Methodology and specifications guide. Last Updated: December 2017 The most up-to-date Argus Crude methodology is available on

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1 ARGUS Crude Contents: Methodology overview 2 Overview, pricing tables 6 Futures markets 6 Forward spreads 6 Forward markets 6 North Sea 7 Russian-Caspian 11 Mediterranean 14 West Africa 15 Mideast Gulf 16 Asia-Pacific 19 Russia Asia-Pacific 22 Official formula prices 24 Official selling prices 24 Reference prices 24 Argus Japanese Crude Cocktail Index 24 Americas 24 Daily netbacks 24 Argus intra-day North Sea forward physical crude assessments 24 Last Updated: The most up-to-date Argus Crude methodology is available on

2 Methodology overview Methodology rationale Argus strives to construct methodologies that reflect the way the market trades. Argus aims to produce price assessments which are reliable indicators of commodity market values, free from distortion and representative of spot market values. As a result, the specific currencies, volume units, locations and other particulars of an assessment are determined by industry consensus to facilitate seamless bilateral trade and Argus mirrors these industry conventions. In the global crude markets, Argus reflects physical market prices employing a range of methodologies. These include time stamped bid/ask ranges, averages of deals done in a window, volumeweighted averages of deals done over the entire day as well as cumulative transaction averages across a month and cumulative daily averages. The rationale for each methodology will vary by market. Argus often applies crude basis differentials to various prices such as WTI and North Sea Dated to arrive at fixed prices because this is a representative method of converting differential prices into fixed price assessments When Argus uses a deals based approach for price identification deals must meet the minimum volume, delivery, timing, and specification requirements in our methodology and the deals must be bona fide. The same requirements apply to most volume-weighted averages. The time period used to produce representative price indications is that which in the opinion of Argus, following consultation with market participants, can be used to produce a reliable indicator of physical market value. Argus will announce its publishing schedule in a calendar located at. Argus may not assess prices on certain public holidays even when the exchanges are open, due to anticipated illiquidity in the cash spot markets. Survey process Argus price assessments are informed by information received from a wide cross section of market participants, including producers, consumers and intermediaries. Argus reporters engage with the industry by proactively polling participants for market data. Argus will contact and accept market data from all credible market sources including front and back office of market participants and brokers. Argus will also receive market data from electronic trading platforms and directly from the back offices of market participants. Argus will accept market data by telephone, instant messenger, or other means. Argus encourages all sources of market data to submit all market data to which they are a party that falls within the Argus stated methodological criteria for the relevant assessment. Argus encourages all sources of market data to submit transaction data from back office functions when and where possible. Throughout all markets, Argus is constantly seeking to increase the number of companies willing to provide market data. Reporters are mentored and held accountable for expanding their pool of contacts. The number of entities providing market data can vary significantly from day to day based on market conditions. Should the number of entities providing market data repeatedly fall to a level that assessment quality may be affected, supervising editors will review the viability of the assessment. For certain price assessments identified by local management, should more than 50pc of the market data upon which the assessment is based come from a single entity, then the supervising editor will engage in an analysis of the market data with the primary reporter to ensure that the quality and integrity of the assessment has not been affected. Argus has committed to deliver many of our final published prices to clients by a particular deadline each day. Because compiling and confirming transactions and other market data in advance of this deadline is a lengthy process, price assessment procedures must be concluded well before that deadline. As a result, Argus has instituted cut-off times for the submission of data by market participants. Argus will review all data received after the cut-off time and will make best efforts to include in the assessment process all verifiable transactions and market data received after the cut-off time but reserves the right to exclude any market data from the process if received after the cut-off time. Market data usage In each market, Argus uses the methodological approach deemed to be the most reliable and representative for that market. Argus will utilise various types of market data in its methodologies, to include: 1. Transactions 2. Bids and offers 3. Other market information, to include spread values between grades, locations, timings, and many other data. In many markets, the relevant methodology will assign a relatively higher importance to transactions over bids and offers, and a relatively higher importance to bids and offers over other market information. Certain markets however will exist for which such a hierarchy would produce unreliable and non-representative price assessments, and so the methodology must assign a different relative importance in order to ensure the quality and integrity of the price assessment. And even in markets for which the hierarchy normally obtains, certain market situations will at times emerge for which the strict hierarchy would produce non-representative prices, requiring Argus to adapt in order to publish representative prices. Verification of transaction data Reporters carefully analyse all data submitted to the price assessment process. This data includes transactions, bids, offers, volumes, counterparties, specifications and any other information that contributes materially to the determination of price. This high level 2

