EY Price Point:
global oil and gas market
outlook
Q3 | July 2019

Q3 overview
Oil prices have roughly ended the second quarter where they started. However, that doesn’t tell the full story. It has been a seesaw.
Prices in the early part of the quarter continued their upward run as a result of OPEC and Russia (OPEC+) production cut compliance,
the impact of increasingly effective sanctions on Iran and Venezuela’s near-disappearance from the oil market.
That upward run was reversed in June by growing concerns around the outlook for demand amid escalating trade tensions between the
US and China. More recently, military conflict in the Middle East caused a price spike, albeit muted when compared to the impact similar
events have had on prices in previous periods. OPEC+ also announced a nine-month extension to its existing agreement to limit oil
production in July.
Again, North America can claim credit for the calm. In previous quarters, cash flow and takeaway constraints have created doubts about
the sustainability of North America’s output growth. Those doubts have all but evaporated.
Gary Donald
EY Global Oil & Gas Assurance Leader
gdonald@uk.ey.com
Andy Brogan
EY Global Oil & Gas Leader
abrogan@uk.ey.com
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 2

Q3 theme
The theme for this quarter is consistency: in the significant trends impacting prices, at least. The forces that impacted oil prices in the
second quarter were the same as those that have impacted prices quarter after quarter for the past several years. Surging North
American production counterbalanced by OPEC+ production cuts has kept prices in a fairly narrow range. The market has become
remarkably resilient. For some time now, long-dated oil futures have traded at a price very close to the market’s view of the break-even
price of unconventional oil in North America.
Short-term supply interruptions have been managed by production increases elsewhere or draw of stocks. Complying with agreed
OPEC+ production cuts has been relatively easy. The impact of US sanctions on Iran and political turmoil in Venezuela has reduced the
burden of foregone revenue on other OPEC+ members.
There are signs of future disruption. Someday, Venezuelan and Iranian oil will come back to market and cause uncertainty. There are
hints that the traditionally strong relationship between economic growth and oil demand is beginning to drift. LNG spreads have also
faltered as demand in Asia has grown less than expected whilst new supply arrives to market.
• When Venezuelan and Iranian oil returns to the market, will other OPEC+ members be willing to curtail production?
• If they can’t and prices fall, can IOCs deliver efficiency gains that can sustain profitability in North America?
• How will trade tensions between the US and China play out and what will be the resulting impact on global oil
demand??
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 3

Q3 trends
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 4
A hint of
demand risk
Except in times of recession, oil and natural gas
demand growth has been reliable. Long term
forecasts account for some slippage due to
decarbonization initiatives, efficiency improvements
and vehicle electrification.
The impact of those events is not, as yet, pronounced
but there are some signs that the time may be near.
Crude supply
outages on the
rise
In 2Q19, crude supply outages reached highs of 3mbd
due to OPEC+ production cuts and the impact of US
sanctions on Iran. Despite a significant rise in supply
outages, crude prices fell in June and the impact of
geopolitical shocks were muted.
North American
M&A is not
over
North American oil production continues to surge and
has come to define the market landscape. Production
is not only increasing, it is increasing at a growing rate
and there is no end to that trend in sight. The shale
production profile, with its short cycle time and rapid
payback, is an ideal complement to traditional IOC
developments.
New LNG output coming online at a time of weak global
demand growth has caused LNG prices to fall to
record-low levels. Investment in new LNG supply
continues with new projects recently sanctioned in the
US and Africa, supported by long-term supply deals
with buyers.
New supply and
weak demand
impacts LNG
prices

Market fundamentals
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 5
Source: Thomson Reuters Datastream Source: IEA
• Brent and WTI averaged US$69.10 and US$59.96 per bbl, respectively, during the second
quarter. Average prices in 2Q19 represented a 10% increase for both benchmarks when
compared with the previous quarter. However, recent prices tell a different story.
• Brent and WTI prices continued to climb throughout most of the second quarter, supported by
strong OPEC+ production cut compliance and the impact of US sanctions on both Iran and
Venezuela.
• In June, Brent and WTI prices fell rapidly reaching lows of $61.66 and $51.13 per bbl,
respectively as a result of demand concerns driven by escalating trade tensions between the
US and China.
• Significant geopolitical events were in abundance during the second quarter with tanker and
drone attacks occurring in the Middle East. However, the impact of such events on crude
prices has been muted.
• The global supply-demand dynamic remains relatively consistent with that of recent years
with OPEC+ supply restraint and steady demand growth working to offset growth in North
American output. However, the outlook for demand growth is a concern.
• Year on year, production cuts from Iran and Venezuela (1.7 mbpd) have accounted for the
majority of OPEC’s overall curtailment. Adding that oil (or even a relatively small portion of it)
to the market without additional cuts from other OPEC members, would certainly stress
prices.
• As always, the biggest questions relate to North America. Although there are pockets of
distress, there is no indication that capital constraints will dampen production growth. In fact,
there is only indication of heightened interest from IOCs.
Demand concerns drive down prices in June North American growth continues to drive oversupply
40
45
50
55
60
65
70
75
80
1/1/2019 2/1/2019 3/1/2019 4/1/2019 5/1/2019 6/1/2019
$/bbl
Brent WTI Movement to undersupply
Movement to oversupply
(3.50)
(3.00)
(2.50)
(2.00)
(1.50)
(1.00)
(0.50)
-
Starting balance Demand growth OPEC North America Other End balance
Millionbarrelsperday

