581 52.618 82% 0% 52,618 32% 144 Haim. Resaace4 E3311114041/CIC•0141e) 51050 53.500 53.050 5704 595 5450 (565 53.151 93% NM 5731 59% FANG Obaloodbaildnagy 8303.341031944) 53540 5600 $350 $320 $41 $225 ($21 $563 96% 38% $338 58% OAS 0444 614/440601 621SiatialtetIke043) $2400 51.500 51.500 51,145 $67 $150 1549 51.313 96% 11% $1,163 16% In EP Meta BM 52800 52.500 52.500 53.549 517 SLECO (5101 52.76$ 96% 35% 51.765 62% NIX No,411440 Embeatta Ba1(543ble).43854Sub14) 144 51,400 51,400 51.377 53% 50 ($22 51.750 99% 0% $1,760 99% 1.7504 tWatuoam Resotacts Ca42110;ACCC4114691 NA 51,150 51,150 5606 $0 50 517 $623 103% 0% 5623 103% ONFI 0en4PyResouOes 6111taNel /55(5$404) 51400 53.600 53.600 53.176 519 50 $215 53.414 In% 0% 51414 In% SN44080.4480344 Sint caw& Sa. 'Montag !owe. LP for St Soong orpows nit cowei Or O8 POO Weld th: &an AgivenoWr Nt%w4a,O cownsusegmacos AtICPOZAReal.C.X0 OLFIGVELTSCMAINRA,60O.OASPLPVitROST.SMSAVERSMTPLAt 72 Wend WAX 011ockas vaetary Across R&e anOity etkAronaodensm e01re3AM EFTA01097684 'OUI SO9lJnaS Illeg 04 m r -< 2: n g3 E :g n Figure flik« AtPli 24: Liquidity and Borrowing Base Analysis at $50 Oil $3.75 Natural Gas - S millions ~Icing Surplvt/Shonfoll over 2015/2014. ~eat IlarowlneCapecIty tecluding Addltiom to lorrorrIng Sne 'emneleg 54204s/3~11 over 2015/1016 Na 44ditions to Bonowine Ant Cawmay Nam* Rat Amenian Pannen C481/CCCe 8.02«.21.4 Illas* 5650 CommIt~ 51.000 Ara 5650 AllOsepm Awilabllity (II $550 Caf" 550 ina~mal 911 tamd 5255 Falkeni 15/16 151148) AI 16 tAtt ~By 152931 FTE 2016 LIquidlcv %33.130.4 -38% incremental 88 A5%44 Total liquidity 30% FTE 16 Net IlquIdIty ee. 8111«4«.264 15514. 'TE 2016 liquIlxv54 615taetINI 44% ISO «Kimte, Petroleum 6-(314ble)/C48115table) 553 5750 5525 $154 526 5275 (5482) 15271 60% 15302) 46% k tn SANST Sym% Inwitmem Comp,C4811Neg Wath)/CCC(N8C 9« $10 00 51.250 $1.030 9431 52 5500 (5946) 15121 .1% 54% 15512) 15466) -55% %WEN Sewn Geeennon5 IINPosHOX•15table) 5480 5480 503 $480 512316 5520 152,031) $54 3% 25% -22% WPX Vin (nem Balreuble1/88.Ineej HA 53.500 $1.500 $931 5614 5200 151,525) $220 13% 11% $20 3% PAMP ainjuim ~or Resourcell315339%)/60Z(Neel 5325 5750 5325 $175 5212 5280 (5560) $107 16% 42% 1517)) -26% SD Saraidge Energy 821Stabb)/8-1Stabbl 51.200 5900 $903 $746 $590 5425 151424) $337 19% 24% (SES) .5% NA Ilikorp C .33493 883 MI« 91.400 53.250 $1,250 53,249 5336 5150 1$1.376) $358 21% 9% $208 32% %E 0133.134% Enormt 851(1%.40.41/118.1Poslov« 5254 53,000 $1093 5998 $564 5100 1$1.057) $605 36% 6% $505 30% Flom ~Au Resourco2 911k69%)/8111.15tab%) 5950 $100 $800 5690 $24 5100 ($396) $415 51% 12% $315 39% PVA Pan %ryk.« Ceali5155%)/13.15tab%) 5463 5450 5438 5498 $124 5163 (5162) $423 54% 21% $260 33% SM SMCnem le2(«26161/88(PoN 52.400 53500 $1.503 53.499 5195 53.100 151286) $3.509 54% 39% 5409 35% CXCI Corcho ~Nes le«PoN/1111.1514ble) 53250 52.500 $2.503 $2.500 599 5500 151.393) $3.706 55% 16% 51,206 39% HEI Sorgen C2e6I ven 1331«etsle)/tHkebk) 5450 5400 5•93 1426 593 5100 (5276) $342 55% 16% 5242 39% PC Pande Cr412CCC.Ikeblel 5326 5750 5326 $327 5133 $73 (5126) $307 58% 14% 52» 44% 6C0 exC0 Resources 11315teble)/CCC.(5146k) 5900 %A 5900 $789 563 5337 (5396) $594 60% 14% 5457 46% CHA 056.34663ke &egi lel Irovw.«)/18.(1%.50Nel 54,030 54.000 $4.030 $1,937 55,012 SO 153,574) $5.385 60% 0% 55.385 60% RRC Ra«, Rosoutcos Ela2(P*0288.15t6034) 53,000 52.000 52.000 $3,267 $0 5250 (1697) $901 60% 17% 5653 43% AR Ant4f0 ~Alt BINUOloWN33030141 93/139 $3.000 $3,010 $2.506 $256 53.000 151.396) $2.367 63% 17% 51.367 36% SN Sambu (nam, B3iPoillt-IPotl 5450 5300 $300 5300 $596 5300 (5442) 5754 63% 15% $454 38% TtW 7%116401 82/8. NA $4,750 $4,750 $2,300 $413 50 ($906) $3.805 67% 0% 51905 67% TPLM Triangb Petrobum C521/CCC. 541.5 5500 $415 430 $53 5385 (5271) 5597 69% 44% $212 24% FANG Diamomback Enet«. 831P4s1.1161PON $350 5600 $350 5320 543 5225 (5149) 5436 74% 38% $213 36% CUP OUI Resource, lel(Sublelffle.Isteme) to. 53.800 $1.930 $3.796 51,403 10 ($2348) $1.350 73% 0% 52.350 73% HOI Ne«4«61 Explonmon lel(kuble1/1388-(5«flel HA 53.400 $1.400 $3.377 5396 10 (406) $3.368 77% 0% 51.363 77% LIX% Ughbutom Nesttun«, C2421Neg,VCCC..(Negl HA 53.150 $1.150 $406 SO 10 (593) 5513 85% 0% 5513 83% 045 CoNs Petroleum 621ketk)/1145t4bk) 52,000 53.500 $1.500 $3.145 567 5350 (5191) 53.171 86% 11% 511/23 73% I« Nokon Resowm C4811544ble)/0:C•1501:441 512360 53.500 $1.050 $703 595 5450 (5329) 53.119 90% 36% 5669 54% ON* Otnbury Rex4.963 11115tabk)211111544618) 51.600 53.600 $1.600 $3.178 519 10 ($97) 53.101 92% 0% 51.103 92% F.PE EP Erm«. 82/8 52.500 52.500 52,503 $3.849 $17 53.000 (5167) 52.699 fl % 35% $1.699 59% .59/4w 0933$014 8~ ~arr/SA «tren fan C« falne kawng ~menns nz• co...falbyOS nr~ the bacon Ferneene~ 6~9 CON.,,WIC~,M1" , AMCPCR.AR.BCOXXCVANO.M.LTSICAMMt4.0.0ASKPv4ROSCSIZSWGEN.SACIPtAt 72w ano WPX Ill Inc!~ ~~1y Klan ABU anditny aktirawl ~eie en ~fløte. EFTA01097685 13 January 2015 HY Corporate Credit Energy Hedging Screen Hedges are short term in nature and most important for 2015 cash flow. To the extent hedges preserve liquidity and operating momentum over the next year for E&Ps, they remain an important tool and differentiator. In particular, should the commodity cycle snap back more quickly than expected, those with hedges that afford more growth-driven capital programs in 2015 can carry that momentum into 2016. However, those E&Ps, which have made more drastic capital cuts, will have more ground to cover in terms of ramping production back up to reach optimal efficiency. Looking at the top quartile, one can see higher cost E&Ps protecting against down side (DNR, HK, MPO) while other E&Ps hedged oil price risk out of recent acquisitions (HILCRP in Alaska). The top quartile is significantly more oily (average: 65% of production) and seems to have been more defensive about protecting against oil downside. On the other hand, the bottom quartile averages —55% gas production and given the performance of gas recently, there was less to protect in the way of cash flows there. Page 32 Deutsche Bank Securities Inc. EFTA01097686 'Figure 25: E&P Bond STY Versus 2015 Hedged Production Levels 4,500 4,000 3,500 3.000 Z500 2,000 1,500 1,000 500 %EC 0 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 9.76%28 • MPO 10.76%20 • LTSCN 625% '20 • 9.75% 20 • AIMPER 7575%21 • SD 7.5% '21 •XCO 8.5% '22 TPIM 6.75% • '22 5475%22 iKUS 8.875% '21 PVA 8.5* '20 • • W11% '20 SEVEIENt825% 70 Roe .75% 7* SN 6.125% '23 EPENEG 9.375%20 • FANG 7.625%921 OAS 6.875% 22 • PARSLY 7.5%02 ROSE %645%21 NIX 6.875%20 DNR 5.5% '22 OEP 6.875% '21 AR 5.125% '21 • • • *CHK 4.875% '22. W 6.6% '21 .S . ii m p i c 6- ILCRP 7.626%21 • • • COCO 6.5% 73 RRC 6.75%1 60.0% 70.0% 80.0% 90.0% 100.0'' Sane Otweren• OveA mnowy dot &barb. g hvoce LP rftt kalu,,ng reenoon not cowee Ov 08 fl YASI de lacuna Awn TRW lOxertag congman PCR.AR.8CO.PCOJAVO,(PCLISOVAMAMPO.OASIT.IVAROSESIKStVGEItSkTPLAt Mg owl 'VP% -13 O y EFTA01097687 -o 10 0 F Pm Figure 26: Hedge Ratios by Revenue - 2015 (top) and 2016 (bottom) 100% xx 1 2 % 33% 3 4 % 34% 16% 14% 28% 80% 60% 1st! I 1 65% 40% 20% I 0% ! aR wPx SAM! SD 'CO -20% • Gas - Hedged 100% 80% 60% 40% 20% 0% 16% ONR 2 32% i1 31% M[ W 1161 UPS 11111111 r‘ 33% 111 FWG {TICK NM I U R WA ROY 4N 1t WIN INA 151 u Gas Unhedged • Od - Hedged Oil - Unhedged • Gas Hedged Gas Unhedged • Oil Hedged • Oil Unhedged &wee Orotscnottsmt conweIaOra. Olcornixeg Inner LP toe Inebnowngcoenoonns n cowed by 08 Mr nett sly fireceirs *gores plea Obanerg consanto evaares ern?. AMEPERAASCO.O12, AN0SPLOW4IAYR440O.OASPEIVAROSE.SIKSEVOPOUTPLAtaVione WP,C 1 EFTA01097688 13 January 2015 HY Corporate Credit Energy Adjusted Cash Margin Screen On the revenue side, locational differences in major plays drive realization per unit. The cost side of this metric incorporates relative costs given play type (at current levels), maturity of an overall portfolio (efficiency gains), corporate costs (G&A), and capital structure (interest burden). Our "adjusted" cash margin (includes G&A and interest costs) will skew other basic insights into the more intuitive lowest cost producers (i.e. best base assets). Additionally, we would note that relative interest burden could be improved with possible restructuring or distressed debt exchanges leaving solid assets in a better place to perform outside limited capital structures. Important to note, we have not incorporated decreased service costs across our models despite recent announcements from producers about 5.15% deflation with more likely to come. We believe this is more conservative especially as the service costs will move down slower than the immediate decrease in oil prices. We think looking at cash margin in conjunction with play-by-play breakevens is a valuable exercise. See Figure 27 for our equity counterparts estimates of breakeven oil price for an IRR of 10%. IFigure 27: Breakeven oil price for US onshore unconventional plays illinons CO Pea kre 10% MI // cip /0,74/10//247/ (7,0111,01/20W/e, J./ SONCO" ONISCAS. tom), *am. en Deutsche Bank Securities Inc. Page 35 EFTA01097689 Deutsche Bank Securities Inc. 'Figure 28: E&P Bond STW Versus 2016 Cash Margin - 8/Boa 3.600 IL /IV* CU • $•8e— MPO 10.76%20 • ac00 2•00 LTSCN 8.026%'20 MHR IlliS --- ---____ vr.n AR% '0, • SD 7.6% • AMEPEP HKUS 8.876%21 7.376%31 • PVA GS% 20 • MIA 76%'22 lye RRC 5.75521 • SEVGEN 8.26% SM 6.6% '2 AR 5.125tw22px• g1/4, CHK 4.875% 20 ty .126% '23 HILCRP .G46.875%21 2 240SE 5. • 22 XEC 6 7.625% 7l • *ops 6.875% DPIR 5.5% 22 % 21 NFX %72 SCERISINLA31 POSLY 22 6.875% 20 20 5% '22 FANG 7. • W 6% 20 • .21 660 a I CX0 SA% • 45.00 $000 $600 $10.00 $15.00 22000 226.00 13000 Sawn, °cum*. 8seA <WIPP./ 07)(8. Stanteg fence LP fa' rftt Mgvry aP.wnei not ca,reci 0v Oa fly* »et,. de forocasts Awn mhG 6tomtwg °Gwen, egmoms au?' AMCffRARBLYLCROF AIGLPLOSVUMR4600.0ASPLPMROST.SASO/CENSMTPLAtRiV are wPX $35.00 $40.00 EFTA01097690 13 January 2015 HY Corporate Credit Energy 'Figure 29: Marginal Costs FY15E Sel sn $31. $34 3 521 I nrM ill G&W =J a in' 71 1 ' tam' AM = 1 (11 (11 = 1111H T ill I I I I II I II ,fro t•il• e t e g +t el . °P ette 4009 /.0.,#4e sirtee+ 4," Santr Dances. ent cameo/ Mat Awning Amore L. For ern tabs., concentv not convect by 08 MO field rho broom; Sum renxe 61bombog ccneenws nummos AMEPERAIC8C0.0c0.0WaSMLISCWAYAMPO.0.41PESVAINXIEStatWEN.SACIAMTLIN and WPX 'Figure 30: Cash Costs and Cash Margin for FY 15E La tN IRO So mo easily Oily mai t== j ,fr 4. neeetko ste,,, efr # <et ea 4.* •Total Calk Cost • Cal Mania Rai:talon Soured DAirlth0 &WA alsaary SKR @barite'? FnMCO tP far IMIOAbworlg.COMpas au Sank 2 by 08 Stra mot um, fordalista 4tunis. WWI BbOograrg conamsta Ofidethifila ony. AMOMARSCROC4MPASEPELTSCWAYRAMCWASP{PVAROSEMSEIGEMSAt IRA( YEW ma iMPX Deutsche Bank Securities Inc. Page 37 EFTA01097691 13 January 2015 HY Corporate Credit Energy 'Figure 31: Marginal Cost FY16E SW NO P al G MO Si, 0:=1 Gassy wY naN tie cm= 40 e s00 P # t yP #'• es' k e,- teen t ee Saae &View &at coma", dara 61b:mbeg Iwo*, L. "'rely foMmon g convened not cowed Oa Hect the brown eguees #w1 Aborbelt coweasto <similes <et NAPERAlteCOXAVANGEPLOWKWYAMPO.OASPEPVAROSESPYMCEN.SWIPLAIlLin•nci wPX 'Figure 32: Cash Costs and Cash Margin for FY 16E 106 00801, Oily Oily ws Nnurl I I I Yw • Total Cosh Cal Cosh Mays ft Mibliffill• Source Dam". &Mk ainuliMy ara Bbombeg Panto LP For No fol.bwow compas no: convect by DB lfpf AWL es foneasta Vann 'eta Erb:rotas; conantius a:Wilt TINS OW ANEMIA, I.SCE).0,4FAMEPCLISCA(A4YRAMCIOAAPE.PVAROSESWEICEMSRIFILMIEW end WM Page 38 Deutsche Bank Securities Inc. EFTA01097692 / 13 January 2015 HY Corporate Credit Energy Commodity Mix Screen Despite bear oil markets, we still see oil mix driving higher per unit cash margin for the oilier E&Ps, especially a credit like offshore E&P Tullow (TLW) with significant assets in the development stage. We concede, in this analysis, E&Ps with long-dated and core natural gas reserves screen poorly here despite clear long term viability. For example, RRC, AR, and WPX are screened in the bottom quartile here despite roughly BB ratings. Deutsche Bank Securities Inc. Page 39 EFTA01097693 Deutsche Bank Securities Inc. 'Figure 33: Hedge Ratios by Production - 2015 (top) and 2016 (bottom) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 35% OK si 52% 21% 19% I 42% 39% I WS As OM 36% 36% • 41% (KO Iftli MPS 4914 57% 22% • IMX) LISCH MK* • Gas Hedged Gas Unhedged • Oil Hedged Oil Unhedged • • 34% 42% SS% I Is LIM SA. SO 39% I I 48% I I 35% I IMI I Pt PAL Mutt a 39% % 45% 47% a; 8 n a 1 tn I I i 1 fn . ! m to OM a -2 P. I I I I I I I I I I I I I • Gas • Hedged Gas Unhedged • Oil • Hedged Oil • Unhedged Sawn Oeyesok Link co.nowydwa. (Mwritatp Inn. LP t0( MploPoiwy reerponvw.x copycat)), OP WthineW me knows Awes WP:a Spa leg cwwww, °women OM' A PCPAP.8CO.CXXWANO.LPEL,SCAMMUPPOOASW.PWIROSCSKSOICEN.S4(1•111112wand wPX EFTA01097694 13 January 2015 HY Corporate Credit Energy Conclusion: E&P subsector — maintain Underweight Keeping all of the preceding in mind, we believe investors should be underweight the DB HY Energy E&P Index, and maintain this recommendation. Last year, the DB HY Energy E&P Index was the worst performing sub-sector in high yield. HY Energy was down -6% for the year, which compares to overall HY being up —3.5%. In particular, we see little room for E&P subsector outperformance as these smaller HY credits can't really continue their aggressive growth strategies of the past as they try to make a path to neutral FCF. In short, we believe these credits can stay in and around FCF neutral but with little opportunity to expand the asset base and delever. We expect the best they can do is survive and reach the other side of this commodity and credit cycle. In particular, we see more value in the "higher quality" El/CCC credits like Halcon (HKUS, BUY-rated) and EXCO Resources (XCO, BUY rated). Given this lower-quality bucket has led the way down in energy, we believe upside/downside is more positively skewed there. We understand the natural tendency is for accounts to reach for quality in the BB area. Our concern with this strategy is that these names have outperformed thus far. We worry that if HY energy credits take a step down due to seasonally weak oil in 1I-I 15 that these names will take a disproportional hit. Therefore, we suggest that accounts stay in the BB-rated credits with upwards trajectory related to possible M&A like Cimarex (XEC, BUY-rated) and to development of new higher margin plays like Newfield (NFX, BUY-rated) in the SCOOP/STACK. We believe both of these credits still also have IG upgrade potential even in this market. Lastly, one of the most important reasons why we are maintaining our underweight stance is driven by our suspicions that early 2015 fundamental weakness in oil will mean that investors won't "miss the trade." Despite positive data points around slashed capital budgets from many HY issuers and even selective capital infusions (LINE/BX), we are moving back towards the energy sector wides seen in December. More specifically, looking at LINE bonds, which were the direct benefactor of an effective capital infusion from BX, they are trading at pm-funding announcement levels. In our minds that means the market isn't giving much credit to that increased liquidity either because there's a perception that more capital is needed or on a macro basis, that we just aren't there yet. Deutsche Bank Securities Inc. Page 41 EFTA01097695 13 January 2015 HY Corporate Credit Energy DB Price Deck and Commodities Outlook The current DB commodity price deck and outlook are summarized below, as presented in our Commodities Weekly (published January 09, 2015) and our Commodities 2015 Outlook. IFigure 34: Deutsche Bank Oil & Natural Gas Price Forecast WTI- Brent WTI USDibbi) Brent USD/bb0 Spread Nymex Gas (USD/bbl) (USD/mmbtu) WTI/Gas Ratio 2013 98.01 108.74 -10.73 3.72 26.3 Q1 2014A 98.61 107.87 -9.26 4.72 20.9 Q2 2014A 102.99 109.76 -6.77 4.58 22.5 O3 2014A 97.25 103.46 -6.21 3.94 24.7 O4 2014A 77.00 80.00 -3.00 3.85 20.0 2014E 93.96 100.27 -6.31 4.27 22.0 Q1 2016E 52.50 57.50 -5.00 3.90 13.5 Q2 2016E 52.50 57.50 -5.00 3.75 14.0 Q3 2016E 55.00 60.00 -5.00 3.65 15.1 Q4 2016E 57.50 62.50 -5.00 3.70 15.5 2016E 55.40 59.40 -4.00 3.75 14.8 2016E 65.00 70.00 -5.00 3.90 16.7 2017E 70.00 75.00 -5.00 4.25 16.5 Score. fleombem (wow LP. Orenvene &w* US Natural Gas - Production Cost Declines Promise Weaker Pricing Production cost declines in thermal coal and US natural gas mean that oversupplied conditions in these markets in 2015 will likely lead to further downside. In thermal coal, lower costs have been achieved through reductions in workforce, renegotiating mining contracts, cutting fuel expenses, reducing strip ratios and postponing sustaining capex. We expect weakness in producer currencies and crude oil to translate into further cost declines, although this could be offset by a partial rebound in other costs. Limited deviations from the longer term trend in supply growth matched against new signs of demand weakness suggest that oversupplied conditions are likely to continue and that declines in dollar-denominated costs may be a guide to future price developments. We lower our 2015 price forecast for Newcastle FOB to USD60/t and Richards Bay FOB to USD63/t. Production curtailments remain limited, despite the Glencore shutdown of Australian production for 3 weeks in December (-4mt). Furthermore, any idled mines will be available for restart in the event of improved market conditions, limiting the potential upside. Page 42 Deutsche Bank Securities Inc. EFTA01097696 13 January 2015 HY Corporate Credit Energy In US natural gas, estimated development breakeven costs (excluding finding costs) have declined by roughly USD0.60/mmBtu in the last year owing to well cost reductions, more extensive use of pad drilling, and increased numbers of wells per pad. Production growth has recovered sharply from freeze-offs in November to average +4.3 bcf/d yoy. While we expect this growth to slow to only 2.0 bcf/d yoy in 2015, we believe the market would be balanced at only 1.3 bcf/d yoy growth. Therefore we expect storage normalization versus the 10-year average by the end of March, and building surpluses over the remainder of the year prior to Winter 15-16. Consequently we lower our 2015 Henry Hub price forecast to USD3.75/mmBtu. Overview Production cost declines have characterized both the global thermal coal and US natural gas markets in the past year, with further USD cost declines likely in thermal coal. We expect oversupplied markets to persist over a multi-year period in thermal coal, and over the whole of 2015 in natural gas. Consequently, lower costs of production translate into a lower likelihood of supply curtailments and greater potential downside. Natural gas supply growth raises oversupply concern An extremely cold winter in 2013-14 ended with storage gas at the lowest level in both percentage terms and absolute terms since 2003. As in 2003, this was followed by a very strong injection season with 2,770 bcf (59% of working gas capacity) added, as compared with 2,491 bcf (61%) in 2003 when measured from the end of March to the first week in November. This was facilitated by the strongest production growth rate (+3.1 bef/d) of the last nine years apart from 2011. Of particular note is that production growth accelerated into the end of the year, despite the weakest pricing also occurring in Q4-14. 'Figure 35: Dry gas production growth and Henry Hub 'Figure 36: Dry gas production (bcf/day) g Jan to Nov prod. growth (bcf/d yoy) 74 2012 8 o Henry Hub Avg 72 . 2013 7 0 0 ($lmmBtu) 70 - -2014 6 Forecast A 5 68 November O 0 /-% freeze offs 4 3 0 0 to, I I i i 66 64 ,_ 11 ympsvti v 2 I I 1 I I i I 62 0 60 2006 2008 2010 2012 2014 \,) l l l l l l l • . Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Sow re. Abcogorp (wore N. Benin Conn. 08 Mequiy flosowch &wren 00,1104 CrIfe9y, Oeu:selhe 96N. Continued strength in production growth poses the greatest risk for pricing in 2015 and we lower our price forecast to USD3.75/mmBtu on expectations that supply will exceed requirements in a normal-weather scenario. A shift towards lower costs has been facilitated by tighter well spacing and longer laterals, while we do not expect reduced drilling for tight oil to detract substantially from associated gas production growth. We expect these costs to remain lower in 2015 versus 2013. However, a continued backlog of takeaway capacity in Northeast Pennsylvania may hold back growth below what it otherwise could be, owing to negative basis relative to Henry Hub. Deutsche Bank Securities Inc. Page 43 EFTA01097697 13 January 2015 HY Corporate Credit Energy 'Figure 37: New drilled gas supply breakeven 5 4.5 • 4 3.5 - E 3 • 2.5 • 2 1.5 • 2013 2015 2014 2 4 Sam' Wood 'Wayne.. Deutsch: an 6 8 lactid 10 12 'Figure 38: Dominion North Point (USD/mmptul 76 A 5 4 3 - 2 - 1 Jan-14 — Horny Hub Dominion North Point Mar - I 4 May-14 Jul-14 Sep-14 Nov-14 &km. blovenbeg Mora tei. Data's tar* On a year-on-year comparison we expect lower demand from normalized winter weather to be offset by growth in power utility generation demand and industrial demand. Winter-to-date weather has been quite close to average in cumulative HDDs, with generally mild weather being offset by a pronounced cold spike over 12-21 November. This cold spell also triggered freeze-offs but a retum to mild weather resulted in a quick resumption in production to the highest average of the year at 71.5 bcf/d in the week ending 5 December. Figure 39: Natural gas supply & demand (yoy change) 'Figure 40: Storage as % of working gas capacity 2.5 Supply 2.1 Demand 2 1.5 0 0.6 ` 0.5 v 2 0 -0.5 -1 0 os -o 3 co 0 A.% To : t c .... O. .., 8 5 E 8 -1.5 0. -2 Soso t600 I. /0A. Otvascne AM 100% 4135 bcf 90% 80% 1718 bcf 70% 60% 50% 40% 30% 20% 10% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 10Y Range (%) — 10Y Avg (%) 2014 2014 Forecast 2015 Forecast Sawn. OS COCICK &tante Conk Overall we expect that the market could be balanced and restore normal storage levels by mid-year if production growth averages 1.3 bd/d yoy in 2015. Consequently, our forecast of 2.0 bcf/d yoy growth implies normal storage achieved by the end of (11, and building surpluses relative to the 10Y average (measured by the percentage of working gas capacity) over the balance of the year. Therefore we lower our 2015 forecast for Henry Hub to USD3.75/mmBtu with downside risks over the summer in the event of more aggressive production growth. Page 44 Deutsche Bank Securities Inc. EFTA01097698 13 January 2015 HY Corporate Credit Energy 'Figure 41: US natural gas supply and demand (bcf(day) Bcf /day 2013 10 2014 20 2014 30 2014 40 2014E 2014E 10 2015E 20 2015E 30 2015E 40 2015E 2015E 2016E 2017E CONSUMPTION Residential 13.6 28.8 7.4 3.6 15.8 13.9 24.9 7.2 3.7 15.8 12.9 12.9 13.0 Commercial 9.0 16.5 6.2 4.7 10.3 9.4 14.4 6.0 4.6 10.3 8.8 8.8 8.8 Industrial 20.4 23.0 20.0 19.8 22.4 21.3 23.8 21.0 20.8 23.1 22.2 23.1 24.1 Electric Power 22.3 19.7 21.0 26.8 19.7 21.8 19.9 21.8 28.3 20.5 22.6 23.3 24.0 Other 6.0 6.8 5.9 6.0 6.3 6.2 6.8 6.1 6.1 6.3 6.3 6.4 6.4 Lease and Plant Fuel 3.9 4.0 4.1 4.1 4.1 4.1 4.2 4.2 4.2 4.2 4.2 4.2 4.2 Pipeline and Distribution 2.0 2.7 1.7 1.7 2.1 2.1 2.5 1.8 1.8 2.1 2.1 2.1 2.1 Total Demand 71.4 94.7 60.4 60.8 74.4 72.6 89.8 62.1 63.3 76.0 72.8 74.5 76.3 YoY % change 2.3% 7.4% 1.3% 0.0% -3.3% 1.7% -5.2% 2.7% 4.1% 2.2% 0.3% 2.3% 2.4% DOMESTIC SUPPLY Alaska 0.9 1.0 0.9 0.9 1.0 0.9 1.0 0.9 0.8 0.9 0.9 0.9 0.9 Gulf of Mexico 3.6 3.3 3.4 3.1 3.1 3.2 3.1 3.1 2.9 2.9 3.0 3.1 3.2 Other US 65.7 67.9 69.6 71.0 71.1 69.9 72.1 72.5 72.6 73.0 72.6 74.1 76.2 Marketed Production 70.2 72.1 74.0 75.1 75.1 74.1 76.2 76.5 76.3 76.9 76.5 78.1 80.3 Dry Gas Production 66.5 68.2 69.8 70.7 71.6 70.1 71.9 72.1 72.0 72.5 72.1 74.0 76.2 YoY % change 1.2% 4.2% 5.3% 5.9% 5.8% 5.3% 5.3% 3.4% 1.8% 1.3% 2.9% 2.6% 3.1% Net Storage Withdraws 1.5 22.8 -12.7 -13.0 1.0 -0.5 15.6 -12.1 -10.8 1.7 -1.4 -0.7 -0.2 Other & Balance -0.233 -0.2 0.6 -0.1 -1.0 -0.1 -0.9 -0.2 44 -0.2 -0.5 -0.5 -0.5 Total Domestic Supply 67.8 90.8 57.7 57.6 71.6 69.4 86.5 59.8 60.8 73.9 70.2 72.8 75.6 LNG Gross Imports 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 LNG Gross Exports 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.6 0.3 1.2 2.2 Pipeline Gross Imports 7.6 8.4 6.5 7.2 7.2 7.3 7.8 6.9 7.4 7.4 7.4 7.4 7.4 Pipeline Gross Exports 4.3 4.7 3.9 4.2 4.5 4.3 4.6 4.7 4.6 4.9 4.7 5.0 5.3 &tom 16 00E4,4 Dusias SAM Please refer to DB's Commodities Outlook published on December 16, 2014 for the more detailed discussion on our commodity outlook. Deutsche Bank Securities Inc. Page 45 EFTA01097699 13 January 2015 14V Corporate Credit Energy E&P Relative Value and Comp Sheets Figure 42: Industry Relative Value XWN4MOYl8 Films** Redonse19401“ E;112~EUIDIESEZEUEEELMEMOEILICSEMIMEMEICEIELEIEDIZEIEBEI9nmazia ~4.46EtirgyP4ifn I17 223 217 453 756% 128% 694. 77 14 252 NM 92% 704. • • 2.149 2816 3.44711403744 955 1.688 1923 2.729 122% 95% 42% 647 3085 1.506 130% 85% 41% 5 II 12 2.079 3994 4916 B4.4434. ONA 411 558 563 577 n% 42% a 211 383 346 82% 36% .108. 181 509 638 1.018 Cnw9tlu 17.279 16975 19.476 18266 47% 13% .18% 5,063 4225 4.09) 33% -17% a 837 4.713 155 . 1 13.291 11.569 11,649 Cmn. En727 1.933 2.735 2443 1,915 23% 27% .22% 1513 IR» 29% 16% 36% 5 315 924 1.430 1.645 ond» demma 22M 2177 2430 2577 24% 21% 1.412 2502 1.775 22% 20% -11% 3.430 33579 4.141 ran 440.00 2434 2.430 2 401 1595 24 3% 31% 1.639 1321 IV .14% -30% • 3.2.7 2597 1415 bro» 1534 Energy 201 432 4» 452 In% Ia% 4% 156 391 315 306% 133% -19% 18 410 flo 681 P EN77/ 1,772 2265 2110 2200 45% 21% 1% 1.171 1573 1106 .12% 31% 2% 345 4209 4.4)0 4.772 (bo 54544•04 hu 675 594 452 578 4% -II 11113 393 305 33% -19% Ti 21 22 lat 1.121 1.692 FOn:Gi 459 329 249 539 36% 46% 116% 166 473 364 474. 186% 110 94 600 2469 2572 alandwooreas 977 1.165 1.178 1905 2113% 21% -19% 605 744 EG 405% 23% .12% 3 3.185 3167 8.685 kø-654re, 2..191 2.320 2301 2349 23% 5% 2% 1.641 1572 1.073 77% 2% a 140 155 11 1.525 1.438 2228 /.54.43.1494. 2.58 7)6 430 397 -5% ED% as 161 113 NM 91% a 42 680 1.437 1.437 1.1046164 Pocioloorn 496 642 641 452 104% 29% 40% 337 476 309 114% 41% -374. 33 1.701 1.709 1,991 04100 E 456.110/. 2.123 2.180 2193 1.569 -21% 3% •104. 1.258 1393 1.19) .194. 6% .115. 593 3,694 2.767 2533 Om% Porrokorn 1.134 1.336 1,471 1246 fa 27% .13% 907 974 79) 62% 21% .19% 92 2.536 2685 2751 P4rONEMgI 115 257 311 374 214% 110% 20% 211 237 lar% lb% 12% 19 430 566 743 Penn Vegne GI Ml 695 ese 213% 71% 54% 306 401 180 28% 33% 70% 1.911 1.186 1.401 or" eescuse 1083 3.411 3.479 3215 13% 13% 1.496 1.107 .3% 0% .21% • mb 921 2.935 2218 2210 44421247vron lai 1227 1.901 2208 21% 13% 7% 1.056 1.157 1.123 21% 10% 4% • • 3.141 3.153 3,381 744 ~n 130 1.566 3033 699 40% 24% 1302 714 515 45% 19% 191 • 1.300 1.578 2166 Sym, 1325 1.072 LOG 160 4% 4% .nry, 616 622 467 9% -11% -213% 113 • 3.244 3.100 4391 ~654 E41;,/ 1.458 1556 1.610 1.382 .1% .19% 529 794 683 .15% 50% .111% 1,585 319 3.196 3,125 1524 24.1 Enda 2287 2484 2.413) 2.349 45% 8% 1.458 1565 1238 44% 7% -21% 282 120 1900 2,200 2.779 5493.5 Enord xe 613 675 EaS 614% 121% 209 454 413 NM 119% .10% 154 363 593 1.746 1212 uk. 01 2647 2565 2.397 2904 13% 4% .16% 1.967 1521 1213 7% -13% .29% 353 . 2261 3,039 4517 ande Partleurn 258 498 558 575 827% 116% 9% 103 226 220 Nil Mi 4% . 818 874 NI WP.4 En:r. 2.849 3,235 3210 3465 14% 748 3083 320 .23% 40% .11% 99 651 22 2,326 1507 1507 115 223 249 3 46% 401 40% 71 d5 113 47% 49% 46% • »4 CM ANN 77.2)9 M973 1947$ 71056 756% no, 116% 621.1 4225 4.050 406% 1.16% 1.565 4.710 1.1151 sans 71508 17.619 Men 1942 2241 2102 1223 101% 31% 2% 914 1509 110 ff % 4$15 4% 198 2111 la 2.311 2106 1.1431 Medl» 1,125 1,311 1921 1241 24% 21% .7% 447 715 110 21% 23% -14% 112 - 1405 2200 ia QnPrry .1114,11044~? ~1% nannE:fficrernarafflEMEiENCEIIII:ZZOCEIE=ICE:ICIEZIEMEMES3 An.,a, Ere", ?mi w I ”:5 4 ,>1 to.144 Z,441 55;Z: >AU J.{6 eT Tro ::7 : 44, 447944.44 8.a. ens.. 170312 291E 31040 15171 142013 32141 247 42» M71 4055 16.172 7.)31 191.417 35911 31%174 51.144 53927? (49 410 IR 91 1001 112 1.177 112 1124 74% R4 44% 436 .R.. ' 831, b% 4% 30% 44%. 30% 614 11444.1P Daa 119140 141.103 931012 11165 76.441 76461 1.441,733 1101361 1A2748 OG 434 345 3% bl 4% 75% b% 62% lirt C41•01 &upi 13S2µ 154145 193128 21257 17.1.7 3070 252.74) 314455 351µ0 114 3$7 W1 10% 194 12v We. 49% 344 Cui.toRmaena 75051 91.010 101581 21.121 15151 X011 201.84 243.218 »1526 ib 675 46 204 b% hb 374. 36% 4,44,,, 4,4A6 Durry.0214.4,Esn 6(06 1.751 4743 lam, telt z4114 274 mos Mo 21.14. 1144 143432 15131 lans 41.41 ' 7 4,1g 421 44 44 ni 446 118 .2% NR 41, RI% 0% 4.1% 6% 11% 6% 10% li% 21% 71% E1Ettg. lemAmaamm h. 92345 194521 74.111 1.175 121.357 Ml% 112191 16«0 1.41 231a 2A/5 27410 2631 15031 /619.17 214420 19t187 271514 127570 517 444 911 373 116 Ml ..V4 e» Wbs e» " a 44, 169. 33% 14% 24, 44. ars 70% 134..0. »lb 35475 6250 474 1144 5414 75157 933.4. 9351 79 105 Na 14 -lb 154. 62% 10% 154. 194 143.844445 8.1813 477% r.w 10131 13.871 14272 723/9 9140 93105 70 252 »5 2574 b% t% 11% 10% 794 råv" Cren 13143 15440 'am tene 17017 24.340 13334 35154 1,241.9 em bo 129 224 on 14,. (0% 52% !fl 152%4 4.47 10352 21137 »700 IA% 230 3.114 21593 37.2% 133479 54 '02 149 403. 74, 415% 41, 59% 72ra 624 11444.4 4.1464% 184/51 251.15 27.145 SIG 7522 724 12.511 71316 PISS lb b bi 15214 40% 0% Nos 99% 57% 64% ~OS (.44YS 0291/41,%411 114) 00 7.448 11 7.104, 14275 117310 10.129 21.(» 11.133 Med 14.714 /0071 15144 217331 74247 276.110 91179 237426 14294 6711 9/3 45 271 116 211 . l 4% ne, ta 374 b, 8% 47% Kb Os 10% 72% 411 ad (6% P444,1.90 Mb 734 ene loe 4,04 6440 4274 b Ib 4027 30 3/ in 114. 44% 543. 43% 24% 10% 344 Pf.Wgfie 1546 11460 14711 4.417 1119 9221 1•33I 56760 7040 112 e34 112 % 24% 34% 26% 27% 21% 41% CEPP.e.9... 3440 170405 181473 15611 12033 28419 5114134 511597 333)15 847 DU 931 a. b. 8% 711. 56% 54% 594 PgrO,Rt4"rA$ 5(441.Re4N+Vef tema 4.:17,4 23234 4127 336181 67.471 13122 4%0 23.017 4,422 21771 17549 344022 443.0 43154,1 16343 517.1 62 173010 910 256 1. 181 311 1.417 474 25% 379 b% 32% 971 20% 77% 37% R% $6% 5414 7211 52% .4;:, LIMT 19140 11144 19141 1995 9241 bia 210572 ladt 1434M 570 411 bl .1b 44 Os et ex at 4%1 54414370444 10143 6060 84018 16570 11554 15414 Mal 02140 18245 Vb 44 41 1% 35% 6% Mb 49% 46% 74% 914444, 114147 149.310 173213 ne 24510 31517 210.0d 31454 9/2.1.2 716 871 1.047 92% hb bs li% 47% 45% 5215 31% 544 140.14 3 018 14246 24526 3364 1514 11311 11230 05111 9040 61 1“ 312 776% 113% 41% 111, 27% 324 47% 34.04 1.251.6 4202 2154 23972 33.35.1 24134 1143$ 4140 06516 54 44 al IN .43. 2% b% 14 161. 53% 46% daee Palen la 2151 214 UG »NI 448 11575 21181 24552 st ea 78 ta 107% ris 5% 9% 11% 90% NTEre4W »51.93 nano men 4627 16.827 91211 44.721 41114 3440 12(0 3135 13%4 .16% .11% P% K% 76% fø% 36% 46% 1.11 020 6814 2611 qI mø Zal 9.178 HAN 14552 27 a 23 41•4 44 4.4 55 n 24% Os 1/43003 754403 15196 6115:1 M4µ 74Ø3I 047» stant 014 010 345 726% 188/1 lb% b% 88% 1344 95% Neon 116517 111412 128.141 4109 1011 1143 44.841 211111 531 b2 6611 41% 41% 474 41% a% 414 31010/ 111116 Nar »661 51.227 4.15,1 11.111 14.1“ 11172 116717 411 410 ab 24% d% 43% »16, 1:1% 41. &unt Co~ny ~fra ~1~4~ rsivna 8033mbe49 F3W334 LP Ru il*to.03w3, cousaloi not coawd br DB NN:* %od. 03, lornusro 43~ nifia ~omhug ~stu 433",:or orh3.. AAISPEA.A&SOACW,F4Viantl ISCIVIHR MPO.OASPF.PVAROUSI4SEME43~TPLISUEW 4m1wrx .9044. 1~18090/044W9 5,0ants av IA1t.4,6 4vxAog .1.6%..wy 31 of 464~y~ Page 46 Deutsche Bank Securities Inc. EFTA01097700 13 January 2015 HY Corporate Credit Energy IFigure 43: Industry Relative Value t•prz I PC, To441044.• =EI Can. ifft,I1 Can T4.44 EMSZCILEELIEWILEMatilatilatilalMaS Tal ~Og 49119/2 EZZLEE:LEEEZEZ abba"» C•oexi 0117641 WZIIMEELEI FCF (511-045 MELEMEMZEZIOS FC4 0161 EZIEEKIEO EMS 4/4mmen Ettave Pram, ttk • 4:5 tak ro. 3 ØRON11Eø 429 1516 61 50 Ile $06) 41 • Na Va ftt 13% 1m /JF tat /4.1 60, 4%.4 (nek 124 741 419 119 3 11 0 0 22O% 142% 149% 42% 42% hm w nu' »i NY 144 Cbampwe Enn/ 9374 1147% %SN 2849 2600 NO 7/2 41 10 170 314% NS 55% Sl% 14A MI 10 Må MY Pynt. Inna 15.2 14:8 1372 532 463 42 SI (41 0l 126% 120% 115% 4l% 48% HM Mi eat 14.1 N14 CCMIORMOMM 1.70e 2.717 1151 NO 448 193 211I 117% IN% 111% 26% 38% 18.1 IM tal 214 ... , 111.1 Dt...tuy Pe..44,11. 1.179 340 446 216 246 Ti iB 96% /02% 79% 23% 31% 4% 1% 24% 3% Named &Ot Emq. 80 112 210 11 44 5 4 4 29% 249% 59% 19% 14.1 /N IN 14 MI EP Entitry 1.541 1512 1124 462 140 MO 369 Ia Øl IN% ila 1.94 35% 9% W Mi eat Mi NU MI 24:014«0M44 9•4 534 321 120 1416 46 09 11914 MI% 81114 71% na I% IM tal 1414 MI 5144,101 14)41 731 346 338 247 IN) 130 /291 01 IR% 148% 117% 0% la /1.4 kI4 FN M4 NY I4.1 _ca Actarata 74 442 2480 415 425 Id 229 0 anc 304% 225% n% 14.1 Ia IN Må MI MI MiccepEtsm 1234 13441 1,144 463 504 53 51 2 1.3% ia% 146% n% 40% 144 MA mg Mi NY tal /4491$ 414tettt RINON44 292 449 612 242 314 40 70 1235% 38314 75014 In% 373% 14.1 1.L. 1.31 4414 MI 14.7star....F44,144,1" 243 422 574 43 246 II I04 32 246% Na 170% 53% 61% 114 1.44 FN M4 NY 14.1 /44444” Et Øvd. 1.340 1210 140 1047 044 106 2:6 03 132% lia 110% 45% 51% W hit eat hit NU HM Ona 844•444un 613 1453 DM 16 5? 02 0 na 212% Ill% 23% 24% 18.1 Ia 1411 214 MI 144977 EN.% 25 47 218 1411 19 5 3 340% 255% 210% 1.11 25% 114 »I FN Mi NU 14.1 Pm.. M42~ • 371 4424 378 344 56 70 6 MI 16% 156% 112% /14 »I FN Mi SY NM OEP amena 1349 1163 124 10 121 lea 1470% ICC% 4.4% 48% 18.1 Ia MI Mi NU MI PeretRonam 1211 1321 1.446 105 144 »3 159 <01 i /a Ila 24% 13% 144 hit mg 444 NY tal 11011194144.4426 433 622 871 91 147 25 CO 4 28 IN% 150% 145% 22% 24% 14.1 1.L1 1.31 MI MI MI 1.949 129 1,441 449 743 22) 382 3 221% 172% 1!0% N% 146% 114 1.44 ra M4 Mi NM $4, 401 544,91.40, Erffat 1.744 2.146 IAV1 562 400 IS? 275 5 21.5% 219% 154% Sa 41% MI 1.11 Nil 1414 MI 59 6.449Y 1413 140 1354 410 SI? 01 (01 146% 148% »7% 45% 36% NM Mi eat Mi Ml HM E^4,91 21 170 482 5 le 100% Må 231% 4127% N% MI 1.L. HM MY 124 MI %Na 04 1451 1449 2400 1456 1349 1(0 104 244 252 91% /46% ION 85% N% MI IN HM M4 Mi NM Tang* 84,00an 49 143 440 2 119 24.10% 421% le% NM MI Ml tal Må /dd WPX Etwpy 1472 1421 1.158 1273 97 10 121% 150% 150% 116% 1394 14.1 MI 141.4 Ml Nil 144 67 214 6 14 Ne .9 67% NO% N% 9% N% 6% fl g 26% 2% 003 7% M.1 9274 11.976 5.505 2.1.8 2.600 060 73 264 262 1235% 4387% 751% 6127% 273% 8% 047 26% 2% 403 7% Nam 1318 1.313 1.310 443 522 125 141 19 9 210% 433% 191% Ml Yl% 94 0.07 28% 2% 0.0 7% 1,144 Va 1,154 142 373 N 104 11924 172% 140% 53% 42% 94 0.07 28% 2% 0.0 7% Santa' Ccmpsey ~os Oho~ 8~ smwox flarrai7 Same t0 itlt FolFoxong ~tarm nx cow9Firt br 08 NN~ elte Avetarts‘gores rein Moombovorwansvsaiun a"?' AMEVERARSCO.C.(01/WGEPCLISPOINAMPO.OASKPVAROStSti"N.S.4. rP(Mrtw *na wPX 4,0%, 7~90 990.2~4 654.,95 n kv nlrerc1..»./åwv 31 of a7 svozaV» "14 Bautaene Bank Securities Inc. Page 47 EFTA01097701 13 January 2015 HY Corporate Credit Energy 'Figura 44: Indus ry Relative Value FledOed C033133333 Pexmcan Energy Ponem kom Finsomes berce Creb. Shempotlke4.4.11Y rom, Eimrttt Cert* Rasa*. 34.1389 Rmasets 014599:i Bab «naw EP bmw Luz Rama@ Ino. Faro« Oil Iltoon ~xc latan3 Ein 14.9n99 Mm« liemorms 510.994 ~Xx^ N.9890 EiOnlon Pterc1bm F84•145.Exy3y I99,3 nou OEP PK•oxKos Rw* ~wron Losem Ilmo.r«.. Sirman *NON* E9901 Ml Enem, Sara« E4e19Y Tut« Ol 714b2le9eimlevm WPIC Enem 591 Mu Win ~Mn Se99. Smurte le~me Senior 3.9999. 30131 Lemar Net Leverne ION 'MMDXX CISMS321MaRI2SCSIMS~~~MZEEWSISEatiaiffiCla 21. 0.4x Pex 124 «Ix Ot« 0.1x 0.1x • tlx 02 tlx 0.5x 06. 0.6x 0.1* 0.4. O.h 1.3. ISx 224 P5a 1M • 28. OAc «7. tlx 0•5x 04* 32 10. 12. *h I.* 0* 02. 0.1. 0/8 tlx IITA 5.7% 003 0.63 tlx I13. 0.5. 031 . . OS 07. 0.99 • 01. 0.7. IM 25. 42€ • . 0.5x - - O* 00. 16* 24. 9.1x 0.44 124 0* • 11.9. 0. 3* 13. tlx lb 2.2. 2.9. 2* 2.h tlx 0.71 0.9u 14. 22c Ib 2.2. 0.5x 0.1. 0.6* 3* lb 2.1. 3.4x 219 2.9. 3.7/ 3* 5* 443. 2,4* 7.2. 5.3x tlx tlx 0.41 07. 2.1* 10.4x tlx 11.1. tlx Ab 0.2. 1.19 11. 15. 3.1x tlx tlx 5.h 2.7t 311. X* 21. bh 2/3t. +.5* 49* 0.5x 0.7. 0.9. 2.5x 2.6* 4.2. 321 LIN Sl* 10* 4.0. tlx 1 Ix lb tlx 2* tlx 4.3. lb 23. 3.4 sa sa 349 2* Ib • 14.5x 12, 3* 1.e• 2.b tlx 2.7X 07, 0* 22x 119 21. 2.h 3.19 119 1 43 24. 3.7z 3* 48. Sb 53.• 5* OS* 1.1* IQ« OS. tlx 348 29. 2.1x tlx 213. 57. 2.7X 42* 2* 20. 1.5. 3.0z 2.7. 25. 2.6x 51a 6.1x 430x a.* 1 lx 1.4x Zb 3* 1.2, 22. I I 2x 29. 2.93 2* I* 23x 3.7x 2.1* 2b• 55* 721 513. 21x 12.6x IM« 2.I* tl x 30x 2* 1.9x 313x 42* 9* 5.1x 22x tlx Sas 3* lix • 1t6• 11.2. 12. 1.3. tlx 1.2. 22 2.9. 25. tlx Zb 0.7. Oh 16. 2.2. 1.8x 2.33. 2.1. 2.7. 17* 22.. 1.0. 2.1. 12. 2.9•• 2.9. 3.6. 3/3. 5.44 4.2. 5* 7.2. Lb SAK tlx 0.4. 10.0. 54 12* 0.«. 34K 0.5. 23. 21. 2.1. 3.«. ZAK 3.6. 5.5* 27. 10.. tli 29. 2.11. 2.0* 05« 1.1* 3.0. 2h 3* 2.2. 26. 4.2* 4.9. 6.1z 91. 11. ab tlx O8. tac 23. • 3.0« 4.3. 1.0. Zb 3.19 tlx SA ab 3.0. Ola 1.6. 145. II b Mw It* 14.0. 44• 4.5x 56* 7.3K 13.8. tlx 71x 6.1. 10.0* 82. Bb tlx 2.h 17. 29x 102. 12.9x 73. 5* LO. 5.9a 2E« 5.4x 56. 549 7.2. 53. SA1 tlx NA eM Mb 9A 17.2. Sb 3* tlx 1b 4.5. 1s• 54. 42. 0.2x 55. II* 10.7. 13.0. 4414 2.9x 44. 2* 4.1. 15.9. 9b 10.3. SA Zb 4.2. M N6 M 9h 40c 0.2x 1,4 43. tlx 434. 48. 0.7. 92. 114« 10.0, 0.9. 29. •.? 16. 60. EV S Leveraae - Milheated 81191, 9. ~mn *mw P-an RIIAro Rescvn393 EiCe8moC•99 Chogmbm End* Cr33,1 trel/ Cifa limane‚ 0498.91999.Nes Obn~ EMck Enn,. EP *mb boa FINKorm4 Pc. Fmni pl 34~ R13~300 map Enn/ /4.3,8xn ‚Lm. *mmcm Mdtraim MISY& ~34143 E993•881, COM PWC4313,11 Parsky Enen3Y Penn Mina OEP PetiNSCO3 199ga ~om Ra*eeARMOJfef Simen Siediti534 Etergy SIIEtargy SYMO Enng 148...00 Tron2kP9roltam WPX Enr9Y Mn 1.9. Nom ~kan 59~ Sattam texx..0 Smlot ~mo TOW Let•ft4,1 No L4gefślal, IfliffirliinEDJWCflEiEa fl ar MiMaflOt~ 02. 10.74 14.33( 127* • N3. 14.33 12.73 09 09* 4* 3.7. 15. 43. 3.7. 35. 4.1. 17. 3.5. 33.711 21.1. 16.7. O.M 1.7X 2.3. 4.a. 1.7. 22. 40% 23. 40. 4.2 4.73 7.63 LI. • • 2.5. 24. lito Il, 2.5x 354 15a ib 73* 52. 0.1x tlx 0.71 0.b 1.6. 07. 0* I Za Oh 07* Ib 7. fi 6.1x 10.0. 0.1x Pb 2.1x 1.9. 13. tlx I* 32. 2.1. tlx 22. tlx 1.1. 11.3. 0.1x O6x fax Ob OS. 1.b 22x 2.h 713x 22. 27x 53* 2.11 7.9. tlx 0.4. Oh 2/9 14. 2.2. tlx I* 2* tlx lA. 22. 2.h 10.1* 13* 151 1.3, 213x 3b 2.9. S.6. Mx 2* 58* 12. 29. 589 74x 6.1. II.4x 2.4x 0.4x lb 4.1x tlx tlx tlx 3,5. tlx 311. 14K 0.h 0.* 14x 0.h 26. 54. 5.4x 2.5. 10.5. 5.4. 5.* 105x 4.7* 5+* 10.5. 7.4. 5.1* 10.6. 0.0c tlx 1.4. 5.1x 5.0. 10.3. tlx 5* 103. LIN 5.0a 10.1. tlx 51. 10.4x 051 0.4. Ib 0.4x 0.7. 2.1. 09. 121 01. 1.1. 2.0* M 114 2* 17, 6.5. 951 12.3* 95. 132* 9.1, 85. 132. N.4* +2.9. 1719 lix PBa 22. 4a Ms 7.1. tlx 341.4 7.4x 4.7. 3.4a 7* 5.9a 3.5. 7.7x 0.5x 02. 0.1* 231 +.5. 11. 2* 32/ 2.3. 2* 12. 5+* 4.44 7.4. OM tlx 3.1x 2.9. 0.7. tlx 249 5.7* tlx 29.• 0.h 53. Lb tlx 58x tlx 00* 0,3x 0.71 sa 42( t7* UP 4b tlx Sb 4.2.4 2.74 3* a* 29a 5.1* tli 27, UR 4.(11 tlx 51x 0.0K 144. 4,5x 14,4* tlx 04x 2* I.5* 2.5. 22x 1.5x 2* 2.2. O* 1.5. 46. 2A 5.6• tlx 0,5. Pfi Ib tlx 2* 3.74 11. 20.• 11. lab (1,3x 12.2x • 01. 04x 254 24. 0. Zb 25x 50x 2.2. 2* 5.0. 70. 28* 50• 23. 4.9. 324 54. 10.5. Sb 5.7x 105x 4* 5.7. 10.5* M M M ib 4.3. 9.0. 6.4. Ab 90x 13* 184. 9.0* 102. 4.8. 10.9. Mx t* 3.1x tlx 1.4x 3.1* ab la 3.1. 4/3. 42x 8.2x O.M 2.7. 19* 5.2.. 27. 3.A 591 20* 1+. 5.9. 4-11 4.44 7.6. 043.. 1.6. Sb 2.5* 7.1* 1.2. 2.4x 70* 1.0a 24. 7.0* 92. +2.5x 31.2. 2.1x 04 I.9. 3.3. tlx 0.h tlx 3.1x 5.7x 24 tlx 0.h 25. 3.1* 0.h Okt 25, 13. 2.h 1I, lat 27. tlx 0h tlx S* 4.1x 9.6, 04br 1.1% 0A Ib 0.94 1.44 tlx 68. S74 .7S4 95. 1019 1234 964 14.74 1324 8.1x 14..b 1.7.24 3474 Mx 31.24 01. 01. lix tlx 2.04 42. Lix $.44 0.7. aA Lix 7.9. 0.7x 10,51. 049 «b I* ih 24 4.0x 2.1. ih tlx 2h 2.fi tlx 0.34 tlx 0.11. 5~44 C44».4444 14474 an 4 17x14441,413444 44c4~44 84447,44,4 Gi444.41P Air 44 .3313,~19 carpam rot conm81/8 08 414X 8411. t/33 Momsro 4.unts Mfw ~embarg ~tau 44~14 014, 4144PER.AR, Gawro FAVREPCI ISC7444714114P0.0.4.7PCFVAROSE.S~EN.SA4IPU117ZW4M14711( Nom. 7~444414.44"4 19u'nsnohv 414 494149 J.444.4,7 31 4.14h4s~ysie Page 48 Deutsche Bank Securities Inc. EFTA01097702 13 January 2015 HY Corporate Credit Energy 'Figure 45: Industry Relative Value Reserves , µAV Conway +.0701 P4.00.7ta 04:40 (nap 44.0un Para Paeonn 114075.00,0040.an xt.2 t23 17/604170 Custfartsan P•nn y run% Rana Hanna 0:74774 %WIN Sanaa 4.4.40431.0.4 3.4 Eat SW= EaNY lead Tao* Peakua 'WS% Eneew MitSMIMISMIlaiSSIEMElaaaMillaaafIESES • NO • 14 1.00 206) 203 6614 I43 193 11$ 1940 100 1746 1216 1.09 1.05 460 MR '@4 I.= 1262 1.06 1303 OW 114 079 74 160 167 202 1.09) 1.106 1431 2.191 172 IS I? 347 937 Oa 425 211 XI 39) au 440 1.03 113? 711 118 Si 291 177 464 IR 222 316 4/4 1.712 1.937 1.007 1.523 NO IS MO IIM 69 la 76 168 252 330 XI 410 1112 215I IRA 1164 Ida 4160 IONI 4.010 446 542 AI 1.129 I.301 ERR 707 0 I.µ9 IMO IMO 131 10 1.20 762 1.316 22 MI 105 204 KA NA NA NA M Itit 0 146 2.703 2771 1799 1144 402 4344 Mal 1.10 1.471 a6 ai 714 lag 014 1161 1.141 679 740 721 910 4330 2642 316 410 MOM 16171 2259 2.417 2.461 3.014 2.456 2810 241 342 301 3245 IMO 1.124 6363 625 453 BA 1.164 2275 434 456 ISS 747 3319 2.450 160 1214 437 22/ NI 914 3136 4440 4406 3202 071 204 6117 3316 2101 6341 2172 127 352 2.346 2141 a 241 4.01 4'42 10 342 26460 3.07 1241 1007 0761 1057 2 700 5196 1221 21.701 6201 9/03 10104 1270 1130) 14 743 2.770 7•424 922 LON 60)0 JAI 731 1.717 6012 7933 3162 2/15 6.191 SSA 1.165 paa 134 4363 27•10) 4.112 3202 14.64% 4271% 641.4% 4270% 116% 11937% 2615% 4007% 193% 374% NI% 941% 260% IP% a 136% 310% 202% 310% 224 408% INS 244% Min 4934 310%. 326% 161% 1601% 1313% 433% MI 204 3)11.. 06% 0% MI6 0% OVA aro ISM 121% 10% 129% 2711% 615% aaaa MY 2486 MK MM 32% 130 i7.4. 10 17% WM% 727% 629% MI 192% CR% al% 10% 14:31 7M% 671% 411% 1374% 1404. NC% MR 11% 399% 71% MI 141% 115% IS% 111% al% 412% 114% 811% 1.74. 020% at% 402% 2(4% 4% 253% 4% NO% 201 550% 146% 170% 60% 369% 414% MO% 435% 3333% 439' 2 771%. 344% 10% 2111% 00% 2746% 1019% 49 101% 97 50% '9% 71% .35% 0% 9% Val% 4270% 6540% 4172%. 93% 90% 1032% M.1% 403% 102% 06 436 34.9% MI% 336% XS 42% 40% '4% /10 NA 15% M% 72% 201 37% 33% 54% 8 10% 12% 32% NA 16% 02% 20% 71 SD% 36% 48% 126 21% V% 34% 173 '4% 16% 63% 61% 74% vs NA ON 10% 34% 02 67% 71% 34% NA 19% 0% 64% NA 4.6% So. 34% NA 33% SI% 36% IU 31% V% 62% 106 82% 46% 44% 126 II% 13% 40% 116 22% 24% 57% 00% 36% 60% 144 10% 14% 41% h% a% IPS 100 42% 40% 61% 116 0)14 67% 34% NA 42% 03% 34% la 47% 46% 41% 240 12% II% 61% NA 12% 14% NA la 14% 11 40% NA '5% 7 I 42% MY 01 41% 120 41% al 0440144/ • 0. 7770, 0,......LoSak. 006404.0.0174,7 Crolfil4 Crew Rsoutes 0408/04.04. cora. 500<eXpt 11 174.7/ Goalanns• ha icea 04 lea R1341/144 Nan Ermsn lartn,117707 Rastas 140,03004vn Waal DO) rake, INS.. 009 40 Pan 900 CEP AMU,. 1147041.4auta R31 1w 84•0441 Svc/am Elan Vaal/ 5.1744.71Erew Tan 01 bunk rdlall117 1,77% Eno* Mn Ilan We 000 r3= I MUialanZIS=MlaCalaiiianialaatla NIP NW 10 0 51.06 51.40 5103 1007 1110 1161 $1.06 51.41 $122 1024 1041 1046 31.67 SEM UM SIN 1216 1191 1232 NM 1216 NA 1262 SS 31.91 31.61 1168 1113 1190 614 1262 MM M72 IOW 051 MO tan 1341 002 $147 1616 ISM 61 41 11.70 II 91 1172 1263 106 MIR 2204 OM MM 1211 MN 9126 1762 SIM NM 1093 WS 9112 1092 1272 M46 MN UM 1204 1214 1191 31.1? 31.44 31231 NW WM UM NA NA NA 1060 3411 UM KIN 1166 1394 9112 9112 $202 an um 51.32 sl4 1233 1121 .1.10 1224 /a HA SOS 1410 1030 10 00 1050 5122 1067 100 UM 1020 1033 1037 100 $1.14 610 017 1132 1377 SEM 100 1121 1M 1122 $'23 51.42 1134 11.42 $014 1137 SIM 510 /321 13 033 033 9034 11.04 1243 $123 41.40 SIM 1222 1077 010 $1.0 MAO 11M 61111 002 014 $131 100 4037 11 0.44 1011 90.71 6.30 10.44 1031 ION 1034 9010 51.14 41.73 1111 11.03 1127 1113 MOS 10.4.1 1036 1000 000 SIM 1117 1017 9019 11.01 MN 11.42 Pi 70 1034 NM MOO 1691 MO 0232 13/3 2320 Mat Ma 6111 14177 MIS 1121 1002 100 MD 6145 032 1191 110 6223 1,414 9191 NM 140 12.42 033 40.11 11.16 SIM 12 42 310 120 SIM 11 75. 1323 1395 • NA 6133 1113 1249 12 74 110 11 76 12.4 $421 03 70 105 1124 1226 5111 1161 $136 1204 123) 1247 11.73 $131 3,394 1137 1643 1270 1427 070 SIC 174 1131 317 9311 SOS 40 71 5070 $4S9 7723 6016 161(0 1112 12.41 Sane' Comma", 'Wet 0,00evesele aµot £uMml *bombe, tow c LP £6r 00 700406790304110141704 comae 6P MAP, 01.61 sly beacon's towel 'OWE ithambep consensus to onY: AMEPERARSCO.Or0MPI0IPELTSCIOANALIP0.0AS.PI.PvAR0SE.StStkaN.SUIPLAtin am, wPX Nov Iron, b mookon's knees see 4r Me wo.enowg Amon 14 of me surce<Ong Rtw SOO 10.76 92.19 0.41 1471 1 140 100 037 040 9333 1131 MOO 1039 9042 10.43 1171/ 11 6116 SI 1112 14.1 9101 170 $9.11 10 1032 450 10. 1032 $241 44 1117 1161 416 470 1010 10+7 10. 1127 11 93.74 *4.2 1037 1060 10.00 1060 NA SOM. 101 SCSI 100 69 00 SAO j , PSI $1.46 107 1 IPA Ilk Deutsche Bank Securities Inc. Page 49 EFTA01097703 13 January 2015 HY Corporate Credit Energy IFigure 46: Industry Relative Value Re11112.111011 & Costa per Mof! Company Amencan Enorgy Permen Anion> Resource. Bonen.. Geel. Chosapeake Energy Oman+ Enen/ Combo Resource. Denbray Resource. Citernxid Back Energy EP Energy Emo Resource. Inc. Fabel Oil Haken Smarte.. leken Enen/ Magnum Hunter Resource. Ledstales Penroleum Ruwheid Eg:dartelen Oaus Petroleum Parsby Energy Penn Vink.. OEP Roseurne Range Resource. Reseda Resource. Samion Sanelltelge Energy SM Energy Sandroa Energy Tullow Oil 7/lengte Petroleum WPX Energy Min Max Meen Mediae nestigen°. I Costa Lifil" " A I D" A I OperatinAme tet g 3 Year All in I 3 Vest Ekll I Full Cycle Rum Ree ymo pm. 2014E 511.04 51.79 11.98 13.51 53.76 NO /....5 35.10 31.80 50.60 51.27 31.63 30.91 $043 111.74 £2.46 51.40 54.17 33.21 33.49 $3.37 54.53 50.92 50.21 $1.73 51.67 52.48 51.77 $7.53 £2.13 50.30 12.58 32.52 $2.67 $2.64 511.21 5224 50.84 54.05 $4.08 53.52 53,21 514.53 55.66 50.99 53.58 34.30 52.87 53.03 $1118 $1.97 50.49 54.08 55.46 34.23 $2.75 510.05 51.58 50.74 14.04 33.69 51.64 51.53 $4.79 51.42 50.46 51.98 50.93 3422 $6.27 $8.413 $2.02 10.60 12.17 31.49 34.10 $3.54 512.76 53.12 51.30 56.67 $2.45 57.37 55.95 5883 53.38 50.54 12.72 32.19 $1.96 $2.15 57.90 53.09 11.48 sase (508,4) $10.27 519.59 58.89 51.60 10.65 54.15 5249 53.37 53.92 37.97 32.13 so.eo 53.11 51.94 33 80 33.91 51169 53.29 50.91 54.26 55.93 53 33 52.62 39.85 $1.90 51.28 5277 53.90 31 90 31.72 51092 51.75 51.59 5901 51.57 $e23 $0.41 57.36 $2.27 50.57 $3.03 $1A8 52.78 52.38 34.41 51.23 50.50 51.32 5147 $084 $0.71 17.33 51.60 50.52 $2.89 $2-22 51.85 51.35 55.55 51.47 50.93 $2.53 30.72 53.60 53.62 18.48 32.08 50.71 52.63 53.06 32.67 31.911 57.57 52.22 50.51 12.33 52.51 51.95 51.78 510.28 32.18 51.12 1501 51.95 37.19 53,51 515.37 5320 $1.29 5361 37.09 $7.95 $895 $1227 $2.42 50.75 $4.11 $4.98 $2.9 $2.5 35.42 51.13 $0.68 12.30 31.58 33.39 $2.78 44.41 50.92 50.21 51.27 51527 55.66 51.98 56.01 37.09 3109 $220 308$ 3249 3273 11 52.95 $3 53 5822 53.77 56.20 57.28 310.62 17.11 55.57 $8.79 59.01 *13.61 56.12 *18.60 57.51 17.28 58.92 NM 6.92 2.11 1.911 1.98 2.28 2.48 3.12 3.69 0.44 0.26 1.18 2.37 (0.223 1.11 1.41 3.07 $6.19 2.96 31412 0.72 56.15 1.92 3295 3.37 54.47 3.06 56.35 (0.33) 57.18 2.42 54.90 2.45 512.40 1.82 313.14 0.98 572 $3.8 35.411 0.88 40.33 $6.32 52013 112.04 Company Reakaatk>n Uiting Coats G&A 1303A Operating 3 Yeer All in Income 3 Year Dril bit Full Cyck Recycle Ratio ARK...c en Energy ne men $9.64 51.75 50.58 12.75 54.58 NA NA NA NM Amen> Resource. 