EY Price Point:
global oil and gas
market outlook
Q2 | April 2018

Page 2 Q2 | April 2018 Global oil and gas market outlookPage 2
In the first quarter, oil markets converged to a sustainable equilibrium. Demand is
growing steadily whilst production economics are predictable and in control of pricing.
Short of the threat of political chaos in the Middle East, there aren’t foreseeable market
developments with enough weight to move the markets significantly up or down.
Profits are acceptable, if not spectacular and there’s enough capital in the system to
keep production growing in North America and enough discipline to keep it stable in
OPEC.
Gary Donald Andy Brogan
EY Global Oil & Gas EY Global Oil & Gas
Assurance Leader Transaction Advisory Services Leader
gdonald@uk.ey.com abrogan@uk.ey.com
Q2 overview

Page 3 Q2 | April 2018 Global oil and gas market outlookPage 3
The theme for this quarter is sustainability. Are geopolitical risks enough to drive
prices to the next level, or will they hover indefinitely? The ongoing meltdown in
Venezuela, the escalation of conflict in the Middle East and potential sanctions
against Iran all loom.
?
► Are OPEC production cuts sustainable in the long term, given
fiscal pressures?
► How will capital discipline in North America impact production
growth?
► Is the Chinese government’s push to get factories and homes
off coal and onto natural gas sustainable, and will the LNG
infrastructure be enough to meet that demand?
Q2 theme

Page 4 Q2 | April 2018 Global oil and gas market outlookPage 4
Latin
America
and Asia
on the
margin?
Latin America and APAC have had the most
predictable response to falling prices and
may hold the key to the market’s future. The
price at which capital, and therefore
production, returns to those fields will provide
a critical signal.
Most market forecasts assume continued
growth in North American shale oil
production (about 1 million barrels a day).
Pressure to return capital to investors will
continue to constrain spending. Increased
operating cash from higher prices helps, but
it’s unclear if that will be enough.
1 million
new
barrels per
day from
shale oil
production
Trends
In the aggregate, OPEC production
discipline continues and the market seems
to believe in that trend. Political turmoil in
Venezuela has supported OPEC production
cut compliance. Fiscal pressures will put
increasing pressure on supply in the longer
term.
OPEC
production
in the
longer
term?
Low oil prices and a thriving world economy
have worked in favor of robust demand. IEA
estimates demand growth of 1.5 mbpd in
2018. US import sanctions and the
predictable Chinese response may have a
significant effect on economic growth and oil
demand.
Trade wars
and
demand?

Page 5 Q2 | April 2018 Global oil and gas market outlookPage 5
Market fundamentals
► Brent and WTI see-sawed in a narrow range throughout Q1 2018.
Prices increased on reports of OPEC and Russia production cut
compliance and robust growth in demand. Prices remain constrained by
continued growth in US crude oil output.
► Average Brent and WTI prices in Q1 2018 were higher than Q4 2017 by
8.7% and 13.6%, respectively. The Brent-WTI spread fell from highs of
$8/bbl. in Q4 2017 to around $4/bbl. during the recent quarter.
Prices see-sawed in a narrow range
55
60
65
70
75
1/1/2018 2/1/2018 3/1/2018
$/bbl.
WTI BrentSource: EIA
01/04/2018
(1.50)
(1.00)
(0.50)
-
0.50
1.00
millionbarrelsperday
Movement to
Oversupply
Movement to
Undersupply
Source: IEA
Uneven supply response
► Year over year, the market shifted from being slightly oversupplied to being
slightly undersupplied.
► The market was largely subject to the same factors as last quarter. Demand
grew at a healthy rate, OPEC and Russia held production steady, North
American output soared and natural decline and capital scarcity impacted
output elsewhere.
► Total OECD stocks are being drawn at an accelerating rate. In the fourth
quarter of 2017, industry inventories of crude and products fell by 1.37 mbpd,
compared to a draw of 0.53 mbpd and 0.16 mbpd in Q3 and Q2, respectively.

Page 6 Q2 | April 2018 Global oil and gas market outlookPage 6
Market fundamentals
► OPEC production cut compliance varied among members. In total, OPEC
output held steady.
► More than 100% of OPEC’s output reductions are accounted for by
Venezuela. This decline has everything to do with political turmoil and
nothing to do with voluntary production restraint. The situation in
Venezuela seems to deteriorate daily and there is no indication of where
the bottom is or what the end game looks like.
► Russia, Saudi Arabia, Kuwait, Iran and Iraq held production steady while
Nigeria and Libya increased production.
► Absent of supply response outside OPEC and North America, the global
market would continue to be oversupplied by about a half million barrels per
day. In a sense, Asia and Latin America are on the margin.
► The pattern was consistent across the board. Reduction in capital
expenditure continues to take its toll on field productivity.
► The future is unclear. As prices continue to stabilize, mature field economics
will improve which could see the return of capital to fuel the next phase of
production growth in mature regions.
Mature resources down across the boardOPEC compliance supported by Venezuela chaos
-0.60
-0.50
-0.40
-0.30
-0.20
-0.10
0.00
0.10
0.20
0.30
0.40
millionbarrelsperday
Source: IEA
-0.14
-0.12
-0.10
-0.08
-0.06
-0.04
-0.02
0.00
0.02
millionbarrelsperday
Source: IEA

