COVID-19 and OPEC Price Wars

COVID-19 and OPEC Price War–Implications for April 23, 2020 11:00 am EST Oil and Gas Markets, Prices and Companies

Jim Rebello Managing Director, Head of Energy M&A Advisory

Jed DiPaolo Senior Energy Advisor

Martin Rubio Managing Director, Energy M&A Advisory Agenda

Introductions

Oil is a Geopolitically Driven Commodity

Capital Markets

Conclusion and Recommendations

Q&A

Senior Energy Advisor

Jed DiPaolo has served as a Senior Energy Advisor for Duff & Phelps, LLC since 2011. He brings more than 42 years of experience in the energy industry. Jed was a Partner at Growth Capital Partners, L.P. for eight years. Prior to that, Jed worked for over 27 years at Halliburton Company where he held several managerial and technical positions. Jed retired as a Group Senior Vice President of Global Business Development with Halliburton Company in 2003. Prior roles at Halliburton included serving as North American Regional Vice President and Far East Regional Vice President. In these roles, he was responsible for overall operations of Halliburton Energy Services’ North America and Far East operations. Jed currently serves as the Lead Director of Evolution Petroleum (AMEX:EPM), and a Member of the Board of privately-held Deep Well Services, portfolio company of White Deer Energy, Air Drilling Solutions, a portfolio company of Black Bay Energy Capital, Altitude Energy Partners, also backed by Black Bay, and Danos Energy Services. He successfully restructured Seventy Seven Energy through Chapter 11 Bankruptcy and facilitated its sale to Patterson-UTI (NASDAQ:PTEN). Additionally, he served as Interim Chairman of the Board of Directors of Boots and Coots Group. He also served on Superior Well Service Board prior to being sold to Nabors Industries and the Edgen Group Board before being acquired by Sumitomo Corporation. In addition, he served on the Board of Innicor Subsurface Technologies prior to it being sold to BJ Services. Jed received his undergraduate degree in Agricultural Engineering from West Virginia in 1976 and an Honorary Doctorate of Science in 2013. He also serves on the Advisory Board for the West Virginia University College of Engineering and is a member of the Society of Petroleum Engineers.

[email protected] +1 713 986 9327 Houston

Managing Director and Head of Energy M&A Advisory

Jim Rebello is a managing director and head of the Energy M&A Advisory practice, based in the Houston office. He leverages more than 25 years of principal investing and M&A origination, execution and management experience, assisting companies in the Southwest with all aspects of transaction execution. Prior to joining Duff & Phelps, Jim was a managing director and member of the Executive Management Committee of Growth Capital Partners, L.P. (GCP), a merchant and investment banking firm in Houston. In addition, he was a Principal of both SMI I and SMI II, GCP’s mezzanine investments funds. Before that, he held the title of corporate financial analyst with Energy Ventures, Inc., where he was responsible for treasury management functions. He also analyzed the financial performance of Energy Ventures and its corporate subsidiaries as well as potential acquisition candidates. Earlier in his career, Jim was a Credit Analyst for Prudential Capital’s Southwestern Energy Group. Jim has extensive experience managing merger & acquisition, divestiture, recapitalization, restructuring and private placement transactions for a variety of clients across a range of industries, including exploration and production, oilfield services, distribution, industrial services, business services, metals and manufacturing. He currently serves on the board of Unifocus Corporation and a member of the Independent Petroleum Association of America, the Houston Association for Corporate Growth. He previously served on the boards of Paradigm Valve, White Petrov and Growth Capital Partners. Jim received a B.S. in business administration with concentrations in marketing and management from Northeastern University, graduating summa cum laude. Jim is a FINRA Series 7, 79 and 63 registered representative. He also serves on several local non-profit community-based organizations.

[email protected] +1 713 986 9318 Houston

Managing Director, Energy M&A Advisory

Martin Rubio is a managing director in the Corporate Finance practice, based in the Houston office. Martin leverages more than 20 years of experience in the energy industry advising equipment suppliers, distributors and other providers of technical and specialty services on mergers and acquisitions and recapitalization assignments. He also has experience in both middle-market corporate finance and in operating positions for the energy industry. Prior to joining Duff & Phelps, Martin served in finance and business development roles at Turbine Air Systems, Ltd., a packager of modular energy systems. Before that he held commercial operations and project management positions at GE Energy and Stewart & Stevenson Services, Inc., a leading designer, manufacturer and distributor of specialized equipment and aftermarket parts and service for the energy industry based in Houston. Martin received a B.A. in political science from Loyola University New Orleans and an MBA from The University of Texas at Austin with a concentration in finance. He is a FINRA Series 7 and 63 registered representative.