54.77 51.57 50.45 $1.26 51.50 $0.91 50.43 5923 8.03 Bomro tructi 38.67 5232 51.36 $3.95 31.25 53.49 $3.37 57.77 1.40 Ons-spet/b Energy 33.92 $0.88 50.21 51.73 $1.10 52.46 $1.77 33.83 1.57 Omarox Energy 55.15 52.11 50.29 $2.55 $0.20 52.67 52.64 55.18 1.07 Concho Resource. 3287 51.98 50.80 54.17 51.99 53.52 $121 56.84 1.59 gorovy Recourcos 511.40 55.01 10.94 $3.58 31.87 52.87 53.03 59.74 1.61 Olemoncl Back Energy 59.26 51.64 50.49 54.10 $3.05 5423 52.75 56.87 1.75 EP Energy 51.48 51.34 50.74 54.01 5347 31.64 $1.53 55.68 3.22 Mao Resource. Ine 54.52 51.59 50.53 51.91 $0.49 5422 56.27 57.14 0.28 Petoet Pl 35.60 51.41 10.52 12.30 31.37 54.10 53.54 57.54 0.61 Heken Resource. $10.79 32.49 51.28 56.30 51.03 37.37 $595 513.48 0.98 lelcorp Ener,' 57.65 53.65 10.35 52.97 50.68 51.96 52.15 56.29 1.49 Magnum Hunter ReeOuntett $4.54 32.14 51.18 54.60 (53281 $1027 $14.58 515.61 (0403 Midolotee Petroleum 57.09 51.40 10.55 54.33 5081 5327 53.92 57.35 0.61 ~Alen Exporatien 56.61 51.82 50.80 $3.72 50.70 53.80 5141 $6.80 1.10 Oasis Petroleum $10.82 52.55 51.24 53.90 331 2 33 33 $2.62 33.49 1.23 Patsloy Energy 57.73 51.67 51.15 $2.95 52.07 51.90 51.72 52.50 2.37 Penn VIrgina $9.95 31.42 51.30 56.07 31.15 3823 50.41 312.18 0.98 OEP Resource. $6.17 52.10 $0.57 53.18 5832 32.76 32.38 35.88 1.29 Range Resource. 53.94 31.24 $0.52 51.32 50.85 50.84 50.71 52.90 2.93 Rosette Resource. $5.93 51.51 50.71 5289 5882 31.85 $1.35 54,38 1.98 Seleion 54.54 31.33 10.79 $2.57 150.161 53.60 53.62 56.25 0.52 Sander*. Energy 56.82 12.00 10.70 $2.57 $1.45 52.67 51.98 56.69 1.18 SM Enen,' $1.07 52.30 10.55 53.30 130 081 51.95 $1,78 5507 1.54 Sanchez Enorgy 57.01 52.02 50.50 54.75 ($0261 57.19 5151 $11.39 0.86 Tullow Ol 312.57 53.25 51.17 53.61 34.34 $7.95 $895 313.21 0.79 Tinne,* Pettedourn $10.11 51.99 $0.75 54.05 $3.32 52.92 52.52 57.01 2.74 WPX Ener 55.09 51.16 $0.68 $2.03 31.22 53.39 52.78 55.44 0.70 Min 4 ax 0.9x 02x 1.3x (3.4x) 0.8x 0.4x 2.9x (a04 Max 12.6x 5.0x 1.44 6.1x 4.6x loss 14.6x 15.64 6.04 Meen 7.4x 2.0x 0.73 3.24 lix 3.8x 3.6x 7.4x 1.6x Medlen 7.04 1.84 0.73 3.33 1.2x 3.43 284 67s 1.3x Santrecrneorg Moos ewan4xe0ne 8rn, trans. ~mbov Itsnor fD X« «P 104154,1 COntaine4 nX CO.WO011y 04 High nekt lno toveren Som /erna ekanlang mamma ~Mar enk AMEPttARSCO.CX(21/910£1t1.7$04MHAMPO.0.4.9.K.WAROSESN.SEII9EN.SAMPLMILW4n4 kW% Naar IMnitporoilwars figtees n tor Sr )w...~ Amon' SI aide mos:~ we Page 50 Deutsche Bank Securities Inc. EFTA01097704 Figure 47: E&P Relative Value hol CO 0 SINNed ow Tin 41 Dior 11.616... • rW rx $16.405 1.1•1666561 teat Cecil xu COOL atAILONC51 LaC131ll Waal 661 Locoo, SIGMA LIMA UMW. VD 01104 Mn.. Loon.. lamon• 101 N9 114 Nn '.4 N4 NA Hof Iw IW IW 1640 1640 Iw 1414 en en NIR 10 NIR NIR 80 80 SO No NA tot Ards. Sr g. Pe/04M Alegi 9165 ASCPCR 7.123% MAPCO 730% hen lbws LAC M 40% 53704 ”22.4 Saunas CNA ea. OCE. 1 An 19 107 Caottter 1100 503 40100.1oCCC6.01 1I10}1 5403 4•4410.010404,114 10050 MS1 01:145brot111240 1.10.531 000 Ost40.841601 404443 1403 111.:$00.5110240 LS% k 15,921 VM 8/1000918400 574% Br, 1,4013 330) 8/110.09 4100 47,0000•4•4001040 CNA 20% CNA 2944. CNK % CNC 29% CNIC MN CNN CNN AM. CNC CNN 317A CNIC 111614 CNIC 76014 Onon XEC 506% XEC 4316% Ombons4444s Cm 70% CO) ES% 00 SS% 00 SS% 0010411540 I,.." FIAO 7026% Dram Plaros DMA 4376% Dw MO% 440% Otani EPE CPC CPC L. 1110514 5503 150.20,1064640 OEM 16.461, 105 (1111501925.451141 L. 1140.17 SOW 150.20,1064640 A. 1600 IS Mn Sol Oto101,150) 15.046./1 11.50) (1111501925.451141 A. 1346023 31.303 150.160610620) A. 14.420 $503 150.160610620) 154021 11.0)) (10.350105.451141 A. 'Soon IMO 150.2t010620.1 15,0.0 11.500 (10.P0103../51141 0'. 15.619623 NW 110.P01105.7501 ono et. 1.1044 I/O) 06 SO 06 SO So P54 0306Pso 141223.046.6P06 114031 1403 Da3PcotiS60010 1544,12 MN SOPio88443440 142242 1477 110Ptot060410 1.40.23 $1.03 Safttoll.6.0410 10.151 8)112451) 545 14.031 50) 013640•111081.00 1144t ft 5124) 013640•111081500 1144423 $1230 111120•5110000 412244 6580 1 Unit 1750 043145.86/61. 1323% D. 1414,50 $2.03 11:060/59 22 M 141.0 1330 10/400/59 5001•40111440 )103 70:06 O 4/204 M. 1104610 1170 113111.4644444•104to. 14462 SO) 15349nOlOCC5.9540, v4)16 31.0,17 314017 10334. 10344 I .0014 11420 1.1p.10 1040 Winn' 5130 OA. 10131 I Sell Ian I314.14 141 NC 141 NC NC NC NC 143014 101 IC fic NC NC NC NC 111014 10401 1430I? 103 OA NC PC 5.141,1, KO 44 140.624 *30 154014 Kan 16411..9 10314 asi 7 Kan 10217 10272 14x14 10533 15.040 1.111,1, 133010 1102i5 61S/4i 151$517 11.3014 153017 17 1.19 .04 1720 Is1.44 12103 93 Se 103P 10404 nx VS la W22 129 1310 279 950 9303 452 4.19 423 49(0 421 769 NW 494 26i 9m 4.13 AA YA 1039 423 10325 444 9, 9) 1012S 132 1079 134 1040) 496 100 03 137 943 50 .229) 432 .40 9460 5- 9 1 047 940 a Ale 103 CO SS US .0459 40 4.:0 I00 co Ito az I00 co Ito az MW 101 (OS 9460 )46 674 409 )29 012 0303 720 sic it. 09 499 64 100 co 337 70 929 913 73/1 7321 17.11 1054 0) 1510 114 NA MA NA HA NA ta 10 '765 154 121. 121. 1217 I. YY 1212. 54 014 lb Sic NA 0.30 ii.11. 3.25 It IA IA 0104 1027 &OPP it 074 144 144 III 5DA3 PO IMO .*.1000.04.0 012 44 1.44 1.44 tic tit Ott 011 tic 14 I4 44. tit D14 IY 224 224 444 %III*" 14 *et 174 II. SO 11140 Cc"' 14 tic tic Sic IVO Eil 54 116 II. 05 IlInhoraktScunliceocattaao earoppetatektencolOrtetoAt 1312 14.01 41.52 fq•PC 04 014 04 64 MW IDM44 074 014 CIO 41. MW W9141 14 4134 14 14 Met MO 1212 3.14 024 234 234 024 51.14 O 11 tic Clb lb lb lb tut* 00 LA 1.74 1.74 24 51.12 O 12 ONici 01. Ab Co* 417, Co* 1213 ilk *34 at at 10. 124 1,11PC IN At 1,4 1,4 OM tie 40 441 Iv UlyNvOnonJO/004036004 WO 27* 044 04 lit Iii riall 120 HI 27* AU 04 27. lie 028 421.501 3.7% 044 4144 3.7. 324 $123 i3.15PF" 334 144 144 514 14 144 324 1/00tallEVCIONWO 4 44411 0 0 464 0 0 144 MA 110 14 444 1133 914 Kn. 3.16 014 .34c. 14c. 41. 110 .2 e• 44 3.4 04 34. 34. 34. 010 1216 Eli 94 1.4. Sic Sic Sic 110 As Obcos../11.1460, 0 04.401 ten sopeanahainme 0)52744sapoltmulyes Sae rA 440460155.5Ons AV Sair0.2 / AVvl Mid 00424010 Salk EttOmeet IN•33.309 r3,2040 LP NM MO M0Ou1M 00001ait. no :wand by 08 MO 3312:4 Ma 40433.113 4324449 ateea fAbonative 4033441Stts las *AY AMEPERIMICE(010.FANCIEPC TSOVOIRMA10.4.SPEPAROSCSNSEVOEA(SIW.TPU471W And WPX 0114 104 546 CO 0210 14* 10 10 C 131 0310 907 MY 954 SO 010 231 141 NA NA 211 123 212 In O Nt. 223 1.311. IIC 1311. O IN o 143 311 10 M1112 4$ 144 456 313 0310 219 035 xtes IN sic 42 22 8:0 00 Itl IM m14 191 14 246 344 247 NC. 49 143 YL 410 965 14. 03 IC 0Yn 3 r LO '8 g a W 8 a n • EFTA01097705 to 'Figure 48: E&P Relative Value (Cont) cn 14 141 4.A.C4•4 144.41444144-4 ot 4... 44.4.0$ ...... 601 Pla 1261. int Prveml 044 Ina SOW* 11194 IOW SW COS 1.114444/ 1.44444 COMM SOMA 4 4 M 44111111 131411114104 1114444M4 144444 en an 44 44 6, 4.2 4.2 40 40 40 40 Is Is 4441411 .151 :MN OM Ratak Mc_ 1234. 7422% 9.4401 10:0% 444.44 04444444 t.• 14104149419444rom STSCII 144444 PAW Wan. 14141 3Z% 441.41•4 NNW. 11 MON APO 1144% ana karma S • SWn 4L2 101223 QV 0.042400 02P 105.4 CCP 4/07. CCP 4•07. CCP CEP 3.2444 OEP MEE 4. vn Si, lb la 20 1221 MAW) WI 844111/110444 WW1 1393 8441111114)i1 $0471.4 /603 24., 040240461 1444741 11112 C4•11914114CCCWW0 144421 SIM C4 I •1•44114CC4014410 15 NIL= 3.01 9002.9207,09400 144.4/0 CUM C444141:14114.941141 IOTA 144421 3337 04493144141=07441 SAW C444.444144111141 C60 04.04.119102 Sava kW 114I 6,04660$9402 14434 10333 Dal 44444.-'042.3 114091 WS 1414444101149440 9 IMF II till 14$121•6410.3444 St 144416 3134 41544.101.12401 St 142610 3136 11.794•14$00,249 St 112621 221. 110,91,1042442 9 I 0922 IAA 404121043-2144 9 1A NN 6011610•142,74121 animas OA 0.8 )2,014 99413 901 1010/229.113291) WI 049 MA. awn 901 101/904144014913 WI 00 422•14 1614222 11.021 101/001/466444913 10 OAS MOST IS-4413 103 0491444.4144444 Pon641992 4. PE 180/1 Y. 1540r. YM Ca$190:444$44941 Paints% 4. INA 1294 944 112472 NA C100100442040 41 Pv1. At" Ste* PI.r tin C041129$44200 .0.00.•••••0• en MC 1.TM 6444 144021 1691 11494046, 902 en SAC 3.3% 6444 144•21 MOO 16,90746-202 en RAC 3028E 423 1444322 920 11490746-202 44 RRC SCOT 1611241 MO 14209$41.4:2010 13_I4 $01” $619611 WACO 40216 $13/1 14.4111 MAO 119.1414 WAY 1140.06 24.4 547 1) "443 ii24401 NY 1244,16 INN 14216 $221 4...4616 MS, PARC • 94 AMC • 94 I 940 IS "WC • et list .2 '3344 31P1 41420 WtO 0/14:0 WtO 0/14:0 WtO 0/14:0 WNW 411140 WNW 41114) I kb IS /a 164•40 10907 0444 19311) 1026 10.4 $2344 ITN $032, '0421 I Am i4 ma 14006 9214 .800.7 1023 1414411 1025 14CA 4: 444 34 05 3123 .440 63103 722 42 63103 Pal 610 II 2 43 An PICO 7103 /PIA 4120 Itl 6143 I2SC 1160 263 260 3423 102 7120 220 144 2323 4304 442 101 9 .032 '0460 10260 10215 4160 9310 IA II IA „ in II PS 3424 221 3404 2420 197 421 n 92 427 524 90 422 f▪ l 422 471 440 KO 443 411 32 416 051 SAO 121 Cl? 2410 420 Wm 1 1 06 1393 1393 PS TS 1340 167 IN 43 SSA SN 104 .30 1 / 4 4 ` ` , w • v " P t SIC 1411 nm TM st 1214 Es. 44 Ain Ain 414 Mai 475 44 i 284 PP E Nit Mk 244 Ab 134 1.1 " : kb at. ).b ).b ).b PA Awns, we( ASAP a A I AST PM NA NA NA 444 074 134 PIA WAS 1.414 MCA 44 944 074 1.14 NA item not, EP 20 14 214 214 PM OM Pe Pat ror mc44444.0101AlisoanOtwa rAw440•30 Wan, I e ANNOY' A OW /WOW cra4v.IMI linen? •1P1' 4,4 014 42.4 42.4 424 149.2 ir ea.* EA"' &et OM 444 444 St SS IS 1515E-4 1144 CON 64. 644 Al. 13.4 119041491409041 4444444144 ia$12 214 Ca Ca 224 a 1223 'all 274 14 14 274 274 1321 ve• P. 22. T. 40 20 20 1221 PC mons* 443902304 11 1112 At IN 644 644 Mk 24 WS 104 91.4 1044 144 15114 44 9104 AIN 234 174. 174. AU VW Po Pat 0 800.800080.00. 1412 4.4 Mk 444 At 724 SIM 1413 44 14 414 414 Lb 1222 91401 94 AU AU 24 at. 120 PAW MA40044 kW aA46000.4 cotton. Await. 044•440 Plan at 1.34 234 At PM ilk KC. 24 024 14 234 434 Kt pals a 24 414 14 234 4•4 343 44920.464090106 *14 Pr Pk . 1.74 1.74 244 1150 multiEP 04 . 1,14 114 Vie SIM 276401 . 1,4 1,4 Ale 110) II brUffela MA roi A. *Won name* ANO1444 sAroft:nrIVet•Oce 012 2.24 244. 24. Ale SIM all 304 444 214. 214 (44 OAS 914 24 014 24 214 4$4 SIM 012 AO Ak Ak MA PM 'all kli CA/4 6/4 6/4 MA Silk 4140 214 02.4 214 214 11.34 1123 MAPS IV RAno•Vaataalgare ISIS 24 • 21e 21e AM 4047 ISIS 44 Pk At At, 61. 04/ 4140 2k • 254 2.44 444 1121 ilaanarevalaciaaavaeriaaw PM 2h 044 044 274 44 MT th Ph Ph 274 024 £S 01544 34 ON ON 204 1034 10.1 INSIC 444 92 146 INSIC 210 :40 20 20 02 14/4 AE KC 61114 262 2t6 02 114 772 710 $10 IY III 232 2:0 12 110 22) YI 1014 346 (Ca ON 300 311 434 ND O 142 EO 2.0 re. 2110 244 242 YI 03 II.* 24 22 03144 M NS Son Conowyffings end Deutsche itynk tam atiornberg Fame LP I9. m4 baxtmg convener natcotearl by 08 Pry* **I WO WOW WMOS MOM &bane.° COnSfoRse 4.60MItAl AMEPERAASCECCAO.INatiffrECTSCWAISRMA2OMPLOVAWASCSNAIVOEMSIW.IPLACILIM sal WSW m 60 O g a z a; 8 a EFTA01097706 Deutsche Bank Securities Inc. 'Figure 49: E&P Relative Value (Cunt) 44.049 94.9409.79491 w 6° O E F,. E aunt 11.0 1340404 rINV .Tx 31040: 1=2 odd TOW Doa itil:01104 &cc /or aoroa Lao... Lnn.nas Lts9104 31110, MC= 1212:04 Waraawall 01 1..• PMF 3494 :Sawa 9M3 111ORWalee T t4 / H04 V a 01. 1 a 109 n POSC 3/9: 14.22 951 413953400 0 300 !Oa 9 9 5a SOD 1203 21a 2ft 204 410 $040 210 7520 3994 4. I WO 8114411004 03104 10,05 W %CO 197 649 04 t 74 Ola Z74 Z74 Z74 20 41 lW024 594444 7a rY Mt Baufil 8.4 4. 1144020 9243 Calf 1/494CC4740> 9.1.011 94 1M 3503 4.16 .W4 814 444 Y4 444 It. 144 9034 50 IWay 44 YS. b4 11111. x4 x64 IL16FY 404 4x 9.44 9.44 x4 4.b 0~ 690 0314A 4.0 70% 4. 1410) 001449 i994 15940l7 10314 51 0 >9 339 'Zit MI 144 100) NA 41 4x% 169933 tug 113PO4:949441 159910 14004 4403 4.0 1313 it 20 20 444 $144 144 •1139 It, 21. 21. 21. 44% Pr 1 »"WW«emnr ay". -44 14. 010 80.4. 10 434% 46 9044 $444 &8444.818P411 4649.16 :1491 470 1519 OW 50 44 $4, MI* 434 434 474 011 94 440 80.4. 10 7 9% 151~9 96:9•144839111 151414, 14 :110 003 1430 1620 401•Cli it, at. at. 444 091 Co XS* 444 30 %Call 930 43000.0 0000 Mali 1840 4300 1421 149 91101 34 Oh Lk 314 324 1155 X• 344 80.4. to Ha I. Fa 23 1404 Waal) 00340 15040 1x24 000 IS 16 1911 04.44949900•40.44•1:949994444001414 -419raralka fM 03144 8019): 144 128% Y 9.1492, 17.1 0491/44409:11.4193 169916 1031 410, >PI 42.0 1,44 4.• 414 1.4 4174 2711 P• 040 2.14 214 1234 134 ulEmnt 144 191 46% 914014 930 0"05004841954 0 rob 13 WWI 901 723 1212 la (134 144 144 Cli C144 44 410 191 4530% 154•421 1130 40003540/441 law.% 1%323 939 723 91 1213 Pt 1.14 1.14 444 CC 434 433 443 Em 4441% .0a 00 4000004134a 14.117 0026 00, 194 661 4 lb l.x l.x Chi 414. 40 446 104 3O1)% 15-9904 SAO) 0•24019•111001 15999 01253 449 497 031 49 44 Mena. 493194. 141 01144 301 14.44 4944 L. 154.19 349 9•1994.1004094/90 159917 4149 479 116 194 1213 24 214 234 234 >It 444 400 •11, aa at. 27. 44 (0401,049109444444140004~ 4- 04 0214A Ilw 4Ø et. 1.430» 44,44 1914440.1111.1 19916 CH 319 9 9 1112 O4 la la OW OA. 414. 671 414 191 TLW 4 a 94923 1410 0335444 1~17 IOLA* 319 592 Co 1213 444 C014 124 1.144 024 Lx sai 4t• 614 1024 144 WP9 tr0437 03 HA WIA i4 an 1430 13212940411C431 49.9 WC) 439 352 49 121S It . Lx 144 204 4054 30 212 PX 40)% 16.4"22 SI») 9148994613.19.1 46499 :00) 439 49 96. 4214 314 044 244 314 414 $2, 445 W101 325,: 1559024 1630 132129404110/1031 159444 14403 9125 744 ta VIM 444 Ott 1.)4 234 304 4043 a 345 :40464:999/2(.4439 04404444 4M499.49404•49 04 9944 Sane* COlany Woe and 0404403 tak Baer" ilituvriberp Menge LP For Us bawd?* torm»Mt. 1101 con:malt* 08 HIS IrIab, Wont" Paw. mida Elbombarp mr~t“ ~Ma fa" AMEPERAV3MOD,FAMZEPCLISOMMIIWPAOA;PCPWIAOSCaSEVOEMS147PUtTLW and WPX EFTA01097707 13 January 2015 HY Corporate Credit Energy Chesapeake Energy Relative Value Chesapeake is well-positioned to weather the current downturn in commodity markets, a welcome contrast to the stress the credit faced during the 2012 meltdown in gas prices. Operationally, the business is on a strong footing as focused efforts over the previous two years to streamline its vast operations have driven a substantial reduction in cost structure (both opex and capex). This has been well supplemented by a disciplined financial strategy including modest capex outlays and debt reduction via divestitures (>$11 billion of cash proceeds over last two years). The biggest and most critical of the asset sales was the sale of its Southern Marcellus acreage for $5.0 billion. This was extremely well timed with an October 2014 announcement, just before the sector was besieged by the sham fall in oil prices. There were concems that the buyer could walk away from the deal given the changed market conditions. However, CHK managed to close the deal in late December - the final price was $400 million below the agreed price of $5.4 billion which was partly attributed to waiver of future claims related to title defects and environmental liabilities. Thanks to the deal, CHK is entering the current bear oil market with a substantially stronger financial position than it would have otherwise - net leverage pro forma the sale is 1.6x, compared to 2.4x at Q3 14. Liquidity has also been significantly bolstered to $8.0 billion - even after factoring in the $1 billion share repurchase program that the company announced concurrently with closing of the transaction. Lastly, the company replaced its $4.0 billion secured credit facility '15 with a new $4.0 billion unsecured credit facility '19 last month. While we do not see the weakness in commodity markets posing significant downside risks to credit fundamentals, it does present a major setback to our thesis that the company would join other large E&P independents in the IG territory. The view was based on the expectation that the company would see meaningful deleveraging and tum FCF positive over the next couple of years. However, under the changed environment for commodity prices, CHK looks unable to generate significant further earnings momentum despite quite solid operational performance. Over the medium term, we expect the company to record organic annual volume growth in the high single digits (with steady improvement in liquid mix) based on a modest annual drilling capex of $4.9 billion (versus $4.8 billion in FY 14E). We expect EBITDA to be in the $4.1.4.4 billion range during FY 15 and FY 16 (versus $5.1 billion in FY 14E) which implies annual FCF burn will average —$1.6 billion. We also do not see the gap being substantially bridged by asset sales as the management is unlikely to pursue non-core asset sales proactively in a weak asset market. Overall, we expect net leverage levels to move back above 2x levels (2.4x in FY 16E). Given CHK's lackluster hedging program (29% in FY 15E), we see considerable downside risk to earnings. Further, differentials on its gas production (-67% of FY 15E volumes) is one of the highest among peers (>$1.5/mcf), making it even more vulnerable to weaker-than expected commodity prices. For example, at $60 oiV$3 gas, we see FY 16E EBITDA moving down to $3.4 billion and leverage going up to 3.3x levels. Moving on, management had of late been indicating that it was open to acquisitions. Its strong liquidity levels after the Marcellus sale in the context of the asset market turning into a buyer's market presents the company with an opportunity to shift faster to an oilier asset base. Page 54 Deutsche Bank Securities Inc. EFTA01097708 13 January 2015 HY Corporate Credit Energy In summary, while we remain constructive about CHK's operational story, we believe the impact on the credit will be offset by weak outlook for commodity prices. CHK bonds have outperformed the sector solidly over the last year and especially since the meltdown in oil prices. The longer dated Notes trading in the 5.4-5.5% range, which we see as fairly valued as the prospect of an IG upgrade over the next years has clearly dimmed. We are therefore moving to a HOLD from a BUY on longer dated bonds ('19-'23) and maintain our HOLD on the shorter dated bonds ('16-'19). Upside and downside risks are tied to a recovery or further weakening of commodity prices respectively. Deutsche Bank Securities Inc. Page 55 EFTA01097709 13 January 2015 HY Corporate Credit Energy 'Figure 50: Chesapeake Energy Financial Summary ChOMPON421 EMMY las Pelcadroo 1141 0440.0401101120 044511 Wks, . 101 ‘Pin fear loop 1'.a -n..1 40 000405 5500 10517 NC IC 115110201. 15 Foranato. thaw/ 4 2 0•0 1 PC IC 510102542 10 onanotto. 5•00 110010 IC IC 10 8-, 044 OM PRA 44.4 034 RORY) 11400 14040 0110 11.01.102542 al 414.0440. thaw/ 11 1000 PC IC Santora 542 al 41420410. thaw/ 1005 IC IC OO.L.I.$44•444444•4 O. 24:54•44444 Nom a / RR Ow deR4loo NO ' aZIISMIEMMIEMaM2XIMMCa =========1 04 05 :ROC ...RR ...OPP Own am. Fit a wiSn tot an RIM 0111 1.114 R AI .42 000 4041 MA 114 011 NW Ian t1 1175 ruts 5.00410 544 ant 00 05 170 1450 71111 MO dooR444 4-140na Coon Rom. • 11494 Na MN TRO•11441ithonls) IAN lMP VII I,M Lie 400 Oa Ma Nto(oolniol nen., a Ill a A IA 15 IN 1174187410121411 litrals) 154 I.T I.131 la use tar TM ITN • • : AA A ns AG 740 55 106 1142 all 407 al 0 65 10 04 2143 XXIO 02 ISO 0 0 5 V la 40 71 al nava, M Cl 111 Cl NO IP) OROS IN NO 12 42 la , Oil 50 'ISO >votes' Conn M M 21 •!) It 2411 NR OM • 54 113 aft III, I v Two 10 KS MO WI CO Ira 002 OM O 120 0051 4 Can 0 40 14 AI 01 al 02 In 57 1444 0,4 IM 1001 0 la, l0 15 1,919 ova OM 437 1171 1211 9Dr AM 1117 15/ 5111100.4044400)44=0/ 4•00.5441 Sa▪ l LIR 010 046 ;746 0611 aM 101 Aiwa 1.0044(021144.04 .0406 nacan WATT MA WA 14/1 74n MN RA Sal MO 5000 NA WA Val RA R.1 NM 1101 I14 1111 4I0 VOA 113) I022 024 a 11 NZ) WM NM 011 201.1 112 SIM $174 MR PA Na PM all 01011 0 04 “ 1117 HA SLY Na Na 145 UM fi ll . 151 anima 1022 Na 105 1511 1511 115 *14 a4 Na Iron 00(4. at RA RA RAI RA 1144 1214 12.11 RN R4 044 4101440.4 War 115 II A 1116 011 41 0 ** 144 4 50 001 PP Pa ass ow nu ow MO 1)00 001561010( 11145.041016.0 Oa 00501120002 TM 1.05 lin 15) 1110 1411 010 1441 125 °nava Ii) Ill II) 141 WA 5 la Gnu- Pavan I Caokran osm te.rn an 11051 MAI MIN man ono OR,' Cory - Seer .21404405.04•04 OA/ INN OM oni 14111 II/al 0214 0101 OP: Sna - 040410401 Capra, (110. 13201 100 50 0 11 0404 1101 111411 417. Tail Ina 050 0.401 115141 Mal 1111111 0011 WAN 114701 P101 t hM00414MRO•444plot Of/ II ILA 10 101 0 1 1 111 (1214 PP 55 442•14. 511504 WI orra an on nil 11521 Ran 112.0111 6.2 .44•14t4 Cop•Szongeoeb 124 OO, ill% II) • IT 0 4540.0.4 pans 101 00 III) IC RIM 111111 ON 0111 aft Coallara 214. NM MO Pill Pa Ala AM PIMP Ga. PpPaac I Mem ITN 740 Pi all 717 1471 11412 pea 0415611101005401104 III 121 in NI 1411 154 157 11511 1444 illantoaraiNeo 541( N. 101 004 MC n f:, bu So4aNnos. 01044 11726 11111 11$46 11.50 1110 1010 5450140050 040'4 0 44 0114 0100 12/0 111102 nl VP *Ea 1145) 1364 NSA Immo ;ern F000 Una 10.0 400-4454 0000450521 16.1 231 504 Yf 0% )20 40555 Out. 2% tles 41. M 199 O100440014100a /5042. analpal Cceanoleen 2.444010/540 astran0 nova OR NO✓IRTOOF ORS 00054 ant( 2.44101011110 rualnie. spat veNtOPPalf ivp ft. mitt. Peewit 4.01 00 1 44aa 2.44tual 4.0041440•40 .515 15 OP 744 I 1 I4 141 21, 144 11, 214. 224 1.• 244 1k It 15. 15 Ifs 21,4 114 214 alt Ms 75 25 214 IP 25 237 fi ll MM WO R.R R.R 4172 115 414 1111 Na Na nip 124 144. lla 871 6122 1114 lb 114 18 NN I' ll 144. 24.v. 24 NM It CORINOWORPROR•lo Canal* tooll ovetoodolm SIMS • 4okflooteel rt0414 0.00.4 m..rtos • to 000 ppe P✓ PAPP tow. pm Pst g. it pea+ OP 4441•4IR n IR Wan move, *01.444 444 aang so1asata(20/04.20 603 Ivan to US ISSOSSUSICSIS 71+1501203YM 0.5470044440004•4004. Sant Zama. B1t compeay dam omornet to•o40•4 310 II • •••)44, I ono,. t0•41.4.14.4 11ORT• *TAR* Pna Oa bonnenal 110010) 111250) 11140415 Os CS M 100011•21011 Taw 150101 IO 11 Naar hopaornon PIA 117. WI PIT. alma 4.0404ras 01141 471f MPS 150 4141 4 Omen...POO 0410 Page 56 Deutsche Bank Securities Inc. EFTA01097710 Deutsche Bank Securities Inc 'Figure 51: Chesapeake Energy Financial Forecast, "MalainnagnatanW=Innia &pp AO) 6.34 3.141 3316 4.64) 3221 344 1173 1241) 11.414 1710 7%147 13214 HAP 42 44 Hen Gen : pap . 4•44 0 Pinpt SP 1113) 24 in III 214 I/47 IN 1344 92 041 0711 a 0 04014.1.• 4110 4142 Sal 493 191 UM 4111 4173 12423 11.7711 17270 Ma 1404 1747 N....49 Com 3.40 IC 379 2102 1/104 514 190 194 2.14) 744* 1244 phi 4.430 I2104 v4.04.041010304.12460 • 50400 rsannila law* 1.213 215 944 10 IC 5201 PST SAS 133 aln4 nana 41 33 IC IC It IS 174 19 431 414 041362 MM 4440491149 Data 12/4 1472 10 410 1.444 10 LP 110 6.44 4114 4910 tl 175 472 446 an 444 4•4 1921 411 1502 444 244 444 344 X& 242 ZO MI 464 IP 04 2.161 2274 197 1416 P. 1? 43 N IN 154 143 49 00 tea 9342 (4)) 1333 241 id 0404 22 III2 190 314 00270 164 1341 Oro no non 33 43 IS 4432 416 71 6814.4444 724 PI WM SR th 289 MS 344 VS 11.42 1254 246) 143 1.4 744 MO III 07 112 *3 IDS IN 444 1.122 OP 14 NO 47S pi Pan013•444414 I by 31 43 01 C4 64 ca 44 44 172 in na 444 214 10 1•411w am 144 ne 144 74 n IN 141 1.6?0 PCO 464 411 43 347 1.1%44117DMI0.46449464014404319.14444•6 4431 Sal SAT LIM 444 4215 ON 4404 4224 3.10 sma 4.434 4438 4270 1.1%4CISCIDMIt44•449041401440431994111694 UN /MI SACO SAM 4411 UM 5.324 UM WI WI LIU 4.41 pal 4270 4440 44. 44.0 IMP 19210 5171* 52341 66260 N40 PM MM MI6 34 14 1.142 ULM 96493 Ph 444 14414.61404 04040 14.h 1444 416 nu 09 13 74 Ph St 4 UN NN 41) 4427 0.76 Ph Kay Malta 0114 Cgepany min 04040994 ival 2714) MDR Ma VAC 2334) PP 43801 114000 1.12490 1.01690 144191 49.42 1444 2920/0 027 4440 4144 Ocs 44.'6124 04 12 CIO RR 10.16 12 16 12.13 MR MT 12 43 1223 RAO 1416 12 II Cups% 011•10.4044 191110 0900 1093 PICO 11144 1094 1940 11 96 12477 41464 SIC 414412 4344 •6243. CAP 34.4.49 0104 0140 MN 14323 1061 P434 14414 MR Mt.M 14623 1410 10 14 03243 ph WO NO a C4apay PO. 1%33.444411444 PR 720) IC WACO PR SP 4112 A411 • 0416 NM 3.41 4249 14172 46•74 PP 44464 111173 531 03 82216 114N 1109 113h 41142 SIPS MP MN 427.44 4199) Val 1043 791 4.3494% Pa.. 049 34322 27•440 1020 314061 244307 91.02 30431S 2410 1.16004 I.3!93 1.0290 1401361 119.74 1144,:o TV40E4mvaiP440/64.4.100 OA 149) Ma PR OS) 00 UN 1010 1610 MCA IAN 4463 09 NM 11199644 A Mama Mama M Deb IN CM 444444 OM 480 MS KW UP 6444 441 IMO 020 MN 41,31 WM DR PM L.19 Con HID MID MY 4444 KM NY MM NO Mt II OS MM UP HS MY CAA NM 1424 10 10 9444 NM 140 1031 1021 09 036 1031 4021 $421 10 9 2014 1472 WM II 42 105 033 II 45 4.7) SI .73 SIP MN It, 1143 103 II It 444.4 10 441 MO MA 4148 MN MM lull 41) 412? MI MR $144 04 1120 81.4 444 N2 44.14 10 10 1033 1422 1031 1014 $0.23 MI6 1024 4021 1421 SOX 3, 4y 2 42 96 411 UM WAD NN 4144 N.Y 4246 $244 1146 12.10 NY /214 RA MA 11 4* ay 44 CIO 444 4111 1111. MN II 41 101 rah II )1 ti. 77 III? $1.14 II 41 IIA St?? 1411. II It 1442. c an NM San Ruh 1113 $3412 /24.1 134 41.21 NM WO MA 43.0 $34 084 09190 Fa , E6104 44.464 442404441144) 'MI IMO 129 1131 94 69. 1061 1.111 624) &on 6224 CM 4.153 14" 0421474x. IP CO 24 00 PI on 244 • 40444 4444.44 PP 11030 14.149 0149 0330 6214 II 4" (1210 ( 2AR) 402C4 144041 4770 (140 MAP ;44. Aar 4. 4.0•449,1.43440.4 no pro 410, 0144 040 Will 052 la 1%310 OJOS 6021 0.21% 114) *4 244 0/ 46464 0460 100 „.3) 0. N N. 444 AO IM 12.091 RAI) PP 11411 RCM 46 7.4 944 144"' 14. 43 11441) o.nn. ono ono on, 0.430 047111) C1440 94 41 44311 1:4140) 1474 244. 4 44444444 :94 44•141r 0.12.4,64 nen 19 C94417•41.001 43 cc, 450 170 69 4411 11 10 101 0441 Ma Oa Ila gr) 011 MI ii 07 1121 :441 PI n OM 019 ii. 14.440 ,:iti24 haul 43 0.34 0441 oAC., OP 0214 Ohl Mecown lop eons 1411 410 . ay 110 (19 00 00 DS) oro 0311 00 SA M 1.44 OIN dab NM) 0.44 )6444.4 0 AMOS 41, ill 4/1. 200 14412 11244 4460 444? CO 43) Re 44 1119441 Ann 444 in NS (41) 4440 (4813 CPI 1$ HP 1/157 PM) 4140 4341 04270 1144 1141.94 434410611 203 IOM 192 00 4710 3323 2331 1747 ISSI 341 207 437 474 IASI 241 2444 Nan 4 444444 1244 4.14 RAO 4663 MP 1•474 RAS 4.443 001 1240 IRS MP hAra 1189) 414.44)9011•419 4 Oft 15 4 lin ars 74441 114 9 11443 140 1141 4 go 111 ICON 1443 /1144 1140 1144 IMO) V18 OnvelM414-.1. Ilignirsa Core liens. lioad linfolp Cat tl K .34% 0% .11% 474: .24% 3% 24% 45% 64.24 444 4% 3% 3% IM 10% 31 Pa 4% LP RP 4404 4 6124244746.44 Cou4449 744 7.14 744 b O 404 Ca Os 70 244 C.4 4h 44 72* 04440§4041040 4,046,019•4*•440 144 25. 214 10 20 2.4 4 2.94 214 214 A. 2.6.4 234 214 20 I•4 0•0E200A4 0%1 /4/(011014) 0.4.1:. 20 114 214 13. IA. 20 224 244 2174 A. 1.44 10 244 244 DR4CIIITCIAtTC1 notsertlinflask. 236 214 2% 14 44 27* 34 Mb 09 224 2.44 Lb Mb 24. 74.1100131000 (pct. racensara9440441 214 123 2% 19 1.74 2.9 29 241 a 344 224 sit 241 244 2444464444449114 PHI NM MR •141 MN MN •141 NM lebt PM 970 40121 1:9 Int: 4444404444 444.414462 /AR PO al CO 41.11 114 11 it 4,13 SI IA 696 II 41 Seurat Doursoto EWA, clammy, "don EFTA01097711 'Figure 52: Commodity Price Scenario Analysis: Chesapeake Energy Forecast Metrics 3 Strom Dow.wts Stwg 1970 $400 $50.0 lion $70.0 5600 Moo $30.0 $40.0 $504 $004 $70.0 WOO $900 FY 15E Eel* DA (9111.1166( 1.11.1FX 51.75 12.25 1273 83.25 502 St 012 $2.322 $2.731 51.90* 52,317 32.725 13.136 8311 12.721 13.131 13.510 12.716 1.3.126 $3.535 $3.945 13.120 53.530 $3.940 $4349 36025 $3.831 $4.314 14.754 36057 14.297 $4.700 15.116 FY 166 EUITDA (S IMIEX Ga* (S. and $1.75 1225 1248 $736 1368 $1,356 VAN $1.976 52.107 $2.596 12427 $3.215 S1347 13.835 53 966 54454 NYSAE X OP (S'mc10) $3.7$ $4.75 13.065 $3.375 $3.728 53.409 43.779 $4.133 53,676 MAO 14.537 41278 14.598 14.942 $4.683 $4.992 56316 13007 15.397 16.751 13449 13459 16.113 $275 $3.25 $3.7$ $42$ $4.7$ 51.45 51.713 32201 12.616 $3.177 518 14 52.332 12820 16309 3.57 12.444 12.962 53.440 51926 $4.416 $3.053 $3372 11060 14.546 $5.043 13.703 24.191 14.679 00.167 16.656 $4.373 $4.81. $5299 $5.787 66.275 64 912 15.431 15919 16.407 16.1191 FY 1SE Net Leverage 51.75 52.25 275 325 $3.75 14.75 µ75 630.0 7.2. 59. 4,8. 4,0. 3.23 I I x 28. $400 5/6 17. 34. 3,3. 3097 27x 2.4. 5500 47. 39* 33. 2.0. 26x 23x 2.1. 160.0 316 32. 2.8x 2.4. 22. 261 It $70.0 321 28x 24x 2.1* I.S. 13x 1.66 SA 2.7x 24. 26 1.9. 1.6 14x 1.6.. 5600 2.4x 21. 1.9. I,?. I.6x 1.4x 13. FY ICE NIA LeVetilie $1.71 5220 62.75 17625 3.77 64.30 54.7$ 190.0 53.6x 17.6x 10.3. 7.2. 5.5x 4.4x 3 fix $40.0 14.7x 92x 6.6x Sill Aix 3.4x 2.54 5500 121 80. 4.7. 31. 326 EN 24. $500 51x 46. 33. 3.0. 26. 224 20. 170.0 Aix 14x 28x 24. 2.1x It En $80.0 322 2.75 23x 23. I. It 5.46 5600 26x 22. Mb I.?. I.6x 1.4x 1.2. 1- 1' I SE rcr i 5 trF 11.75 µt5 1275 13.25 39.75 µ25 54.73 $304 (53.299) (3.023) 124771 1125311 112367) (12231) ($1.416) WM (2.006) 02240 (22911 112.1451 111.905) 0 1.804 (51.603) 1560 (21543) (12.257) 1021/111 111.7051 111102) 0 1.466) (11.2.50) 600.0 (12121) (11.975) 1114291 013821 NEN% 0/.082) Win) Pt* $1.738) (11.432) roao 01.0001 18371 ($700) 11510 $100 01.355) (11.109) (tS63) 166171 (1441 WM) ($132) MILO 0 1.015) (1773) ($527) 112001 0 1171 120 1205 FY 16E FCF (5 Million) NYMFX C., 51.7$ $326 $245 190.0 ($5.151) ($4.672) lµ191 $40.0 (14.522) 04.013) 113.566 $504 (33.010) (11.0 0 02106 5600 ($3.285) (12.756) 42207 $70.0 (32636) 02.157) 111679 $80.0 02007) 111.521) 111050 1904 IV 3751 (5896) ISMS) $3.25 $3.7$ $425 14.75 i$3,7i5) 151229) 02460 0 1.2546 153286 $2301) (12113) (Kra 1124171 1$1.674 0 1.010 111000) 111.6291 111.313) ($055) 43725 1112001 1$7141 02271 $257 35711 0861 1402 2886 16. 1547 51.035 11.518 FY 16E Deb 1PrOved Reserves (EMete) /104E% 044 (5.661.9 $145 $215 $2.75 325 53.75 $425 615 133.0 $0.8 OA 108 108 50.8 50.8 50.8 MO $0.0 106 $06 $00 10.0 $0.0 606 1500 $0.0 106 $06 $00 10.0 $0.0 106 160.0 $0.0 $03 106 100 10.0 1.0.0 $03 $70.0 $0.0 $03 106 100 10.0 1.0.0 $03 5900 $0.0 ENO $0 8 106 506 »e SO 6 500 9/0 $0.0 106 V.I8 9)8 50.0 106 FY 16E Debt Played Fle(serve, (SEICIe) liY1.1Fx Ci S. rnchn $1.75 122$ 275 $7125 $3.75 µ2$ SA. 130.0 50.9 509 509 309 50,8 50,8 503 140.0 50.9 509 108 308 50,8 14.8 $0.8 1500 $0.9 106 606 600 930 $0.0 106 $604 $0.0 106 $06 $00 930 $0.0 $06 $70.0 $0,8 $03 $08 308 508 1.0,8 $0.3 183.0 $0,8 $03 308 108 50,8 1.0,8 $08 1000 $0.0 106 606 $00 50.0 $0.0 $0.8 Deutsche Bank Securities Inc. EFTA01097712 Deutsche Bank Securities Inc. 'Figure 53: Chesapeake Energy Benchmarks 510 170 lie 550 140 110 520 110 SS o 60% 50% 40% 30% 20% 10% 0% 2011 2012 2013 gi,. gamma ensi, 121 $30 136 $20 115 110 $05 100 129 Ore~er•I•VMde $2 5 2013 201E Dow gamma 2013 3014E •C .4( air, I il 1 2015E 2013 2014E 2015E •NielniN Gain 125 120 11 II& 110 115 p0 lix 124 10. 08x 013x 04x 024 00 Cab Calm I t. $3 9 120 7111 1012 2013 .01a ',Man allIn 110 1110 150 140 130 120 $10 100 2013 2014E 2015E 36x 301 25x 20x It( 164 051 00x :Oil 7011. 10?) .0.1. ea I% =Win Cah01. ~UN* 558 15 7 $5 $4 .0a alWwa iNea 3 Ox 25* DebtelllTDAI 17x 17 2a< 1C1( 2013 2114E 2016E fik Sou tee 0~.~ 54v,k. Bloon~p ~LP, co~v Sui lexfusny fowl 44~4114atim 8E~ 14~ MooRaintlucAi «nut mid non. ~ate conyakein For N. iboowns, corny:wit. ~al by C18 High Pf.ffiq NOMradnApw.n owm4MAO4aY(Mnlna CM( =DIM, ST.XCOMILCRP,M1( FIPXOEP,RRCSAIIIST ..vgl SD For N. iboowns, cornirmna noun" by OS Pfdpn YMA CM linleaSt* 4nårtli air Bbointsip maims saw ontyALIEPEltilABCD.OailielEP/iliSeliMill~,OASPE.PV4ROSE.SliSEVGENSWPWIEW ~fa EFTA01097713 13 January 2015 HY Corporate Credit Energy Cimarex Energy Relative Value Cimarex (XEC) ranks relatively high within the peer group in context of facing the current commodity downturn. Its strong financial profile creates a solid platform; its sub 1x net leverage level (0.6x at end of Q3 14) is the lowest amongst our peer group and liquidity is solid at $1.6 billion including $564 million of cash and undrawn revolver of $1.0 billion. The favorable financial position is attributable to conservative management, which over the years has focused on maintaining a strong balance sheet. During the Q3 call, management reiterated its focus on the balance sheet pointing out this would be one of the major factors in determining the FY 15 capex program. Besides a solid financial profile, XEC's asset quality and strong operational momentum are both unparalleled. In its core Permian play (—55% of Pie 14E Permian capex budget), XEC has successfully drilled longer laterals with upsized fracs providing solid upside to well retums. In a recent update, XEC noted that its traditional Woffcamp well (i.e. Culberson County, Woffcamp D well) with a 10K foot lateral would provide an impressive 89% before tax return at a price deck $6013.50. The returns on a normal 5K foot lateral are also highly competitive at 45% before tax (@$6013.50) clearly explaining XEC's investment opportunities. Wells results in its other core Permian zone -the 2nd and 3rd Bone Spring - continue to yield solid results with 30-day average IPs rates (New Mexico wells drilled in FY 14) improving 47% YoY. 2014 also saw XEC's renewed interest in Cana where returns improved on applying upsized films; the new frac designs allowed XEC to expand its addressable Cana acreage. Cana opportunities were widened further with possible Meramec prospects - where the company has drilled seven wells with the encouraging results from inception — 30-day IP rate was 9.4 Mmcfe/d. Driven by the positive developments in Mid-Continent (24% of FY 14 Capex), XEC plans to increase capex in this play for Pie 15. The quality Permian and Cana assets has allowed XEC to build a strong operating momentum; the company has raised production guidance from 13% growth at the start of year to 25% YoY now, and all this is happened with capex of $2 billion, which implies modest cash burn of -$350 million (majority funded by asset sates, net of acquisitions). Moving ahead, the positive momentum will play a crucial rote in limiting cash burn given the bleak commodity outlook; we see the company moving down towards a run-rate capex of $1.5 billion while maintaining 10-12% annual production growth. Despite a largely unhedged profile, the company still be able to limit cash burn through Pie 16 to under $700 million, and we expect net leverage to be less than 1.5x at FYE 16. Page 60 Deutsche Bank Securities Inc. EFTA01097714 13 January 2015 HY Corporate Credit Energy Overall, XEC is well positioned for the current situation driven by strong financial profile, quality assets, solid operating momentum and conservative management. The only negative in the overall positive picture is XEC's unhedged nature; that being said this hedging approach is not new to management and in the medium term this is largely offset by positive operating momentum. Also worth noting, given its extremely deep inventory in the highest IRR play in the US (Permian), Cimarex is the rare company that remains on the M&A radar for large integrateds despite the drop in commodity prices - this is observed by looking at XEC's strong stock performance other oily BB names (NFX, CXO, SM and DNR) over the last six months. We also believe this strong profile does not preclude XEC from still being upgraded to IG despite the commodity backdrop. On the whole we like XEC's positioning in the current situation and possible catalysts in the form of either IG upgrade or possible M&A. We believe it could still see tightening from current levels on a probability weighted basis (4.375% Sr Notes +320 STM). We maintain our BUY rating on both the bonds. Downside risks include possible leveraging acquisitions. Deutsche Bank Securities Inc. Page 61 EFTA01097715 13 January 2015 HY Corporate Credit Energy 'Figure 54: Cimarex Energy Financial Summary tee Men MSS IC OW IC Pb 5075% 50 /425.4.4 X02 041 pen,/ 00. ni401 140022 141107 10274 427914 S0141•00•4 2,101 041 10.0.40P MN 4.0401 1.041144 144t.24 1030 111•1100 2AC I 14:4 ni 444tnolliejni Osn Meal • [us Ike Hats • • NW Ann. 647 460 2.451 1.791 1914 esl Operalto Cot 184 130 1-14 IN 2* 7P KB 64 €Al /4 a•N0449,4 g mantes, t NI III III NI III 7 0 Pi CenD.ve am wows NI 167 IN 417 444 IA/ IA* 1446 IAN ODA 196 174 074 116 221 744 19I 61* 60 WIT 02 143 231 342 O4 an 145 555 747 04041 i 6 7 9 NI 3$ 2 21 051i4.5 01w0, 126 179 224 234 444 $43 674 741 omonn...2964.44 A Oa 4 131 P11 0441 1 14 Oa C441, 010,7S ®10441011 120 324 221 1616 236 IA* HI Al AM 0.044 92 117 $1 n 44 377 112 207 323 •441140400 IN 24.1 IN 149 414 614 430 341 OS UM ENTON se 1404444 IAN OK IAN '.00 14311 IAN 121$ 1444 1304 I. 00 ESTAIX *AIM 00.0 tlia I.NI 4411 IAN 1414 IAN NW 1.4E 1.90, S OWS Vfilen101101/ 10141 1741 1941 INN 9726 1412 018 44,1 97 . 40.04.0 004410 f a z 144 4 ,000 340 8.16 472 464 316 424 402 243 4.47, Preaues Cub 0,rpirl Itgazi G. KI0.014,11W471 31.9)3 32134 NAN 37.314 43.014 144.714 inn, 114.416 1282. /hand /*Mal Gie nic•ifordi n 372 3.16 132 442 413 4.48 443 IN 74,94,4 0 prosacco 11400 1115 MN WM 300 1231 14.742 075 11414 13.00 9t4120140 Rio IWO IAA len Oen 9314 P27 1101 NW NH Pay C4 4414N PDX Pro:4~ WNW UN 1.143 2251 INI 3276 102N (421.9 4.39 ,b;" 444400 WA P. 44 41910' 230 3144 104 3135 2440 Mil 031 NM 211: WalE41.00el 40:1•201.90) It(01 1994 1044 12721 14.51 NAN 91403 3424 41.0: Total 444004 444041130444 PM 14•3 12.• an OM 4744 6735 4I.:• dIrr. 41•5404•044•5404/54033 pies 4444031 $6410 MA MA WA WM WM 142.12 $4141 $4435 , b010393 41211 MIA ran tit% 11221 MA SINS INAS CAA 2203 3221 1220 11.30 $10 SIM 1240 )3.1.4 11444 41401 11815 41142 11621 MN Inn 11329 044, 364 Moto 12121 INAS IAN 41940 $1417 117.44 42231 INN SOS% ROI 1047 1041 3044 50137 1040 440 1027 00 (02.140 2101•111 41401 PHI 114.01 MAI IOW $1411 Sit a $ion 4r4 'r 114000. NO a ittO 400, 11313 OSP SNP MN SINN $1NP 8121$ 11111 44* meats Ian Pan $3239 PI.4 nue 331.4 MA 43723 CM Carell Flow. 1.9102•014400.. MI 54,7 444 437 440 1430 IAD IA: 0•004 14444 0 0 la I an 4 44' Tau CYO 0 l 'wig all...WWI Ca•tal a 010 POI/ N 10 M I itt MP 1211 44433 0.1 (W 42 4 or7m 11.4,1:1 419747 4 VI 4.14300 Otte 56.00• 0) all al On 44 I Hap NM an n4. n TIE., 3403.401 3403.401...wait 2 10 I II 1 nn 24 6 ii 27 rsaCiirtrkar a PI) PT P7) • PIA 41104 inn P711 ictiaani PM a J.:. il <I Ass., N 24 • I AN 44 22/1 313 N 4.mcoo now mei mgasisa sin menuns 1 0) 177) 1314% a n OM INN (ITC S 5 5 139 544 544 2 A 3 Bala. al a :AO Sin, as 101”. Crtcle Peal*. _Gm Tan Odl Ye7 awn Sialltia noel. Ca m•ti nlag Iteind Pan, Gat 4,0.0. Crust. LW Ca Sala talltACCash hal Ora 4;ov/ea letmet11 St 040 OM' (SIVA Don WTI OAK ionrn 0.1k.:. )414$110010000104Onaw. ttlbei no 740 740 1.610 INN 144$ 150 174 275 03 W l_S 113 ss 740 750 174 04 MI6 IFS 32/4 24% 1x 34% 010 43 IN/ 23% 3I% Mh 2724 Oh 0 I IK Oh Oh 1230 3223 An 4271 n6Mdalbiw..44 SI yawl fa .441016'• 01.10,1 le 10 041 3Iya4^w40n,Wani l444 WO 22 373% rat Was 24 44•1 owl Pus %win (43 Pa. Prolw44 64•01. nrotrqf !rat. a 23 h 223. 313a • b Oh 41 OS 43. 1244 33.40 PLO PM 1341 14.61 AA 1261 Callinalanc Pram trmire an manage* oir NMw awns ▪ 444341041411 040.1). u 440 n Don...w.Cotr055 II. coney II (411.11.Th !MI, IMO 0 nine. (2311'. 44. 100 40,1413,.. W4.4 N34'4110 As 5IFY IS 0.511304. 0544 moms 0.4 23 lib ran art (mar tn. tOCar N Kw •••Leanalow I:0 Urns en et 44 mamma natty CI 14 naran PS 60.•s•9 cOr, A74 MK., WIMMOAC 4410(44011, .. a OWAsso9 non.. 41.wanw astaray Won en efainkuLti.ausu a) 03, 704 PF /win•• .4.0awArn Sows Dwane Bak 030 6111' OAC4 a 1i., Ws k 34 • 0% .9% 23% It 4. 411* Mkt x • Oh 04 1015 31314 11.44 4249 fib Oh 5222 222i 00E 4% 14 Page 62 Deutsche Bank Securities Inc. EFTA01097716 Deutsche Bank Securities Inc. 'Figure 55: Cimarex Energy Financial Felted, -WM Fumed Non 640 • Can 4) kr.•••• 00.44 Cava 66,0409V 0.36 Low O4704.2•11101000 COL Or 044% 511111946.109 O143100,2014014 0•6940400 91001.2169 RAI an iron 00216.7 0094 40.074 C0C49 60009 160.4600 L140042910466n 0600000094400 Am. IT Crude (SOW, 041•2144,4,140 /441.i 004140 10/00140140 PM O444.0.444.1.2•4 annicsan Om, 1444.:401.44v.s 0.10ce 4"(I1 04, 03fle 0 4rt0.4, cn MOP 114.404101tto 4010 04,31, 0 KA 04:444. 4910 1144.04 94 104 400 0.0.1140 00.4010441 cia Lwow. 404.0.5 0001 Plinerue 4 194459.1144944 pw 04 %SOMA 140 C440 &A 1:00 O14.544 gag nem 33400 10 • 04 4441 3614a 73014173292 41100 cm m Cash Mr O11043 40044.44 04/24141 as C4644 C1011 ^4f 40.0160 CON 41'4142005 600. 090 11,0 09 .4991 neon et Gash Al. Acq4raan 13.01.4 re A.44k. F,. 0441/1734 Mame 24400.1. bW Sea Wiwi &Ca. 211134440 Loy 1444412.14 toT0 8605Ns lige. Crown 1014162 594.001030.140. 1460.0 46 006 TN 640 0000 IIITIMX40414.01,142 C0,04041Itlea0 4, SR 3431 1E01704 040106111:404 an 4104 0/193 1:491,4403040,44 41410 OdanPron•I ITnybcpse lawn. Mk* O46Prom210400 0501 ponsggo la.ttimailteava. Mae) $3.000 06650098* Comoro/ abes 0 go 0. 650 533 464 446 434 1410 I.m6 • :a go. I.VA 2434 101> 660 637 440 663 460 460 40 431 190 1.614 1.75$ IAN I.* 1.434 1014 10 10 110 214 217 321 226 223 371 MI5 534 511 037 III 617 47 OI 16 9 62 7 0 6) 7 446 el W fM 91 a 201 19 M IW 1241 5.1% . In 10 231 al 221 2215 330 94 205 DB 214 94 610 Ill 69 231 242 219 III 20 22 16 A 374 (06 54 69 767 at III 7 S 10 9 10 10 10 /0 13 I 2 II 21 34 * 224 91 3110 III ICI 13 24 a al sas 443 574 746 117 err 4 al 66 69 6) t Id 1146 014 . . AI . 234 220 IP ICI 13 24 014 141 01 04 05 0 IQ w 44 41 • 6 10 4 0 771 ta 312 207 10 234 32 If 10 144 Y 5 0 15 Y C316 95 530 344 6,6 5" 100 1.513 Is» 1131 1467 Im 114 ISM 0.03 1.210 1.336 1.141 I.a 1.631 1125 LIII %ME 1.446 1131 1.416 1.366 191 194 491 1.1P 1.29 1.10$ IMl 1,424 ISM NMI 100 07.15. 7322 5220 5250 1400 1721 61 50 4214$ WM 13 10 WA 1341 349 472 404 314 363 376 3.75 325 3.76 49 416 012 244 374 42? 374 31.93 37.311 432401 41370 41301 42332 4392 43333 117231 132013 19.19 1.0023 121241 IMAM 170.123 69 402 4.10 39 379 379 103 3,79 4.13 639 4.0 203 376 442 379 365 39) 1031 4201 419 4726 46141 4.724 1033 09 9.771 0511 1391 15321 15101 0222 2333 021 AM 4133 030 WOO 130 1113 7033 1140 4523 044 6033 2304 2242 2.76 *276 33.4 297 LW 363 294 4271 4234 1262 077 11.645 11037 91 3533 344 MAI 1334 1034 MY 21.14 • 340 4231 309 936 339 269 11.106 gob 14451 non 1543 ION IOU v4.70 20.169 *al 3419 33211 4219 12.741 9992 00 449 4414 3721 330 2423 31.15 3347 3425 4446 13.9 4133 <9 4521 90 16 IA NW MIN WO MAI IMO 1102$ 01.15 4129 $3426 0146 9031 Mt* I/132 61121 Ia. 111711 1126 1122$ 0233 11261 112.41 11247 19.72 1021 11040 11104 1160 111.70 420 1120 1220 $IM 11.45 119 Sl,n 21,72 %ITS 31 .73 5101 11.46 51.70 WO 11,10 110 1175 1106 11522 0531 1921 0526 0421 11621 1921 06 9 100 111.9 313 79 11411 SoS.63 MS 13272 MO NW OM 3210 10.11 HAS NM 1216 1910 1931 0403 1106 01/4 $111 9111 OM 3047 5044 PM SOU 1.041 NM WIC 1002 109 ION 9251 MM 1007 11441 11401 1116 016 11101 001 0101 196 169 11112 11224 31401 11111 046 1161 11514 11504 $1114 1159 11161 11513 11513 145114 11122 3167'3 51115 113 50 11114 11534 11526 0230 13610 53036 MO.n 41.0 13103 13140 01.14 COSI PAM 535.31 07.21 909 53131. 13146 91 07 440 341 241 340 94 274 142 1.210 1230. 1,141 I.a 191 1 Ca 0 30) 92 1106 1411 4 1 0 PM 0073 NM VIVI ON) 519 13111 430 0335) 1160) 11.5013 114250 0.09 114711 (1.92 01) 419 42 9 (4 0 26 041 17 00 120 61 09 61 0 9% OS) 10 gm (IC 11471 IW 0331 213 87 NMI alefe 124(0 *MI 000 13 1 Is I II I 43 11 33 5 12 a az a 6 73 07) 0 1319 coa 2444 411 061 135 M 4911 0503 WI) Pal (4404 big WII • 450 124 IS .2.1* 313 03 440 • 0 7.1 take 140 0201 Von non 69 011 941 M (WI non WO (1251 0110 6 IA 34 1:(6 te 3 IN 2 70 6 310 150 1W 193 1303 1320 331 a 350 19 a 1400 193 274 146 25 13 174 122 ;I 1.39 503 111 42 336 . . 336 124 1,373 1.332 CM I? 107.130. 371 10.714 5010 13.075. MN Pt/ PA 062 415 SO4 11101 1.1124 1312 Ian II 10 106 40 110 100 1333 1050 I.a 39 363 405 a 06 1010 12.4) 30% 204 In 5% aft .Ses - 46% 4% 4% 23% 9% 1214 21% 311 304 1014 IN 4% 2% 6w 24% 43% ¶01b 25% 12% 211 )374 331 2444 294 4h 131 1234 Ilk 9.h 4114 Met .272c 24.4. 1334 lit 12. • 014 00. 014 12. . 024 1.7. 01. OM 01. IS. 10 6r 113 045 13. 03. 074 0.7. OB. oh 13, 004 00 074 Ott 1.14 10 19 044 09 034 014 Oh 075 Itt I3 941 PC MN NM We) 2040 Oh* Pa 1019 Ma 1333 PP NM 444 9:151 1415 Mn 9.73 9171 Mn $075 12133 0034 1024 941 gym 413 NA 12413 1203 1140 PSO VICO 1140 1340 144 SI 34 11.11 13.9 1110 lan 1300 NA Pe $161 KO 1411 1461 051 14.61 KA V* 11.44 PM 110 120 140 444 EFTA01097717 'Figure 56: Commodity Price Scenario Analysis: Cimarex Energy Forecast Metrics NYNEX Gas t SUS $300 $179 $40.0 $383 $50.0 $587 500.0 5791 MO $995 $80.0 sue, $90.0 31.443 11.75 OSLO $200 $400 1125 310.0 9840 9900 117. 130.0 31.098 SSW) 21.322 $90.0 $1,54] $225 5267 $471 5675 5879 51.010 $1.267 11491 $2.25 6297 $522 $746 1370 11.195 $1.419 $11/44 NYIAEX 084(1'mcle) 11.75 12 0.25 µ75 tA.IS µ75 $30.0 126x 82x 6.0x 4.6. 3., 3.1x 2fix $40.0 5.6tc 43x 346, 29. 2,5x 22x I9,, 1500 33x 28x 2.4x 2.1. la 1.6x 14x $40.0 22( 20x 1.7x 1.5. I.4x 12( 1.I. $70.0 1.24 1.5x 1.3a 1.2. IAN 0.9x 0.8x $100 lax Six Nht 0.e. ortc 0.7x 06x SO It 0 9,, 0.11,, 0.1,) 0.(4 0.6x 06/ FY 15E ERITDA )8 Million, $2.75 025 1,355 $443 $599 $647 $763 PSI $967 11.066 51.171 5)25,9 $1.373 $1463 $1.579 14)667 FY 16E El3ITOA (S Million) 4525 639 $491 $616 $715 $643 1910 $11367 11.164 $1292 11.388 $1311 01.613 $1,710 $4837 FY 1SE Net Leverage all 1425 $4.75 $531 $619 $707 $735 5423 $811 $939 51.027 51415 $110 51.231 51.319 $4347 $1435 61.523 $1,561 $1.639 $1.727 31.755 31.843 11.931 $335 16.26 84.75 1.9118 $485 $781 $312 5909 $1.03$ $1406 $1.133 $1.230 11.261 $1358 $1455 11.485 31.582 01.679 11.710 21.06 ELKO $1934 32.031 62.126 IV 145E Ncl LeVetdlit . SSTS 5226 Sin 3325 =7S $420 µ3O 130.0 1211 83x 6.1x 4.74 3., 3_Ix Zfix $40.0 5.6x 4.4x 3.5x 2.94 25x 21x 1 8x 1500 33: 2(0, 2.4x 2.0. la 111 13x SA 224 114 47x 1.5. la 1.1x 10. $70.0 ISx 1.43, 1.2a 1.1. la 0-8x 07x $80.0 12 It 0,9x 0.8. 0.71 011 05x NU 01: *$$ 0,7x It/ 0,5x 0.611 04x Sours, Deana. Sank MIMEO= FY ISE FCF' IS hYNIFx 1..1 $1.7$ 12.26 $2.713 025 63.76 $4.25 $4.70 $300 ($1.082.. 