bank of america merrill lynch conference · core upstream producing areas 5 gas 54% 29% ngls q1...

34
Bank of America Merrill Lynch Energy Credit Conference June 7, 2017

Upload: others

Post on 25-May-2020

3 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Bank of America Merrill LynchEnergy Credit Conference

June 7, 2017

Page 2: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Forward Looking Statement

2

This presentation contains forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward‐looking statements. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” or other similar expressions are intended to identify forward‐looking statements, which are generally not historical in nature. However, the absence of these words does not mean that the statements are not forward‐looking. Without limiting the generality of the foregoing, forward‐looking statements contained in this presentation specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including as to the Company’s drilling program, production, hedging activities, capital expenditure levels and other guidance included in this presentation. These statements are based on certain assumptions made by the Company based on management’s expectations and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward‐looking statements. These include risks relating to financial performance and results, current economic conditions and resulting capital restraints, prices and demand for oil and natural gas, availability of drilling equipment and personnel, availability of sufficient capital to execute the Company’s business plan, the Company’s ability to replace reserves and efficiently develop and exploit its current reserves and other important factors that could cause actual results to differ materially from those projected.  Any forward‐looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward‐looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. The SEC generally permits oil and gas companies, in filings made with the SEC, to disclose only proved reserves, which are reserve estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. In this communication, the Company uses the term “unproved reserves” which the SEC guidelines prohibit from being included in filings with the SEC. “Unproved reserves” refers to the Company’s internal estimates of hydrocarbon quantities that may be potentially discovered through exploratory drilling or recovered with additional drilling or recovery techniques. Unproved reserves may not constitute reserves within the meaning of the Society of Petroleum Engineer’s Petroleum Resource Management System or proposed SEC rules and does not include any proved reserves. Actual quantities that may be ultimately recovered from the Company’s interests will differ substantially. Factors affecting ultimate recovery include the scope of the Company’s ongoing drilling program, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals and other factors; and actual drilling results, including geological and mechanical factors affecting recovery rates. Estimates of unproved reserves may change significantly as development of the Company’s core assets provide additional data. In addition, our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases.

This presentation contains financial measures that have not been prepared in accordance with U.S. Generally Accepted Accounting Principles (“non‐GAAP financial measures”) including LTM EBITDA and certain debt ratios.  The non‐GAAP financial measures should not be considered a substitute for financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).  We urge you to review the reconciliations of the non‐GAAP financial measures to GAAP financial measures in the appendix.

Page 3: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Unit Corporation: A Diversified Energy Company

3

12

10

5

54

13

Casper Casper 

Houston Houston 

Oklahoma City

Oklahoma City

PittsburghPittsburgh

Tulsa HeadquartersTulsa HeadquartersArkoma Basin

Marcellus

North La/ East Texas Basin

Gulf Coast Basin

Anadarko Basin

Permian Basin94 Unit Rigs

E&P Operations

Mid‐Stream Operations

Office Location

• Tulsa based, incorporated in 1963

• Integrated approach to business allows Unit to capture margin from each business segment

Page 4: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Company Highlights

4

• Highly economic opportunities for our E&P segment

• Contract drilling segment growing with industry rebound

• Midstream segment EBITDA poised for growth

• Fiscally conservative• Capital spending within cash flow

Page 5: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Core Upstream Producing Areas

5

Gas54%

29%NGLs

Q1 2017 Daily Production: 42.0 MBoe/d

Key focus areas include:Gulf Coast: Wilcox (Southeast Texas)

Mid‐Continent: Hoxbar (Western Oklahoma) Granite Wash (Texas Panhandle)

Mid Continent Region

Upper Gulf Coast Region

Wilcox

HoxbarGranite Wash

0102030405060

2013 2014 2015 2016 2017 estNatural Gas Oil / NGLs

91 121 10

Average Production (MBoe/d)

44‐4646 4750 55

35Net Wells Drilled:

17%Oil

2016 year end total proves reserves: 707 Bcfe or 118 MMBoe

~25

Page 6: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Buffalo Wallow Field – Economic Advantages