Market fundamentals
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 6
Source: EIA and EY analysis
• The relationship between economic growth and oil demand is well understood, consistent and
reliable. Forecasters have come to depend on the stability of that relationship when assessing
the outlook for oil prices.
• Long term oil demand growth has been a question mark for some time now. When electric
vehicles reach cost and performance parity with combustion engines, there will be an
inevitable peaking of oil demand. Only the timing is uncertain.
• The developing world has led economic growth and oil demand growth for the last two
decades. Between 1998 and 2018, developing countries accounted for almost all of oil
demand growth worldwide.
• In the last two years, oil demand growth in non-OECD countries has been below what would
be expected based on GDP growth in those countries. The most recent data point is enlarged
on the graph above. Are we beginning to see the de-coupling of this longstanding
relationship?
• In 2Q19, the impact of supply outages reached levels not witnessed since OPEC’s decision
to cut supplies by 4.2 mbpd in 2009 following the financial crisis. Recent highs have been
driven by OPEC+ production cuts as well as the impact of US sanctions on Iran.
• Despite a significant increase in supply outages, crude prices fell in June. Events that have
historically led to a significant spike in prices had a muted impact. Drone and tanker attacks in
the Middle East led to spikes of less than 5%. Our research shows that similar events have
historically resulted in price spikes of around 10%.
• We believe the muted impact of such events could be due to a structural shift in oil markets.
The market has confidence in the ability of US shale to offset the impact of supply outages
and there is evidence to support the decoupling of oil demand and economic growth.
Signs of long-term weakness in oil demand growth Crude supply outages on the rise
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19
Millionbarrelsperday
Non-OPEC OPEC (excluding Iran) Iran
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0%
Oildemandgrowthfromdevelopingcountries
GDP growth in developing countries
Source: OPEC, IMF and EY analysis

Market fundamentals
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 7
Source: Thomson Reuters Datastream
• Supply growth in North America will continue to dominate the market landscape for the
foreseeable future. In each of the last two years, the number of new barrels brought to market
by North America has met or exceeded the growth in global oil demand.
• Returns in North American shale are adequate, sustainable and likely to improve. Easily
scalable investments with a short payback period, such as those in North America, are a
natural hedge against the risk of demand erosion from efficiency, vehicle electrification and
structural oil price shifts.
• The first wave of North American consolidation has been successfully completed. Further
consolidation is likely to occur and, with it, better access to capital and technology is
expected.
• Takeaway constraints appear to have had little effect on production growth. Approximately
2mpbd of new capacity will come online shortly, eliminating that issue for the foreseeable
future.
M&A activity in North America is likely to continue Gas and LNG prices fall globally
• Record gas production and mild weather in the US has caused gas prices to decline despite
low storage and growing exports. Henry Hub gas prices have fallen to their lowest point since
2017. The EIA estimates an average price of $2.77/mmbtu in 2019, 12% lower than in 2018.
• Ample global gas supply coupled with weak demand growth in Asia and Europe has
depressed regional spot prices. UK NBP and Asian LNG spot prices declined by more that
45% year on year and sit at their lowest level since 2017.
• Recently, Europe has acted as the market of last resort, absorbing excess LNG supply. In the
absence of a revival in global LNG demand in upcoming winters, European demand will be
key in balancing the market and preventing production shut-ins.
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2017 2018 2019
mbpd
US Land Production Growth Global Demand GrowthUS land production growth Global demand growth
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
10/1/2018 12/1/2018 2/1/2019 4/1/2019 6/1/2019
$/mmbtu
Henry Hub LNG Asia UK NBP - right hand axis
Source: EIA and IEA
p/therm