[email protected] +1 713 986 9311 Houston

Jed DiPaolo Senior Energy Advisor OPEC and OPEC + Members

Haves Want to Be Have Nots OPEC Saudi Arabia Iran Venezuela OPEC + UAE Iraq Algeria Kuwait Azerbaijan Nigeria Qatar Oman Libya Russia Kazakhstan Ecuador Mexico Angola Congo Equatorial Guinea Bahrain Brunei Malaysia Sudan

OPEC Nations OPEC + Nations

24,708 16,355 Source: Bloomberg

Spare capacity (millions barrels per day) $/b (real 2010 dollars)

7 Spare capacity < 2.5 million barrels per day forecast $140

6 $120

5 $100

4 $80

3 $60

2 $40

1 $20

0 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

OPEC Spare Capacity WTI Crude Oil Price

Source: EIA, Refinitiv

Note: OPEC output includes all members; Brent prices as of Feb. 24 2020 Sources: Bloomberg, ICE Futures Europe, U.S. Energy Information Administration

Jim Rebello Managing Director, Head of Energy M&A Advisory COVID-19 / Capital Markets

WTI Spot Price

$80 $77.4 $70 $63.0

$60 $52.4 $50 $40 $30 ~85% decrease ^OSX $20 since Jan’20 $8.9 $10 $200 $187.4 $180 $159.8 $0 $160

$140

Jul-17 Jul-18 Jul-19

Apr-17 Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20

Jan-18 Jan-19 Jan-20 Jan-17 $120 WTI Spot Price $100 $78.8 $80 $60 $40 ~67% $25.8 decrease since $20 Jan’20

Jul-17 Jul-18 Jul-19

Apr-17 Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20

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

PHLX Oil Service Sector Index (^OSX) - Index Value

Source: CapitalIQ, EIA

Economic Contraction ▪ Q2’20 economic contraction Worst quarterly US GDP contractions since Great Depression (% q/q, annualized) expected to be 3x larger than worst -10.0% Q1 1958 quarter by contraction ever -8.4% Q4 2008

Q2’20 U.S. GDP forecasts (% q/q, annualized)

YTD 2020 Weekly Unemployment Claims -34.0% GS 6,867,000 7,000,000 6,615,000 -33.0% DB 6,000,000 5,245,000 MS -30.0% 5,000,000

-25.0% JPM 4,000,000 3,307,000 3,000,000

2,000,000

1,000,000 ▪ More than 22 million unemployment 282,000

claims in the last 4 weeks 0

1/4/20 2/1/20 2/8/20 3/7/20 4/4/20

1/11/20 1/18/20 1/25/20 2/15/20 2/22/20 2/29/20 3/14/20 3/21/20 3/28/20 4/11/20

Source: Deutsche Bank, US Department of Labor

World Oil Demand (millions barrels per day) 105 101 101 101 101 100 99 99 100 100 100 100 99 99 97

95 Lock-down among 90 global economies expected 85 to result in a 30 to 35% 80 reduction in demand during 75 Q2’20

2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2

Actual Demand Reduced Demand Forecast

Source: Spears & Associates

US Crude Oil Stocks (thousands barrels per day)

700,000 653,448

600,000

500,000

400,000

300,000

200,000

100,000

2/7/20 3/6/20 4/3/20

1/17/20 1/24/20 1/31/20 2/14/20 2/21/20 2/28/20 3/13/20 3/20/20 3/27/20 4/10/20

Crude Stock Pipeline Fill & Stock in Transit Working Storage Capacity

Source: EIA

Crude Oil Demand for Q2 Reduction Forecasted 2019 Top 20 Crude Oil Consumption Country (thousands bpd)

United States 20,291 101 100 China 14,035 India 4,961 Global Japan Economic 4,287 Rebound Korea 3,018 80 Canada 2,525 ~10 mbpd Germany 2,377 Plus cuts Brazil 2,257 60 Saudi Arabia 2,043 United Kingdom 1,598 France 1,582 Mexico 1,548 40 Indonesia 1,471 Thailand 1,279 Millions Millions Barrels per Day Spain 1,277 20 Italy 1,235 Australia 1,089 Netherlands 984 Taiwan 973 0 Turkey 953 2019 Q4 2020 Q2 Demand Forecast Reduced Demand Forecast 0 5,000 10,000 15,000 20,000 25,000