6

Geology‐11 Granite Wash lenses‐Sands consistent across field

Land‐~8,800 net acres ‐Operated and ~90% HBP‐Average working interest ~ 90%‐220 ‐ 270 potential XL locations         ‐Resumed drilling in December 2016‐Continue to expand position

Infrastructure‐SWD network lowers disposal costs ‐80% and allows for water recycling‐Electricity throughout field‐Superior Pipeline gathers and processes the gas

Page 7: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Buffalo Wallow Extended Lateral Results

7

5 BCFE *UPC ROR: 9% Corp ROR: 16%

8 BCFE * UPC ROR: 36%Corp ROR: 58%

11 BCFE *UPC ROR: 82%Corp ROR: 130%

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0 20 40 60 80 100 120 140 160 180 200

Cumulative Prod

uctio

n (M

MCFE)

Days1 5/25/2017 Strip Price Deck with 1st Production Starting 1/1/2017;See Q2 2017 Economic Prices in Appendix (also available at www.unitcorp.com/investor/reports/html).

2 ROR calculation includes midstream margin.

(1)

(1)

(1)

(1) (2)

(1) (2)

(1) (2)

ROR assumes well cost of $6.3MM

1st C1

2nd C1

1st A2

* Potential EUR Range

Page 8: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Hoxbar (Marchand Sand)

8

H O X B A R  3 , 0 0 0 ’

Hoxbar Marchand Core Area‐EUR ~ 550 MBoe‐Estimated well cost $5.0 MM‐83% liquids (68% oil)‐~26,000 net acres (64% HBP)‐60‐65 locations‐Working interest of 50‐60%‐ROR1 ~ 100%‐Resumed drilling in late April ‐5‐6 wells for remainder 2017

Future Growth‐Extended laterals (XL’s)‐Performing waterflood study ‐Waterflood offers significant upside potential

1 5/25/2017 Strip Price Deck with 1st Production Starting 6/1/2017;See Q2 2017 Economic Prices in Appendix (also available at www.unitcorp.com/investor/reports/html)

Page 9: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

‐Paid $56.75MM cash plus contributed 180 acres in McClain County

‐47 PDP wells23 operated by seller20 operated by Unit

‐Proved reserves = 3.2 MMBoe

‐Production = 1,367 boepd (73% liquids)

‐65 gross potential Hoxbar locations13 new locations52 planned wells with working interest increased to ≥80%

‐8,335 net acres (71% HBP)42% increase over existing acreageNow 26,000 net acres in playExcellent overlap with existing acreage 

‐Planned secondary recovery projects will substantially increase oil recoveries

Hoxbar Acquisition

9

Unit

Acquired

Add’l Interest Acquired

Page 10: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Wilcox (Southeast Texas)

10

Overall Wilcox Highlights ‐Drilled 164 operated wells since 2003(155 vertical, 9 horizontal)‐Program ROR > 100%‐Operated with working interest ~ 92%‐Production: ~ 90 MMcfe/d (42% liquids)‐Resumed drilling activity in Jan. 2017JASPER

POLK

3D AREA494 mi.²

HARDIN

Prior Years DrillingHorizontal Wells

TYLER

Gilly Field

0

10

20

30

40

2012 2013 2014 2015 2016

Gas Oil NGLs

Wilcox Annual ProductionBcfe

Gilly Field – World Class Gas Reservoir‐500 Bcfe stacked pay gas resource‐Cumulative production ~ 100 Bcfe‐Average EUR of 10‐20 Bcfe per well‐Typical well cost ~ $6 MM‐ROR > 100%

Future Growth‐Over 100 stacked pay recompletions and workovers to do in existing wells‐Latest horizontal IP 30: 9 MMcf/d, 240 Bopd‐First of 2 exploratory wells waiting on frack‐Generating new exploration ideas using 165 square miles of 3‐D data

Page 11: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Wilcox Activity Map for 2017

11

POLK

HARDIN

TYLER

LIBERTY

CHERRY CREEK

GILLY VILLAGE MILLS

SEGNO NE

WING

Page 12: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

2016 Wilcox Recompletions& Workover Results

12

Composite Gross Production from Recompletions and Workovers20 Recompletions   &   7 Workovers     Total Cost: $10MM