41.0171 4952) SIMI (36231 4 756) 1149/3 $10.0 ($8331 44663 1$034) /391 ($671I ($610), 11546) INA 4785, 4720) ISM) 5901 (16261 4481) 4394) $00.0 (56341 i$571) 11507) 11421 ($377i 4312) 11218) POO ($4871 (6423) 0356) $2301 (52291 (MN dog) $na 43391 4274) 11201) 1451 4801 ($151 149 6040 4 1901 (5125) 661) IA $69 $133 $198 FY 16E FCF (5 /Aillion) NYMFX Gas IS 111.75 1225 $3.25 $3.75 MSS 64.76 $304 ($1,346) Ol.2521 41.157) l$0383) ($8,0) Gem) ism $430 41.1218 41.013) On) 1$13441 ($7501 4655) 11561) 550.0 ($2091 (SUN 1$7274 1111$911 (35311 NON 4342) 560.0 ($590) (4695) 11501) 111061 ($3121 4318) /1123) $700 (1,471) MTh ISM 181881 ($431 $1 $96 $130 41521 41561 OW) 131 $126 $220 $315 590.0 ($33I $61 $166 5260 $345 $439 $533 FY ISE DebtProved Reserves (SIVIefe) NYIAE X Os. (SINN) $1.75 5225 3275 0.25 530.0 50.9 $09 1,09 308 MO 54.1) 104 $06 $08 $900 54.1) 804 $0.7 $07 560.0 $0.7 0.7 93-7 106 170.0 $0.7 105 sae 106 6604 $0.6 SO 6 SO6 SO6 NO 0 60.6 Sob $O6 $x6 ]5 SOS µ76 SOS SOS SOS SO.7 30.1 10.7 $0.7 SOS 10.6 30.6 60.6 605 30.6 60.6 605 $0.6 60.6 10.6 96.6 60.6 10.6 FY 16E Debt Played Reserves (S Melt, lin1Fx 0 S. m< 4 I $1.71 22$ $2.75 025 0.7$ US $4.23 1930 544 $14 $1-3 $1.2 81.2 $1.1 $1.1 140.0 $1.3 $12 $1.2 $17 $1.0 $1.0 10.9 $500 $1.1 $1.1 SIC $I 0 $0.9 $0.1) 104 $500 $1.0 $0.9 S09 SO 5 $0.7 50.7 104 970.0 Sal Kra $07 SO7 SO 6 SO. 6 $aS 140.0 60.7 60.6 606 606 10.6 $0.6 SO. 3900 $0.6 $0.6 SO6 SO 6 $0.6 134.6 10.6 EFTA01097718 'Figure 57: Cimarex Energy Benchmarks ocrit 3A 20% '5% 10% 0% ProlsOisisarn 2S% xg, 20% 18% 011 1202 1 330 201E 501 aran011 Gown oc wl o 2012 2013 Ewan* Eon 81% 31% 50% 40% 30% 20% 10% ii 2011 333E 1710E swc ovege W . 2013 201E 2011E stEC 34.59$30 0403 200 20IE 2013E sec Erns roan 041 00 00 0 00 $00 86 7• 63 507 213 23 Oh Oh IERNEstEse SUS 5590 250 $45 540 2 MI SE it 842 I an 9 ISO 50 100 8 100 263 264E 20IT 141 1080660 04886 2013 2011E 201 CM sins Erin 2012 2013 Side PP -In 250 200 150 00 150 100 33 201 20E 1 3 10i 03 03 311 arC 294 sew foto dem 012 01•1 in ED cal op. ions 6800 6 131 Ii 2013 201E 331 fteenel wit4s Saaoo ClaWare ant Abontrog F4444w to carman/ as Mar: sp In w)114.434211133Qn Stand Wilda, S 4444444.41444,W LM' 4orwoclawl non. owawlcomptela Pm 1.4.4 (66r6.6 cor6n6s comved by OS HO MOE Use (ww.4-33 Agway ,86:t ourputan054468869. CH( XECDAWFSPX00.4411CRP,AVWX004,ARCSAIIIST LW SO FP, LI*(40444.44 cor6v8is not cnrcal by D8 Kph 168. CA 6Wnst 69LiAlt /oho 11334.pbug consensus wohtunti an3AASEPERAUICE4OCOMIKEPXOSOWAYPAIPC40ASPEPW4ROSEXX(SEVGERSA(1)341112W (kW WPX 13 2013 2014E 2015E 03c •••••••• Oben Og 97 97 cn EFTA01097719 13 January 2015 HY Corporate Credit Energy Denbury Resources Relative Value When we moved to a guarded stance on Denbury (DNR) early last year, a key reason was the company's inflexible and high cost business model in the context of rising medium term downside risks to oil. With the downside scenario on oil playing out - more dramatically than expected - credit fundamentals should see meaningful stress, though impact in near term will be cushioned by its strong hedge program. DNR's relative vulnerability is explained by its asset portfolio, which consists of conventional assets (including core tertiary operations), in contrast to its peer group dominated by shale assets. This translates into significantly higher LOE cost of $35.71/boe (FY 15E), more than double the group median. While management recently stated that they would focus on lowering their cost structure, we see limited scope for improvement in the near to medium term. The asset portfolio is also characterized by substantially lower decline rates and long lead times periods for its tertiary projects - both of which reduce the company's strategic flexibility in the face of an oil market which has suddenly become unstable. Basically, the company will be stuck with highly defensive (i.e. maintenance level) drilling program given the heightened uncertainty regarding long term oil price outlook implies shaky economics for assets with a backend-weighted production profile. The ambitious plan for a full-fledged tertiary program in the Rockies, deferred to the latter part of the decade earlier, is unlikely to be executed if the current oil price environment persists. The outlook for a defensive approach is exemplified in the company's FY 15 capex budget - at $450 million (excluding $85 million of capitalized interest and costs) - represents less than half of its previous medium term annual capex outlook of $1 billion. While YoY production is expected to be relatively flat, only modestly below previous target of mid-single digit annual growth, the corollary to that is it will be unable to respond to an upswing in oil prices with a quick ramp-up in production via aggressive capex in the medium term. Moving on to FY 15 outlook, we see a meaningful decline in EBITDA levels to $927 million from $1.3 billion in FY 14E due to sharply weaker realization. While, on paper, the company has strong oil hedges (77% at —$80/bbl), more than half of the hedges also have a short-put (average strike price - -$66/bbl) embedded in them - given our FY 15 price deck of $54.38, the protection provided by the hedges is somewhat mitigated. Net leverage should deteriorate by 1 turn to 3.7x but FCF should be modestly positive at $235 million. At our long term price deck of $70 oil/$4.25 gas, run-rate EBITDA would be close to $800 million implying net leverage of over 4.0x, and we see the credit steadily moving towards that level as the current hedges roll off. Even this scenario would be acceptable because the company would still generate slightly positive FCF based on maintenance capex in the $550 million range. The critical threshold for DNR would be oil at $65/bbl (unhedged) — at that level, cash flows would not be able to sustain maintenance capex. On the positive side, liquidity is solid at $1.2 billion (largely availability under its $1.6 billion revolver) and should improve over the year as the company uses FCF generated to repay revolver borrowings. Page 66 Deutsche Bank Securities Inc. EFTA01097720 13 January 2015 HY Corporate Credit Energy In summary, we view the split-rated DNR (B1/BB) as relatively more vulnerable versus its BB-rated peers in a scenario of extended period of downturn in oil prices, thanks to its high cost model. Admittedly, yields have widened significantly in recent months factoring in the new reality. However, even at current YTW of 7.0-7.5%, we see better relative value in a credit like Hilcorp, which is a good comparable given its largely conventional asset. Hilcorp Notes '21 (YTW: 7.3%) trades in-line with DNR Notes '21 (YTW: 7.5%) but has a significantly more resilient credit profile (1-2 notches higher credit rating) driven by a meaningfully stronger financial position (FY 15E net leverage of 2.0x versus 3.7x for DNR). Hilcorp also benefits from its exposure to Alaska gas market (-20% of FY 15E revenues) with fixed long term contracts, a welcome diversification from the weak US gas and global oil market. On the other hand, investors looking for more direct oil exposure (and the effects of an increase in crude) with a financial profile/rating similar to DNR could look at names like EP Energy (EPENEG) and Rosetta (ROSE), which can deliver faster changes in operating momentum, in contrast to DNR (discussed above). EPENEG Sr.'22 (YTVV:9.1%) and ROSE Sr. '21 (YTW: 7.4%) therefore provide relatively more exposure to commodities in such a scenario. We are maintaining our SELL recommendation on all DNR bonds. Upside risks to this rating include a strong and sustained improvement in oil prices in the near term. Deutsche Bank Securities Inc. Page 67 EFTA01097721 13 January 2015 HY Corporate Credit Energy 'Figure 58: Denbury Resources Financial Summary - Si,- 54644.40 8.4enwein P4m4.• 5):#4 :sr r..44.4.4.4.41.4”. au 2333 s kn.) 5.44.344143 ,4n4.1.4 ZVI • 8111401399(1174.10 littrAlb.4.110.94/4•1 Pillt$4/b44 .02 'Built! 1\X4 1 14.1.42 1444 23 1647016 14440-17 4$ NS 64) 674 616 221 244 744 277 II) 1271 $ Minn 445 nnom 337 Ms 004 14 U.S 141 LOT 232 184 191 49 47 LOT c4o04041411 267 Ia 86 147 a 43 131 .54i0tN(401 LOI1464014% Taml 67 M 36 -Mims Lnatelirtninia Mien ISO 1.040 1411 130 49/10214100.41414141 1411 1.11 4471 1441 NW 41.444• ,S1144 1106.13 19441 114710 evi Mk Nan 0101444011 $143 347 102 44 0_05 Kiln 0.1.0.40•44$ 044'01 n. new NS Cs tro144/44 2.112 pal 994 410 307 4441 t33, $427 Ae 04Pna) Wt. MO>) 4229 1242 23.6 4.1 n. new Cl Pro11044 POSSO 23303 543.41 lint El...abeef4c0.4.112,41 6441 on 1133 8431 7. eid [.144 melgR.f 110.1 P012) 161137 1.9921 0144,n4•41304.4139)014,0ro 10. Prnantan $141.21 Inn 414.54 ,144(. 11 3316 13277 21111 13370 12147 5537 4454 PO D OHM 13119 41.0 tb 42 09•1•11.4 Sc.,. 14132 13441 M15 57434 44 14,712 4.3 3 awl 440•11643ai 51631 31219 11771 11410 ..2.7.10•41042.41 5312 41147 SP 114 (3347ars fr. CM Fine 10342 914.11 51416 Wi1 Letr4AX•45414.0.4 417 327 345 30 C3(027454 414 III rail Clem am Pa) 42113 Ct•nonX41Was.r.2Coplail 54 ON Avaiat1V0, 010124Mro Si 14 13 ..en111.1 Cocilami near/ 13 4..40 Flow Dago. reAuir• fn. Cash Maw hilM4441)414.1 0 D•44.444. 444 we. iner.44 1119 141 0331 423 1443 Can flow 44444 443343444•4 SPAM* Miami 9444 0I 27 It 8 12 0430 (44. 350 340 140 64 01.44M 40hr 7415 2937 3444 2123 Reg tem Nte 1276 10411 1614 Yet ov44 4410411.4 P3.4434.3.3314 4443444 4444.4•014408443443) 3, 41443. Gown (TM en•3144•6414". LCITOACCan344•••104.3 Caliand 3044344 (34304404343 N10 MOM 4I,C4t4E0/104.11 bit40.e.441NNthpalAounts 449a41 421, OA* 724 OAP 044 all 224 2315 224 410 1744 14 a 411.41 Can 6 MUM() 1474445 Mae* Pop 444401457 =16 C001.0.1 1.4443133144m MP fir 113 MEM 40404241140140051liry 2146 4i0 0.0•11101.14 .10114/as 333 TOSS Sow- COI 742 • 710 Snv145474•04 P.m (14 7017 3 t 72:16 some shewneciP4ases4 2321 400 :MeS.rvrumareps N7A•411.332,7 1203 4421% Sony 5.44e.44 • S f.aam 4 be 2023 Tad 0401 3443 14410444 144 14m0171•14•1441102w* Yana Cis 3333 Calteptim Vase 4443 ELY 48(1114, 4.4( 11•1040.4111T042 174 II/ Ill tenets' Sp SI SAnt DA•001,4 Bonk Compaty 0461 In 7X Ode 2.45 4.4 5124 103.1.1 1411 10213 433 2413 431 Z43) 242 124 11071 344 547 30 41 3 444 044 834 tom 111 1.550 IAN UM 610 PIO 1013 09 14 14 41 5 IOU IP) 8X) 01 le 34 129 144 31 213 410 412 1,34. 14725 Ulf 1.741 UM 2417 330.28 mn WS3 $4 4743 WM 1344 121.68 1633 98341 344 try 34 1721 It 414 3,165 164 1.14* 1.350 4.449 1.441 1433 IMO 510 1194.14 31 07 6421 123 347 214 10054 21434 301 1247 40 4 22411 24442 2054 MAI 1477 110300 X414 X01315 2103 1.91 102 04 17 59143 44.53 1.4.17 1306 1306 43340 SUS 5641 11141 11(04 MD) IM71 543 WII VAS Si 45 11731 V/ a 11417 Sian IT 4041 Ian NUS 40 IAN 11 1411 4I2 (1.4731 0.74<0 44.410 DO 31 23 143 130 127 14 0111 440 41 61 13411 ono ani 14 1 OHO at It 2441 3.141 It 10 940 2037 3297 2% 3% Oh 34. 244. 11241 72a 0h 22a 275 5748 01* (404144213244441204 0•4141)R410,1411.4 •Yla30:0•It•ta4 ve444 (flan 00•3•21, wann 40.440, 0,14/0 404 ana44 410).6,67. ((W1 its•Nos nv. 1444t441.414.wuns SatIniarr of roarml• I w,Nye 304430.0 ann. n Menne 210•0%,440441.A.It. NSW. Loa ma Mibtra POP". Snraw hie} *AMC 47 4 C.C.W, 14.414.11111 140surgp LOLMLat loam 4.03.1.3%) IltiAte amain ptt•Ifreall• maglaina bign37 40174410 4444440 Ewell l. 4•5 44( 055 2.71 4748 14344 723 On tat 444 11241 215 415 723 02. 2.13 lb 44 P. nanny Os porn, rut GI, !tali Itintazt Lbp111Prvittl{. 4.041 bia•antIn, 440. Cas r.7.11:••••;p41 4rone Ln.Vnen 4rone 4414bITMIIAll el !Inn. RibpIX•••••1101 rt.. Nora ISM, pi 441 1:0 714 4.4 (6 4112 3300 17 RICO to 01 20140 24111 05( 1104 .16 07 7115 Int • 1633 Page 68 Deutsche Bank Securities Inc. EFTA01097722 13 January 2015 HY Corporate Credit Energy I* l9 3 0 8 0_ C 2 LL 2 0 cc C di is) ca LL a a a a I3. as El ER IR gii ii Ii Ii e€ 24 a ae - ' £s PO ! II 1E Ilg I !! !I!: as N 12 1 ta g2 _tsassaa 922 deg 6 II 9 WI -12 0..2 E3 1 2 2 " I E s§ ;: !1,1 t: axsb a •t1 ag 22 gar 2 e rg_i II 1: glgitsi R.2 ii r a 92922:22 12222222 92222222 19929932 22:22222 ; 3222222 8292222224192 12 2 2 222 2 22 £232223 2222222N• 1112.2941012 latrimt ti 22.222222 22222292 21111:11 22222422 • 12:22222 iesegsaii ;11ttatl 99292932 ; gisiita I 2929292 aeseelle F a .€l9 I rt€ 242222222 IIIII* Ill 292229222 asseetazi 22442222X t et al gggl 2 tea aaaaasaaa aSgil IllEas331 23 99999 IfiUIlatil iiI:III1 'WW1 4222224292 9434 Etsitsati 42242222; 24R22 4 422 ateaaR2R5 2026432e acasturatt Wa llin/a sit2:11111 0; n3(1121111 ill .41; hi ii it' i3 212134.i2 2)414 2₹652 246 2261 .L 242.2 rite Ia€.c 1,3!. a *a ma e a g a ant 9 -9 29- a RI•IG 231 ▪ it Ei • ag .2 1 2 EF31 2 al 13! Ci! 22 O 12 2 • 172, 44 2555£ ( 4 5212: 64 2522: 64 2242: 44 2:32: (A 2245: 44 2222: 41 2222: I 1 i a. !I I III Ili.2 lig JAW, ? s26112224 i.!1,4 I I Deutsche Bank Securities Inc. Page 69 EFTA01097723 61 O ri 'Figure 60: Commodity Price Scenario Analysis: Denbury Resources Forecast Metrics Sour. Dordiso. &yr* um $313 FY 15E EDIT DA 'S Million. $275 025 075 1425 $675 $1.75 $225 FY 15E ICE $275 Iru'i 9245 53.7$ $30.0 3669 $663 $567 $572 11$75 $306 $300 ($1211 0115) 0114) 111111 (6)071 $4OO 1699 $703 $?Ml $712 $716 $721 $726 $400 ($171 413) 1110) (36) CM) $50.0 4939 5844 1845 1952 9356 SEM 5866 150.0 $87 $91 $95 395 $102 $400 $960 5984 $9811 5932 $997 $1.002 57007 $300 $192 $195 $09 $232 1206 $704 11.073 $1577 11552 $1.036 $1 000 31.095 $1.10) $700 $200 $264 $267 5271 1276 580.0 11.106 31.110 $1.114 51.115 51.123 31.128 11.133 $80.0 $205 $23) $293 1297 $300 PAO $1.293 51.234 11238 $1243 51.247 51.252 11.257 $90.0 5392 $395 1399 3402 $406 FY 16E. EDITOA )S Million) FY 16E FCF ($ Million) NYMEX Gas Minot IMMEX Gas IS mcI 61.7 $29 3275 $3.25 µ75 49 54.75 $1.75 $225 3275 13.25 $3.25 $305 t1391 ($3$1 428) II= 4171 0111 ($61 $300 t1635) t1630 it6n) 1$5201 (SCR SOO* $106 $192 $196 $254 1209 $215 $221 $400 04271 (UM (417) 10121 (407) 150.0 $412 $41$ $424 $429 $135 $441 $446 150.0 ($2181 (6213) RSV ISROI (0961 $50.0 1638 5614 1649 5665 3661 1667 5672 $60.0 0101 ISS) 9) $5 $10 $740 1829 OW 5861 UN 5872 $878 5884 $700 1178 WO $188 $193 $199 NW) 21.020 $1.00 0.039 $1.015 21551 $1.056 $1.20 $230 $322 $327 $332 1037 3342 $90.0 $1220 $1.226 $123.2 51 237 1120 31.249 31.251 123.0 1403 $41.9 3494 1499 1504 NYNEX Gas (6.mcle FY 15E Net Leverage 51.7$ 42.2s 3275 63.25 $3.75 $4.75 µ73 005 65x 657 6.57 6.4 6.4x 63x 5.27 $40.0 5.1x 51x 50x 5.0. 50x 49x 49* 150.0 417 4.17 4.17 402 4 Ca 407 520.0 3Ax 347 347 3.4 3.4x 33x 337 $201) 3.1x 117 357 3.0x 3.6( 10x 207 SSOO 307 29x 2.9x 2.6. 20 29x 29* MO 25* 26. 2.6. 2.5. 2k 25x 2.67 FY 16E Net Leverage NYMFX 11.75 52.23 2275 13.25 µ75 54.75 µ75 $90.0 1059x -127.1* .152.7. 191.6x -2373x .3925x .130.47 $400 21.2( 20.67 20.04 19.4x 185* 1937 17.87 SO ilk Six 116x Ili 52. 521 61x 560.0 621 5.2x Six 5.1x 562 5.06 407 $70.0 35x 357 Ilk 3.6 3.52 35.3 3. $6.0 2.3x 287 287 2.10 2.71 273 2.77 WSJ) 220 22* 2.1x 2.1x 2.1. 2.1x 2.1x FY 15E Debt(Proved Reserves (SMO1e) NY/SEX Gas Manc( ) $1.75 /2.25 $275 13.25 53.71 $300 31.3 $la 513 sla $1.3 UM $1.3 $13 $1.3 313 $1.3 50.0 112 $12 11.2 $1.2 $1.2 550.0 $1.2 $12 512 $1.2 $1.2 $740 $1.2 $12 512 $1.2 $1.2 $10.0 ill $12 11.2 $1.2 27.2 $900 $1.1 $1.1 11.1 31.) 21.1 FY 16E Debt Proved Reserves (S Morel HYMEX Gas (Smcre) 17.75 5225 13.25 53.7$ 130.0 11.5 4.5 $15 $I 5 $1,5 $04 11.4 $1.4 $1.4 $1.4 $1.4 1'1 $500 S1.3 $1.3 $1.1 11.3 543 0 $60.0 MI $12 $12 $12 4.2 170.0 $1.1 $1.1 11.1 ILI $1.1 $800 $1.1 $1.1 11.1 11.1 $1.1 030 ill ill $1.1 Kt 4.1 $425 (Sip SI 3106 1210 $276 $304 $410 14,75 ISM 35 $110 1214 $202 $306 $414 µ25 SATS (5610) ISM) ($401) ($396) 01931 MON $15 521 1204 1209 $347 $352 $609 $514 54.75 $1.3 $1.3 $1.2 $1.2 $1.2 $1.2 ill µ75 $1.3 $13 $12 $12 $12 $12 $1.1 EFTA01097724 Deutsche Bank Securities Inc 'Figure 61: Denbury Resources Benchmarks 100 020 100 IMO 12:10 0:10 930 01113.dilford Sao 00100.020.0 2012 2011 &DWI •Vaalli nee 3313 leo 2011 3312 2013 Ca ~003 111 Ma 30% 30% 70% $40 $57 930 N0 130 000 ST30 100 $5 0 $0 0 3313 3014E 3010E We Twee. ei0n. 1174 snit *Mat —in 90 BO !O 613 00 10 30$ 20$ $ Orb 0•1001106.0 919 2011 3312 2013 oobsinat — 250 320 50 00 150 100 1300 000 00 900 200 100 100 3000 IOU 01190 1101 he 3313 2010 20M 401 36 301 451 20$ 151 10 O6 Ors $ 1l54, lies 31125,8 44 3311 2012 3013 an -ea *Pe IIVIR Sena 1013 4014E 4015E C. Ole°, ale So of Doidacts Bonk condi,/ defy aleapfelOOLP Mean" fowl Atlietz Mallen BB.a,M.6t,n H MMob indaeb bah cowrod mid non. p>nna 4000•049 FOE NO Meow," comparve. oann00y D8 HO 1N( NO &Incases F" w46 mats puWAtIod astinwas. 044 XEC,OWSOCCOMILCRP,III(NOCOEPARCSAIVST an: or SO Fos No Meow," comparvey nix cow**. by08144 YeaL al heat iViva ne,1 Beep co/:minus amatunts oter. AMEPERARSCROCCVAIRUPWSCA(MHAMMOASPEPVAROSC SN.SEVLWAtS4VPIA4 YEW OM WAX EFTA01097725 13 January 2015 HY Corporate Credit Energy EXCO Resources Relative Value Severe commodity headwinds have pressured EXCO Resources (XCO) credit fundamentals. While the company's core asset, the gassy Haynesville, is a quality asset, cash flows are decreasing at the current FY 15 gas strip (—$3.0/mcf). Its acreage in Eagle Ford is second tier but still of reasonable quality but is likely to have marginal economics below the $70/bbl threshold. Offsetting this gloomy scenario, we see some positives. First, its core Haynesville position is has resilient economics. As of June 2014, the company had a gross well inventory of 85 wells in the Holly area (Desoto core), which garner the best returns in the play with a breakeven (defined as 20% pre-tax retum) at $3.35/mcfe and 40% IRR at $4lmcfe. Next, it had another 143 locations in CCM-Haynesville with estimated breakeven at $3.72/mcfe. With close to 230 gross locations, which will generate robust returns at longer term gas prices of $3.75 translating into -5 years of drilling inventory (drilling plan of 42 gross wells in FY 14E), the company should be relatively resilient to downside risks from a gas market grappling with oversupply in the medium term. Over the longer term, when the market is expected to be more balanced, the company is well placed with about 600 gross locations with a breakeven threshold of $4.27/mcfe (or --14 years of drilling inventory) and another 600 locations with a breakeven between $4.27 and $6.00/mcfe Second, its asset base also has a significant Proved Developed (PD) component - —737 Bcfe as of FYE 13 or 5.4 years of reserve life based on FY 14E production, which reduces the pressure on maintenance capex levels. Third, the company has made good progress on the operational front both in terms of reducing costs and optimizing production. Fourth, liquidity is reasonable at $853 million as of Q3 14. Moving on to financial outlook, EBITDA could come under further pressure due to weaker commodity prices - however, 2015 hedges are solid and we see less downside risk to our current estimate based on the revised -$55/S3.75 DB price deck we are currently using. The company should go into a largely maintenance mode in Haynesville or even below that if current strip prices persist. With medium term price expectations of $70/bbl, despite weaker economics, we see the company continuing its drilling in Eagle Ford. We see total capex of $460 million (versus —$435 million in FY 14E). Overall, we see this driving a cash burn of -$350 million through FY 16 - therefore, current liquidity is sufficient. Also, PDP buyouts in the Eagle Ford (for wells that previously reached the required rate of return) should enhance revolver availability marginally in the short term. Overall, we acknowledge that like many other lower tier HY credits in this commodity price environment that XCO is also under stress. However, yields have also widened significantly over the last few months factoring in this new reality. At current levels (YTW:16-18%), we see the risk-reward matrix favoring the latter due to credit positives discussed earlier; the most important drivers of this view at relatively better 2015 hedging (top quartile) and through cycle liquidity (2nd quartile) of XCO versus similarly rated HY peers (B/CCC). We are positive about its high quality gas asset in Haynesville - despite current weakness in gas prices, we see improving S/D dynamics in the US market over the long term driving a more sustainable business model. In the interim, we see current liquidity levels as more than adequate for getting through the next couple of years. We maintain our BUY rating on both the XCO bonds. Downside risks include weakness in operational performance and a further weakening in gas prices. Page 72 Deutsche Bank Securities Inc. EFTA01097726 13 January 2015 HY Corporate Credit Energy 'Figure 62: EXCO Resources Financial Summary Imp 711411.410,4 Oa Mt s o% nes .M CSC 10111010/ CCU OHM/ to Mao isccasaw 410714 41407II 507714 440017 Ms) MN 'flan Nana MS CO O an III TO 144 so 01 0.044•1404040, 040 • Can 440441441. MIAs... MS MO PP 03 III TO 744 dIJ 0 k40910444 72 77 0 a a PS PM 20 PI 4400 444$10040.101 II 0 01 113 1 114 114 UR a 011,414.04444 444 TIT IN IR 41 04 WI es al 70* 44 OD P N al RJ 101 017 a N N a a IM 713 Fon 24 )4 1 44 44 73 IP 417.100.4 0 23 2 34 142 77 .0 0.00141440404 0 21 23 4 011 IS 10 04 SO 6. 4•04.4 i RD i IN ax LIP PC 1.100 04.1 POI ila 0 1 a O. 13 00/4 a In 0 sepr• POI Pa a i Q O. OP 011041.41141144.14 04 0 40 432 IP 414 PIS CP 441 ...11014160.4140 1004 234. .12) 412 40 417 43/ 444 Z1 234 44011111104401404 1531 PM RN UM 1722 440 PC NN WC 0440 Paw 0.4,10.10.4 0Si 10 30 5.53 5053 3/5 20 4•2 03 1/7 Fr 4044144 Pi 4.111111.0.1.53 prnweell MRS AM R722 PPG 2120 111441 04240 442140 722221 A•44•4443•414.47343.34, 0. DP 0 IP 241 IP NA la PA 40 Oa 4$4‘... 4644 242 GD SO 40 IP :ISA 743 7:4 3434 Pe• and t' taa 2.144 0 DP PA Na 4143 IP NA la DP C400il.C4 4...,201 S2 0 a a 43 N. • all 20 Wane PAK ha4.3143 Pr 40.0 0$4 ) 441.E fps Oa...0 %Dow *wen 421 4.42 4/15 40 40 477 4P 314 414 44440.4 0.4011410104 WIER 0404144 $431 µR FY FM µ44 µR 007 UN µ1I .4.44... 44 11 1121 11.38 $141 110 SW IIR SW 1114 041 RR PR RP PP WO ROD PIP DI 44 772 11031 PM PRO PP 110 1110 1117 1241 477 4114 Of 444•4 004.. RR MR VIII PM PAM NP Pa 11471 $020 ...sr., ssrowss SW Rq Rµ P.N San 2202 KR MP 4041 2004 CAD 4 , 4 0. RP FM DIM NM 1422 1422 4310 $143 PH 2/4 a, 140.4 ,.../ ...I 1144 $427 1427 4427 3427 $627 SI 10 110 14 17 MCP 0 Cm µN µY OM 024 4/4/1 KR µY FM 4424 00240 Mal 44101.n11041 101 117 00 402 Al 40 IN 0.1 01 04044 Ter 01 Twee.. 0 41 101 Si' P.1 OS PRI OW SDP IMII 000 n 000 0.4 C.40 141 34 see WO /a IN 00 I21 21 10/.44004.17 Fet Fr/ 4 Sr i i II? PI A IM 400 44 101 0.4,2•41 C4401411.40 R II R 12 a 44 a R 10 ...cwt.. 1. 0 IS A 04 • PA OR 4.4.10.0 404 04071 il PI OF 18 072) 111 100 2444 0 Cos are 04 04.1Con Pie in 10 a 2 10 SI 444 124 790 1,4•04411,0 10 Mel 904 PIC a 04 1 0 21 IGI Me IN 1401 is.....0. IS 71 III II 70 71 III HS 11 PM swans • Ots• Lei WS 42/7 In 748 10 C.42144.444 aL 15 374 IR 20 9tl 1144 1101 222 .40 ton 04 (0 FY 070434/41144 14.D.D. 0,..4 Iner$ 0 04 0 04 0 041 0 I% 44% 11% 7% PR .106 406 P40,00, 5, WIN 4% 0% 0% 4211 4% 1.11144414 4444144 Ha 000440410 es* 4 4104141410 44100 141440 DURN$Conav 4 1.f 4%.10 004 4.4 414. 4k 47$ Sty 444 764 2b 44 M. 20 4440110.1 Ma 214 . Lk 44 OT Oh 222 24 24 Peat 11704 Oh 4 74 14 134 3.b Alp 4 7$ uste041.144141 44 44 114 14 IF IF 3$ 24 41. 0440%,0 Nape 4.04 UR PA PA TIP PM PM SIR SIP PIO 0%I 41 5 1444, RN 41.04 RR RCS RIO RIO SIM PIO RR 1.1110441440004.100040440 Fin0 1100141.44044441,010411 111R0C•0•0•444 pia Cipune.10044 44 44 An An 7.4 40 44$ Dt. 410 014.0 14. 474 044 04 04 US 24 214 01047404 24 I4 324 414 474 N14IL.ag4 a. 4040 414441010 Raft. 304.4. Sla 04400214111/ 4%0 knere010404420/4. Lon 44.004 6404000010 toms 43404114E awl 0:442.4134,4241 TwOot Fah.. S.* cat onnewsano tats N. 014144 114 414•44540 41040 0000 ton C. 401400 0 4 . emu: Ms Cason sows. alobia•toff any. 114 IS 046 - 711' 422 ra 327 1.433 33 70 IM 011 414 1St 41. 14 44•040.0 .Jor 00 414 44441 010440,10 • PM eon cs$40d4r4•40•444 4•4•4044444100.40)Ck.,4•4 4$0,4” 844040c 01440.4400 714 MA, 4040, 000 4 ap 414 egroot$10444 44444nr 04$444.104100 04.004 • 14:010 0x44. 0,74.4 040 .44...4 DI al•Vel.lpail orriat, 441:40•44 pAx• Dap Oren,. al east 0411101•111$ 114 400•114/4414 00004404es 4I- tam 70•10.44 .---.: SWest I:MAWS BMA GOWN* 410 :CDC. 22111 10% 447441 40% 417410 Deutsche Bank Securities Inc. Page 73 EFTA01097727 13 January 2015 HY Corporate Credit Energy 0 2 2 O u_ Co O C O X t.) 2 0, lL 2 :‘ aasasaasa Eg 9 A Eget' 2:139 IA it IR 2 t-. Agn aSt AYA Ae w- t I 88 T3i 2gIggl i 8 I0 88 EIA050 5 " 88 IF, /7O,2E, g OE 7t 0000I0 II :t glE1.1 1! OE g! E2ga.5 lisa2115 tf Z.! g£ z1 Si *2 12121225: eggsgessat 2a2a22142 111211222 StiaR2932 datia242aS atas9R292 FaRU.22:43 tae--:1 RaRaaRaa itgaam NI RaR c.BA 0.6g 2 Filerf g 2t- 2 COPSE ER 9 l'ilg seta a £a e U 8 /I I Ai a II y f 444.1,1,20 4424 4$ gi£24gi gig: Ed ggliga 4444 Litt A6 sswsa9 wsws gg 44££aP 2.s.££ ft £e£4gE 4Z£4 2.2: a e AA 1r, ciligvg 1!121122: P I 2 a a g. g P A $4 I!!!!: t!1; 2228 13- It " 0Sg g g 00! a's Cs a a a aSaaq:Ukt Mari:2424a 9 ! E .• e I Z4 gilt 22211 g-. a l II 111! pitli:It a 12221122I' s R as 0 R a Si Af 6g £sisal gill 28 a O0 e R2 glIgAtit, O 'S a 1:1115221 A g . . Si A! 8 66 g4gg" gill 2 &V a 3. as !1 !prip 2 l ' I:III:221 AIR R11 !Eft( 2 pi gt £a£s;;3 ligi gg a IV : A w xdYe Biss V g - a !1.1 et g4i1243 ttll i I 1 1 2; a ft^ a 00 &II! 8888:84! 1222:1221 E I14 gals; E gear iftaggl31 , rig I / i 1 I i l II i E. zit PI 1 ge ; ; if g “8 9--4 is it '.( Ipll i - -I 1 ,za 1 gi ] igphi21 ,,:. I I 11 I II li li I !! I-t 9OASSSe 91i it tist f° it ' i II hit! O.il il qiiigisgli, ttii 88 ;wgigliti ilLsgs ingS !.2 szailig.mt, . i ilg In 1 g I 41 g nil! I t *-51;Ii iigg il.,Iiii ilt= ii4Ifqiill .s bt.gtais ! i . . -A.1 :-.1-1 ifUp.a. 111"i ugl "1/1Pi 13ing ;trig/AM gIalO I I I Page 74 Deutsche Bank Securities Inc. EFTA01097728 3 I 13 00 0 UI Figure 64: Commodity Price Scenario Analysis: EXCO Resources Forecast Metrics FY 1SE EDIT DA :5, NYVFX riliE rcr I S !fir h.., 61.76 $2.71 025 6315 226 saga $1.76 $225 $2.75 4125 13.71 $10.0 $157 $187 1217 $247 $270 $299 1215 $300 06861 0641) 15316) 3201 0210 $0.0 $172 $202 5232 522 3285 $.0 1329 $40.0 03541 03293 MOO 132711 02801 $100 $186 $216 1246 1276 5299 $328 1344 ($3421 (4317, 13292) 152671 0246I MO 1200 $230 1260 1230 $313 042 1358 $004 03311 0300 13280 15201 02361 $70.0 $214 $244 1274 0345 $3327 $356 $372 $70.0 ($3191 0294) 11269) 32431 (2241 $90.0 1229 $259 12199 $319 $342 $371 $381 $80.0 0307) 0280 15210 02321 0011 $90.0 $243 $273 $333 1333 256 5385 $401 $90.0 ($2951 (270) 13240 3 2201 0 201) FY 16E EDIT DA ;5' Whom FY 16.E ICE IS 1/1,11Lon NYMFX Gn. :S 222.1 NY1,1FX Gas SI.,. $225 276 0.25 $67. 54.13 $4.73 SITS 5225 276 1025 53.7$ $30.0 57 $43 $94 1144 $190 6239 4289 490.0 03741 (1327, 112803 112631 MTh $40.0 $15 466 $116 1166 $212 $261 1320 140.0 03521 0306) ($259) 32121 01691 $604 $38 100 $136 $188 7235 $283 $333 5500 ono (064) 0237) I$1901 0 1481 $004 $60 $110 1160 211 5:257 $305 $356 000 C$3091 (010) (216) 141681 0 1271 170.0 $82 $132 $183 133 5279 4328 430 5700 02081 (041) ($194) 31481 ($1051 $0.0 $104 $155 $205 5216 1301 $350 SAOD $90.0 (12671 (220) 0173) 31261 0341 $127 51 77 1227 5277 1324 1372 $422 500 (245) 0198) 13152) $1061 0621 FY 15E Net Leverage 14211E% Gas IS mcle1 51.7$ $22,1 215 $3.25 $3.7$ 5429 $4.75 130.0 113* 94 160, 6.9. 821 56x 524 $400 100 8.7x 7.4a 6.* SS( 534 &Oa $00.0 90 Itax 7.0a 6.11 Seac Ste 4.7a $00.0 0.74 162 ttlx 60 50 48x 4.5x 5783 0.14 tax 6* 6.51 5.0 454 43x PLO 7Sx 882 Sax 5.24 4.4. 42* 4.1a 00.0 709 82a S.Sx 40 ASA 4.1x 13a '3E Net Le $1.71 5225 $2.70 SIM WS $426 $475 $30.0 4252* 4114 0.0. 13//c 10.14 7.84 624 84/0 140.6x 310 17.6a 110 0.* tOx 5.7x IMO UM 23Sx HA 10.9( 7.0 821 524 $400 350 18Sat 12.0 9.0. 7.19 Silx 4.8x VOA 2501 16.1x 10.0 8.04 114: 534 44x $880 190 12.7x 9.3x 7.1. I& 4.8x 41* MO IS8x 180 82a 6.54 Sac 40 3.8x Source LboacHe &yr* a FY 15E Debt Proved Reserves (S Mere) NYMEX Gas ISYnele) $42$ $4.76 (041) 1130 ($235) 11222) 0220 ISM ($212) $198) 1 OM) 15176) 1 0 1761 ($163) $42$ 0.75 0140 MOO 0124) ma 0 103) 060 COO 060 0801 1016) (538) 16 ($171 327 $1.75 $225 $20 $3.25 0.0 $4.25 $4.13 593.0 518 SI 8 $16 0 6 $15 515 PS MO $1.6 $1.6 $16 111 51.5 $1.5 MS 5500 MS $1.6 $16 $13 51.5 $1.5 MS 00/3 $1.8 $14 $16 $1.5 PI $1.6 MS 570.0 $1.8 $14 $1.5 $1.5 51.5 $1.6 MS 1810 MS $1.6 MS MS 51.5 $1.5 MS $900 $1.6 $13 VS $15 51.5 $1.5 MS Iv 141 Debt Pieced Mete.' r %ILA. mclo $1.73 $225 12.70 11.25 svo 2.0 $1.9 Sit $18 140.0 $2.0 $1.9 $19 $15 550.0 $2.0 $1.9 $18 $11 $600 $1.9 $1.9 $18 31.7 5,08 51.8 $1.8 $18 $1.7 $90.0 $1.8 $1.8 $1.7 $1.7 590.0 $1.8 $1.8 31.7 $18 10.7$ $425 56.78 $I.8 Si.? $1.6 $1.7 Si.? $1.6 51.7 $1.8 $1.6 51.7 MS $1.6 51.11 SI .4 MS $11 III MS 51.11 $1.5 $13 -‹ e k R C B a; a i En EFTA01097729 Deutsche Bank Securities Inc. IFigure 65: EXCO Resources Benchmarks hidedWI:ma 50% 43% 40% 30% nu 25/ 4% 20% 10% 0% .10% .20% • 15% -11156 (0 2013 1.1E 2015E .CO arta.0 r wart .8% nit 00 40 $70 re 0 150 $4 0 13 0 12 0 $10 ISO 350% 330% 25016 200% 150% MO% 50% 0% 44,0414may 190% 900% eil ml %15% m i1% 0449% ME I 201' 2012 2013 .*co •11•••• OS $35 $30 125 110 11 5 $1 0 105 100 ICY 90c 7 Ot BO. 5(k 40 30' 2a 104 0a 00% Hedge% 70110% 1% sninniy,„ 2013 2014E 2015E exCO 'Maine ootaaan 04.41149 Olarg% 0 819 12575 2013 201.E 2015E 4.02 etotadog SoigattOrtetior 7 7% 2013 1014E 2015E 4xco .%e0.M SSP. no Sa 5 140 136 $30 125 12 0 115 110 tab ti 0 nth Coo 91k% $45 $40 94 12 $2 12 140 184 18x 1.4x 124 10x 084 08x 04x 02x 004 1013 3714E 2015E .000 •1•40.141 San I 04144,1 Rare 111 1 1011 1013 .*CO ..a.0 soma 14 5 1440 ns $3 0 $1 $20 $1 $1 0 10$ 100 3Y• Awe 100 0 8 64 542 38 $34 nal: 7 19 $3 4 2011 7012 2013 eXCO swettang 011•00 $70 100 to 0 0 $40 $30 $20 0 too 12 Cah01.115140141/114% SG 5 SOO 52 11 0 6 0, sax 40x 301 10x 2013 2014E 1015E CO SW a ..4/14 O.hM rnurt 1013 2014E 2016E •rt0 107•041 .Y•••1 Sasee Oduaotio ay* totHounidtot Abontsp Sumo* LP lodeXey NAV A411441140dien BB,ana Afidon Stdacattalotiob bah cowrod awl nom mat [wpm* is c. fswelp 00inpang. &Mind by C19 HO Mt( toollyearadgnviaset00410rtOraWMOOaSt00019 CHI( XEC,DA4FSOCCOMILCRP,111(10)(0EPARCSAIVST an: !SD F. the (003w..lp 00enparva. not COSS,: by 081,91Yeett abn frt•taffik iipura. fear 8700/71Ali(7C0rtiOWAS 40410.1013 6/70. AMEPERAR8CO.CMFAII4E-Pg1MTN.ACHIW10.0.4$PEPVAROSCSMSEVGEN,SMIFTIA. YEW eftel WPX EFTA01097730 13 January 2015 HY Corporate Credit Energy Forest Oil Relative value When the merger between Forest (FST) and Sabine Oil & Gas was announced in May 2014, it appeared as if it would trigger the CoC provisions in both the FST bonds. But, with the collapse in oil prices during Q4 14, it became increasingly clear that the new merged entity would not be able to refinance the bonds. Nevertheless, the two companies went ahead and completed the merger plan in December by circumventing the CoC clause (i.e non-FST shareholders owning >50% of voting stock of the merged entity). Under the revised transaction terms, while Sabine shareholders continued to hold 73.5% economic interest in the merged entity (which will be named as Sabine Oil & Gas), the voting stock issued to them was limited to 40% with the balance issued in the form of non-voting convertible preferred stock (with no conversion permissible if it would result in Sabine shareholders owning more than 49.99% of the merged entity). FST shareholders therefore continue to hold the remaining 60% of voting stock. With CoC option completely removed, FST bonds now trade as a function of the (highly distressed) fundamentals of the new entity. One consolation is that the overall new entity has better scale and superior asset quality compared to standalone FST. However, in the current commodity environment, even the combined asset base still implies an unsustainable business model, especially given the high leverage levels of 4.9x. The three key assets of the new entity are - East Texas (Cotton Valley/Haynesville), Eagle Ford and Granite Wash. Of these, the first two provide only modest retums of 17-27% even at $90 oil/$4 gas and therefore would be largely uneconomic at our current price deck of -$55 oil/$3.75 gas in 2015. Only the Granite Wash provides solid economics of >100% at $90 oil but with just 33.5K net acres, the inventory is limited. Given the above, we expect that the company would limit itself to a sub-maintenance level capex program in the $400 million range over the next two years driving pro forma production decline in the 10% range during the corresponding period. We see EBITDA of -$350 million in FY 15E further declining to $250 million in FY 16E. Cumulative cash bum through FY 16 should be in the $450 million range, largely exhausting current liquidity levels of $480 million. More worryingly, it points to a business which cannot sustain even sub-maintenance level capex. By end of FYE 16, we are also looking at net leverage moving to precarious levels in the 11x range. One near term positive in an otherwise gloomy picture is the company's strong hedge levels for FY 15E (84%). In summary, we are looking at a business, which cannot sustain beyond Pie 16 under the current commodity environment and likely cannot sustain under a long term price deck of $70/$4.25. With current bond prices in the 30s, we do believe the high risk of bankruptcy is somewhat factored into the trading levels. And, the company does have runway through the next year due to its strong 2015 hedges. However, with significant leverage and limited liquidity options, the risk around any RBL over-advance situation if the banks take down FST's borrowing base is real here - and would be a significant further negative for trading levels. We are therefore moving to a SELL from a HOLD on FST bonds. Our previous rating reflected expectations for a CoC that never came to pass, while our new rating reflects the current commodity market realities and a higher than average risk of default given higher leverage and less liquidity versus peers. Further, the company's assets do not look to cover debt even at current trading levels in the 30s. Yields in 35-40% could at first seem like a cheap option to investors, but we still see downside from current levels. Upside risks include improving commodity prices. Deutsche Bank Securities Inc. Page 77 EFTA01097731 13 January 2015 HY Corporate Credit Energy 'Figure 66: Forest Oil Financial Summary Pa 11044 MIMI 1/414414 NO Oa It Pa • Ma Nat abro 4 4.1100,4a4 CPI. la 0400 140011 PPM I MIA Mai CeaSta•MCC (Moroi. rPt Mast, I5.1•• VI 110121 )PAS am Coe 4000 Pa reesao, la 65.444 09044 11010 IRS I., a a 0 .41 A 0414111040040.11.440 Cala. IMok a Aar. III 0 SOS 144+541 , 14 a a a 1 Ill NE ISO 1,044114.4•1444.0 eat 10 0 4 III 00 044 141704.00.00,4 II (I 13 0 40 III al a PM a a a IP in Na N a II 4 • of a PS as me 34 SS 14 Ili 0 /3 41 PT IL) CO 0444 Pa, • 4 5 01 I 10 a X, .10 am 4 Oa IS 10 IV IR 071 04 01 M at era. UP COTISIMM. Ia 0. la 0Th <II MI 11114 rs t au 0) a 01 0 111 10 0/ .10 01 1. 100• i IN Oil ISA 00 051) III II. N 1.01001)M•014004 NI 10 MI 10/ 10 MI IN 01 112 trIferpti 0104 maw TN Ell a• la in 147 OW In PP okl.Wn Cm eta man Ina 040 1100/ PIM all MO Ian Pia Say Sam Coo Iola 040 00 IM MU lag 1401 MO 11,14 1171 pc.0•0000110, a, Ian Onookee• n•e1 111.1 lal OM Ulf filo at Ka 111.10 alp Sayyst MAI Cm 0oo IIISI La 50 VP OW 014 1114 MU 041 Olt m, 04 IvoIoa, Ms. a a LP al Ill 1411 110 101 Lab No•i•I co M• IMO MOS WOO PIN OPP Pal WOO ROOS OOP PPM mirM9Kools,a/ON (4,1 a a 00 PI la 3 51 1<t4 /114 PaLMMOsPo• ail 0/02 004 03 43 PLO ••••• pa• 1340 Pall Pa I (fa tarm•Maa ow*, ItaI 11111 la POO Int 4304 nail Itla 0.4? fa tom. 0. ma r1...., 13 III 631 Phi OP 0.3 COI 144 444 SM Como Asa*. 1%4. Saki Isms As./o•I Ot/1. Nemada•Malalamma/o we SOIS aim•II Mao ',Inn IOLA II1443 Pk 4-411 Rota Pat mom.. ban. .'nn Tsai CaaCalealeedkaaaws 4104•144 MIMS 704 51451 z•••• •••• wan, W. ▪ 4.0airtor taloa ,40 1 40 Ca4/444 Pa* trot Ca Is• aaaras 110 Ca Pa W Aso NW •••••••••44 Cos as (4 44 II I • Ea awn,. lag COO OM PO NO IN Ora taw.. 411 a 0114 Sa? •00 104 1375 211111 Pal 1/04 011 171 OM ON all 001 MM Ma II a 00 I220 uM Il ft 1911 111 51.3 1141 1111 11.117 11 IA 0 MM MM UM 011 pp Mq 0.11 1114 111 11 144 5.31 IAN 1144 1214 111* 14.11 Mfi g? 6.2 a WW1 N 143 I,.. 1224 111.0 POI MIO fIM 'III t• 00 00 al 10 114 OW m fri a II 0 IT 00 011 1141 MI PO 0 40 O Ot OP l 0 * II 00 041 111 10 1 a) MI OM a la a illi 0) CM WI 01 PO 0 40 Is a I 32 I la a a 00 N PI/ 1101 IN MM PP 11 144 PM POI ISM Pp 144 031 ion On Ma. 1117 1527 11/0 PR • 11 1 444 WI 121 am OH Oh 01 II 11.41141 cm cin a 0 • 1411 41131 a Oa i1X1 01 MO 044 ant a 14 04? 11111 11•1 I 1 14 NO IM YO Oat fano 1‘04.0$010.0040300 .30. 44% 4•1% 41% 0,0a,4.0.0 .34% 4143 Q4 43% OM Nt4.44, ,aar 00 644,141not LT so 10 134 * a fate MAX em 'Alt -MOO 43, 50 14 114 >antatba....0414,0 1110 ILO 5.44 110 1'00000 tut• -to 0.000 411e0 II 17 11 P1 PP Oat ailea 44011. "SOS Par area.. a aeon OM J* 141 03•0001.40.140 1004401•44 00401000•04a• 4. 14441041.041, 01011 00P 11.004.0., 04.01,4444 air . 40 coat • wain Oalarae 4010,4•40104441.044., na anuan no .41% 401 01% 441. lc 4114 1 .14 110 450444 reap a Jima, Al to Sao Mt Mao II. 11.10 1444144all oakimohtimaMII %cat ▪.M.SooliMmaaVo 34 ▪ Tam Maas a I Taal 011 Um/ amla hiaa !I 4.10IIIWO al 401.40110 044040•P01104'. O. 000111 114101' IMM IMPacomet ...M•0) am AIM 4•0 arIIS aaaoro•• IOW a so 0 a 0.010.0•01, ,10,0 , 000 %NI ••••• MO 0A911. arta. avant. I) Savo. Dwegalo Bak avnane 01 Ir CO 311 OS TIM Lae 01, 420 ^”.410,44.4.1 04 a (at 040,4•00104 44044 Tat 13030 X% f5 0403 3410 ,44141 ISOM 424111 110 /3% 1 011% • ,1i. 111% 00% 10% Ulf /41 7Id 44% elf 121 t µ rod Par Page 78 Deutsche Bank Securities Inc. EFTA01097732 Deutsche Bank Securities Inc. IFigure 67: Forest CH 02020 1.6 49 41 s IN IM 104 IK ▪ 4401 aN 64.701.010004nr Stal. eh tee» rt tart 0 0 0 ti Ie) ne in In ns n3 (cc 00. na 424 40 074.00 »Is 54 i ta i 44 4) 49 46 20 til m I oe IN oe 10 On On 1415 042 En 9100 WI (1031 OT) D/ 0131 Iq 1011063 tibet 04 5•1 4115 112 449 »4 S iaat...ka Otet.I.Migt,tbaY• 411170IX 444411445.4474 Jc 04•41 NO 21 11 4 is 20 n n 3) 114 .1» »I 214 10 ss Ot 60 is 14 14 i i 34 23 » ISO ISI 142 li 4S 113 1» (IS 40 3 Ob 051 ni in 61 2.15 141 16 20 Wi ini 000 15 75 114 1471 1271 114 Ca) n ut 021 061 10.1/ 087 051 IN 14 01 3M 711 0.00 79 1$0 at 060 01 113) II) • • 47 113 0) i 011 Pi 11041 . 01 . 41 . 01 Z.A I% 0 1341 N 020 ;ni Otq S al en 141 I00 353 »P 04 04 it 414 212 141 344 S S til »7 04 IR ne 2» KO 744 70 1411 244 ni 244 S 11 Y 54 M 61 57 144 W 312 141 344 S 244 444 2» 172 n til 119 .7.0aWitaisIttio et 1141.93 11026 12110 4624 Kien VMO 1614 teert Niet taant Mn 5494 Me PP la» $374 M.T. lan Et eelt Ie Cyngars Náln 00 tets »vit 0446 u15 4.430 4267 oen* I&34 15091 i1450 n04445 nu» ui.. ~di 1334 Ui 41.14 5411 5417 Mn OOI 1443 ...mix 01PofterM iet 744 291 331 916 02 he 7» 710 +..441ø0441140 16.44 10$ KIM 20.12 47141 4124 121213 47404 7.74 mep WAL 5511.4Ma 411.154) 110 lei 271 1M C47 4.14 415 vo ;04 »3 941.$44 Sem 1$45 1194? 11406 121h 11412 3492 11332 1004 3.412 la ge •103 2100 2401 23.274 Zilt ni 54.45•11140.414142140 41M 414 137 702 557 511 1/72 50 1577 le» 14744 la 4171 .4» 3021 3.110 ni Cs....s.nAnta....«. »H 021 Q12 $11 01$ IVO 94.11 gl.vonn 6~401anikapeasew -1,9 Gab »te te Ooit t.w.:. »ia Oss ce nat .0 Telt. 114 $130 Mn is. *n n» n» Pa SP 4.41 nn 140 1274 L114 55//) Si te 1741 91411 51.1 11,41 11111 1•91 SOM 5000 n 53 SOM 54/52 n 53 II» II» 1.10 12 10 12» 143) 1130 e» Sin 1541 41/4 na 11.34 51.12 n» 41.44 144 1109 519 53I0 11.09 $1.94 SIM 1109 140 410 4110 $110 140 1410 Nl0 1411 1.154 1334 usa n4 P1 13.54 1754 1314 31.B1k2tage • s slens!..1a . k 44 is 111,45321.21z a na en 17493 19434 N(14 P» Ot 4114i VA» 01614 ME Mn 1113 Mn 5127 Pn fa» inin 101.132 n .444 NON 14001 n* 4930 41.93 KM la51 lint 54.4 1443 PM ion 2109 3.1» 7273 130 400 2/03 17330 lati en» S4 031 1014 161.14 3.7» a ns 340 30X 7,47 2.4» 2240 In n 010 19210 1200 114.43 In» 13311 14623) nam 'pan». 21057 »aa Oini 4425 277 ef4 5» om ca 550. 4» >3.534 aas 23 133 1.34115 5314 0 ni 1444 3440 34, 44 nM 3426 3414 9441 2941 WIT pm 9144 e$14 NM 141.1 iel nu n» 31.0 si 37 L142 11.41 $144 5•414 WAS 95411 SOM Mn 1512 5114 1157 1147 1234 12 V ni? 1230 e» tva 55.34 Il.n 59.» 1045 11.37 5454 Mn 3143 91.17 iiI se $3.34 1741 310 11.11 1403 en 1410 010 140 MM MC »n fan P54 11.54 P54 p» 1414 5447 1434 5244 M.N qM 0,44 ai el n 44 P 4$ 04 01 417 141 M4 150 . • • ' • 114) III 75 i n 00) Oen 0401 000 0141 11411 0~1 nel OS RIO 14419 OM <Iq n 3 5 04 041) 34 OM I 04) n 01 0535 V ni 01 551 17771 14101 ala (6 rop ge 000 " (411 MI WI) 00 p» 11311 010 030 te 0541 066 040 041 1411 00 031 1314) all nel 117» Om 1101 Dal 10 03 171 241 1317 202 N 0. 41 44 114 00 MC 939 ti 0» Mn 31 lil» OOI st • • • KO 40) 400 1/34 .246 ..441 1346 inf. 13 414 5» in €43 no Y9 en 413 7.419 vo 84» 7.4.1 2244 20 3 0 .34 . . »43 1.40 Ie 00 014$ ken 0546 ns 05 4I4 €46 445 ..) lig int KO 2.091 21.5. 2710 10 .01~5teas .7.‹.0 Oe. 040041 46464 1~140 Ot, 64% 47% 43% 24.4 it.% hem KO% 10% , „...», en „, 4.3% .53% 401 4$ la% ia% ia% us% t7M4401W1414 :7 restatt4010» Cest60440 444601001 1.(458440.45 .e 75011144114.9 754•4154.1mm1W4e :447.54•414~41Poweas 1114.51 7.54 24 114 3h 301 301 Il.» tin n 1193 21e I4 10 21.1 244 20 00 24 42. 44 41. I% 4 k 04. inn 901 th 12. 41. Mi Ut 131 at 70 1130 $3 N na 1347 13511 ta 1103 16n n» $6*. 41916 ta .16% 44% 49% 114% .0% 4h 40 30 144 I» 30 It • eb 02. • 2h 14 1141. 2 h nik 1110 24 4h 12. 112i 244 30 31( 148 100 723 110 NU teM tui O 2.1 N/ NA NI ti Ni» II.» N n NA »A 444 Stal«. Deutlelse 3404 liet dia EFTA01097733 3 < 4 _e g` '8 E it. -2 IFigure 68: Commodity Price Scenario Analysis: FY 15E ERITDA '5 Million. 51.75 52.21 $275 1325 Forest oil Forecast Metrics 5175 µ26 FY 15E Fel- 5 IfF 51.75 $225 $225 1325 53.7$ $425 54.75 Via $301 3107 1.312 1315 5323 53111 $314 $300 31021 3130 maa 151831 O114I ($UG) 15205) $41.0 1514 $660 1326 Via 1339 $70.0 1/362 919 1325 $731 5312 5339 5344 5345 5350 536 9W 530 139 $335 1348 1161 5374 5331 1343 1356 £369 $327 5339 5352 965 540.0 ($1761 ($177) 1177) 151771 (3/701 350.0 (51711 (51721 11721 151751 ($174) 5500 (50161 ($157) 1167) 151671 01169) 5700 ($1611 Me/ ttlf2) 151621 (31641 ($190) ($105) (WO) ($175) 15200) (5195) (5190, 1$124) n a k 5660 $362 533 $314 $379 $394 5379 5375 5860 ($1561 ($159) 1150) 01511 men ene 3182) $20.0 1371 $377 $383 $389 1393 5389 $385 $910 ($1571 ($157) 3158) 151581 ($1591 (5170) (516) FY 16E EDITIDA (5 Million. Y 16E [GE libIlLow trvairx G ni, 5, 51.75 $225 *75 9125 $335 5425 5675 51.75 5225 5275 $325 $3.75 5625 54.75 $30.0 41 565 593 $115 1140 5165 5190 $200 (1.4771 (1451) 11426) 5401 (13751 ($350) 11324) SPA 572 $97 1122 5147 5171 5196 5221 $40.0 (54451 (1419) 11394) 014 (53431 ($3171 15292) $60.0 $103 5126 $113 $170 3203 £226 5252 $50.0 ($1131 ($3571 3362) $205 MIG 3205) WO)/ 540.0 $135 $159 5184 5209 1234 5259 5284 $60.0 ($3811 33551 15330 3304 <32791 32531 11341 $70.0 51611 $191 5216 5240 1265 5290 5315 5760 (13491 ($32) 11296) 1272 (12471 ($221) (5196) $10.0 511)? $222 1247 5272 5297 1321 5348 510.0 33170 32911 (1246) $240 MIN ($IO») 3164) nes na $253 12713 $.93 $325 $353 93 190.0 .12511 4234/ $204 3 1531 ($157) 41321 FY 15E Nel Leverrage FY 15E Oebt PICIVed Ret.CnICS (5 LIclej Ipl uniE X Gas 15..mcte) 51.75 $225 5375 5125 $3.75 5436 5/75 5225 9275 5925 53.75 14 $4 $3110 BAx 111. 6.o. 8.0. 7.94 00x (1.2a 5)00 Sa I f4.1 54.1 f4.1 94.1 11.1 NI $40.0 11.1x 79x 7.8x 7.74 7E« 7.7x 78a 540.0 1.4.! Ui 34.1 US 4.1 1A.1 14.1 SA 7.7x 713x 7.54 7.4« 7* 7.4 75a 8300 34,0 $4.0 $4.0 $4.1 34,1 34,1 $4.1 000.0 7.4x t3x 7.2x tb 704 11x 72* 8600 34,0 $4.0 54.0 $4.0 34,0 34,1 $4.1 $70.0 721 7.11x 6.9x 6.1). 6.7x 6% 70* 570.0 54.0 54.0 34.0 540 34.0 54.1 54.1 ton 6% 4.8x 6.7x 6.6. 66x 5.7x 68* 580.0 54.0 54.0 34.0 34.0 34.0 54.0 54.1 $50.0 62X 67x 6.6x 6.5. 64x 6% 6.6a 8920 54,0 54.0 34,0 54.0 34,0 54,0 54.1 FY 16E Nel Leverage FY 16E DeE1 Pleved Reserves (S'Mcle) NY11F X Gas ( le NYILIE X Gas (5.Yncle) $135 $ 5225 $3.75 54.23 µ75 51.75 6225 3275 5925 $3.75 431 4.75 $300 7431 45.1. 32.* 25.4x 20.7x 17.5x 15.1x $30.0 94.8 549 54.7 54.7 14.7 MI 14.6 $400 41.3x 304 24.0/ 10.74 113.7« 14.5x 125* Lt ~0 14.5 $4.7 $4.7 $1.6 NA 54.6 $45 PLO 21« 22.75. 10.11/ 11).1« 143* 12.4x 11.1x 150.0 54.7 $4.7 $4.6 nl 54.5 54.5 $45 500.0 215x 18.0x 15..* 1334 119« 10.7a 9.74 560.0 $4.6 54.6 US 545 54.5 4.5 $44 OOG 1793 14* 13.04 II. 104x 9% 5.7* 8700 $46 54.5 54.5 $49 54.4 54.4 54.4 $500 14.3« 12.6x 1124 al. 03 lix 7.0x $500 14.5 14.5 $41 MA 14A 54.3 $41 MS 122x 10* 9.0x 00. 024 7.6x 7% 590.0 14.5 $4.4 $4.4 51.3 14.3 54.3 $41 Saum 0~.~ Stat Deutsche Bank Securities Inc. EFTA01097734 IFigure 69: Forest Oil Benchmarks 200% 1506 100% 506 0% .50% 400% 110 ti0 t 7 0 110 150 610 130 120 Slo a0 h0100110•Geowi 161% .39% .4914 2013 20146 2015E etg,/ .ivuet, 201; 2012 2073 eltr0 -g-r IMmn 160% 140% 120% 100% 13051 60% 40% 20% 0% 160•11•1~110 131% 11% 2011 2012 2011 afro eile1•11 rsecyce•ctst.1:41/14 135 0 125 120 II 5 SI 0 105 too Medie% OS% 135% 2013 2014E 2015E sf110 ~tø alumn 173 529 2013 201E 2015E .pi0 eMiese 01~ Orøø14•114.01•V %de 12525 t50 840 110 t2 0 S10 t10 1 4x I 2x h 013x 00x 04x 02x 00 casa caritas 141 n 30 03 2013 3014E 20ISE afro rami ~4n 2111 *FOTO møtet@ ~On 1012 2013 14 5 L1 1735 t16 $20 $1 5 t10 105 100 Oasaq.141MtArs t6.5 111 ta 0 170 tio 550 $40 $30 520 110 10 0 5 150 2013 2014E 2015E ein» *ymse 9 +Mt01. 90. 70x Ox Ox 40x 30t 2 10x 2013 2114E 2016E r@10 wwm@ ~Øm Sam» INuaö. 