Page 7 Q2 | April 2018 Global oil and gas market outlookPage 7
Market fundamentals
► The spread between Henry Hub, Asian LNG and UK NBP prices should
narrow during the second quarter. China has limited gas storage capacity
and is not able to take advantage of lower summer prices to build stocks.
Supply will be bolstered, with an additional 20mtpa of LNG capacity
scheduled to come online by mid-2018.
► The short-term outlook for US natural gas prices is consistent with history,
being stable. US gas production is forecast to reach record levels in 2018
and there is no evidence of LNG exports or domestic demand putting
upward pressure on markets.
► Growth in North American shale production has consistently required capital
spending well in excess of operating cash, even in recent years with
depressed service pricing and below-par service company return.
► North American operators have begun to feel pressure to rein in spending
and return cash to shareholders. Higher oil prices will drive operating cash
higher in 2018, but no one expects a burst of new capital spending.
► Service capacity is expected to tighten, which may put some pressure on
costs, spending, activity levels and (potentially) production.
Gas price spreads expected to narrow on ample supplies North American capital spending stable
0
2
4
6
8
10
12
14
16
18
20
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
US$/MMBtu
Japan Spot LNG Henry Hub
Natural Gas Europe UK NBP
$-
$10,000
$20,000
$30,000
$40,000
$50,000
2017 2018 (est)
MillionUS
Capital spending - North American Operator sample
Operating Cash Capex
Source: Thomson Reuters Datastream, World Bank and Japan’s Ministry of Economy,
Trade and Industry
Source: Capital IQ

Page 8 Q2 | April 2018 Global oil and gas market outlookPage 8
Brent and WTI oil price outlook: brokers vs. consultants
Brent:
Brokers’ and consultants’ price estimates
ranges and averages
WTI:
Brokers’ and consultants’ price estimates ranges and
averages
For both crude benchmarks, the
broader sample of banks/brokers
predict on average slightly higher oil
prices in 2018-2019, but lower oil
prices in the mid term than the
smaller sample of consultants.
Banks/brokers range is wider due to the
presence of several outlier data points.
Consultants focus primarily on the
analysis of a long term sustainable oil
price while the banks/brokers tend to
provide their view based on the current
market and technical analysis.
Banks/brokers provide on average an
almost flat Brent and WTI oil price
forecasts at around $65/bbl. and
$60/bbl.
Consultants’ forecasts result in
averages of $75.6/bbl. and $72.1/bbl.
vs. banks’/brokers’ averages of
$62.9/bbl. and $60.1/bbl. in 2022 for
Brent and WTI, respectively.
Data effective 31 March 2018.
US$62.9 US$75.6 US$60.1 US$72.1Brent:
Average price
forecast by 2022
WTI:
Average price
forecast by 2021
Banks/brokers Consultants Banks/brokers Consultants
Source: Bloomberg, banks’/brokers’ reports, consensus economics, consultants’ website
30
40
50
60
70
80
90
2018 2019 2020 2021 2022
$perbarrel
Bank/Broker range Consultants range
Bank/Broker average Consultants average
30
40
50
60
70
80
90
2018 2019 2020 2021 2022
$perbarrel
Bank/Broker range Consultants range
Bank/Broker average Consultants average

Page 9 Q2 | April 2018 Global oil and gas market outlookPage 9
Futures
Oil markets remain in backwardation
with a contrast between near-term
dynamics and long-term production
economics.
Markets appear as settled as they
have been in recent history.
Volatility ended the quarter slightly
higher than it began, at 25 percent,
but less than 2017’s average of 29
percent and well below the 2016
average of 44 percent. Speculative
opportunities are more focused on
geographic and product spreads.
Data effective 31 March 2018.
0
20
40
60
80
100
120
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
$/bbl. WTI Futures
0
10
20
30
40
50
60
70
80
90
2010 2011 2012 2013 2014 2015 2016 2017 2018
CboeCrudeOilETFVolatility
Index
Oil Market Volatility Index
Source: CBOE