3 of care applies regardless of the methodology employed. Specific to transactions, bids, and offers, reporters seek to verify the price, the volume, the specifications, location basis, and counterparty. In some transactional average methodologies, reporters also examine the full array of transactions to match counterparties and arrive at a list of unique transactions. Several tests are applied by reporters in all markets to transactional data to determine if it should be subjected to further scrutiny. If a transaction has been identified as failing such a test, it will receive further scrutiny. For certain price assessments identified by local management, Argus has established internal procedures that involve escalation of inquiry within the source s company and escalating review within Argus management. Should this process determine that a transaction should be excluded from the price assessment process, the supervising editor will initiate approval and, if necessary, documentation procedures. Primary tests applied by reporters Transactions not transacted at arms-length, including deals between related parties or affiliates. Transaction prices that deviate significantly from the mean of all transactions submitted for that day. Transaction prices that fall outside of the generally observed lows and highs that operated throughout the trading day. Transactions that are suspected to be a leg of another transaction or in some way contingent on an unknown transaction. Single deal volumes that significantly exceed the typical transaction volume for that market. Transaction details that are identified by other market participants as being for any reason potentially anomalous. Transaction details that are reported by one counterparty differently than the other counterparty. Any transaction details that appear to the reporter to be illogical or to stray from the norms of trading behavior. This could include but is not limited to divergent specifications, unusual delivery location and counterparties not typically seen. Transactions that involve the same counterparties, the same price and delivery dates are checked to see that they are separate deals and not one deal duplicated in Argus records. Secondary tests applied by editors for transactions identified for further scrutiny Transaction tests The impact of linkage of the deal to possible other transactions such as contingent legs, exchanges, options, swaps, or other derivative instruments. This will include a review of transactions in markets that the reporter may not be covering. The nature of disagreement between counterparties on transactional details. The possibility that a deal is directly linked to an offsetting transaction that is not publicly known, for example a wash trade which has the purpose of influencing the published price. The impact of non-market factors on price or volume, including distressed delivery, credit issues, scheduling issues, demurrage, or containment. Source tests The credibility of the explanation provided for the outlying nature of the transaction. The track record of the source. Sources will be deemed more credible if they o Regularly provide transaction data with few errors. o Provide data by Argus established deadline. o Quickly respond to queries from Argus reporters. o Have staff designated to respond to such queries. How close the information receipt is to the deadline for information, and the impact of that proximity on the validation process. Assessment guidelines When insufficient, inadequate, or no transaction information exists, or when a transaction based methodology will not produce representative prices, Argus reporters will make an assessment of market value by applying intelligent judgment based on a broad array of factual market information. Reporters must use a high degree of care in gathering and validating all market data used in determining price assessments, a degree of care equal to that applying to gathering and validating transactions. The information used to form an assessment could include deals done, bids, offers, tenders, spread trades, exchange trades, fundamental supply and demand information and other inputs. The assessment process employing judgment is rigorous, replicable, and uses widely accepted valuation metrics. These valuation metrics mirror the process used by physical commodity traders to internally assess value prior to entering the market with a bid or offer. Applying these valuation metrics along with sound judgment significantly narrows the band within which a commodity can be assessed, and greatly increases the accuracy and consistency of the price series. The application of judgment is conducted jointly with the supervising editor, in order to be sure that guidelines below are being followed. Valuation metrics include the following: Relative value transactions Frequently transactions occur which instead of being an outright purchase or sale of a single commodity, are instead exchanges of commodities. Such transactions allow reporters to value less liquid markets against more liquid ones and establish a strong basis for the exercise of judgment. Exchange one commodity for a different commodity in the same market at a negotiated value. Exchange delivery dates for the same commodity at a negotiated value. Exchange a commodity in one location for the same commodity at another location at a negotiated value. 3

