An explanation of the current state of the shale industry in Ohio. Presented by Vince Bevacqua of ShaleComm at Cohen & Company's Client CPE Day.

1. Cohen & Company
Utica / Point Pleasant shale play briefingp y g
November 19, 2013
Vince Bevacqua
E V P ShaleCommE.V.P, ShaleComm

2. The State of O & NG in the U S AThe State of O & NG in the U.S.A
Shale Energy = Game changer
'It's difficult to overstate the shale revolution's
profound contributions to the U.S. economy'’p y
Source: IHS study reported in several national media outlets 9/4/13
In 2011, the U.S. became a net exporter of petroleum, p p
products for the first time in 60 years.
Source: Bloomberg Businessweek 9/3/13
Crude oil imports DOWN 19% (first half of 2013) =
$31.6 Billion off the trade deficit
Source: IHS study reported in several national media outlets 9/4/13y p

3. The State of O & NG in the U S AThe State of O & NG in the U.S.A
Shale Energy = Game changer
"Barring any major environmental accidents related to
onshore shale drilling, which could slow or reverse
i d h h U S hindustry growth, we expect the U.S. to approach
energy self-sufficiency toward the end of this decade."
David Wood a managing director in Standard & Poor's Corporate Ratings groupDavid Wood, a managing director in Standard & Poor s Corporate Ratings group
Source: Akron Beacon Journal- 5/22/13
F t Gl b l 500Fortune Global 500
7 of top 10 companies = Energy Companies
Most Profitable = Exxon Mobil $44.9 billion

4. The State of O & NG in the U S AThe State of O & NG in the U.S.A
Initial Benefits - National
1.2 million jobs directly or indirectly linked to shale
energy exploration
Will grow to 3.3 million by 2020
58% i i NG i 2007• 58% increase in NG reserves since 2007
• NG price DOWN NEARLY 75%
• $120 billion in U.S based investment - 2012
Source: IHS study reported in several national media outlets 9/4/13

5. The State of O & NG in the U S AThe State of O & NG in the U.S.A
Six major shale plays in U.S
Bakken (ND)
Barnett (TX)Barnett (TX)
Haynesville (LA)
Eagle Ford (TX)
Marcellus (PA)
Utica (OH)

6. The State of O & NG in OhioThe State of O & NG in Ohio
Initial Benefits - Ohio
$34 billion outside investment in Ohio by 2015
Last 2 years = 38,000 Ohio jobs
$793 million annual Ohio salaries$793 million annual Ohio salaries
Source: OOGEEP

7. The State of O & NG in OhioThe State of O & NG in Ohio
Initial benefits - Ohio
Tax Collection Increase
21% increase in sales tax receipts in shale counties
1.4 % increase in non-shale counties
$12.3 billion in 2011 to $14.9 billion in 2012
T b ll P t M h i W St kTrumbull, Portage, Mahoning, Wayne, Stark,
Columbiana, Holmes and Carroll
Source: Cleveland State University Study

8. The State of O & NG in OhioThe State of O & NG in Ohio
Initial benefits - Ohio
Road improvements
RUMA (Road Use Maintenance Agreement)
Mahoning County doubled its paving program withMahoning County doubled its paving program with
O & NG money
NiS $1 5 illiNiSource - $1.5 million
Halcón Resources- $500,000

9. Current state of Utica / Point Pleasant playCurrent state of Utica / Point Pleasant play
Unproven…but with
i lgreat potential.

10. Current state of Utica / Point Pleasant playCurrent state of Utica / Point Pleasant play
End of October 2013
953 Utica wells permitted
427 Drilled
164 Producing
1 000 NEW wells expected to be1,000 NEW wells expected to be
IN PRODUCTION by 2015
Source: Media reports of ODNR data

11. Current state of Utica / Point Pleasant playCurrent state of Utica / Point Pleasant play
93% ^ oil production from 201193% ^ oil production from 2011
80% ^ gas production from 2011
• SO FAR, the Utica is primarily a “wet gas”
play
• Currently selling for 85% of crude oil value
• Ethane, Butane & Propane
Source: Media reports of ODNR report 5/22 /13

12. Current state of Utica / Point Pleasant playCurrent state of Utica / Point Pleasant play
Current top producers in Ohio
# 1 Chesapeake (Oil & NG)
# 2 Anadarko (oil)
# 2 Hess (NG)# 2 Hess (NG)
24 Other E & P companies in Ohio including:
BPBP
Chevron
CONSOL
Halcón ResourcesHalcón Resources
Hilcorp
EnverVest
Antero Resources
Source: Media reports of ODNR report 5/22 /13