Page 10 Q2 | April 2018 Global oil and gas market outlookPage 10
Gas price outlook
Henry Hub:
Brokers’ and consultants’ price
estimates ranges and averages
UK NBP:
Brokers’ and consultants’ price
estimates ranges and averages
• For Henry Hub, the bank/broker
view is essentially flat, reflecting
general price inflation and no
increase in real prices. In contrast
consultants’ estimates reflect a
steady upward trend, reflecting a
view on demand growth and
production economics.
• Banks’/brokers’ and consultants’
estimates for UK NBP are scarce
with only 6 and 4 data points
available, respectively.
• Consultants’ and banks’/brokers’
forecasts are almost flat and
largely aligned. When we compare
the consultant view of NBP to
Henry Hub, it reflects a widening
spread between the North
American and European markets
and a bullish view on LNG capacity
tightness and profits on LNG trade.
• Data effective 31 March 2018.
US$3.8 GBP48.5 GBP45.2UK NBP:
Average price
forecast by 2022
Banks/brokers Consultants
Source: Bloomberg, banks’/brokers’ reports, consensus economics, consultants’ website
Banks/brokers Consultants
US$3.3Henry Hub:
Average price
forecast by 2022
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2018 2019 2020 2021 2022
$perMMBtu
Bank/Broker range Consultants range
Bank/Broker average Consultants average
25
30
35
40
45
50
55
60
2018 2019 2020 2021 2022
GBppertherm
Bank/Broker range Consultants range
Bank/Broker average Consultants average

Page 11 Q2 | April 2018 Global oil and gas market outlookPage 11
Brent oil price – banks’/brokers’ and consultants’ estimates
Appendix
Bank/Broker 2018 (US$/bbl) 2019 (US$/bbl) 2020 (US$/bbl) 2021 (US$/bbl) 2022 (US$/bbl)
High 73.2 81.0 81.0 80.0 85.0
Average 63.5 63.5 65.3 65.8 62.9
Median 64.5 62.8 65.0 65.0 65.0
Low 56.0 46.7 50.3 52.0 47.0
Source: Bloomberg, Banks’/Brokers’ reports, consensus economics
Source: Consultants’ websites, Oxford Economics, Wood Mackenzie
Consultant 2018 (US$/bbl) 2019 (US$/bbl) 2020 (US$/bbl) 2021 (US$/bbl) 2022 (US$/bbl)
High 66.8 67.0 75.1 85.1 90.7
Average 60.1 61.5 65.3 72.4 75.6
Median 60.8 62.4 64.5 70.2 73.0
Low 52.0 53.0 53.0 66.0 69.0
Data effective 31 March 2018

Page 12 Q2 | April 2018 Global oil and gas market outlookPage 12
WTI oil price – banks’/brokers’ and consultants’ estimates
Appendix
Bank/Broker 2018 (US$/bbl) 2019 (US$/bbl) 2020 (US$/bbl) 2021 (US$/bbl) 2022 (US$/bbl)
High 68.3 78.0 78.0 76.5 81.0
Average 59.7 59.5 61.2 61.2 60.1
Median 60.0 59.7 62.0 61.5 61.6
Low 51.3 41.0 48.7 50.0 45.8
Source: Bloomberg, Banks’/brokers’ reports, consensus economics
Source: Consultants’ websites, Oxford Economics, Wood Mackenzie
Consultant 2018 (US$/bbl) 2019 (US$/bbl) 2020 (US$/bbl) 2021 (US$/bbl) 2022 (US$/bbl)
High 60.1 65.0 71.9 81.1 86.7
Average 55.4 57.6 62.2 69.0 72.1
Median 56.8 58.7 61.2 67.9 70.6
Low 49.0 49.0 50.0 61.0 64.0
Data effective 31 March 2018

Page 13 Q2 | April 2018 Global oil and gas market outlookPage 13
HH gas price – banks’/brokers’ and consultants’ estimates
Appendix
Bank/broker 2018 (US$/MMBtu) 2019 (US$/MMBtu) 2020 (US$/MMBtu) 2021 (US$/MMBtu) 2022 (US$/MMBtu)
High 3.3 3.5 3.6 3.7 3.8
Average 3.0 3.1 3.1 3.2 3.3
Median 3.0 3.1 3.1 3.2 3.3
Low 2.8 2.7 2.8 2.8 2.9
Source: Bloomberg, Banks’/brokers’ reports, consensus economics
Source: Consultants’ websites, Oxford Economics, Wood Mackenzie
* Wood Mackenzie has reported figures in US$/mcf. We have used conversion ratio of 1.037 for mcf conversion to MMBtu
Consultant 2018 (US$/mmbtu) 2019 (US$/mmbtu) 2020 (US$/mmbtu) 2021 (US$/mmbtu) 2022 (US$/MMBtu)
High 3.3 3.6 4.0 4.1 4.2
Average 3.0 3.2 3.4 3.7 3.8
Median 3.0 3.1 3.3 3.5 3.8
Low 2.9 2.8 2.8 3.4 3.6
Data effective 31 March 2018