Start of Year3,360 mcfd80 bopd

End of Year40,000 mcfd1,100 bopd

Page 13: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Wilcox Horizontal Test –Village Mills Field

13

Depth Map on Dempsey Sd

0.23 BCFG2.3 MMCF/D IP48,000# Frac

1.03 BCFG2.6 MMCF/D IP214,000# Frac

1.45 BCFG1.8 MMCF/D IP72,000# Frac

West Univ. #1H5,800’ LateralIP30:  9 MMCF/D, 240 BO/D3,000# Flowing Pressure22 Stage, 5,300,000# Frac

Page 14: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Rig Fleet Presence in Key Regions

14

10

12

54

135

Area # of RigsMid‐Continent 17

Bakken 3Niobrara 1Permian 6Pinedale 2Total 29

Current Rigs Operating(1)

94 rig fleet 

69% electric 56% 1,500 HP or greater 94 equipped with top drives 59 equipped with skidding or walking systems

31% total fleet utilization at present Nine BOSS rigs operating

20 ≤800 HP: 21%70 1,000‐1,700 HP: 75%4 ≥2,000 HP: 4%

(1) As of June 5, 2017.

Page 15: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

SCR Rigs Continue to Make anImportant Contribution

15

0

5

10

15

20

25

30

May 5, 2016 Aug. 4, 2016 Dec. 31, 2016 Jun. 5, 2017

A/C SCR

• At industry trough – 13 drilling rigs operating

• Currently, 29 drilling rigs operating

• Four additional SCR rigs under contract

• All BOSS rigs operating

• 20 SCR rigs operating̶ 13 SCR rigs required 

no modifications̶ 7 SCR rigs required 

some upgrade

7

9

12

20

6 79 9

Page 16: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Average Dayrates and Margins (1)

16

Average Rig Utilization

Margins and

 Dayrates

$0

$5,000

$10,000

$15,000

$20,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 '17

Margins Dayrates Average Rig Utilization

100%

75%

50%

25%

0%

(1) See Reconciliation of Average Daily Operating Margin Before Elimination of Intercompany Rig Profit and Bad Debt Expense in Appendix(also available at www.unitcorp.com/investor/reports.html).

Page 17: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

The BOSS Drilling Rig

17

Optimized for Pad Drilling Multi‐direction walking system

Faster Between Locations Quick assembly substructure 32‐34 truck loads

More Hydraulic Horsepower (2) 2,200 horsepower 

mud pumps 1,500 gpm available

with one pump

Environmentally Conscious Dual‐fuel capable 

engines Compact location 

footprint

All nine BOSS rigs currently operating; tenth under construction

Page 18: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Midstream Core Operations

18

Appalachia 66,000+ dedicated acres 53 miles of gathering pipeline Connected 24 new wells in2016

TulsaHeadquarters

PittsburghRegional office

Hemphill

Reno

Bellmon

Segno

Pittsburgh Mills

Processing facilities

Gathering systems

Panola

Key Metrics

• 25 active systems

• Three natural gas treatment plants

• 340 MMcf/d processing capacity

• Q1’17 processing volume 127 MMcf/d

• Approx. 1,470 miles of pipeline

East Texas 66 Miles of gathering pipeline 120 MMcf/d gathering capacity

Texas Panhandle 52,000 dedicated acres 135 MMcf/d processing capacity 343 miles of gathering pipeline

Northern Oklahoma and Kansas 1,975,000+ dedicated acres 193 MMcf/d processing capacity 579 miles of gathering pipeline

Central & Eastern OK 57,000+ dedicated acres 12 MMcf/d processing capacity 428 miles of gathering pipeline

Brook Field

Snow Shoe

Bruceton Mills

Page 19: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Midstream Segment Contract Mix

19

Contract Mix Based on Margin

Fee BasedCommodity Based

85%35%

65%

15%

Contract Mix Based on Volume

Fee BasedCommodity Based

49%28%

72%51%

2010 Q1 2017

Unit vs. 3rd Party Margin Contribution

3rd PartyUnit

41% 35%65%59%

Page 20: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Midstream Historical Volumes

