Coral Energy / Shell Trading Producer Services Wyoming Pipeline Authority

1
Coral Energy / Shell TradingProducer
ServicesWyoming Pipeline Authority

• October 28, 2003

2
Overview

• Coral Energy / Shell Trading is Royal Dutch
  Shells (RD Shell) North American natural gas
  and power marketing affiliate (RD Shell ownership
  _at_ 90.8)
• Coral is contractually obligated to purchase RD
  Shells 2.4 Bcfd of North American natural gas
  production
• Coral is headquartered in Houston with offices in
  San Diego and Calgary
• Shell Trading markets 9.5 Bcfd of natural gas and
  15 GWs of power
• Coral is rated A- by SP and A1 by Moodys

3
Overview

• Corals core competencies are in the aggregation,
  marketing and price risk management of natural
  gas
• We have developed the infra-structure, expertise
  and experience in operations and marketing to
  meet our contractual obligations to RD Shell
• We leverage those resources and capabilities to
  provide a cost-effective market alternative to
  EP companies
• Including a comprehensive suite of services
  allowing Producers to focus their resources on
  EP activities

4
Background

• RD Shell sought to reduce its cost structure and
  credit risk, maintain high production capacity
  factors and focus more resources on EP
  activities
• Through Coral, RD Shell out-sourced its North
  American natural gas marketing functions
• Coral is contractually obligated to purchase all
  of RD Shells North American gas production at
  competitive prices
• RD Shell realizes substantial cost reductions
  improving profitability
• Credit risk is effectively transferred to and
  managed by Coral
• High production capacity factors are maintained
• More resources are available for EP activities

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Discussion

• Significant infra-structure and resources are
  required to effectively market natural gas
• These marketing efforts require substantial
  resources that could otherwise be available for
  EP activities
• We believe the primary goals of a Producers
  marketing efforts are to
• Sell every MMBtu produced
• Receive a competitive price
• Get paid
• As well, the high capacity factor required in
  producing fields is not well matched to the load
  profiles of markets

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Discussion

• Without significant investment in storage and
  transport assets, Producers are limited in their
  ability to shape production to meet market load
  profiles
• Further, Producers have substantial credit risk
  through their marketing efforts or require
  substantial back-office support to mitigate those
  risks
• As such, and in our opinion, few Producers have
  sufficient scale and scope to support an
  effective marketing effort
• For these reasons, aggregating production to a
  financially strong counter party
• Leverages core competencies
• Reduces costs
• Mitigates credit risk exposure
• Increases profitability

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Producer Services

• Why Coral Energy / Shell Trading?
• Scale Scope Coral markets 9.5 Bcfd in North
  America
• Geographic reach
• Infra-structure, experience capability
• Marketing, Asset Management and Price Risk
  Management are core competencies
• Comprehensive Service Offering
• Strong balance sheet and credit rating

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Producer Services

• Shell Trading Offers Marketing Services that
• Are comprehensive and flexible
• Are cost-effective
• Focus on maintaining or increasing production
  capacity factors
• Eliminate credit and non-payment exposure
• Lever core competencies
• Involve transparent, competitive prices
• Facilitate price risk management
• Reduce costs, enhancing profitability
• Support an increased focus on EP activity

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Contacts

• Contacts
• Laird Dyer (858.320.1536)
• Bill Lyons (858.526.2155)
• Erin Kenney (858.526.2116)