4 Bids and offers If a sufficient number of bids and offers populate the market, then the highest bid and the lowest offer can be assumed to define the boundaries between which a deal could be transacted. Comparative metrics The relative values between compared commodities are readily discussed in the market and can be discovered through dialogue with market participants. These discussions are the precursor to negotiation and conclusion of transactions. Comparison to the same commodity in another market centre. Comparison to a more actively traded but slightly different specification commodity in the same market centre. Analysis of prices in forward markets for physically deliverable commodity that allow extrapolation of value into the prompt timing for the commodity assessed. Comparison to the commodity s primary feedstock or primary derived product(s). Comparison to trade in the same commodity but in a different modality (as in barge versus oceangoing vessel) or in a different total volume (as in full cargo load versus partial cargo load). Throughout this methodology, Argus will explain, in more detail and on a market by market basis, the criteria and procedures that are used to make an assessment of market value by applying intelligent judgment. Volume minimums and transaction data thresholds In establishing each methodology, Argus will list specific minimum volume for each assessment. Because of the varying transportation infrastructure found in all commodity markets, Argus typically does not establish thresholds strictly on the basis of a count of transactions, as this could lead to unreliable and non-representative assessments. Instead, minimum volumes are typically established which may apply to each transaction accepted, to the aggregate of transactions, to transactions which set a low or high assessment or to other volumetrically relevant parameters. For certain price assessments identified by local management, Argus will seek to establish minimum transaction data thresholds and when no such threshold can be established Argus will explain the reasons. These thresholds will often reflect the minimum volumes necessary to produce a transaction-based methodology, but may also establish minimum deal parameters for use by a methodology that is based primarily on judgment. Should no transaction threshold exist, or should submitted data fall below this methodology s stated transaction data threshold for any reason, Argus will follow the procedures outlined elsewhere in this document regarding the exercise of judgment in the price assessment process. Transparency and confidentiality Argus values transparency in energy markets. As a result, we publish lists of deals in our reports that include price, basis, and volume information. The deal tables allow subscribers to cross check and verify the deals against the prices. Argus feels transparency and openness is vital to developing confidence in the price assessment process. Argus asks for transaction counterparty names from contacts in order to confirm deals and to avoid double-counting in certain volume-weighted averages. In some markets, Argus does not publish counterparty names. In other markets, Argus does publish counterparty names in its reports. Basis differentials and absolute prices In the global crude markets, prices are often negotiated bids, offers, and transaction values at differentials to futures prices or to reference prices. Argus fixed prices are derived by adding the assessed differentials to the reference price. Swaps and forwards markets Argus publishes forward assessments for numerous markets. These include forward market contracts that can allow physical delivery and swaps contracts that swap a fixed price for the average of a floating published price. Publications and price data Argus global crude prices are published in the Argus Crude report. The Argus Americas Crude report contains a subset of these prices. Other Argus publications also include some Argus Americas Crude pricing data. The price data is available independent of the textbased report in electronic files that can feed into various databases. These price data are also supplied through various third-party data integrators. The Argus website also provides access to prices, reports and news with various web-based tools. All Argus prices are kept in a historical database and available for purchase. Contact your local Argus office for information. Corrections to assessments Argus will on occasion publish corrections to price assessments after the publication date. We will correct errors that arise from clerical mistakes, calculation errors, or a misapplication of our stated methodology. Argus will not retroactively assess markets based on new information learned after the assessments are published. We make our best effort to assess markets based on the information we gather during the trading day assessed. Ethics and compliance Argus operates according to the best practices in the publishing field, and maintains thorough compliance procedures throughout the firm. We want to be seen as a preferred provider by our subscribers, who are held to equally high standards, while at the same 4

5 time maintaining our editorial integrity and independence. Argus has a strict ethics policy that applies to all staff. The policy can be found on our website at. Included in this policy are restrictions against staff trading in any energy commodity or energy related stocks, and guidelines for accepting gifts. Argus also has strict policies regarding central archiving of and instant messenger communication, maintenance and archiving of notes, and archiving of spreadsheets and deal lists used in the price assessment process. Argus publishes prices that report and reflect prevailing levels for open-market arms length transactions (please see the Argus Global Compliance Policy for a detailed definition of arms length). Consistency in the assessment process Argus recognises the need to have judgment consistently applied by reporters covering separate markets, and by reporters replacing existing reporters in the assessment process. In order to ensure this consistency, Argus has developed a programme of training and oversight of reporters. This programme includes: 1. A global price reporting manual describing among other things the guidelines for the exercise of judgment. 