13. Current state of Utica / Point Pleasant playCurrent state of Utica / Point Pleasant play
Current top producing Counties in OhioCurrent top producing Counties in Ohio
Permits Drilled Producing
Carroll 339 148 94
Harrison 141 74 20Harrison 141 74 20
Columbiana 91 47 8
Noble 70 40 11
Guernsey 60 22 20Guernsey 60 22 20
*(400% - 600% growth since 2012)
Trumbull 13 7 1
Mahoning 28 8 0
Stark 12 5 1
Portage 14 7 2
Source: Media reports of ODNR report 5/22 /13

14. Current state of Utica / Point Pleasant playCurrent state of Utica / Point Pleasant play
Reasons for optimismReasons for optimism
A single Utica well produces as much oil as 312
conventional wells
A single Utica well produces as much natural gas asg p g
448 conventional wells
* 34 Rigs currently working Ohio’s Utica Shale* 34 Rigs currently working Ohio s Utica Shale
Source: Media reports of ODNR data

15. Current state of Utica / Point Pleasant playCurrent state of Utica / Point Pleasant play
Reasons for optimismReasons for optimism
Chesapeake
“The Utica is outstanding, and we have several other
emerging areas that are in the evaluation process that
we’ll be looking at.”
* Gas production DOUBLED in 3Qp Q
EV Energy Partners
“The pace of Utica drilling at this early stage of itsThe pace of Utica drilling at this early stage of its
history exceeds that of the other major shale plays at a
similar stage.”

16. Current state of Utica / Point Pleasant playCurrent state of Utica / Point Pleasant play
Reasons for optimismReasons for optimism
McClendon betting on Ohio
• Former chairman and CEO of Chesapeake Energy
• American Energy Partners
• Has raised $1 billion for new venture• Has raised $1 billion for new venture
• “Staking his comeback” on the Utica Shale play
• Guernsey, Belmont, Harrison and Noble counties

17. Current state of Utica / Point Pleasant playCurrent state of Utica / Point Pleasant play
Reasons for optimismReasons for optimism
McClendon betting on Ohio
Utica shale (is) going to be the biggest thing to hit the
Ohio economy “since maybe the plow.”
Estimates $500 billion
worth of oil and gas
under Ohiounder Ohio

18. What’s next?What s next?
Processing plants Pipelines midstream investmentsProcessing plants, Pipelines, midstream investments
$$7.2 billion in plant and pipelines in eastern Ohio
planned
• 7 processing-separation plants
• Several pipeline networks• Several pipeline networks
Source: Media reports

19. What’s next?What s next?
Examples Processing plantsExamples - Processing plants
MarkWest
•$2.2 billion
Cadiz Harrison CountyCadiz, Harrison County
•$1 billion
Urichville, Tuscarawas County
Momentum M3Momentum M3
•Kensington, Columbiana County
• Leesville, Carroll County
•Hub- Harrison County
$1 billion + combined investment$1 billion + combined investment
Cracker Plant(s)
Shell Chemical
Monaca PAMonaca, PA
“seeking ethane suppliers”
$3.2 billion
Ethane > Ethylene (plastics)

20. What’s next?What s next?
Examples PipelinesExamples - Pipelines
Antero – water line from Ohio River to Tyler and Ritchie Counties
80 miles - $525 million$
Spectra Energy
70 miles- Columbiana County, Carroll, Jefferson, Belmont and Monroe
( ibl M h i & T b ll)(possibly Mahoning & Trumbull)
NiSource Services
“Hickory Bend”y
50 miles- Columbiana County, Carroll, Jefferson, Harrison & Belmont
Counties
$300 million

21. What’s next?What s next?
Examples PipelinesExamples - Pipelines
Hilcorp Corp. and PVR Partners
45 miles- connecting Utica with Texas Eastern and Rockies Expressesg p
interstate pipelines
$125 million
Willi C i I d B d lk Pi li P t LPWilliams Companies Inc. and Boardwalk Pipeline Partners LP
Bluegrass pipeline - connecting Utica and Marcellus with storage in
Louisiana

22. What’s next?What s next?
midstream investments
Halcón Field ServicesHalcón Field Services
Oil storage & rail transfer station
Ohio Commerce Center, Lordstown
$70 million

23. “New” Rock?New Rock?
U D i f tiUpper Devonian formation
• Originally drilled in 1970’s
• Above Utica and Marcellus
• PA & WV
“C t hi ” il d f• “Catching” oil and gas from
Marcellus
• Could be more “liquids rich” than
Marcellus

24. OutlookOutlook
Locally, production numbers are inconclusive due to lack of data.
However, if this play comes close to expectations, the Utica /
Point Pleasant formation will produce oil and natural gas for
the next 40 years.the next 40 years.
After 2015- 1,000 new wells a year for 20 years
Lease sales/ M & A will create new wave of E & P activity
Royalty payments will continue throughout the duration of
production
New technology could enhance production, just as horizontal
d illi d f i t h i h t d thi t itdrilling and new fracing techniques have created this opportunity
Source: Media reports and expert interviews