POSITIONED FOR GROWTH BNSF Railway John Miller Group Vice President - PowerPoint PPT Presentation

POSITIONED FOR GROWTH 
 BNSF Railway John Miller Group Vice President Agricultural Products BNSF Railway 1

Historic Rail Industry Volumes U.S. Class I Weekly Rail Volumes 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 800,000 750,000 700,000 (000) Units 650,000 600,000 550,000 500,000 450,000 Source: AAR, CS-54 Data through Week 21, May 28, 2016 2

Recent Volume Trends Across the U.S. Rail Industry Year-over-Year Percent Change Four-Week Rolling Average Volume -7.3% U.S. Class I Rail Industry year-over-year Last 4 weeks through 2015 2016 10% Week 21 -14% 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 3 6 9 12 15 18 21 Weeks Source: Association of American Railroads (AAR) through week 21; May 28, 2016 3

BNSF Weekly Volume Trends 2006 Peak 220 219K 2015 Peak 215K 205 190 Units 175 BNSF Railway Units Weekly Railroad Traffic 160 Actuals Through Week 21 2007 2015 2016 145 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Source: Association of American Railroads (AAR) through May 28, 2016 4

Economic Conditions 
 The Good, The Bad, and The Ugly U.S. Railroads (CS54 Groups, % Change in Units Handled) 2016 YTD, Most Recent 21 Weeks 2016 vs. 2015 (through May 28, 2016) ALL OTHER 22.5% 18.0% WASTE AND SCRAP 9.8% 7.6% FOOD AND KINDRED 1.2% 0.9% CHEMICALS 0.8% 0.5% LUMBER AND WOOD 0.2% -1.3% GRAIN -2.6% -6.0% GRAIN MILL PRODUCTS -6.3% -6.4% PULP AND PAPER -6.6% -6.8% CRUSHED STONE -7.1% -13.7% -20.4% METALLIC ORES -20.6% -26.3% TRAILERS -32.7% -40% 30% Source: Association of American Railroads (AAR) through May 28, 2016 5

U.S. Economic Outlook Trend 2016 y/y percent change 2016 Annual Forecast Changes Over Time IPI Less Tech GDP Source: IHS Economics, May 2016 6

The Rail Industry Sees Cyclical Movements Similar to GDP Percent Change Year-over-Year 12% -17% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 U.S. Rail Volumes U.S. GDP 7

Exchange Rates 
 Wall Street Journal U.S. Dollar Index U.S. Dollar Index 100 91 82 June 3, 2016 86.15 -0.7% y/y 73 -5% YTD +19% vs. Jul '14 64 01/01/2013 03/19/201306/04/2013 08/20/201311/05/2013 01/21/201404/08/2014 06/24/201409/09/2014 11/25/2014 02/06/201504/24/2015 07/10/201509/25/2015 12/11/2015 02/26/2016 05/13/2016 8 Source: Wall Street Journal, BUXX; June 3, 2016

BNSF is a Leading U.S. Railroad • A Berkshire Hathaway company • 32,500 route miles in 28 states and operates in three Canadian provinces • Approximately 8,199 locomotives • 13,000 bridges and 88 tunnels • Moves one-fourth of the nation’s rail freight • Operates about 1,200 freight trains per day • Serves more than 40 ports and 25 intermodal facilities • Leads rail industry in technological innovation • Unlike other forms of transportation, BNSF trains operate on an infrastructure financed almost entirely by the railroad 2015 BNSF Density Flow 9

What BNSF Carried in 2015 (000) Units CONSUMER PRODUCTS COAL 5,066 2,286 Y/Y CHANGE +0.7% Y/Y CHANGE +0.5% INDUSTRIAL PRODUCTS AGRICULTURAL PRODUCTS 1,044 1,873 (thousands of units) Y/Y CHANGE -5.9% Y/Y CHANGE +7.2% 10

Consumer Products Commodity Breakdown Domestic International Automotive 11

BNSF Network – Consumer Products 2015 BNSF Consumer Products Density Flow 12

Consumer Products The long-term outlook for Domestic intermodal 
 is strong given the demand for Highway-to-Rail conversions International intermodal will grow with the economy and Trans- 
 Pacific Trade Regulatory pressure on Truck Industry – Hours of Service, Electronic Logging Device, Drug and Alcohol Database, 
 Speed Limiters 13