2. Cross-training of staff between markets to ensure proper holiday and sick leave backup. Editors that float between markets to monitor staff application of best practices. 3. Experienced editors overseeing reporting teams are involved in daily mentoring and assisting in the application of judgment for illiquid markets. 4. Editors are required to sign-off on all price assessments each day, thus ensuring the consistent application of judgment. Review of methodology The overriding objective of any methodology is to produce price assessments which are reliable indicators of commodity market values, free from distortion and representative of spot market values. As a result, Argus editors and reporters are regularly examining our methodologies and are in regular dialogue with the industry in order to ensure that the methodologies are representative of the physical market being assessed. This process is integral with reporting on a given market. In addition to this ongoing review of methodology, Argus conducts reviews of all of its methodologies and methodology documents on at least an annual basis. Argus market report editors and management will periodically and as merited initiate reviews of market coverage based on a qualitative analysis that includes measurements of liquidity, visibility of market data, consistency of market data, quality of market data and industry usage of the assessments. Report editors will review: Informal discussions with market participants Informal discussions with other stakeholders Internal review of market data Should changes, terminations, or initiations be merited, the report editor will submit an internal proposal to management for review and approval. Should changes or terminations of existing assessments be approved, then formal procedures for external consultation are begun. Changes to methodology Formal proposals to change methodologies typically emerge out of the ongoing process of internal and external review of the methodologies. Formal procedures for external consultation regarding material changes to existing methodologies will be initiated with an announcement of the proposed change published in the relevant Argus report. This announcement will include: Details on the proposed change and the rationale Method for submitting comments with a deadline for submissions Notice that all formal comments will be published after the given consultation period unless submitter requests confidentiality Argus will provide sufficient opportunity for stakeholders to analyse and comment on changes, but will not allow the time needed to follow these procedures to create a situation wherein unrepresentative or false prices are published, markets are disrupted, or market participants are put at unnecessary risk. Argus will engage with industry throughout this process in order to gain acceptance of proposed changes to methodology. Argus cannot however guarantee universal acceptance and will act for the good order of the market and ensure the continued integrity of its price assessments as an overriding objective. Following the consultation period, Argus management will commence an internal review and decide on the methodology change. This will be followed by An announcement of the decision published in the relevant Argus report, to include a date for implementation, publication of stakeholders comments that are not subject to confidentiality, and Argus response to those comments. Updates to methodology The Argus Crude methodology is constantly updated and revised. The latest available methodology (which may supersede the one you are reading) is available at. Appropriateness of the methodology of existing assessments Termination of existing assessments Initiation of new assessments The report editor will initiate an informal process to examine viability. This process includes: 5

6 Overview (Argus Crude page 1) Argus provides an overview of the day s crude market activity, highlighting changes in key crude prices and the price differences among the various regional crudes. The report discusses that day s market activity with particular reference to the main crude benchmark prices. The summary has a global scope, allowing readers to quickly understand the key market drivers. Pricing tables (Argus Crude page 1) North Sea, Russia-Caspian, Mediterranean and west Africa The front page of Argus Crude contains duplicate assessments of the crude prices in the various regional sections. For the North Sea, Russian-Caspian (including fob netbacks) Mediterranean, and West Africa, prices are published as fixed price assessments and also shown as differentials to the benchmarks. The primary benchmark in the Atlantic Basin is Dated, but Dated itself is shown as a differential to the forward North Sea price (the flat price). The price methodology for these regions is described in the various regional sections below. Mideast Gulf The Mideast Gulf table contains the price assessments made at 4:30pm Singapore time for front month Dubai, front month Oman, and the Abu Dhabi crude Murban. The Dubai price is published as a fixed price assessment. The Oman price is published as a fixed price assessment and is also shown as a differential to Dubai swaps. The Murban price is published as a fixed price assessment and also shown as a differential to the Abu Dhabi National Oil Company (Adnoc) OSP. Asia-Pacific The Asia-Pacific table contains the price assessments made at 4:30pm Singapore time for Minas, Tapis and North West Shelf crudes. The Indonesian Minas crude price is published as a fixed price assessment and as a differential to the Indonesian Crude Price (ICP). Malaysian Tapis crude is published as a fixed price assessment and as a differential to the North Sea Dated and substitute Dated on UK holidays. Australian North West Shelf condensate is published as a fixed price assessment and as a differential to North Sea Dated, and Substitute Dated on UK holidays (see Asia-Pacific