Enverus LFC Panel Discussion

ENVERUS INTELLIGENCETM | RESEARCH

Macro & Permian Insights

June 2021

Enverus LFC Panel Discussion | Macro & Permian Insights | ENVERUS.COM | 1 The Macro Picture

Enverus LFC Panel Discussion | Macro & Permian Insights | ENVERUS.COM | 2 Key Takeaways ENVERUS INTELLIGENCE™ | RESEARCH

$60+ crude prices are a result of OPEC+ supply management & demand improvements (actual and anticipated based on continued COVID vaccine rollout) • Iran deal presents downside pricing risk • Storage is well on the way to normal levels

Natural gas prices hover around $3. All eyes are on production, summer weather, and LNG exports

The New Mexico Delaware is well-positioned relative to our price expectations and other US basin economics.

With OPEC+ redoubling market management efforts in January 2021 and moving to conscientiously taper production cuts going forward, global inventories are expected to post further draws through the end of the year. However, our expectation for a lifting of US sanctions on Iran may test the resolve of existing OPEC+ participants. The balance below assumes the core OPEC-10 members will step in to balance the market again in 2022. Failure to do so would undoubtedly spur a steep decline in crude oil prices.

110 9,303 10,000

105 8,000 Supply/Demand Imbalance (MBbl/d) Imbalance Supply/Demand 6,533 100 6,000

95 3,250 4,000 2,900 90

1,432 1,416 1,273 2,000 85 767 966 739 100 195 0

Supply Supply Demand & (MMBbl/d) 80 -241 -251 -570 -487 -438 -535 -650 -653 -1,081 75 -1,450 (2,000) -2,208

70 (4,000)

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22

2024 avg. 2025 avg. Supply/Demand Imbalance [RHS] Demand Supply 2023 avg.

200% 50 191%

160% 45 /d) 143% 148% 147% 143%

130% 139% 132% 130% MMBbl 118% 130% 121% 120% 120% 114% 40 120% 107% 106% 112% 101% 105% 118% 103% 103% 113% 110% 113% 110% 96% 113% 93% 103% 109% 91% 104% 102% 73% 99% 90% 100% 95% 90% 90% 80% 84% 89% 35 Compliance 73% 86% 66% 74% 73%

48% 48% 40% 30 OPEC+ Agreed QuotaLevel (

25%

0% 25

Jul-21 Jul-17 Jul-18 Jul-19 Jul-20

Jan-21 Jan-17 Jan-18 Jan-19 Jan-20

Mar-21 Mar-17 Mar-18 Mar-19 Mar-20

Sep-20 Sep-21 Sep-17 Sep-18 Sep-19

Nov-20 Nov-21 Nov-17 Nov-18 Nov-19

May-21 May-17 May-18 May-19 May-20

Enverus anticipates the Biden administration lifting sanctions on Iranian crude oil exports in Q3 2021, resulting in an increase of 1.5 MMBbl/d of supply from the Islamic Republic by the end of 2022. This will likely test OPEC-10’s resolve, but will nevertheless require additional production cuts in 2022 in order to offset the additional Iranian barrels and avoid another price collapse.

OPEC-14 Crude Production Iranian Crude Production

34 4.5

4.0 32

3.5 30 3.0

28 2.5

26 2.0

MMBbl/d MMBbl/d 1.5 24 1.0

22 0.5

20 0.0

2020 2015 2016 2017 2018 2019 2021 2022 2023 2024 2025

2015 2016 2017 2018 2019 2020 2021 2022

History Forecast

Enverus expects relatively strong prices for the remainder of 2021 before a drop in 2022+ as a result of Iranian production return, US production growth potential, and slower demand growth trends after the rebound.

$70.00 $64.20

$60.00 $54.70 $55.00 $55.00 $53.50

$50.00

$40.00

$30.00 Henry HubHenry ($/MMBtu)

$20.00

$10.00

$0.00 2021 2022 2023 2024 2025

Enverus Forecast

Dry Natural Gas Production

Natural gas production growth has returned and 2021 2022 2023 2024 2025 is expected to continue over the next five years. ∆ Dec. to Dec. +1.63 Bcf/d +2.58 Bcf/d +1.0 Bcf/d +0.77 Bcf/d +0.4 Bcf/d Higher oil prices of course mean lower gas prices can still bring incremental gas production to the market. 100 Dry gas areas in the Marcellus/Utica and Haynesville gas plays are expected to drive the growth in 2021 along with higher associated gas 80 production in the Permian.

60 Bcf/d

Year HH ($/MMBtu) WTI ($/Bbl) 0

2021 $3.19 $64.2

2021 2022 2023 2024 2025 2022 $3.27 $54.7 2020 2023 $3.00 $53.5 Other Williston Anadarko DJ Western Gulf (inc. Eagle Ford) ARK-LA-TX (Inc. Haynesville) 2024+ $3.00 $50.0 Permian Appalachian

Bcf/d 10

Jul-17 Jul-18 Jul-19 Jul-20 Jul-21 Jul-22 Jul-23 Jul-24 Jul-25

Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25

Legacy Capacity GCX Permian Highway Whistler Permian Pass Production

14.0

12.0

10.0

8.0

Bcf/d 6.0

4.0

2.0

0.0

Jul-19 Jul-20 Jul-21 Jul-22

Oct-19 Oct-20 Oct-21 Oct-22

Apr-20 Apr-22 Jan-19 Apr-19 Jan-20 Jan-21 Apr-21 Jan-22

South LA (Sabine, Cameron) MidAtlantic (Cove) South TX (Corpus) Southeast (Elba)

Houston (Freeport) Monthly Average Forecast

Enverus expects higher prices than those currently trading in the forward market. A price increase starting in 2021 to $3.00/MMBtu is necessary to incentivize production growth to meet expected demand.