Brent futures
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 8
Brent futures declined in June for similar
reasons to those impacting spot prices.
The angle of backwardation has
steepened, potentially due to near-term
supply concerns caused by US
sanctions on Iran and continued decline
in Venezuelan output.
Futures data is effective as of 26 June
2019.
Source: Thomson Reuters Datastream
50
55
60
65
70
75
80
85
Jan-2018 Jan-2019 Jan-2020 Jan-2021 Jan-2022 Jan-2023 Jan-2024
$/bbl
Historical Brent Brent futures - December 2018 Brent futures - March 2019 Brent futures - June 2019

Oil price outlook
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 9
For both benchmarks, consultants (on
average) forecast higher oil prices
throughout the period.
Consultants focus primarily on the analysis of a long-
term sustainable oil price, while the banks/brokers
balance their views on the basis of current market
conditions.
Downside forces including North American production
growth and demand concerns have weighed on the
outlook for prices, in particular those forecasted by
banks/brokers.
In the long term, we note high relative forecasting
uncertainty given the proven ability of identified risk
factors to move the price significantly in a short period
of time.
Consultants’ forecasts result in averages of
US$75.7/bbl and US$71.2/bbl vs. banks’/brokers’
averages of US$67.7/bbl and US$61.3/bbl for Brent
and WTI, respectively in 2023.
This data is effective as of 26 June 2019.
Brent:
Brokers’ and consultants’ price estimates, ranges and averages
WTI:
Brokers’ and consultants’ price estimates, ranges
and averages
Source: Bloomberg, banks’/brokers’ reports, consensus economics, consultants’ website
US$67.7 US$75.7 US$61.3 US$71.2Brent:
Average price
forecast in 2023
WTI:
Average price
forecast in 2023
Bank/broker Bank/brokerConsultants Consultants
45
50
55
60
65
70
75
80
85
90
2019 2020 2021 2022 2023
$perbarrel
Bank/Broker range Consultants range
Bank/Broker average Consultants average
45
50
55
60
65
70
75
80
85
90
2019 2020 2021 2022 2023
$perbarrel
Bank/Broker range Consultants range
Bank/Broker average Consultants average

Gas price outlook
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 10
Consultants predominantly forecast (on
average) higher Henry Hub gas prices than
banks/brokers. The trend is reversed for
NBP.
Consultants focus primarily on the analysis of a long-
term sustainable gas price, while the banks/brokers
balance their views on the basis of current market
conditions.
The views of both banks/brokers and consultants
have been adversely impacted by the reduction in gas
prices noted in 2Q19.
Estimates for UK NBP are scarce with only seven and
three data points available from banks/brokers and
consultants, respectively.
This data is effective as of 26 June 2019.
Henry Hub:
Brokers’ and consultants’ price estimates, ranges and averages
UK NBP:
Brokers’ and consultants’ price estimates, ranges and averages
US$2.9 US$3.3 £50.5 £51.7Henry Hub:
Average price
forecast in 2023
UK NBP:
Average price
forecast in 2023
Bank/broker Consultants Bank/broker Consultants
Source: Bloomberg, banks’/brokers’ reports, consensus economics, consultants’ website
2.0
2.5
3.0
3.5
4.0
4.5
2019 2020 2021 2022 2023
$permmbtu
Bank/Broker range Consultants range
Bank/Broker average Consultants average
35
40
45
50
55
60
65
70
2019 2020 2021 2022 2023
GBppertherm
Bank/Broker range Consultants range
Bank/Broker average Consultants average

Appendix
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 11
Brent oil price estimates
This data is effective as of 26 June 2019
Source: Bloomberg, banks’/brokers’ reports
Source: Consultants’ websites, Oxford Economics
Bank/broker 2019 (US$/bbl) 2020 (US$/bbl) 2021 (US$/bbl) 2022 (US$/bbl) 2023 (US$/bbl)
High 74.1 78.0 80.0 80.0 74.0
Average 67.9 68.2 69.1 69.1 67.7
Median 67.3 68.0 70.0 69.8 67.5
Low 62.1 60.4 61.1 60.0 60.0
Consultant 2019 (US$/bbl) 2020 (US$/bbl) 2021 (US$/bbl) 2022 (US$/bbl) 2023 (US$/bbl)
High 75.1 77.1 80.5 82.5 86.6
Average 69.7 69.9 71.5 73.3 75.7
Median 69.0 68.5 71.0 73.7 75.9
Low 66.5 63.8 62.2 63.0 64.8