section below). ESPO Blend is published as a fixed price assessment and as a differential to Dubai swaps. Sokol is published as a fixed price assessment and as a differential to Dubai swaps for the month of loading. US pipeline The US pipeline table contains the prices for LLS, Mars and the Argus Sour Crude Index (ASCI ) benchmark, LLS, Mars and ASCI prices are published as fixed price assessments and as differentials to the front month Nymex WTI settlement price. Canada pipeline The Canada pipeline table contains the prices for Canadian Synthetic and WCS, published as fixed price assessments. Americas cargoes The Americas cargoes table contains the prices for Alaskan North Slope and Colombian Vasconia, published as fixed price assessments. Futures markets (Argus Crude page 2) Argus Crude shows market information from four world futures markets which trade crude oil. These futures exchanges are the London-based IntercontinentalExchange s Brent contract (Ice Brent), the New York Mercantile Exchange s Light Sweet Crude contract (Nymex WTI), the Tokyo-based Tocom Mideast Gulf crude contract and the Dubai Mercantile Exchange s Oman contract. Argus Crude publishes representative price and market information from the futures exchanges including the Open, High, Low and Settle prices and where possible the estimated volume of trade. Forward spreads (Argus Crude page 2) Argus Crude shows the North Sea/Dubai spreads for three months forward, the WTI/North Sea spreads for four months forward and the WTI/Dubai spreads for three months forward, timestamped at 4:30pm London time. Forward markets (Argus Crude pages 2-4) The forward markets tables show prices in the forward markets and the intermonth spreads between the different monthly prices. They also show various exchange of futures for physicals prices and exchanges for swaps prices. Various short-term swap price tables are shown. The section also contains pricing components that are used to calculate other Argus price assessments. North Sea forward Singapore close The North Sea forward table for Singapore close shows prices for four months forward in the forward North Sea market at 4:30pm Singapore time. This market is the Brent forward market (with Forties, Oseberg, Ekofisk or Troll substitutionality). It is called the North Sea forward market in Argus Crude to differentiate it from the 15-day Brent forward market that it replaced. This forward market trades in parallel to the Ice futures market in Brent as an over-the-counter market in Brent. 6

7 The contract trades at fixed prices and also in the form of intermonth spreads. Argus assesses the prices for the forward North Sea months by applying the intermonth spread assessments to the first-month North Sea forward price. Argus uses the EFP differential and the front-month Ice Brent futures to assess first-month forward North Sea, including expiry day, except for the last three sessions in the life of the front-month futures contract. On these sessions, Argus uses second-month Ice Brent futures and the corresponding EFP differential (see Calculating North Sea Dated). North Sea forward London close The forward North Sea London close table duplicates the Dated price and also shows prices for four months forward in the forward North Sea market at 4:30pm London time. This market is the Brent forward market (with Forties, Oseberg, Ekofisk or Troll substitutionality). It is called North Sea forward in Argus Crude to differentiate it from the 15-day Brent forward market that it replaced. This forward market trades in parallel to the Ice futures market in Brent as an over-the-counter market in Brent. A weighted average of trade on the most liquid forward North Sea month is also the forward (or flat price) used in the calculation of the Dated assessment. The forward North Sea market trades at fixed prices and also in the form of intermonth spreads. Argus assesses the price levels for these intermonth trades in the forward intermonths table on page 2 and uses these intermonth assessments to construct the fixed forward price assessments in the North Sea table. The BFOE forward contract rolls on the last working day of the previous month, so the March 2015 forward contract will roll on 27 February. If this date falls on a weekend or holiday, then the roll date will fall on the previous workday. The last day of trade will be the first workday prior to the roll date. Dubai Singapore close Argus quotes forward Dubai for four months forward at 4:30pm Singapore time. A more detailed explanation of the Argus Dubai methodology can be found in the Mideast Gulf section. The components used in the calculation of the forward Dubai prices are the Dubai/Ice Brent EFS differentials, which Argus quotes for three months forward, and the Dubai Intermonths, which Argus quotes for three periods forward. Dubai London close Argus quotes the forward Dubai price for four months forward. These prices are assessed at London 4:30pm and so differ from the Singapore 4:30pm assessments. Dated to Ice Brent frontline Argus quotes prices for the Dated to Frontline (DFL) market which trades the difference between the Dated assessment and the frontline Ice assessment. Argus quotes this market for three months forward, two quarters and one year forward. The front DFL month will roll either on 18th of the month or up to four days after the 18th of the month, depending on liquidity. WTI Cushing WTI is assessed on a cash market basis at 1:30pm Houston time. These prices reflect an intelligent assessment of the bid/ask range at the time stamp. Cash WTI rolls on the fourth business day following the expiry of the front-month Nymex Light Sweet crude futures contract. North Sea (Argus Crude page 3) The North Sea crude market is one of the most important oil markets in the world. For many years, the main North Sea crude price was the price of Brent Blend. This was the main price benchmark against which other crudes were valued. In addition to trading physical cargoes, and having other physical