20

 ‐

 20,000,000

 40,000,000

 60,000,000

 80,000,000

 100,000,000

 120,000,000

 140,000,000

 160,000,000

 180,000,000

 200,000,000

2009 2010 2011 2012 2013 2014 2015 2016

Gas Gathered (MMbtu) Gas Processed (MMbtu)

MMBtu

Gathe

red & Processed

 

Page 21: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Midstream SegmentCommodity Price Sensitivity (1)

21

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

2009 2010 2011 2012 2013 2014 2015 2016 2016Adjusted

$29.40 $38.64 $43.26 $31.50 $35.70 $30.24 $15.96 $15.96 $21.07$54.89 $75.07 $88.47 $89.93 $87.46 $81.25 $37.03 $32.56 $47.33

Realized Price*NGL/Barrel:

Condensate/Bbl:

*Net realized prices – prices received after transportation, fuel, and fees paid.(1) See Superior Pipeline Company Reconciliation of EBITDA in Appendix (also available at www.unitcorp.com/investor/reports.html). 

Segment EBITDA Before Intercompany Eliminations

2016 Adjustments

• Utilized 2016 volumes

• Assumed $55.00/Bbl oil price

• Adjusted for average NGL price of $21.07/Bbl

• Adjusted average condensate price of $47.33/Bbl

• Prices are after transportation, fuel, and fees paid.Adjusted

PriceRealized Price

Page 22: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

*  Drilling rigs are not included in borrowing base.

Debt Structure – No Near‐Term Maturities

22

Senior Subordinated Notes

$650 million, 6.625%

10‐year, NC5; maturity 2021

Key Covenants      Interest coverage ratio ≥ 2.25x(1)

Secured Bank Facility (Redetermined April 2017) * Elected Commitment 

and Current Borrowing Base  $475 million

Outstanding(2) $150.0 million

Maturity April 2020

Key Covenants              Current ratio ≥ 1.0 to 1.0(1)

Senior Indebtedness ratio ≤ 2.75(1)

(1) As defined in Indenture/Credit Agreement.(2) As of March 31, 2017.

Ratings S&P Moody’s FitchCorporate B+ B2 B+Senior Subordinated Notes BB‐ B3 BB‐

3/31/20175.07x(1,2)

3/31/2017 Actual3.10x(1,2)

0.54x(1,2)

Page 23: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Segment Contribution

23

Oil and Natural Gas Contract Drilling Midstream

Revenues ($ millions)            Adjusted EBITDA ($ millions)(1)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2013 2014 2015 2016 Q1 '17

$0

$200

$400

$600

$800

2013 2014 2015 2016 Q1 '17

$1,352

$1,573

$854

$602

$176

$787

$410

$252

$75

$667

(1) See Non‐GAAP Financial Measures in Appendix (also available at www.unitcorp.com/investor/reports.html).

Page 24: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Operating Segment Capital Expenditures

24

$0

$500

$1,000

$1,500

2013 2014 2015 2016 2017 Budget

Oil and Natural Gas Contract Drilling Midstream

(In Millions)

Page 25: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Investment Considerations

25

• E&P segment three core areas provide compelling economics

• Contract drilling segment resuming pattern of growth

• Midstream segment positioned to benefit from increased activity levels and liquids price improvement

• We maintain fiscal discipline• Solid balance sheet with ample liquidity

Page 26: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

26

APPENDIX

Page 27: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Non‐GAAP Financial Measures ‐ Corporate

27

Adjusted EBITDAYears endedDecember 31,

($ In Millions) 2017 2013 2014 2015 2016

Net Income (Loss) ($41) $16  $185  $136  ($1,037) ($136)Income Taxes (16) 14  117  87  (627) (71)Depreciation, Depletion and Amortization 56 47  334  405  355  210 

Impairments 38 ‐ ‐ 158  1,635  162 Interest Expense 10 9  15  17  32  40 (Gain) loss on derivatives (11) (15)  8  (30) (26) 23Settlements during the period of matured derivative contracts 7 (1)  (2) (6) 47  10 

Stock compensation plans 5 4  22  24  21  14 Other non‐cash items 1 1  5  5  3  3 (Gain) loss on disposition of assets (1) ‐ (17) (9) 7  (3) Adjusted EBITDA $48 $75  $667  $787  $410  $252 

