Tristone

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Presentation to TMAC by Tom
Ebbern Managing Director Institutional
Research November 16, 2004
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Full Service Boutique

• Tristone Capital was founded in September 2000 as
  a private equity firm. Its AD group was
  initiated in September 2001 and the capital
  markets group initiated in September 2002.
• Tristone is 100 owned by its employees.
• Tristone is the only Canadian Energy Investment
  Banking Firm that actively combines the following
  business units

A D
60 people
Capital Markets
Corporate Finance
Financial Experience28 Senior Professionals(form
erly of TD Newcrest, Peters, RBC, CIBC, GMP,
FirstEnergy, BMO)
Industry Experience32 Oil Gas
Professionals(team of 15 engineers, geologists,
economists)
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Current Energy Commodity Landscape
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Crude Oil Price Drivers

• Record Demand Growth Faltering Non-OPEC Supply
• Supply Disruptions Strikes in Nigeria Norway,
  Hurricane Ivan and Iraq
• Limited to No Spare OPEC Capacity
• Low Inventory Levels
• Major Pricing Dynamic Shift
• From Limiting OPEC Supply to Balance Demand
• To Demand Erosion to Balance Supply

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World Oil Demand

• China/Asia and FSU lead the world in demand
  growth in 2004
• Despite high oil prices, demand is forecast to
  grow at 1.7 in 2005

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Energy Efficiency Inflation

• Oil would have to be 130/b to have same economic
  impact as in the 1980 price shock

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OPEC vs. Non OPEC
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World Oil Supply

• OPEC Needs to produce 28 mmb/d to balance markets
  in 2005

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OPEC Excess Capacity
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US Oil Inventories
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Impact of a Weakening US Dollar

• Euro dollar denominated oil prices have lost
  US10/b since January 2002 relative to the US
  dollar.

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Crude Oil

• Crude prices have risen more that 50 year to
  date
• Oil prices are driven by tight supply and firm
  demand a major shift from the historical supply
  management. Oil prices are now based on
  balancing demand (destruction) with capped
  supply.
• Oil prices are expected to be 40 for 2005 and
  36 for 2006
• Our long-term view is for flat real oil prices of
  US30/b.

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Natural Gas Issues

• Demand Sensitive to Competitive Fuels
• Gas-fired power generation
• Secular growth remains supply constrained
• Industrial demand
• Secular decline as capacity moves offshore
• Canadian oil sands
• A major consumer of gas over next 10 years
• Supply
• US and Canada supply on decline
• LNG to play and important role in the future

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NA Production on Decline

• Despite record drilling, production is on the
  decline. North American production is down
  slightly year over year

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Record Drilling Completions
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Relative Economics Netbacks

• Mackenzie Delta, Atlantic Basin LNG netbacks far
  superior to Alaska Highway economics
• Alaska netbacks are negative at US3.50/mmbtu
• Chicago/AECO basis at risk with Alaska capacity
  going through the WCSB

Source Alaska Department of Revenue, UAA,
Tristone estimates
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LNG Closing the Gap
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LNG Growth
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Gas Linkage to Oil
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Natural Gas

• The North American market will have limited gains
  in gas supply until 2008/2009, when new LNG
  northern pipeline projects come on stream.
• The natural gas supply/demand picture remains
  tight and is not expected to improve in the
  short-term
• North American gas production is expected to
  decline by 1.5.
• Canadian production is expected to grow by 1.8.
• LNG imports to cap at 2 Bcf/d for the next 3
  years, with increasing competition for supply
  from Europe.
• Long term gas prices will be dictated by
  competitive fuel alternatives with oil being the
  prime driver
• Tristones NYMEX gas price forecast is
  US6.50/mmbtu for 2005 and US6.00/mmbtu for
  2006. Our long-term flat real price is
  US4.75/mmbtu.