grades price against it, the Brent market developed a forward market and also a series of derivative markets, such as short-term contract for differences and long-term swaps. The Brent market is also the underlying market to London-based IntercontinentalExchange s Ice Brent futures contract. But there was a problem with the Brent Blend benchmark. Production of Brent crude is in decline and the number of freely available cargoes for trade is declining even more rapidly. This means that the benchmark did not always reflect the consensus view of the prevailing market. Consequently, Argus developed the concept of a generic North Sea benchmark which involved broadening the base of liquidity that underpins the benchmark. The generic North Sea benchmarks in Argus Crude evolved over time from the Argus North Sea Index to the Argus North Sea Reference Price but eventually the generic benchmark became Argus North Sea Dated, a price derived from a methodology that involves five grades, Brent, Forties, Oseberg, Ekofisk and Troll. This price became known as Dated or North Sea Dated. Calculating North Sea Dated Argus North Sea Dated is the market s implied value for the North Sea Dated price reference obtained by cross referencing forward trade, CFD trade and physical differentials for the five benchmark crudes within the 10 days-month ahead assessment period. The building block from which the North Sea Dated assessment is derived is called the flat price or forward price. It is the price for Brent crude for loading in one (or possibly two) months time. The forward price is the price for a month-ahead North Sea contract (Brent with Forties, Oseberg, Ekofisk or Troll substitutionality), a contract that trades forward in monthly delivery periods but which will mature into a physical obligation a month in advance of the cargo date nomination. Argus identifies the flat price from a volume weighted average of North Sea forward trade (partial and full cargo) reported to Argus as having transacted between 4:29 and 4:30pm London time. The transaction data threshold in the identification of the North Sea forward physical flat price is 100,000 bl. This has been established 7

8 Argus North Sea Dated calculation Today's Brent Forties Oseberg Ekofisk Troll 25 May 2017 CFDs date Including Including Forward N Sea Aug Anticipated Day Date Days Dated Aug Dated Aug Dated Aug Quality Dated Aug Quality Dated Aug Quality Quality Dated forward related related related related related related Premium Premium related related Premium Premium related related Current CFD week 22-May 26-May 22-May Mon 22-May May Tue 23-May May Wed 24-May May Thu 25-May 0 26-May Fri 26-May 1 1st CFD week 2 29-May 02-Jun 3 29-May Mon 29-May 4 30-May Tue 30-May 5 31-May Wed 31-May 6 01-Jun Thu 01-Jun 7 02-Jun Fri 02-Jun 8 2nd CFD week 9 05-Jun 09-Jun Jun Mon 05-Jun Jun Tue 06-Jun Jun Wed 07-Jun Jun Thu 08-Jun Jun Fri 09-Jun rd CFD week Jun 16-Jun Jun Mon 12-Jun Jun Tue 13-Jun Jun Wed 14-Jun Jun Thu 15-Jun Jun Fri 16-Jun th CFD week Jun 23-Jun Jun Mon 19-Jun Jun Tue 20-Jun Jun Wed 21-Jun Jun Thu 22-Jun Jun Fri 23-Jun th CFD week Jun 30-Jun Jun Mon 26-Jun Jun Tue 27-Jun Jun Wed 28-Jun Jun Thu 29-Jun Jun Fri 30-Jun 36 6th CFD week Jul 07-Jul Jul Mon 03-Jul Jul Tue 04-Jul Jul Wed 05-Jul Jul Thu 06-Jul Jul Fri 07-Jul Dated Component Dated Component Dated Component Dated Component Dated Component 53. Anticipated Dated average for 10 days Aug N month ahead Sea Brent to Dated 0.15 Forties to Dated 0.08 Oseberg to Dated 0.60 Ekofisk to Dated 0.35 Troll to Dated 1. N Sea Aug N Sea Aug N Sea Aug N Sea Aug N Sea Aug 0.32 following consultation with market participants. In the event of there being less than 100,000 bl of North Sea forward traded in the time period, Argus will establish the flat price as a function of the value of an exchange of futures for physical (EFP) contract and the prevailing Ice Brent futures price. If Argus assesses the flat price of the forward contracts using an EFP differential and a representative Ice Brent futures value then the EFP is monitored throughout the day and then assessed at 4:30pm London time. The Ice 1 minute marker based on trade at 4:29-4:30pm London time is assumed to be a representative value for the futures contract unless Argus deems otherwise. Argus will deem it otherwise if the Ice 1 minute marker does not appear to be a representative value. When Argus uses the EFP to assess the flat price Argus uses the EFP differential and the front-month Ice Brent futures. In the last three sessions in the life of the front-month futures contract Argus uses secondmonth Ice Brent futures and the corresponding EFP differential. The North Sea crude prices used in the Dated methodology are assessed either against the anticipated value of Dated or against the flat (forward) price depending on which formulas are under discussion by the market. The market often uses the anticipated Dated value as a reference because it is common that crude grades will price against the value of Dated at the date of loading. The market anticipates the value of Dated, for risk management purposes, by trading contracts for difference (CFDs) between the forward price and the anticipated value of Dated. Argus can construct the market s perceived value of Dated several weeks forward from these CFD prices. Argus uses these CFD values to publish an Anticipated Dated value which is an average of the prices 10 days-month ahead as anticipated by the market for Dated. Prices for the five leading grades of North Sea crude, Brent, Forties, Oseberg, Ekofisk and Troll, are valued either against the forward (or flat) price of Brent or against the anticipated Dated value at the time of loading. Argus will use one or both of these sets of differentials to construct the prices for Brent, Forties, Oseberg, Ekofisk and Troll in the 10 days-month ahead forward period. A quality premium will be deducted from the prices for Ekofisk and Oseberg in the 10 daysmonth ahead forward period, starting with cargoes loading from June 2013 onwards. A North Sea Dated month-ahead calendar is available online, illustrating the start and the end of the North Sea Dated assessment period and the cargo loading dates that may be delivered to settle forward contracts on each working day of the year. Click here to view the calendar. Ekofisk and Oseberg quality premiums Argus will publish quality premiums for Oseberg and Ekofisk for cargoes loading from June 2013 onwards. The quality premiums will be taken into account in the Argus North Sea Dated assessment process. Argus will publish the relevant quality premiums for Oseberg and Ekofisk on the first publishing day of each month, starting 1 May The quality premium will be applied to cargoes loading in the following month. For example, the quality premium announced on 1 May 2013 will be applied to June loading cargoes. 8

