Investor Presentaiton

12000 The State of Alaska's oil revenues have fluctuated widely. In the first five years of North Slope oil production (1978-1982) Alaska's oil revenues rose dramatically because both oil prices and oil production rose dramatically. A rapid growth in state spending led to a huge economic boom. Then oil revenues began a long period of decline, as oil prices declined and (after 1988) oil production also declined. The steep drop in state oil revenues in 1987 led to a sharp reduction in state spending and a severe recession in Alaska. Oil revenues fell even more during the late 1990s, leading to major concerns about the future of state revenues and the Alaska economy. State General Fund (Unrestricted) Revenues (adjusted for inflation) 10000 8000 Revenues (millions of 2011 dollars) 4000 2000 0 6000 FY78 FY80 FY82 FY84 FY86 FY88 FY90 I Non-Oil Revenues 1 Oil: Other oil revenues 1 Oil: Production taxes Oil: Royalties → Average Oil Price (ANS West Coast) FY06 FY08 FY10 $0 $20 $40 $60 $80 $100 Oil price ($/barrel) $120 And then everything changed! Oil prices soared and in the mid 2000s the state also increased production tax rates on the oil industry. Suddenly and unexpectedly, Alaska was rich again-with record oil revenues in 2008! Revenues have fallen since then but remain very high. 24

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