North American Timber Outlook: The Supply Overhang

Presentation Outline Sawtimber 1. Price Forecast Highlights 2. Supply Risk Assessment Pulpwood 1. Price Forecast Highlights 2. Supply Risk Assessment Copyright 2016 RISI, Inc. Proprietary Information 2

US Timber Outlook Through 2018 Sawtimber and pulpwood prices are expected to increase Sustained economic growth Further recovery in US housing Strong growth in mill output Improving profitability for lumber and plywood Canadian mountain pine beetle Copyright 2016 RISI, Inc. Proprietary Information 3

US Dollars per MBF, Quarterly Gains in PNW Prices Prove Difficult to Maintain $900 $800 $700 $600 $500 $400 $300 $200 Delivered Sawtimber Prices Compared West Coast Whitewood Southern Pine (Delivered) Southern Pine (Stumpage) $100 2010 2011 2012 2013 2014 2015 2016 * Assumes 7.5 tons per MBF Scribner for southern prices*. Copyright 2016 RISI, Inc. Proprietary Information 4

Future Increases in Sawlog Prices Will Be Restrained Timber inventory is not a constraint to North American production US South US West Expanding growing stock inventories Weak Canadian dollar will unleash Eastern Canada Harvest demand will not fully recover Harvesting capacity concerns are fading No super surge in log exports from the South expected Sawtimber diverted back into domestic markets US West now a high-cost region for softwood lumber Declining share of US markets Copyright 2016 RISI, Inc. Proprietary Information 5

Sawtimber Will See Some Revival $70 Southern Pine Stumpage US Dollars per Ton Nominal $900 Douglas-fir Delivered Logs US Dollars per MBF $60 Inflation-Adjusted (2015$) $800 $50 $700 $600 $40 $500 $30 $400 $20 2000 2003 2006 2009 2012 2015 2018 $300 2000 2003 2006 2009 2012 2015 2018 Copyright 2016 RISI, Inc. Proprietary Information 8

Softwood Sawtimber Demand is Unlikely to Fully Recover Billion Board Feet 25 US South 14 US West (Inland and Coast) 20 12 10 15 8 10 6 4 5 2 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 Copyright 2016 RISI, Inc. Proprietary Information 7

US Sawtimber Supply/Demand Snapshot South and West Combined, BBF Int l ¼-inch 550 Operable Inventory 40 Harvest Demand 500 30 450 20 400 10 350 2006 2018 0 2006 2018 Copyright 2016 RISI, Inc. Proprietary Information 8

Age-Class Dynamics Will Change the Supply Potential 8.0 7.0 6.0 SYP Managed Forests Five-Year Age Classes Million Acres, 2016 5.0 Matures in next five years! 4.0 3.0 2.0 Becoming overmature 1.0 0.0 00-05 06-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50 Copyright 2016 RISI, Inc. Proprietary Information 13

Harvest Ready Timber Keeps Ahead of Demand US SOUTH PINE SUPPLY (Cumulative for 2016-2020) Roundwood from Pine Plantations (1) Acreage Stand Age 26-30 Years 3.0 Acreage Maturing within 5 years 6.1 9.10 Million Acres Roundwood Yield at Final Harvest 97 Tons per Acre Total 880 Million Tons Roundwood from Other Sources Thinnings 225 Natural Stands 325 550 Million Tons Roundwood from All Sources 1430 Million Tons Roundwood from All Sources per Year 286 Million Tons 350 300 250 200 150 100 2016-2020 Averages 73% utilization Note: Data includes all wood fiber sourced from forests (1) RISI estimate of area available for commercial production 50 0 Annual Supply Annual Demand Copyright 2016 RISI, Inc. Proprietary Information 13

Potential for Global Sawlog Production to Increase Softwood Sawlog Production, Million Cubic Meters per Year 400 North America 160 Western Europe 90 Russia 30 New Zealand 350 300 72 140 120 29 80 70 18 25 250 100 60 20 200 150 80 60 50 40 30 15 10 100 50 40 20 20 10 5 0 0 1995 2000 2005 2010 2015 1995 2000 2005 2010 2015 Source: RISI Global Wood Fiber Database. 0 1995 2000 2005 2010 2015 0 1995 2000 2005 2010 2015 Copyright 2016 RISI, Inc. Proprietary Information 11

US Dollars per Cubic Meter Global Softwood Sawlog Prices are the Lowest in 30 Years $95 $90 $85 $80 $75 $70 $65 $60 $55 Nominal Real (2015$) $50 2001 2004 2007 2010 2013 2016 Note: Global average price calculated as weighted average of all softwood sawlog production and delivered prices. Real prices calculated using the US producer price deflator. Copyright 2016 RISI, Inc. Proprietary Information 12