9 The quality premium for Oseberg will be calculated at 60pc of the difference between Oseberg and the most competitive benchmark grade in the second month prior to the month of loading. The quality premium for Ekofisk will be calculated at 60pc of the difference between Ekofisk and the most competitive benchmark grade in the second month prior to the month of loading. The relevant quality premiums will be deducted from Oseberg and Ekofisk assessments for cargoes loading from June 2013 onwards as they are captured within the Argus 10 days-month ahead forward period. An average of the prices in the 10 days-month ahead forward period will be used to determine the Oseberg (with quality premium applied) and Ekofisk (with quality premium applied) components as well as the Brent, Forties and Troll components in the Argus North Sea Dated methodology. The lowest of the Brent, Forties, Oseberg (with quality premium applied), Ekofisk (with quality premium applied) and Troll components will set the Dated price. For cargoes loading before January 2018, if the quality premium for Oseberg or Ekofisk falls below 25 /bl, no quality premium will be applied. North Sea Dated (with no quality premium applied) Argus will continue to run a price series based on the North Sea Dated methodology above but without any quality premium being applied until further notice. This price series will be called Argus Dated BFOE and can be found on p4 of the Argus Crude Report. Forties sulphur de-escalator Argus publishes a sulphur de-escalator for Forties crude. Argus does not apply this sulphur de-escalator to its North Sea Dated calculation or to its assessment of Forties crude. The sulphur de-escalator is calculated according to the formula laid out in the standard traded contract, which is currently Shell s Suko-90 contract. According to this contract, the sulphur de-escalator is applied at a rate of $0.15/bl for every 0.1pc of sulphur above the 0.6pc standard. The 10 days-month ahead average is determined by industry convention. This methodological approach used by Argus is also utilised by all active participants in the North Sea market to identify the value of Dated. Argus identifies CFD and EFP values by using an assessment of a reasonable bid and offer range at the close of market. Argus assesses the physical grade differential for each day of the 10 days-month ahead assessment period for Brent, Forties, Oseberg, Ekofisk and Troll. Argus identifies the physical price differentials at 4:30pm for each loading date which has market depth at 4:30pm and will use information gathered throughout the day to make inferred price assessments for every other loading day of the 10 days-month ahead assessment period. Argus will take into account price movements beyond the assessment period when the bulk of trade in a given month moves beyond these parameters. The lowest average of the daily assessments for the five crudes in the North Sea Dated methodology will then set the North Sea Dated value. Argus uses the Argus North Sea Dated Calculation spreadsheet (see above) to construct the North Sea Dated assessment. The spreadsheet illustrates how Argus assesses prices for each of the Brent, Forties, Oseberg, Ekofisk and Troll crude grades on each individual working day in the 10 days-month ahead assessment period. The spreadsheet shows how Argus takes into account market structure when transactions for loading dates in the 10 days-month ahead assessment period occur in close time proximity. Argus will ensure that confirmed market information will be placed on the Argus Crude Oil Bulletin Board during the day, and guarantees to do this in a timely manner. Argus uses inferred price assessments based on information gathered throughout the day because there is insufficient market activity at 4:30pm to construct a bid/offer price for every grade for each loading day within the price assessment period. Argus does not rigidly use the highest bid at 4:30pm for a single loading date in the 10 days-month ahead assessment period to set the prices for all dates in this assessment period. Using highest bids for a single loading day may lever the entire 10 days-month ahead assessment period in a manner that is not considered representative by the market. Neither does Argus weight the assessment according to transactions at any particular time during the day, nor does it average transactions to identify a price level for North Sea Dated. The North Sea Dated assessment is the benchmark price against which other grades of crude oil are assessed in the Atlantic basin. North Sea assessments Typical Grade API Typical Sulphur % Basis/Location Timing Cargo size Dated fob Sullom Voe, Hound Point, Teesside, UK or Sture terminal Loading 10 days-month ahead 600,000 bl Brent fob Sullom Voe Loading 10 days-month ahead 600,000 bl Forties fob Hound Point, UK Loading 10 days-month ahead 600,000 bl Oseberg fob Sture terminal Loading 10 days-month ahead 600,000 bl Ekofisk fob Teesside, UK Loading 10 days-month ahead 600,000 bl Troll fob Mongstad terminal Loading 10 days-month ahead 600,000 bl Statfjord cif Rotterdam cif Rotterdam Loading 10 days-month ahead 855,000 bl Statfjord fob platform fob platform Loading 10 days-month ahead 855,000 bl Gullfaks cif Rotterdam cif Rotterdam Loading 10 days-month ahead 855,000 bl Gullfaks fob platform fob platform Loading 10 days-month ahead 855,000 bl Flotta fob Flotta terminal Loading 10 days-month ahead 650,000 bl 9