Appendix
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 12
WTI oil price estimates
This data is effective as of 26 June 2019
Bank/broker 2019 (US$/bbl) 2020 (US$/bbl) 2021 (US$/bbl) 2022 (US$/bbl) 2023 (US$/bbl)
High 69.8 72.0 76.0 73.7 69.0
Average 60.5 61.9 63.5 63.0 61.3
Median 61.0 61.1 63.0 64.0 61.0
Low 52.2 55.0 54.0 53.0 53.0
Source: Bloomberg, banks’/brokers’ reports
Consultant 2019 (US$/bbl) 2020 (US$/bbl) 2021 (US$/bbl) 2022 (US$/bbl) 2023 (US$/bbl)
High 69.6 73.4 77.0 78.2 81.9
Average 62.3 64.4 66.9 69.0 71.2
Median 61.0 63.8 67.6 71.4 72.8
Low 57.8 55.4 54.0 54.7 56.3
Source: Consultants’ websites, Oxford Economics

Appendix
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 13
Henry Hub gas price estimates
This data is effective as of 26 June 2019
Source: Bloomberg, banks’/brokers’ reports
* Brokers have reported figures in $/mcf. We have used a conversion ratio of 1.037 for mcf conversion to MMBtu.
Source: Consultants’ websites, Oxford Economics
Bank/broker 2019 (US$/MMBtu) 2020 (US$/MMBtu) 2021 (US$/MMBtu) 2022 (US$/MMBtu) 2023 (US$/MMBtu)
High 3.1 3.5 3.7 3.3 3.3
Average 2.9 3.0 3.0 2.9 2.9
Median 2.9 3.0 3.0 2.9 3.0
Low 2.7 2.6 2.7 2.6 2.7
Consultant 2019 (US$/MMBtu) 2020 (US$/MMBtu) 2021 (US$/MMBtu) 2022 (US$/MMBtu) 2023 (US$/MMBtu)
High 3.0 3.1 3.3 3.5 3.6
Average 2.9 3.0 3.1 3.2 3.3
Median 2.8 3.0 3.2 3.3 3.4
Low 2.8 2.8 2.9 3.0 3.1

Appendix
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 14
NBP gas price estimates
This data is effective as of 26 June 2019
Bank/broker 2019 (GBp/therm) 2020 (GBp/therm) 2021 (GBp/therm) 2022 (GBp/therm) 2023 (GBp/therm)
High 55.0 60.0 60.0 60.0 54.0
Average 47.9 51.2 53.3 53.9 50.5
Median 46.9 50.0 53.6 54.0 50.5
Low 42.0 44.5 47.0 47.0 47.0
Consultant 2019 (GBp/therm) 2020 (GBp/therm) 2021 (GBp/therm) 2022 (GBp/therm) 2023 (GBp/therm)
High 50.0 53.8 56.2 58.5 58.5
Average 46.4 49.7 50.2 51.2 51.7
Median 45.5 50.0 50.0 51.0 52.0
Low 43.7 45.2 44.4 44.2 44.7
Source: Bloomberg, banks’/brokers’ reports
* A bank/broker has reported figures in $/mcf. We have used the particular bank/broker’s rate forecast and an mcf to mmbtu conversion ratio of 1.037 to convert the estimate.
Source: Consultants’ websites, Oxford Economics
* Oxford Economics has reported figures in US$/MMBtu. We have used exchange rate forecast by Oxford Economics from US$ to GBP conversion.
** GLJ has reported figures in US$/MMBtu. We have used exchange rate forecast by GLJ for USD to GBP conversion.

Key contacts
Q3 | July 2019 EY Price Point: global oil and gas market outlookPage 15
Important notice
Price outlook data included in this publication is effective as of 26 June 2019. Given the rapidly evolving nature of the market and views of market
participants, analysis can become quickly outdated. It should be noted that our analysis is not for the purpose of providing an independent view of
the outlook for oil and gas prices. Instead, we are collating the views of market participants.
Price outlook data should not be applied mechanistically. Instead, careful consideration should be given to the purpose of any value assessment
with price forecasts assessed in the context of the other key assumptions, such as resources/reserves classification, production rates, discount
rates and cost escalation rates together with an appreciation of the key sensitivities in any such analysis.
Jeff Williams
EY Global Oil & Gas Advisory
Leader
+1 713 750 5916
Gary Donald
EY Global Oil & Gas
Assurance Leader
+44 20 7951 751
Derek Leith
EY Global Oil & Gas Tax
Leader
+44 12 2465 3246
Andy Brogan
EY Global Oil & Gas Leader
+44 20 7951 7009
John Hartung
EY Global Oil & Gas TAS Leader
+1 713 751 2114

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