11". et ~da Bloontis Al~e LO ~stry tusl ~4 Malim 13B.nal Afti:f an I MitoRa "Va costed ard non. A 1 ~amen Fot". Agbiwnp ~vit ~al ty DI DA* I1/4 « zro listens Nuv.; tatt publåAo as~. CH1( XECAIDXFST.XCO,HILCRP,HI(NFX0EPARCSANST ånd SD Fos th. legbiwnse COrtly»At. cosnic by 08 Kg f 1490( elm 'brunni Fpunis adlw Bbombårg ~sus ~VM. <kW AMEPULAIISCEACY4FANO.EPELISCIVAMWPO.0.4SPEPVAROSCSN,SEVGENSµTPLIµRW ISPX ro n as E :g n a i tn EFTA01097735 13 January 2015 HY Corporate Credit Energy Halcon Resources Relative value In the face of the dramatic downward shift in commodity prices over the last few months, the question hanging over the lower-rated credits is the sustainability of the business model itself. For Halcon (HK), given its high leverage levels, this issue is even more relevant. In this context, the revised outlook provided by the management earlier this week is a major positive. The company said it would contain drilling & completion capex to $375-$425 million, sharply below the $1,100 million in FY 14E while keeping total production relatively flat. To place the new plan in perspective, it is just half of the previous capex budget provided in November of $775 million while production target has been taken down by just 18%. The management is achieving this by halving its rig program from 6 to 3 - two of the rigs will now be focused on its best asset, the Fort Berthold acreage of its Bakken play. The East Texas Eagle Ford play, where the company had previously planned a ramp-up, will now be allocated a solitary rig. The revised production target also means its oil production for FY 15 is now largely hedged (88% @ $87.29/bbl). We therefore see EBITDA of $655 million (only 15% below FY 14E levels) with a modest cash burn of -$75 before asset sales despite a heavy interest burden of $185 million (about a quarter of EBITDA). We see a largely similar financial performance in FY 16 as well - flat production levels on a -$500 million capex program though driving slightly higher FCF bum due to lower realization levels (negative $85 million). Liquidity, while modest at $797 million including $95 million of cash, will be more than sufficient to manage the revised drilling program. Overall, while leverage levels will stay elevated (5.8x by FY 16E), the company looks reasonably well placed to service its debt through FY 16. The longer term outlook is more challenging however. The inventory of its best asset, Fort Berthold acreage is limited and will run out over the next couple of years. Therefore, run-rate maintenance capex in the medium term will increase to above the $400 million level. Its other assets -Williams acreage in the Bakken and East Texas Eagle Ford acreage - have considerably weaker economics, which require $80/bbl VVTI price to generate a 20-25% IRR. That said, we see the company driving considerable reductions in well costs - both due to greater efficiency and softening service costs - neither of which are factored into the above analysis. Going forward, we expect both assets to be economic at our long term oil price outlook of $70/bbl. On balance, we acknowledge that HK, given its high leverage levels compared to other B/CCC peers, is more vulnerable to the current commodity downturn. However, we continue to have a constructive view on the credit since we believe the risk-reward matrix is attractive. As we noted above, strong visibility from its robust hedge position and low near term maintenance capex levels provide relative stability to the company through FY 16. Longer term, we see the business stabilizing on the back of improvement in medium oil prices from current levels and strong cost efficiency gains. Admittedly, our earlier expectation of meaningful deleveraging over the medium to long term driven by strong production growth does not hold in the current environment. But with yields of 14.5-15.5%, one of the highest among B/CCC peers, investors are being suitably compensated for the additional financial risk. In particular, with bonds trading levels at or around 75, the company is trading close to our expected 2014 PV-10/debt level providing reasonable asset coverage. We maintain our BUY rating across HK bonds. Downside risks include extended period of weakness in oil prices, weaker-than-expected efficiency gains. Page 82 Deutsche Bank Securities Inc. EFTA01097736 13 January 2015 HY Corporate Credit Energy 'Figure 70: Halcon Resources Financial Summary Mw 594A MA 11623%Sc Man .414416 A Mir 7000 Caligatii47014.41a4) C91131/0410:C•1111414) Calit1/0410tC.111/041 wa ISJIM 14164.21 Wen NODS 114116 13444•4 13.443 it IC MA 10464 43444 "al rea 101 114411441114044 M!1400 • Cie/0/4 NON. wo firma 104 20110 CON IOS itti a 410 e. 03 2.44201020•441/ foal ark/ 071440344 MI le 143 us a Sr S. 4374 70 14 114 MI 36 141 II 31 10 AS OW 4.414.4.44.1.44 a s 4I ICIP 27 0104 IM IMO 1/1 ID 61 0 •• 0.00 In .441 nt, 00001. 0.1117 onl IM 049 1.00 • .0 111 ens MPS 1410 01 1,11 at nil 40 IL 11.L111 111. , 144411 /1444413 l tonartmea3 14•4411 026 1411 049 0 02 . rut970.44.41.4•41.49at al 143 IDS en 644 644 74 70 763 11.1 IN 111 fa In WTI .11 411113140 1012 304 0.0) MOO /151 3,223 ale as I. tau 4, OA 14•411 SM 3 VA 4/2 414 LM 42 4.41 243 AN 4,111,94444124.4 • , piry Nri N Vas 07).{.6, u.%Ii LOIS LIM INN Sao IMO AA Zia 414. 4.5 ....1441Nant twx• Final 5.70 447 146 477 a,. 4t9ro3114.434131 Ma1 •4441.9 IT. 09, MM 04.0) air 244 MM 322 Na 391 MM Ira 021 NM MM 201 044 ISA* IOC ,4144/1A4 Mama 44 Otto 711 227 34 221 366 012 344 412 ..s pari W4/. Oro 11041 N:, 5C 45M Ma 33S 172 4737 3114 • A Osman Ot0•40.340 240 Ala 310 >AM .a, 14471 51.4 301 13146 to 9.11 07.14 NM 221 sass 014 Kra,. 1 1910111140 6116.0r1 me OA 14314 177.0 100.10 163.41 17414 M621 01•23 Pr. 1221 . • ..C144 44 A%14 $42. 11 51 MM Par MA? MN 014 NAM 5723 302 MM tale SIAM 012 MWI fare 124 iC 1412 0419 PIM 13417 13264 3117 Sian $223 151.11 11404 236 51474 MaM 1417 0117 Ira PAO 15133 4•4141•••••9410•3441 Ma POO 110,01 11154 HUI 11344 11541 I ON•mnat. 000 1411t 1015 14111 201 W9 MOM 114.1$ as ne• tintle 5212 Ws 1»14 0411 'Mn IinN 0277 1201001140 MM MM WI - Mu ris 161716 11104 -a Mrs. 11:1041144414.0.04 IN 00 03 213 13 70 0 al 4.45 &Toe Iasi 0 0 ('Si • c], CA. 060 MI Mg 0641 aw 0270 OM 030 2130 -rAi•X•i14341111:444/ 119 M 9 42 0.00 131 63 0 4. W. PlIa 0221 -1 OM 131 (430 i1•41100 f44•0404600 34 I. 117 OS Mk 0534 Mr 021 022 11 5242 0 0 1220 117. li) 0$ - 015- n0 IN it. AU 441 Ifiv00.004lhallowl010 0141 SIM) IM 4444 11 1 ...la Unian, 10 14 a 3 3 223 Sr 5.5 2217 361 Lu ZIO 3004 343 .2112 34 1041 Ml 210 2.00 x16 222 340 3 ..,10.4.0 Singles on, Atka. uime).0),” Oaf, 4% a% 4% 147% 10% I Ito% 41% 16% 10% 213% IN Ins I ITOX10n evi am 1 Co 4.1.4414wou 14. .1.71 at 10 24 ifs I a 10 Y T244 aft 13t 40 el* 40 44 In. 504 114. 0.4•41111,41 aft 13. 34 4.44 4.34 45 44 In. 33. 114ttOvora 11.44,••• r13:41 art 13143 136035 LISM Ian mr 11023 La 36404 al 33 V473 MM 14413 Int 14101 Sur Cg CA Mat 04% So y01" 040014•0401117• I 4111% urns 044 Aran OAP re NI: I% rit Coo 0414 4570414 40.0 Nan Oa MO • 413.49. 444n Oa 3:0 • St Ni4.04r= 111,A..041413 /444,1,144A1 vs. Can 444144,04 IPA HM Orr . No Odin/ Orr . 010240 NW 0 0204tis• 40.070106,4000000 livirxisrini 20 0.1% 14044.54 Ve 4•4•14resw..44 .2144.41.14,y Mt (AMAX 4.0040.0Mmum .117 311 MM 434 •IN 54 4 a 24100000444110 Noir 2.004 0• 4200444•02 Nor% 444.414 ava201•144:100411.10014•11•0414i fl an. 444 3•41•144. Tt• any; AI 19144 ▪ 3/110/ 440 0 MI 40 24 04 OW [nor no 401.44464:4 4114 570540 1400 M0 0.m. tN024 reasok AnArori•I Ciao NO 60100•••••• an 60 01400001411.1 O4 Ora Tim p arm el woman° 0012 02 Urpiavta4 4441414114•46.40444n Al AA* 1.4.44et 19194 Refit M Ala f V Or* 2 tom 04004 a 0410460 ryloay. •••• 15.• LA, 44411.41, Lose. 9,9 sus .S 'At °AMMO MeeM Company ICI 11.4.4.44 ht4G9 sottgAstarress0 flearnil w tY•01 itt70226240011.• 04.400.0240011120. Pi 0 Atiot401er al 51 Alf% 041. 2202 Nizt Oa 442i 44% 94.4414 Deutsche Bank Securities Inc. Page 83 EFTA01097737 Deutsche Bank Securities Inc. 'Figure 71: Halcon Resources Financial Forecast 106 45) I NI 140.0221 n410004 /11.3661.9•0 P04110301 IN Ite.w.a• 775 37/ 307 21? 154 1114 103 WI 104 240 035 IMO 70? 1:4> 04.0(3 Can N 0 93 111 79 IP II 0 DI 135 213 an 211 3)) 0404 H.fln Ca,: 5.1.1 PI (III P1 42 140 71 03 II (0 ? 001 12 234 141 tarn:awn 11•43ti IN 113 WI 157 IN 153 IN Ill II IN COS /TO Of ON COI 120 133 IN III 120 IP 146 151 21 N 441 603 654 41( ENT BO 3) N 30 4 14 IS 16 20 29 III 40 96 II (Imp 31 30 N 30 4 4 4 46 1? 31 61 IS On ?)2 101.0.0010/ It 41 2? 40 2 07) 113) (30) 2 40 03 0 MI 00 Otte aro,. it Anew 31 IN ORO 01 Of It 1331 00 smantp. II • • 1.444 II • 1.111040094 1731 0371 111 . 421 Pi I I ON WI 0001 PO ( 1 1•••• 0) 03) 050 PAT 03 I 1)1 00300A0119> /14o6cout4070400 45, $4, (111 40 (II 40 (I) 40 PM (III 901 02) Ilt NIC NON MI 031 187 (11). ot., /X, 00 110/ 0) (ICI (I2331 24 (1211 PO 1.7111101044•401410003 4 FM 4201110•41.404ros (00 747 7(4 311 474 715 074 664 4 121 101 731 Mf HI ON 703 11.5 rn Yb 331 240 267 a m NI 10 357 211 /446641110.9410101411 003 11003 1320 1214 5210 UM 03.50 9:4111 94.111 =in 23)0 Na C.? 141(40401040140NION 4,741 472 49) 34 303 3.75 376 3.4 176 402 203 374 427 326 7. 7 169111041•310 OM Coroa Noes Cope010101009 143 202 00 260 1.676 1.24 1.13) 400 242 4664 9103 9.73) 7414 7446 AWN" 000 ON INN WWII 463 493 316 369 376 374 373 172 477 361 349 407 3.74 161 CoN•4504P•Oleass (141011 20X 3210 1211 305I 032 302 1240 3.510 NA 2415 10.14 13131 131331 131331 11.10•104 Pro 00044 601 43 33 094 TIM 1.222 I' 0 43 ON 7410 9335 9340 9343 54315 7234 II:: Corplew NM Prtdemn )Aft. el I)) NI SG II 210 211 3:3 34 Pc on on ea 1241 1241 PINN41140.0•• OAP 4141 3121 3357 3701 210 2125 II = 2325 NIA 6137 3594 3051 7244 :74: 70.1.44504ta 4(0010 HOS 70114450410 PAWN SONO 305 344 4.10? 43)3 300 310 4.00 4.110 1.004 3442 12.165 10333 15413 16/1' (OM 1141 74133 0 14 7260 6261 623) 011 1113 7304 9324 7463 4426 01.0405 OpoN1014.04. -ix FININNI MAO NON 5740 071.10 PILN MN 0433 542-I4 545.13 0/3.44 50124 47053 01.11 554.1 ..44,3005, 00113 01143 5170 11150 11411 514 74 11407 51111 S00 57131 P113 511.75 11443 413_4 00 WM 17.14 XII 00 V= 010 p0 p.0 11141 11001 110.43 PM 1747 XIV. 64.1 134 07 13304 IX 03 tarn IMO 460 0100 102) SS 2) KO II 13524 13603 4P) ',tree* (NON 0419 MOM 6104? NA HAN 14.1(4 1,470 UV HAN 3110 $11.63 044 NM 14) 000 1000 0404 1107) 013) 11220 DOW 1062 61429 1014 MK. 11166 13477 160 /1142 MS) 174 31(441.0300044 14.19 14 19 11419 la 19 1419 la II 1419 14419 MIA 16076 14 19 41.19 14.19 16t • 3 ....171,14•1101•941 2031 0572 50 12 05N 13512 11532 MN 5072 IPA 71210 Sao 2031 2031 13%.1 Jl qb..m N IIIA0 04512 54137 NS 03011 IOI0 5757 404 16444 540.43 M. n /42.0 Pm NO Plan( (1)110/0.0 1440,” PO 213 WI IN 174 163 III 141 a 120 (05 Ti) 656 611 3201313 7.41 00 a (9i 74.1.144074 (5111 NIP MN MO MN (IN) MN OW 00 (620 COOP 03411 PIA 4014 }U100110101rNaroCepu 0 0) 3 en $104) 37 PI) 19 0 63 (01 I) I It) rat ANNAN (a CNN 5••••• 020 OM 11371 13241 MX 04 4 170 01 OM 0 oni 0111 In to a ••••1Xya Cualiel Plan 31 31 33 31 53 35 53 20 I 12 21 IN III 2): •4 Cul% lisew MP 0141 117171 PIM 0141 II MI II (C (MI 05131 CON' (731 111 Amino. • ' ' 09301 031 Owed 0 Axon • 01 IO • 4 21 4 4 0 32 144 an MO Fes 04 Pow 140 4740030 (MI IN 0641 MO 04 4 (if) IN CP 060 (I Nil (0141 27 PI 0144613'1100 :05 0 101 56 0 1 3 021 -Soo Noe A Orto 3.157 v4 3102 110 1110 1110 3110 2.160 IX,/ 3.1115 3.10 3.142 3.14> - Cm* Inas 344 750 345 5C4 03 570 NO NG 232 X2 5N Cl ht) ...asl I'm r rnembl. 3521 341 034 307 3745 3321 3741 1.140 192 210 3.110 360 3061 3.74e NYSam WOW:4 014044010,43,1145540110100/NONG•N 43% 4014 4% 04 004 160% Ma 21% la 900076 000 411. 44% UK 1414 Na a I% 0% 1004 260 4% 1% .0' 1.11110441415490k4 301103.6C•sh arse the. 00400 vittno 274 Lb 2A• 2.54 Ns IA* 23* 2.14 Lk IA. 30 25• 3I* 21. 41401110M 14• 44 404 4.O 424 5.3.• 504 544 40 IYA• IN 6.4• SO 51, 140 04441010440 SA• AM 45. 4.O 40 5.3.• 541. 544 40 17A• 13* 6.4• SO 10 4010401000149411 MAO 26 36 1200 12719 12791 12716 12796 12710 069 ION In 43 12719 12710 1274( ...140190•03 Nvelq400.3340.46 Mkt} INN 1013 143 1673 06030 $9)04 INN 147.49 1010 414 16033 $7.70 $719 $9.37 54001 090440013031.04 04400 439 EFTA01097738 'Figure 72: Commodity Price Scenario Analysis: FlaIcon Resources Forecast Metrics FY 15E HUME (S. lhon) $1.75 Mal MTh 10.25 $676 $42$ $4.75 $800 1603 5593 $593 $590 $583 $505 1497 $44.0 $617 $617 1417 $617 $617 $519 $621 884.8 4fAl 5641 $641 $641 $641 $643 $645 MA 1665 5665 $666 $74.5 $665 5667 $689 ONO 5649 $68? MI $518 9389 $681 $693 $83.0 $713 5713 $713 $713 $713 $714 $717 POO $762 $762 $762 $762 $762 $784 $766 FY 16E E81108 (S Millon) 51.75 $225 1275 13.25 $3.75 1,425 $4.75 130.0 957 4440 $463 $414 $468 $471 6.474 $400 $511 914 1516 3519 $622 6525 926 $404 945 6547 $570 $573 $676 $579 $502 $80.0 $610 $421 $624 $427 9)30 $633 $635 $70.0 1472 $675 $678 1580 $683 $586 1489 SA $726 $729 $731 $734 1737 1,740 $743 MO $782 $785 $7413 $791 $793 $796 $799 FY 15E Net Leverage NVSIEXOa* (5.6fc/e) $1.75 $225 $3.25 $175 NM $4.75 $90.0 63x 634 6.34 6.34 6,9 63x 624 $40.0 60x 607 6.04 6.04 6,04 601 604 1504 547 Six Sex 6.4 544 57x 574 MS 5Sx SSF 5.52 5.56 591 5.5* Six $ae 594 534 5.34 544 524 Us 6.34 SA 5.1s SIX Six 5.1x 5.1f 5.1x Six SS 4.7x 4.74 4.74 4.14 4.74 4.74 4.74 FY 16E Nel Leverage NYMEX0a4 51.75 $225 $175 63.25 $3.7$ $423 54.73 $30.0 8.74 4.74 8.64 8.6( 854 8.4x 8.44 140.0 7.7x 714 7.64 7.64 7.57 754 7.44 5504 Six Mk 6,04 6.7. eh 677 667 900 027 617 6,17 67. 1704 60x 607 $70.0 5.6x 5.57 5.54 5.54 5.5s 5_4( 5,84 $80.0 Six Sax 5.04 5.04 Sett 5_0:4 497 MO 467 4.67 4.67 4.54 4,57 4.5x 407 Sao ot Eteau44.4 FY 15E ICE I5 IC Iron $1.75 $2.25 WO $5.25 53.75 $19.0 (Slop MO) 0101 1$10) ($101 6.0.0 $5 $5 $5 $5 $5 $4.25 1591 $6 M TO $7) 9 -‹ 01 c O ) g a a; 8 a $50.0 520 $23 $20 320 520 $21 $23 960 535 $35 $35 335 535 $36 $38 $700 .90 $30 90 $50 90 $51 $53 $80.0 549 245 $44 $55 545 $46 SU $91.0 598 $93 $98 396 598 $99 $101 FY 16E FCF (5 IAlll ion) /4Y1,1FX OA. $1.75 $225 $275 13.25 4.75 SIM $4.75 $90.0 42501 4249) 4247) 112451 42431 ($26% 4239 MO ($291 ($202) 11200) 01901 ($1961 ($194) ($191) $50-0 41571 ($1651 16153) 161511 4160i ($147) 1944) $60.0 ($1101 ($109 16101) 161001 OWN ($100) 13381 $70.0 (1841 11821 11031 1150 01551 (1841 11511 $40-0 ($171 115) 4131 ISM (181 171 1541 $900 $39 $41 $13 344 546 $49 $52 FY ISE DebtProyed Reserve.: S 51c e1 tenIE X Gas 16mcte) $1.75 $225 $275 $3.25 $1.75 NM $4.75 $30.0 44.6 46 $4.6 $4.6 $4.6 4.6 $4.6 $40.0 54.5 $4.5 45 45 34.5 515 115 $600 $4.5 $4.5 $4.5 $46 34.5 545 $45 O $60.0 54.5 $4.5 $4.5 ils 54.5 4.5 $4.5 $70.0 54.5 $4.5 Oa 54s $4.5 4.5 $4.5 64930 54.5 45 Oa $45 $4.5 4.5 $4.5 $930 $4.4 44 f4.4 44 44 14,4 $4,4 FY 16E DebtProved Reserves (Slide) MIME X Gas (SYnele) 51.7$ 5221 57 75 5.25 $3.75 $4.23 425 $30.0 54.9 $49 149 $49 $4.9 62.9 149 $40.0 6.4.8 $44 $1.8 41.8 14.8 14.4 Sad $90.0 $4.7 47 47 $47 14.7 $4.7 $4.7 $00.0 $4.7 47 47 $47 $4.7 $4.7 14.6 $70.0 4.6 146 34.6 $4.6 $4.6 4.6 $4.6 $50.0 £445 45 $4.5 $45 54.5 4.5 $4.5 940 44 44 44 44 $1.4 $4.6 $4.4 EFTA01097739 Deutsche Bank Securities Inc. 'Figure 73: HaIcon Resources Benchmarks 51400 SOO 0 5110 0 HO 0 $930 $400 1200 100 1•11Cyde Cosi Van 1124 5 $005 2013 2012 'Mtn 9 900% 100% 200% C00% 92056 10014, 330% 200% 700% 0% Ars Sally 775% cons% 129; 7staitais 2011 2012 2013 eta ealore astir I iVC ONO% t% 61% 51% 41% 30% 21% 10% 1% 2013 201E 2015E Mt Skala nbtulin 20 $ 0 10 0 $1110 f14 $10 138 100 1170 014nOlop Itirgiali floe $14914914.7 sePse 2013 701E 2515E not MINIMS war Realluttiatt8•• 0) Ot 1 A55 POO 500 1618 510 0 3 1110 0 11 1400 $33 0 5200 HO 0 00 0 2013 2014E 2015E sit •1111.1011 -SM 0 n0 300 n0 310 50 10 SS 0 t10 2013 3014E 2015E WI( IMPleOmEl Wall 25.Ck 211Ca 5a 0a 5a 00 2012 2012 niteill ritaSm I 1801 1605 $401 POI $201 nos $01 smile 00 4•4081*(18441 593 144 2 116 6 i20 All 7012 2013 0415 *WOMB oilier. $000 5500 $400 $300 5200 $100 $OO 2013 2014E 2015E 601 601 4a 20x 20x 10x Oa Cob*. Mays Vex. eXiciiia atficlit 2012 2114E 2015E 540n0 OWNS. I Souris> Douala* Hank concur./ dom, AMMO Hum* LP Weary Ss, ISCOAMMaliennandAfilcianS ?Atoka Mo'uthi both cowrod awl non. moat( dormant For No IbOosvap corny:wits ““vtd by DI I HO Ka Me be tunes Aran alba our puttatood an:non OK )ECIWIRFSVCOMALCRP,MCAOZOEPARCSMST and SD For Oa IbOosvap torniorsits no: cosset by 081fel YAW is fOnleaSfik igtvos new Bboorimip consoutd animas my: AMEPERAR.SCE).0(0,5440SPE,17SCA(1.4YAMPOOA$PE.WAROSCSA(SEVGEICSA(TPLMIZW end WPX EFTA01097740 13 January 2015 HY Corporate Credit Energy Hilcorp Energy Relative value Hilcorp, despite its strong financial profile, has been an underperformer among BB E&P credits following the sharp weakness in commodity prices in recent months. This is attributable to its asset portfolio which consists of mature, conventional assets, amidst a peer group primarily focused on shalehight oil assets. In a weak commodity price environment, this places Hilcorp at a relative disadvantage as the company's per unit LOE costs are higher - $21.90/boe, almost double the peer group median. More recently, this was not a major concem as long as the oil market was steady and the long term outlook was robust. However, the contrast versus its more nimble peers (operating unconventional assets) is highlighted more given the current oil backdrop. That being said, we see several important offsets to the above metric. First, Hitcorp has a strong financial position with net leverage (pro forma for BP-Alaska acquisition announced last year) in the sub-1x range, one of the lowest among BB-peers and solid liquidity levels. The company also has impressive proved asset coverage. We estimate PV-10 s of FYE 13 pro forma for Alaskan acquisition of over $8 billion; even assuming a 50% haircut to factor in weaker commodity prices, we are looking at pro forma proved asset coverage of 2.7x. Second, the company has a strong track record in executing on its business strategy - a key aspect includes acquisition of mature properties and extracting value by optimizing production levels. Importantly, given its strong financial position, the company is well placed to take advantage of attractive opportunities in a buyer's market. Third, Hilcorp also benefits from a solid hedging program covering 58% and 38% of FY 15E and Pt 16E revenues, respectively. Of note, the hedge ratio includes fixed price long term contracts on its Alaskan gas production. The latter accounts for -20% of overall revenues and provides a key diversification from the volatile commodity markets of the lower 48. Its hedge program lends good visibility to eamingskash flow - we see EBITDA in the $1.1-1.2 billion range over the next two years, sufficient to meet estimated annual capex of $1.2 billion. FCF burn should therefore average -$100 million annually excluding impact of acquisitions. While net leverage should increase from current levels of 0.9x (due to decline EBITDA pro forma for acquisitions) to 2x area, it is reasonable for a BB-rated credit. Looking at a downside scenario of $50 oil/$3 gas, we see FY 16E net leverage should still be at acceptable levels of 2.7x. On balance, we acknowledge that Hitcorp's business model does place it at a slight disadvantage versus its BB-peer group given the changed commodity environment. But, with its yields in the 6.7-7.6% area trading in line with SELL-rated DNR, we see solid value here. We therefore maintain our BUY rating on both the Hilcorp bonds. We see DNR - with its high cost, conventional asset portfolio - as a good comparable to Hilcorp. Hilcorp Notes '21 (YTW: 7.3%) trades largely in-line with DNR Sub Notes '21 (YTW: 7.5%) - we see better relative value in Hilcorp given its better ranking and significantly more resilient credit profile (1-2 notches higher credit rating) driven by a meaningfully stronger financial position (FY 15E net leverage of 2.2x versus 3.7x for DNR). Downside risks include extended period of weak commodity prices. Deutsche Bank Securities Inc. Page 87 EFTA01097741 13 January 2015 HY Corporate Credit Energy IFigu e 74: Hilcorp Energy Financial Summary la las N_ MI.. RM>. n a ea, an 14.1.919 154021 199411 Inca :44•144.4 Pal 00. ,,..„ 7, '0.9 ..is 51<[nea, du NAM A., FN. has 1140.010411410 /, -1. ' “ `,0 M.111* III In 5% Owns Ons 227 246 SI) 254 223 24(0044930.2. <Iasi • 3 4 Oa On 40770,12 on 1.90009 V. 30 231 313 MI X% I* 114 10 141 162 102 ItO IFS 11$ VI 10 (tau II it a II 6 101 /441104ni 10 166 14 a MI 249,90•01.0 WO 11 ID M 0...1,0•0104ne. CM C4 SI 37 1.2) 7,• 4 ,49, 0 47% 6 II 11 . D uniti.t..e., 144 A Oa 137 10 01 I I <II MA Fan. iltl 44 IN 114 14 fl rlagMEMMIEMCMME084 Int 204049/4 •44;44 /4002011.0%.4 /Wm 1.106 on 1.20 1414 1277 Ian 041 12/0 j a y wt., c14,4. ow, 041 1011 0741 tal 3210 .. n, %..., ”., %I .• 1 O. "Inn AM as VA In an C.I Oat lob WII :-.nist• ?Nal Com r%041101mt4 3234 32123 24431 .34.312 33321 4..1%/.0040%* 111%1 40 40 4.11 CU 334 01144/9 0, 14,4•411. 114011 3461 430 4211 4141 3122 464.101 r•CO 1164 WI* 9334 M.M COM .1447 tar (7.9440172440 2444 9444 9450 1(1 314 1014 290 71144....1040 an !Sew 3574 3733 5231 11431 1123 0144•09102,4499 0011,0411 40* 40 vxn 0174 137.31 ' I n 0741 Inn 11944 044 taw law X41 1104 pan awn* gun. $10.11 SUM 704,9 11.11 11.14 3,1414111110 ON 141, 3103 $1313 I 24 70,044144.0 10,31 1101 4,4 04 044 5724 014 t in 1014 Apt €01101.14a 14001 314 926 2..14lex 01 (CI Cue • 63140210 4,10,44•0441 12661 Oal , 04, %art a 0144.10 L.osete MI 01 0449 - Ore 449,4%4 22.00.1 21 (CI 1401014* cm (111I 049*. 2 rcets us* Cane I 33 144,499.740... O4.0>9. 1 0 •tr4S .7%, C444/14,4 %Put. I II g nu*. nm 14 . ..pmatIlAx..% 0 49.2.4. Ron MO 414 1.14 0 0~41. 9x10.11 1101044 02,04 0141 14.2140.102,4 C•alt I minis Its 104 144 04 row 0440 9,410,2, 4.,....t C00110414 11.141,410 401.1/ 0 0 IDF 0% Pwucitt *411 In a 1111,0791Unalet 0 ,104200402741144 C4444444 *Wu. WM 22.4 1. Sic 01111011110 0 ,4231lant 0/4 02. 1.449900eunto,1201. 0.14 I14 >et 4043 C44,04 run*. 211,4 11.11 SIO %f, • 101414%.0%•14. 4.41.1.0 Oat tun.. A/ 14 0341On1 %0 I l %00wo 041 4 174 1240 100 114 194 %Ty C.s/. lea gun. al 14 44404.49,10,42 * %as at 444 7(04 ruts 0 , 0 21 17% %, no*** 24 Sal 040 0. $0..% WW1 444 412.12)94 1 140, 1•19441 44•100412,11,4 IntalaITIM 07 210 0 260 950 90 6C0 40 40 Lilt 101 3.114 3)16 wo Wan. IV 00.4•01010•14.001 0 Maw 4.14014ermars COAL•elftfleatlial Sam &14K319 tat Caaalitio 1410 $1332 1213 SILAS VIM 35123 0U MU Ma MN 13111 IN Ill 413 0110 MU 1109 11.10 $360 $11.76 $1173 III It 112.93 0243 11114 WM 4$401 tan 321 312 3 111 0 1211, 1741 13111 1211 a 001 oto ill 0 IMM 5114 44011 41 1241 a 1 a 04 13 13 6 IF II (0) 53 44 13 430 101 I3$ 102 141 14$ CM II% 74 X 331 V% .5% 13 4 H. aa. 0G 414 0.0x 04 112, 0.1. $12) $1,4$ 114 PIC $./12 $171 Camay 4204.099 u 1•14 7504 iradobr en.V.Idk• ?PO ankrills• St....Inore 0 >I If War pi .441,40 0 .11.Htro Ce...1.41%T.V.1.1rab In an) 00004 snOno•emni W0 Anna air/Sa 201 1.011 SAO 05 a% • 202 IAN Pa 'MI on 120 10 0 926 a 321 IP 3712 04 NI 2f) 5$ 431 1620 313 101 26 ea 63 91 22 43 III 00) 05 10 3 914 70 OM 44 5 11431 {N 43 MI la in. M W Ile at) 419 IM3 II) 0 0 4 I Ma 4.1 l 01 1241 041 IMO 1.201 IM Cl LIU 12:7 1427 1411 0110 Non 314 343 41/0 243 1:3 MAW 112313 nn. 107.477 13013 341 40 444 412 441 4MS 16.416 0764 Mal 102$ 17.16 4133 MN 9121 9944 11.70 42212 0.1% 31492 41111 011 503 5423 2.12 2141 11011 1139$ 13442) SUM SUM 12046 MA 110> MO 000 MA 140 1323 134" In n MI 0 114.72 $1142 $1147 Mal OM 114/10 114.0 Ma 011 1124 029 $1.16 III It 311.71 11131 $1113 311.73 11310 'Ufa 1149$ 04* MS) MU 010 11434 OM PIM 929 1101 05 135 1.0 0 11) ql W 111 00. Oa 014, 17211 , (..x.4 1010 MO 221) ISM I Ill) II) al MI 43,27/ 001) 005) (13,10) 0.1141 10 IT IM lM 41 0 is 143 63 (11) 1210 900 IRS) 17101 22 74 IMO 731 U 0319 4317 1.45 1F 14441 01 0 Ni 114 101 910 1,190 641 50 441 II% 5% 0% n% 14% 33% 627 23% n a Ate DA I /to 13 4 Oh 04 Oct 013 01. 013 04 0 0 1157 0) $194 1, 0 Si. OM IX 17. Sr< 001 11 Ammo% Lgairlitte44 i11411 1794% 214471 PO14110114.4144000 141411 30143 40443 27 44 fa% 149 40 neus 040041 43% 64% YA Paws matey 10 4 II 0/14/4/ 41011010r1241.0 al% DO% 412% Rau Ilatured MO MI u7% IX.% 20% PV (4114440,00 1411 CIO) 2004 442% 10 329 12111 6•X 014 420 0125-4149.44.7 nun, 4442,10444 On flan 2,017 0,40249 earn tuo maPIn5Mr0.%ww.304:34 Page 88 Deutsche Bank Securities Inc. EFTA01097742 13 January 2015 HY Corporate Credit Energy y Financial Forec c w ft . I• i. a atop Wig Egg Si, Agn 0412E 22220 it it a S La a a a a • s. ;22 20: 8 4gtgre Hasa ale *As ax 8.20 5- a 5. ye 9 29a9 2 A l I pg 12 0 gg la!: I IE ;2 r.ir la tItt P54.. aL pri 2228 79 a; m- St ..1r 9" !A C2 2223 Y .2 a g! 1g, 1.921 !! P! pap. 1 15 i i 1 iflil i ire / S il -.i .- -t -t , t b - pss ,1 s 6, 1 13--lggi l ! i Sit i IN li 1;02/51-2ti ti ril lit;r2 J al ifillfillig ig 1 1§:iggAgi, ss ilssi isibh FJ1 s- va A ta i 2 2222t2 2228222 008a88490 2222 22222 42:4222=2 g21221" ;;ll:Igi 0 822U8802 222.2222' X i,a 820582XS saataate 2 t!5 el:Esau:0a g as O eg 87.2VSAT2 2222822' $445242 want 5 22O1 848 2 222 iL !AT IQ! S 3 00 tgeltIE is ZETZ s2 td i'& l° ggsw 4 it REEIQS: I g. tatssar.24 2402 22 "2 88014049 fir-dm:D r2:282t2 222. 2 .2 II4111f1 fi eRt82482 222.2222"2 90282Sta 0a2:02:" 2 t gaviate a O 88-ig Wigs! i PI Igi gg! E as ! 3 I i 2 I a E Pi Pi a 3.3 § tt 244"242, ^ 44 4sr;11 gt ItItI/ t S 40 aesaEl -- ;tan; it sissei snots 44 saartr 900022 g I oil 3 i 11 A 111 ill 5121i1 I .- I 1 ••.i. _gi! ! II E€! iii3/11111 1.401; Js 9fl Deutsche Bank Securities Inc. Page 89 EFTA01097743 6147 F 'Figure 76: Commodity Price Scenario Analysis: Hilcorp Energy Forecast Metrics FY 15E ERITDA IS Million, 11.7$ MA 3734 180.0 1646 150.0 $967 104 11.066 $70.0 21.179 $900 21.291 $90.0 11.403 IA 1751 162 $373 11.083 11.11 $1.327 $1.120 UM $766 $879 1990 11.101 11213 $1,724 $1.435 is).25 $714 196 11407 11.11 $1229 $1,341 61.453 WS SOW $912 11023 $1135 $1246 $1357 $1470 $4.25 $121 $902 $1.043 $1.155 $1.266 11.377 11.493 St75 2647 $91 $1.070 $1.181 $1.292 11.034 11.516 hYMLY. G.: . 1-116EEEINDA :5 Million' el 11.71 $2.1 an 13.25 13.7$ $436 $4.75 $300 5492 $521 $59) $579 $607 $639 $672 SOO $643 $691 $720 $749 $776 $1309 1813 $500 $833 $862 190 $919 $948 $990 11.013 MO $1003 51032 $1.061 SLOW 11.114 $1.150 $1.183 $70.0 $1.173 $1.200 $1231 $1.260 $1209 11.320 11.353 SOO* $1.344 $1.372 11.401 $1.430 $1,459 $1.493 11.524 190.0 $1.514 $1.543 11.571 $IAM $1429 $1.661 $1.691 FY 15E Nel Leverage NYMEX Gas l2mc IC/ $1.75 $2.23 $175 $125 $371 $4.23 $4.71 $300 32x 31. 30x 3.0• 294 26x 27s $400 26x 27x 2.6x 2.53 25x 24x 23x $50.0 23x 231 2724 2.2d 2.1x 21x 21// 3 $600 276 1.9x 1.9x 1.94 It I.8x 1.7x STO 0 i . t 17x Lex 1.6s 1.6x Lk Ilii $OO 0 ' 15x L4x Ltd 1.4x 1.3x Ilx $930 i . 13. 1.2x 1.2. 121 It 1.1x FY 16E Nil Live:Joy NYM F X Gas (5.bible) $1.75 42.3s 1275 13.25 $3. PIS µ7S $30.0 581 48x 4.5* 4.3d 4.1x 19x 37x $404 37a 36x 3.4x 3.a. 324 3.1x 29x $50.0 30x 29x 2.0x 2.7. 2(0 26/ 24 $00.0 25x 24x 234 2.2* 221 2Ix 20x 171V) 20x It Elk It 1.74 1.61 15x MO Ifix 1.6x 1.4x 1.44 lac 1.3x 124 $10.0 121 12x 1.1x 1.1m It 100 09x 5'arot Eteutith)a O 0 FY 1 5E ICI II Miro,. M= -‹ Ed' R B -` G3 Sin 1225 1275 5325 $3.71 µ1 an $800 01.246) 11.229) 1112111 113941 111371) $400 01.146) 11.12/) 11.1101 110931 141.0757 $50.0 11.043) 01.026) 11.0091 1493,1 (1974) 11.167) 0 1.0357 1954) 11.132) 1 1.030) nem a; a En $440 19421 1925) 11907) ($6901 (16721 11852) 11827) (1151) 1 726) $100 (INN ($6231 21416) areal 0 7711 180.0 1 7291 ($7221 0 704) ismoi ($6691 on% atm $90.0 18371 16197 26021 asas3 INN ($5471 115227 FY 16E ICS IS 10LIloa'. tiMILX Gat :S. mcfci 76 $22$ an $225 $3.73 US $425 $300 t18251 1799/ 1773) $7461 17201 1690) IWO $83.0 16621 MC/ 014/ deat asap COM IWO $50.0 ($6081 (1482) 11451) 114291 (1403) 1373) 11341) $60.0 (13•91 ($323) 112973 11271 (ag ($215) (SIM $100 11911 114) 1$131) 31121 ($161 ME 2241 $R0 ($321 241 $21 $17 313 $103 $135 $90.0 $127 MR $179 1206 1232 $262 $291 FY 15E Debt Proved Reserve's IS Mcle) NYMEX Gas 'Sande, $113 $223 $275 13.25 $3.75 $4 25 1/5 $330 $3.2 $31 $30 $30 $2.9 $2.6 $21 5430 22.6 $2.7 $26 $25 52.5 $2.4 123 5530 $3.3 123 122 $22 $21 $2.1 12.0 1630 $3.0 $20 $12 11.9 $1.8 111 11.7 1700 $1.7 $1.7 $1.6 216 $1.6 $14 5630 $1.6 $15 $1.4 $1.4 21.4 $1.3 $13 5330 $1.3 $1 .3 312 $12 $1.2 $1.2 $1.1 FY 16E Deb09rove0 Reserve./ rS Mole: NYMEX Gas (Gmela) 11.75 1225 $275 13.25 $3.75 SOS $4.75 $30.0 55.0 141 $4 .5 $43 $4.1 $3.9 13.7 $RO $3.7 $36 $34 $33 232 $31 $2.9 $50.0 1.0 229 $26 $27 $2.6 $2.5 $25 $60.0 $2.5 12.4 12.3 123 222 $2.1 $20 $190 $2.0 $11 $18 $111 $1.7 11.1 11.5 $119.0 $1.6 MS $1.4 $1.4 $1.3 $1.3 $12 $90.0 $1.2 $12 $1.1 $1.1 $1.0 $1.0 $0.9 EFTA01097744 Deutsche Bank Securities Inc. L a5 Figure 77: Hilcorp Energy Benchmarks 7411Cyd• Castilla* 3 139 N2 144 I $383 136 00 AS 171 II SI Is XIII 1011 2011 ML •5144651111 eleckn 2013 nu eleaan es elitist. Hedge% 2014E 2015E Opentimiltergiati 844 POO BID 0 SIB 0 $140 $8 0 $550 118 $00 ~I. attain:mill Waal» el 0 no MO SO BO no PO Cab Get Site 1260 $348 $28o lea 20146 2015; _Minn slet07. I rhtOLL11804 120 1 Olt l 5155 415 1128 113/ m4 „ N H i ll SI 1 7 2011 2011 1013 406 Whin DI oven 1400 $350 $300 $250 $200 $150 $100 no $10 1013 2014e 2015E •Millard• calstal Cab 0.314•06 Vow 1340 134 2 129111 511 91247 la« lem1y Nast" Rimern 0•141114TOAIC 605b 50.56 62497% 44519% 130x 112 70x 35x 204 301 27 4056 30 804 14d5 50x 148 13 3" 4114 12 254 nri 2 ex le< I1 10 10 304 02 fJ 20x lOx 1 ex 091 0 00 00L 2011 2012 2013 2013 2114E 1016E 2011 2012 2013 S. ilitidinIN OYWe •14L ~WOO C1.1141,fl Nl Wen 11 awian I Source Dour~ compaecdtre /116666~9 Hence LP ~to leper114~4 ~dim Maier S CAMS Mo'sob both corencl and non. ~ex I ~wen Fos the 454~49 tormung.~44 Cy CIS *MK* es. Incises Xpu665 new O4~O ~a. CHS XECOWSUCOASCRIOMUUFX0EPARCSANST å Po SO For rho Sbevoge corneener not ~cif by 08 Pepe YAW rho foments Sperm Mgt, Sheinberg ~sus of Mime. on4.. AlAEMtAk SCE1,O,O,FANCEPCLISCAWNIVAPAOASPEPVAROSCSMSEVGENS« TPUK TOW end IMPS EFTA01097745 13 January 2015 HY Corporate Credit Energy Newfield Exploration Relative Value Newfield's recently announced FY 15 capex (excluding capitalized costs and interest) is around $1.4 billion range or down —$500million YoY; this was below the $1.6 billion levels, which management noted as the likely level based on $80/bbl. The lower capex outlook is expected to bring meaningful reductions to its FY 15 cash bum; we estimate -$200 million of cash burn for FY 15E. This bodes well for its goal of neutral FCF in FY 16. The reduction is likely to be across the Uinta, Eagle Ford and Williston plays, while it would continue its focus on the core Anadarko where the company demonstrated solid operating momentum in FY 14. NFX has set an ambitious target of doubting production in Anadarko during FY 14 and achieving an exit rate of 50 Mboe/d by end of FY 14. Of note, NFX already reached that target exit rate in Q3 14 and expects to average 50 Mboeld during Q4 14. Well results in Anadarko - across the SCOOP, emerging STACK and newfound Springer Shale - have been solid; both SCOOP and STACK wells continue to outperform the type curve. Besides the Anadarko Basin, momentum in other plays continued to be solid allowing NFX to raise its FY 14 production growth guidance to +21% YoY (PF asset sales), above the previous 10-20% YoY target. We expect this operating momentum to continue in FY 15 and FY 16 and drive single-digit production growth (6-8%) despite lower capex. Besides operating momentum the other key factor in the medium term is NFX's hedging program; with 80% of FY 15 revenue hedged and 57% of Pie 16 revenue hedged NFX ranks 3rd highest in our peer group. However, the caveat to the solid hedge levels is the hedging structure; 80% of the oil hedges in FY 15E and 100% of oil hedges in FY 16E are three way collars limiting downside protection to $70/bbl only. Driven by the operating momentum and some hedge protection, we expect FY 15 and FY 16 EBITDA levels to be —$1.4- 1.5 billion. On leverage front, we expect the company to maintain current net leverage levels of -2.0x currently, which factors in $600 million proceeds from China asset sale. The timeline for the sale has been extended recently with price as an issue. We believe solid operational progress and a high likelihood of divestitures (China) will push this currently split-rated credit company (BBB- /Ba1 Senior Notes) to full IG within the next 12-24months. We maintain our BUY rating on all NFX bonds. On the margin, we believe the possible positive catalysts for NFX (operational, asset sales) make these bonds trading at —6% more attractive than SELL-rated QEP bonds trading in the same area (YTVV: 6.1-6.3%) given we might see negative catalysts from that credit. NFX Downside risks include higher-than-expected spending needs or lower-than- expected production growth. Page 92 Deutsche Bank Securities Inc. EFTA01097746 13 January 2015 HY Corporate Credit Energy 'Figure 78: Newfield Exploration Financial Summary ISO% Sam 2.6•4144.44 Inv 41.*X01 7,49M404•44.414W02 OW% 044,4 NOM On DM SIM 0414. 144014 11a) MAIM Y. Mem ON 10.0 3044412 AI Mel* NS ISM0. MOM AMA 144.1. a1 MOMMO. Matti WIM) WW.13 Ilwww 401 011 x10 1411 x141 ]J10 44044114400.4 Om *Mal • O.Ow. 11 1 Moors. IA 143 IA 674 2203 2471 1147 Len "onryf a" 10; IA AI 9Y 104 ON 1.141 *A Pm 1.4.4 mam4 Gm. 1.4411 17 Py 07/ 00 11/4 Ill 01 SI 11a x744174 74 damn.. apirAm IM IY f 4) .121 Yf 1411W 474147 Ma In 110 141 Px AI III M 743. Oat M W W 14 In W WI ...a SD A A 34 34 ID II 117 IN Mt 44i mom W Yf AI M III MI AO SO 730 Dr*, In as . r P10 IA al a 07 7.4 ,...• nun I AO tun Jt 9 •7 A IY C W 114 IR SI WON 30 17 W OA 471 m W OM* - 40 011 /Mil (PAM 1140444 1/14 In W 1301 IAN IAN IMO WI IAN MA (PIMA •144.11144pn MO 1.410 MR 1.20 IRA IMF INN WI yw . x111..1441 SOW In 02 DUI 11012) WA WM IAA 10140 Mn m4,44 41•44, 44.4441 IMO 4140 1471 MA An 1114 AA VW 1.161 Ai AMAMI On ./0. ne4.044 MM. MIXO MAO NM AM P.A IMO) inn* 144741 IMMO P.M/4W Cm nee 0.../th 1,114 An 1403 AA An AA AC AM MM C.A. 0•4444.am 14114 1401 x112 .Ill Ma WI Ota 11441 MA IWO 0.41.4444Am WI SA NW I•124 NW. AIM MIA IMO AIM OW C.....Am1.444444.am 1414.• In IMO WI !MI 3214 MA • • 41(4 PM 444.04 4.444.04 OAA MW 140.11 PIll SA MI WA AA 340 0141 •....... WY 01 MwNSW 11. MUM .c tly.../1‘..$11.4.1 An FON Alt AA AA MN •444.46.4 Mese. 444. 10.091 KIX* 1110 . - .. .. /1444•4 4 ASA, 46•044 444104 /1446•104 WA PM AA 9.44441.4 Mn SOW MIA L.n..2 (cm MA IOU AIM .IA MA AA /4..A ICA 117111 Inn 111/4 Opmlmj Imm OMA OW PIM ....44 DA 14171 130 , 4t4.4 MO 41044141 IAA 122I0 WA ),..... 610 a MO 414, WM WW 1nr yr 744µ4Y mit ma An ▪ MO Pim 1141/A4•44 maim 411 fO 4.W 11W On On Al IMO 101 314 AIM •4404.0144 • 04•04.4444 MI nit. mu MTh 007/ MIMI c..C. Aar el, ...m. .Lannolle ▪ CI I., I, I..... tout .P. s. OIB All i OA, 118 P6 i.4 ri.444 • Me NYµ Cmm II OS/ .10 SI 14 tat AMA. A OM 44v4• 4131 11471 1.111x.71044411W4µ1 Oh CA 1.41^.1. MO 04•1 GM II...00 O.. 1 II P, ....M.,t• ?W. 4A/ 1111 Com 044411•64 14 444 904/ CAA VIA AD 41 01/ On 050 AI %Imo OMPM r.:4•• w m 117 34 AO Otl Aw14:641104.0 eta 1,014 MO MO 3011 3441 Inn Cam “...4 Om • Pµ11 JAW. /144....myr•AIMM)11•41•46 MO 43 O10 041.4444.41, 4110 CAM SWAM '0104.1.4. 141111)0 COW.4 war/ 144.4400,1044 04115/744 4441010.44 • 04401,741.4 MiMn41M111.1. 14'.1. Minims °meat 441444611Wn O, 11 PA In RV IA AIM An wN MM MW 41.141 •• • •... • 41.211 An VW AM NW MLA 11412 MID saga 14111 1173 SIM 114. Inn feta 1,1 It AA Mtn 11111 QM 04 11413 WA IAA 10111 AIM 1...... MN AM AA W MI IMI On M} OA 2.3141 ORM (1.}O at Mar 674 1447) OA 1120 OM OM MI MO IA 0MI 14 Cr Mil Pr lag 112, OA 11%11 71 9144 IM IA 41% 42% V% as 4% 144 X11. PI% 2111 PI CM GM 144 IA 1 4.34 9.44 OA . MA IA IA III Ile IA 244 224 IA IA IA 2.16 2.14 IS 144 IS 1142 II A OM KW IMO 11.11 1111 41M 4150 11.17 -44iM.1444.0434.341404 looMg C44,4 //At 44,4•• Ole Wm* Wow yen 410•44 Mc fa A.M. L...•• in IM - Gm I Int 175 1277 A.M../ 4 µ Wily 4.2.4. no VmmIMMI -1 0 0.n ▪ Pt% Mn Min 04,M5 Ira 57• 1.X44 7471. Oen titalnkhe Man ••• TO f Ala in 1.44417•4444444. 44. /Oa I pa COI 701 all 710 .1444 710 IAA 24.4 1201 1,14 IAA 414 W [wow 20 444•Me mainl 1174x4.4.010 AIntolemte a I UM kSJ )0. paor • it ale. no* a aninstaam sees CO 1. a IAA Mcm4.444,SA' 4.44.44.4421s4 gooac WI P. MIT 0 4,04.4..1 1mie Owe 1103 w. ▪ MIMI /411,44,44 W..uMw Amt. la h11.o.1. Savo. Dresers Berk CMW01Y 0001 MM PA 11% 4.4 1% 410 IN u 144 04 O11 044 O46 Iy 1T IM 22g 1077 4020 aA 1111 11.73 ll p C41501 2.133 716 1 nr ow Mt on smImM0 CI% 1ST 4114 1MM DAMAO 54% 574. 404•441.1164441411 111 111 1141 1114.7µI PIM 1444 11x4 IM Moms holawil1001511 laa Axn IP& 4.10/444•4444am) Ml lilt MCI rut Tat 17% 011. 0.7 44% •70 • An Deutsche Bank Securities Inc. Page 93 EFTA01097747 mi r 'Figure 79: Newfield Exploration Financial Forecast 110444 4443.41 4044 04 044.404 Can 4724417.1 444 0440 344074 Con lbw., Hob. 0. 00 [pnaalnn0WNN4 0006 7P07.1vaN¢ DOA WIT ben Mlµ o 30 ,7 0747 561 oaa 4 if II yl 375 443 03 in 4111 AN 40 4744 567 314 Ott 210 WI in 110 III lit 10 PO It 101 04 XI lb IM) 8.4:1 07 , sb 1Aµ 2.471 LW, 4.4 433 la b331 al 441 la 123 3.070 3204 03 9644 4344 1224 IS* 00 a 771 417 03 331 NS ni 3 i 274 244 NG in 4.714 IAN IAN 0411 MS3 1.444 la 212 334 22. 331 313 2414 NJ W ON Mr 055 10 47. 14/0 I03 (I* 40 7.2 OM St 12 If la0 34 PI 37 414 101 442 II, 519 I0 703 747 .7 NI ply 47 II 141 10170 at* 20 13 la 434 $3 fa • 4.0 777 241 " 171 TN. py 414 33 0 3 N 14 PO▪ ) • 2:4 yl No II) IN N 42 Sohn* i 4 ftlf W N 0 Pb 010 11.1•4 141 Pt N fµ YN4WO4Xsl$NM34. 1011 IAN IAN 1474 1340 IAN 1.334 5.110 I.TI 1.0. INS IMI 44141 4.1.11 1.444 LT% 13107.2 04.44 Napa ISO 5.47 4.244 430) 1243 NO 747 4414 lab 1,40 1.474 fiAn MN 377 1.111 all Cna. 1.(br, 0 0 1029 21725 472µ µ2N µ2A $6627) µ3M 3679) 1µb 1µ14 IN 40 MP T3µ µLM 0.0) me, Kt Stns. i Got ifonli 1 All 1404 WO 1153 4372 43.17 0.75 071 NA NM NC) 031 1311 an 137S 0.73 a. NOON, p7. Snow 0.....w4n4NM al= TAµ 31,01 µ9N Oa) µ11f 23444 A2µ 4020) WV* 01120) 1.193) 11210) II?.110 0210 5.44.154 bi. 132.2319) ON 4.140 073 1174 1311 101 IMO $811 .72 NA 143N DO say 01$ Os) GILL 011.242.0 24414) 4.131 4235 9m 4044 452. 4214 14.14 120 13172 1440 114314 14534 04470 n a 001 21444 4.04410440•41004 MN MA 14141 µ115 Mµ 14414 1019 0414 WA 41732 Wµ MN la 0 01015 V43) /15.2..2,222. 111441 1.11 UM WO 2lµ 2340 LSO 2441 104 AM 400 OVA NON 11.42/21 0120 itC144 PO II NI.11 4340 4204 0.331 1.1.2. ¶2021 $21.41 *CO NCO KM NCO 53375 13277 0317 97.04 1.44 P..1.0...101 4101 NM/ Tµ4 111233 µY12 ?MN T4µ µN4 1677:42 2T.)µ µ31N MAP 243920 µ9W 247143 31l4µ 1.42 (0.020.01.3200 1113 13µ µµ µN 1131 1470 140 14045 110 1415 ISO µµ 1464 1717 14µ PM IN C4..2120.0.00ca tea 1140 12243 14534 0702 13211 0444 0003 42272 44.421 4•AN 41(41 44221 41/433 4001 33541 Nu ( %Not 00441 411340 Wµ 1410 445.44 147.14 Di O. µL17 MA) MGR 1414* 1410 5540 µf46 µ1µ Wµ 13444 MN 11004 4 0440442144474540 ON 44034444 1•041 10.74 33.33 W.N W 11310 NMI INN 1012 µ0N 10 al 109) INNS 133* 1017 MA WY AS WM 4 SI TN 164.1 44 0 ;r ▪ ata INN MVII 1#7. M.7. WAX 111•1 MX 110, ri1100.40) 12210 UM =AO $22 IN 12210 511 /A 12210 $7214 01013.00 74 SW= 0.33 04n 12210 12344 SE 44 sti.$4:4, 4 .0:0,:s Ca COM NIL NS ON KW 1410 NW $1.40 14 N 1334 SLI13:51 553010 Th 5"111 a" X 14 /AT UN 0.01.01roa ben 41241 110* 411.44 $1ION Oa Oa I401 1233 MP 12 44 430 1227 MAI 021 ION It 45 MA $210 1144/4 100 1710 014 milla 40: 13 0 I 1 1 Ai ti ll I 4141 Ilia $1121 110.1.1 11974 1237C. 111.74 114X 11974 11414 110 0 210. Ma lau 1113msti 1 .• 2.1230400200 Ma Ma Ma la 44 12044 Mae MR CON 1407 11)21 0 St 1200 12044 MN 7".04.44) 1401 14ta 142.41 104 14014 1404 000 YON 01/3 Ma 140 1410 14111 PPM 004 4400_10: WOOS( Nampo SP) 30 )0 X. 271 as NI W 1.714 us 14$ 1411 1461 20 124$ 1,414 Owl los i44 re at, NO 1020 0:20 0216 Kt Can • 0102.110.4440 0111 140 011) .3431 04 POP NNI 020 020 0.311 020 11.7106 111.42. 111421 11041 0 1.1, C.Iplit 0520 01401.201.1.44.0411 11* NI Caps Oar 0444%4 Nan oil OL 12 044 0441030 MI 147* PIP 021 Mg 12110 140 001 0.370 OA* WA PASO PAM POI 0241 0.4I 00704 40641040 Cam trn) .2 a a 14 0 : la 0. 14 ik 4? a II 13 IN 412, Gm DM 400 40 47 4 0411 1212 a 0.11 14 P 1020 a /2-1 NNW 04.1 dal 1541 land ibra C•24442110441 al 117) 00 (Ill S. ill 10 01 PA (17) SY 070 00 (la. (1144 .112 lin Collln 0111 31 PM) 001 00 44 Mal It 437 PM PSI) 00 020 PM (4111 0441 0340147.4 BO 1 444 RP (CO 0 0 WO a 104 440 1/4 20•2142 a boas 110 01 • • ply 1740 a (lb 0 Tv 001474410144444 NW Ca 17 344 0711 4P 43 11441 la 07 9044 00) (72) OOP 444 pp pal 44044 NMO.N 040 00) 94 baaaira.• Lay len Cwt. 107 a 3.6 97 M 74 23 a al 16 320 2141 1244 231 2.4.3 2.01 1244 1433 7.17 LM 304 )47. 2146 1246 1441 31 >1.1 47. $7 364 la M W M N 241 3Pa XIX 433 27.7 3.143 12444 1033 2431 Va. 350 305 3494 2.70 am Mei 1044 043.04 9000 004 Gs* !..2.3..lbaba 1 bp,' Col .24% 27% alf 4% ..Ta II% TA 15% 1% •21% 3% 42% 1•407% Omt. A% 2174 22% 13% in 5% 3% in 1% 5% a 440 11% 0 4% 4111044431/004 N00%it.. toots? Iry CotatOlteelll 0u 44. 410 SI. 0 64. 442 10 lib 212 422 41.2 6.4. 0h 0 Se 344 analltAx • ON • Lb • • 01a 1114 014 514 O44 Ste 00 CON 444 Y.2440122. 13. I lb 141 434 12. I44 IN 023 014 eta vL It II. 1.2 00-1030( II. U. 144 1.23 14. LF 21. II. II) Lu 94 LF 7.0 v94 III 144 144 3010 04X It IN 14 IA Ih 1.74 Ma 114 I la 70 lac Ill it. Dental bo..... 140144 Ida 034 ail 0 ea la IN $44 Of $372 IASI MN 3141 la 0 HA 84724..3 Moan 440014h.1 am 089 0.41 NI fa la NI NA RAI Ilia WO Ian 4,144 PA NI 0 Swear 0.44000 Sank Caren tam EFTA01097748 IMOS >NCO 0143S)110O 'Figure 80: Commodity Price Scenario Analysis: Newfield Exploration Forecast Metrics SIM $300 $713 $40.0 9193 $50.0 91.072 FY 15E EDIT DA 5 91.110... 12.24 $275 $325 $722 $731 $740 $.901 MO $919 $1 081 $1 .190 $1058 117$ $749 WO 11.107 $425 $770 1319 3172$ an $297 $976 $1.155 $1.75 $300 ($2051 MO (3601 $50.0 $108 FY 15E rcr $225 IWO 17325 ($204) 11280) 151971 4 461 1543) isx.) $111 $115 $119 53.75 01931 (13I $122 $435 (1170 gem $138 an 15156) $3 5160 c) 0 6°` $ 5 a -z a; 8 a $600 $1.251 $700 $1.430 Si 240 5(.269 $1278 $1.43) $1.445 51,417 II 286 $1 466 51.306 $1.467 $1.335 $1314 $800 $265 $700 $423 1269 $273 $276 $427 $11.0 $434 1290 $437 $296 $453 $318 1476 i tn n • $80.0 $1A(11 $1.490 $1.499 $1.500 51616 11.537 31.565 1173.0 9499 $416 $469 1463 1466 452 $505 190.0 $1.503 $1.512 $1.5.21 $1 $1538 $1.559 11.687 $90.0 5452 1456 $459 1463 5467 $482 $5735 FY ISE EBITDA Ninon, 1-1' 16E FREI'S. lAtIlion) tIMLX77-5 (7, HMI_ X Gas mi $1.71 $2.21 $2.75 53.25 1$75 $425 81.75 $1.73 $2.25 1275 $7515 53.75 $4.21 14.75 0 1900 $199 $451 $504 $566 9109 $662 $714 $30.0 1.1(16) ($1.134) 1511011 1510261 (33761 (12231 070) $40.0 1626 1678 1731 $783 1836 $889 1841 140.0 i1362i ($809) 15850 11/041 (17511 ($699) 117116) 1500 1853 1605 1991 $1,011 51.063 51.116 51.16$ $504 ($7371 (WM 11832) 115791 ($5271 0,47 f1421) 0 MA PAW 51.132 51366 $1.238 $1290 11.343 51.396 $800 716131 ($460) 11407) 113561 (0021 clew 15197) $70.0 51.307 51.360 51.412 $1.44,6 $1517 51.670 $1.623 $70.0 02551 (52361 15183) 151301 ($781 (5251 $26 $10.0 $1.444 $1,497 $1.549 $1,602 $1.664 $1,707 11.760 $80.0 (11541 ($101) 1149) 54 $57 $109 $162 MO 51.508 11.561 11.613 $1.666 $1,719 $4771 51.824 $800 ($821 11391 113 368 5118 $171 $224 FY 15E Net Leverage FY 15E Debt Proved Reserves (Slade/ NY/71FX ($.1ncle) NYMEX Gas (5.70417) $1.75 $2 $3.25 13.75 5425 $4.75 1227 3275 53.25 13.75 4. $30.0 41x 40 4.0. 3.9. 39 387 36. 130.0 S09 509 108 108 50.8 $0.8 $08 $400 3.17 3.17 307 3.07 310 297 24 MO $09 106 $06 $05 $05 $0.6 $04 $A 2.47 247 2.47 24' 237 237 227 $500 109 $0 6 $06 $05 $05 $0.5 $0.7 $00.0 227 Lk 1.97 1.94 1.47 19:7 1.87 160.0 $O 7 $0.7 $07 $07 10.7 $0.7 50.7 $70.0 1.67 187 1.67 1114 1.27 157 1.57 170.0 $O 7 $0.7 $07 $07 10.7 80.7 50.7 1800 157 1.5* 1.57 1.59 1.57 157 1.47 1030 $O 7 $0.7 $07 $07 107 80.7 10.7 USA 15x 1.67 1.57 1.5$ 1.57 1.47 147 $900 $0 7 $0.7 $07 $07 107 $0.7 10.7 16E NEI Len IQ FY TEE DELI Pro.(70 S. MI.- ft NYMFX C. NVAIFX G ( 1.7$ $225 $275 6325 53.7$ 4,35 an $1.75 122/1 1225 1245 53.7$ an an $90.0 1027 897 7.97 7.07 627 5.77 527 $30.0 51.2 $12 11.1 51.1 $1.1 $1.1 $1.1 • $40.0 59:7 $50.0 397 St 4.97 4.57 367 237 3.1]. 4.17 297 387 2.77 3,57 167 $10.0 511 $60.0 $1 .0 51.1 $1.0 11.0 10.9 $09 $09 $1.0 809 $1.0 80.9 $10 lag $900 277 267 247 2.24 2.17 247 110 $600 75 .5 10.8 $06 $05 $0.6 801 50.7 $70.0 117 1.17 1.77 1.67. 124 147 1.37 $70.0 75.7 $0.7 $07 $07 $0.7 80.7 $001 $80.0 1.6.7 187 1.57 1.4 127 1.27 1.11/ 180.0 80.7 $0.7 917 $07 10.7 $0.7 50.7 Kt* 157 1.47 1.47 127 127 1.17 1.17 NCO $0.7 $0.7 917 $07 917 $0.7 10.7 m w &moot Poona. &yr* EFTA01097749 'Figure 81: Newfield Exploration Benchmarks 0premling 104.4141 044 PndecaleGeorie 2 20% 4% -15% -20% •I5% 2013 7014E 71115t erel as444.4133 "vain 19% la 0 $640 N10 1310 121 0 1110 a0 00% 90% 70% 60% 50% 40% 20% 20% 10% 0% 1390 loll cycle com V ••• 148.7 W27 1406 $44 2011 2072 2013 era etean it ellede 94% 2011 2012 2011 e, MOM@ 411•31/4 120 ti 116 100 two 100 15 0 14 0 190 10 0 100e (I Oe 00« 211 ûâ 72% Hedge% 72% ?111% 0414 2013 1014E 20114 ere) 4e4.4410 414444, 2013 2014E 2016E inn 41041•141 le/441•4 2013 2014E 2016E 4141 _ma •1480,4 M100 VS 0 ISO 0 1150 111 150 Gabriel Van 1239 $233 5248 1208 148 73 2013 3019E 28015E see admen» ant, II 10x 70x 130x 60x 4201 304 20x 1119 00x O4be1 Raw. 1301 4251 $7011 5151 1101 15 $011 $1r 404A(141441 q17 1228 1101 k 5 14 11 All 11++14 4%01144 tomon 2012 2011 140 0 1350 120 0 1250 120 0 1150 1100 150 110 Cub*. IS* taw 1348 1342 2013 2014E 2015E 124 0 1247 Is tea atteetieso owea•• Otot 29), 301 Ex 20x lox 11x o 5,1 00 Storm Dgeuee lb* melearydget, illtombsp Halm LP Foy Maxtereg coneunge °mew/byDB MO WM( rito becems 77gtati roe« ow pialfflodatinx.e. dKXfCLV9ifST,XCO.INLCRP,NK7911C0LP,NACSwS7aM50 Re D.oMNW.q ôtrewvas. no: cow« by 08 19911441al tM broom, 49wer new Bboneboig conanus «Sum cory. AMEPULAItSCE70,4FAW,PELTSCPWAII7ANClOASPEPVAROSCSN,SEVGEA7SMTPLIKIEW end 'SPX 131931 ssoan EFTA01097750 13 January 2015 HY Corporate Credit Energy QEP Resources Relative value QEP Resources (QEP) divested its midstream business in October 2014 for $2.5 billion, and before it could make any major decisions on rewarding shareholders from the sale proceeds, oil prices cratered. Thanks to this fortuitous timing, QEP is starting off the current commodity cycle on strong financially footing - net leverage levels pro forma for the transaction are 0.6x (the lowest within the peer group along with XEC) and liquidity is an impressive $3.2 billion including $1.4 billion in cash (the company paid down -$900 million of revolver borrowings and unsecured term loan). While QEP scores over its BB-peers in terms of financial risk, the outlook for business risk is relatively less attractive. Specifically, QEP lacks high quality assets with significant scale (i.e. lower inventory life) comparable to peers like RRC and NFX; its Bakken acreage is only 109K net acres of which the top quality South Antelope acreage is just 27K net acres. The issue was only partially addressed by its minor Permian acquisition in late 2013 (263K net acres). Consequently, it is difficult to see any credit catalysts in the horizon for the company driving a meaningful improvement in credit profile from current levels. We acknowledge that, given its strong financial position, management could attempt to remedy the situation via another major acquisition of high quality assets and that, given the current condition of the asset markets, could even get it at an attractive valuation. But, at this stage, it is too early to factor this into the credit outlook. In terms of financial outlook, we see a modest deterioration from current levels over the next two years driven by weakening eamings and modest cash burn. We expect annual capex to be about $1.4 billion (versus $13 billion in FY 14E) driving production growth in the high single digits. However, EBITDA levels should be in the $1.2 billion range for both years, below $1.3 billion in FY 14E (pro forma for divestitures) due to weaker realization. In turn, we see cumulative FCF burn of $550 million during the next two years and net leverage moving up to 1.3x by FYE 16. The company's hedge program is fairly modest - 25% of FY 15E production and close to 0% for FY 16E - exposing it to downside in commodity prices. Taking all of the above into account, we are moving to a SELL from a HOLD on all QEP bonds (YTVV: 6.3.6.5% on longer-dated bonds). Overall, given their recent outperformance, BB high yield E&P bonds have significantly outperformed - QEP included. Further, given our shorter outlook for oil in 1H 15, we think we will see further weakness in overall E&P bonds before we see any marked improvement; we think this leaves BBs without catalysts as set to underperform, of which QEP is one. Upside risks include using cash on hand to pay down debt while downside risks include potential levering acquisitions. Deutsche Bank Securities Inc. Page 97 EFTA01097751 13 January 2015 HY Corporate Credit Energy IFigure 82: QEP Resources Financial Summary 444.40 1144 000441 NW 46 tt% al aNente. MAYA 04434444 Man 4.4•11A 041 LWOW 4040144 044%04441!4000 OP 044144106.0100144 W I% 440140014404 414100441444400101 '31214444IW .14.1041 41 04414.4444 04164 O040.s We 4.04/3 04106410040044 Innen 'I. nal4.0•44 0.4.43141 10.1 0.0 0 _4!4._444.114 inn wn Alan re• a. 777 41 11) 010 177 %IA 110.444% 1:p In 10 4411 21 M as 044706444 044•• IA10 IS 000004144.04.1444 1,100 IMO 1.101,/•µy. 444.0 14.01 444.414441404604 040 1114 1.41 An 11.4106 PM 444.0 4. 