10 North Sea assessments Dated or North Sea Dated is set by the lowest of the Brent, Forties, Oseberg (with quality premium applied), Ekofisk (with quality premium applied) and Troll components. Consequently it is not the price of a grade of crude but a benchmark established through a methodology. Therefore it has no API density or sulphur specification. The prices for the various grades of crude oil are established by adding the current Dated price to the current market differential for that grade of crude. Argus assesses the grade differentials during the course of the day with a cutoff time at 4:30pm London time. Formulas for Dated-related crudes are an indication of the differential to Dated around bill of lading assessed as achievable on the day of the report. Argus does not consider ship-to-ship transfers when assessing the grade differentials. Argus also publishes the component values for Brent, Forties, Oseberg (with quality premium applied), Ekofisk (with quality premium applied) and Troll that are used to calculate the price of Dated. It is the lowest of these four components that sets the price of Dated. The component values for these crudes are not necessarily the same as the prices for these crudes, as the grade prices are calculated by adding the market premium for the grade to the current Dated value. The Brent assessment is the price of Brent Blend, a North Sea crude. The value of Brent is calculated by applying the market differential of Brent to the current Dated value. The prevailing market differential is also published separately. The Forties assessment is the price of Forties Blend, a North Sea crude. The value of Forties is calculated by applying the market differential of Forties to the current Dated value. The prevailing market differential is also published separately. The Oseberg assessment is the price of Oseberg, a North Sea crude. The value of Oseberg is calculated by applying the market differential of Oseberg to the current Dated value. The prevailing market differential is also published separately. The Ekofisk assessment is the price of Ekofisk, a North Sea crude. The value of Ekofisk is calculated by applying the market differential of Ekofisk to the current Dated value. The prevailing market differential is also published separately. The Troll assessment is the price of Troll, a North Sea crude. The value of Troll is calculated by applying the market differential of Troll to the current Dated value. The prevailing market differential is also published separately. The Statfjord cif Rotterdam assessment is the price of Statfjord, a North Sea crude. The value of Statfjord cif Rotterdam is calculated by applying the market differential of Statfjord cif Rotterdam to the current Dated value. The prevailing market differential is also published separately. Statfjord is an offshore crude loaded at the platform rather than at an onshore terminal. The Statfjord fob platform assessment is the price of Statfjord, a North Sea crude. The value of Statfjord fob platform is calculated by applying the market differential of Statfjord fob platform to the current Dated value. The prevailing market differential is also published separately. No modifications are made to the prevailing premium or discount in respect of freight arrangements. The Gullfaks cif Rotterdam assessment is the price of Gullfaks, a North Sea crude. The value of Gullfaks cif Rotterdam is calculated by applying the market differential of Gullfaks cif Rotterdam to the current Dated value. The prevailing market differential is also published separately. Gullfaks is an offshore crude loaded at the platform rather than at an onshore terminal. The Gullfaks fob platform assessment is the price of Gullfaks, a North Sea crude. The value of Gullfaks fob platform is calculated by applying the market differential of Gullfaks fob platform to the current Dated value. The prevailing market differential is also published separately. No modifications are made to the prevailing premium or discount in respect of freight arrangements. The Flotta Gold assessment is the price of Flotta Gold, a North Sea crude. The value of Flotta Gold is calculated by applying the market differential of Flotta Gold to the current Dated value. The prevailing market differential is also published separately. North Sea EFP Argus quotes the North Sea EFP, or the exchange of futures for physical price, which is the traded differential between 600,000 bl of Ice Brent futures and an equivalent volume of equivalent month North Sea forward contracts. Ice Bwave Argus also shows the Bwave price for three months forward. This is a weighted average of trade on the Ice Brent contract on the previous working day as calculated by the IntercontinentalExchange. It is used as a component in the Saudi Aramco formula for crude sales into Europe. Argus shows the Saudi Formula Base price which is derived from the Bwave that is the underlying price in its sales formula to European customers. The same formula is used by Kuwait and Iran in sales to European customers. Ice minute markers Argus shows the Ice 1 minute marker price which is a weighted average of trade on the Ice Brent contract between 4:29 and 4:30pm for two months forward as calculated by the IntercontinentalExchange. Dated CFDs Argus quotes prices for North Sea Dated CFDs, timestamped at 12:00pm and at 4:30pm London time. These are contracts for difference (or short-term swaps) for Dated against forward North Sea contracts. These North Sea Dated CFD prices are expressed as differentials to forward North Sea for six weekly periods forward. Intermonths The forward North Sea market rarely trades at fixed prices. Instead, most trade is in the form of intermonth trades. Argus assesses the 10