2016

Three months endedMarch 31,

Page 28: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Non‐GAAP Financial Measures ‐ Segments

28

Unit PetroleumIncome (Loss) Before Income Taxes (1) $ (45) $ 36 $ 239 $ 199 $ (1,631) $ (102)

Depreciation, Depletion and Amortization 32 22 226 276 252 114Impairment of Oil and Natural Gas Properties 38 ‐ ‐ 77 1,599 162

Adjusted EBITDA $ 25 $ 58 $ 465 $ 552 $ 220 $ 174

Unit DrillingIncome (Loss) Before Income Taxes (1) $ (1) $ (5) $ 96 $ 42 $ 45 $ (13)

Depreciation and Impairment 12 13 71 160 64 47Adjusted EBITDA $ 11 $ 8 $ 167 $ 202 $ 109 $ 34

Superior PipelineIncome (Loss) Before Income Taxes (1) $ (3) $ 2 $ 11 $ 2 $ (30) $ 2

Depreciation, Amortization and Impairment 11 11 33 48 71 46Adjusted EBITDA $ 8 $ 13 $ 44 $ 50 $ 41 $ 48

(1) After intercompany eliminations and does not include allocation of G&A expense.

Adjusted EBITDA

($ In Millions) 2017 2013 2014 2015 20162016

Years endedDecember 31,

Three months endedMarch 31,

Page 29: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Non‐GAAP Financial Measures

29

Reconciliation of Average Daily Operating MarginBefore Elimination of Intercompany Rig Profit and Bad Debt Expense

(In thousands except for operating daysand operating margins) 2016 2013 2014 2015 2016

Contract drilling revenue $38,710 $37,185  $414,778  $476,517  $265,668  $122,086 

Contract drilling operating cost 28,098 29,227  247,280  274,933  156,408  88,154 

Operating profit from contract drilling $10,612 $7,958  $167,498  $201,584  $109,260  $33,932 

Add:

Elimination of intercompany rig profit and bad debt expense ‐ ‐ 17,416  29,343  3,991  235 

Operating profit from contract drilling before elimination of intercompany rig profit and bad debt expense

10,612 7,958  184,914  230,927  113,251  34,167 

Contract drilling operating days 1,878 2,291  23,720  27,516  12,681  6,374 

Average daily operating margin beforeelimination of intercompany rig profit and bad debt expense

$5,651 $3,474  $7,796  $8,392  $8,931  $5,360 

2017

Years endedDecember 31,

Three months endedMarch 31,

Page 30: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Non‐GAAP Financial Measures

30

Reconciliation of Average Daily Operating MarginBefore Elimination of Intercompany Rig Profit and Bad Debt Expense

Years ended December 31,2008 2009 2010 2012

(In thousands except for operating daysand operating margins)

Contract drilling revenue $622,727  $236,315  $316,384  $484,651  $529,719 

Contract drilling operating cost 312,907  140,080  186,813  269,899  289,524 

Operating profit from contractdrilling $309,820  $96,235  $129,571  $214,752  $240,195 

Add:

Elimination of intercompany rig profit and bad debt expense 29,381  1,549  9,158  19,900  15,583 

Operating profit from contract drilling before elimination of intercompany rig profit and bad debt expense

339,201  97,784  138,729  234,652  255,778 

Contract drilling operating days 37,745  14,183  22,367  27,619  26,704 

Average daily operating margin before elimination of intercopmany rig profit and bad debt expense

$8,987  $6,894  $6,202  $8,496  $9,578 

2011

Page 31: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Midstream Reconciliation of EBITDA(Before Intercompany Eliminations)

31

Total Midstream Income (Loss)Before Intercompany Eliminations $ 7,126 $ 19,267 $ 19,555 $ 8,237 $ 15,636 $ 6,626 $ (24,159) $ 8,799

(Gain) Loss on Disposition of Assets ‐‐‐ ‐‐‐ 81 313 ‐‐‐ (97) (465) 302Depreciation and Amortization 16,104 15,385 16,101 23,110 33,191 40,434 43,676 45,715Impairments ‐‐‐ ‐‐‐ ‐‐‐ 1,278 ‐‐‐ 7,068 26,966 ‐‐‐Segment EBITDA Before Intercompany Eliminations * $ 23,230 $ 34,652 $ 35,737 $ 32,938 $ 48,827 $ 54,031 $ 46,018 $ 54,816