40.40 100 4410 4414) %s t., 6 0 010 40 143 14.11 ti 4064.6 000 1140 IMP 00.46. acw. WI. 1411 • .17431244.41•.1444 LAIN LAIN 0446.404464 acw. 404 1134 Ats ensetAtinek) IxY 'tuna InnwIfinati Mn RM 4714 41.14. 14404 040.44414.04 In ids 64•44440 OM 014 00 00 114 401 0,44. IAN Lai 40. 44 WO 0404 . 10.0 PM 4141 mmaanArnanIaineniCA. ION 1014 )44443 POIA RP RM wan 040 00 141 0 4444 00 1M4 MI 444.60140 0:1040 as 6404 Na 04 Cal Thin 04 06 64•1040 4 401 PM 4040 4444040414460 P. 646444440 Os 440 MI OW 44•444 04 04.000.0 2 077 (NANA roe al• ANNA, In) CO 040 604 WWI 444044, INNS Ms Anna, RANA ANNAN DI CII51 MAN PANS ANA In 4.7 110.1 150 1210 NG NO 'a. Tel IS 0 44440044040 1_0611 04.000 6 440466114 100%01001.4% 4% 01144444004004 00064.0 Owe OA 10044•46 fax 1. IA 441410.44 1741 040 4 04 IA • Ontaritv4 Isla [4444 444 44040. WO 41 nn 0 4 410 OIII 10/2 15 .112 44 OY is 0A 44 An A nakimn Ana. NANA Conitnnefl 44 5 ANIntann Os . 11. 1.4 tau , 4, t 4 n IAN, I iir 0 . 2 ... 4• 46,0n Ague.* rAdka ...AAA Ila 1........ 0... U".. " L • Y., I u I r'W• MS• I MS X 41 .<...r: i r, t.w.,...... r",....w.,....rn 66 ws Au 020 34 IN (a >to aro im w, tr. ..” ta, .44 44044 0644 0601400•004 040 WI 1.041 44 IL% At 141. 44 46 3 46 4\M ...°°,1= 4" 444 uniwnesnexta in 44.. Oshawa. II •44441:40/044•444),X4•4444404440a.44 144Y0a .wn.o. uu464v , 444 , .N rre44•44•44.44440C4.44 infra 014arear toast meal- atenws1001.01 01 01 an On %mu% 0.101amr10•1110.• Of 10111.1141 /DO M444 -14 44 104•4040,0100410 44404 46044.444064460100 07.5 wan -WA PAW MG... • saws boa 40.00444.0 44144 4 400644440.1•4442tArcnninCONIANV44400AtAANAnnennrorPennalan 1444 PK Oa Ws WW1 064 40114) 1401 $4444) WM 144440 0 44) 04) 4104.4 144.4 WA 600) 1464.1 WA 1400 44444.1 141400 AI a. IAN IAN UN IN 101 741 011 1411 IN rt WI 011 4143 100 LW 411 1104 OA I 444 PI SP m NI 164 IMF LAO LW CHO A 00 AA 170 40 S IN) IN PO IA M 11471 5 Ib CI 41. b 0 r 44 114 0 494 40 as In 07 i o NO 144 IN IM 40 OS OS 92 44 M 14 10 m WI 4.04 PAP La. IAN LIP Ule Mr 1• 11 141 IAN IAN 441 1.144. ma 11410) PIN PAIL n' MO NA 4414 1.141 14.4 440 PM UN 4410 400 4140 WM acne 1010) AN 1414 4424 142) 104 4411 4421 44 4 Illt 4.41 407 14.444 NM 40 10/11 144 PMT 1441 144 WO 1001 1410.44 1000 14044 140 Mal TO NAM NOW AMA 466 414 WO 4341. AU WA LW MOS MM 70.44 111.010 1440 Win MOM an an as PT MM 404 NA 14.4 Ni ION OM Ma 461 014 QV 0 14 1147 RA NM MS 11W al 1177 41.0 44 1444 144.1 UN MC 1.114 140 1117 0134 100 1444 PA Pa SW PAO 0.4 00 4411 Ma MS 0411 104 0112 14.11 MC RM 11441 AA RIO P.R 1461 II 41 1101 140 IAA 44 44 Pa 434 0111 NOS 4.40 P'S MO UM UM M 40 NJ 1444 LW 15 I.M lb (A la) b CM 0$ M440 1012 4412 1 44 7} 14011 1..4417 III I% lig 92 44 A .4 . Mb <14, AP an 0054 007 1,y n OW Pe MM AN Si nal (I W Mn 1,O 0.441 PI OM TN ale 074) OM NMI MP 4 I0 11 1110 WI An LP, 1470 tin am .m IPA *A Ael NO *A 440 A. III? 0.411 WP -r ale O 71* i 434 7110 4.1.11 AIM AIM 1411 4: 14 $5 IA% In II% In As SA 4.6 ate 431 PA 104 On 04 40 (0) OA 05 LA OM 14 114 It It Ufa 7107 Mn 1410 144 1144 44.6 ••• 1444 114% OA 06 414 10 114 to IA 4 6 44 114 144f 14 0 414 {ill 0714 1444440,44•444444Pialie 404444 444•44614, 44.444/ he .44.4401 444084504.41444.4144 aolla4 •••••••4.4 4.• • NOM t 444 444, 14.• L AAA 440 44'44. Pat PIO. G. C. 441 444 Al 0.10 244 144 44 MI 1.44 144 LW 44% 0 46.4466004 44% 16•441404.44 10 10 04 44•44 , 00444•441 i4 711% PM 114 1444444044.4004 A )11% 00% VI% Pe at 0404 0044 AIN 401 AAA ti 4•141 AA CT 41117 &wee. Deurectie 8semt Convirly Page 98 Deutsche Bank Securities Inc. EFTA01097752 17 OP 10 0) 'Figure 83: QEP Resources Financ F 1345040 44 IV $10 Kt 44 K2 100 41 1.111 2.07 2.310 2116 3.44 2.910 1011 40000 0004 00411L44-G1041MW44 1.1 11 71 10 4 74 70 212 72 379 40 344 10 /4114414 mis Ka 24 624 777 Ka KIS an ;In 44.6 2.736 3.043 349 3210 3 Ovunrni Cons NA 302 42 an 413 III 631 $57 107 134 1131 SSW 143 2.010 2461 14 ise.44 144134; Gan '11444) tAinr0000441144144 344 440 243 34 71.4 2011 NA 314 IMO 1.341 1296 546 5.410 3.434 1216 304 240 293 231 247 no sea 373 240 643 745 lia 1.016 In Ipn 1.143 441 144 150 112 101 25 22 27 34 494 610 412 522 KO 540 61 4444.4 43 44 42 37 35 35 35 36 114 SO 123 160 167 140 07 031(100 054 101 105 70 64 114 OP III 10 410 520 370 342 341 OK MI 0001 30 261 011) 2 t 2 2 3 On 546 In 12 III 0 9 044414 0004 • . . . . . . • • °Wird 004n) 4 I 7) 231 4 Ill) I 41 04 la) 44 421 110 210 2ID lµ P91 lawn 9 MA 10 9 14 011 141 II) MT 134 a no 72 1161 ON 441inceme 40 PK 171 a 17) PI PI 3) 3311 267 In Ha 510 Pal 47.14440.42.44444 1547 1.507 1.576 l.p 444 IYI 4225 151 1.536 1.341 5256 524 SAW 1.11 5.214. ATM AMMO 41401.46)43 144 1.141 1.514 1105 524 1444 414 111 64 1300 419 1.310 5111 41 5204 1.01045401. 1461 114040 017.26 0101 15210 1.5250 1650) 157.60 17159 YHA 44.11 11407 43.01 1540 14504 1440045.41.460 $1140 14.72 1.558 6116 134 13.75 1.176 491 4.75 14.4 UM 12,93 3314 1427 1.175 10. 14406444040 OW 1161$41 Gx. 1,4444 IMO 4100 4.1.03 41400 41103 40333 413411 63412 4/.703 36340 =KO 24300 214100 175440 143,443 403012 0.0.404 40 1405.1144 4.4 34.25 4.50 017 13.71 Sall 471 471 4,4 34.21 349 3421 1423 0.71 PM 4 Or 0434an taw 3.312 3161 4472 440) 5757 4.14 1014 3133 424 37/3 4,07 43210 10.340 13472 33074 144099 .1,).1.13tio 4350 4177 4141 4132 $4454 364.03 05425 93534 Yµ10 USW $46.73 4424 Man 4447 µ)2' 0404 Mi. Inspient14440 1144100 l4µ4 15410 1.445301 142414 1.0017 147324 190 Van 114100 4611.00 4A)7.µ 422102 172734 144.1424.441. 4444 404 4026 3134 3260 250 20.01 2001 001 12111 - 4.54 340 3196 420 2074 24.77 TOW Pr04.1414. 0040 73.714 MO) 7%216 7744 0543 111512 IOW MU 22040 271.44 34.330 3•101.0 31447 93124 SWIM Tow 41441•11•014441440($14741 4.13 4721 ma $724 0154 µ11 454 WU WU WU 4.44 14.4 am $417 1444444 a 0.4441.0144444 per 444 14•414044, 57.33 57.32 UM 94.74 µ54 µ11 µ4 µ4 55.24 55.24 35.44 µ4 57.34 µl7 .J40444 1321 $2111 32.47 1217 071 ¢µ 1010 32.12 µ10 µ10 31.31 3144 3227 µ4 O.1 .304.4 µµ Ulf µ17 010 an µ1Y 4.1a µ15 410 12.45 1143 13.05 543 µ14 17.1 315 40 WU 10.42 465 1057 1057 1061 10.57 10.34 1016 10.43 10.45 1057 1057 605 09414 134)44 11.4 11.72 11.4 411 430 1027 NW 44 11.44 11.10 417 147 1141 MU 10. 440:4 bps.* ird.14214a4.1Di1/41 /04 456 /0.52 1019 1043 1042 1065 10.40 1061 10.32 /On 4.52 1053 1041 0) 04 913.204 1170 3.270 11.70 624 22.71 3.270 12 4 Un 1.450 11.72 1152 474. 1076 StIts 12. 3444.40 KM 3238 1218 12 4 WU 3238 1233 $2.313 UZI 11.54 11.04 WU WU 104E 12 Out erb ante µ4 µµ 440 µµ US 4µ 1417 35.46 µ4 5140 PM $5.13 µ55 0a SI 11/44 174 144: 343111444 Kinn 364 403 3µ 344 204 KO 3:0 314 1136 461 1116 1136 1.456 1.117 1214 1.44 144 Ps 114 Po 1 0 114) n 130) 174 OS) Tolotepin 1330) 1444 WI) (Cl) OSP POP 0101 11.346) 11.343) 15.354 1544 15.736) PAM OAK Of?. Own 0 44043 0401 IN) 116 114) $4. 36 01 0071 7 lib) 819 126 4714 50 a 54 105 4.3044. IY0416404 16 03 1154) 112.0 08 71 001 100) Pi% (23 16 427111 OW (4451 0271 MAYA 253 Cti4401044.11, 144) 141) i4.11 (30 1344 na PI 04 1134 IN) 04410 OP 04) (44(4 0403 Fib 44744 1269 U PON 059) MI 10 041 40 Mb ION 114 434 MO MO 09) 0044450 AM IN 0 • . 041 144 11.401) 1411 WA 414 04 bap 146441•14344 PM 32 PIO) On Pal a 0941 PI) 4102) (144) 0 All) 4474 15.310) Ian PM P44/a444 3 Ka 01) 2921 n 6 1 211 late ha 44 bap Ire Ana Sam 1174 na PIO) 3.345 04 211 OOP PI) 4474 OW) DAM 4244 5.411 Inn PO lionea.4440416 Casa 4 702 1.413 1294 1.24 1104 111 12 5413 111 44 42(5 24410044 2.110 WO 2.110 2211 224 2111 224 2210 1.01 1.073 2.517 2.990 2210 2210 241 4101414141 44 143 290 431 007 HO 40 .0414014:01 394 344 3110. 146 224 L4B 446 124 44 U7 024 JA7 1210. 1210. 2011 Ulf 0..st SionlIn 11444•4441, 4441•41144444441444441 14% 11% 13% 9% 4% .11% .0% a% 4µ 411, 13% 13% 41) In. 40143444 0% 1% 44 11% OK 1% IN 21% 203. in .3% 2% a% a% LTV 441 2440 41404544.4144441444 C44441•414evel) 224 414 204 Lb 674 at 64 113a 11.4 154 lista 24 54 524 MIA Sr $C 400300/4 074 0.74 024 04 04 04 03a 01040101 264 244 204 lb Ilia lb 1.4 I* It I1, 2a It I* I* Lb 4100:0900.44 264 2.14 20 054 0714 0.74 1.4 1.1e 13: 19 2a It 1114 I.IF 113,4 01044.4 444.1.450 1417 1090 1077 PA HA NA NA la 10.49 10.4 1011 1074 la NA NA 1•440..404.440414444 3.44: $SW SSW SIAS NA PK NA AA NA 3141 KOS SIM 5135 NA 1.0. MAN $7444 Oros°. ttenk 0136.44 04 EFTA01097753 'Figure 84: Commodity Price Scenario Analysis: QEP Resources Forecast Metrics WOOF'S Cii t >I $225 FY 15E EDITDA (S $2.75 5125 1371 $42$ $4.75 FY 15E ref" Is 7,1F lic., I, I S1.75 $225 stet 121.20 53.76 14.20 $4.70 4516 6 3 5 a -2 $ 304 5600 5742 $10.0 $786 5846 5006 $057 $910 5972 $929 $1435 5891 $1.097 51.034 ELI* MA 44831 ($413) t$592) $400 56071 ($657) 10505) $W UM 54151 41051 ($441) 43557 11394 4300 a; 8 - 560.0 5891 $953 $17316 $1.078 51.1.93 51.202 $1,265 MO ($1211 ($471) 15420) 5370 153191 ($229) ISM $00.0 1997 51369 $1,121 $1.183 $1246 $1.338 $1,370 MA ($435) (SM) 153347 12.4 (82331 4183) 1132) $70.0 $1.102 $1.164 81.227 $1219 $1351 $1413 61.176 $70.0 ($3491 42911 (5246) $191 01471 175071 114611 WOO $1.206 $1.270 11332 4494 $145? $1319 $1361 $50.0 42631 52127 (1102) $112 ($611 (SI II $40 no. $1,313 $1,375 51438 $1500 $1382 $1.624 11.687 $503.0 ($1771 ($126) 076) 1126) 526 $76 $126 FY 16E ERITDA 'S FY 16E FCF (S I6111ion) r. ()IF 1.1 NYMEX Cx515 no> $1.75 $2.15 St75 $3.25 $3.75 $426 54.75 $1.75 5226 $275 $3.25 $3.75 $425 64.75 530.0 $151 $238 $322 $406 $489 $573 $657 530.0 41.196) 131.120I 151.041 159691 49921 (6916) 47401 $404 $362 $446 $523 $613 $697 $715 $864 5•90 41.014) (438) 5862) 5784 4710i 4634) 45581 $60.0 $570 $653 5737 $621 $305 5856 $1.072 5104 (10331 4 757) 11017 OM (16201 4 453) 4377) $60.0 $777 WI $945 $1028 $1.112 $1.196 $1.20) 0 560.0 05521 40767 IWO/ 18121 (173401 0.27/./ 4195) $700 5685 $1,069 $1.152 $1236 $1320 $1.401 $1487 570.0 44701 43947 4.3107 11421 151661 ($901 $14) $194 $1.192 $1.276 $1.360 $1.444 $1527 $1,611 $1.695 5800 42111 5213) 1137) 065 $15 $91 $167 5900 51 40) $144 11.568 $1661 51 735 51.619 $1.033 500 ($1071 5311 $45 $121 $197 273 5349 FY 15E Nel Leverage FY ISE DebliProved Reserves (Stride) iirMIFX 095 IS more) NYNEX O** ISInele) 41.11 52.33 539 $325 14.71 14.25 SSTS si. 122$ 53.25 $1.7> $423 $4.m 1310 257 227 207 1.87 I.67, lax 127 1330 10.6 46 $06 $06 $0.6 $0.6 SOS $40.0 2.1x 134 1.77 1.67 1.44 121 Els 5400 10.6 506 506 306 106 $0.6 SOS $500 1.77 1.0* 347 137 124 137 1.07 5300 $0.6 50 6 $0O 6 $0O 6 56 5.6 $0.6 0 $600 157 1.37 ft 1.14 las 097 to, 5500 $0.6 50 6 $0O 6 $0O 6 106 50.6 $0.6 $70.0 12x 1.17 1.117 0.4. 047 01* 0.7* MA) $0.6 506 506 506 106 $0.6 SOS $80.0 viz 1-07 097 087 0.79 13.7x 01* VOA) 10.6 506 506 $06 50.6 $0.6 SOS $90.0 097 007 0.07 0.7o 020 067 06* 5930 Mt, £0!) 537 537 506 50.6 $0.6 E Ni-! Le._ Li FY 16E DedProved Reserves (S'Melt) Ne313.3 (.0.: Tr' wall. X Gas ISimolel $1.39 Sta 11.71 10.20 SITS 1.420 San $1.75 5225 am 8025 5.75 US 14.75 $30.0 1697 11.7* 63* 62o 44* 4.07 337 5300 $40.7 $0.7 $0O 7 $0O 6 $0.6 $0.6 10.5 $400 737 5.0x 4117 3.77 3.14 267 227 540.0 110.7 $0.6 506 $0O 6 $0.5 $0.5 10.5 560.0 421 3.47 297 227 2.1x 1.8x 117 550.0 $0.6 50.6 505 505 50.5 $0.5 $0.5 sap 2.71 23* 2.117 124 1.4x 127 1.17 O MO 50.5 50.5 905 505 50.5 $0.5 50.5 $700 117 1.67 1.47 1.21 las 097 0.77 5700 501 105 SOS $0O 5 $0.5 $0.5 10.5 580.0 137 1.1x 307 060 024 067 0117 580.0 501 105 505 $0O 5 $0.5 $0.5 10.5 $800 0.96 Cits 0.7a 014 0.5x 0.4x 0.2x 590.0 50.5 50.5 905 305 50.5 $0.5 50.5 M 3 Stamm 0.7776.51463 Deutsche Bank Securities Inc. EFTA01097754 Deutsche Bank Securities Inc. 'Figure 85: QEP Resources Benchmarks 30% 26% 20% 16% 10% 6% 0% .5% $51 545 $273 535 115 115 11 hoboOaf:ma 24% 20% 20, t 2015E 4011. secoaqe -v.:So* I 0.4•411.% aryl. a One rya. cis.' on 542 3 544 0 20 126 1235%1 1 3— 0 12109 2011 2011 • 00 •41404.10 -.15. 2013 44n4 bray 11016 57%2% 32% 64%•4810% 50/6 40% 3 30/6 30% 10 0 2011 2012 2013 IMP OWOSSO etionia 1146 8 1120 110 0 010 100 44 0 120 100 40 2013 201E 201 4001 sonde. BB 1174 113 17 114 '010 18 51 t5 160 2013 201E 2015E DOIP Meta ID Wads Reelkaibm1/111•0 030 0 154 153 0 $543 0 145 $44211 140 0 1730 0 20 0 P O 0 1 51 270 5364— $42 1 W0 2013 1014E 2015E 4011. 1920 ri 0 1.3 0 1150 150 50 0 00x 7)3x 00x 613. 40x 30x 20x 00x Cab tilt/ $248 123 3 issis.2° 2013 3714E 28015E KIP 00S Sono 2111 2012 2013 .OEP sawn BB 40•1431 1251 0101 'Is' 1101 1751 The 2011 WE' alstOn93 elsecb. 313 fogiCISA(0340 120 I "3114 .15 5 5152116 I 701: 2013 1400 1350 1200 $260 1200 51 50 1100 550 SI 0 35x 301 25. 20x I 5x 091 003 Cob,. ilea11103. 1311340 1342 1261 127 2013 2014E 2015E 'OP eNsta ID .Mme. 124 7 Debt( OSTIA' 2 7x 2 3 Ca 2013 3914E 2015E DOI, dilfits, OP &Fagot Douala* Be.* [ovum, of a, Moats FAmte LP For DU ib“)~9 cooPawd* ismndia, OS Ng.3EN(me Akeeasts I:gun...taw our putt. g oranosta CH( XECOMVSTXCOMUCRP,MCIO,COEP,ARC SANS! ma SO Fora. M)nvev cornpant3 nM cowl% be 08 1,330 Y IN /oakum' Owes Mita Bbornbeipomanus animas 0,04.. AlAEPEnAlt8CTICXQFAACEPELTSCNAMMAIMOILSPEPVAROSCSN,SEVOMCSMIPLAULMind WFX EFTA01097755 13 January 2015 HY Corporate Credit Energy Range Resources Relative Value RRC has announced FY 15 capex budget of $1.3 billion; $220 million lower than FY14E levels given further capital efficiencies, the company maintained its production growth guidance of 20-25% YoY. The FY 15 capex plan is expected to drive cash bum in the range of $275 million while for FY 16 considering flat capex levels YoY, we estimate RRC will fall slightly short of its goal of positive FCF, although still pretty close with cash burn of about $110 million. RRC's strong production growth outlook implies solid EBITDA improvements despite modest hedging levels (47% of FY15E and 6% of FY 16E revenues). We estimate FY 16 EBITDA of $1.3 billion, +10% from FY14E levels maintain leverage at the current 2.7x level. Looking at operations, the focus will continue to be on its flagship, low-cost Marcellus assets where the company is spending 92% of FY15E capex and continues to focus on drilling longer laterals and increasing frac stages driving both efficiencies and better returns. We see RRC's Marcellus acreage as one of the top-rated assets within our peer group; for instance in the core southwest Marcellus dry gas acreage a 5.2K foot laterals well delivers 85% IRR @$4/Mmcfe, which should get even better with the company targeting to drill 6.2K foot laterals during FY15. Driven by strong operating momentum in the play RRC continues to expect to grow its Marcellus production to 3 Bcfe/d (net) with the key positive being its ability to take the production out of Appalachian basin to improve realizations. On gas transportation, RRC has noted that its takeaway capacity would more than double from its FY14E levels of 1.1 Bcfe/d to 2.4 Bcfe/d by end of FY 18. On the midstream projects; two of the three ethane projects are already online i.e. Mariner West (15 Mbblld gross) and ATEX (20 Mbbl/d gross). RRC expects the third project - Mariner East to begin carrying ethane in 2I-I 15, while the transfer of propane using Mariner East is expected to start this month. Once all three ethane projects are online RRC expects a 25% uplift to its realizations. In addition, propane transfers should benefit the company via higher international prices and lower transportation expenses. We maintain our BUY rating across the structure. Longer-dated RRC bonds yield 5% (or in line with the BB index). Aside from the "energy" taint, these bonds would be trading 50-75 bps inside the relative index. We still believe the credit is going to IG, especially given it will come close to reaching its goal of positive FCF in FY 16 and beyond - an impressive feat given (i) production growth of 20-25% YoY and (ii) a commodity bear market during the same stretch. Downside risks include any midstream project delays and widening Northeast differentials. Page 102 Deutsche Bank Securities Inc. EFTA01097756 13 January 2015 HY Corporate Credit Energy 'Figure 86: Range Resources Financial Summary 424 10041 nn_ MOW NC Ma 4 2424. 444 54.0 7.424 0.44 342 Waft. 1111411 1.24324 1040 15 40312 6 25% 534445.0 40444541421 444.2 4144402142 49500 t ./.21 1 ht. II 10223 S ON. Saw Lb Wee 0369 4143 213100 'Steen 2,4442.77 15400 1026 6 025 24.23.444.4 4.40214 Ar i220.90. 11100 If 1.0 14110 II 000) Iltam 1444444441120040140 • Gun 12241204 461030inae 04•4410:40 244040140442300 EMDA.422.4444 cat ▪ 041 •601 COT 16144•40 O00 O 0105.1. 4033066 7.04. 114101, LIN 4.4111:113 01111•141114 4.22044244441.01414444 A4122 371 010060 /213112.0105163644(1120) Key Peide111)4 Pt Cterporri 66446 00614•06.01 4544. 44494 a 4.0120410944 Cann 002044 44.22 Pine 4443111601.010 0:063/NOL40416014.6 Pine veziNGL Pne 600 70.124504161440.2.1i091 O3000 Via Cws GtA CO4A 240402404 4001 3 042 00 0 (4441 36.44 PLO A610 •22 F•4131.11015 EINTDA222440:444 Omert las C•16.1 634•11.1.6 00011010 C4444 .244 0 200444 41.40474 O00 • 004 3623 5 teems 7•1•113444 cnni• 0 xi 4444 capts 09 222.010,03150104. • We 945 cspeato40042 44.44(32.1442 1240010 Asia tee Cask Rem MO .4414. tin Sawa Shia Ms Cal 42044344 4440 m.o142. I 0 oy 0.40.4414274 3.400 4444 0044401247414044 044 O2000 tner• Old 041111$16•111•1 c5 .21146.01•01s1•124 00.14446 0600 1. 50 0620000 O.24 a tax Ca 9 7.2004.4. 244 4244 0444 40404 54 4,0 .00, 04 • , Col • .104 17 a 2 473 6 441 0111 SA 63 146 443 122 32 124 0441 474 M 446 41 17 1/144 717 107 tt) 32 •• T 130 IX Ill 423 10 MI 341 144 144 lie 433 III 544 424 44 45 45 45 3* OS Oa It, im III SI KO 414 30 St 91 67 OM 0541 424.1 835 II 4 10 24 II 44 22 31 01 61 24) 214 641 a IS Cap 10 14 M X0 34 1344 1 1.155 LIM LIM 774 440 1.014 1.140 1311 1201 1244 01 41101 *OM 124441 1402.93 4425 14.42 9354 044 536 5472 11494 005 54.24 IA 02 11•025 001 atm 4.ei 75045 57014 145202 1344 SI* 144 045 1441 114? 1134 444 an 4.016 9.) 144 2042 1.94) 9344 54295 1.0203 56)0 57144 1610 01.13 MO 241 4.01 4.6 4.10 1044 4352 11.11/11 0233 594 12.13. 532.53 115.06 0024 12107 54.41 19472 5434 .057 $11.41 440224 WI 111.114 54.17 MAO 14.57 42071 551111 427 1421 414 1122 114 Cal “24 WM 406 0351 $095 50.44 PSI 50.72 1141 Oa 11.16 1133 1124 4133 114 1145 1442 11.7) 113) 1125 41.4 1221 050 TOM 046 406 035 40.44 10.24 1024 1043 1043 Ka lea 443 KM WS 5021 SOT 40.31 2071 4021 MAI PM 44.14 1411 OM 1141 NS) ISM 274 273 243 273 al 1.1$ 771 0 0 lq . III 0 III 1113 050 004 0241 dill MOM 11241 424 co a 121 ill liii MI WI (a) 1511 10 10 Pal 41271 11101 WO MN 4411) OM 112431 11.4341 01 5 172 25 03 1441 P14 WI 051 4571 IN) 00 120 Mill 1541 07) 153 132 072 41231 11411 012 11111 $1411 44141 0 0 146 III 425 • 0 0 0 • • 0 244 420 240 2310 210 2314 1.744 427 6l 014 40 445 4I 147 4W LIo 464 2403 2114 23% 174 4014 2114, 94 214 2114 20.5 354 513 Cie 40 G. 41S 444 10 04 0.4 0E4 1444 04. 044 (05 210 .3.0 221‘ 250 271 272 114 SOO 06 WI, Ha 434 1137 I03) 4045 414 $1}77 OM $071 son KM C_.4 4..641.0...1.. 1•60.2.0 era 106 42. r . 000 ' L03.,•>4 02 4049 3.04.024044 11104 ...rotowg 11 1r Mew, 413..44.0433 2 01. 5:004540 0102~240 240 • 2344.4 24 Nan en 1031 540 506. Sew fa Kai wenn 140 5 424. 2344.4 sat mos 43144 750 T614401 564 034 1.441 2444419444441.0040 444444440 ..7. Eme41242244 IC5711:11JC 170 Nei cenemmx 2.74 'Oran. L`A.W.ecma. nrnAnextorOnttir VAN ve 100.10 0. 60 Santo. Owtsche Swot 44407204144 7.04444.40 1420. 0n 2440440 44 ThesI4240 239001 an, 60000 4.0.6012 ...caeca:. anon...nom o" • an oanon con ais awada a 11., $°17. 0... kora. ...woo.. ' 440.2 04 104543. V IS. Contort • 0241110.terl• • 'too 4n, a It 1.11: 650 214 H4 1.716 ST la II 1311 IN IAN 445 40 34 50 IP 177 255 3411 IP in 127 50 26 1W u 24 1410 la& 104 al* 14a 141447 1243 074 314555 SAM 1435 44 2451 UV 1044 OP 9146 5041 13271 2100 34442 5505 1141 1127 11 11 5042 WM 1142 114 1140 114 1041 W.5' WM 44 1411. 671 MP 414 244 2441 774 503 2431 312 412 44% 151. 371 ft 014 424 325 304 1044 1034 10.42 1171 11.1066 44. anima 4 ecta4 042.4- 1.401106043 34612 11440. OuCw1.41n4W1 404424 %cm 40 4030 C444/240 MK *4% 1040.41404441010/14 Pvt. 11211061111011011 0112% 7741 4121 A7014.0 1021445 246.441 412772 00542 0 214077 744 404. 31% 533 510 M•441...4544 CAM AN* WOE 06E 723 14256 20 14525 Deutsche Bank Securities Inc. Page 103 EFTA01097757 Deutsche Bank Securities Inc. Figure 87: Range Resources Financial Forecast m -<x ia CMMIIIMMEIMMIEMarrIAM e 8401112 570 473 44) 43 49 44 471 493 (27 4.44401440.3404.2.344 222 4349,2 2 6 4 62 60 51 49 47 203 143i 444.2 44 172 479 441 630 479 497 62) 542 90 es.... Cogs F“sz«..nrocián,,.., 174 006) 179 OA 191 I7 203 215 224 233 243 231 44 1010nx 42 043443 211 273 911 KO 214 273 297 210 743 03n 129 133 let 103 140 1.17 174 lei 303 EEO' 44 139 139 I47 104 106 II) II1 390 0 0-441 45 46 39 37 32 34 30 39 117 031 447.1.222 119 94 IGO 00 67 4$ 7,5 el 243 Oren 67 020) 041 27 le 20 21 21 201 Croine0, 203$ 10 34 13 ' • ' 04 1012•0 4322 GI 291 NO 03 4 4 65 03 (591 Taw. 19 119 04 32 19 K 21 23 (45I 140 le.cre 23 171 105 93 29 30 33 25 3544 7424 C24 $24 2470 Itr 04 al • 01 00440.49rS 4•444319141092 %TM 3.151110/43 9% NAM* I.KO 1.115 1.120 1357 1329 1.121 1.134 1123 742 1/142.5.11734201“01/1•0044 I.NO 1.113 1234 l.m 1025 05 932 93 330 Mud 44710014 2.0t0 9191 19093 73231 1110 5950 62.20 R003 122.9 35193 Mull n404 02•714..M GualIne0 54.72 PM 53.21 00 fan PT 0i1 075 020 001400410009 Cnenore Mani Om 001.101~411 42411 4l0 7505 16910 94» 5039 51.121 141174 13693 1.24149 04/4410.4 Asa 11~ $420 lam $343 051 054 OM 054 9354 011 Clenore 0i lInclurne, .901 1430 KO 911 1.047 1415 1.471 1533 I.m 2157 1.241424 CI Mx. 5.91 $02.3 010 17930 10205 30710 07.10 357E 3912 9254 Clenore NCI. 0,00~ ~I 4,471 4.471 1235 5.10 MOO 5035 091 6513 2107 1.241424 At4. I....:2 :190 0734 121,1 0253 04113 31710 3129 5141.10 11551 $2023 100 It 0400•01003.40 in:10 25/31, 10191 111.103 124.20 12193 124.334 Inn 111.00 162112 Rio ton Uri 1.044.3 :1~ 21 40 19 417 111 314 332 394 393 044 torilEep.SPrceMed ICOn 1543 1575.1 14.631 4740 20255 21.47 215421 22141 2.519 torilEC,~/Pailxij it« 2952 SS 2500 2510 2344 2332 2367 2373 MK 14244.50 500n00 144904 PM 119 14,4”41-05 10/2 Sue an KT 414 Nit 134 1201 KM ...35.4 C09$ 5132 I132 51.19 1120 an 024 1124 1125 114 Gan 1051 1066 1024 PM 0152 1052 0362 1042 wn 0354 5135 11 23 Ma 1132 51.22 032 0131 1132 0224 .1030120. Mont 51.73 1139 1125 11.1(1 WK 1043 10 05 10.07 1239 'ran WM 10 46 1035 1310 431 9030 1029 9020 90 N 31.09 RIO 4014 40 104 IWO 10333 PP 1013 PK PO WO 0104 3242 TO 4014044 1471 9370 10.71 1071 Ian 9075 13 71 1071 1155 1‘4 090304 KN 1301 0361 1241 410 KM KK 1203 144 Fr« C40 Row COMM( 01.2140$03 293 273 ea' 310 264 273 24 293 70 00101 7203 i15 KM 0 01 Ill Ill 01 101 7442.24. OW) (100 0601 OKI 1325) MN 025i 0725) 9141 0 ,0:0 .0 501.04.301940 Ina 26 4241 3 19 T 23 0 (430 Gsn4u4[4440tt1 since 157) 66) 0051 (40 PEI 04 4261 (14i now lE0 Caine two, 150 0 43 051 (19) 063 093 fAi (1091 Fr« C40 Row <110 (MA (14I6 1005) 00 013 021 OKI 3-sor.4 45 Amos 0 Ig 33 225 Fen Cath$14214044445.3144 0 10 27 0591 (107) O4 1113 1721 CPO 103 0~ —041. Z:!...., 0 Ds ..0 NU** 2041 2303 293 200 2.3311 2,10 2350 23410 101 0.31.4,4/.* 94 403 543. KO 01 00 930 1.031 524 ...00 Um OM 220 x02 x02 ;la 9241 220 a;9 ;PI 13 '74304441151•1141244 flee. 09 0 .11,3‘001~114049%; C204 17% 3% 2% 1209 >e: 10% 12% 4% 120.5410 0~ 21% 21% 23% 33% 25% 20% 12% 10% 13% 1.7.40.44 51411•144 1.531119Caon 70~119 00.404.5044.44:, Oh 49 50 214 424 70 7G 7.54 Ms b.0:94124120% 0.24 0.44 192 Pic OM 014 01* O.O. Pt 041244100% 20 2.54 274 274 20 3h 21* 304 232 4210•9113110AX 324 94 274 174 20 32: 214. 304 234. Pettem41144..04410/440 3033 035 9037 ra 10. NA IN Ni 9390 34.0.00v4d 02.22.344444 0401 1477 1087 1071 «A 14 WA KA KA 1120 Source 13442.41. <Coca 45 45 910 291 51 Kt 144 191 131 147 III 540 044 1471 031 042 344 37020 1431 14 034 34.46 1501 901.31 4100 33033 1032» 523 33.132 3137 1421 1491 1474 1201 5136 1473 5121 119 pM Kil I 0.1234 d wiN 0751 325 0N1 /09 al4 1217 4% 14% 5114 0.44 30a 304 30A4 5090 10 1.115 343 143 102 234 100 WI 73 02 197 26 1107 1261 1246 246 2033 2371 20 521 429 744 305 1.102 32 30 01) 404) 771 MS 1255 1,197 1.1113 UK 311 45 413 500 WI MS 431 Cl 54 593 44 44 12.5 IK 177 47 150 152 312 265 316 423 211 300 116 103 179 (293) e$ 97 93 127 59 59 • 79 25 150 033 211 24 20 12 24 202 92 70 43 13 116 401 121 124 711 103. 1.09 1.157 1.121 1270 133 94 1/314 120 2241 1244 50510 0118 04•07 Kam Kam 03141 00 1223 13.74 $4.27 tin 13,71 11903 214555 34 220 23.23412 3364414 30230 3431 025 140 017 054 1134 l.m 3051 397 4.057 604 7240 311.12 WM 3.157 15730 0010 5302 0937 2215 12010 33 741 0171 11021 Will 13271 3972 91125 02 27 man 27.3.44 243/322 once 47142 020514 550 545 1.11 441 324 342 31.50 46011 67.175 71.103 KIM 14432 2356 3020 2946 KM 23.05 22.93 KM 1645 1411 14.4$ 1334 *34.? 074 1127 51.25 1123 1124 1111 073 134 101e 1010 1061 1052 MO 114 11.44 1132 1131 1132 1220 1164 MU 1137 113 05 10.72 5074 MK 1451 10.23 1029 1021 5014 1041 1413 IMO PK 1011 SOT 90T 1471 1071 1371 10.71 1214 1327 52.19 90.4 1291 4244 779 039 1456 1270 (1) 01 0 0 HI IN (1.40 0441 0290 0.001 0.101 090 04 031 14* 66, 65 73 I1K1 9491 12.4) 083) 0241 39 143) 050 (1504 (103) MCI 0 12I- 11291 02011 0 40 MK WA 0 10 KS 161 316 103 66 (MI NIT 12711 0 11) 120 2.19 2041 2293 200 2250 157 93 500 KO 102 LON/ L9N 3019 ;wl ;la 009 2110 11% 33% 21% 13% la 14% 5% 40% 25% 9% 9.74. 33% 524 ST 064 7.14 7.1. 50 02* 11.0 024 0.74 014 1:424 2.54 132 204 2.74 3.04 275 2.54 132 304 2.74 3.0. 275 $033 EOM 035 Ni .10 IS MK 13.3 9015 HA NA 114. a "2 a; g n a 1 EP EFTA01097758 Deutsche Bank Securities Inc. 'Figure 88: Commodity Price Scenario Analysis: Range Resources Forecast Metrics t 0 Stamm Etoidao. Sorg FY 15E ERITOA IS Million) LI $1.71 62.25 1275 S3,25 33,73 1425 64.75 $30.0 1630 3713 3767 WI $936 31.019 $1.110 $400 $715 $79) 13164 3938 51 012 51.096 61.116 $50.0 3792 3866 $910 $1.014 51 088 31.172 $1.263 SOO 3868 5942 51.016 $1.091 51 165 MOO 51.339 $750 3144 31.019 61.003 $1.167 31 241 51.325 51.415 $.0.0 31.021 31.096 51.169 31.243 31317 51.401 51.492 180.0 31.097 11.171 $1848 11.320 31394 31.473 51.538 FY 16E EEITOA (S. Million) 1 61.3E 32.23 $2 TS 3.25 53.73 34.20 $4.711 $30.0 5132 5303 VA) 3444 1814 3305 61.166 340.0 1212 3433 $4.30 3774 $945 31.115 11.216 350.0 3382 SSW 6734 1904 11.075 31.245 $1 416 1000 3622 6693 $884 31034 31205 31.375 $1.546 $700 9563 $523 WM 61.164 31335 31.106 61.676 ISM 3783 $553 11.124 $ins 314165 31.636 ELKS 1960 1913 V 034 61254 $1425 31595 31.706 $I.937 FY I SE Net Leverage tlYkl EX GOO 15 rticle.) 31.75 $223 5275 0.25 137$ 4.25 34.73 3204 $0* ....O. 1.7. 4.2. 301 344 31x 340.0 52x 47x 424 ISA 3.44 314 264 350.0 4.74 4.24 3.84 3.44 3.1x 28x 2.434 $804 422 384 3.44 3.1m 2.44 2.6x 2.44 3170.0 354 344 3,14 2.0. 218 244 2.24 680.0 3.44 314 2.94 1.114 1.42 22% 204 39.0 314 29. 2.6. 2.4. 2.1, 214 1.9% FY 16E Net Leverage NY1M E 05, (i'n5cle) $1.75 3225 =75 33.25 14.75 WS 34.75 MA 423X 17.0. 9.94 6.8. 4.54 3.834 3.1x POO 1984 11.0x 7.14 62. 4.14 321 2.64 350.0 1234 7.04 6.6. 4,3. Ms 274 2.2x $10.0 964 Six (Si 3.54 204 2.314 la VOA 544 Allx 174 3.114 244 1.0x ..is $A 5.14 ak 3.1* 2.5. 1.1. 1.75 1.44 ISM 4.14 334 tat 1.24 la 1.6s la 0 f I SE icr IS Nr1IFY. I. I 31.70 3225 SUS 353.0 07141 (36061 ORR non .26661 0370 135107 lir Ire', 17320 $510 344 13.76 (4421 4373741 64.20 193661 (12941 64.75 13264) 0216) _( c_ o R 2 B < ri No 0 — 650.0 ($6771 (15091 4441) $374 (13061 ($229) 1$147) 0 in $60.0 (45091 (ONO it373) MG 02371 ($151) ISM 3704 iV1411 03731 ISM) $23 01691 ($934 alit $50.0 dam two.) Ma/ NI (SION ($141 1.33 $90.0 13041 0236) 4168) 3100 (3321 344 6126 FY 16E FCE i5 Millie toiVILY. &vs 5 m:Iel 61.7$ 622$ $2.71 5125 $3.71 $4.21$ $4.75 fa ($1.103) (51.004) 047) ISOP 1 (*SO 15377) 1319) 40.0 ($1.039) Rea) (1726) ISS6SI ($4131 (3253) 19971 134471 12911 ($1229 $25 $50.0 (19171 (67031 13330 $500 117951 ($639) 11440 113261 MS% ($121 1147 3/04 06731 COM OM mix (347I $110 $269 $304 (16511 C$395) (1239) 302) $74 $232 $310 $63.0 MOM 02731 3117) 340 $196 1.354 S512 FY 15E Debt Proved Neserves (S lade) NYNEX Gas iSralei 31n $223 32 73 0.25 $371 $4 24 SO 73 $330 Y)5 $7 t. 505 SO4 9)4 $0 4 $01 5430 $0 5 30 5 514 9)4 $04 301 5500 $0O 5 $04 O 1 SO 4 304 $ 50.4 304 1050 SO $04 SO 1 SO 4 304 50.4 304 1700 $0 4 301 $01 SO 4 9)4 $04 301 5050 $0 4 301 $01 $O 4 9)4 $04 301 3350 SO .‘ 504 504 104 SO< 304 FY 16E Deb1Proved Reserves (S'Mclel NYLIE Co (S mclo) $1.75 $225 1275 13.25 $3.75 $4.13 $4.75 MO 10.6 $06 105 $05 $0.5 $2.5 $04 $404 60.6 10.6 105 $05 935 $0.4 10.4 $50.0 $0.6 $0.5 105 $05 9/4 SOS $0.4 $60.0 SO 5 10.5 sas 105 514 $0.4 $04 $700 30.5 $05 105 $04 WA 10.4 $0.3 MO $0 5 $05 $04 $04 $0.4 10.4 $03 $90.0 $0 5 $04 $04 $04 504 $0.3 $03 EFTA01097759 Deutsche Bank Securities Inc. 'Figure 89: Range Resources Benchmarks 30% 2 20% 10% 0% Indecale Cia 215% 14% 20% 2013 2014E 2013E SSC • va3te, 00 '11106311 re 0 120 1110 $50 14 0 030 120 SID No 6016 50% 40% 30% 10% 10% 0% 92% 49100% 2011 2012 2011 awe *Wolof. fl ail>. 125 $30 12 420 5 II 0 $05 $00 Hedge% 73% 72% TO% 2013 2014E 2015E 'WC essmIll/ CIAMPI 119 006/91sellers%/14619 POO S0003 0 17 0 SG 0 $5 0 14 0 $3 0 t2 0 SI 0 50 0 ftellkatlaeallc10 501 199 51r Sf $7.0 10 2012 2014E 2016E ORO 0/041.413 d4 2013 201E 2015E OK Swale nista I 4x I 2x 106 08x 013x 04x 02x 00x 2013 COMM $6 1 tat 111 $21 SI 5 SI WS 11/469 106A PIA, 13 128 42.1 12 4 $34 2011 2017 7013 •7$9 909,0193 ones, $2 120 $60 150 $40 $30 120 II 0 SOO 2013 2014E 2015E •9•9 manna am- St 30x 25x 211x Sx lax 051 001 C0•800 900101/119% $38 152 557, $4 10x 26x 22, 27 I 30x 1 Ca 2013 1014E 2015E sac OMrMW 011•0•1 Source Ilousces So* mecum, dee amnw.9 Moto. LP lewlescro level ArciliortMedire need Merton S Wake Ma.* bah covered red no. mwm coreposer For the Sewage corrounits mewed te 08 legb Ka( No &now o Sows seta ou pulgelor urinous. CHI( XEC.DIteSSUCCOMALCRP,HICIA9COEFORRC.SA ?VW' on a rS0 For the 610314volge corrounits not cower I by 08 Mee YAM ere fOnIOUtI139w113 meta @bomber g wiener terntraeu et. AMEPERASSMOCQSAIRSEPSLTSCAWAYtlePAOAS,PEPVAROSESN.SEVGENSMIPIA(12W 000 lOPX EFTA01097760 13 January 2015 HY Corporate Credit Energy Samson Resources Relative Value Samson had a vulnerable credit profile even before the current weakness in the commodities market given its high leverage levels and the modest quality of its asset base. Nevertheless, we had a constructive view on the company for two reasons, the company had a good proved asset (or PV-10) coverage (relative to its yield levels) and we expected an equity infusion by the sponsors as part of the restructuring of its business. With the sharp downward shift in the commodity market, the first contention is not valid given the substantial erosion in PV-10 value. As regards the second, the sharp depletion in the value of its net assets largely rules out the possibility of an equity infusion. The $2.25 billion Senior Notes '20 currently trade in the 30s, which implies the equity value of the business is negative —$1.5 billion. Given this it does not make economic sense for the sponsors to invest equity into the business. Therefore, the credit is now basically driven by the outlook for fundamentals, which is clearly precarious. Leverage levels are already at 5.5x and this is set to worsen further over the next two years to 9.4x on earnings weakness. We see EBITDA deteriorating meaningfully from FY 14E levels of $622 million to $496 million in FY 16E - based on flat production levels and weaker realization. The lower EBITDA levels are not sufficient to meet its maintenance levels capex (excluding capitalized interest) of $630-$700 million. Moreover, the company also has a high annual interest burden of -$290 million. Overall, we are seeing a FCF bum of close to $950 million over the next two years - i.e. a business which cannot even sustain maintenance level capex. Also worrying, current liquidity is just $434 million - the company will run out of cash by 1I-I 16 unless there is an expansion in the borrowing base (we are assuming a $500 million addition to its credit facilities in 2016, likely from a second lien loan). Further aggravating the weak outlook, Samson, which has generally been a conservative hedger and protector of cash flow, has fairly modest hedges for Pie 15 (40%) and FY 16 (25%) driving further downside risk to our estimates; for example, at $60/$3, net leverage could be close to 12x levels by FYE 16 and cumulative FCF bum through FY 16 would be $1 billion. Even in our base case, we see the company breaching, by a wide margin, the net leverage covenant limit of 4.5x in Q1 16 (the covenant has been relaxed through FYE 15). Overall, many of the positive ideas we discussed in our 2014 initiation of the credit are being tumed on their head given the commodity backdrop especially the deteriorating PV-10 and equity infusion in addition to the difficulty of selling assets in this market. Our initial call was very catalyst driven - positive ones. Further, given that a structure has already been set up to layer in additional second lien debt ($500 million), we see future layering as highly probable outcome. So, white SAIVST 935% Notes '20 bonds are trading in the 36/38 context, we do see further downside. We therefore move to a SELL from a BUY rating on those notes. Upside risks include an equity infusion from the sponsor, assets divestitures and/or distressed debt exchanges. Deutsche Bank Securities Inc. Page 107 EFTA01097761 13 January 2015 HY Corporate Credit Energy 'Figure 90: Samson Resources Financial Summary TIVI•Sincria•Oxiitt Cal OM waft 4) 4•000 151.440 WW Net /4404- 144144C04 4404114•4400.44 4.444 0 PP .4104444 n 404 40414 LIP COMPS WO 14•414 IL IN C1171144taMip04 COI 444044.11000 10171111141 410140 0.014.4.1441110 14114111-4 20140 /WM 142011044 (WOW 404,444 44001/4 WPM 24440444 C4 IMAM MOO 11101 WO WM Zama/ 41. M40.44144440 44141114. Ma 1111 414/414 4444114h Mkt to 414/444 44.4144414441 awn e 4 OneaPOSIate roe le* 4.44, . 4140 Cow PA :OM 144144 Mar mme 1 441. 14/1111 14144141 lI 54 floe tem et•p• eagelotnIWO 440410111 41,11110 (41410/140114 !n04,., 00,4 Ti Cl,...balindlp • 14144•444 C144 07011401.1.4440440 210101 014 131 • Part•002244444 Can 44,10014 0111 4444 Went IEN 04044411.40111 Nee C41144 Awwf Anti, Puie Con Use he 144•111.44 f alum Owl Pea Cat. 0401 100 km • se- us 0414 Nam 444.100 IM 111 In 21$ in .42 ai 442 70) 1. '14 BO 1340 IXO 111 03402 ISO as, / 622 Ma D Na MW aX Pa $140 1304 illa la 421 OW 1101 at Ng Hi CO 5314 2.2:0 1st PIN 16100 SW a 111 41 (II 7(0 (44 711 114 Pi) 1543 113393 54" MW 1100 144 1123 1/201 1.14 SIGH Sa Pail II 31 511 Rai 144 1043 5224 PSI MM iW tat tat Ina 341114 1234 Inc 113 DI 54 41.444 34 ISM 11 le We 1211 nM Plc Ulf 5214 In al 43 440 0 11 OW) 71 404 53724 1414 SI *It 110 .303 1147 spa IWO alit SM 1449 PISS 0303 12.1 WW Wa 1114/ ISM nal fl u in tai 14 Ow/ 14 all WM 1. 11715 110 ON an 412 13151 114744 142 Sc 01.0 0220 0270 00.1 124 0200 14.104444 245 72 114 It 1.44 • am • 7, t, OW) • le am $ ice S i T. 113 all 14i 740 la /14 114 11414 5. n 1141 1403 1411 41:4 2104:0 1524 140140 143* $397 (337 44:0 411: 1.314 In 70 1052 SKID • 44 44$4 14 0 1221 41147 214114 14.15 1013 S.77 41 131 MU PUP R1 al Pali .I .I1. 1111/0 WR nii Mn Wm UPI 11241' 10.11 PUY PIO WM nal 13 41 MU 11.11 13 41 W.Y Pau 4213 5 lean 113 Mi MM an Pi AM pin 1422111 11) cal 412021 044l a, fl Ml IM 0/441 I2 n3 P3 Pill 1141.11111 Ann. Gen. i i.la4444tc nein Cat 1410024444/4 COI 0401 SUM. 0104.414.4 0.40414 C4011471042 21411421 404 Otat UT 01 :400.4 come 11404..2•4104.44 it44 44441441444 0414C0414044/44 404701 ▪ 01441414144014 4017014 204444444414.4 1.144i 21144012.14. SP.1,11 I 122) 309 110 3214 If Pi 1214 a 220 2m 3210 41. 11 411 41 T i. 1% 111 411 214 kb 01 424 ult uk 41 41 41 s 1 GU GU 41 41 41 524 4. t4 454 220 Lb 0.22 21 21 21 414 424 4114 Lis Us Us 414 th 4114 114 Us 14 PM St 44 tiff 441 $543 121. 12•4 53 14 4303 Pal spa UP .3% 4% NM ass Ma al tit 41 3.0 tit 414 IN 274 la Ilit 4.44 47s Ilit Us 47s 1.54 Ill PP 20 27, 121 COMM 04114114 1 440 1.4144104 .4 • en 0 44 Imni tw, 4400 4,44440 1 4201 No 4 ow 40 tes aw 41004 tow werwv4440.040040.440 .44.4 wiw 0.41004 IAI icer wet 5* Ina 114., ••-•4 ON104. WW - ways 4.011t 040•14 ICO Pa/SCAM nod on 4714 IV I% In Ifj VrOlz ...we aitem min Mutt 41411111441.4 Ca4 00414104eu• 4110010 01141•040 COG... 041404440414 43.42114 0..ot , ere Mtn Ow 74 4044.1427 441120.7 414.101.40400111 044 II 0 it ll n •14.04 &mg azia4 Pm/ orwurce C10140040 /MP 44104 1014110.70141•4414 444 44400-404 WA 04 4 40712 Maim mol• town • ',ISM. 5. 0,...:41 ▪ 410444 44114440114 PAW Cnikonlata I In 0 4 124417 11142 102717 2(.442 1/044114 % Gat % 14,4 0141104 linen Pclunull 4.1 44 Ramo Min MI% 45% sum 114 Cal WI 4% In 84% 7224722 42•41.23 Sant. eassasa SM,e.01ltIPyalre Page 108 Deutsche Bank Securities Inc. EFTA01097762 mI F -0 8 'Figure 91: Samson Resources Financial Forecast rams 141. 177 177 0/ 114 1199431.3273 Ian 7690 Cain %prompt, Ies 1711 011 es 1074.079 271 317 274 24 210 217 221 224 1147 14101 Las 1444 443 04 Cana III Ilt 114 103 103 103 103 104 344 CC Ma 441 413 III 1144e43.0304040•600 020.2.401443046 IM IM 04 IN III 114 11$ IP Ml 174 It) a Mt 49 WA III 133 120 19 124 124 134 134 01 021 LP 40 441 04 Off 0 II 9 42 (II) (II) 10 PI 342 02 144 la PI) 9 110011 m 21 14 a a a a 26 34 P III to 037 004 an1 ft 0 31 It 21 44 20 3* el KO a la 4 'al? 00, Son 091•001001 a I 211 al r0 711 III a Ca . 117110/0001 01 all OM a a PD IMO 03:01 o.lp 0111 II I) 194 1171 71774 POI .66 dl Ttg gi% 2 1011 g 03331 012 dM 4 1.111/ WOO 0410109 742 04 014 W OT PI 310 41 120 'PM TI MI 41 .114 017040114.0400 Aran DT 714 171. 011 Oa 40 177 70 TI 04 79 141 30 116 Cearaanfra IT III IT IM IT 19 IT IT 01/00060100•40/11241•00.0 *ans . 772 III (44 (37 40 346 311 ADA 771 736 (44 313 341 0 11.0 1170041770 Wal. VON PIT 3731$ 1.9117 OM 133(0 4950 10.11$ MI6 3000 War SUP 116507 0 97 .00 00 ,409 444, 0 SAP 1414 PM Pa OP un PT PA Ma lad 3374 1427 P.T 1:176 On Fenn*. Cula 0907 00.0109944•419/7 n no 34 044 33511 33223 33.94 33212 Jab son 2190 19202 1993 ilia Mal POW 4,0401101000640001 PI 123 PI 107 Pt. P6 06 OS MN SAT no? 9153 a. 07790 01404.04 0941 1.7112 1224 1910 1910 1277 193 1213 1.133 44* 4217 ta 020 6.316 4,4P 44.04s00.001440 an 47444 VP 41 413 44 AN 13 0424 $421 WM $700 NO 33 $14.13 MIA MP 4314 agog a Patna. 1.10 410 I.10 OW IX* I= 1273 1223 4 DM 4474 401 la 1333 37030177.11/67 SW/ 13414 PIM PI a 43160 PM PIP Ma 91.10 WA pa 0111? 1041 pa 13444 10.1677.6011177741 000 41)21 4440 41.311 MPS 46.44 46.20 4.40 *40 SPIN Pia PPM 1954 Sat 1124% 10.1 (.77 sal 4/069.1606 663 614 30 SW 4* 4n 466 40 All 433 AM 456 444 all 0040.4 6 Opts* Sara pr a 0.4:4, OW KU 040 KW 1444 la 140 340 46.23 140 PSI 1.61 349 3431 •••• Corti 034 1121 II 63 11 24 111. PM PS Na 11.0 11 14 09 1143 033 UM Pa 3043 912 MN NA MN 1424 N.N 11.70 SOX SOP SOP IOU 1100 $074 0244 4244 4217 6144 PP 3137 UP Na SIP 119 UN 1021 3213 SIP UP 20•041004 4014 14)4 1014 PP p6. pa 3411 4110 11.43 43 It MN 8(135 14 14 $841 17941 40.41 1441 1043 1044 1061 HP 41152 PP WO SO PP PP 1041 PP /PM 1002 CIO 110 le* •10011449.49 UM LIN PM PM OW PM 1.94 Ma 1043 33 40 1330 5264 OP U0 1042 a •1104 401•414.40.144na Pill 3.1/3 916 Pa CI 42. P@ II@ 3342 1342 UM Pt 334.1 4342 PO (00910411 au 1243 303 1410 1524 1424 PM PP NA 1444 MI MM PM Oa 104 Cosh la patatwan0 01110/770011930$ 170 114 IS 1% 113 114 110 172 La) 776 7/3 (I2 431 416 averra 01 0 PI 1 PI P) 01 • Ca 491040 4 004are 240 all GM (1411 027 1140 0/1) 00 110271 MIMI (1410 0141 OM taps 004 40.0/ • 14204* 143. 1131 110 N.N ?3114 03111 0010 31111 1 04~aM 3180 R10 IIM 0020 • Ns Wan. ail 041 04 2 a 077 4 0.60.4444 0 Dill an 1 0141 431 (1011 21 (114) 314 031) 09 1190 31111 19171 1340 Oil 1.14 160. Glafte0,00,0 14 0, 12, fa 347109 100 lib PAH/ all Orb 6:41_110 witg_111402 , "c.a . et Atm 44 0 GI 24 4 24 24 414 773 317 a a 1/19 Ind Pam IN. 4.42 (01 OM 77 (I 2* PM) WO IWO I44) COP PNI) OSP Sera Vise 05* at. I It 2 127 3 i Old 4477e 199 4 awes 320 3210 320 320 320 320 3230 3210 2314 320 3.233 320 320 320 09100707 414 440 917 Pe KO MO Ill Pt la 326 PI 40 543 709 140 Ca 3516 la MP 310 1109 00,0 4.1“ 4.1* MP SAP 3121 106 21., •4,00 020014 04•119 riff OM. CIVOti. i t of bin Poona I traps Ca . . AY 433 40 01 a 49 4%. 4% 0 10404 0500 0% 04 0% 0% 4% 0% 0% (1% IM 0% Pk 4% 1% OW 914/1414041.1 111170/00011491071.0.7107/111•740 101 91 it 117. I lal 1 At MI 20 414 29 14 140991:41( 134 40 €717. sa 724 4114 Ott 4 14 40 4.04 4.17 Ott III 1/4 04(307071 5.3• 59 40 417 ta 70 617 30 31. 40 4111 4.0 a 40 4404004.1011713709731143701713744094167ma lb II. at 20 20 at 2/11 I.M 19 ET 22* 20 I.M 17. 414 a 11* 40 ea a 70 40 RA 40 474 10 St 40 watcaral4 0160000 431 a 00 40 69 60 721 a Its 4/4. 474 30 a 001 tea*/ 41•04040640.1 PM 641 1241 12 44 PM 1166 MP PA Ill I.a 011 1241 PA Pro 1004.7.07440a1244400 pea 4342 3244 33 24 916 3312 942 $340 244 1.77 3442 3314 $3.0 MP 0.00074 400000400* *Ana ono 0714..waynkcs2andutOtonaamenneorin Ana nias 0014 dal OWICalalla*PAM1134/41 }S*aw etna a ;we: wo• On II .N44433 bonutwalilleoW slaw inennoteesetal• Insbellyeato 04 0097007791904 02.04 nee (0000antalan ad 04 04/5 09.44 dans C01/DA Win 00.94114 SX.07 (V1.0.7700003 EFTA01097763 13 January 2015 HY Corporate Credit Energy sis: Samson Resources Forecast Metrics Figure 92: Commodity Price Scenario An MUM aa4dagg giga2gag. :camas MUM CV:0;;At* g2laaaS dus2 16222 7,- aa2 al NT. U022;$22 auutiouum ag " uggau, uggduu ,1 UU22UUU a adoviu6 iiiiiii aOqi) I 0 ILIA aBfg-aiag 1.-,-gfil gETE4.P. HIM; d iiiiRii gns*nsrAn t22assa» nrAt;:A8P., ERRS I 22222222 A•N. 044 222222U2 ;O222222 aOqi) I 0 ILIA R-A4g--x 1611l$14::; Page 110 Deutsche Bank Securities Inc. EFTA01097764 Deutsche Bank Securities Inc. 'Figure 93: Samson Resources Benchmarks 60% 40% 30% 20% 10% 0% -10% -20% 1•4414e Gana 42% 261k4s6 47% 2013 •14rIV St 0 14 0 170 150 150 $4 0 13 0 12 0 t 0 110 170% )00% 90% 60% 40% 20% 0% 201E ermine Oasselblmly 79% 1914 0'41 nose 105% 2011 2012 2013 attieBT OISE, altola• 136 130 125 120 Si 110 $05 10 0 110 5) 2013 201E 2015e oftwat mat. amain 13%29 Opura444 %erg% VOW, 12S25 2013 201E SNOT Wawa@ $50 145 140 13 5 120 $25 12 0 It 5 110 $0 6 90 fah Cal 1/11.14 145 $4 1 76x 201 15x 10r 0 004 2013 3714E 3015E .awl aeon. tomma 2111 2012 2013 stalveT candi, seats 14 0 $3 5 1:3 125 /20 $15 Si 0 105 SOO 2011 •SVeir 2012 522 133 124 stlectine rt./Amnia eurro p.m " 4 26 2013 star fit 0 520 10 0 $50 $40 $30 $20 Si 0 100 2013 201E 2015E 001410141/Ne% 155 $11 _n *Nadine Wow 11. lot lot 264 3 04 10x 504 0410 anon 6 lx lex 2312 2014E 3015E 6544444 Sara Ow/ate Stook tom:on/dm& &bombs guAlunce LP Mdustey ten) Mcdieet Modem BRAM Moan S Mtth Ina.* both convoc Avnl ncv. aawada4pton Fos the Avaanvo compass. 