EFTA Document EFTA01385329

January 2018 HY Corporate Credit HY Multi Sector,Media. Cable & Satellite Figure 16: Cumulative additional natural gas pipeline project capacity originating in the Northeast bi*on thin ttret opt lay gaintra in-senice capacity from Northeast or Appalachian Basin lo 9 2 1 0 Source 001 7.17 8:17 9-17 10.17 11-171247 1.18 2-18 3-15 Southva.st Northeast The reducing risk to capacity expansions translates into continued improvement in the production growth outlook in the Appalachian basin. As seen in the chart below, EIA which had estimated US dry gas YoY production growth of 4.4 Bcf/d in September has steadily increased its growth forecast to 6.2 Bcf/d by December. As our O&G Services analyst David Havens notes in his December 8th note, Woodmac has an even more aggressive estimate of +9 Bcf/d YoY growth with half of it driven by Appalachian. Woodmac expects Haynesville, which has seen a meaningful revival in its drilling program over the last year and associated gas production from Permian and Midcon to be other key contributors to FY 18 growth. Figure 17: EIA estimates for 2010 gas production YoY growth since Sep '17 7.0 62 6.0 s-s -a 50 4.0 C. 0 2.0 1.0 Sep.17 Oct-t7 Sawn_EN 2010 price outlook -SiD model banks on a normal winter EIA, in its December '17 STW report, is forecasting a broadly balanced market for 2018 despite the sharp production growth and has forecast an average gas price of 53.12/mcf for the year. We note that a major source of incremental YoY demand is heating demand (+1.42 Bcf YoY) and this is driven by EIA's assumption of a largely normal winter (report dated December 6th) - this expectation appears to be broadly back on track after weather in early December had opened up prospects of meaningful downside risks. Page 54 Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0086613 CONFIDENTIAL SDNY_GM_00232797 EFTA01385329