(1) Assumes 35% demand reduction

Source: JODI Oil Dataset, Monthly Update, Spears & Associates

% of High Yield Index Trading at Distressed Level (% of Face Value) 100% ▪ More than 90% 81% $140 billion 80% of high yield 70% energy debt 63% 60% is trading at

50% 46% distressed 41% 40% levels 40% 36% 32% 32% 30% (spread 30% 27% 23% 23% 22% 22% >1,000 bps) 20% 16% 15% 11% 10% 10% 2% ▪ Highest ever 0% energy

Tech sector

Utility

Retail

Media

Energy

Leisure

Banking

Services Telecom

HY Index HY distress ratio

Insurance

Healthcare

Automotive

Real Estate Real

Fin Services Fin

Basic Industry Basic

Capital Goods Capital

Transportation Consumer Goods Consumer

Source: Deutsche Bank, CreditSights (data as of April 7, 2020)

Martin Rubio Energy M&A Advisory U.S. Rig Count, Drilling and Completion (D&C) Spending

Rig Count $ in billions 1,200 $160 1,032 $138 $130 1,000 943 876 $120 780 $104 800 675 $94 Estimated 2020 D&C $73 Spend of $57B 600 513 515 $80 $66 417 407 $50 400 318 332 $40 $23 200 $13 $10 $11 0 $0

Land Offshore Drilling and Completion Spending

Source: Baker Hughes, Spears & Associates

You are not alone in this. Lack of Visibility Drives Increased Need to Reduce Have vision, stay positive, think long term. Costs and Manage Cash

▪ Discontinue unprofitable divisions/product lines ▪ Evaluate liquidation of non-core/underutilized assets ▪ Scrutinize/defer working capital and capex investments ▪ Evaluate credit policies

Develop a Survival Plan

▪ Three year strategic and operating plan ▪ Extended cash flow and liquidity forecasts ▪ Discuss your plan with all stakeholders ▪ Evaluate capital structures that will provide liquidity to achieve your three year plan We will get back to normal…eventually

Testing Therapies Vaccine

Duff & Phelps is the global advisor that protects, restores and maximizes value for clients in the areas of valuation, corporate finance, investigations, disputes, cyber security, compliance and regulatory matters, and other governance-related issues. We work with clients across diverse sectors, mitigating risk to assets, operations and people. 4,000+ MORE THAN 13,500 CLIENTS INCLUDING TOTAL 19,000 NEARLY PROFESSIONALS ENGAGEMENTS 47% OF THE GLOBALLY PERFORMED IN 2019 S&P 500

THE EUROPE AND ASIA AMERICAS MIDDLE EAST PACIFIC 1,900+ 1,100+ 700+ PROFESSIONALS PROFESSIONALS PROFESSIONALS

Each of our service groups performs a critical function in Duff & Phelps’ integrated platform for enabling clients to maximize value across the transaction continuum.

Transaction Due Diligence Financial Deal Integration and Realization Identification Analysis Negotiation Post Closing and and Closing Support Structuring

Industry and market Quality of earnings / Financial projections and Anti-trust / Merger trustee Purchase price allocation Tax structuring scoping studies / Working capital analysis / transaction modeling services Marketplace knowledge Cash flows Goodwill impairment Buyer identification Business and asset Fairness opinions testing Strategic relationships Key deal issues valuation Sell-side advisory Transaction documentation Corporate real estate Transaction strategy Accounting policies and Market assessments / Information memorandum Sell-side due diligence consulting systems analysis consulting Accretion / Dilution Letter of intent M&A purchase price Buy-side / Sell-side Identification and analyses advisory disputes measurement of Bid process / Data room Preliminary purchase price unrecorded liabilities management Assessment of strategic allocation Tax optimization alternatives Purchase price adjustment Capex pro-forma analysis Exit structuring Valuation and structuring mechanisms of contingent consideration Taxation and earn-outs Commercial and shareholder disputes Information technology Negotiation support Valuation of guarantees / Indemnifications Financial restructuring Purchase price adjustment Representations and mechanisms warranties Carve-out requirements Operational Consulting Operational due diligence Private placement of debt Tax valuations and and equity strategic tax planning Financing support / Collateral valuations Transfer pricing studies