444$4441 by 08 HO Mt( me lincases 4gowis,4144a owpWaiodasrinwvs 041( XEC,CMFSCX021111CRP,H4hr4GEPARCSAMTarbISO Fos No 1434nvage tornymng. mt cosi Ed by D8 KO YAM rho Icitimuts Own new Etbonbarg comouus amithints app: AGIEPERARIICEIXO,FANCEP{LTSCMMIAMPAOSIMPVARDSCSN.SEV001 spenenW and WPX EFTA01097765 13 January 2015 HY Corporate Credit Energy Sandridge Energy Relative Value As a single-asset company with modest economics, SandRidge (SD) is relatively more vulnerable to the new, significantly weaker commodity price landscape. Notwithstanding the high-grading and the substantial operational improvements across its Mississippian acreage over the past two years, the company is likely to struggle to build a sustainable business over the long term given the weak outlook for oil prices. DB equity research sees the Mississippian Lime achieving a 10% IRR at $80/bbl oil, one of the most challenged plays in the US. The structural funding gap problem - the intensity of which had been steadily receding in recent quarters due to solid operational performance - is now front and center. Despite a sharp ramp down in its capital program - we expect annual capex to average $1 billion over the next two years (versus $1.6 billion in FY 14E) - we see the company burning $1.2 billion of cash through FY 16, exhausting most of its current liquidity of $1.3 billion. More worryingly, we see outlook for continued cash burn indefinitely beyond FY 16 even in a maintenance capex mode. We see annual run-rate EBITDA of -$710 million at $65 oil/$3.75 gas. Given annual interest obligation of close to $300 million, the company will clearly be unable to meet maintenance capex of, say, $500-700 million and remain FCF neutral This situation would be further aggravated in a downside scenario of $60 oil/$3.5 gas with EBITDA dropping to $560 million. In short, the Mississippian acreage is not well suited for a low commodity price environment, especially as a core play for a company as financially leveraged like SD. Further, the option of augmenting its liquidity via asset divestitures, which appeared to be a viable one just a few months back, is now all but gone. Its midstream infrastructure in the Mississippian play, which might have fetched a valuation of up to $1 billion earlier will now be worth much less, and on a partial monetization, could receive maybe $200-$250 million. This overlooks the difficulty in even attracting buyers given questions over long term sustainability of play economics. The value of its stake in upstream trust subsidiaries has also taken a severe beating in recent months and is now worth a little over $100 million. While we acknowledge that the recent resolution to the financial filings is a positive, the viability of the Mississippian play is still a major concern for the market as evidenced by the trading levels of other HY issuers with core positions in that play. Midstates Petroleum (MPO, not covered) is a relatively smaller Mississippian comp with a fraction of the liquidity of SD and about 1.5x turns more leverage (6.5x in 2016 Bloomberg consensus) - it trades at about 2x the spread of SD (STW: -2500 bps area). That said, looking at SandRidge, we don't see any visible catalysts on the horizon. Technically speaking, the credit is up roughly 10 points from its mid-December lows (bonds now in the 66-67 area, YTVV: 15.18%) leaving us to believe that upside/downside is skewed to the downside as we enter the seasonally weak 1H. Further, we think current trading levels already have an expectation of lower announced 2015 capex levels built in. With that said, we are moving to a SELL from a HOLD rating on the name as we believe one could see more attractive entry points in the name going forward. Upside includes better well cost reductions and higher type curves and lower than expected FCF burn. Page 112 Deutsche Bank Securities Inc. EFTA01097766 13 January 2015 HY Corporate Credit Energy 'Figure 94: Sandridge Energy Financial Summary lea Sea, lite Wes lanialandola IN adilailla Sawa I.S•ilt Van EIS laapinall Kt Pan sal Par ina inn rafailaball • a ana nal MM:CMC:i.n:12MnnEn — 301 'PA *Pan a •Il v. • ,/. SIP La. IPE Sala El 11.4 E. nt IQ SO 40 NI IP Vra etrole, ma. O ,I4 e a MI a a MI CP 7011 on sena nea ler. . Lea a WI MN 1.1111 s. se ter,e4 a m W ee. Napes ona Sea. L 04 A* la N tin in la a a am a a al r • ii a a a SI ay a a a a III •• a '71 annonao a AM a al I/I Pt Mei smea,l. a eat Wave,. el 4 10 0 PI m Oa NI Si 1.4 i....., a 0 Ill al Mn ▪ le I ata a 1170 DP al 71 ill N all OW Wee tea lea as era 1.151. UN I.N UP WO LW Mr LS Jana a.a, an re• semen I.IN 011 I.N 1.014 IWO IM/ NO IM4 MO We an lea on lee IMO 01 On ND 04 01 4$ PI NI ..ry [arta in an ranoranal. In fa NI NO 414 06 07 an $0 +ea am le 404 1.07 MO Se Kt* MP 1101 Sit SS Na On Oa San la aell 4M 10 02 40 10 4.0 40 20 IN ps Agana. aill Mal la Pa al nal na• Oa Ian annalanavn la a a ••• a la In a Se arnana Pa Ms a la a la Ila la Ira SEC Ina me le in ail al al Oil MN an Pla ...Lana a a IS Ma • a. ana. •••• a • an a an al JIM • • la In Sanaa at .lial a I Da 4400 we we a In PlatalannI a OW III SW la a PO (IT III el •a• •aa a am nae al la It.. la In 1I•• SO al ea a UM ea s nee apnea ea Wads Ma MN as MM. NM Ina Maa Ma ea ...ale Balt HIM WC Illa 11141 11141 PIN Ile MP 44.4 tin NM Pa Ma AS MN Ma NU MM )14.4 1010 1.1124 ta 4 1.1111 I1111 1114* PIP 1100 PIM P al Sin NM 040 MP NIT MN Mil $104 NM tan Pen Na Na 100 la* MP 1.1214 OOP •I 4 a a SO elan INS 1.14 01 Ma 1.1101 11041 De 1.1.121 MN 1,4 It OOP PI PC:1::::' MP 1. 10 0 OM w4* wa Ma Ma 111/0 14141 WM 1410 1.14 al Ina lilt IMP Einlinalla IMO SI Sala 00 la 4 I 01 al 01 Teen ' at il OM* Meal par as a N rajas a I 5 km ge. tail PI Pao 44 anainnalta• al • ne 0 o MO le on an Pees edeee. me on nu In an mn um .a.,, en /Mao an Ina. 0./.• GOSS CM 44 e St 5.4. Pal Pc OM In lanalla ON M Pa la PEI al Oak Pei Oa Salat as Ili IV a 04 A MI NM Om 0 7 affalai 3 0 *a 2 4 elk On e el. >111 Fee le al has 4.44 el MI IN Mal OM ON PO nate le Pea far le a ..04 IS LN 1p MI NO 04 1,4 141 NS Ca liall.a. Ma 10) MS ON UM 110. lam ape /VA Cetera .40 le le 4110 lea a allf a ea la a as ...Sanaa Yana pas /Pa nano %soar. Oa 04•• laa• allanala IOW Colafrall • aftialtee era eft/eke we rear. 4.0140Xeletna 0.4 401000.8114 slipwe et -MP yea rent aaabarete payee Nalit nee* MUM /Naleaebeneeelleseeese IS aA Oa IS▪ M ara • aniami ass.. Prams anal • a lessanna/ Pia Salsa la a a an* Peal. an Pa COO fa treleas 4.0.1 PI ten* ` IS Pan lelanta. W 14 no Ala anScansaarans 4.0ano sa ranee •ea. We 4•0 MIS se$4 Sonar Oadscia &test .comosny Oats MS a la IS JO a. In . Pa IN It 214 11 . t• IS. 4b 20 :.... 244 tit. 10 214 ea tea PP PM P9 In all PIS Ills EIS Oneftera50004•Ca. I ere IP• • 1.0 •S IS la LO• 40t 41. ta Or Alt to 441 10 0.74 ES 144 OP It. Ha pa lar i!w Ian MO cs.. toilet oink, aa axe 'Se, Panalare in.. an taa naa a a . a eilelaalip•O 41% 1.71. "a Ian ear/ an au era adaleman a INS a NI% Mawet44 14 41n la /a IVO n. a a n• In ES ill• • ita Deutsche Bank Securities Inc. Page 113 EFTA01097767 IFigure 95: Sandridge Energy Financial Forecc-,r m <x 5 4.43 naMIENE B FE3 05 63 n a 551 14404.10 40 143 377 174 54I 0 7411 74» ,14 e.= IA» 124 17044 10.16) G44 1 tap .00 n» 114~ 449044.0 444 >n 24.1 404 446 1.415 It» 1555 lø» 1114 4400 ::1391 343 ta 433 OL 44444440444 04 1.401 114 n 424 130 7/I 47 sml fN 2» čd čd saa te. 103 n1 114 ‚ist Is? 1444144.414044 24 24 In 141 4•1100174404441.1•44 4.44414444111 514 »I a 1I4 i* 144 in *i tø 54 .143 •44 TO 440 ia ai 44₹ ,OŘ I» 113 In 146 I» IS III I» W W 334 »I 4» MO 44 44 »0 Dl 9 33 114 6? » 24 » 27 »4 1» »1 171 fa 311 341 Ii 40 BIS« 42 43 CO 10 44) 40 40 41 143 Ill >17 337 412 5» >0 »I 2» IIIT sta 440.1 24 Mi ål • al al 010 (3.0 10 144 N 44 C 74 94 Pl* 11701 04044441:4•••• Al 75 11» » >4 (MI 44 14 114) al) il, 174 a a Ca•as 1.W 1.41 • 3 315 »6 • . 4117147 440 41741 140 IG3 421 01 na 00 1410 HA» 114121 11.17) 435 1221 0101 PI4 1144. P41 1.44 ° M III OM ni 14471 10 II» 4 00 ON Yd 4.4.• PM I» I» ab al gal CO 1» Ilt» II MI Al 141 74 0,001 18> PO> 044 4 ON a • 44 LIV ~OM Se» 44441440 4044 1.14 1.11114 1~ Ist li» 5 fø ni ur 464 el 47? 4144 114 I»? M 107 44 4 »1046 »k 4.4 44 4.406,44 441 404. 1.11 lni IX» 147 103 SI 44 43 I» 10 414 0 1.474 I.NI M 44 Oh LIV 51144141114.44 444.41440014 401444 M 1•3 RO gle RO III hl 103 W I» Pl W OP M 41 •FS 14 .4440119441 .445 44445 4•444 4.4541~ C» 01 814 411 «6 4» Cl »1 PS »6 416 44 kli 417 411 311 4» Anal 411 64401140 44 »MO 1124 7220 UN 414 1403 4.7:10 0440 4143 IIII4 34, 4 01.4 »47 2401 14» 41» 1444.404M4444 C4144 4» MI 314 3 63 24 40 4 Sn 3» 444 463 »i 440 141 174 49 131 10404404 00 .44.4444,440.40 40 40:44444 nr, 4 tIM 0 »li 21.01 21414 Min 40/40 9221 9.113 4144 444n 110 01344 94110 14 24 44143 OM» 44" 444444I Fim) 044 444. 41.444. 446 341 »7 »7 »a 3» 293 293 I» i.» Si) 533 Sc 144 4.42 440 LTS 44.04 0144417).1.11444i V» 734 141. 3343 Lyn 134 3443 SNO 7236 1404 439 PM, 14.443 OSP II.« I2A0 12.40 44044 014144.2444 44» 1411 44.10 430 Mi 31.10 411 441 Ml 424 0114 0141 »h 12» MO ?V» 140$ 4.440/44 Ml 4414404 lam 442 744 1.13 1.141 740 730 P» 4447 3444 4740 ~an 00444-04 tatt 41S7 1441 3624 10.47 10* Na 1421 1413 • • • • • 4474 an n4 n i.? Tea 40.04.44 4.444 49 4.4., 7.124 44l lin 7440 7400 754: 310 44.4 %Na 14471 43044 22341 33.443 tl.fN 14.474 »a) ».3.4. Tam 44404.0 34440, inni 444 51.44 419 4140 4061 444 4094 4141 04 450 4445 »35 2510 44 OM? 4693 »33 ~rut 0404404 Peon - - ~øl. 414114 1141.44 1141.44 14414 0414 143.43 Ia» 14411 /CM 4493 WAS 54/14» SaAS 11478 14/0 1144113 Ialt 1171)4w 1454 »OM 14141 144411 BM SODI 11201 31201 11121 $001 11323 51401 0143 SIL» 11)44 17101 41171 OSA 2414 44 43» II 0 61» 61» 1420 114» 44 1414 44 It» 11.41 4411 4127 44 4410 X.6.4 1145 11431 »1» 1430 114 15314 4040 MI» 1179 II») 1140 1114 11013 4144 117130 3N4 4414. 0444440144 4 44411 Mn Øsa 44.31 N» DM $417 1111.111 1011 144.114 MR 4344 414.* 11121 4143.4 HP 534 4144 I» 61 111.443 II» 1.04. 445 CM VM 4.4 4044 41133 112.4 11030 14144 023 OM 41 1700 140 41.4 em 414 11443 04 ti 144 140 150 4403 1110.10 11241 113» 11430 11024 41414 1144) 111450 3454 IN 19 4 7 119 440 a st i 440 III CO III. 4114 11144 III N 41lµ 4110 1111.4 441 1111 11241 4144 Ilt» 111.4 VIM 414 1714 %mor 44.4 4444 614» 4444 414 “3.34 LO* 44404 ~it ISO SNO 441 f4l an? ML* 44.14 111111 4444 CM FM (1075441.44404 ZO »1 »3 »3 IS I* 0? M tei 164 631 »7 1.14 1.114 1407 774 707 .75.... tant teui teia PHI ir, 030 14144 104 Mil (1711 PM> MO pl Pall IRR 3 140441 9 147441 PI »410 Pi 14471 in 0»31 . 0401 44411 :4•44.4 thime 0.14 4 4 N»? »I 44 in, 74 4711 IS al) II) 31 101 144) II. 141) 44 W6 37 4.4~40 44 444 40.44 4103 1134 P» ry) 041 44 it*, 1441 0241 .2414 ion 0.447. 04.0 000 PC P* Inn vit... 44.44444$44444.4. C» 174 0:4 a al al I* PI) 6211 11414 pil, (134. ič34) 4014 Pm 141) 84.4 w,4».4,44.0.)40441.4.144.4.01 1» ICI W4 .. . P. MIT. r n. el 4i4 n33 444 øve. ~Mg. 4:: MP itIZ .. A 11 Ra 014. 11.4441 0341 00 11.170 11.40 y, : I (1.417 N» 614711 /Åra a 174 a . . i714. 030 170 PM) 410 Pi> • T 7~o, 44.4 cf 4444 ta 0 • • 0 »3 le Ill? 1110 2411 ?30 • es 44.4441444inu Aase ~a 403 (141:1 MR m4 Si na 14101 »Ml 0441 070 i» 43» IS 11141 040 Sl 44444 OM On GN MOD IftS ZO 310 44 G 4 )44 1* III 311 5.44.04m k Ole NIOS 2.114 1.105 NOS NOS NOS 1.415 MOS 1 W 34* 1.4•4 3114 4341 LI* 3,195 Nett Sin 0N444.. 40 433 fn 444i 223 430 ....44/0441 LI* 3144 SIS SI* fa. MO 53* tla 13.14 14•74 2.444 7A14 AMI !JO alif MOI 454 Vit Orme 44-44 444404 0~ 144 444~4 044~000 444 in ON 44‘ 14 1444 4444 41 44.444,11044 »1 24% n. 711 I» 5% I% 4% 7% 14 144 4177. 11 ar CA Ult OM Man C14714<4.144446 00.4144115•46 SN 34 154 >44 14 I» S4 3 74 40 34 304 304 14 44 144 174 24 4 1« 04 41110441.40 4.014 mea) • 1440 . • Oh 04 10 4.14 44 4104 • 054 04444.0(laistaisarap anna LO LO Mrt 1.74 404 421 4.N lit 14 440 460 460 4.4 13a >N Sat S4 14404401/1441.444411401081. LIS 3.40 »4 34 34 Als 4.» 6.14 34 460 460 460 ta lås 44 Sat S» 4 14 440111044.4.0.4540riemt • me • • Oh 0t 14 O.h 44 44 • 044 1.4 344464744 MI 4474044444 at 34 lit >b >44 3» 4 11 44 34 44 44 34 174 44 14 454 44 V» 0 01~1 46 .44414 400) 14 3.14 15t 24 >44 344 4 11 44 34 46 44 34 34 iµ 214 454 44 1441544410444.14441 VP 4437 V V XI XI Påk NA NA 4044 11134 14.41 OS OM P» 04 0 44 JO4fOoLl OPOOOP ~Ot MIL* 511,10 IBM 11141 Ia Ia 0 kl kl 111. Mal 1110* Sene Mai $11.44 kl »k 44. San DO/tfeňe bra (14P14µ444 EFTA01097768 aC (Figure 96: Commodity Price Scenario Analysis: Sandridge Energy Forecast Metrics In Za= FY 15E. E0ITDA (S FY 15E FCF (1, Mallon) SITS $2.25 $173 $3320 WS 5425 San NYMEX Gas (S. mcf el $1.75 $21$ 1275 83125 53.76 1425 75 O d a -Z $10.0 5362 5384 $416 1/411 1460 $512 1645 $300 . $885. r56571 15629) MO 07721 ($743) 5714/ $80.0 3435 $487 $50.0 3418 1650 $EA $531 $562 $614 3583 1648 $585 $678 MD 1710 S40.0 155201 ($791) 1$732) 117511 ($725) 11597) 714 6866 (36401 (37061 (51177) (UM 1$643) 550-0 12481) eespa 173 449.0 SEW 1.633 5666 3697 $729 $761 $793 0 $400 (MR ($519) 13531) 6802 415 741 (5545) 11516) $700 $444 $716 $80.0 5150 $762 $7441 $771 $814 3416 M I $878 $144 $910 $4 76 $943 5 $700 /51/221 (11353) Me 583.0 (16891 (16•3) 55123 $135 $483 55081 04551 (See ($426) 11450) 1$397) 590.0 3787 $819 $851 3.533 $315 $947 $880 4910 ($5431 ($512) /IMO) Sea 434281 ($397/ (5341) FY 16E EBITIDA (5 Mahon) FY 16E FCF (S Mullion) NYLIEX Gas te =le) NYME X Gas terricie) $1.71 $225 $2 A25 93.75 $4.23 $475 75 $225 $2 75 $3.25 53.73 $4 25 $4 75 $30.0 $40.0 580 5122 £2!, V) 5165 1207 5113 $250 £1J5 5292 aniS 5335 s 193.0 22l) t$1.171/ 151.1371 n18.951 140.0 ($1.086) (51.11/4) 151.0021 $1 032/ (39191 $1.0.21 11477) neon> in n) 15980 15826 $500 5216 5259 $331 $311 $387 5429 1472 w $1 $500 (1.9511 (1509) ($784) ($742) (PM $600 $353 $0$ £4p3 SW $523 SUB $GSS 5 $400 (ale c$774) 113$3) 1149 ($6491 (18071 15565) 3490 $.533 $57S $B15 ZVI £703 5745 170.0 5/511 ISM t16987 1$525 (5514/ ($472) 11431) $80.0 5627 “70 $712 5795 9797 5840 5882 $80.0 (14471 ($50R 114133 I$421 (1379, ($338) ($296) seao 3760 5803 584S SM MD 5973 $1 OIS $900 54161 .1374, ($3323 16290 152481 .4207. '11651 FY 15E Net Leverage FY 15E Debt, Proved Reserves Waste) Proved NYNEX 0/19 (5.34313) (Male) 51.75 S2 2$ $173 $3.25 $3.75 $4.75 $1.75 $275 23 .7 pia $1.75 $30.0 10.74 984 8.94 82. 71,‘ 6.6. $90.0 51.7 517 $1.7 $1 6 51.6 51.6 514 $40.0 86x 734 7.34 6.8. 644 6.0x S.64 $50.0 51.7 115 51.6 $1.6 51.11 MS 1.1.6 $ec, 16x 66* 6,2x 48. 5 34 52x 4 ex $5/30 5131 $1.6 $1.6 Ste $1.1 514 $14 $60.0 116x Sex 6.1. 40. 444 4 54 43x $400 5131 51.6 $1.6 $1.6 $1.5 51.5 SI 4 $70.0 S.14 4.4 4.66 4.44 424 4.04 3.8x MO US 11.6 $15 51.5 S1.5 SIS SIS MO 4.64 4.44 4.26 4.04 3.32, 166 3.5x $10.0 51.5 SIS 31 .5 MS 51.5 SIS SIS 5.3.0 4.44 4 24 4.0., 3.84 36* 334 33x $90.0 51.5 S15 f15 11 6 51.5 51.6 SIS F' E Nu! Len HI Fl FY 16E Debt Proved , se .ves .t."ÉMLA N MLX Gas ISMICIel 51.73 122S $2.73 83125 517$ 5425 S4.75 51.75 2 12.75 83125 $33.75 $421 34.71 530.0 .721x .2793x 146.14 2604 353x 256x zoo. $30.0 52.2 $21 $21 52.1 E2.0 920 MO 51.4x 312. 24.44 195 158x 1144 11.64 840.0 52.1 621 $21 120 $2.0 52.0 $1.9 $50.0 185* 15.34 13.94 11.34 1004 59x 8. Ox $50.0 52.0 52A 52-0 SI 9 S1.9 51.9 SIS $80.0 11.16 9.11x 8,7. 7.94 72< 664 61x SA 52.0 51.9 S1.9 $31 e 31.6 Ell SI/ $700 75x 7.1x 66x 6.04 544 52x 46x STU 51.9 MS $1.8 Ste 31.6 51.7 517 14410 606 55. 590.0 496 42. 42x 4.114 4.34 4.114 4.54 322 4.21 164 4 Ox 144 555.0 51.11 51.5 51.7 51.7 S1.7 SI.7 51.7 51.7 51.6 S1.8 51.7 51.8 f15 590.0 51.6 same Doeseto Sent [weeny ea EFTA01097769 to 0) Deutsche Bank Securities Inc. Figure 97: Sandridge Energy Benchmarks 30% 47.1 40% 30% 20% 10% 0% .10% .20% holocia Gana Is 2013 -11% zu14₹ 2111E DSO asaa4611 monk 1610 161 0 $410 Sal 0 sate 1100 'to 7016 BO% 0016 10% 30% 30% 1056 0% 2011 2012 2013 HD 606404 404.14. !Merest...n401ln Hedges 74‘VO% I 45410%5% 2013 301.E 3015E •80 Nadine memo Ovms114011s.olat, 044 1200 1 1n%1130 24 II " Pe 0 $140 $120 1100 110 160 $40 120 10 0 00. 7 Ot 10. 50. 90. 30. 30. 104 00. PIPI4 10.7 2013 201E 2115E owelme •MoMo 2013 3019E 2015E 4110 •11,04.11 ems 004 913x 70x 150x 613x 404 30x 20x lox 00 2111 2012 2013 .10 aM.me aNmsen 1251 $201 till $101 tS I 101 $450 $400 1360 1300 $250 $200 !ISO $100 $50 SOO 301 601 $0. 40x 30x 211 I Ox 00x I I hog MA Neill 1 1301155 ii5: 71 42°1 032316411 1.1 2011 4:70 2012 ~re 2013 °MOM Ce460.14•401.1.044 $30 1 VW 6 S34 48 $31)•34 2013 2019E 201St 1200 124 X24 7 .ID •./Mat4 Mk/44M. 00x 11x Daher WWI 40. 5 Ix I 2073 2119E 3016E seo Soave* OuuacHo 1744,4„ Cantu", dot /:ammo Fame* LP Mama. levolli4a1444044dien 88.44414144444 H 4,044:41 induob both cowrode and non. moot comptess* For theNokrowvlp COrnp.vaa mmted by D8 HO Vinbt No &was 4pums alai ourpuzumodastimarts CHI( XECOlift4,4:X021/14CRAIMIt4740EPARCSAIVST an a rS0 For the A101sv4p cony:wit not [onto.° by08 449n *on Us browns OWNS neat Abootep consatas oawudsPAY AMEPEF(ARBODICYCVAKEPCLISCIMIAMIMPQW4PCPVAROSESI4SEVOEA(SUTPLI4111W44.1 IWXa EFTA01097770 13 January 2015 HY Corporate Credit Energy Financial Summaries and Sensitivies for Non-Covered E&Ps The companies that follow are non-covered by Deutsche Bank High Yield. Presented are historical financials only, as well as sensitivity analyses based on Bloomberg consensus estimates. None of the below figures represent Deutsche Bank estimates or opinions. American Energy Permian (AEPB) Antero Resources (AR) Bonanza Creek (BCEI) Concho Resources (CXO) Diamond Back Energy (FANG) EP Energy (EPE) Magnum Hunter Resources (MHR) Midstates Petroleum (MPO) Oasis Petroleum (OAS) Parsley Energy (PE) Penn Virginia (PVA) Rosetta Resources (ROSE) SM Energy (SM) Sanchez Energy (SN) Tullow Oil (TLW) Triangle Petroleum (TLW) WPX Energy (WPX) Deutsche Bank Securities Inc. Page 117 EFTA01097771 13 January 2015 Hy Corporate Credit Energy 'Figure 98: American Energy Permian Basin Financial Summary RN 6MR KS AS% Ha Han 315% Haar Han ceascscs Cad PeCto IrCOC• I A1.11-19 144.41 NC OM* As0 IS 31.'.73I! C Poo. 10100 l(634 t0147 11.0100 12010014301,9 0110 ANN • C446 Fbea4937.4 Ma Kt 00 OaandO Can SandMoan. 00100911111/409411 14,11M000 LIM 0:01101 alb Nalco LIM 0:01101 -boa 114.10. Wit Otos• awry e.0Wpro0nilutll 092 Peoluake Data /02.41Cua 0.0322/1. !WWI 002•0 Pie CooPe0,144er, Ous• OtPKOacion Mani 04•12•0131Pro4tb, Tow Et3o4Net 9•102%0101 70.000/44nt R0%04400 Pm Csalt flan 601104% HAM. On. Taa• 7400.0 000 a Not Vold), Call/ 0011 A.14211 WOW 51f,1 009 120 Nana 103 C.000.1 110/10 !rata. flow 010 01. ta..4 of As • rap Can flex 1nel Mal Sala 010 (let 111 111 35 35 62 41 12. 76 120 25 11 111 26 11 111 64 27 74 10 41 40 36 Ito 12 ss 77 SO 2.10100 10740 $340 2345 506 13.34 325 506 4116 225 691.14 475 67237 II) 611) 1(21 121 112 121 137 131 $11119 3.1(003 912 M69 120 SAW 452 0214 1.025 001 114 $0124 5421 1315 121 340 73. 0424 1.149 3.201 166.36 $6005 131 137 55011 926 3410 $4.17 2120 14091 1210 120 40 124 20 A at 13.) 197 1211 23.21 03 1M 1.12 Sen 02.7 204 1416 1670 $7135 06 57227 23 23 17516 716 910 0636 35 34 131 77 940•14 be-I D. Car PlY CruSifimaa NA NA - Sena Nda 4 ON. 611 Ia 1.0.111,1 Cub, NA YOY010.156011401 Peoteut On:exhort) or0414414406,7740 0 Gar5 Pi.os.04.(kown LTA PP Cnall Ssibilkos OCCIIEE4106X 1.61)421E91154.11 01019/0404140,01911CIN 00019/040 90090 RO$0011114110 Dethand Par.. It kg 1 004101and Pratpal limns ribao 11.1331 03 1911 11311 Q49b 13.0311 2 021 11316 0105) 130011 090 0 0951 (CIO II (am a NA 156 144 114 NA la 79 M 1117 lAn 000 126 156 144 isid5 414 NA NA MA 111 HI1 NA NA NA NA NA 901% KV% NA NA NA IN NA NA 249% 222% 126 126 141 lA HA NA int 1273 11 46 9246 VOW 1.,1 T1 112% 1212 11.74 310 WM 0001 1.1I 150% 700% 126 114 156 156 156 156 144 144 207% $511 $149 $106 Coos 3.19 CuN 4 MfltUtI4 St<utla Reo)11.9 001 4021,2 Was 2019 Lets0of 0,100 Natany 120 410 SO 00 000 Pt.. 11•ahrq0401 40•••aractx 2011 1441064011110144 210,4 Apra Sear Nan au 2019 7.121%Sana Kno 0.0210 7 373%Sana Kno 0.0201 IMO 001 OW 1140,4% Canahla On Na• cla NI22 IM/Hake 0•41 NC 004 Mnerdly Yana! 011wa taaN0entssan Inlaprim Vela EV94 691194.11 OtanDat FY1SEMIDAX WS Cm I Onfl4:10,. FY15 6010101 ne Nat FYISEINIDAX VI) <X /3 04 12 nett donna 0 rquviawelenrani a aVveawr .25, ;sinew I Marta. fl 0...u..2.•Arawa”.....Mate in a: AM/ OYU - IS ..edpratalxvi dint 4R-item' beam Cf a.703 67 Monty a/ 45.53 l.114anaw ri•On ieaurid.r. £I. etWil ...%",w1t. 7310 Oar el, 3.1.10411 paalan1 Atdatpmaf.wanva 41 OW/ 3: 2014 .4511 •,...4.1n1 for Af f 1, PR Gala Ana) 201. M14 PrOft, n1t,r. gaia$:.ce IOI Ges13N'O1110fC yhx,x,isoy4 /5/11004.2Y243 aro", :Oen as cratt 31. Mt wove et ins niC4/44a0210),%4106 03000 FY 13rceene gsvet Scene' Amenne &I12 Cornamy 10 M 30 010 00o 1177 4737 )736 1.109 211 674 613 111, 100 111 Ml 90 400 I.697 STI 2.212 2162 1.261 12.1 674 Sex Sex Company Omenpam• Peny, Bun 'Mit, Mx n Mint 2311 •al n.. covion 04241 lutot, at:pa ot,,flPmn In Pun awns 1"). EMmO Pos.luces let saw, 455$ 1002 Tr apnea froa II IRV iciatice Iran non., •af nil oada1 mu• Ti. 00-rowv rod, Mania. Ortv"..• welmno stud* P•nun Bna 4 re a 01 144.0ana 1204 4101001 NEW P01124.0 11144441 0 114 11121344 Mn AV 1001 12 ION. 0004 PFPOINK0100:141 Palma Ban • Malan, 3320 40490110.4,40/041100011 01 0 Ramos • 11.% 015 01111111 10127 0 444001 • 00.01110111 13206 Poe E•prala0/401 150314 %COI It% % 000 0•000 19% Amen La Wand 21 111044 4112/401110 (M /1) 4270% Noe. Fincenell OS Oil 4270% *Vat tn. as'In) 240 0111E W4 14.45 .4 /12 2413E 40 110 .442 Page 118 Deutsche Bank Securities Inc. EFTA01097772 I ffi ID 'Figure 99: Commodity Price Scenario Analysis: American Energy Permian Sensitivity Based on Bloomberg Consensus FY 15E ERITDA ;$ FY 15E icr is IOr lion $1.75 $225 2375 $3.25 $3.75 WS 24.75 $1.75 $225 1275 13.25 13.75 SIM $100 $120 3180 $159 $179 s199 $219 $10.0 ($9931 ($641) (5822) 3603 ($5341 $40.0 $156 1176 $195 $215 $235 $255 $274 $400 0041 06065 11567) asi ($5291 $5.10 $212 $231 $251 $271 $291 $310 $330 $50.0 (16491 (6633) 11518) 1490 (4741 $603 5267 5287 $337 5327 5346 5366 $386 $60.0 (649.1 (1.475) 1$456) ($438 (4191 $700 5323 $343 $363 $382 5402 1422 $441 $760 (4391 (tA20) MAN) 11382 03641 $100 $379 WS HIS 2,430 $450 $477 $497 $800 (63ei ease .$346) 1132 ($1081 $800 $435 $454 $474 2494 $513 2333 $553 $90.0 ($32SI 4310 i$291) 11272 (52631 FY 16E EBITDA (S FY 16E Fel IS MLA Gas roiclOi Ga. i5m.lci $1.71 $271 3775 53.25 $3.71 *423 $4.7$ $1.76 122$ $273 9325 53.7$ 230.0 $20 $0. SW $45 $52 $50 $64 $30.0 08411 (1834) eve ISOM (95141 $40.0 198 $104 Si 10 3116 $122 $128 $134 $80.0 (67711 (6764) 11757) ($7511 07441 $60.0 $169 SITS $181 3187 $193 $199 1205 $500 137011 (YSI) 75688) 126811 MU) $600 $239 $245 $251 $257 520 5259 5275 $100 ($6311 0620 13690 116111 (36041 $70.0 $399 $915 $021 $322 $333 $339 5345 $70.0 (1662) 1666) 7$645) IW11 ($6541 $90.0 $379 $385 $391 $397 1404 2410 5416 ICAO (1492) ($485) 11470 114711 04651 $800 5450 14% 1462 $468 3474 5414) $401. $900 (NM ($415) MOB) 154011 (53951 FY 15E Net Leverage 1121.1EX Gas IS nx101 11.7$ 1235 9275 13.25 $3.75 435 $4.75 $300 262x 29 4. 20.0• I7 4x 4. 15 44 130. 12.4. $090 1714 15,7s 14.0. 126. I14* 106. 97. 2860 128. KU 10.7. 9.9. 9.1. 354 79. 8660 lilac 924 8.13. B.a 7.5. 7.0. 16. $70.0 8.I. 7.8s 7.1. 6.7. 6.1. 110. 57. $10.0 15.7. 14. 60. 6.7. 54* 124 49. MD 574 55. 5.2. 4.9. 471 45x 43. FY 16E Net Leverage NYNEX Ge9 (I'mtle) $2.25 9275 23.25 23.75 439 1175 $30.0 1322. 10210. 91.1. 78 74 691x 61.5. 55,3. $410 36.4. 34.0* 31.94 30.1. 28.4* 268* S.S. $810 2064 19.0. 10.0. 10.14 11.44 IV. 16,I. 800.0 1294 131. 13.1. 124 1234 119. 11.6. 270.0 10.4.. 101* 9.8. 9.54 92. 814 88. $100 9.1. 7.9. 7.7* 7.54 7.4. 72. 70* $110.0 164 14. 6,3. 0.1. 5,0. 594 60. O FY 15E DebtProved Reserves (SSICIe) NYNEX Gas iSYncle1 $1.75 $225 $275 6325 53.75 $690 $0 0 $30 529 529 $29 MO 52.9 129 $29 $29 $28 $50.0 $2.9 $2.8 $28 $28 $2.8 $60.0 $2.8 $23 $28 $27 $27 $700 $2.7 $27 12-7 $27 $27 MO $2.7 12.7 126 126 RS $90.0 $2.6 $26 $26 526 $2.6 FY 16E Debt, Proved Reserves (S hic le) Nina% Gas (Yncle) 5225 3275 1325 53.75 $30.0 53.9 $39 $38 $38 MI $400 53.8 $3.7 $37 $37 $3.7 $500 $$ 3.6 $9.6 $36 $36 $3.5 $60.0 $$3.5 $9.5 $34 $34 $3.4 $70.0 53.4 $33 233 $33 $3.3 $ O 53.2 $32 232 $32 311 $960 $0.1 $3.1 Sal $30 $30 &moot Lboacts literasonts9 FOUnot LP for site lbeavOng conounts no: cove. n 1 by D8 PROMO. No IIMI4tfl flaunt ream 'Mamba 9 conseet ASIVALI45. 0I4r AMEPEIJARECROCO,FAMZEPCLISCIWIKAOPCt04APCPVAROSESA(SEVOEMSA(TPatIEW and INWX $425 S4.75 ($565) 4567) ($510) 12491) ($455) 1$436) 15381) ($400) ($345) 15320 (1271) ($209) (62341 11215) $420 $4.76 (5007) 1114:0) 040 (17371 (2687) IWO) 06971 11591) (1626) 11,521) ($458) 118881) (388) a3/3f) 114.19 $4.75 $2.9 $2.9 $2.0 $24 $2.8 $2.7 $2.7 $2.7 $2.6 $2.6 12.6 32.6 $2.5 125 14.25 $4.75 es $37 $3.8 $16 515 131 53.4 13.3 $3.2 $32 $3.1 $3.1 $3.0 12.9 EFTA01097773 13 January 2015 HY Corporate Credit Energy 'Figure 100: Antero Resources Financial Summary Web CNN* N144 ).134. )) ma S15h tr10144 hey O11•31333•01014) O11•31333•01014) 110011.0.04),041,7 ban. .CO. NUNN 4em apt! 13410 r 147421 1444.11 13410 :I I 017 V024 WIEEMWEEISCEIM MEM Proems 11411.0411.14.040, Nan 2)04 rim MOO 3.1 row ▪ 00)(4v, 11411.04 11.14.144, Lurl 3313111.th Moms 004 027 11) 133 414 11,4 140 43: 444 IN ara 5I 241 "5 M71EMMMIMEIEMI 0432 10 ▪ 3 14 ▪ 44 105 31) ire id ef 52 Ie e2 IN 141 a. 171 Itl N 311 IN IN 31 443 IN E611)0 'TS), 2O IN Caen 0244 0011417 0004 42/ 4.4.14071 114. 140 1004 Sacco. 15704 (Rl LT41 IMMO 4.11414•Sge) 1.141111004.1•01))4144412. 40 Cavde 01:441 440404/0044.100 c1.40 11444.1440400•11 100% C.441144$444•01441i 4404: 1144 004440 II% 5140 04 404.00 OR.% 4101.40 0 7040504 444004 P•nar.. 01001 5 0140 0 704 0544 lob thethelea beg IOY 1.04430113414•1(0144.) Pon. Omana)111.0.0441143 1144144.14. 4.1.0 C44% COLA CIA Ofmeructewe ire nr Esem:e pro 6, s00•104 7114101 MIA "mN5*2 be tee Cels Na 171 slab tlN 47370 1411 3101 NY 1.313 111•4 11.11 1031 1031 14 1031 am NN NN Cal Owes M. Cfellilw robes 132 Cew Taw bee • f ASWAN 4 Orakpere 01 C444. One Pwet • blown 144144417 C04441116•111)40. Crow C444 40404 0440 94.n. nom CAW Weans twee no•Csie nit OwlettArA0 010.04440041401 11. Cul Ms W ANNUM 3•10140114410•14 mw eld Were • w " NY Groat bun. 44).-0. 4vn ;r4 arc no>) $ 00114.40 00077 LIN bob 91111134 • \C,4 rheas i I C.44... 1.0m( on•corom Mr 0.44R041 0440,-.44,11444,44 15b. OS) 410 Nim "a 11412 1121 104 I IM. 92 IN 05 OLIN KA 1323 1121 1121 1331 SIX 1147 NM ILO Mle 214 4 257 IN 1144) 431 33M 11113 114 III 09 1411 046 6 3e IN 233 31 IN 404 102 IPA lit la 40 Mn 421240 MN 271 bee 1.131 1311 "-4 Mn Nn NIt IIN MN al 044 NM 1043 PM .34 IN In tel SK040 577 MM OK 72201) mob MN MM 344 313 547.34 112 47 1447 544" SC 16 41213 Nib 3131 1111 all 1033 II )1 1073 an lee Nat AO 241 Obl NI 01 111 111 0101 MN) 37 4 NM 32 30 III. N33 1213 33 NM SO 43 nn 237 (I) 032 (I) 11,g 461) Om MD et 0110 /7771 on Ma fit fen 170431491 $4.4, Lt“ 570 0247 MANI SIM 1034 024 -a NN 3241 1031 11.3) IN CNA 41 .21)3 11111 RUM an an PI OSP 440 1N.10 el INN NN NW 1.11 13.103 17013 171142 He lab lee Ill II ZS IMO Mail MIX 1301 171 11.12l NM Weft ILI 4 111.193 WAN 110.447 NA 1191 WO UM MI} 11,3 NY 3221 1191 M0, 1422 Ur 1452 NS LIM IMO UM WO We MN H. N.R Ha KS Ha NV WA UM Pe 3" MI 50 1. 0.337' eel PT AI6 Pao vAM 0200 0.932 1911 5171 101 100 0.334) GLOM IS 1211 4•44 17 AO ISIS INS 1074 OTh 01113 If 11 1,321 2131 SIM 1144 1321 101 3171 4.121 23)3 4134 1110 INO lee SM 311 1217 I/113 9011 17 4321 21N NI 414 Sat 511/ 3341 1214 12b4 I27/: 13% GOT e4A KA NN 7704 474 114 111 414 lb 3 b SI. IN • 4 734 331 234 It 42/ 404 N27 MN 1044 NA 034 1110 11 )6 UM tea 044 -C 431 I4 IM Na 1.156 0C IIM ▪ Pt 3304 N▪ Y 1140 4" xw 14▪ 27 655 C Isitel CHI .4•40414. 110000203117010 0,244 7414 4.4.2xnamn Cal 1 1143 I No 1100.4042.4015.40 A• MI :OIL € 41114. 000 44441003/47 S 004 Serpa *006..414. 204 444021140147.041412 1:440• ut. 575 140 410 44•1004 14044011/41111•2 Wane • 1201044 ▪ 044440110111 is Cr 1: 0014•10404110 01470nal 4.14404% W40.6 haeiedwitene ea frown al. S. 1.0c e nahva -0175044.4.401' MehaN44•1/44017MOIC41C1 0,07'74 nnan.4 mar (041141141? b $3 011(32.121314free 0 erelaSN 530.W.stanera ettitben Nottlab 4.111 11b &gear &Ste 811a one COTWORY NN 44901417 01144 01. Odin Remus. 1)0 .394 4 Maw an mh, • se Cie caw*, vanaetweeet Vappainan 0:40,4 Wad %N. MS hen "anti 04 bibrallas 00rols.4.01,0444•2•343. C4 M OM .1141. 0.001 1442441404/O 4~$100 7451. V 14 3.40)44 7.'044, rout P kW.% 11.4000•10•411 NS. G. Cesubb14143 %Oa % Pawl 03414144 Aiwa LbIYMII Rowe 41y.4nr1146) brow bowed be Pe PS Cl Iterearelre 3231 3014 4134 sl 340 141 411 403 7AN 7.% IM 64.? 4130 non 1430 25% 21% 26A 01% 2415% 27 II *Pa 1101% 1921 5$121 3115 31111E 71% ett.de era 4.104 Page 120 Deutsche Bank Securities Inc. EFTA01097774 Figure 101: Commodity Price Scenario Analysis: Antero Resources Sensitivity Based on Bloomberg Consensus -‹ I F FY 15E. EDITOR (S WAIL% Gas :S. I $1.71 $225 $2.75 12.25 WOO 9302 $097 SSW SIM $40.0 1934 vas, 51.124 $1218 $00.0 11.067 11.162 ELM. $1.351 5175 11.101 $1.313 51.446 µ26 51.276 01.40$ 51.540 $4.75 61370 51.502 SI 316 FY 15E FCF (S Million) hf‘ILY !Ins S 51,75 $225 $2.7$ $126 53.71 893.0 01.64/0 (41.529) 414491 161 2101 111250) MOS (51.526) (11.437) 111.3471 1112581 151.188) WOO (11.401) 111.315) 1112251 91./381 151.018) $425 01.201) 011.079) 11857) $425 121.111/ 11989) 11867) A n a a F WOO $1.199 $1.291 $1389 $1.483 $700 $1.332 61.427 $I.521 $1.616 $1470 11.711 PAM 51105 11.767 $1.510 WWI 0).20 (SLIGO) 11.1031 91.0141 ($5251 570.0 01.1111) ($1.071) it$12) IMO2i (3603) 035) (PM) (1)46) MN) re' WOO 51.464 $1.559 51.651 61.718 $900 $1.597 $1.692 SI.726 11681 $1.543 51.976 51.538 32070 12.032 52.165 1600 0 1.0391 MO) iM6O) 3770 16811 SSA ($817) (1.927) It739I (16181 C41691 (1591) 04701 11.912) 11310) FY 16E EBITDA IS 012112on) FY 16E FCF (5 Minion: 111.1F X Gas :S. in 1,-i NYSIF X Co 11.75 112.15 1275 6.25 µ75 1425 µ7S $1.75 $225 1275 15.25 13.75 µ2S µ75 1300 1442 $1.039 11234 51.433 $1.630 11.827 $2.024 890.0 (11.460) (11.274) ($1.0681 119Oi' (17151 05291 (1313) 6600 51.038 $1.235 $1•32 01.629 $11326 60023 52.220 $400 (51.29)) (51.091) isoz) anal (15321 ($346) 1$160) 150.0 $1.231 VA* $1 .527 $1.824 $2021 S2218 12.415 $50.0 ($1.094) ($901) 11722) 112451 ($3491 (1163) $23 0 $60.0 11.428 $1.625 11.822 $2019 $2216 12413 52.610 $00.0 lath 0725) 10539) 153621 (MS) $20 $206 $70.0 11.624 11.821 $2.018 12215 $2.412 12609 $2.1)36 $704 0.728) (SS42) ($356) 111691 117 1203 236 $100 51.819 $2.016 $2213 $2.410 $2.907 $2.004 $3.90, $10.0 ($5451 0359) ($02) 5200 1306 $572 $103.0 60014 $2.211 52.4841 $2.666 $2102 12.999 $3.196 $90.0 ($3621 (SIM $11 $197 $383 $569 $756 FY 15E Nei Leverage Ey 15E Debt Proved Reserves (Slade) I,/\1L) Gat S 'Ic m:fer 5175 $2.24 SSW 91.11 $3.75 $425 $4.75 $1.75 $2.21 7$ $125 6.71 0 25 64.75 MA 3.7x 335 3.0* 2.7. 2.5x 23x 22x $300 SO.? SO 7 06 SO 6 9)1 $0.6 $0.6 $10.0 321 29x 27. 2.11 23: 2Ix 201 550.0 $0.6 SO 6 SO 6 SO 6 $0.6 $0.6 $0.6 $60.0 2/3x 213x 243 2.24 2.1x IS 124 $50.0 $0.6 10.6 $06 $06 506 $0.6 $0.6 SOSO 25x 23x 21x 2.01 LW IS 1.78 O $00.0 $0.6 SO 6 $06 $06 506 10.6 00.5 MO 221 21x 2.Ox LW 1.7x Eh 1.0x $700 $0.6 SO 6 SO 6 SO 6 $0.6 50.5 $0.5 $80.0 20* 19x 1.1x .J. 161 Lk 1.5x $80.0 $0.6 SO 6 10 6 10 5 $0.5 $0.5 $0.5 $90.0 1.9x 18x 1.7x IS. 15x 1.4x 161 190.0 6,6 506 SO 5 SO 5 10.5 $0.5 00.5 FY 16E Nel Leverage FY 16E Debt Proved Reserves IS MC lel tinIF X Ow fel NYISEX O8.(1Yncle) 51.7$ $225 9275 1;125 6.75 stm $4.75 51,75 6225 1275 63.25 63.75 LI 130.0 49x 40. 3.3x 2.9. 2.11 23x 2Ox $'0.0 W.8 SO 8 $08 50 7 507 SO 7 to 6 MOO 410X 3.311 29x 2.5. 2311 201 1.9x $400 10.8 00.8 $07 $07 W.? $0.6 tO 6 $50.0 34x 2911 26. 2.3x 2Ox 791 1.7x $300 $0.6 SO 7 SO 7 SO? $0.6 10.6 $03 0 $60.0 291 25* 2.3x 2.01 I is 1.71 1.6x 0 $60.0 $0.7 SO 7 SO 7 506 30.6 10.3 $03 070.0 25x 23x 2Ox IS. 1.71 1391 1.5x 170.0 5O,7 $06 106 106 915 10.5 tO 5 1110.0 231 2Ox 1.9x 1.7. Ikx 15.1 1.4x MO $0.6 $06 106 105 915 10.5 64 $90.0 2 ix 1.9( Os 1.51 1.5x 1.4x 1.3x $900 $0.6 SO 6 SOS 505 10.5 $0.4 $04 af AI &tiro, Owesetre any. JAWS g f Awe CP toe me Ionrwrog inerpOWS nor coati/ by 067100 7o By forocass fesproneeKr Okarbppanstemrt 4srynyees onSr 041010. 041.8aSCX04ANCIPELM$44.4414.4010.0A.SPLDVARCIT,914.51WEN.$44 Was 77 Wood ni4X a EFTA01097775 13 January 2015 HY Corporate Credit Energy 'Figure 102: Bonanza Creek Financial Summary 623%6 140143021 140 2.6. 140044 9331 03 11044 44.0-.944 400.:.1.924. 00401 1.e0.33 15.441 1.040 . 1.33 Il 0 ..;c 10 131 la 162 <4 ' 122 11.6046,31.090.36 .13062 • GM 00.4140.1)14 .44 14413444403 t6 126 131 162 146 22. 422 044.1 co, 10 35 36 44 St It 76 129 000 6070 440 11-03 Ill PI Oh Ill (ill 16416016441030 27 14 100 335 IN 251 ODA at 41 14 100 10 taa 47 44 40 34 44 10 1001 $ 11 40 037 140 41140 17 31 26 31 126 119 030116106413/ at 24 Mil 0% IWO 00444 287116410700 a• 18 132 113 • 1144142403 15 N 43 35 181401174100•91140.111.1 IN 236 N1 316 961 P5 165 LT 116110014 044 .11441664 IN 214 313 327 815 346 NI 165 NIPS 0000 4041 9422 10513 1741 9141 10219 $726 9112 9418 14.441 044 We 040 6411410 400 3M 315 472 401 115 420 28) an 11400413.0444 Dos 300464.440464434440444 006 2.114 204 3326 3/300 3037 430 1402 5173 1073 2644401041644 Fro 110:0 442 416 aN 333 3200 530 374 433 Den gin/ 014446ci 11004 11118 1317 1370 1.333 5.363 2111 1610 1164440 rnoieStero 17.41 1216 130 170 031 0054 8140 NN 0 4 06 031 6 010414 0406. 7t 94 101 14 S7 •04 205 353 0604 10. Prie 4.90 4101 66.14 4135 P.M 011 4103 6110 600 6174 rad tEl.to INKIcef 1233 11134 1143 1.78 137, 2441 4163 308 5.113 06 60 46.4 46‘40 41.1. 870 7330 8771 7068 4421 051 0711 054 14001464 4 00460 44•41As tow Pb Prat 0444 147211 5738 147.72 670$ 17041 15121 6061 15132 4{815 1410044 11411 11216 1016 M/0 11619 114.30 SK i7 10 10 PUS 04.4 1410 Nm 1744 0010 MAI 044 1826 49 27 181 504.1. 0313 132/33 0031 12130 0443 43.15 1007 004 1214 046/04 4.40.4 04.13 0132 523.70 5033 117.14 0312 MAI Pam 132.0 Woo: 54.0 1130 00.0 $336 1.454 3344 021 1A ars 30643 140.4 In ADZI 0136 0 10 00.17 4027 0027 4027 1230 PIN 12110 3. mug 14201 04, r.:4431 61024 1300 1033 12020 $093 PON 51100 Lou OM 4(414 15615 14344 $5117 O2$ 144.17 19 1 146.17 44815 EM 040rIo.: (84262 4014610 53 $4 97 90 144 an 165 UI C4444 164.6 lc* 111 69 t• In/Cy. 0441 112•1 11311 0571 111•4 pin) aug 14541 044.0 heiVortni 000 23 1111 13 a 93 340 A0140 1.31 04445.06 141 011 III 1413 71 IMO 1104 00 047 Wag 13441 Cnnia.31844.0 1 1 10 17 a 50 3 13 142.63041.64 021 0 42/ 05 1112) 040 2003.4 /046 400403144140004$110 101 021 116 W 4111 0 42/ 060 0 1 4 4441 1141.140 wPOs 46 17 NI 431 37 13 4 1111 • 5001400 4 Cese 340 330 309 181 434 KO 503 • Cam 0064 WO 106 01331 33 40 0001 466001 136044 0440 0003144.3101,4411410.60 611E 103% 52% 619 70% 30% 59% NA 79% 6000 , 004 6516 M% 79% 996 9)% 444 61% NA 74% 1.1110801. Sumo 002200 40344.1ta 03100 Praell 44118 5244. 2124 9353 1144 7.574 734 53.14 210 re 54e Oat 41111174 42. • • • 1104 1104 Ir • 0461321400[ I th 14 I a 1.4 2a 20 1.14 1414060034101131.1128 6666 1634 1730 17.21 2721 11144 11169 1215 1310 014060.0 0000401101410 4901 112.51 0420 SIM 116.12 MOP 126.11 Ian 600 1600 C0614 1.104.44 6460p 003 Apt004.8.46.6904 1.0141001141 0411 1.q63101 1400.016401 4020 34 173%1r 4144•811 175%59 %40'13 000 TO01 001 IN 14.30.104 13 421 MI. 0030 0:46 44.411Irinlll LOS 20 11•40000184 (11.011194 /4104410104/ Tam 401414032% MI 917 1/31 1.422 44. 144 124 .4 sw 060000 SOu • At DAR*11 8011•01C0166.144 460 Cataparez 1440.110: (1404.3CtopEn414 4: 0141 ,e 060n Oot er4 41,4 a 234 44043 (COOS n re 60046 141NON/r 26.40466 {fICWISIO. 44 am Ill 044.0 Sinn be 6046 assann <64 41c. 4 ay. or ter NW, 114611441444 4411160)634 n .404.4 A404.40 tato ea 4. ^00.4 +(^ 9.05 n 644 moo 1.437160 6.104 .40. 4040. 14100 PO 44.4464 000.331421 040013414140194/1400 ICs 9304 0_ It460•100601 40461110144.100 (0.10 06001401414144 1011911 I✓CI R(40, 44 41644 119 33 63 27% NY SO 373% 191% 05 10 46 70 2004E 200 PK 11.134246 41% 1141.1163 Page 122 Deutsche Bank Securities Inc. EFTA01097776 I Figure 103: Commodity Price Scenario Analysis: Bonanza Creek Sensitivity Based on Bloomberg Cr—en, t.Yr.IL $W Oat',* Ir<Icl $231 $300 $155 $167 /40.0 1213 $225 MA 1270 5283 VW $328 $34! $700 $352 $3111 SW $417 5429 $50.0 1464 1477 51.75 61.25 IMO 157 $70 $40.0 1129 $142 MA 6261 5213 100.0 $272 $21)5 $700 1344 5356 WA 1395 84011 WM $457 5469 NYMEX Gas I ) 11.75 1225 130.0 769 69. MO 539 4.9* 100.0 030 38* 2M0 3.1x 30* 170.0 26x 25x WA 224 22x MA 201 19. NYNEX Gas (S'mcle) 11.7$ $225 $300 24.1* 19.5.. $400 99:4 88x $00.0 56* 53* $OSO 36* 36* 170.0 2.7x 25x 180.0 221 20x WO 1.7x 1.6x FY 15EEPITIM (S NYMEX Gas IS7nele) FY ISE FCF (S Million) $2.75 $180 $238 $295 $353 $410 $442 $4.49 0.2$ $190 $250 $300 Sat6 $419 $454 $952 San $204 1262 $319 9377 5431 9466 $513 14.25 $215 $273 $331 $358 $442 5477 1624 $475 $226 1285 5.343 5401 $454 540 1637 $1.7$ $30.0 (12591 140.0 ($3111 $500 (2531 $00 (421($ 170.0 ($1711 MA (11421 $800 (11031 $226 (1248) ($301) 0253) CM%) (1160) 0132) 143Z $2.7$ 11338) 1290) 11242) 11104) 11150$ $121) :$142) 113.26 an7 11279 11231 11153 313 15110 1571 $33.75 ma 02701 (62221 0124( 45150( 01011 0611 14.26 (1108) (1M) (112) ($164) ($120) (8811 (1621 14.75 11267) 11250) 11202) 1350 IMO 1181) 1141) FY 16E EEIITOA (S FY 16E FCF (≤ NYMEX 0, rid 1275 1x25 $3.75 MIS µ75 $1.75 $225 1275 13.15 63.75 SOS 14.75 183 $95 $108 $121 $133 130.0 05245: 12391 i12614) 112071 CMS) (1183) IWO) $154 $167 $180 $192 5205 $•110 11175) 0162) MISCO 111371 ($MN (1112) 1100) $226 5238 1251 $254 1276 3%0 (6105I 1192) 11791 an 15541 ($421 429) $207 $310 $323 6335 £346 $50.0 0341 1122) 1$9) 54 $16 $20 $41 1310 1382 1394 5407 5419 170.0 536 $48 161 173 $86 198 1111 8420 1433 $44.6 5458 $471 $W 885 198 1111 $123 $136 $148 1161 saa $494 $507 $520 $532 MO $1•5 $156 2171 $1113 1198 1203 1221 FY 15E Nel Leverage Iv 15E Debt Proved Reserves (S rilde) MAW'S firs :5 idle) 13.25 6175 WS 61.75 $1.75 $225 8275 1.25 53.75 14.25 $4.75 6.4. SI. 5.5* 52x 19* $30.0 $2.8 1.2.8 52 7 52 7 521 62.7 92.7 4.6x 4.44 Aix 1* 37x 10-0 $2.7 32.7 326 326 52.6 $2.6 US 3..6x 3.44 124 al: 30* 3504 12.5 225 126 $25 52.5 52.5 $24 2.9x 2.7. 26 264 24x 160.0 52.5 $2.4 124 124 52.4 52.3 $23 24x 2.14 224 216 20x 170.0 524 23 123 123 23 52.2 22 21* 2* 2* 19x 1 ex SW 52.3 23 122 122 522 52.2 $21 10. 104 1h 1.7x fix $800 £2.2 122 52 1 S21 RI 521 $2.1 FY 16E Net Leverage FY 16E Debt Proved Reserves (SMCle) 331E X On (SThcle) 275 225 $3.75 $4.75 61.75 $225 2 53.75 $425 14.75 16.2. 13A1 1209 106x 9.4x 190.0 53.3 13.3 $32 $31 21 53.0 $30 7.9x 7.24 6.6), 689 5.6x 1•30 53.0 $30 129 129 128 $2.8 $2.7 4.8* 4.64 424 4 Ox 37* $500 52.0 2.1 $27 126 $2.5 12.5 $24 33x 3.14 2.* 28x 26* $800 52.5 $24 $24 $23 $23 2.2 $2.2 24x 2.14 2.1* 2075 1.9x 170.0 52.2 122 121 121 120 52.0 /LS Eh 'Si 1.71 1.6x 1.5x SODA 52.0 12.0 11.9 $1.9 11.9 51.9 SI.S atlx 1.4 1* 1.2* 1.2* 1800 51.9 $1.9 21.9 $18 $1.9 $1.8 $1.9 Sarre Otreso/e Sank tooning Mona LP for re anomengoanyvvernotcovarecla ON?M0 W. me orecopeskgWel Meta E'Ea,n0ng constants. avower or* AAWEICAASCO.CXCVANG.S.E0SCA(MNRUPO.atIPEPVAROSE.SA(81VGEN.SAUPLAtiLW end WPX M 3 4236 6 - 5 EFTA01097777 13 January 2015 HY Corporate Credit Energy 'Figure 104: Concho Resources Financial Summary - ASS 4111114 IC- VC 1410 /01.Uranne ZS lInft Sa MP 001014414.1410 04941 Mann INN OP unman now WINN, AS 041.1.1419.1404) 040 S. 0.101/ KIM 42% Vienna SIP IN446•914 111,041/1.4010 i0.4 0 10274 14411. tan. /1:1)4v0Z09 0441.441100044, 14.01 JO i 0 MDDI Malta Ca 43? CO M Vf 2322 1.146 INS 1230 O141.1.14.0.2 La .11.010 Za.11.411•044 IP Nona CCI 402 C41 7t4 Al 9W 1.14 19L 2930 M•443 Cos IN IU In IN IN 174 401 IA ON Meal 14.114311•• , 0)0 On M ta. 0101:02).11007.4 IAN 101 Ina ON NA 271 916 DI 217 97 NO VI 613 173 PIT a6 91 .29 717 1a It) 10 79 IN iiiren 44 4 44 0474.00001 110 10$ I I I 01404,41011241014 in 1171 0 IN 0021 (04I 0 7I la no can...nos. 11 A 21 20 It III II 4I III 00 11 fa etwz N la IV It 4/2 744. n em n 22 M 9 IN 201 29 MI I4 11400444 20 171401001)141.10004 ISIS IAN INS We INS 100 IASI lali )100 trUCI)1794flesPer IAN inn 1/93 IMO 1574 1)4 In& It UN Ann WTI PIN )0011 44413 914I MN 43213 019 NO UN ft 44 7714 004111004•1000.04•40421 244 3114 473 414 IN 411 442 301 LC Ke0.0101.0 Dile CliforreN142/ACe•OlIikaTirtli 1114 1000 10.40. 210•4 22418 Y•14 alit 113 AIM ID•Den00. C. AD. 144 0 SAS SO SU 170 4u S72 70 Cat 1/1 errteg CM Civsou .21.10 SAO DSO SAD 1230 C10 2.1514 14571 ICAO 21.01 1101.4 Od AD 0411 , MY oea 0024 410 Mit NH 44 It 100 SOD Tat C.4.00 001.04•404. Sal EIS • $410 14411 Man 27620 3711 a us T.140.4.00 0.01.7.0/070 110 1191 1113 103 1141 1114 110 IUD Tout 44.4.11.01411114:41 UM 710 700 eel& 111.0 744 4454 11 MN na•fla. • Opeollini Mateletpoulas rnalten 107.) SIN PIN fan MN MO INJ4 OHM 0101 .04 040 SUN 1142% 130 1127* 1.13 41. 4012 StrIe SUSI 1101 GSA SLIM SIDI 13 44 /AID DA LIU 4327 S31) 1401 0016 1220 WY 1341 0433 fan 43437 41434 230.9 /2111 44040 item fah DIM 01114 17..9 VW 127.71 13443 NOM 10722 111.063 144 SIX 1414 SSW OP 4471 033 10 ICS I.0 03 440 II 0 40 SAO 110 1240 1210 NIP 111.111 111.1 110 12144 3,44, (ID 01•40 04 4170 lila 1111 41912 1410 100 11224 417.17 11224 hUtstlotea 1444$ MID NIS $4421 $4127 sass inn 14334 114414 70.4 CNA Pow 010091.1.14.94 447 41 471 444 122 ISIS 1241 IDS 042 Cent 0404 ( 7/ Oh OD 01 Oh nie la 111 lot*Cso• 001 MN POI 0111 1700 Pan 001 1/00 PAN Cup. n ha Neece.)C..) 4 6 9 a 4741 Ph 0 41 01 A 0. Can Aaata 4.0a 0/ 0 4,44 (IM PIP 041 1 771 SSW 00 lints D. CTIPIll.., tan, 44 a 44 21 42 10 n ea in tn. C nr An. 0)1 01 Oil OA PM 071 141 0 740 Cla 000 a .4044 0 0 04 432 IS 4404•00400441.44/444144 410 0 0 11 0 0 1 Pill 041 1/01 NM/ ON 00•01•010 091 40ner C.v. flan 1an "my C.41 Crowto10410 44.00 Sae 1020 .0.2•4 GIN 4, 4•Jil Cron ( 1144.9119141. Pr% akr6*. hnir .9.4 Conan ran) :Le ic Own 131110.1 00440194.4 110.44100,241 0040p01 Ass. tient pear•nos 0••••••ii Mow,. anti 0 0 214 40 LIN Pala 390 3,17• 2211 327* IAN 2707 1340 249 30 241. 97. ▪ 434 0▪ 4 024 att 22. ▪ 22. MU 1703 Inn 019 mai 0004.400.001.0I4 vs tOm er•00 04. 04040 Gra 40404 0.1,•mes U.4 IkInow ZVI 25 la:aortae 2tor alam Oa at2 Ian vet... ass. ma.= 944.00.040, San / On Oa DO bans Loa Ma 044400 404 400304.44 en. Masc. 444 navvy $44 044440 taw zat fa, O19044 01•4 CVCD1104 11•00014111121 713160141700 Sayre* Dfaiaaldr Balk COmperly an. 7244 to COI INI 994 1990 041 11020 74. 1.74 30% 30 104 40 130 2471 101 1194 DA 17 111114 $22.4 Crew 0440014D OtennennanContatonana Kat swain 40.100 22 140/41/0044140100 14 10*On. anseargard gronant 44 .1 N. noniron n NUN 400 44 0 400.4.0401040010 0010.9 4,4,22 wt4 )0 tot ol area are W 14T 191. MA INN 444 19 014 024 44 23. 324 23* 224 1431 14 42 17Z VITr ;I. w,... Rare" • Nal Bann 00024 IACLOM 111329 7:11270 V2205 a 7 aCt Gad ata•Flaati )0531 4).140 IQ R2 Cr 30% 33% 1 04402 00~1 4,17. 41% mat Lama..., try Roplatatat Cant ZY CC% 77 23 4,1% arts iliatanat Peet) inatraaket am aim a a ear NW zonc 074 MO 4 00. 74,14 1 11. Ifte 102 E s Va•ke SARI. Dann IllaD. T•a• Pet. Page 124 Deutsche Bank Securities Inc. EFTA01097778 'Figure 105: Commodity Price Scenario Analysis: Concho Resources Sensitivity Based on Bloomberg Consensus FY 15E FUIT DA iSVif.o1. N. //LX Gas $135 3225 32.75 PIS 8175 14.25 $4.75 UME% Ga: 6,10 31.75 91.25 82-75 13.75 54.25 14.75 O M 1.300 51,90 SI 346 31.377 $1,47 SIA98 $1845 $1.814 MO 5714 14621 (9550) (Mal ift411 113031 (3s21) e 140/3 $1.405 15459 31,659 $I.5150 11.810 $1.861 $1.711 esSg ,W13) (935» (S3451 46181 114841 (54521 r) MA 11.321 $1.8/2 S1.822 $1.1/2 11,23 $1714 $1124 $39.3 $575, MN) (8611) (14791 44471 114151 (59n) F O MA 170.0 11534 sue 11.746 $1.797 stre :lyre $1,147 SIAM 81.436 11.948 8114 $1.999 $1.937 $2489 O au smo es474) (1443) (14101 14751 4371 nie) ($37e (13411 tien 153461 152771 (o14) (ss) 1 $800 11269 $1.910 $1.950 $2.011 12.051 $2.112 $2.1151 5800 15541 15136) (S2104) ($2/21 t$2401 1520e ($116) Ut/ 51.972 $21122 taon en, 12.174 $2224 $2275 »Io leaw 1126)) (S2376 (62031 [SUD 111361 (5106) FY 11,E FUIT DA if; Mil on FY ILE FCF bu' IIYME X Gas (S. mckl 6IYMEX 6,, I 11 75 tl 52.75 13.25 53.75 $425 84.75 51.75 32.23 t2.75 $125 $3.75 84.25 14.75 $300 sn2 51642 Sun $1,201 11273 $1.143 $1.413 130.0 $1 455) 4129» 111.3401 4 12821 (112231 111.11)) 4 1.1103 140.0 $1197 $1 24 $1.337 $1.407 11.473 $1147 $1.617 5A00 41.316) t11.25e) 111.2011 411.1431 (11A131 i$1.023) (MO) $50.0 51.401 $1.471 $1.541 $1.611 51 31 $1.751 $1121 $50.0 41.176) 1$1.119) 01.0511 015041 119481 'Seth eu» tua $1.35 $1.873 $1.745 $1.518 SIX« $1.9e6 $2.0215 560.0 isto3n 15879) MU) (11641 45071 117491 08021 170.0 51110 $1.830 $1.910 $2.020 $2.090 $2360 52230 I$eSeJ tee) WU) (Pei ii657) 11601 (Ma $80.0 5014 t2084 52.15.1 5.224 12.231 12284 12_435 5600 ane 6100) (3643) 45851 115281 134701 0413/ $9,10 $22111 12288 $2353 S2.423 $2.493 12589 12.839 sus tuai t$581) (ree) 6 4 61 n3;181 112111 (3273) FY 15E 142I Lcvcrayc FY 15E Debl Provecl Reserve tS MtfeI hi //LX Gas 'S NCIALX ! I, 6,10 $135 4.25 $2.75 13.15 8175 34.25 84.75 51.75 52.9 $2.75 $3.25 51.75 14.25 SAIS $30.0 3.4 Sit 3,I* 3.0. 2.9. 2.01 2.7x OMO $1.5 11.5 11.5 SIA S14 SE& SIA 1400 3.1* 3412 28* 27* 24 2.5x 2.4x SM 51.5 SIA SIA SIA $1.4 31.4 SIA $800 2.114 2.7A 28* 254 2.4 211 2h 850.0 51.4 IDA SIA SIA SIA SIA SIA $800 Sb 2.5x 2Ax 23* St 221 2.1x 980.0 51.4 MA SIA SIA SIA SIA SIS 170.0 St 2h 22x 21* 2.1* 2.41t IStt SM/ MA MA SIA SIA $19 11.3 SIS $80.0 St 2.1* 2.1x 20. 1.2* It I.3) MD 11.4 11.3 SI.3 SI.3 $19 51.3 SIS $90.0 St St I ax 18. 1.8. 1.71 St MS $1.3 81.3 $1.3 SIS $1.3 81.3 SIS 6E FY 16E 0801 Proved Reser Mc HYMEX Ges *ci< NYMEx Gas (Seule, 31.75 33.15 $2.75 13.15 53.75 14.25 4 11.75 53.2i 52.75 $115 537$ 425 4.75 5300 60. SSa SI* 47. At 4.1x 3.fx SS] .0 51 .6 51 .6 S16 SIS SIS SIS $IS /40.0 48. 4Ax 4.12 19* 34 3.4x 3.2t 5,77.0 SIS SIS SIS 115 SIS $1,5 SIS 1300 3.9. 3.73 9Sx 32* 3.1m St 2.7x MA $IS US SIS SIS $1S 31.4 SIA $800 3.3. 3.1* 20% 28* 2.8* 2.5x 2.1t 169.0 $IS SIS SIS SIA $1.4 31.4 SIA 3.709 1.8., 2.7x 2Sx 24* 225 2.1x 2.ca MO SIS SIA SIA SIA $1.4 31.4 SIA $00.0 1.4, 2.3x 22x 21x 2.11t 1.91 1 Au $80.0 11.4 SIA SIA SIA $1.4 31.4 SIS $90.0 St lat I t 1.8* 1.73 1 t 800.0 11.4 SIA SIA $13 $19 SI, SIS FY 15E FCF &un» oteet Stekettnenf-tilM00 LA For lbOovéner con:unes na conseil by DB Ment« Me Ancra ',Paume Mea &bot g romettut ons, MUAI f tAMICS1.0(CeFANOAFF{LTSCAMYRJAPO.OMPEPVAROSE.SA(SEVGENSµTFIA(RW end MX -o w EFTA01097779 13 January 2015 HY Corporate Credit Energy 'Figure 106: Diamondback Energy Financial Summary 1111% if Pt: 4.1 1.1111110044 411310.0m 1.1111111104144444411141011 WT • ends µW 'wee «44 suai 113 10610 Km Itta0134 Nagt15.11041001101. Pnatu 4Ow nog *SI I Ono 0 11,0.0.0 .11444 O 6.1a0 Cots. µWO Ciaon PC. 051.1011110 15011011.4. µe , µ061 leta (salmi Kang) µM 1090.0041144.01141101140 10. (salmi WW low 144611 51.µ02q larneis I Opleasfi Vagin M OM CAA 00 O0410401mso Ong 37 no 11011.441/ or • o PIO ma4 04 naugo11° Fs Coe It.µ: 101061,01.16001 Cow/ 14.0 Cm. taiongat Orniunes Cams • 000 011.04044100.041 Cam.. Omit Paw' Coergri TOY OM O110 014010.4.4p00/0 Cs. a021µe 0 OM sag sae got tang 011.6041 O44 0/0114, Ca mt. oAap. he anRu4e lafill•afn V0I 0.µ4 91µ02o Rana Gnat 0.0.019 Red 1405135,0i Po00n040/ LIU 0041111.014.1 110041(40100100 C4441/ 44311•010 ra faco(401/10.0 C444010 04X FM04al0µMlt Co441100 Arun* /113.101 pg140•043 00.10011104046 µOw 140 IS U7 34 MO 66 tl a 4 47 101 111 Mt 110563 10711) SIM 1302 11241 150 /2111 Ian 4241 3447 127.17 .44 161 024 14 offi 11 Ia Ha NO 1 IS 6119 OSP 0211 340 619 Pia 3100 1321 1.14 at 13101 11101 04$2 INS 01 114 40 10 0 vgt 10 31 47 41 14 141 ill 161 1472 PTO 0211 we tall Nµ 106 1103 103 17144 POP 11151 1574 721)1 0117 11511 IMP 11111 102 i PS IW alti 01101 0344 0 0541 0 3110 11171 $2.2 12444 0713 14 Tr 1460214629 PIO 115.42 1542 =It 1306 1011 11011 INx IN UL (1034 014 19 (414 110 041 ill) 04/ 0141 141) 040 041 140 XS In 246 02 300 1421 11111 11111 SIM 12414 13444 Mal 11131 344 141 MOH OHM (01 11.301 .44 13 1%041 041 044 NOS S 37 II IP 44 140 MO NI NO 60 411 630 41 IN a Il 13 101 31 $61.0 1104 Ax mat 5076 SILO $4.10 11.10 Wf IS) a It 4 00 N 0131 1263 PIMP 11 103 0137 111.0 11141 112AS 4 Nt Inn $11 Sc. 16111 111 12321 1601 "Ill 17474 1/2176 NM 1.110 1321C 110 11324 1141.? 