Real Stumpage Price (2015$/Ton) US South Sawtimber Supply Curve with Forecast $65 $60 $55 $50 $45 Resistance 2000 to 2007 $40 $35 2008 to 2015 Support $30 $25 $20 Forecast (2016-2018) 90 100 110 120 130 140 150 160 170 Stumpage Removals (Million GST) Copyright 2016 RISI, Inc. Proprietary Information

US Dollars per Ton US South Pulpwood Prices Are Ratcheting Up $12 $11 Softwood Stumpage Three-year average $10 $9 $8 $7 $6 2000 2002 2004 2006 2008 2010 2012 2014 2016e Note: 2016 average of first and second quarter Copyright 2016 RISI, Inc. Proprietary Information 15

Pulpwood, US Dollars per Ton Sawtimber, US Dollars per MBF US South Hardwood Stumpage Has Broken From Trend $13 $12 $11 $10 $9 $8 $7 $6 $5 $4 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 $300 $280 $260 $240 $220 $200 $180 $160 $140 $120 Copyright 2016 RISI, Inc. Proprietary Information 16

US South Log Price Spreads: A Return to the 1980s 2.75 Ratio: Delivered Sawtimber over Pulpwood 2.50 2.25 2.00 1.75 1.50 1.25 1.00 1986 1991 1996 2001 2006 2011 2016 Copyright 2016 RISI, Inc. All rights reserved. 17

Pulpwood Prices Feel the Pressure of Escalating Demand Harvests will surpass record levels Factors in expanding chip production OSB output recovers within next two years Wood pellet capacity start-ups Supplies expand, but at a slow rate Boost from come-along wood Declining areas available for thinning Contracting hardwood resource Copyright 2015 RISI, Inc. Proprietary Information 5 Copyright 2016 RISI, Inc. Proprietary Information 18

US South Pulpwood Prices Dollars per Ton $12 Stumpage $21 Harvest and Delivery Costs $11 Hardwood Softwood $20 Softwood $10 $19 $9 $18 $8 $17 $7 $16 $6 2006 2008 2010 2012 2014 2016 2018 $15 2006 2008 2010 2012 2014 2016 2018 Copyright 2016 RISI, Inc. Proprietary Information 19

Million Tons US South Pine Pulpwood Production 140 120 100 80 60 40 20 0 Bioenergy OSB Pulp 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Copyright 2016 RISI, Inc. Proprietary Information 20

Age-Class Area Dynamics Subtract from Thinnings 7.0 SYP Managed Forests Five-Year Age Classes Million Acres, 2016 6.0 5.0 Now nearly thinned out? 4.0 3.0 2.0 1.0 0.0 0-5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50 Copyright 2016 RISI, Inc. Proprietary Information 21

Million m³ per Year SYP Pulpwood Thinning Supplies Are Unlikely to Be Sustained 60 US South Plantation Pulpwood Thinning Volumes 50 40 30 20 10 0 1991-1995 1996-2000 2001-2005 2006-2010 2011-2015 2016-2020 Copyright 2016 RISI, Inc. Proprietary Information 22

Billion Short Tons A 27% Decline in Hardwood Demand Was Not Enough to Stabilize Hardwood Inventories 6.0 US Operable Hardwood Growing Stock Inventory 5.5 5.0 4.5 1995 2000 2005 2010 2015 Copyright 2016 RISI, Inc. Proprietary Information 23

Dollars per Ton Dollars per Ton US Delivered Pulpwood by Region $55 $50 $45 Softwood Softwood North Central Northeast $55 $50 $45 Hardwood $40 $35 $30 $25 $20 2003 2006 2009 2012 2015 2018 $40 $35 $30 $25 $20 2003 2006 2009 2012 2015 2018 Copyright 2016 RISI, Inc. Proprietary Information 25

US Dollars per Bone Dry Ton We Never Expected the West Coast Chip Rally to Be Maintained $160 US West Coast Chip Export Prices $140 $120 $100 $80 $60 2000 2003 2006 2009 2012 2015 2018 Copyright 2016 RISI, Inc. All rights reserved. 26

Timber Take Home Points Wood costs are rising Timber inventory is not a constraint to North American softwood lumber production Pulpwood prices maintain gains achieved since 2011 Downside risk to the timber price forecast Copyright 2016 RISI, Inc. Proprietary Information 27

Recently Released Timber Products Southern Pulpwood Study www.risi.com/uspulpwood World Wood Fiber and Forest Product Database February 2016 North American Timber Forecast www.risi.com/timber5year Copyright 2016 RISI, Inc. Proprietary Information 36