Page 14 Q2 | April 2018 Global oil and gas market outlookPage 14
NBP gas price – banks’/brokers’ and consultants’ estimates
Appendix
Bank/Broker 2018 (GBP/therm) 2019 (GBP/therm) 2020 (GBP/therm) 2021 (GBP/therm) 2022 (GBP/therm)
High 55.3 55.5 52.0 52.0 55.0
Average 44.3 44.8 44.9 44.5 48.5
Median 45.3 45.3 47.0 44.6 48.5
Low 30.2 33.0 35.1 36.8 42.0
Source: Bloomberg, Banks’/brokers’ reports, consensus economics
Source: Consultants’ websites, Oxford Economics, Wood Mackenzie
*Oxford Economics has reported figures in US$/MMBtu. We have used exchange rate forecast by Oxford Economics from USD to GBP.
** Wood Mackenzie has reported figures in US$/mcf. We have used exchange rate forecast by Wood Mackenzie from USD to GBP and mcf to MMBtu conversion ratio of 1.037
*** GLJ has reported figures in US$/MMBtu. We have used exchange rate forecast by GLJ from USD to GBP.
Consultant 2018 (GBP/therm) 2019 (GBP/therm) 2020 (GBP/therm) 2021 (GBP/therm) 2022 (GBP/therm)
High 46.3 50.0 51.9 53.8 55.0
Average 41.4 40.9 42.3 44.6 45.2
Median 41.4 40.8 43.8 44.9 46.0
Low 36.3 31.9 29.8 34.9 33.5
Data effective 31 March 2018

Page 15 Q2 | April 2018 Global oil and gas market outlookPage 15
Key contacts
EY | Assurance | Tax | Transactions | Advisory
About EY
EY is a global leader in assurance, tax, transaction and advisory
services. The insights and quality services we deliver help build trust
and confidence in the capital markets and in economies the world over.
We develop outstanding leaders who team to deliver on our promises
to all of our stakeholders. In so doing, we play a critical role in building
a better working world for our people, for our clients and for our
communities.
EY refers to the global organization, and may refer to one or more, of
the member firms of Ernst & Young Global Limited, each of which is a
separate legal entity. Ernst & Young Global Limited, a UK company
limited by guarantee, does not provide services to clients. For more
information about our organization, please visit ey.com.
How EY’s Global Oil & Gas Sector can help your business
The oil and gas sector is constantly changing. Increasingly uncertain
energy policies, geopolitical complexities, cost management and
climate change all present significant challenges. EY’s Global Oil & Gas
Sector supports a global network of more than 10,000 oil and gas
professionals with extensive experience in providing assurance, tax,
transaction and advisory services across the upstream, midstream,
downstream and oil field subsectors. The Sector team works to
anticipate market trends, execute the mobility of our global resources
and articulate points of view on relevant sector issues. With our deep
sector focus, we can help your organization drive down costs and
compete more effectively.
© 2018 EYGM Limited.
All Rights Reserved.
1803-2623867
ED None
EYG no. EYG no: 02434-184GBL
This material has been prepared for general informational purposes
only and is not intended to be relied upon as accounting, tax or other
professional advice. Please refer to your advisors for specific advice.
ey.com/oilandgas
Important notice
Price outlook data incorporated within this publication is effective as of 31 March 2018. Given the rapidly evolving nature of the market and views of market
participants, analysis can become quickly outdated. As part of our analysis, it should be noted that we are not providing an independent view of the oil and
gas price forecasts. Instead, we are collating the views of market participants.
Price outlook data should not be applied mechanistically. Instead, careful consideration ought to be given to the purpose of any value assessment with price
forecasts assessed in the context of the other key assumptions, such as, inter alia, resources/reserves classification, production rates, discount rates, cost
escalation rates. together with an appreciation of the key sensitivities in any such analysis.
Adi Karev
EY Global Oil & Gas Leader
+852 2629 1738
Alexey Kondrashov
EY Global Oil & Gas Tax
Leader
+9 715 6416 2251
Andy Brogan
EY Global Oil & Gas
Transactions Advisory
Services Leader
+44 20 7951 7009
Jeff Williams
EY Global Oil & Gas
Advisory Leader
+1 713 750 5916
• Gary Donald
EY Global Oil & Gas
Assurance Leader
+44 20 7951 7518
•