$3.50 $3.27 $3.19 $3.00 $3.00 $3.00 $3.00 $2.87 $2.74 $2.58 $2.57 $2.59 $2.50

$2.00

$1.50 Henry HubHenry ($/MMBtu)

$1.00

$0.50

$0.00 2021 2022 2023 2024 2025

Enverus Forecast CME (4/27/21)

Source | Enverus, CME Enverus LFC Panel Discussion | Macro & Permian Insights | ENVERUS.COM | 11 Permian Themes

Enverus LFC Panel Discussion | Macro & Permian Insights | ENVERUS.COM | 12 NM Delaware Inventory-Weighted Breakeven ~$34/bbl ENVERUS INTELLIGENCE™ | RESEARCH 56% of Sub-$35/bbl Permian Inventory Situated in NM, 55% of Delaware Inventory in NM

$60

$50

$40

$30

$20

Cycle Cycle Breakeven @ WTI:HH 20:1 ($/bbl) -

$10

10 10 Half

- PV

$0 0 25,000 50,000 75,000 100,000 Location Count

NM Delaware TX Delaware Midland

Source | Enverus, BEG, BLM Enverus LFC Panel Discussion | Macro & Permian Insights | ENVERUS.COM | 14 Federal Land Inventory Risk From Potential Ban on Leasing ENVERUS INTELLIGENCE™ | RESEARCH 7% of Delaware Inventory at Risk if Only Currently Producing Leases Are Considered HBP

More Severe Case - Considers Only Producing Leases to be HBP

40,000

35,000

30,000

25,000

20,000 Remaining Locations 15,000

10,000

5,000

0 Federal Unleased Federal Not HBP Federal HBP Non-Federal

Source | Enverus, BEG Enverus LFC Panel Discussion | Macro & Permian Insights | ENVERUS.COM | 15 Federal Land Inventory Risk From Potential Ban on Leasing ENVERUS INTELLIGENCE™ | RESEARCH 5% of Delaware Inventory at Risk if Leases with Early Activity Signals Are Considered HBP

Less Severe Case – Producing, Drilled, Completed and Permitted Leases Considered HBP

40,000

35,000

30,000

25,000

20,000 Remaining Locations 15,000

10,000

5,000

0 Federal Unleased Federal Not HBP Federal HBP Non-Federal

2,500

2,000

1,500

1,000

500 NM Delaware NMDelaware Production (Mboe/d)

Jul-20

Oct-20

Apr-20 Jan-20 Jan-21

Feb-21 Feb-20 Mar-20 Jun-20 Mar-21

Sep-20 Dec-20

Nov-20

May-20 Aug-20

Oil (Mbbl/d) NGL (Mbbl/d) Gas (Mboe/d)

100% 90% 80% 70% 60% 50%

40% Permits 30% 20% 10%

Percent of Monthly Approved Percent Approved ofMonthly 0%

NM Delaware TX Delaware Midland

100% 90% 80% 70% 60% 50%

40% Permits 30% 20% 10%

Percent ofMonthly Approved 0%

NM Delaware TX Delaware

900 7,000 Permits Approved Cumulative

800 6,000 700 5,000 600 500 4,000 400 3,000 300 2,000 200

100 1,000 Monthly Approved MonthlyApproved Permits 0 0

NM Delaware TX Delaware Midland NM Delaware Cum Permits TX Delaware Cum Permits Midland Cum Permits

1,104 Current Permit Count

3,580 2,103

NM Delaware Midland TX Delaware

200

150 Rigs 100

Jul-20

Oct-20

Jan-20 Apr-20 Jan-21 Apr-21

Feb-20 Mar-20 Jun-20 Feb-21 Mar-21 Jun-21

Sep-20 Dec-20

Nov-20

Aug-20

May-20 May-21

NM Delaware TX Delaware 100% 90% 80% 70% 60% 50% 40% 30%

Percentage Percentage ofRigs 20% 10%

Jul-20

Oct-20

Apr-20 Apr-21

Jan-20 Jan-21

Feb-20 Mar-20 Jun-20 Feb-21 Mar-21 Jun-21

Sep-20 Dec-20

Nov-20

May-20 Aug-20 May-21

100% 90% 80% 70% 60% 50% 40% 30% 20% Percentage Percentage of Frac Crews 10%

Jul-20

Oct-20

Apr-20 Apr-21

Jan-20 Jan-21

Feb-20 Mar-20 Jun-20 Feb-21 Mar-21 Jun-21

Sep-20 Dec-20

Nov-20

May-20 Aug-20 May-21

NM Delaware TX Delaware

Active DUCs 243 425

410

Note | Active DUC count includes wells spud over the last two years.

COMPANIES MENTIONED IN THIS REPORT COMPANY NAME TICKER EXCHANGE

Enverus LFC Panel Discussion | Macro & Permian Insights | ENVERUS.COM | 22 General Disclosures ENVERUS INTELLIGENCE™ | RESEARCH

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Enverus LFC Panel Discussion | Macro & Permian Insights | ENVERUS.COM | 23