14124 191 101 I 114 10 (go 241% 20% 01% as 1114 04 014 34 202 W Ox 1110 12/1 13.111 51333 Can 14•1001310046 Pme1s130001.1060140 2016 /pa PenauCrodi PS. Lau 9151 Nom 41 110 1I0 MM. 1,4,10•1 DNA) ArMYT %le .."), M fi••••••ANOF 10g Somme NM MS% bow 100 011 fat ;I” IN T41111:444 00 Mm 140 Ming 1414ral 10Yn 214 Mats 3210 4.110 (OF 04."2 Nun %11ocotornmas EMOOINOvna watt 136b04.10 &VA 1Lµ(µµ55 0401 M Oa alen• 00-• 44sµu4 14% IP% MT Oat 11523 11111 "7% Wi% 142e 62a • 0 10a am Imo 1105 I'll% IM It g 1102 • 010/0/000•19416m 0.1064 En01.1100,480 04001011.04400.01093 a,/ 001 Tea pormaram105110 0 PS.. 424t ago Prow tea MO Aupo Egg 1.4 mono barg Vagarm a .3577 NO Pa 4 a 0010.012 iY aeon( rm.laa mass ma IVa Peng papas 011/0 me PS: • AM Xt. Ilealgesa s.uµn.n.0 nom. 1111110104110 411• 400 ao • oats... I an.a. log (asap .0 am. pao 1611% INA IM Igo 1031 11447 0% 04 1314 2 2 214 111% 116% 41% Ora Ora 10µl 11.111 tau 3514 u 214 Mfi 0761E g 10.0.0t %a 015 .11 Sara, 05011Y0s. Plat Cmagasma145.1 • Gal • 00.41130.0•00 Amon LO P001 Amon PaseraIM W 11 Amon Paseralmitt• BO hie 1344•4**1•0. 61D1µ NAP 43110 14% 34% Is ISOM 4217a 6.109 .5*, IN 47% 130a 3(11% 41.11 12/0 23146 WISE x%1.33 .1411. 101 1 13 • 1466 Page 126 Deutsche Bank Securities Inc. EFTA01097780 mI Figure 107: Commodity Price Scenario Analysis: Diamondback Energy Sensitivity Based on Bloomberg Comte') FY 15E EEITDA (S Million) “as 5. $1.75 $222 3273 $3.25 µ75 KM µ75 $30.0 $144 $147 $150 $153 3156 $159 $142 $40.0 $209 $212 $215 $218 $221 $224 $227 830.0 $275 $278 $240 WM 3286 $269 3292 MO $340 $343 $344 $349 3352 $354 $357 $70.0 5405 $493 $411 5414 $417 $420 UM $80.0 All $473 $478 $479 $482 fAaS $486 $90.0 $536 $539 $342 $545 S547 $550 $513 FY 16E EIBITDA (S Million) t0.1LX “as 's $1.73 12.13 $175 4225 $2.71 $425 $4.75 $30.0 $119 $W $126 $121 $131 $134 $137 $•0.0 $165 $191 MN $197 ROO $203 $206 $50.0 525.4 $261 3264 1263 $259 5272 $275 $800 5327 $323 $333 3216 3339 5342 $384 $700 $395 OP) $402 $405 $406 $411 $414 $80.0 $458 $40) $471 $474 $177 $403 $90.0 5535 6523 $541 3544 3547 $589 $552 FY 15E Nei Leverage NYMFX I tr'Clel $1.75 $223 8275 $3.25 $175 Mn µ75 020 50x 49* 4.8. 4.74 4.54 4.5x 4.44 $40.0 34 214 3.14 3.04 3.04 294 2h $50241 224 224 2.14 2.14 2.14 21x 204 $50.0 15x 1.134 1.84 I.114 IS* 1.5x 1.54 $70.0 14 124 Eh I.2d 1.24 1.1x 1.14 $430.0 11a4 0.At 0.9.4 0.9.4 0.24 0534 094 $90.0 07x 074 074 07. 0.74 0.7* 074 FY 16E Net Leverage inklEX Gas IS me lel $1.75 $2 2s $375 $375 $3.13 S423 $4.73 $90.0 87x 65. 604 13.1. 5.9x 581 664 $40.0 344 354 144 3.1. 3.14 34 114 $500 214 Zix 204 2.0.4 Ltd lax 1.9x $600 13x 134 1.24 1.24 124 1.1x In $700 074 074 074 0.74 0.h 06x 06* $80.0 034 0.34 034 0.1. 0.14 014 0.34 $90.0 01x 0.1x 0.1x 0.40 0434 0.03 014 =I FY I5E FCF (S Million) N v \ IL(( Gas ISITICIO) $1.75 $225 $3.25 $3.75 $4.72 54.75 $30.0 32081 32031 ($201) 111981 3351 (MTh IMO) $404 ($1481 ($145) 3142) 31401 ($1371 ($135) 3132) $50.0 C$1191 Oh ($M) µ92f ($791 ($761 374) MAO ($311 ($259 ($26) $23) µ211 ($161 316) $70.0 $27 $30 $32 $35 $37 $40 $43 $(10.0 $85 $88 $93 $93 $96 $98 $101 $90.0 $144 $146 $149 S•bl $154 $156 $159 FY 16E FCF (5 Million) NOOILY. Gat 51.7$ $223 $2.75 S225 83.71 $4.25 $4.75 $30.0 3671 300 an) 1$78) µMI ($731 ($70) $40.0 µl61 if15) ($13) µ1q µ2I ($41 Ito $50.0 $50 $53 355 359 $32 $85 $88 f00.0 $119 $122 $125 $128 $131 $134 $135 $70.0 $IN $191 $194 3196 $199 $202 $205 $(02.0 $257 $259 $262 $265 $266 $271 $274 $90.0 $325 $328 $331 6134 6137 $340 $343 FY 15E DebtProved Reserves (S lade) NYMEX Gas 301410 M. $225 57-75 53.15 33.75 PM µ75 $300 $1.9 fi 9 $19 S1.9 51.9 $1.9 $1.9 $400 $1.6 $1.7 $1.7 31.7 $1.7 $1.7 $1.7 $500 $1.5 $1.6 $1.6 $1.0 31.4 $1.5 $1.5 $40.0 $1.4 $1.4 $1.4 51.4 MA $1.4 $14 $70.0 $1.3 $13 $13 51.3 33.9 $1.3 $12 SO $1.2 $12 512 512 33.2 $1.2 $12 $439.0 $1.2 $12 $1.2 $1.2 $1.2 $1.2 $12 FY 16E DebtProved Reserves ($ MC le) NYMEX Gas (Stacie) 73 5773 5273 3725 an 54 is 7813 $30.0 $2.1 $2.1 $21 $21 32.0 $2.0 $20 $40.0 $1.8 $1.8 51.7 51.7 $1.7 $1.7 $1.7 $500 $1.4 $14 51.4 51.4 MA $1.4 $14 $800 $1.2 $12 $1.2 $12 31.2 $1.2 $12 $704 $1.2 $12 $1.2 $12 $1.2 $1.2 $12 MO $1.2 $12 $12 512 33.2 $1.2 $12 190.0 $1.2 $12 $12 512 33.2 $1.2 $12 Sauce Davao. BMA abootAg Meat. LP Fa Me fafaxong cAspanas not consist ay laa Kph 31442 OA fawns foams rata abotabAy cons ems nods 0* APAEPERARAICESOC4FANOSPWSCASIASYSIAPC40ASFE.PVAROSCSASAGElanfTFVµIEW.A1 War EFTA01097781 13 January 2015 HY Corporate Credit Energy IFigure 108: EP Energy Financial Summary 4.549 ta law bai IWO To /alai la, .0 KO laYeCt. Lion'( 0144 Y. fn itiya Ian a4 04 •10 In n IL it/ In 19 9 P I MO IAN tit 91. nl IA ark M. t it 413 eY 00 al II1A M1O OA 15 Z eed 15 4.1 Iln Wen alamai N. RS NI PO a la UN WI WID•aita kada In a a. a a its4 le se 4ralinlatallaia ma. Ial a TAIG 1.40 a LW 0000 feee mye 4111 125 TAIT 15 ISM 10 00 ▪ Iill MI C05.44 fl u 05 1115 0•5 0714. all Ms 040 1/15 *52 HA .v55551 0* 15 all MSS 15 Ca 1,40 VAT AO 51.0405 tau" 5rir 00 5%044 1st 315 AM IV 0 IP Ali Mit :45 144103 SAM 056 5054 55 54040 Ma 05 as, 15 ISO Ale 544 Sala 54 5.5•555 45. 15 104 45 95 45 ••••• 54 *0 00 0.5•100 !SW. Me n.,, l0120 Mb 60,5 .1.144 SA a WM tit 9 5a 50.5.. 504 5 IP OA IPA IS 53/0 l.2.0 105 ISA 5054 45•0110 in Me t o: at 0.4 514 IT5 14 /54 0011 VISTII54554000) 445 alal WA WS 50 55 sot tell Abil 045550•14•055 .301 WS WI $105 005 WA 574 MS 010 15••••••05401095045 155•45 Ilse In MO ••••• 55 MN In ISM an Lao Ca Sop 3110, 1119 4115 Mtn 105 59 AA' Mn IN. 1:4 9 RI. 153 0 5 21 Ran Mat PM ow MIN 54 In III a 545 MN Int i• 0 MA 011 I* la 4454055 05 ma MY Ills 5* 05 la 545, 59 na lissi 55 SA! In/ Id * lob STA 05 iii 5 /a we 00. • ota fan VIA PA 00 00 54 54 104 003 7..• .0 400500p 0 0 0 A 15 0 0 AM M4 0 5 15 5 5 55 IYtl 5.1 0.0 tln W W W fits In 0540•154A 0,54•44505 4,557445 5141.444 :409 41545rwet 064 445054 0411050 •••••4 04051550 a at m al 110 dea 1 IWO OM • 4e la M ON 14 Of. Ivento 45 IA) II TA lye. Alma IAe Y. Cs Ron lisiteN Is II- M6 nL 8M A/ VP 0 1,00 4 Ilb 5 01 WA .32b On, 0.80. II TI aoanaUrVaa arra Sance7 OftextaLbat *WWII/ C IP NT /La 15 1•10 IM ISA IAA IN/ 4481 awl till 45 460) SAN '$1 lm 41.• 009 OIl 49) IAA 1,01 • NIA nimI till El lA 7. II OM OM OK nmt Mn i • &JD 015 a ZW) 05 00. int II* A. P WS IP, 5 aaa a a/a 35 lb 5 its 5 i is So lb al lb lb 5 RA PM 05 1103 514 MOT 3% 4 b 1 44 4 b Ib Sn 95 ISIS4 lb 1 b I 95 atl le lm •SiTa by*. a ea 4.5 In lb YM aM in PM fn lb Ilk Is 5 lb la 5 19 lb PS 31.14 WO O 5 WI MST lb 0.0 1 lb P. P4.55 • M. ea Fre 09 15 i In it) 14A AS IM Os t4504.0451 IT AO Oit N :e. 0.• • lea ‘ 5.00•01100 315 55 Sas.. 041 4.5 • 44•554 MA IM 05. 024.1431 anvialle eta We am Page 128 Deutsche Bank Securities Inc. EFTA01097782 I c P -o 1C) a> ID FY 15E FCF (6 Million) $2.75 an Figure 109: Commodity Price Scenario Analysis: FY 15E EBITDA (5 Million) hYsILX Gas 5 51.71 $220 5275 1/225 EP Energy Sensitivity Based on Bloomberg O- isn—rur HYSJE X Gaz I Smale) $3.75 $425 14.75 S).73 $223 14.75 $425 M an 693.0 2/.606 $1.563 $1.510 $1.677 $1574 $1.571 $1.569 630.0 113901 ($351) 11393) 12394 )1396) ($397) ISM/ $40.0 $1.998 $1.596 $1.593 61590 $1587 $1.584 $1.581 $40.0 ($3231 ($374) 11376) 113771 (1379) ($390) 113827 $A $1.611 $1.1101 $1205 $1.603 $1.600 $1.937 11.934 $60.0 ($356) ($357) 113595 )$360 <53621 ISM/ 11365/ $500 26624 $1.621 $1.618 $1.616 $1113 2/110 SI»? 6800 (33391 ($3•3) 123423 12313 <41451 ($346) 11324) 570.0 2663? $1.631 $1.631 $1629 $1126 $1.623 $1.020 57tio (£3221 ($123) i$32))) 15126 ($13261 ($129) I/331/ $80.0 $1.650 $1.147 $1.44 SI 541 $1139 $1.836 $1.533 MO 4395) ($306) )1938/ i $309 (53)11 ($312) 1$312/ $ILO $1.652 $1.649 $1616 $1 613 SI 640 $1.837 $1.635 6930 ($2911 ($2218 , 5338 :SMI (13031 (5310 11306) FY 16E E8ITOA (5 Million) FY 16E FCF Million: llYsiEl( GaS a r 1 NYSIFX G ,cmCl..i 11.75 62.2S 1275 µ25 µ75 $425 µ75 $1.75 622$ 1275 µ25 $13.75 $4.15 µ75 $30.0 51 .153 SI IN) 6IXO 61227 $1252 $1.277 51.301 $43.0 117 537 $57 $77 $36 $116 1136 $40,0 $1 212 $50.0 $1.270 11 265 $1.231 11261 61.319 $1215 $1344 $1310 $1366 21.333 21.393 $1.350 $1.417 $40.0 $66 $50.0 1116 626 nst 1108 $156 $126 $175 $146 $195 $165 $215 $116 $234 $80.0 $1.328 $1.352 $1.377 $1.402 $1.426 $1.451 $1.476 690.0 $165 1184 1204 1224 1244 $2211 $254 670.0 $1.396 $1.410 $1.435 $1.450 $1.484 $1.509 $1.534 1700 5214 1234 $753 $273 1253 5313 $333 $221.0 $1.439 $1.424 $1.428 $1513 $1.598 21.563 $1.587 $1)z) $259 $279 5299 5319 5339 5356 $376 190.0 21.483 $1.507 $1,372 $1657 $1161 21.095 $1.631 693.0 $295 1315 $5)1 5355 5374 $3394 $414 FY ISE Nil Lover,qo FY 15E Debt Ploved Flo6erve6 Mc 'e IFYLILX 62.5 Tri ISYMLX Gas ;5-rncico $1.75 $2.20 $275 1/1.25 5271 $425 $4.73 61.71 $223 $275 1/225 $3.75 5435 75 630.0 3ox 302 302 3.02 302 302 302 690.0 $l 1 fl 6 $15 $15 51.5 $1,5 $15 $400 392 302 3.02 3.02 3214 3.0x 302 $.40.0 51 4 $14 SI 4 $1.4 $14 SIA 11,4 $50.0 29x 29x 3.02 3.02 3214 3.0x 302 $500 SI 4 SI 4 $1l 4 61.4 $14 SIA 11A 500.0 292 29/ 2.92 2.92 295 292 263 $140 si 4 41 114 $1.4 $1.4 51A $14 570.0 292 292 2.92 2.92 292 292 263 670.0 $1,4 614 $14 $1.4 214 51.4 $14 $80.0 23x 24 292 2.92 2.% 292 292 $80.0 51.4 11.4 $1.4 61.4 $1.4 $1.4 11A $80.0 282 28x 28x 2.84 2.% 292 292 SKO SIA 11A 61.4 61.4 $14 51.4 51.4 FY 16E NEO leversqo FY 16E Debt Plootni Reserve: l 5 bleie) NY kl EX Gas ;5. mc! NYME X Gas (5 mde/ 11.75 1225 $275 1355 µ75 6425 µ7$ 51.75 $225 5575 5325 53.71 $4 $4. $30.0 414 402 19s. 3.9) 315 31)) 3110 1300 $1.4 11.4 $l 4 51-4 $1.4 $1.4 $1.4 $40.0 34x 36* 3.7* 3.6. 3.5s 3.4x 3.4x 1100 51.4 $1.4 $14 $1.4 $1.4 51.4 $1.4 $50.0 362 362 3.6* 3.4, 3.34 3.34 3.2)c 5550 51.4 $14 $14 51.4 51.4 51A $1.4 650.0 3.4( 34x 33.2 3.24 312 3.12 3.02 660.0 SIA 11A $14 $1.4 SIA SIA 11.4 $70.0 321 322 3.1x 3.04 3.Coc 292 292 670.0 SIA 114 $1.4 $13 51.3 Sli 113 $NO 3.12 3.01) 2.9, 2.4 20. 262 272 $80.0 51.3 $1,3 523 $1.3 533 533 $13 $90.0 3//a 292 2.6. 2.6. 2.73 2.73 2.6* PLO 51.3 $15 $1.3 $1.3 533 533 $13 Santa 0,~B4nk. Ilbombs g Sn"» LP Fa Ole tonssrng c4~ts ro:~ ty D8 »ø »24 ø. :Mr ~Nes 14u~ Jaa Blasornbny ~ei as~ mins On?: AMEFf&AASCSACY4FAINIEPE.1130411NRIAP00.4$PCPVAROSESA<SEVGENSMIPItel.72W WPX EFTA01097783 13 January 2015 HY Corporate Credit Energy 'Figure 110: Lightstream Resources Financial Summary Iwo 4414.1044144 Oa PP sawn Ca0/440442-4011 •pet s trotaa 1411 raverve 14: s4 c . • 4441$4 04.. AAP 40 4 944704 .40144 41 al Pt IP 00 1Y4 40 0440 In i..1 la 144 IN 40 410 .10 P447.4.404.0144 teal a a al 0 * 0041,004 San fa YS Otl i4 al AI ul Ill la w OP r 4i DI 101 ...nal a a a is a la MI al 11.1 4.44.4.44 II 0 0 IP 44 In III 41a y.4.0. HI M. 44 WI 11 71 al 0 441044441$ 0 IP) 414 04 04 MI 10 la ,14.4.144.44. 4 0a0 Ill V lel Pall IS II al r4.0 a 4 14 P 0 41.144.04.• SI OM II R . 04.0 11 a nail O14401411•0114/044 DO *I f4 71I 10 70 W N1 OM WPM 31441104/44 4 1 1.4% 144 11104 PC/2/4 11474 PIM PPR 11171$ Dl It 110101 414 0 0 4.<44 1141 UM Oa II. H. Pa 145 031 134 .44.04.144.0.4. ....• 60 •to....., 1.0 310 4. Ka 4.115 44,1 4.A WM 11401 14171 4/4 es N. C.n 40 VP. PO 41303 St* WO *a PO RP RP 4.01Creakreke I Walt JAI LSI 11441 1115 S.W 41414 1110 1144/ f1 44 007410.4 MR 1134.0 Rl4 T6 tern Pt 414 fat3/ bp.. 40440 Pep 41$ MIA 1074 D3R PM A011 443 14 14 14 • 1.0444140 Pi 1447 11110 100 3410 1110 4444 WY 1111.14 Ian rue Lyrae! 004444 441 4,14 4,14 PM 310 3411 034 I1490 14/44 04 44444 Pend 44.41 17410 10/0!) 1$ 74 MP PIP NM P•47 PIP Itateua0440.44 Ni400.4•004 "flats 1111* 111.4 $130 11140 14.14 11144 111.1% 11W 44. 0/4 14 10 041 144 PO PP 1411 011 PD 444 PP PP 1117 PT PR 110 P4 PP :CIA 101 1111 SIP UPI 1171 11 17 141 4 1415 04041444/4 141.7 VIP SIP RP P 44 00 0.0 RP 440 VIP VIP 101 11 4. 11/1 II 41 OP SIM Fere CIe 0 ea 4 4 47 1170 /02 $141 It 4 0 0 1143 014 44 Ir." rat.0.444,44,. Wit Ikkak 0.0 ILLI UM $444 140 4414.440/47 111.17O Fla PIP $11 *2: 0 1104 37014 PIA PIP /40410.444•1004141734 4,...,„ 17111 MY lilla tea MAI $27211 MSS MAI .40 PP 441 IMP RS 0 MC 10111 RS P 0211 R444 MI PP PP 141? 1437 Mit SIN PP :CIA PISS 0334 um illa WY 1.0 ile Igtal 1$ 044144/4 Ilea 411.13 RI A QM 31613 WM 04.111 VIP O 4 0 PA MI UP WV NP UM PN PSI 44. 4" 14044010 OLIO la* MN WY WU 1.1114 13411 1134 14 ma 0 .040 44 01 3211. Wale PIA 1114 014 004 1/44 WA 4430/7474 Ma V.4 ITIII. PIM fall MN MP VP Om Can *a 1409/4.0100104 IN 13.4 PG I* 2u 40 DI :444.0.14.0 10•10•114 0 141 0 111 0141 01/ 04 0111 1740 107111044.040 POE A 31 (411 17 tol 0 4 11 44 44444 0 0011440 4 41 CPI MI 4 SO 00 4 44•0144 COP 00444 13 R R II 17 ID 60 Csa clest P D 0 1I IN 4 741 OR Ain 0.4.0444e.cars44 a 2 III IS 444 712 et we *A 51ag act Oen 04144444.0.4144 11 le * /0/ OP PI PA MI I/41 PI 07I W 41 41 144 • W 4 44444044 ••••••••• Law t P444 1444414441 am, 34% .3% 1% 3% 44 4% 04 ▪ 7444 044 II% 4% 4% 04 0% 4% ▪ 44x4 twits 1410.0 vs 14014 401000114044 aT 1.1. 44 14 114 ala 44 434 3.44,44**111:4X IS* IS* Ifs 10 la lit tat 44 NeVtitaz 14 2T 204 34 II. 34 34 ...m Nt4(04C.At 10 2T 217 24 10 5A 314 74 00t.000.00.0 0070s. 1101 100) Pi 4 $1741 1414 I HIM 1101 104 re0•44144447/404.44 4114 14.11 COP RIP MP IP PP PI N WO ROM 14.4.4.44004.2.0144 ..,..)0,4N hawse. As alt en, 'wane, 044 OPS I MalMIO %011(05(4414004.57 4441400/1004 4.1.14%$.44.4.1404.4421114 Ike Olen 444100.1 'MI INDS IA* 1114•1414-414 40•11411 111 M• DOIOQ^ 1W • 0.a4. emu e• • 114 14LP1pf44444M 344•4144 440014 lm 140 1174 Swear Oeverest Sm.! Conway ano 044.404444.4 P4 40 4 0444 0404 us .444 n couplet eeetatetwes 14.4441 444 $2' 44.4.44.0.40-h7 4 1,4 04 0444 4444 4. tetelefle e • (04114404 ltekAp See.oweee 444,1 22 maw. 4 to 47-00 440/ • onea01ellSter 0404•10•40.4 O 4.4444 0 4410 11.4444 04040044 10 4404 IPPip 144 U 31% 441044144 37% )44 4014 IP 44440.11/41 401 34 1711 (PO 13141 74111 41% II/1 .110 0/ 117.114 4045 Page 130 Deutsche Bank Securities Inc. EFTA01097784 Figure 111: Commodity Price Scenario Analysis: Lightstream Resources Sensitivity Based on Bloomberg Consensus Mn Mn $500 $00.0 $70.0 4600 4600 Mn Mn $50.0 Mn $70.0 $90.0 $20.0 Mn Mn Mn 170.0 MCA Mn Mn 220.0 166.0 $70.0 MOS Mn FY 15E El3110A IS Mahon) AYSILYbas Rmvlcl 11.75 SUS $141 1149 $196 $232 $240 $2?? $215 $323 $333 $368 $376 $436 1444 FY 16EEMMA (S Mahon) 001LX (4as S ma41 SOS $15 $65 $156 $226 $296 $366 $436 11.75 12+4 Orr 18x 554 464 39% 3 lx SOS $23 $93 $234 $374 5444 Ipl $2.25 11.4x 64x 66.. 544 394 454 NYNEX Gas IS =IC) II 7$ 1145x 1924 10.3% 1354 504 38% 3.04 $223 74.8. 1724 1.84 66. 46x 174 294 1275 1157 1202 $248 $293 $335 $331 $412 13.25 1166 1210 $255 1301 $316 $392 $4(0 1275 $31 $101 1172 $242 $312 $452 $51.25 $38 5109 Si,, 5250 $320 1390 1460 FY 15E (141 Leverage SIM 10.7. AIR 0.4x 524 4.34 3.74 2.9( 13.25 102: 7,7. 6,1. 4.2. 3.6. 2.9. FY 16E Nel Leverage $273 55.3. +6.3. 124 4.64 3.134 264 $125 4364 15/1. 02. 6.0. 4.5$ 3.5$ 2.04 1335 $172 $210 $263 $309 $354 5400 $462 171 SO $117 1107 1258 $320 $389 $4611 2175 9.6x 144 55.< A.% 4 1x 35x 264 2.1.7$ 36.1x 133x 111. 4.45 3.45 2.74 Mn $160 $226 $317 $362 1406 94/6 5425 185 1125 1195 1266 $336 5406 $476 Mn 921 21x 52x 4.7X 4.0x 3.4x 27x Mn ash 1297 79x 164 421 26x PIS 5191 5231 $279 $325 5370 ISIS $464 $4.75 243 $133 $203 1274 1314 1414 1484 $05 66. 55. 154 324 324 2 7. 423 36.0 12.14 714 6.4x 4.14 124 254 0 = Mn Mn MAO Mn 4600 Mn 9400 Mn Mn Mn SAO MGD $90.0 $300 $400 1500 MAO $70.0 1104 150.0 60.1LX Gas IN 0047 G SERI ($2121 (5144( (1761 1181 930 $126 $198 FY I SE FCF (S lAtIlion, el SUS 1143) $100 11641 022) $19 121 $121 13.25 $1401 me) $56) MI5) 12? $69 $13? IV 16E FCF (5 Million) ,lei $225 MOD (1136) 094) $66 SIM 2.206 32.75 1$196) 1$125) 0601 SS $76 1144 5214 $1.25 141691 l$1201 ($523 116 504 $152 1222 13.75 ($13b (1201 4491 1371 135 $76 $145 $3.71 01811 ($1121 (441 $24 $82 $160 1230 FY 15E Debt Proved Reserves (51.1cfel NYMEX Gas (2Mcle) 1.7s $2.8 $2.7 52.6 12.5 12.4 12.4 1.2 $225 $2.r 128 $28 $2.5 $24 $23 $22 $28 12 $26 125 124 123 $22 25 $2? $2? $26 $25 14 123 $22 $3.75 $2.7 $2.6 $2.6 125 $24 123 1.2 FY 16E Debi. Proved Reserves (SEIC10) NYMEX Gas isYncie) $90.0 $2.9 140.0 $2.7 $500 VA $600 $2.5 MAO $2.4 SOO 12.3 $33.0 12.1 1223 $2 a $2.7 136 $25 $24 133 13.1 52 n $26 527 526 $25 $21 523 121 $1 25 $20 527 $26 $25 $24 123 121 Source (usts 8194 @bombers finance LP for Me tatoxent toot:Anis au a st v A 1 ty 00 3596 YAM the tortsiststpuna cots EISAAhAlt any: A ftAftlICEI.C20,FAMSEPSLTSCAVAHRIAMOASPEPVAROSSSA(Sal2EALSA(17W72W and SPX 75. $2 $2.7 126 1.5 1.3 12.2 12.1 SOS ($124) 0831 45411 $1 $43 184 1152 M25 ($173) (11031 120 132 1100 1166 2235 MM 12.7 52.6 52.5 12.5 $2.4 12.3 1.1 24 iS $2.6 $2.7 $2.5 12.4 13 $2.2 $2.0 SOS ($117) ($75) 1$331 $9 150 192 1100 14.75 ities) Or) 11281 140 1406 $176 5246 $4.73 12.7 $26 $25 124 123 123 $21 24 25 $2.2 525 125 $24 $23 122 12A EFTA01097785 13 January 2015 HY Corporate Credit Energy 'Figure 112: Magnum Hunter Resources Financial Summary 44114941144443010 4004440031144 11040 12 ...... Pan 41• Cia. Nal. • Ca. Mariam I : 44 44•4 as .zantou 4. —4. 14 WA to pat 8 0* 44 .4 AT 4444 coot...sta.. 01 4 4444 a paiTheoaaa.: 011. r..... , h. h„...., Oa -10031011 4444 . NI <00041 oraeolideoi 44 Anna OW ▪ 4 la 0.•01 4444 AIM 4441444 444144T 44440 0404141 144011a. Atslo 44404 44MI 40414.444014141 440 44 14 444 464444•441104 44444 4014101444 40414414 Taal 144 141 44 4444 414141/644 4ll 01 In 414 0111 10 443 .44 .44 la -gs 4 qx I>. 444404 4414 •4444444 0444 .40 06A 0440 law 041 ant 0104 40 141 1 Nava..4 ns• owe nal CiOntoa ma imam, a 44 01 0441 0* 04144 3044 4 14 00 4444•<4.4444 Oa 114 3 I/ 1444 04 0341 040 ) 101. 41 0.04 1404 444 a /ma kip 441 so an 1831 Pa 1040 144 414 113011 414 sr 114.111 1.0166 14111 1414 1410 pa POLIO ran 114144 44 On 4 4 44 444404 CO CV AAA so 144 40044 a 41/ OS as ••••• 010414.• ‘ara 41'.4049 cassaasoa Caro 4•44440 11% I/ LTV 44 444 4444 0n4. law 14441 gonau.Con mon t. 4..... ram. It It 443444114. IA 94 40 0 414 44 444 he weal:011144a 41 44 7.4..1.41.4_44111 MN III* >cam Nakao a......a a5.1 44 4414 LIV 4414 446444444444 4041 044014 440 nn 4440044 A 444 canto 4(41 4* wart...memo 114 Ill ••• u 441 434 Ma/ 1144) sou 4414 sl.4 <Oa CO In 111 al 10 70 7. PA I: .2 .2 • - 74 In 4 a 42 a is a IR It, • A 11 1/ 014 li 41 II 1* .* or ula • 61 4 in II A 44 0 IA 160 TA OM . 14 all in Me Ph 646 444 IA 441 Kt 4 ASS 1111 471 414 a 410 111 am 40 411 Mn AO 110 an 1.00 474 en IMO I44 14 4233 14% 41.40 414 4433 am on MA an 1014 1141 PM PI% 111 034 1411 la RaIl 041 II N 0423 sus UM 411.0 .10111 474 1140 IOU 144 NI 40 11143 Pal P14 WA_ IPA /PA In 4114411 14427 Ian 1161.41 A 41 1 144 . 14 1 411 1•41 111Th all 041 04 01 OA 444 MA 04 3 V A 114 AI PM 194I IWO 04 1 11411 44 • a 43 PI 04, AA Tet NG PC 14 44 PI 01 40 4• al 44% WI 411 0% A% 0% 44 II% 11 410 41 1 As 14a •14 IS It la 424 474 4 III 414 444 444 Pin 114/4 043 PM 11414 II/11 an pia I Tr I fa IA II 114 10 4 7.74 7.S• A a tiflaMOIM 144 II II? 114 1.11 2Al 171; Al 111 <.A 00 III. 4334 14433 SPAS 111.11 ISI.S5 Atl AL 11424 Sal 1416. a.41 1104 .1716 PP sun 14114 sm sr 411 WO 0/14 444 414 44.44 P7S4 11141 .44 III 44 Pa VMS Om 6 01 0 0411 MT Mn I 34 0 IIN or, ° I t 4 44 00 4M 04 4/ IP CS CO 14/ AP 04 WI OS AA 14% AA 101 not 14 34 14 At It - 4.1 40 34* 41.14 it •004 Inn suit PIM 14101 WS 4114 7.0 41.• 1.4 ba I4 IA 3341 44 174 414 114 444 0.40444004 a 40444 a 101. C. • 144 4441•4 14040•14•4 40141.4444441 34 III .44'44 44 114 in <14/ 4410464.04444 4411 414 OA 0644 410 444144 04•44 /a OT Icar Pam.. Ye MI 14•410•441444-44i 1•00.1.1... ?vino...am tan 414 OunCaul•I 14•110444 4444444444 t. vas Gto a.. tans (44144444 as Cs 4444144 444401141404 404 46 away 044444444 hviiek• 1.1.0"...130014 ,•{05.10011SAIINIS Pra oven., Vara "so...ma infrova. W Pal rt as a Mu ea. en nee a. m. MS BS 44 444 339 00, is II1 .... =:=35: :r sar.17.... =f 1 ..„,...v.r.... "L P "*='!" -ar . 27 Wei * r win men '.". I4 111 414 10 IN O SOYA. I:WAWA. &WA Compeer elto) <'a 4104441w. 4.14- 144 44/4 Zia 1.711 4.1! 444 32/44 4/44 3.44 l4 04% C. 404 1444.4004/ 1/ 11 IS 44446444 444 41 ON% >bw IT 444 444444 OA PI 1414 a 334 FYN Amin. Orel .141 Page 132 Deutsche Bank Securities Inc. EFTA01097786 Deutsche Bank Securities Inc. Figure 113: Commodity Price Scenario Analysis: Magnum Hunter Resources Sensitivity Based on Bloomberg Consensus Cirri= FY 15E.E8ITIM (S Biillionl 925.113 Gas :3 rr≤fei 11.75 12.25 1275 13.25 13.18 $425 14.15 $30.0 ($71 210 127 543 $4.0 577 193 1400 115 131 $48 565 $82 me 1115 $500 153 $71) $55 $103 $120 1137 180.0 166 173 $91 $1041 $125 514l 1116 170.0 579 196 $113 1130 $146 $163 1180 $80.0 $39 1116 1133 5149 $166 $183 2199 San $119 1135 1153 1169 $156 1293 1219 FY ISE [BIT DA 11.112)69 9.0.ILY. Gas m:121 11.11 123$ $275 10.36 $3.15 1421 $4.16 13943 4291 1151 $17 $39 $51 RH $105 $40.0 )181 116 539 $51 $53 $105 1127 150.0 SIC 132 140 582 1105 $127 2149 1400 137 $60 Pa 1101 1126 $148 1171 1704 659 1911 $ICO 5128 $146 5170 1192 WOO $50 $102 $121 $146 $169 $193 3213 $800 1103 $122 1145 1167 $189 1211 1220 FY 15E 1171 lever2ge 11.75 SUS SiX 13.25 13.75 5435 84.15 $30.0 22954 156.9a 57.8) 35.12 25.12 1952 15.82 $40.0 10144 466. 31.42 2314 1124 1492 12.6. $50.0 41.74 2193. 21.32 1369 14.14 120. 10.6. NOS 2874 19.112 113.04 13.44 115* 10.02 8244 179.0 185.2 15.12 12.7. ilk 94:. 126.2 7.7a SA 14.64 12.4a 10.72 9.4. 11214 7.5x 6.82 $800 1202 1042 922 6.2. 7 42 674 612 FY 16E Net Leverage NYNEX Gas IS metal $1.75 $2.25 $275 $125 13.11 N. 21 $4.2$ 190.0 •7322 361.62 • 11274 4612 302* 217a 168a MO 34122 116.2a 48.6. 3032 2134 118a 13.6a $50.0 12011s 49.12 30.4* 21.14, 18.84 138a 11.3a $00.0 49.64 30.62 21.62 14112 131* 11 32 962 1/0.0 92.34 21.92 16.1) 1389 111* 96x 632 180.0 22.34 17.14 13.72 11.44 9.74 844 712 190.0 17.34 13.94 11.S2 9.84 8.44 7.44 6.52 Saavoe Oa x54 p Arleta, LP for Me Ubveng CIXPOILIPAS 0 0 in FY ISE FG1i$ lAtIlton M NYSILY. Gas ≤ ≤≤)121 $1.75 $225 1275 13.25 13.25 $4.29 54.71 PO. (54101 ($396) 12382) 1536 (23531 (4339) 43/51 MO (6386) 43721 ORR 4314 03301 8916) (1301) 150.0 MIR (6UI) (1131) 12320 ($3061 C5292) ($27S) $120.0 113391 (1321) 1$311) 10.6 S12021 CRUD ($251) 170.0 ($3181 ($30) 111290) 11226 02521 OUP 11233 $80.0 ($3021 (1288) 12274) 3260 02151 42221 IS2M 120.0 ($2011 (12711 1121?) 4213 (091 ( 2I5) 4201) FY 16E FCF i5. IAlllio0'. NYVILX Gas 2 m:121 $I.7$ $338 $2.75 $9.26 $3.7$ $425 70 1304 MOH 4300) inn) al (12071 155276) (1256) MO 224601 (13ap) 434) $29 02751 ($251) ($233) $50.0 t13381 ($3171 42911 S275 9$2541 ($233) (2212) MO ($3171 02961 12275) LTA (U921 02111 12190) 110.0 112951 (2274) (1254) 1532 (UM ($103) ($199) $90.0 MN 4254) ($233) $211 01901 (5169) alio $90.0 ($254) 0233/ 12212) 2191 01701 41/191 (1123) FY 15E Debt Proved Reserve: /3 LIcrel NYME X Gas Umcle) $225 $275 25 13.75 $4.15 SUS $300 529 129 $29 $29 52.9 $2.9 12.9 $400 12.9 529 529 529 $2.9 12.9 $2.9 5500 12.9 12.9 529 529 ne 12.9 $2.9 00.0 12.9 22.9 529 529 $2.9 $2.9 $2.9 170.0 12.9 22.9 529 529 $2.9 $2.9 $2.9 1000 12.9 22.9 529 529 $2.9 $2.9 $2.9 1800 12.9 029 529 529 $2t 9 $2.9 $29 FY 16E Debt. Proved Reserves (GMCle) MIX% Gas 'Sync's) $1.73 221 1275 33.23 /3.71 3423 ]5 230.0 53 0 130 530 130 $30 $3.0 130 140.0 $3.0 130 $30 230 53.0 23.0 230 1910 $3.0 130 $30 $3.0 110 $3.0 130 $60.0 $3.0 $3.0 $3.0 $30 $30 $3.0 $3.0 1700 $3.0 $3.0 $3.0 $30 $30 13.0 $3.0 183.0 53.0 $3.0 $3.0 230 230 $3.0 130 1910 53.0 $3.0 $3.0 230 230 $3.0 130 ANC ed by D8 MO ACC( It* &YAWS XP w4* lots &00,W9 coniersta 411/0•Itt.014K AMFPBM88CEao,FANOIPELTSCA(lAYAMPO.OASPEPVAROSESA(SEVGEAL SA(TALMIEW &SHP% EFTA01097787 13 January 2015 HY Corporate Credit Energy 'Figure 114: Midstates Petroleum Financial Summary 1.6****.66 ,66•1*****6 now* )616* .....4.3mappon lawns** 4434 • ...inn 1•• • Sarb *Raw •••• Wm* MaliEMMMENIIIMMIIMMEMICIMMIEEMIMEM 1=====Eil ._. nr .7.44 43 4: 4: if Pa 0 si If) 0 Oil 101 0 MI WI 01 00 III 110 01 110 In * IP W O 47 11 ZI In 0 W SP a, *4 to a W II A 04 01 n 3% 5 17 11 7 a 14 n 0 1 0 S 4P A If heel IP P11 0 40 O 0 1 I '3 It 0.4 Po 0 A 0441 11 I 410 0.10 0 0 I 113 IN 11411 014 I* n 77 gni 11 (1% 00 IP COMM manOon A 110 W 40 Cl at M PT TWWWW44•401••••• W 04 4111 04 10 ID *I OF/W*4 Ilan IMP PAM WOM WA Wll 11.11 W II In owl.. an SAW IMO WS Mn 1444 WC 1431 MN NM LW 1.40.4WCW 4.0.'.4.41414. OW is WA 44.11 WO MK *II 4011 IOW owe WCW.30./1 UR MM 1414 OM WI 1110 MP 1011 .4•• CT anew 41w. I.IA Wn 1M) 147/4 1.111 1010 7314 u 010* 11.0i MK IOW VOA W.M WA IWO WO/ 7014 *1 mown A0.0,Wp AI PR Pi C4 MM 2101 CO (IT wen Nit nn. M 0177 3414 inn WM am 1110 PI* 3414 WI (0 µNon i1/4 4.4.4..ral WU 47)14 .11441 47U1 11147 PM API 54147 SISK W I 14.33 VTR PP an On 111.41 PIM nn cas µNon i1/4 4.4.4.4.44 WO 1W 5410 14:4 MO il PI 2717 301 4.111 WO 1034 10.14 WM 11111 let* Pan 11,411 14&7! • Omen* W04 in NI• as SON an OOP an an PM PIM • N Com 41 .0 On II TI PR I'S 410 II es RN 11 SW an UP 411 1440 1471 Mn WO 11* OP 00 PP 1427 PM PP 051 MP 052 P. WOO) I)* 1111 100 1341 LW PP 144 11.44 ova 114 Inn 1117 Ha 1141 110 140 *LS II' M 404 Wet PO PPP RP OP PP RP 041 11.4.1 P. 400 tan la * LW an 11 71 Lt 00•40114 PM 1410 PM 0* PM SOP 100 IT 4.04•••1•11•014410044 inn in* W.00 NW PM MP POP WM Wag Wil 440. 010 an 11441 MA 1521 *JO WC 11114 10 Sp 1414 14.44 140 LIIII 1414 PLO 0144 1411 WA Pn CRP WM In* MO PIN 11431 P. Pow SOP 10.41. 11741 IWO 10.20 1170 Ian 04.44. $14 41 MI 11111 11124 11744 WM 11114 P77 ISM PP n i •40• Ins* WM PTV ROM RIP ROM 0024 RIM ROM CON MOM II • Inf• Infa nail 4 WM WNW) 4'6,14 WM PP PD MI.R WA W4 M4M MI Cab 6***.•••• tan ▪ 00.00.1000wM • Ann OW'S «4411 ibm n Cnow4 WOW. 041 Cam OW OW MN 01111 wep.seintewnwil 34 MI II A ........b.t. Da stk. 04 in n 60 •6116 666.4•1** *0 Po CO a OWN* bb 00 1 la 010 NO IM II0 110 la IP CI ft 117 PT O 0 0 On 01.1 MO •101 1101 1413 1,4 0111 101 Con /Ivo .01•••141•9 Mow (.6•066.• 666** 4 *Iv 66 6* 661 .10.ne *Wm Asa Ow. P 44.441. 004• 40410. 4 WC in 711. ION IP% II% 04. 174 104. 04. I. ea • SW 00t nr. lin 111. Irn 04 111. INN IP 6.11544400 01/1 0 701 15411 OM OW 04.1 • 934 on 1011 We MA 444 Pi OW -I ON PH nu FAO (VII 11 a 14 • 401 401 >14 DO 101 1114 • IRO • 110) WS) 1.04 1A1 1W 7104 1/0 1141 00 WI / 0 33 124 14 PO ISO in 0 4 1664*1119* )0 , 66 0**0"06 , 04466•046666166 t6**6•16•101)0•60 46* QO • A T0 n 57y a. I1131. Pin PAT) 0404444$0.444 la WOW 040 WSW* WI 144 14441nwennti WOW IMINE 11•003 OW bow. 140 AM 111 1041•03.44 4444 an NM P. 10.4.4500 On 7114 34 NW *WW1 rt) WI OW WOW 114▪ 3 ilmniwnia Won Mw CR tftwiennem 11441043 lin 04•4•11100114 10 NA *a Sarni Dana* Sara Conway crua II. I 0. 414 44 10.3 10143 Ib 0314 W0 IN Ill 0.- OM TA 114 16 1.I. 1047 • IWO Inn • lard Certert Pm/6T n C*66 Www MN ppm* • 11 •••• 6 06** 616:6•6* pi• Am* c64), 6.66)***ortne 6.464,601 166.60,6•661. CO* 5•41.0 ,00 663. 46.6.66666.6 II 060666•06661.6664.6.1* 44.4www.A.44.4www04444 mom nave Na. ant are new 6*•**111.666 01 »I 6666.66 Ma!).**. IA ,t, fN Ca* It I 4* an In SIM MOS 1040 47.114 111% 74 10 1110. POP 410% 114. 100 014. IA* Page 134 Deutsche Bank Securities Inc. EFTA01097788 Figure 115: Commodity Price Scenario Analysis: Midstates Petroleum Sensitivity Based on Bloomberg Consensus FY 15E EISITOA (S. Million) NYMLX Gas's $41.16 UM 1275 $3.25 53.75 130.0 $165 $173 $181 $190 3(99 $40.0 $210 1218 1227 $235 1243 150 0 $255 5264 5272 SRO 5209 560.0 $301 $3/9 $31? ECG $334 $70.0 5346 5356 5363 $371 $379 $(40.0 5392 $.403 5403 14•7 1425 ROO 1437 $445 $454 $467 $470 NOOLX Gas ,S mal $2.23 $304 $82 $91 $40.0 $13$ $150 $50.0 $195 5206 MO 5251 5262 5704 $307 5919 580.0 $363 5325 190.0 1419 $431 NYMF' 51.75 12.25 Si $3.25 13.75 1435 $30.0 1294 122* is& Isla 1064 1914 $40.0 9114 96* 414 0.* 044 6 Ix $10.0 0* 774 7.44 7.74 7.0s 624 $80.0 854 6.44 434 8.11 5.% Slx $70.0 5.7x 554 5.44 5.24 5.14 50(4 580.0 451( 4.84 47* 4.54 4.44 434 $904 434 424 41x 40. 3* 364 FY 16E EBITOA (S. 14.25 5475 $2.06 $214 $252 $260 $29? $395 $342 $351 1388 13% $433 5441 4479 5487 12.75 S520 83.71 $4426 5575 $101 INT $129 5143 $152 $152 $123 $185 $197 1.2641 $218 $230 $241 5253 5265 $274 $286 $297 $309 $321 UR 042 $354 $365 $377 $336 $394 $410 $121 WO $443 $454 5466 $478 $489 FY 15E Nel leverage NW EX G.15 lsmclel 51.7$ $30.0 79194 WS 17 17 1500 116* MO 071 5700 68* $80.0 Sax $90.0 457 FY 16E Net Leverage $4.75 974 704 684 564 484 424 304 3215 $275 53.25 13.15 14.25 54.7$ 96.0. 22.9. 20.54 10.54 1604 1544 15.64 14.4 13.1, 124x 1154 10.84 1044 10.24 9.51g 9.14 867 8,14 524 7.04 7.4 7.04 674 64* 66* 62* 114. 6.74 5.44 6.74 52* 5.04 4.8a (1.44 45x 43* 43* 42* 4.4. 3.% 174 354 C = FY 15E FCF($ minion) NfMLY.G.as $1.15 $225 1275 $3.25 13.75 SOS 5675 $30.0 (S4161 ($408) 1$4301 4393j (53851 43771 15370) $40.0 ($3741 ($3671 4359) 153511 ($3441 ($3336) IWO $500 03331 (5325) 43114 43101 ($302) (5295) 11247) 160.0 42911 (5284) 1$276) 152661 POD (5253) 11246) 570.0 ($250) ($242) (5235) 112271 (62201 (5212) (520/) 19000 42091 4200 (5193) 151881 (11761 (5170/ RUG) $900 (Sin (5160, 'sus, 41441 41315 ($599) ($121) FY 16E FCF (S MM.7 L Gas 01)5)5 51.75 523$ $275 53.20 53.75 Mal 1675 53, 0 153331 (5322., (5311) 113001 (12891 (5277) (1266) $40.0 02791 (tat) 11256) 62061 027441 (5223) 1$21b 550.0 (52241 02131 1202) 151911 011801 (5109) 11157) $800 (51701 ($1591 1147) 95138( 019251 ($114) 1103) 0234 (51151 (5104) 493) 15827 (1711 C6601 IS•91 $80.0 CAD MO) ION 1127) (5161 ON $6 $80.0 (561 5$ $16 327 538 549 580 FY 15E Debt Proved Reserver. (5 91)1.9 NYME X Gas (5.mcle) $225 1225 53.25 $3.75 $4.15 54.75 $300 $2.8 92 4 $28 127 $27 12.7 5.2.7 $0,0 $4.7 $27 $2 7 $2 3 527 12.7 127 $500 2.7 127 $26 $26 126 52.6 526 560.0 52.6 5.25 126 126 32.6 52.6 $26 170.0 52.6 12.6 125 125 25 52.5 52.5 5800 52.5 525 525 525 25 52.5 52.1 $$900 52 5 $24 $24 $24 24 24 24 FY 16E Debt.PrOved Reserves (5 Mere) NYNEX Gas (Serncle) 7$ 221. $225 2.25 53.75 $425 207E 530.0 50.2 $32 $32 $31 $1.1 $0.1 $31 540.0 $3.1 53.1 53.0 510 53.0 1.3.0 52.9 5500 53.0 521 329 529 529 52.6 528 5600 52.8 RS $28 528 32.7 52.7 62.7 5700 52.7 $2.7 $27 126 32.6 52.6 52.6 1.90.0 52.6 528 825 825 525 52.5 52.1 5900 52.5 52.4 52.4 824 32.4 52.3 523 San Deutsche*** Obombeg fOunar LP for Mr toCatingcompaner nal <meat by WOO lkitt ENO (omen Agteeneetta Obantberp consents, cameos a* AMPERAMCELCCOFANG.MLTSCP4MNICAIPO.OASPEWAROSESIZSEVOMSKIPLMILWend WM( -o -‹ 412 6. 3 " O 5 a -z a7n En EFTA01097789 13 January 2015 HY Corporate Credit Energy 'Figure 116: Oasis Petroleum Financial Summary MN 13148 4144.440120.0413 0%408.110.''104040 M@ O00%9. 1.2.24.22.0 Nibs Oa ZOZ t en%P. Veawtln cla ZCZ1 44004.<.4 42321. IM 2410,4240.2 /414 ST Cone 01444 Asa x133.0 204 Cu 141.24442 Conon Nistil Gan pO0.4144.4.01 4bn nba.ro Gm 44 fled. Calla% a /414711414 2144•2014.144 Conon N174. 4.23.0.• Mon .21.04.22432 rya fittA TRW Erni. 4.23.4412.444 I pi d Era 12.01022,0112.2,16, Tin bia.44.44.4444.1P24. 1.0124AVVIECI•6061 tita I Rwona• • Op/4N 444 web. 12.4..., 4th C.442. 04.4 L‘NSA 00.44 Kyr* Y ' y / in OOP at loon. I ran fern at 21444. 242•2441401 11.414•44 /nen 00 811 Va.... 4 ON. Coax /Now 4.2 NN.23 Too. (Nu Y42 4.44 440 bona Gown 00444 044414 2.240 Cart felt.. Caron 1.111044314•44 1114102.1.0414.4 W. 6410444.41 ft 5.444 44/114. 24400 DM 44101704 040N4.4 %neon 101444 344Coo.1134.444 .2444 1411$ 6024424.12.4441 6024424.12.4441 6024424.12.4441 0250/4210.4442 11042412 I 14 If 14.31 1140 22 1.1...423 IC COI Ir1L.lf 14.0.10 IN141/ it 41 / MC MO 0303 [421 1:444 1444 Xs 94 34 74 332 01 //0 al 110 307 Ile 313 303 101 04 41 307 a II) 4.2 .14 ILI 23 23 341 220 CI OA V 01 0$ VIA Al 1714 ro 211 011 n423 2.03 1712 4$: 4,42 320 3.247 104 3.44 Mm 146 10 LI 1448 0.34 1443 411 341 445 11121 714 2111 21.4 n. /44 14 X. 320 MO? 6.27 2703 422 92.10 4.24 4.320 7.42 142.0 • . • . . IRMO IPA 1443 0110 *IS& 7220 l$ 3.014 SO 0 SU rani KM 347 MC MAC COQ 1434 2014 bin WM MANI 1211 4123 ISM OTOS ILO Ian Zan 4175 1•270 1010 $1143 $1014 $2004 $204.4 POO UM 0732 1410 25.23 $44 $4.1 41251 Inn MOO t2441 12034. Mit 444.40 ONLY 52 4 MAO 1420 IMO 1111 31 $1411 1441 $004 VW 01410 UM 10/040 21000 0010 IMO) 010.00 4244 $13.44 OIN /4 41.02 3204 415 IIOY a47 14424 10040 4440 In 24 .334 MI MO NO 4 01 III 3 I. 1220 MS MO 0 30 InO 0.141 00 0 14 7 13 00 I In 240 07, inn on, II 31 33 14 33 III 00 OR PO 00 Ina 070 ilaZ ci3a11 322 03 olo 0.141 PA 04 11 24 MO 1304 040 10 II 01 OP 2201 LW) 224 3117 0241 OI AO 14 27% 471 33% 0% la% 33% 13% 2.1% 4% 41% 33% 44% 0I. St Ill 14 elk 00 014 002 111 411 Lk Lis 344 834 10 324 17. I74 lb 10 324 lit .34 40 40 $1111 ION 11001 41.15 4I,4 $334 Ill n It On 114.43 $345 VOA J:0 1142 330 m 143 337 Ill ZO SOO a A 101 ffi 310 all air a 404 al Si RIG MAO 471 244 0131 1.117 412 2723 743 WIN 014 • • 4.02 4434 IAA 134 204 CM 10.4) 01.11 4143 34111 4134 1444 1114 44 1.1310 4.114 123230 23411 PP Ian Ine 41 0703 3.00 . 14 241 1442 31371 KM MU 117.40 1403 INV all WS 4311 1144 020.01 077 4 1320 OIN /4 414 7141 Onn 31) 44 Oa 01 I r 0 431 04 3I (00 Pt 41 MIT 0001 oil 14 4 14 14301 Ilin1 000 4w 144 ea ilOor In rII 4 001 140 114$ In 141. 140 I00% 110% 1244 Lb no 0.2 314 242 2I. 142 30 bo lo 433 111,10 $1133 11723 221740 00.4 4444 00.4.44 2142.444104 Owe gyne.....142•0444.71, 4.4.12.124to Cote L.4442 aeon q.441 4. Colon+ X% 3042%s 14222341 %444. an 4713% 0142340144 44 441 414%BV.44.I%n.m NV 414%. VO•oasiono NZ 7411044 1.2 4144• 102. • ON,04,4014 4.2•242.40•21 La an bteprnevske Cl 40104 0.44.21100414 conk, n 024,c424.0004210 an" 07 MIMI 4404/ memo 44 &bans &ince! Oevescia ant tongs., y Oars M 2424.4.2 044404409 14 new 0400011.44 • vo. he. we. 4%44.2.4, 444nwr, lie con*, al 44.3444 psia4240.22024107 'I. of .1 i..1 14. 4424.4 br•13. Page 136 Deutsche Bank Securities Inc. EFTA01097790 Figure 117: Commodity Price Scenario Analysis: Oasis Petroleum Sensitivity Based on Bloomberg Consensus C FY 15€ EEDTDA (S Mahon) tn1LX. Gas 11.7$ $2.25 1272 $3.25 13.75 3135 µ3S $30.0 $288 $656 $µ3 $671 1678 $486 1811 $40.0 2691 1899 $707 $714 1722 2730 $737 2200 $735 $743 $710 $718 $766 2773 $761 VIGO $779 $7µ $791 $902 9)29 Nu ties $709 $822 2830 2838 SIG $853 1261 $868 280.0 $886 $874 MI $889 1897 2804 2912 $90.0 $917 $924 $922 $940 $947 $955 $(20 FY 16E EMMA '5 Million, 2....ILY.“55 11.7$ $212 $275 1120 2172 $4.22 $30.0 $140 $147 SI% $163 2170 2178 $400 2269 $276 $284 $292 2299 2307 $10.0 5393 $4% SAO $421 $429 $436 $640 1527 2535 $543 $550 WA MS 2700 $656 $664 $672 $679 $287 2495 $80.0 $765 $710 $801 W. 9516 2624 190.0 $615 2922 $930 $937 $945 $953 FY 15E Nel Leverage 11.32 $2.12 3275 $3.25 $30.0 4Ax 4.35 4.34 42. pop 4.1x 4.0x 4.05 3.9. $504 3.8x 274 3,75 3.7. $500 35x 3.2. 3.55 32. $700 33x 336 3.3.. 3.2. $1104 3.1x 3.15 115 3.0. 1900 29x 295 2.95 2.6. FY 16E Net Leverage NW EX Gas IS. mele/ $4.75 $315 $444 1173 $702 $1131 $910 2315 1226 $4.75 42. 4 ix 4.0x 3$r 36* 3 ex 36x 36x 30. 3.4x 13x 335 32. 3.1x 115 312 301 29x 26x 28x 22. $1.71 $2.25 $275 025 53,75 s4.21 $4.75 $90.0 222* 21.0 20.3. 192. 1 8 h 174. 16.6. $40.0 11.2. 109x 10.2 1024 9.94 9.6x 9.4x $600 724 7.1x 695 614 64). 6Sx 2.3x 1020 62* Si. 504 4.9x 4.21/4 47x 46. $700 40x 39* 31x 3.1. 3.h 3.6x 3 ex $80.0 3.1* 11* 10* 3.0. 2.2. 29x 29x $90.0 22x 255 25* 2A 2.4). 2.4x 235 0 = m FY 15E FCF minion) li nIL.T.. Gas's 71:1c1 $1.75 $225 1275 $3.25 13.75 µ2S µ75 P C B oa 130.0 ($182) ($1771 (1171) 131µI ($1131 $80.0 ($1531 11)49) 11140 31381 ($021 150.0 ($1261 ($122) ($117) 151111 01051 Sµ0 ($1011 1$85) 1$901 IS) (MI ($153) 11126) 0801 ($721 11147) 11120) t$83) Oµ7 a; 8 a in 370.0 ($74) 11µ) 062) 1557) 0511 (1451 1139) $80.0 ($471 MAI) .13S) 330) (324' ($181 ISI2) MA ($151 MI l$3. $3 se $14 $20 FY 16E FCF IS 1/1,11i0:1 N \ ILA u.r. tacl $1.71 1221 MTh 13,20 $ITS $4.21 $4.70 $10.0 (23•71 (1332 ($331) 12241 (93161 (3308) ($301) 400 ($2321 (0224) ($216) 32001 02011 ($193) 0180 350.0 ($1171 ($1091 0102) 1394) (1851 ($791 WI) MA 1121 86 213 321 329 136 $44 MO 213 $129 $120 $136 $143 2151 $159 3M0 UM $233 $243 $211 1258 32313 $274 03.0 $344 $352 $360 1357 $375 $383 $393 FY 15E Debt Proved Reserve.: .5 I.IcreI NYME X Gas (Sande) 2225 3275 3125 23.75 µ2S µ75 $300 $2.1 $2.1 $21 $21 $I. $2.1 12.1 $400 32.1 32.1 $21 321 52.0 2.0 $2.0 350.0 32.0 62.0 $20 120 32.0 32.0 $2.0 $50.0 12.0 1.2.0 32.0 320 $20 32.0 12.0 370.0 12.0 1.2.0 320 320 $20 32.0 $20 $800 22.0 $20 120 $20 $20 $2.0 $20 $800 32.0 $2.0 $20 $I 9 $1.9 $1.9 $1.9 FY 16E Debt Proved Reserves (S hick/ 1.11111EX Gas 06ncre) $1.75 2 25 $0.75 54,25 $4.71 190.0 . $23 $23 $23 $2.3 $2.3 $2.3 $40.0 32.2 $22 122 $22 122 32.2 122 3500 321 12.1 121 321 $2.1 $2.1 $2.1 $600 $2.0 $20 $20 $20 32.0 2.0 $1.9 $700 $1.9 31.9 $1.9 $1.9 349 $1.9 Ph $80.0 SIC $113 214 $18 $1.8 $1.8 $1.7 380.0 51,7 31.7 $1.7 $1.7 357 $1.6 $IE Soutar Davao* Sank 6brcr0e•O fovea, LP Ice me bro.m0 *nines nor meal byte MO nett me Iowan Spires nyffea lthantorg cannons s eases anitv AteifitAkilaIXXOFANG.S.ELTSVCOAYRUPO.OASPEWAROSE.SP4SIVCEN.SAtIratIZWorKI frVPX EFTA01097791 13 January 2015 HY Corporate Credit Energy 'Figure 118: Parsley Energy Financial Summary On Mgr Cal CCC-1443 16 Cc 22 • c 3011. 10532 Raffle* linumf 1.2310040 1l000 . Cal1 M. 14:41344 Mt kw,* 0431) Cab acres 11,41,4Can • tical Elea 1411 11400411 DOA ml 120011 EST 010 arc 004n Or. an an, Tea 1101110•124, LM C11110211 Is in 14.0./ LTV 0130,il 4333 Nara 1101 Ct.* Mu" 1410 Name' 4.25:404t, larrreadia 0741C.. Pittuaren afra, Anatol MS 03a P.a. ballaa Cu* Cl 1104. -40 4004 11441eM ai ?maga WA Nagar Mti00 Pats. NO. P.C. ISOM 10211144•4a PrO3044 000 134161.110111•44101111441 264• 22 Opnling lalerdlns mtge. 2.4114421 1.41.0 Con "A 306* acraiNaccee 1rac 0•44, Spirt at (ammo) IV warn% rasa* noon CE4101160114tati Comp Ica 7— Cops 014/0/ 1101.40,09241441 Ca) Av44001, 0(48x.4) larerNal Cop I•ArosItnei hie cas Eke Daral Ail cla 44 Anti Ina Cm/. Ma Ind Pea SawIedadosen &aft Pal Da Cu,. a • Cne re... • 5.033 arca 011,0 imp Ton 040 yelartnaarisia Anne 0:nn ,k< 40.110.62011303,13 Prorrar Gown LM Conn Swages E0T0L\C/200.0' v(1 C•04310,01n0,0 re atlIZIOAX 13/44191104.4 Mn 010 20120% 13041111..4 /kw.. Ira., 7317' 46 'N 111 Ill es an a 121 a 13 10 a 62 64 IS a v IN al a It 20 20 263 a ry I. a 41) 6 121 a a 6 so 10 82 Id a NA I 4 ea 04) II) 0 2 2 9 43 27 75 101 147 In • 110 111 la SIM if $0741 use HAS Hit 1614 322 40210 NA 142 14631 1,412 1531 323 11513 114293 *2722 32 72 SIM 13 1914 2203 100 SIM bb 1397 3 934 24 Van $4 12 IM 283 103 12121 mm 62 a a 12 lir Ip 10112 432 put sun 116.1 ITN VII NA ta S 1274 3410 Pa 0K13) Mob ass 471 2101 1201 IH 4070 NA SIM 11174 lab ULU 11210 ill= HI30 31110 pp Mal 1766 Hp 12226 /WAS 11146 11613 PIA la .74 12405 $171,5 pa 2371 a 10 1716 III 42 Ilia /11 42 Ills MON 12434 $1024 51034 12132 a Iva Iflp en fl 21 27 104 le 1232 1476 mm FON 4 23 26 Ti 0$ al 07 5371 4103 11% IOC ar DI IS) 97 -n ms as /IOM IT II /IOM PIA PIA a Ira MO) plm pita 34 01 11599 ;ars 1142 11142 11014 6010 IA W 44 14 IW PC IN 10) MI Oaf 017) IS NA IM PA Ill NIL 00 Om1 4 4031 3 71 Oa all PI II all 001) a CI MI 0071 2 534 133 12 Ca 591 557 634 Ml 667 IMO 13 12121 022) airy PTO 133 513 017) 321 43/ 10 7223 Pal alt) 221 12 235 Im NA NA 122( IN 122( NA NA NA IM 141 NA NA Car aUaaanta. aa“.. Alta n3C.f3I Pao, lea lci•Sttaa am Ora " 121 410 NI= 2001 1910 Loral 0•44 594606811.04 04 2022 TOW Dal al Oat 15411411)1Mtral tan 1141404* -Vas Cana • Nei 001011110/41. 0/01.201041341ndel mesa .as M natairs• days! 02022•Wtelli/Jata cacao. attrataltenlWargaateir AravACLI 2 2 132 163 126 262 i515 Isa 24 SAOCe' DflarleA0 BMA COSH 4403 RA 7.11 SI) 611 72 122% 260% KG% ON 24 rib 110.12 /231. 1014 64 Oro 0114 244 11017 16. (4, CMOS" 004012900 Puff) OM, .1 .ry.0O nn en) da, eglenia, an: 914.220% 07112I<.4 203 len P0, PC Panaccal %acts n awns, • • 140.51120 » Il OZ la PE Pal IVA an n lab.a. Canaan 13 Paul nos. .1)01v St A.nos *en P010 229/519E(0-001010 ens Mat Pan o aml0.` ta NA NA It 34 LC 11012 It Pa ul P Mac Nadal rail P 13/41101M4441 %an 141197.01013011140 Ao4 La 06311 1:14914411%1Trall PI Mora Pciamen O0 la 500.0 1109 IS 23 22% 43% 12 Ina 1140% an 731 2014e 2211E 213% 1308 • 1237 1404 11.04 -1961 214 245 0 14 14 0 Page 138 Deutsche Bank Securities Inc. EFTA01097792 Figure 119: Commodity Price Scenario Analysis: Parsely Energy Sensitivity Based on Bloombe-r; Co FY 15E 6131TOA I$ Miillion) NYMLX Gas ' 11.12 $2.75 1275 $3.25 13.75 24.25 54.75 $30.0 $103 $107 $112 $117 $122 $126 $131 $40.0 $150 $155 $159 $164 $169 $174 $178 2200 $197 $202 $207 $211 $216 2221 $226 $60.0 $244 $249 $254 $259 $283 $225 $223 $70.0 $272 $277 1222 $284 $291 5296 2301 $90.0 $295 $299 $334 IXO 2314 4318 $323 $90.0 $325 $33) $30 2.09 2344 $349 WM FY 16E EF3ITOA IS Million) hiSILY. Gas :2 ir:fel $1.71 $3.22 $275 1:225 13.7$ $425 $4.75 530-0 510$ $113 $118 $123 $127 $132 $137 $40.0 $156 00) $10 SIM $175 $179 $led $50.0 $203 PM $212 $217 $222 5227 1231 2800 $250 $255 $220 $264 $269 2274 2278 $70.0 $258 1293 $298 $320 $357 $312 $317 $90.0 $303 $335 $313 2.312 $322 $327 $332 2600 $332 $337 $342 1342 2351 5356 $361 FY ME Nel leverage NYMFX 11.75 $2.25 $275 53.25 $3.75 035 $4.75 2.30.0 7.7x 73. 7.0. 6.7. 6.4 du 59. $400 5.1x 49. 4.7. 40 4.4x 43x 42. 004 3,7x 35. 3.21. 3.4. 3.3c 32x 31x 5660 2.3x 28x 27x 2.7. 2.68 25x 25x $70.0 25x 24x 244 2.3. 2.1. 221 22x $004 221 22x 22:it 2.1. 2 Ix 201 210 $900 204 19. aft 1.9. 1$x 18x 15. FY 16E Net Leverage NYSIEX Gas 0 mc10) $1.75 $2.2$ $2 $3.25 142$ $4 75 $30.0 9 Ox 80 8.2* 210 71x 68. $0.0 50 55. 5.34 5.1. 4.8x 4 fix 2504 41:4 39. 3.80 3.7. 3.4x 33. $00.0 32.. 29x 2.5. 2.7. 26x 210 2S. 2830 24x 23. 2.3. 2.2. 2.1x 21x 20 580.0 2.1x 21x 204 2.11. 1.0 19x 180 590.0 10 1.8x 1.74 I.7. 16x =I $30.0 $0.0 $500 00.0 $70.0 Selo $10.0 $300 03.0 $50.0 MA $70.0 $0.0 $90.0 $300 $400 $500 $60.0 $70.0 $800 $900 S30_0 5400 IMO $030 $700 5230 $90.0 M _g LO 0 R C 2 FY 15E FCF (S Million) NYME X Gas ISYncle) $1.75 5275 53.25 $3.75 PM $4.75 02291 (2220 11223) 122191 (2216p ($1971 ($194) 1191) 31871 0 101 ($1651 ($182) 15138) 151161 0 1821 (5213) ($181) 0149) 11210 WM 15146) a_a N8 a 01131 0130) 1512$) 01231 01201 CSI I7) 15113) 01 151 ($111) 15100 151051 (21021 (MN 110$) (8891 1396) 12921 1589) (5081 (3831 1180) ($751 ISM) 1$71) ISO) (WI 0821 156$) FY 16E FCF iS Mild» 54 2\X). mCfc. I $1.75 $325 2275 $1325 23.71 1425 75 0 1571 016E 0 178) 151731 0 1551 ($ O) 15159) ($10) ($135) 15130 1$1281 0 1211 ($116) 0111) (MI (288) 103) 1$78) 0741 0591 100 (1A51 1241) 1135) ISM) 0261 0221 $17) ($131 1021 153) $2 56 SI 1 $16 29 $14 $19 $23 $25 $33 $38 $40 544 $49 SSA $59 $63 268 FY 15E Debt PlOved Reserves IS Rick) NYSIEX Gas (dmcle) 51.7$ 522$ 3275 5325 23.75 $4.75 $4.75 S2f 524 024 $24 $2.4 22.4 $2.4 $2.3 $23 $23 $23 n3 523 $23 $2.2 $22 $22 $22 $22 $2.2 $22 52.1 $2.1 $21 12-1 $21 $2.1 $2.1 S2.1 $2.1 $20 220 $20 $2.0 $20 43.0 $20 $20 220 $20 $2.0 $20 $29 $19 $19 0 9 $1.9 $1.9 $1.9 FY 16E Debt. Proved Reserves IS hick) NYNEX Gas ISYncle1 7$ 22$ $ 25 $1.11 $4.25 $4.71 53.0 $3 0 $29 229 22.9 $2.9 $28 $2.7 $2.7 $27 $27 $26 22.6 22.2 $2.5 $25 $24 $24 $24 $2.4 123 $2.3 $22 $22 $22 $2.2 52.! 22.1 0,1 $2.1 $20 $20 $2.0 $2.0 22.0 32.0 $20 $1.9 $1.9 $1.9 $1.9 $14 21.9 $id $1.5 $1.8 $1.7 $1.7 $17 Swear Owdo1e Sank Obombeg Ammo LP he U4 41bang convoner nce cow. 0 by 08 Se6n 1,1412 the bretwts Agaves mem Sbombeig cannon., eanmtes are A ElY1tARSCO.C2.21:1110271C1.122,44411RA4P0.042PEWAROSE.$1421VCSES1t1PailZWorcl WPX -o 8 EFTA01097793 13 January 2015 HY Corporate Credit Energy 'Figure 120: Penn Virgnia Financial Summary 72% Piet Peselnad Wn cla 3410 luc M., raperu.d14.. N X60 Lel 14.0.1.134101 IIIMPP 0.49.0 °Jul& tap", I44.: man. and tne Hap. Int Pap. Copt en tun OutrOP102.9 OP.. .Low ONTIMX•6104.41014 Oak ml PS cape I—' • Ia.* Pp. IYINna..4 Tun neva LTIIIIITC0616 Pap 1.111 alTC0 non lays • 11(..... 46.1 sop Mt Pan 04.4.4.0 Ka 644•411.• 401 4. CPA. al WW1 'Weal Ia. Oss.** W101n Mop • ea10.1PP P.,1061 Lop.. lat Pe.lxicn Map 11.4.4112t. fop µb1 hut tonalr. ex4.444,1444 Tat 6..../...16.46•4413.01 IlVeaal Osialia Mann pc Mason. areal° 301 33.54 Oponins Wrap I pop, MO 13 01 CsI ra i . 1.3.6114% noo canna: LOMPX61.14.26. 0..n.•1 Tun Tad Con Paveoat IPA, CPS/ toPPOstar POW Loco r na, Capainiinno41 P CAP PP Pons P are. 06.1.1.1.n. Intl PIP µp 10.1 , r4••• IP. T...“}ta 121 II? 133 IX as 120. N 111 O U N 4 Ix 63 CT 13 32 44 a a QI OP IC 4. POW PIO SW 3411 261 110110 NA 1 KO 3.313 asse a NU DAP PLR 111.13 SOP. "SN Vol (1,01.31•161.0 PP .. max LTNICno.19.4101144 14....4 MP Caul.. Pup. E. P. PPE0.10.2 E0,1041 I.. Nat DIM D.t.Pw..341.uemplatat Ptehreor30•41,444 Rounr..104.244 06.Preof Amon 44411 tlesOkneltncryr.04......inlon "MO IMO 1341 10.4 IP a Wm ISO Salk Pa IMP OPP Na 1.113 PIP 113 13 11344 a IP 311 atta MYY 390 SOS INS Ma pl ;Ala flea 10641 (1201 OOP 301 I10310 IMO 3111 Mn I.113 PMa 33210 IW Iter SIAM 91417 3431 110.84 03/ PI Ma 11334 111.1e 11123 311.11 MP Safi 03344 MM 000 an O a Ra 01 3 Na Ill m1 Np 8131 nnl IM 1441 At 11111 IU 111 10 531 a IP 4.1 O a nU 1131) 114 In (c) 30 316 a al II 1426 3231 0514 Mx 1422 la? 401 a ta.11 a 100 U.134 1515 Wry SOO Mla 11101 IMn 131.13 Pia IN II Is a PIP 1.09 111 44 10411 10100 212 Os) a a 33 01 IU Oal 0t 921 1 al n o 33.251 O N 33351 1121 MIU 1513 Pp SOU POI PSI II /3 1, N747 MIN a 314 Nal a a 332 001 PI 001 a a IN It a IM 42. 1.1. 3413 SION WS" U. .1.34 01. at. MW LON 1/131 40 a .44.4 1.4no es tats PoOr.o0•114.....tiptn tacf.e. torn OP Load.. 4W 116.00•Cufl Fait. 13 11 ;34 04.0611044 snr tliaaaos OW* ea Ma I "CM 'Poo 9.030.143 /40101:327 T60 0.141 Offibi %Para amnia 01601 Weal 4411 Papp Pip 0 Maar In OP141110/12 • I rv. Inon6 t513,6 IOW rec. Awned I IN NES iN 1 344 12111 Monant Paeans Scam' Oftexa lank Crain yam 31% PM SIPS pu NT. .4% 13% OD 32. 514 31.43 1143 as IAM =r 0014.66.6 VPOOM fraos 1•10410 60....33. pperzn al el NO .1.4. Na../ :Eat 40.2 11 1.43.an.VAU0 OVISI Ixe/aik*I3I••••••••••11 tom Throtepen tap ..0.3310 . 141 Ara Onus.. 'at cvn... 4 ot.CLIII/X.C• co-tat, 'Or/ I In.03 news P. TO Pa et SI 364 PA • 03 pact. ...1.113 340.4 SIM as V% Mt 33. 1131 LIZ 4444 P. 0% • 24/ pW 3414 1413 IRIS in 9% 434 411 Sn 411 SISP 3.44 as *AO 3 lamp .410•10... Up.416010 at GIS C.Ivelralee.) 4014! V. "OM ineol owsuni tboan n el..