EFTA01371117

31 October 2017 Railroads Canadian Rails business comes from energy (46%). with chemicals (23%), biofuels (22%) and plastics (9%) making up the remainder. In 2016, energy, chemicals, and plastics revenue fell 23% yoy amidst a 65% decline in crude revenue. Recently, however things have turned around as revenue is up 2% ytd and we expect momentum to continue through 2018 & 2019 amidst strong crude by rail demand. IFigure 88: Energy. Chemicals, & Plastics as a Dia of Total Revenue Energy, Chems & Plastics 14% Swear Pad* ant arrow*, Albs Coal - accounted for 10% of CP's revenue in 2016. The majority of coal hauled by CP is metallurgical coal which is exported to regions like Asia to be used for steelmaking. These shipments generally originate from Teck Resource Limited's coal mines located in western Canada and move to port terminals on the west coast. To this point, coal has the 2n° shortest length of haul for CP - 580 miles vs. the company avg. of 853 - which translates to a lower revenue per carload - C$1,990 vs. company avg. of C$2,400. The remainder of CP's coal business is largely thermal coal which is consumed domestically in North America. Coal revenue has been essentially flat since 2006 (0.2% CAGR) as volumes have fallen off in recent years due to cheaper net gas prices. To that point, coal revenue fell 5.2% yoy in 2016 amidst a 5.7% decline in carloads. [Figure 89: Coal revenue as a % of Total Revenue Canadian Domestic 6% U.S. Domestic 10% Sane OftriCht&Init. COACelyiela Metals, Minerals, Consumer Products - accounted for 9% of CP's revenue in 2016. There are a variety of commodities within this group with ties to oil and gas Page 44 We see significant tailwinds for energy, chemicals and plastics at CP due to inaeased demand for crude by rail volumes. We note that the Canadian Association of Petroleum Producers estimates that the supply of oil from Western Canada will increase at a 16% CAGR from 2017-2020 to over 4.5 million barrels per day, well in excess of current pipeline capacity of 4M bbfiday. We believe this dynamic will support crude by rail volumes in 2018 & 2019. The outlook for coal at CP is moderately better than U.S. rails given its outsized exposure to metallurgical coal which is expected to be more stable than domestic/ thermal coal in the coming years Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0064314 CONFIDENTIAL SDNY_GM_00210498 EFTA01371117