Creative, Global Experienced Energy Our Results Restructuring Practice Practice

▪ 150 professionals worldwide ▪ 20 professionals in the US, 550+ 225+ $850+ #4 with key offices in the US, UK, Canada, UK, and Middle East Restructuring Energy Billion in Ranked Canada, China, Ireland and ▪ Advised on over 225 transaction engagements aggregate middle-market Cayman Islands completed completed in the liabilities M&A practice engagements in the energy past 10 years restructured ▪ Completed over 550 equipment and services sector transactions with $850 billion since 2010. Select Energy Transactions in liabilities ▪ Maintain active dialogue with ▪ Advised on many of the most global strategics, financial Restructuring Restructuring Restructuring Restructuring complex, multi-jurisdiction sponsors and capital providers restructurings to the category has expanded its existing ▪ Services include in- and out- ▪ Services include sellside and facilities through the of-court restructurings, special buyside M&A, private capital Financial Advisor to the Financial Advisor to the completion of a priority Financial Advisor to the Company Company term loan Company situations, financings and markets and restructuring distressed M&A Restructuring Restructuring Restructuring Restructuring Differentiated Approach

✓ Unparalleled track record of ✓ Active dialogues with lenders, Financial Advisor to the Financial Advisor to the Financial Advisor to the delivering powerful results financial sponsors and Official Committee of Financial Advisor to the Committee of Equity Official Committee of strategic buyers Unsecured Creditors 1st Lien Lenders Holders Unsecured Creditors ✓ Collaborative engagement style ensures a high level ✓ Creative solutions for capital Restructuring Restructuring Restructuring Restructuring of sector expertise structure and business issues

✓ Unique ability to effectively ✓ Direct operating experience & position turnaround stories entrenched industry Financial Advisor to the Financial Advisor to the Financial Advisor to the Pass Through Trust Ad Hoc Committee of Financial Advisor to Ad relationships Secured Creditor Certificate Holders Note Holders Hoc Note Holders

D&P Energy Practice Leadership Team Distressed M&A Restructuring Restructuring Restructuring

James Rebello Martin Rubio

Head of Energy M&A Advisory Managing Director Financial Advisor to the Financial Advisor to the Financial Advisor to the (713) 986-9318 (713) 986-9311 Financial Advisor to the California Public Utilities Senior Secured Ad-hoc Committee of Company Commission Convertible Noteholders Unsecured Noteholders [email protected] [email protected]

Any positions presented in this session are those of the panelists and do not represent the official position of Duff & Phelps, LLC. This material is offered for educational purposes with the understanding that neither the authors nor Duff & Phelps, LLC or its affiliates are engaged in rendering legal, accounting or any other professional service through presentation of this material.

The information presented in this session has been obtained with the greatest of care from sources believed to be reliable, but is not guaranteed to be complete, accurate or timely. The authors and Duff & Phelps, LLC or its affiliates expressly disclaim any liability, including incidental or consequential damages, arising from the use of this material or any errors or omissions that may be contained in it.

About Duff & Phelps

Duff & Phelps is the global advisor that protects, restores and maximizes value for clients in the areas of valuation, corporate finance, disputes and investigations, cyber security, claims administration and regulatory issues. We work with clients across diverse sectors on matters of good governance and transparency. With Kroll, the leading global provider of risk solutions, and Prime Clerk, the leader in complex business services and claims administration, our firm has nearly 4,000 professionals in 25 countries around the world. For more information, visit www.duffandphelps.com.

M&A advisory, capital raising and secondary market advisory services in the United States are provided by Duff & Phelps Securities, LLC. Member FINRA/SIPC. Pagemill Partners is a Division of Duff & Phelps Securities, LLC. M&A advisory, capital raising and secondary market advisory services in the United Kingdom are provided by Duff & Phelps Securities Ltd. (DPSL), which is authorized and regulated by the Financial Conduct. Authority. Valuation Advisory Services in India are provided by Duff & Phelps India Private Limited under a category 1 merchant banker license issued by the Securities and Exchange Board of India

The material in this report is for information purposes only and is not intended to be relied upon as financial, accounting, tax, legal or other professional advice. This report does not constitute, and should not be construed as soliciting or offering any investment or other transaction, identifying securities for you to purchase or offer to purchase, or recommending the acquisition or disposition of any investment. Duff & Phelps does not guarantee the accuracy or reliability of any data provided from third party resources. Although we endeavor to provide accurate information from third party sources, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.