Segment EBITDA Before Intercompany EliminationsYears ended December 31,

($ In Millions) 2009          2010           2011           2012           2013          2014           2015           2016

*Excludes depreciation, allocated interest, and corporate G&A

Page 32: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Derivative Summary

32

Crude 2017 2018Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

CollarsVolume (Bbl) ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐Weighted Avg Floor ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐Weighted Avg Ceiling ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐

3‐Way CollarsVolume (Bbl) 337,500 341,250 345,000 345,000 90,000 91,000 92,000 92,000Weighted Avg Floor $49.79  $49.79  $49.79  $49.79  $50.00 $50.00 $50.00 $50.00Weighted Avg Subfloor $39.58  $39.58  $39.58  $39.58  $40.00 $40.00 $40.00 $40.00Weighted Avg Ceiling $60.98  $60.98  $60.98  $60.98  $56.65 $56.65 $56.65 $56.65

SwapsVolume (Bbl) ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐Weighted Avg Swap ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐ ‐‐

Natural Gas 2017 2018Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

CollarsVolume (MMBtu) 1,800,000  1,820,000  1,840,000  620,000  ‐‐ ‐‐ ‐‐ ‐‐Weighted Avg Floor $2.88  $2.88  $2.88  $2.88  ‐‐ ‐‐ ‐‐ ‐‐Weighted Avg Ceiling $3.10  $3.10  $3.10  $3.10  ‐‐ ‐‐ ‐‐ ‐‐

3‐Way CollarsVolume (MMBtu) 1,350,000  1,365,000  1,380,000  1,990,000  5,400,000 1,820,000 1,840,000 1,840,000Weighted Avg Floor $2.50  $2.50  $2.50  $2.81  $3.29 $3.00 $3.00 $3.00Weighted Avg Subfloor $2.00  $2.00  $2.00  $2.23  $2.63 $2.50 $2.50 $2.50Weighted Avg Ceiling $3.32  $3.32  $3.32  $3.53  $4.07 $3.51 $3.51 $3.51

SwapsVolume (MMBtu) 6,300,000  6,370,000  6,440,000  5,830,000  1,800,000  1,820,000  1,840,000  1,840,000 Weighted Avg Swap $3.04  $3.04  $3.04  $2.99  $3.01  $3.01  $3.01  $3.01 

Page 33: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

Q2 2017 Economic Prices

33

CrudeNatural

Gas MB C2 MB C3BBL MB

C3 MB NC4 MB iC4 MB C5+ CW C2 CW C3 CW NC4 CW iC4 CW C5+

2017  $51.048 $3.334 $0.261 $0.662 $27.815 $0.783 $0.773 $1.123 $0.210 $0.629 $0.734 $0.842 $1.132

2018  $51.498 $3.092 $0.242 $0.668 $28.060 $0.790 $0.780 $1.133 $0.195 $0.634 $0.741 $0.850 $1.142

2019  $50.838 $2.864 $0.224 $0.660 $27.700 $0.779 $0.770 $1.119 $0.181 $0.626 $0.731 $0.839 $1.127

2020  $50.883 $2.838 $0.222 $0.660 $27.724 $0.780 $0.770 $1.120 $0.179 $0.627 $0.732 $0.840 $1.128

2021  $51.521 $2.887 $0.226 $0.668 $28.072 $0.790 $0.780 $1.134 $0.182 $0.634 $0.741 $0.850 $1.142

Thereafter $51.521 $2.887 $0.226 $0.668 $28.072 $0.790 $0.780 $1.134 $0.182 $0.634 $0.741 $0.850 $1.142

Strip Case*

*Strip prices as of 5/25/2017.

Page 34: Bank of America Merrill Lynch Conference · Core Upstream Producing Areas 5 Gas 54% 29% NGLs Q1 2017 Daily Production: 42.0 MBoe/d Key focus areas include: Gulf Coast: Wilcox (Southeast

June 7, 2017

Bank of America Merrill LynchEnergy Credit Conference