July 29, 2015

CARLTON DOLE DIRECTOR OF BUSINESS DEVELOPMENT

ECONOMICS OF THE PERMIAN CONDENSATE TRADE

THE CHANGING DYNAMICS FROM 2014 TO 2015… 2016 & THE BRIGHT FUTURE AHEAD

BARRELTEX “THE BIGGER BETTER BARREL BROKERS”

carlton@barreltex.com

832-768-5479

¡  Lease Condensate Approximately 200MB/D API 50-65 -Currently Crude Blended -2016 Seg. Ship Pipe PC/Split/Export ¡  Plant Condensate At Least 54MB/D (C5=39 GP=15) API 66+ -Diluent, Naphtha Pool, Last Year Canadian MKT

PERMIAN CONDENSATE PRODUCTION

¡  HYPOTHESIS 2016+ Less Lease Conde Blended & Less to Cushing -Take Away Capacity to GC Mid/Cush Mid/LLS GC Short ¡  Plant Conde 2014 Mid/CRW -$14 Now Mid/CRW +$4

¡  Shifting Fundamentals for Permian Condensate ¡  API in 50s & low 60s: Crude Blend or Cactus & Mid-Sealy -Lease Conde Cactus to GC: Splitter, Pet Chem, Stabilized-Export -Stabilized 50-65 API Mid-Sealy to GC: Splitter, Pet Chem, Export

A CAPTIVATING YEAR IN CONDENSATE

¡  Fundamental Drivers Cushing Inventory, Mid Refineries, Takeaway

¡ Midland bears 65% price crash & Perm has “triple-play” sweet spots

MIDLAND/CUSHING DIFFERENTIAL

2015 2012 - 2014

Midland Trades Premium

Inflection Point Midland -$17.50 Discount

¡  2014 Range MID/LLS -$5 to -$20 ¡  Current MID/LLS -$3 ¡  2016 Futures Calendar 2016 Avg. Implies MID/LLS -$3.50

MIDLAND TO GULF COAST OVERVIEW

TAKEAWAY OVERVIEW

¡ Mesa, Basin, Sunrise Trunklines feed Colorado City

¡  Longhorn 275MB/D $2.50 ¡  Permian Express I & II 350MB/D I $1.93 - $2.63 II $2.10-$2.90 ¡  BridgeTEX 300 MB/D $2.38 - $3.84 ¡  Cactus 250MB/D Gardendale 120MB/D Stabilizer $1.50 - $2.50 ¡ Midland-Sealy 2017 Planned 540MB/D 4-Grades Batched Conde

PERMIAN TO GULF COAST PIPELINES

¡  Upton County (Odessa) 55 API Condensate FOB Lease Mid -$6.50 ¡  Local (1.50) to Mid blend to 42 ($3) Sell Midland -$1 ¡  (Cush) (1 .50) Odessa Station, $1 Basin, .50 Shrink, T/S $1, Cush - .50

¡  To Crane ($2), blend 44 API(2.50), LH(2.50), T/S $1, LLS -2.50 ¡  To McCamey ($2.25), Cactus 1.50, Corp 1.25 *LLS -$4 (Split/PetChem) ¡  To McCamey ($2.25), Cactus 1.50, Stab. 1 .50, Corp 1.25 *LLS -$4 Ex Dock

¡  *Current Corpus MKT LLS -$4 Consider Future Demand & Export ¡  2016 GC Conde 850MB/D Production & 1.5MMB/D Processing

PERMIAN OPTIONALITY EXAMPLE

¡  Let’s continue discussing these developments in 2016 ¡  Linked-In Carlton Dole ¡  carlton@barreltex.com 832-768-5479 ¡  Stay Informed on Condensate Developments Join Linked-In

Group “Condensate North America”

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