— 40 NM WEI NW ale) 113511 131103 Ws al% IP ne. ne. WI 40% .135% Nllf Nil* 414 1314 ..1161 0% 13 SI .1323 Page 140 Deutsche Bank Securities Inc. EFTA01097794 Figure 121: Commodity Price Scenario Analysis: Penn Virginia Sensitivity Based on Bloomberg Consensus 0 P FY 15E EDITOR (5 Million) hYMIX. Gas 11.75 5 µ35 1275 $3.25 13.75 1425 81.71 $30.0 1627 1633 1640 $646 5552 1659 $666 $44.0 $642 1448 1655 $661 5667 1674 $680 $60.0 $657 MO $670 1676 4142 $699 $635 $60.0 $672 $676 $665 Uhl 5687 $704 $710 $70.0 $687 $693 $780 $706 5712 1719 $725 $80.0 $618 $624 1631 5µ7 WM $650 $656 MA $557 $.5M 150/ $575 5642 $586 $596 FY 16E EDITDA I5 Million) GrSILXbas 5 et 11.71 $2.25 $275 6120 $3.71 $425 $4.75 $30.0 µ06 $212 4220 $127 5234 $240 $247 $40.0 $261 12(41 1275 szez 5289 1296 1932 $50.0 5317 $324 $330 $337 1344 5351 $358 MOO 5372 $379 $326 1333 $399 1406 $413 $70.0 $427 $434 $441 $448 5453 $461 We MA 5423 He) WS $503 $510 $517 $524 $90.0 1638 $545 $552 $5541 1665 1672 $579 FY 15E Nel Leverage µ.75 6235 1275 1125 µ.75 MIS IA.75 $260 234 23{. 23{. 2.2. 224 221 2.14 5204 22x 22x 2.2x 2.24 2.14 2.15 2.14 $50.0 22x 214 2.14 2.14 2.1x 264 2.94 $80.0 2.14 2Ix 202{ 2.0. 2414 288 2119{ $70.0 264 20x 2.01( 2.0. 124 1.44 191{ solo 23x 234 234 2.2( 224 221 228 $960 27x 264 2.64 2.6x 254 258 25x FY 16E Net Leverage NYMEX Gas 4. met) $1.75 12.21 $2.75 121.25 13.71 $4.25 $4.75 $30.0 5.5.4 514 7.8. 7.5. 733 684 MO 65x 634 6.15 5.9. 5.7a 524 1500 521 5-0.. 4.94 4.704 4E9 45x 4.44 180.0 {42x 41x 4.01{ 3.9x 349 3.74 3.7x 1700 3.44 35, 34x 3.3x 324 32x 3.1x 180.0 324 314 3.1x 3.0.4 224 29“ 284 $90.0 29({ 294 284 2.8. 2.7x 2.6.5 264 ≥ FY 15E FCF (5 MilliOn) NraLa $1.75 $225 1175 13.25 $30.0 (12441 42401 (1ns) 11231 $40.0 42321 (12271 4223) 11218 $50.0 4219/ (1215) 4210/ 16206 WO (12071 (5113 1191) 14193 570.0 (11941 (1190) MS) 15181 580.0 (12411 (12371 4232) 15228 MA 42841 (1279( 42751 4271 $3.75 422M <12141 MOM 0191 11761 42241 02661 WS 4222) (1209) (11971 MN) (1172) 42191 (52619 3 54.75 11217) 1µ0L) 1192) 11/0) (513 4215) 4257) FY 16E FEE is LIMLX Gas 'S Tcicl $1.71 5229 $275 13(20 53.75 5420 14.75 $30.0 ($274) 1261 1261) 11041 0247i (1240) 1.30) $40.0 (12311 1224) 1213 112111 020/1 ($197) 1111) 150.0 WW1 ($111 11741 111671 11611 (1151) 1143 SA (11451 (1138) 4131) 151241 11171 (1111) (51011 $70.9 (11011 Ittee 4141 1111) 1 741 (1.71 161) MAO (1121 173 401 IWO 1911 1411 191) $90.0 (1611 15/1 11/71 ISIS) 131 1271 1201 FY 15E Debt Proved Reserves {5 Mere) NYMEX Gas 1$Yncle) $22, 13.75 54.79 SUS 5300 SI 8 518 118 II 8 51.9 11.9 51.7 100 51.0 its 516 $1.7 $1.7 51.7 61 .7 1500 51.7 11.7 11.7 112 $1.7 51.7 SI .7 $60.0 51.7 51.7 51.7 51.7 $47 51.7 51.7 170.0 51.7 51.7 51.7 $1.7 $1.7 51.7 10.0 51.8 SIB 513 513 $1.9 51.7 51.7 $40.0 $1 $14 516 510 $1.0 5111 SI FY 16E Debt Proved Reserves (S Mere( NYMEX Gas 11{enele) 1221 5275 $125 13.75 1.25 1. 130.0 2.1 i27 21 21 2.l 521 12 1 160.0 µ.1 µ.1 52.0 µ0 $20 µ.0 µ0 $500 12.0 µ0 52.0 µ0 $1.9 11.9 513 5600 11.9 51.9 31.9 318 $1.9 MI 51.9 100 11.9 51.9 31.6 31 8 $10 51.2 MS IMO 11.9 51.9 51.9 519 $1.8 11.9 51.8 $90.0 11.9 51.9 51.9 519 $1.9 11.9 51.8 $cvnx. DeuesoIe bnk ebombn Ann LP (be Ma ecattvgr company. ~awed by 08 HO 114« Oa knows ewes meeet ~meet° enema envnates ar1: AMEA9?.AA8CO.<702FAHG.MLTSCACMNRAIPO.OASPESVAROSESACSEVGEN.SAUPLA411W end WPX n '8 a7n EFTA01097795 13 January 2015 HY Corporate Credit Energy 'Figure 122: Rosetta Resources Financial Summary ISA la 44011041 UV S SwiaNada 3322 Snell Saga 4/4. 3034 NON 010.10190 410441 ▪ IISO•001 tas O1040400.**0 640401 I*/ 0 1062/ I000 10034 4.10 14214 15114 014 Roam O440,0 a/0 004 4.4/114 ass Clcan•Olob Realielfrre.nOs• ftpo OM a Mal O M OA CST CO a an a.▪Iota* OM /vela ton 0114•00 Lni(010/0.0.00•40. -TU6S104.100•6114410. VT 0444 at* I04,1441Natrel 4401 1/4044040 040 1.044.000, 44.464/ Pant R•4 400 00 14.44 4/0/ a/444n 04041 1144.3010,.. Gina a ears. tfttel 114 0.4 W.1•4441041. Till twits. //oaf ININ 14 morals. Ileal 440 14.414 log E 44444414044440 a 104 44.444/1 444 ea) IbX Mw.w4 Cann Vat MI a R44004 4* Ca 044 0044 014. 41.3141 a• mal ▪ eq, '44.5123014 S. ins Nana, Y•440•44 WM* Pta•Ort0 raIla am. ay. 6441 Paarea -TUC001001/44 041104,40 40.4 WA Cosa Dian & fOtteltim Dattoon 11410040100C aaree Nsoes Eloaree Owe Mesas slap 310 111 2T 41 1412 I73 121 '14 63 ▪0 1 µ 101 62 10 ss la li 3/0 112 110 OI 06 I/ ft 66 214 M • 73 PI 707 20 30 4 21. 40 IT 141 WO 1111 71 21// 40 113 1111 141 2X 111) 310 20 347 V 56 al SO ml VHS Ills 100 0314 lax 11414 IMO Sal 100 44301 In WM II NI 44 4123 121.37 110 44 12(10 no, WM Ia4 fan 'CO 116 14 11 W CO2 0744 1211 MUG fi245 035 4120 41671 Rn III," It en to AO It 07 XIS tam µ4 00 IW 42124 MIX 4e10 51031 5.47 510.4 SIM 1,13 InR 0610 14 6T 141311 MX I1M In" la 42031 3304 414 14721 I472I 074 114 In X 6310 11114 7511 Wm 44 Ilan $543 us Mips INN 4.4 RIO 70( 34 IO 41 14 In W 4.4 4.4 W ail Sat SW 04 if Wa sae U0 4141 72.401 al 0.341 1430 SUS SI II 111/3 149, I.001 $447 11047 SOS 2443 4.473 CVO faro WM ill •7 1001 61.4 10741 VAI nt( V01 APT 1011 14.17' 64417 Intl 14101 NOT WM 021 mm 1411 41 0475 $405 $101 11223 $IM SI/ 01 $7 $1040 012 an SIM 111 It 03.71 441 410 AO 4b SO II Me but 01.0 10 414 032 011 WI 0.81 (COI Imo N0 4.w 41 mix th: 16 Ca am cast 4.41 0. If 71 050 Inn 0011( 101 VS 1.1/6 411 37% 1244 aM 244 24 MS IXX 104 24% In 1114 24. Z.% 11371 I1441 0611 $111 OKI 26 111 ISO • Ine II* A /64 Z 001 1112 1 a▪ % 674 • Zr, Zr, MX IX 1114 In 44% 16 OM to 14.14 107 110 Nn a a 444 at. 274 X 0 37 410 410 27% IS% Its as 'a 4701 191 4)% a 11.34 214 33. 1130 IMO VOn 6 ~Ma 00014 M(00 0(4111.0,0 11Y (00 Lona a Ole a* . Kra, 04411.0•4/ aft a 7001100000 001 41444 tar 4010042121 : Ca Stn. Ian 4. so Mt f a% tar 4.$0004,M TOW Cal NO 001 1000101041401•44 11111~ r irt ille0144 00 4' Mel 134611/117131.%• 110.70A 4040110,0weat mama 7i T▪ O Of CO 7$ 140 latO 5.- Lle San Deutsch: ant Comma y Oars may 0•440040 anaaa at • 4•4 4241• .40004. 44 41,4 as eta 0 Oa 444.1404 4.0 a Ora too Tr earn. • 120C se aaargata• Lao Ar.n1arrY if liee sad l'a Wm. co mama volt e0 ila 43011 T/4 0044%, 02 440aes mew liba Oa 41 44 al A .1.1104•' P40044 1.01 %ma .1.01.104a POI 44a114410311 4.04. 441444•0 alien 4.10411.010011 110041 /1100.404 w0 /11410.40400 MAO Man Inn? iettn 70.0$ 444 .444. Cr a% at" 2041 231E 4 a lit 740.610 41% • 622 tnt Page 142 Deutsche Bank Securities Inc. EFTA01097796 Figure 123: Commodity Price Scenario Analysis: Rosetta Resources Sensitivity Based on Bloomberg Consensus O .4 a 9300 5400 5500 $60.0 $70.0 390.0 5$0.0 5300 $50.0 $840 $700 $90.0 $90.0 5100 5.40.0 5504 550.0 $70.0 sea* 1900 FY 15E &HUM (S /MLY. Gas ≤ re :fel $1.75 $2.73 $224 $249 $327 $.182 $495 $540 $564 f619 $643 654 $722 FY 16E EOITDA (S NiMLY. Gas :Sar.fei tin 33.25 $273 $297 $352 3376 $431 5455 $510 $534 $559 5613 $668 5692 $(46 Snit 51.7$ $2.29 $275 S12$ $131 $157 $124 $211 $222 $249 $276 $.3)2 5314 $341 1367 $334 $406 1432 1459 $486 MO $524 $551 $573 6593 $816 1813 5069 $681 $708 $734 $76, FY 15E Nel Leverage NYMFX fl . lel $1.75 $2.25 $275 3125 1097 977 8.77 8.0. 73* 7.17 6.67 6.1. (507 557 6,27 4.9. 4875 4.57 4.37 4.0. 407 387 3.67 3.47 33x 327 1117 2.9. 297 277 2.67 2.5. NYMEX Gas mc101 II. 71 530.0 21 Ix 540.0 11.71 $500 7.7* $600 54, $70.0 429 180.0 33* 180.0 2.6.9 52 21 FY 16E Net Leverage $2 221.25 12.27 u4. 12 47 1827 9.07 9.17 7.0, 6.37 nil 677 4.77 4.47 3.97 3.57 3.4. 3.1, 297 2.7. 2.4, 23x 2.1. $3.75 MIS 34.75 $323 1351 5379 $402 $430 $458 MN 3509 $537 5660 UN $616 1639 $667 $695 1718 $746 $774 5796 51324 $652 53.75 242$ $4.7$ 3239 $268 1298 5330 POO $369 1422 5452 $481 Pm $543 $573 $806 9335 56(4 9197 $727 $755 1789 5819 1818 $3.75 5425 $4.75 727 16* 607 56s 527 4 87 4.67 4.37 407 318 167 3.47 3.2., 1.05 297 218 2.65 257 247 237 227 1171 54.23 $475 1077 937 827 72.: 6.5x 5.97 5.1.. 437 4.47 489 377 347 3.1, 297 277 238 2.3, 227 217 It 1.77 = 530.0 5400 5500 $70.0 $90.0 $600 $30.0 $40.0 150.0 MA $70.0 083.0 #90.0 $300 $400 $500 $60.0 MO 580.0 $03.0 Gas ≤ mrfei FY 15E FCF minion) 01.7$ $225 1175 $3.25 $3.75 16771 1654) IMP 155091 (34851 ($6841 (5492) 11459) 114371 ($413( 14321 1409) 1387) 1527341 (173411 ($3591 ($33)) 1314) 112321 02619 12871 (6254) 1242) 112191 11961 ($2141 1191) 11691 111461 (3/231 amp (PIP i$90 1571) (3601 FY 16E FCF (S N COL,. uas mrtel $1.70 UZI $2.75 1125 53.75 (SUSI dam $202) i tram (32361 ($2551 ($229) 1202) 1$1761 1 1461 (51851 (5130 111127 386) Val ($751 IMP 422) SS $32 $16 $42 $19) $96 $123 $106 $132 $158 $153 $213 $196 $222 1249 3275 1303 FY 1SE Debt P,oved Reserves (Slade/ NYMEX Gas (5.Thels) 75 51,5 5225 fi 4 $1 4 25 SI 4 S3.75 $14 VA $1.4 $1.4 37 4 $1.4. $1.4 $1.4 $1.3 $1.3 $1.3 $1.3 $1.3 $13 $13 31.3 $1.3 $1.3 $13 $12 31.2 $1.2 $12 $12 $12 $1.2 $1.2 $12 Pt $1.2 $11 FY 16E Debt Pioyed Reserves (S hick) NYMEX Gas 'Smola) $1.75 $225 $275 13.25 $1.73 $30.0 Si 7 V 6 $16 $16 $1.5 $40.0 $1.6 $1.5 S'S $15 31.4 5500 $1.5 MA 51.4 51.4 51.3 MO 0 $1.4 $1.3 $1.3 $1.3 31.5 $700 $1.3 $12 $12 $1 2 31.1 SOO $1.2 $1.1 51.1 $1.1 $1.1 $90.0 $1.1 $1.1 Pt 51.1 $1.1 &tom 088991e8.* Abaft*, tan LP Pp .(Swag oamonns nig coon{ by by 08 Mr) Wet,. loxionslepreoneecaPtovntiegoonsimnoemmartoot A PER.ARSal.CX0rAFIGEPELTSCAMNRA600.0ASPLPVAROST.SIAS(VCENSMTPLIKRW end WAX -o m $4.15 $8.75 1460 1 435) (6358) 1362) Can) 11291) tsar 4121 um) (MP 172) 1251 91 $425 75 (5209) 1179) CP 19) 119) (UM SI $62 $91 $152 $161 $242 3271 $332 $362 S4 $4.7$ $1.4 $1A $1.3 $13 $1.3 $1.3 $1.3 $12 $1.2 $12 $1.2 $12 Pi $1.1 25 $4.75 $1.5 MA $14 $1.3 $1.3 $1.2 $12 PI $1.1 $1.1 $1.1 $1.1 $1.1 EFTA01097797 13 January 2015 HY Corporate Credit Energy IFigure 124: Sanchez Energy Financial Summary 7744844 NNI 04031 405% S. 1404 Le 2323 1.0144 V 06012 NCY.. 11004410.15441 0.3.0 21 160.0 1000 10•4050444 154023 1.5.4011 103 CC 000 24 10 IN Is 207 04 0 it.. 40412/0114400031,0041. 004374.*. 14011000 24 10 13% 14 91 04 43 022.0007vs 32 ft 40 60 60 IN 0 11014•01.000041401.1 III 111 Ill 0) 0 (g) 0 6070.0•04.100.4 IP 0 li Jr It a I DO4 34 61 41 71 /0 204 16 134 MI It 41 M 93 56 MI 112 74 110641 I U U I? 24 71 0 11 till 00 cern • 21 32 0 27 75 00 .0 awn I 1 4 V 40 00 0 8 0.4 sno am. . 4 . I 5 . (6704 area • n 6 020 70 04 11(4 0 Ton NI (4 27 22 164244.0 1 14 3 023 a) 66 00 V • • • LTI.E0.1012..4.09.• Ill /00 70 10 0) 0) 0 VS LT• 251110304001 Haden CM MI 300 154 MI MI 0 210 1010001121 00013 1•741 14.011 $100 WM. 10112 $0411 MCP .4/14.001.010.300405 043 1345 102 1493 096 142* 00 474 100•06.42ien laia %On 041011.031110411 9:4 104 lila 1466 640 9.47, )03 390 II•60.001 Caa 060014411 1.10 LW 140 1440 1414 140 PIS 120 Cu64011N01.410 4.1101 40 1.%9 1.29 104 140 502 416 100 5010001A440101 0114 OM 11444 Wit 02 46 0460 404 010 104.61110040 (14501 144 234 212 M2 WA 1.70 9 455 54410.3 MOO 6.10/ 2.040 1043 00.42 141.74 12012 1034 ION 000 eau 104i 0000 06.00100.0 103 1.711 101 MI 3213 001 401/ 302 NO 624.401114001101011 KIM 47421 1:40. 1703 970 ION 1044 17411 14.44. I 004409 ibpos pa 040 546040 MIAS 17424 MAI MO 957.10 50239 VIM 5104 094 44,4, 0121 0225 0461 4110 1.17S 0214 0121 1130 044 5140 471 11142 11506 00 434 $71644 14132 DO0 136 43 11479 13421 13794 100 191t MP 040 0040164 Incur 11711 $23.43 11412 1120 1.15 1) 144 $1315 0001 11.73 1770 1)45 lea 1777 «0 10.16 1766 01712 1410 SO 15 1.0I5 1015 14315 11703 10 15 19 Noy 160 4/10.00.5i 61511 12101 11101 03 (6 121(6 12156 17010 114 00 4000 11524 14/0 fill 101* $7115 5190 574. 1 /mom now 1010.10 4.11110104 57 >I 44 07 10 CO X) 600 Tim 37.91290 020 045i 0441 022) Cq0 0277 070: OM 00.2.70.40 43”04.110 MI 14 WI Oa ii 44) OO Cut A0000:r0.1? 5.•••‘• 1111 m1 PM (We M Eno 1103 1/00.1 leo, C0, 00/ .0.01 2.44cri. nes 0 1 MN 011 MO) 00) OKI 011) n .,01.),01 Milli 11111 OM illai « (TNO 00 0•04. 0 0......40 44•1144.04.4 in...0.. Woo (61i ISA In 01. 160 de) MN 000 04900 5100 004 440 w 111 3IG 9E 2:4 to 156 cot leed C- Nairn o Maas 107., I.10 tartan Y0 Oath $14146n 040,1101.404110601143744Gul _,..l.,. Gant. mrei cr..0 50000, (010XCie. yews. 0,0 C602420107001 000.11202 344E_00L1 14412.4601g00 DetIP..... 1400..r. es 1414 130 .16.0 0516 00% 711% 9144. %a S1K 0. 24 Oa 216 WM 0010 511041 12401 596 30 sat rat Os Tow Mond Ogg 71% Seen 1010. (Ls 2321 45 •Oo. Siva hoar On ten 1.145 Ott*, 141 701•1041 1.145 1,1001 1.145 Slah 4.11i tiorra...0444 _1,444 EV P. 1010.2'" 1447 Nn coroor CloTDAX 144 014 Pored 160.0.4411.100 014 Powtglc24....... 4.44.4•04100" 333% 151% 02% 215% 3770. 146w ftin. Moo O. fa 194 614 He 21m. 434 414 In 24 274 1,111 12.4$ 194 1042 0442 PO OS • 04410104400211 0•02 60.2( .101 104 V.M anlpitS)*(049010 0n.e• 10064040.11.044010 Tau To T00.00,444001604.46014101 4.44 .4444 2244 .41•60 Y Van 20 2014 900 4,06 720.1•004 104020.41Avee 00 000 a 0.16.4 00004 004•0100120104 00441104 00 209.o. - 1.•...v. 7$ trna 4.4 sanla tem Catrei...nnlyasataeweatt• 0010.e0.0.w u 0.600 271.0100altann40140.402004/11704044 San Deutsch, ant Conway So 414 274 tan 570.15 115% 114% 131w 7404 614 Ito 122944 al. 1515 1010 500 0401 Rowan Ns 00 pool P 0000 • 00040.400 00. 0/••.040,01441 10 4 10 52 11 se %Oa %0.044100064.01 12w II% 11% 42% Pow 6 0 4144 P0039001 IMO 3443,. 490. Pawn 114•140040 tOr• Oil 3440% 630% PV 411,104044 ting 30 37% 1114 .1317 47% 9%-114 Page 144 Deutsche Bank Securities Inc. EFTA01097798 Deutsche Bank Securities Inc. Figure 125: Commodity Price Scenario Analysis: Sanchez Energy Sensitivity Based on Bloomberg Consensus I=1 FY 15E El3ITOA (S NYML). G., 2 rr. .:te. 61.75 MIS SUS 13.25 $3.75 VIM $4.75 MO 1228 KM $248 5257 5266 1.272 $278 $46.2 6289 $293 $301 5318 3327 1332 UM SA $349 $$SS $396 AM $387 $392 $396 MS $409 419 $426 $438 3447 2452 $458 $760 $499 $479 $ag $498 $507 1112 $114 $86.0 $506 $516 $526 5535 $544 $650 $556 $500 $597 2547 $557 SAO $575 12161 $686 FY 16E EIENTOA IS Million) kv ML X Gas :5. m<lei 21.11 $30.0 $76 $40.0 5151 $50.0 5226 MO AM $70 $376 $80.0 $451 $90.0 $626 $10.0 $400 $50.0 $80.0 $70.0 2000 $90.0 $2 2$ $110 $239 5312 $357 $452 $537 N Y MF X C., 1- le: 1275 13.25 $3.71 $425 $4.75 $99 $111 $122 $134 $145 $174 Sill $197 2209 $220 1249 5261 1272 12141 1295 $324 5336 $347 1359 $370 $39) $411) 3422 $434 $446 $4/4 $485 3497 $505 $.520 $549 $560 5572 $683 $595 FY 15E Nel Leverage $1.75 $2.25 $278 13.25 53.75 6436 85x 87.. 7.7.. 74. 7.1* 70x 66* 63. 6.0* 5.8. 56x 55.2 52x 51x 4.9* 4.8. 4675 46x 43x 4.2* 4.17 4.0. 35 18x 36 35. 3.57 3.4. 321 13* 33x 32. 317 3.1. 334 10$ 31* 71). 2.9* 2.8. 28. 281 NYMEX Gas IS Ado) 2915 $30.0 231x MAO 138x 25.0 ISW $800 $218 $70.6 434 PAO 35* 25* FY 16E Net Leverage $4.75 68* 4. 4 6* 187 127 257 2 7. 3211 51» 2:3.25 53.75 54.25 75 25.0. 219. 19 44 i7.1: 1581 145. 127x 11.74 Ia.% 10.1x 15.2 11.9x 8.1x 7.76 7.24 8.44 65* 627 60* Alit 6.2. 5.0s 4A 46* 4.3. 4.1x 4.0. 3244 37x 36. 3.4x 13* 3.14 324 291 28* 276 2.6x 2.54 2.4x 2.4x 23x 0 0 0 MiEtE3:1= FY 15E FCF (S Million) YMLX IC) $1.75 $225 $275 13.25 $3.75 $4.25 $4.75 $30.0 ($5271 ($5171 11508) 1499 (14901 0485) 1479) $400 04891 (24110) 11451) 1442 (3433i ($428) )24221 $500 ($4121 ($403) 11394) 2265 (23761 (1MN 123657 $40.0 (53551 (53461 1$337) 2226 (13191 ($314) 12.9M) $70.0 ($2981 ($289) 11280 1270 (12621 ($226) 11251) 280.0 02611 ($252) 02421 1233 02251 ($219) 12214) $500 02291 ($220) 15211) AA 01931 ($188) 0162) FY 16E FCF (S Millie:1: ',MIL% Gas m.:f ft Fa 122$ 2275 $2,25 $3.71 $4.25 75 MO 02561 ($247) 0235) 113241 02131 ($207) ($191) $80.0 4 1651 IV 73) MO 111511 ($1401 ($1291 1118) MA (11121 ($100) OM) 1278) (491 ($681 11451 WM (3381 11271 1116) (54) $7 $18 $29 $76.6 MS $46 $24 968 40 281 $102 $93.0 $106 $117 $125 $139 $161 Ma $172 $1010 $175 $187 Me 3209 3221 1231 $212 ... --- - - - - FY 15E Debt Nosed Reserves( S. Melo NYME X Gas (5.mcle) 225 1 33.75 6125 $4.75 $300 56.2 162 351 $6 1 A 1 141 26.0 $400 $6.0 $6 0 $60 $59 $5.9 $5.9 $5.9 $500 25.5 MA $56 $57 $5.7 25.7 $6.7 $60.0 $6.7 25.6 $56 256 536 $5.6 $5.6 170.0 $6.6 25.6 $56 $56 536 $5.6 $5.6 $000 $6.6 $5.6 $56 $56 536 $5.6 $5.6 3230 $6.6 256 556 $56 38.8 $6.6 $66 FY 16E Debt. Proved Reserves (Snide) NYMEX Gas ISYncle1 223 1$30 577 270 14.9 5400 $6.7 16.6 $665 SAO $6.2 $62 361 SYAO 2.5.9 $57 2700 $6.6 25.6 $56 SAO 16.6 $5.6 $56 $90.0 16.6 $5.6 $56 A.25 $49 $65 $50 $56 $56 356 356 Sawn,. Ocvernettwk Pearturg /WWI> LP r(77/041027v0 orronvy no twee./ Ov 06 /NM MeV. me fawns fIgNelTeCa ft antwg °Gwen, egnntrel Gt.' A PeR.AR8CaCX0rAFIGVELTSCAlMWR WO.OASPE.PVIORST.SICSWEN.SAIMAIRW sect WPX 13 75 SO 6 36.4 $66.0 $6.6 $6.6 $56 $56 25 s. $5.6 267 $6.4 $63 $6.9 $5.9 53.6 506 53.6 506 $6.6 $5.6 $6.6 $5.6 G 3 O 4 5901 5 a -2 a; 8 n En EFTA01097799 13 January 2015 HY Corporate Credit Energy 'Figure 126: Seven Generations Financial Summary I MOS NO 2103 (INNS hCCONatao I Nunn icuie.3) 104 Remus 144,0401401p0C414...1.44”..C•44n:6•140311. et Pao,* 61 101 Thon•ra Cada 13 11 33 Nub+, 1.33•0 Can'tamp 0 0 11117043 44141100114 I • 135 24 400 remtl 161 4.4, 114331 IS &I IS en S Of ton 0 , 0144 13 S 1011441 gluon 1 1•••• IN 3 11144/44/30 11.17.1101170414 wilhtliden 34 1IS 11.17.1101170414 mahout 1101444 37 I" WTI 6440 WWI 5141.10 $10243 $11474 WO NAM 03$11M01 1264 14.49 Mane40AllsatRb Na Cu Pnalaceml tIOnto 2.113 2,408 ACV A4024014.11 03$6,44114.131 OYU°. 044.44 MO. NA 6 NA Maud Cu PAN .1.104, NA NA NA 044044441“ 16.1.4?? MOW 21.1 410 1441 Au1200143.0/14 thata NA T443,6lonlan04.1.<401444., 132 IAN En' 7444161•4410n134414,40 1.03to 53431 14773 16111 ▪ OparsINg Natent pw 3334 1.4024/Cn CO 4 CIA 33SA 06144014 10:04•4 Mit 314 136 110 AtIninto 3.0 s. emu 143 .3 Pacttl. tub RS C444 4140: LINT0A1•10144134. 43.r. r1 Tam TONI 01614 PCNI,04.6.10W01.401.34.1.1t Cm Amdal• gat Pa Sgroo reontlit40 Cope0404 014.411 314 Ca* Me )43u , If Mien Pet C444 The Mn 42441 Than. 3,44.104.0 con tutus suo Naos 4.15iim. 4.34 Tors 0.41 toy (00.036110164. ?Wane Gott 14434st° Beaus ?UN.? Gin, r Gout LM Crod4 tn•Oith. 16171:1VOC.?. igertu oh? Ceatti0e01,N4i4.41 44 :Lc i(t1131101.4. 3044m44 Mr 04141071111 01305. rue Rtitnt1.13,41 postriaos musics. M.a mem 114.10 Situ 1570 SILO 51.10 514.11 NA NA NA san Mbl Pet 11244 51532 1517 NA NA NA N) a5Ma416 14414 123 .14t 443 I29 I23 4 144 111 47 443 147 101 ▪ is 3) 17 5321 01 111 144 33 ft 31 121 121 12 17 32 01 sent 5108 1271 $1320 lace VS8 NA NA NA GS 183 203 IN 238 111233 $10632 1442 $474 3437 5332 KA ra 3 NA AN 12/1 1320 101 2.11/ 3.296 163,17 MOO 16331 11321 Pm lox 42235 1733 NA NA NA 73 14412 51441 13.43 $1424 510.4 44 NA NA NA 103 203 no 110720 442 11033 Net NA 4333 "a ULU NIA $1441 113.33 113.77 $2112 $4,71 NA NA NA 20 71 CI 141 16 110337 1231 412 6331 7.240 NA IN 30 24 NA NA 234 14741 MA NA 1131 2342 13133 VI* 16131 41112 IOU 4434 sea 1122 11707 11303 S296 VP SO 46 xA IM NA AA 34 NA 3l aI 12/9 •714 043 10 IIM 0321 0321 on) 010 14 014) 0 010 PHI POI 4311 (I711 33 0211 12 0071 814 1221 -4 0141 0 131 • 23 C2013 CON l24 0Th 001 NA NA 414% 00% 14 74 NA NA NA NAL NA 347 413 415 21.7% 2121 414t S4 14.18 VIM 4 Killatatd • 1.' 4•14 • 44144134 AT•4044444...133 Val WO One 40 Cnnt Ary4441,14144413316 NS Swum. 0444 ASO Nal 0•14 0,01 4111.044•14 Mn. Nu. Thu '461411)4.1 041/2/1044 kNIN?v .185,01/ 444•24:4?.11)110.343.44 411 iidinVedit MI AO A' Ce 4.n33a•ZA, Wt., *MP? tO al UMW 117 44 433 744 ?IA 14 414 NA .44 vet 104 NO 046 740 14 3.771 tx 1 I • 504314' 214433'4 110 are* CCVNITly COO 321 14? 117 NA NA NA 333% 234% 4164 NA NA NA NA NA 743 743 .101% NO% 70 743 277f 6.b 71). 41, 1114 24 Let 17S5 092 13320 11714 04•0•140.44010104: 1.0774477.1 i314€4140 • Gnu). nn calt p4.43344.1•64 in Cary Tiu 1441110/11044?,....414crts.V.441504 40 pals in4444.4 a eAerowir AM.} 00.3 3 0 04 Tie canter/ 4.433 vat r.r.4.44 xoi MOW" in Oil II 0.010311,0”.?0101 duos:lure noun, an ro co 13 - 03 is 3470,1114.$1331141 SS MO1 4044111 au b17 nut/nu...14 km*1400211 At <4 441 30 2011. ,04 40401, 41, 441110,141 mast. 4,41PY,10 it 217 WAN* IN P33Nrm.mwry 7,4 04404, 414.11144 41140.1034410024.14 4.4 11,611.1410141014 out uf.fr, 117 7/4, 7" 4141% 74% 714 104 21x $7.92 4134 141 FIN 337 •It 4(C IOTA 74% 233 as 14 4.11 13340 Rants . NM Gas 1.m.di Piga,. • UNaltillet5) CU (01•41011113/11 %au 1.0reml13541.4.4 44141,0 Lai 14401 Maim 14443•34,5% 11444.4114.4aren 94 On 14F0110,44.4.1,14.,1 331423 41225 NUS St% NA NA 1013 44% 5 33 • 1345 33%101 1002 1 Page 146 Deutsche Bank Securities Inc. EFTA01097800 Deutsche Bank Securities Inc. "t3 00 Figure 127: Commodity Price Scenario Analysis: Seven Generations Sensitivity Based on Bloomberg Consensus FY 15E EBITIDA IS Million) Ne.ILX Gas 11.7$ ei 1275 $3.25 4335 $425 $4.71 $30.0 1288 $311 $334 1357 1380 1403 2432 1404 $329 1352 $375 1330 5421 $444 1473 1904 5370 1391 $417 5440 $463 $406 $514 150.0 $412 $422. US, $441 $664 $527 $556 $70.0 5453 $476 $499 $522 1545 $568 $597 680.0 $495 1515 $541 $564 16117 1610 $813 $904 5536 1559 1152 sox, $620 $651 $610 FY 16E EBITDA S Bullion) NOILY. Gas :$..rr.lel 1191) 122$ $273 $7525 fr1.1$ 142$ $175 $304 $70 $123 $176 $230 5203 $337 $990 $44.0 $101 1234 1214 WI $334 $446 1501 650.0 1292 $345 $399 $452 1506 5559 $412 $004 TAW $457 1510 $563 1617 5670 $724 $704 $514 1566 $621 $675 $720 $701 14115 $60.0 $626 OM $732 $186 9939 SIM 1946 $90.0 $737 $737 1844 $897 $950 11.001 11.057 FY 15E Nei leverage NYMFX Go. ff<lo 11.75 $2.25 $275 $3.25 13.75 1425 81.75 $304 4,44 404 3.6x 3.34 3.14 2.14 264 $404 174 344 314 2.9. 2.74 264 2.34 IOU 321 202 274 2.64 244 225 102 $60.0 284 28x 244 2.24 2.14 204 184 2,44 234 214 2.0. 1.94 1.74 184 $104 221 204 1.9% 1.8. 174 1.64 144 $944 194 164 474 1.6. 154 144 134 FY 16E. Net Leverage NYMEX Gas IS necle1 $1.79 $2.25 $275 $3.25 13.7$ 14.26 $4.75 130.0 4764 25.0x 17.1. 12.54 9.64 7.7x 624 1.40.0 16.74 1134 9.54 Lb 1124 Six 4.24 5504 931* 754 614 5.14 124 16x 3.04 $004 aft 544 4.24 3.54 104 264 234 POO 42: 364 104 2.04 23. 204 104 MS 23x 284 234 224 Lb 1.64 144 IMO 21x 204 1.84 Lb 1.42 114 124 0 in FY 15E FCF ($ Million) NIMLX Gas 1 11.75 $225 1275 $3.25 $3.75 $34.0 (11.291) (11.26$) 1112451 012231 111200) MO 01.2521 ($1.221) 1112071 (31.1941 111262) 1500 (11.213) (11.121) 111.141 aims+ 'sum $60.0 ($1.179) (81.1521 111.1291 01.1021 1$1.064) $70.0 (11.136) (11.113) 111.0911 01.0681 111846) $.33.0 (51.097) (11.075) 111.0521 1$1.0301 111407) $900 (11.0574 ($1.63$) •11.0131 'mil ant 1300 $40.0 350.0 $740 $704 $pa $90.0 $300 1400 1500 $80.0 $70.0 9104 $900 1300 202-0 SSD 0 1600 1700 SOO 190.0 ry 16E ICI IS ;AL Irc.1 m 1445 14.75 01.1760 (11.1492 (11.13% (11.11+) 01.1(0) (11.013) (11.002) (11.034) 011.023) 11991) ($884) 1956) (sese) dais) 1:41,11..X Gas c 31. 7$ 122$ $275 4425 5395 1425 8675 91.3311 (11.249 41.2291 t51.177i ISE. 26) (11.014) (11.023) 412227 (11.171) 121.1201 Wait 151.01?) ($906) l$014) (1$04) (11.062) 111.0111 119601 (39081 091571 MOS) (11.0051 ($954) 11902) 11E611 (18001 ($7441 11497) (10971 (1645) 11791) 157431 ($6111 (14471) 1$432) ($7181 ($737) MSS) 191441 159/9 ($831) IWO) Mr*/ ($8791 ($6201 0577) 135251 .1474, 11429 FY 15E Debt Proved Reeerves(SMelel NYME X Gas (S.mcle) 1225 $175 $3.25 $3.75 $423 $4.75 $2.1 $291 $20 520 $2.0 11.9 11.9 $2.1 120 $20 $I 9 $1.9 11.9 MA 12.0 520 $19 $19 11.0 $1.0 $14 11.9 11.9 $1.9 $111 31.9 $1.7 11.7 11.9 114 $14 $1.7 31.7 $1.7 114 11.9 114 $1.7 $1.7 VS MS 114 $1.7 $1.7 $1.7 $10 $1.6 $1.5 0 5 FY 16E Debt Proved Reserves (Slack) NYME X Gas )uncle) 11.75 2 3 36 1275 3135 30.75 $4.25 14.71 $6.6 1S3 $51 $40 $4.6 54.9 242 SSA US 54.6 113 141 $2.9 $3.6 14.5 143 $4.1 lie 33.6 $3.3 $3.1 $4.1 $34 $36 134 al $2.9 $24 $3.6 39.4 53.1 $29 12.0 $2.7 12.5 $3.1 12.9 128 127 125 124 123 $2.8 12.7 126 $24 123 $2.2 12.1 San Owacne 9*et ithamberg IWnce CP Panne browny ON4204*1 nce convect 01,087490 We Vst forocaers Vow re.Wf ft antinv COMMA,' 41VMM/h. 0*.' A PeR.Ail8a1.0X0 64.4404PC 22,CAtinWRAINAOASPE.PWIROST.SICSIWEN.SAI Was 72Wsect W.0% EFTA01097801 13 January 2015 HY Corporate Credit Energy 'Figure 128: SM Energy Financial Summary Na. Rea Asa 4 la bet. %a ...AID Giara 10 0411040 (lad MX% bt. %a bp WI aa 10 0110.0 100•11 {tat bt. %a bra 4•394006111.40 Watt) 4 MA :b. Haul a 1143001•44196% tam 13 l(4. 4 WOW 7iNai air,0.74 tat Cat 'baba JI a Ka. Olt OA $73 OR 424 VIA DM , slt Stn Pax Ca 213 to VP RS 1411 In 439 141 114 lak44100.nbin tan 4T 2 1.2 an 121471241alalpi 2/4 IX UM MW OW IN 341 In 140 143 XI Cm XI 413 0617 324 I*1 130 X* Mt 167 Xi 264 636 hat 34 X 34 36 21 46 4{ 64 *3 ligialab IX n Ill 106 XS IX TM S 2214 MI Cl Os assts. CO Ili aft X 6406 in A a Sacra 11 IA I VI 4 AO VA IX In 0371.0 all 03 IS W 40 340 MO ON 174 /a 4 I A A Ia AO Ill 1771 XS dab 01331 Mae% 1113$ Man* {Ill 06 I a.S17 11131{ Obb {XIX SA ▪ 0112Al 14.6..• 1.267 1.01 1,131 1.14 MIA I.00• (1{1COntobtbbmta I.1tl 1A36 1.0 1.0 1.1 IAN O▪ ▪ 067 SAX tea tInta•01464 1414 1741 011 133 Of XX OLIO *114 014$ VA haul is erg Pa tur...4044 1.44.11 331 314 4X XI 3M 4.30 4.10 IX 371 Key Raba a cab" t.e.-4 Ontario , 7'I 73.6A 30All All OCOA 34.460 140.1410 tt.n3 114 031 MX tabs bra On...1nel 4V a III 4,44 401 404 IN lb Craws Cm taxi, Fab SW 3.1,44 3414 at at 43101 SPA MA 43372 46a1 134 net MIX 1310 01111 SIll XX. 0444 WA VW OR AA Cans tata Ian Pal La ILA 1403 La LIR WM 3.474 4 IV 3373 Mai Initba MX M% 3434 AA 7130 A.V AA 47X AA AA la taalon Late/ 11074 76.034 11ta MVO 43X0 MAI 3111161 WOW 24444 3311145 biattart Peas* b %I 7141 750 744 314 030 lA labatittnotal PA 1120 1304 73441 11.100 1.111 XX! MIX XIX 43342 ra *Nan Pax Mal 47.C• 43t0 44 31 a 44/0 4774 XS 401$ 4112 AV Rae. • 0/04111414044164 alb 0641.na 10.011 SIM NM XIX NM 44614 KY W.R 1430 bat Ca 13144 an 1613 31337 1130 11341 11332 11014 11414 O114 LM 6363 PM UN 6316 1313 $432 SIX MIX Da 11{33 06.31 444.1* 31403 11371 $1421 11114 11344 11714 Cal% bow PM 61431 Ma OR MT Ma PIPS R.R 113.40 sint MR 1114 $121 V 44 11 73 MIA XII QM MX a a 143 bites, MM XIX PIA 11114 XIX lila 117.13 lila. 1., on tatlimbet, 61343 MOM 61413 MX MOM lit X 11341 11373 1108 a Ma ab MN MA 411/0 OR 0130 Van MA MR 411.04 41•40,0 now littVaitelluivi a 214 331 40 .2“ IW 024 4 04 4440 Crawls. (ii 0 4,:i di VI LI 0 'labia la al OS MI Inel Mal Ian la 10 13164 Cult alairas Ca 21 ( 10 144 X 71 414 Olt 44 X Ca. Abatis Oa at* a 27 0141 PM OM 4140) 10 04 I at Oa. Capazalial 14 A 10 37 X 12 4 [alb II MI WI lir 41113 13441 W10 030 MI/ / Diatt a.%% 44 OM 03 SS 44. aria Pa hand 130n 71 IN 1431 a fan 'MI MO XII) Ma 11S40442.40 Ca ass lea as Oa C60 boa My 14. 0 2/0 IA 161 0 0 IX 4 332 IMO IMO PACO la 17300 110 IX 3143 4640 21 a MO 343 4443 I a IP* 10 110 IPA 1430 Tealnan Anna Masa etbso ban MOM an ON1 OM 37% V% In I% 11% x24.74 Vaa. 71% 31% V% IX It X% .111Cal asks Matta. tbetal Celanbal Caaltbu 140 4.4410-1/a DaPeal bra a463( DitalbalCaa tab OWN OL lam Ott MV MCI MM 1134 14 *St SON MA 4341 Ib Ob MV MM lap 024 Ib Ib P77 MA Ob 16▪ 37 0144 St% X% 43% 31% >W 134 13.47 XX 1744 a IN LI IA IN 401 1074 10/2 VW lin X A4 Ma Cite I 414a014 Sara C a area a 41 1311" aas an ON Ia 14 IM 140 IAN CM ha.. a 1MPa 4244%Sar lea a XII Oa% bra lea a al 1 131, tba an a al 4.44% {baba a MI 3644% boa an a3144 Taal 11.10 Cap It. Pans1 Lab • Nap Past La Ca La -_n. 1110•40.4 PP MaNgialla Prat DialliTat ▪ inurabr. VA area axonal inapavatetaa tea n Aar AMAX et baby raa 111. a lbtmaallma 210010% m istiewar ba•7 ea baba 04 O abatinal Kr ace bay at Nab/ m ae a •40 ••a In t MO 760 CO a AI LTA 2474 PON 4477 la Calrassaar tai bap 41 taxa maartarla Oraiallin1 plata inatanautnallallia nave PAX Mon banap m rata 44701m.4 Ana bia It &WM Oftittee est COaallf Ca, 'Pass DISISSI 444/06 01410 LIMN bars • 1440a4 60206 IMMO 23.343 PPM Gm Itabratal 1910316 110010 3133313 %Os X% 41% X% %Paid taille0/ X% M 44 Familabial 0.9 artaaina177 111% 311% *ea Plasial Dan 3/4% MO% Oa% 10. rears an 7 4. 1 3 W 1314 fr ..,beta Pay Lama Safi nos 641110044 Page 148 Deutsche Bank Securities Inc. EFTA01097802 IMMOS )ueO 0143S)110O -o 01 ID Figure 129: Commodity Price Scenario Analysis: SM Energy Sensitivity Based on Bloo—hp-r?Can, 2nsus FY 156 EBITDA (5 Million) tionitiX Gas :Si 11.75 1225 1275 13.25 13.75 TAM µ75 130.0 $651 1709 1767 1425 $883 $845 51.003 540.0 1795 USI 1912 $970 $1.026 11.090 11.14$ 1000 KO $816 $1.057 $1115 11.173 11.231 11.293 560.0 11.005 1113 11.202 $1260 11.315 13379 11.05 170.0 11.230 11.288 11.318 11.405 11.463 11.524 11.5/10 500.0 11.375 11.433 11.491 $1549 11.6(0 11.99) 11.7211 160.0 11.62? 11.596 $1653 11 711 $1,769 11.131 51150 FY 16E ERITOA i5 Millionl Tel $1.71 $2311 $175 $125 $171 1435 $4.75 010 ($471 $46 $140 $234 1325 1.422 1516 $03.0 1159 1263 1377 $471 $565 1651 $752 $500 $426 $520 1313 1707 $801 $895 5989 $504 1462 $756 $850 UM 11 034 11.132 $1225 170.0 UP) 1993 Ku? Wel $1274 $1.344 11.01 $90.0 11.136 11.230 $1323 11.417 $1311 11.605 51049 MO 11.372 11066 11560 11.664 11.73 11.942 11.935 FY 15E Nal leverage 51.75 12.25 1275 $3.25 13.75 14.25 µ75 1300 502 4.51 4.1. 3.5. 354 3.22 10* WO ON 361 331 Ils 216 2.72 2.14 SA 322 3.07 261 215. 2.42 222 2.111 560.0 2.72 252 231 2.24 2.12 192 112 POO 226 214 20* 1.1 152 1.72 1.6x $10.0 IS 1.112 1.72 IS. 152 1.42 122 $10.0 15* 161 115 10. 131 It 1.25 FY 16E Net Leverage NYNEX Gas IS. =le) 51,71 $2.21 1 2 n 53.35 13.7$ KZ 94,71 190.0 .947x 96.0•. 374. ICS( 12bx 95x 755 9170 22975 14.92 10.8. 8.4 11.74 66x 4.7x $50.0 9.4* 7.4* 6.1x 5.1* 4.14 3.72 122 1000 54* 4.7x 4.07 3M 3.0s 267 2.3x 1700 3.32 327 2.0x 2.54 224 1.9x 1.7x $80.0 28* 23x 20x IAN Ialx 1.4x 131 $10.0 ISM 1.7x 1.5x IS. 1.24 163 0.3x NYNEX Gas libido) F3 15E FCF $275 3/3131114 $3.25 53.75 190.0 (11.126) (51.077) MAKI 119791 (10301 SPA 1/.000 (59551 1906) 117671 MIA 100.0 11021 ($8331 1/61) 157341 16851 $60.0 ($7591 ($710) 1561) 156121 (SNIM 170.0 (UM WW1 11539) 14411 11101 113671 1403.0 ($6151 ($466) (1517) 1 311 990.0 10761 132% t1217, 13111 (51021 113.0 pap 150.0 9900 $700 $90.0 190.0 t, /MLA Gr. $1.75 122$ ($1101) (51.293) (11.167) em.cteex (WM (501) (57291 (UK) (46101 15131 12911 (1204) 1701 117 FY 16E FCF (S Million: 11.70 4125 11/121 11.1251 1893) 1173)61 17741 116671 MSS) 114681 (1336) 152491 1117) ism 1104 $190 5175 111.0301 115191 (6001 13811 (11631 166 $277 FY 15E Debt Proved Reserves (S Mete) NYME X Gas (Snide) 1175 22 $t75 $3.25 $3.7$ $300 143 $13 112 11.2 11.2 $400 11.2 $I 2 $12 $I 2 $1.1 1504 $1.2 $12 $1.1 $1.1 $1.1 0 $60.0 11.1 $1.1 $1.1 11.1 11.1 $70.0 11.1 11.1 $1.0 11.0 $1.0 5174 $1.0 11.0 110 110 111 lirat) 11.0 $1.0 $09 $09 30.9 FY 16E Debt Proved Reserves (S Mere) laYMEX Gas (Sande) SOS 54.75 (UM ($M) 1756) 11706) (66341 t$5$1) 1611) MC) (13991 MK) ($2K) 1217) (1133) 001 $421 14.75 (60511 ISO (1732) (144.5) 103) 11426) (5290 11207) 1 751 112 1154 3231 $365 $125 54.75 11.2 112 $1.1 $1.1 $1.1 $1.1 11.0 $1.0 11.0 $1.0 $0.9 $0.9 50.9 109 $1.75 1721 25 $1.7$ $4.23 $4.75 190.0 $1.6 $1,6 11.7 SI 7 11.1 11.6 11.5 MO $1.7 11.6 11.6 115 11.5 MA $14 1500 $1.8 $1.5 11.4 11.4 113 $1.3 $12 $6041 VA $1.4 11.3 11.3 11.2 $1.2 $1.1 $700 $1.3 $12 11.0 $1.1 11.1 $1.0 $1.0 $800 $1.2 $1.1 11.1 $1.0 919 10.9 10.9 $90.0 $1.0 $10 1.19 919 919 10.9 10.9 Sums Oraitsche Unit ithambeg fame LP for Me (Swap °alewives nialconereelev (59 Meth Watt me ilartabbes6pates mew Keembege eanstinot simartates am, 4/4CPER.Mt8CUCSO 4:5010147.155(450#0.140.0A.SPLPV4ROSt.SALSWGEN.S.44 Mat 72W end ine4X EFTA01097803 13 January 2015 HY Corporate Credit Energy !Figure 130: Triangle Petroleum Financial Summary II% 54e4ar .642032 CC4 SOU* 150422 162617 101 1.,1..,0.4 Malan AMINO MCON00441, 10/41• 0.34 Pot 61•0275 4414.44 44400 cat. Manna )`1510 C-' Vao) 01174.4 4111 4494 nnrt n.40 $.01ice$1.31Nrs. Onrs Oto in,. Omni. tell 615 onrX. Inn 64•116(4644 • 09 n 0) 19 ID 10 17 LTV CONN 4410116410.• 72 OW 44028 44441.4144 M yi µ Cu*, 1.12,6 $10133 left II.0 Namtlea. i1.46di SIN 144/ Pv411.044 0•14 14nrol Gat lIteclext 0.1/.11 IN Manna NO Gm 14.4• 11.4/41, 446 Cn.A4 011.”1$01. •1.40$ ma Pc44 JCS g$, e 49,1 11410 c40.0., Pat nmricrat•14.14$ N 11440.0t. tin littli 53444 Icul (.2..• ;Jar. P.)3.4.$ 1$‘4., RS T4431 (.2..• Wet 1$4.41:011.00i 11 739 Raten. 4 Opralai Mars p4r Ile• 141µ/1[n WM 0111C404 61651 O4 5427 DNA 13614 000454/140414 937.71 $14,441 13.20 21^..I twain 40 410 3.p 4.3 NO a Oa° sat $1135 FA 4,00 ON NM Fr. NM Nan LOITOAX 401. Malan 31 0400134 - Cape 144)0516 4 00$02)4•40 1114) 641.4 • 1704176$045 4 NWT.% III) 'NS CNN 1114) O464 a 401404•9 444 14) 4444 .4404040 9447. 1194) 17244044 capes/4 Irleresio 1 Fr044•461,1•44 OM NOhW51MMal.1 AstACCC Once. 11.444510 0 Amen Irmo NA 10•41,41 Am. 54144 Ile) O9100.9144 04 Or1. 10) ROI .- Ciao 4.440 10 500, kfles 4 O•a 111 lint,T0n 041 tfe Vey Own 941464 grew 0.14.1$.1.04.1.4 Itt41$0114,11 02,1 240. 1104.0 4444 310% MN CIS 5144441.4 LOITOISC•4104.411)$$ C45161441 7/ mon NIA Ss. See entE04/04.$ 24 32111619/104 42. NO 120446110AX 2/14 17441742.44 now.. it's>. I 12442 04109•$.41N..m0,1.P.,..., F..a 0770 Cal 4.0•5AwiAN an, 1554 Cm1.0%.p•mtri 644 x'so 14444 C00 4044044 209 L4161140lion 040. L.644.141 1054 a01 40401 Oa /16501. Cram loverst6)t On4np Taal 444 004 ▪ 15$. Saw, 4.1/(1.1.2222 6,4 0.,...ettiflan 1041 2414 Note** ihrote$1$10est Othm. 114+1414 erninnam.741,- 47 [0.7044 On, o$1 an$.$3 1.v VAV4P6NTAWN SOLOA4 DARYA. SA COMAMy IN 142 174 502 03 31) IN 174 602 90 214 56 ri lee 245 54 t$ 40 01 07 4) OS 010 20 21 V XI 1O 11 12 27 3. Ica 10 19 31 24 43 0I) 34 (49 010 3 0): 041 61 6 10 10 19 44) 44 K IS IS 041 140 14 122 403 203 1 110 104 H6 177 20 207 13010 110110 5140.10 INN 71175 41731 410 IA N $4426 $111 4.21 12.4$ 3343 30) 441 AN 654 I.6m IN 030 $4.20 1421 15.41 14.50 MN 475 Nil $77 CI 417 347 IMO CS 1)21 479.64 49) 4 13247 Ma 183.39 193.73 W 4 o al 52 II 40 II) 3 72 55205 WC $352) 33224 542.42 00 01 $41.72 467 721 971 1.121 8.447 *3 1.121 47114 99296 14024 VAN 41014 $0111 WM Pt* 14.63 1424 670.44 Pea WM WM 117.31 $1519 115 44 O5.4 0443 $1529 Ili* UN 1457 5423 1114 5432 12491 $442 5269 5472 124.15 WM 52111 =SI $21.47 fall 93916 $3434 127.70 1.31.14 MM 114.37 1527 151* NO MM N1* KM 1314 $170) WM $1730 $17.50 $1054 1240 $17.30 $1511 II5 II $15.11 51511 11511 $1335 $15.11 4014 NW NU/ 144.15 4477 VOW 141.31 32 43 63 46 703 7 403 ' ' III 0) 00'2) 041 INN 170 OW OW 14011 05 (141 1141 OP 0141) 06 13$ MO OZO WV PI) PIO 041 14101 32 571 PM WA PO (1 9 IN 00 00 1431 140 IMO 074 0141 (I) 2 2 1 $ IRO 00 0971 117) PIO OTO 13441 07) (I7) 021 01 2 2 3 44) 00 11971 06) 000 P42) t2 10 44 33 14 33 215 143 40 65 10 25 2:$. 148 14 64 604 41 123 174 343 43 432 429 439 144 30 M4r 43% 175% 103 166% 64214 227, 421 203.4 IS% It% 296% 419% 20 214 344 16 la 2310 25.46 474 40Z 2.1$ 224 03. 921 0.44 94 2n 130 ale 3 70 330 $34 324 33. 24 2.44 34$ 2,1 atx 1254 214 1651 MAI $1564 1.1463 • 0443 111011 vet 4019 12191 $3221 SAO • 14 43 R.4 044006471)154010.4c Marl* 4tVOINM C001011400 (PL/$11 4 47400 n 21410216 upstream. mkistorn 611 4144 sankr. •th in 4444/44 141040 on 1101/44 444.111.11 operates III 00 0 en *Minn Mn 11071114 LAWN SOPM14 alich 0. nave. %NIG.. °anal P Mora. “440loteit) 12 12 7c 14n Oat (004144 0041 16 0: #444 Ren40 WIAm.2011 .'d.464 4m • Prom.117•4444441 14% al% 0.4.040,009, CaIbc mOstrom P000%. • 10.0. 0 in Soplentwn 2032 Getay let "YU 11 444:4211014 7012% Itron• 1445bienwil 06 111 27504. 1032 PV RICCH14,40 225 47, 044 7•44.41N 60% 1447 .144 WAG 475 45.1441 Page 150 Deutsche Bank Securities Inc. EFTA01097804 IAMBS >NCO 0143S)110O -0 0. 0 Figure 131: Commodity Price Scenario Analysis: Triangle Petroleum Sensitivity Based on Bloomberg Consensus FY 15E EBITDA (S Million) toRILY. Gas :3 11.75 130.0 $185 $40.0 $196 $500 $206 RAO $219 $70.0 $231 $80.0 $242 $10.0 $203 UM $IM $IN 4209 $221 4232 $244 $262 1175 $ITS $199 $211 $222 $234 1245 420 $3.25 $IR $201 $212 $224 $235 $247 $S55 µ75 $191 1202 5215 5225 1237 $248 5258 $425 $193 $294 $216 223 UR $250 $216 $4.75 4191 4206 $217 $223 $240 1252 $270 FY 16E ERITDA (S Million) tOOLY. Ga:',Smael 11.7$ $2.24 µ75 1125 UR 1435 Oa 4159 $10) WS $163 4165 $166 $103 $40.0 $176 $175 $179 $161 4152 $164 $185 $40.0 $194 $194 1197 SIN 1200 5201 5203 RSA 4211 1212 1214 UM 4217 5219 $70.0 226 $2.9) $231 $233 5235 5236 $236 $80.0 $246 $247 $249 $250 5252 261 $256 190.0 RN 1269 4271 $273 1274 $276 $277 FY ISE Nei Leverage SYSIFX C..... :soon. $1.75 $2.25 275 $3.25 $3.11 $425 $4.75 4110 434 484 4.7. 41. 4.64 464 4.54 $400 45* 444 4.44 4.4. 414 434 424 $500 424 4.24 4.14 4.1. 404 4.04 404 $60.0 39x 19x 194 3.11. 3.. IR 174 470.0 3.74 174 164 3.11. 344 1.54 154 4050 344 14$ Ma 3.4. 344 IR 134 $900 92x 324 334 3.1. 3.14 3 Ix 304 FY 16E Net Leverage NYSE% Gat. IS. mete) 41.75 42.23 $2.75 $3.25 $1.1$ UR 14.74 430.0 624 61x 6.0. 0.0. 5% 564 524 $40.0 544 5.4a 5.34 5,3. 52. 5.1* 4.14 .4 4470 434 RR 4.74 4.7. 464 4.64 4.54 $50.0 934 934 424 4.2. 42, 4.14 414 $700 31* 3.04 314 3.1). 314 174 3.74 180.0 35* 154 334 3.4. 344 3.4* 3,34 180.0 344 114 114 3.11. 34. 104 3,114 San Owesche font *wt., Imam LP tor the (Swag corpomes not convenv 083494 Weld the ferecaSsRpees.e.S-ct 0.b mg °omens., cgs's/tom* A 0 m FY 15E FCF($ Million) svOLY. Gas 'S 71:fel 41.75 µ25 8175 13.25 13.74 µ2S µ75 g a 190.0 ($2271 (6225) 1224) 11223 $400 ($2171 ($215) 11214) 11213 150.0 ($2071 ($206) 14205) 11203 190.0 (MN ($196) 1190 11193 02211 ($2111 02021 01921 ($220) ($210) ($200) ($191) 11219) 11209) 1193) 11193 a_08 a En $70.0 ($1871 ($186) $IN) 14183 ($1821 ($181) 11175) 180.0 141771 ($176) ($175) 15174 01721 ($170 i9370) NIS ($1631 (6ICO ISIMO l$153 ‘5158I also Ism FY 16E FCF iS Million) f 'Pt Tel $1.75 4225 $275 1125 $3.7$ $535 41.75 $300 ($1011 (39) 1$97) me (RN ($331 WI) 140.0 OS ($57. WS) ON OKI ($501 ($n) IMO ($781 175) ISM 1471) 0701 (4881 ISITG MA ($831 1182) 1160) MO (5571 (3881 ISSN $700 ran SR) SW IBM) (441 ($431 IWO 180.0 ($391 MN ($36) ISM) (53321 MO (269 PIO ($20) 1119) 1117) IWO 0141 11121 1111) FY 15E Debt Proved Reserves (S Motel NYSE X Gas 11Mcle) 41.74 $225 275 225 53.35 PIS µ75 $300 S4 i $4.1 44.1 MI $91 MA 14.1 $400 54.0 SA 0 48 0 14 0 $4.0 20,0 490 4504 $4.0 $4.0 $40 $4 0 $4.0 $4.0 44.0 $60.0 $4.0 $3.9 419 $39 119 $19 53.9 170.0 $19 $3.9 419 $39 119 $19 $3.9 $500 $3.9 $39 $38 $38 118 $3.8 $3.8 443.0 43.6 $3 6 435 $35 sae $3.5 413 FY 16E Debi. Proved Reserves (Softie) NYNEX Gas Mende) 41. 23 224 $226 1125 43.75 4.25 44 T. 193.0 44.5 45 SAS SA 5 41.5 $4.4 444 $40.0 IAA $4.4 $4.4 $4.4 11.3 14.3 14.3 $500 4.3 $43 413 113 $4.2 44.2 142 850.0 $4.2 $42 42 42 $4.1 $4.1 $4.1 470.0 491 PI $4' 41 44.0 $4.0 $4.0 $80.0 4.0 44.0 410 410 $19 $19 53.9 190.0 $3.8 $33 US $18 518 $3.8 $3.8 PIA.AAMICAO4AFIGEPELTSCIVANICA640.0ASPEIVARO:$2.21252,CENSK IPIAI12Wsnoni4X EFTA01097805 13 January 2015 HY Corporate Credit Energy 'Figure 132: Tullow Oil Financial Summary lan• MOT Xxse 21211 4.2%0 IlnI 643:02 Iw 480.4441.48 Or Pau Ca7,47•140.7. • 4.1.4•40 044,0 9 te4) 41.40.0.14.1100 c414 lull 1111104%.4314•0301 110.44 Ohl (014041.4443, Onrin..400.44444 Oh, 06.04040 °PIS Oslo Ina *nor. ITI 1410C46401.14474 44.404.4 4.4%,4144.044 Ann 8.4.4 060403.0 • 114/44.iOss 3101, 114.01.03n4•044.01.4.140104411 0614 Gantry /nal On 444.3.40, nab 110.01,40.411•411W4 t84421 ConarOl.n4.74. 300 11•41.40, 7744 San Cana Ora nnae4419.14 11•24494171. 14. 404 Inat6...”440.40.40.34en St la1 44.1444.104. OK Rvanuelloniting.latans MY 744,4.• 4446( 44, 04.4 07S. N.Y 4414.....• n.. 440 4 in mu 1,4.j 44.34.44,.., 1•11004.40 114•9•••••• 1-0114.1, 41 Ingn too 0.• 4 cent 440444.01•04.411 44•••44,4,4•17.4.••(.444 LW 4.41 474 04. :nu 44.44.: CH44744 rId4441 hoe tun NA 44 44 4.47. me tn. Ohm hat Ato..• neon An. me tn. I0. hat soul tets 11•908 112114 0294 Nara I 141..n .a.fran IC Oen 114014 IS0.17 NC Mao 140.03 i0.01 Ina .an xsN am YI IYI u* 463 en NI r ntl NI 877 281 3116 321 263 221 191 24 47 444 430 100 444 11111 ICS 474 435 1241 4, IND 312 IN In 47 492 313 ra (alb I.747 IMF Lin , an 11 1.18 1017 t ar 205 0421 In/1 nif 1104/0 IPSO 14024 la n .1 OM I - 949 24.110 anf nag 10.042 Ina 33 741 14:0 020 In ION 101 944 0.002 inn u440 11,04 22 441 18144 I "Al, nal /01310 IAN Inn KA Ra Ra 104 its Ma IA010 tun 9050 1001 KIM Ina 1230 81.91 .4210 12111 1)20 MOM 049 11.70 MO 01313 4033 in Ma nn -c 14410 $01 Nan 14420 17344 1/1 RICO 4443 IOM ill 44 81111 17 9 W3 NA 14020 'PAO Na Ina 0952 -a Mtn 9044 wan SNP Sill nth nµ MOS 1194 RA 9X.4 2244 1.744 2244 00 IMO OI 3.70 14.1 vN 4 PI 011 lM 41 la IMI ISIS I IGII 811 Oaf Ile 212141 WIN Nan 94.212 1344 323 1434 Ina 118 1431 ua ua I Ina 4130 905 21,0( 0414 14144 30 -4$ Na Inn 0300 (214 wr 197111 1921 43141 IGO nag irfin Pa 10311 27 444 9361 Mal 11028 It.,' 11134 44 ▪R A • 0.44%01/440.4 14.•44...0•444,144474 4.44/ 7 0. 4. ht 0 44 tun,' 1.1110•41174•1444% illgOAACIII)111••••2 act 1.••••Ci re io.}t4 40 in D.tattl714.4 34•714147.14 441 lin IA 11-4 40:0 nal 0 0 / IS 31 39 IWO/ In 1103 0.7160 not 94 7 114 LIM Loa nn 1/111 110 1 Al ( 1113 17641 07 PIM 14.6171 WWII 99 13 Q1I On O 01 01 0 00 Ilat 0 33I 503 On an 010 2444 z 417 67 1.044 1.113 1976 1747 011 Ina OA aro nal OM 11* 3:0 010 C40 343 411 In 2.461 7610 I.133 Ian 1,110 IAO 2,A4 3/111 01 I al I10 213 0 47I 05 81 ata * 11 (an 1 In 0" Lin 207 3 An LIM (4•01 Dab 331 36.1 144 tn. ILN 83111 126.1 10% 110 921 6% 0% 140 8. 94. 4.140 16% la% 7,6 1.44 Ott to ISM 411% 4417 017 Ib 16.01 .114 128. Ii. u. t. an 9% 024 I.1. iKS li 143 IA IA PAU 3% 14.0 0.2. 'Sc f▪ a fa t V•••• • A,•••••• L•f ▪ l843.01••NOCCI 4404 6, 7.47 Anne Mkt C.-w. Ann.. :ma Ar••••••1 I 0, 3, %V •••.1.10 t.4., ?on...oaf:tit NY. 144.10.14 k% V.cal P•• :OA I a nt • • L•11 0.184. Yaw 477,0104 1.4 0.114140.131 14013.01214147n .11 ISM 439 1114 Ian Saint De.rtni‘. Ma CtI.N.4447 1841 019.14.450nallOwn 7On (401a*/00as n 4.044. 444,041 Ortnnes Only. 4.477444.4 an 840 twosome.* omen. Ews son Mime ins Au 71wiewirO.O.Trama ann./ alcan 4«11....81.449.. Can 401 4144414. 14.4 wywrry 444 In *so 47•• taunts al 1•04 PMACteretli irriV 18 re 0 4.84• $.7311464.14.430 0064 79 Iniiat 711 n 1115. 214 :V a.m., kg 18 trete' It Mann 4.441.4444.1 z•Oeboamsow %Oa • Ia.*. 0•••••• Rana ay MOM as Pawn* (Ala PannanneinIall 12.1 no m444 33)053 144280 MI IN 317351 111187 In 305 1818 Ili 440 11 Mn Mn Ian If% KS 11 'in an /a NI* 63* 1343,17,73 Page 152 Deutsche Bank Securities Inc. EFTA01097806 Deutsche Bank Securities Inc Figure 133: Commodity Price Scenario Analysis: Tullow Oil Sensitivity Based on Bloomberg Consensus ==l1 845.0 7.55.0 K40 $75.0 S85.0 144.0 :no wu, 555.0 165.0 $730 $430 195.0 $35.0 $45.0 584.0 1040 175.0 585.0 5910 FY 15E E81TOA Million/ 6UVNa!umlGnv 'eerce !Perm 115.00 5828 $1.009 11.049 3/.169 31.250 $1.330 $1.410 HOP Na Si 5 CO 5.43) 58(7 5764 1001 $1.038 $1.175 31.312 $2300 190 $1.043 S1.124 $1.201 11.284 $1.366 $1.445 $35.00 19% $1.078 $1.158 a 11319 $1.399 $1.480 105.00 $1602 $1.113 $1.193 sen sus $1434 $1 114 FY 16E EFITOA 1S Million/ Cs pence ihnon 1200 $ 552E P25 190 1933 13076 $1.213 $1.350 113.0 1977 $1.113 11%0 SI 95: SK.00 1603 5740 sen $1014 $1 151 sl an SI 425 FY 15E Net Leverage HOP Naha« Ca (pence Pierm) $1500 49x 49X 4.1x 3.8x 35x 32x 305 25C0 4:. 49a Witt J65 34n 29x 100 4 5, 43. 3.8* 335 230 205 28* 10 03 43. 40. 3.74 3.4. 12. 2.7n FY 16E Nel leverage HOP Neutal Gon (pCnC-0 1n*:(111 s15ø 550 993 145.0 78* $55.0 801 $430 491: $750 41x $85.0 $95.0 30x 25.40 91. 707 5.119 4.15 3%. 345 296 $33.00 8.4. 5-35 4.42 277 82. 287 7.9, 6.1. 3.6n 3.1. 2.7. 356.03 51667 $1.147 $1226 $1.308 51.388 $1.499 $1549 356.00 $641 577(1 5915 $1052 11193 5132C 51 4( YØ $1.102 $1.182 11.262 $1.343 $1.423 $1.503 $1.584 165.00 1623 $.909 51.030 51.226 51.312 5559) $7369 $1.137 $1.217 61.297 $1.376 K454 $1.538 $1.619 17010 $716 199) 51.127 51,:+51 115.03 M5ø 3 C0 42( 40. 39. 35:( ah 36a 30 3.4.. 3.3n 3.3. 329 3.17 3.1x 347 2% 2% 28/. 275 2.7), 20 2.55 $36.50 2. 4.7x 4.04 3.« 269 24. $6500 7). 549 43x 18/. 339 28x 25x 7300 93. 51n 405 285 3.17 2 245 $35D $45.0 5090 $61.0 575.0 $85.0 $9$ PY 15E ECU' S NBP &Bigot Gr. .nercc (Icuri 115.0) ($1790i (1.9361 (18821 ($6281 (17741 (37201 .1466, $25.00 t$883) (1903) ($851) ($801) ($747) 4693) 1143% 135.00 1193% 11%21 1/774) 4720) 13616) 156131 $46.06 9908 6255 748 96994 5640 5596 FY 16E FCF (5 Million I:BP Unturcl Clax Iherrn 515.03 52500 115.00 3330 5333, .5365, 4332 $43.0 ($8911 Qu) nus $55.0 ($119! (5188 S1Å) 595.0 (1861 1159) 1131) $74.0 $16 144 $72 $1130 $118 1146 5174 195.0 $220 1248 sere 535.0 1450 OMO $75.0 SBSO 5840 5320 SKO 165.0 $64.0 $71.0 $85.0 /350 $46.00 113091 IØ71 '$1061 ($3) 359 5202 5301 18520 GUS (18291 07751 (3)211 06471 06131 ($5691 16500 02611 41791 9071 $25 $127 1230 5332 F Y 15E Debt PiOved treserven (S Sicle) I:BP Benn.' Cas (penc. ihnrm) $15.0 $2.0 $2.0 $1.9 $1.9 61.9 61.9 61.9 $210 520 $2.0 $1.9 11.9 11.9 SIS SIS 511.00 520 $20 $19 119 519 519 $1.8 .00 120 519 SIS $1.1 SIS SIS SIS $2.0 $1.9 $1.9 $/.9 $1.9 $1.8 $18 F Y 16E Debt PiOved Ptserves (SINIcrel HOP Halles) Gan (pence Inerm) 15.09 $2.1 $2.0 11.9 11.9 11.8 11.7 $2500 $2 I 120 $2.0 11.9 114 .15 11.7 $33.00 121 $20 $IS $13 $1.8 $1.8 21.7 1.15.00 520 $20 SIS SIS 0 51) 512 Saxo>. °reine. 8zek Martin Miece 20 98•700.70970 ors0n7/ 8e1s778•90 Oy 0814W) Set) me krocassiespeeneher etantwg contenu., <ventres o., ), A PER.AA8W.CA12fAi/OLPEL7510446.046.0.0ASPEWAR00.0.98%6A1$11101,1172%.991 WPX $50/0 52.0 52.0 $1.9 $1.8 518 31.7 $1.6 $65.00 ($856) (1802) %Ne (1898) Sie (1686) ($532) M5Ø ($253) 19151) (091 $53 $155 $257 $30 1100 $1.9 11.9 11.9 11.9 SIS $IS $38 $6140 43.0 $1.9 $1.9 il.? il.? 11.9 575.08 (1775) 11721) 11861 11414) 71960) 1$506) $71.00 $1.9 SIS 91.9 SIS SIS SIS SIS $7300 120 $1.9 SIS SIS 117 il.? 636 EFTA01097807 13 January 2015 HY Corporate Credit Energy 'Figure 134: WPX Energy Financial Summary MOM 5.204 9./444441114144 600% 9. Ur040004 NOM 52% 4/.1.4440421404 4444I ismannotbas, Bat .00.103-0.101, Oil Z.1424100..Noi, nolway 15..1217 15.4, 22 11.21/•24 NC Sate X61.4 15 04121 an :V 0 • IC MIS MIA te).0) MOO) 114441 673 734 7244 (.11 666 I- 1114.02031400IN Gan an!. C.1.4144/0441303 111mleue 4 4160 071 Is 074 746 1.014 414 301 034.41.46x1. 303 340 Mn 333 .34 7144n.1111•30.4 Gin titan, 021)28415149112 161 177 91f 911 402 CO2 241 222 207 213 43 Eon non. 20 27 30 (CT tad anvil 031 Iw 40 (Mei 33 430 34 230 04101 40t640 MPS. 14.11. Eel NI tarsi 110/1 11.5561 (2011 09 Tans al 13711 23 NO Inns 1444 11 (121 54 11011941•18 14.7.11•• 90 740 401 402 1.011 ITO Et111941•182.47.1144 416 767 1453 1.143 I ('a Intel 80101 93241 92141 11022 2725 Hong lib til.n/ Gx .3.3145 1:103 1311 14.73 TAN 22 Key Pr.:4MM Cs Nara On [l01,00./t. li 1108) 41332 07.8 (OAK 5206 Eb NN MY. On Pew .1.1.1y. 22 29 31 0;04 01 P.tpxio. 911044 202 2.226 2234 2440 2439 Moms 0.18,4• %OM 279 63 86.2 402 012 PC' frolatien .Ntn. 1µ0 IA21 Ise 1933 4402W flat P4?..1.00, 312 348 248 314 376 Teel 40040041 0400 114471 111.74. 11021 114141 TI fandeni 1144144 0 4 0$ Mm 10047 13131 431 MM 44.0na• 6 Operate atolls po• /kW Moil nil:, bey(..:. 5440 1101 54.47 $014 22 14.44 Ma lies II a Cola 1207 6204 1127 1.1.9 1220 Ca 250 10µ 9341 043 217 Opital h. nen 923 50.71 61.15 91.22 4.25 enrol (same Os ns4 272 1023 9333 9324 1021 3 Y. A...2 /MA" 1367 1131 1333 1339 225 37I.411 I4O 1219 270 12%1 1221 4274 FO011" 1640 6121 MM Ma 4414 Pm Cr Ilea: (011M 11•32n Onl Pam Teal 244 Our°. .110.1001010.441 CMHr4u4rti 0.37 Sac. area iI4 [truncated]