Consumer Products Market Drivers REAL GDP VS. "LESS-TECH" MANUFACTURING OUTPUT GDP GROWTH VS. INTERMODAL GROWTH 4.0% 16% Real GDP Less-Tech Mfg. 8% 1% -7% -15% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0.0% 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 U.S. GDP NA Intermodal RETAILERS INVENTORIES 50 Driver Shortage (-) / Surplus (+) 48.1429 300 46.2857 225 44.4286 150 75 42.5714 '- 40.7143 '(75) '(150) 38.8571 '(225) 37 '(300) 8 8 9 9 0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 0 2007.1 2008.1 2009.1 2010.1 2011.1 2012.1 2013.1 2014.1 2015.1 2016.1 2017.1 2018.1 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 - - - - - - - - - - - - - - - - - - - - - - - - - n l n l n l n l n l n l n l n l n l n l n l n l n u u u u u u u u u u u u a a a a a a a a a a a a a J J J J J J J J J J J J J J J J J J J J J J J J J Source: IHS Economics, FTR 14

What BNSF Carried in 2015 (000) Units CONSUMER PRODUCTS COAL 5,066 2,286 Y/Y CHANGE +0.7% Y/Y CHANGE +0.5% INDUSTRIAL PRODUCTS AGRICULTURAL PRODUCTS 1,044 1,873 (thousands of units) Y/Y CHANGE -5.9% Y/Y CHANGE +7.2% 15

BNSF Network - Coal 2015 BNSF Coal Density Flow 16

Coal Decreased electricity generation due to record mild winter and low natural gas prices has resulted in all-time high coal inventory levels Unfavorable export market driven by worldwide supply and strong dollar Increased Federal regulation leads to more renewable capacity and coal plant closures in the long-term 17

Coal Energy Markets 
 Low natural gas prices and softening utility generation NATURAL GAS PRICE PRB INVENTORIES $6 115 94 $5 73 Days $3 51 $2 30 $0 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Days of Burn Normal Days of Burn PRB COAL BURN WEEKLY U.S. POWER GENERATION 45 400,000 38 315,000 31 230,000 kWh Days 23 145,000 16 60,000 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jan May Jun Jul Nov Dec 2015 5 YR MIN 5 YR Range 2016 5 YR AVG Source: Nymex; Energy Ventures Analysis; EEI 18

What BNSF Carried in 2015 (000) Units CONSUMER PRODUCTS COAL 5,066 2,286 Y/Y CHANGE +0.7% Y/Y CHANGE +0.5% INDUSTRIAL PRODUCTS AGRICULTURAL PRODUCTS 1,044 1,873 (thousands of units) Y/Y CHANGE -5.9% Y/Y CHANGE +7.2% 19

Industrial Products Commodity Breakdown Food & Beverage Petroleum Products Beer & Wine Crude Oil Canned Goods LPG Perishables Asphalt Vegetables Alcohols & Solvents Construction Products Pipe, Sheet, Structural, Scrap, Taconite, Aluminum, Sand, Salt, Clays, Crushed Stone, Cement, Lime, Gypsum Chemicals & Plastics Building Products Acids, Intermediates, Paper, Pulp, Lumber, Panel, Caustic Soda, PVC, Rail Equipment, Transformers, Polypropylene, Polystyrene, Generators, Roofing Materials, Polyethylene Waste 20

BNSF Network – Industrial Products 2015 BNSF Industrial Products Density Flow 21

Industrial Products Dramatically lower oil prices have driven down demand for petroleum and its associated products (such as frac sand and steel pipe) Demand for residential and commercial construction materials (aggregates, cement and lumber) remains solid The strong U.S. Dollar is limiting steel exports, as well as steel inputs such as taconite 22

Active Oil Rig Counts Bottoming Out 
 Current rig count supported by improved supply-demand and pricing environment WEEKLY WTI SPOT PRICE U.S. OIL RIG COUNT 2009-CURRENT 120 1,800 1,350 90 Rig Count $/bbl 900 60 450 30 0 0 1/2/09 8/14/09 3/26/10 11/5/10 6/17/11 1/27/12 9/7/12 4/19/13 11/27/13 7/11/14 2/20/15 10/2/15 5/13/16 Jan-09 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Oct-14 Apr-15 Oct-15 Apr-16 CRUDE OIL PRODUCTION NEW WELL OIL PRODUCTION PER RIG (Lower 48 States-Onshore) 1,000 Bakken Eagleford Niobrara Permian 8 750 6.5 Million bbls/day BBLS/day 5 500 3.5 250 2 '- May-16 Nov-15 May-15 Nov-14 May-14 Nov-13 May-13 Nov-12 May-12 Nov-11 May-11 Nov-10 May-10 Nov-09 May-09 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 23 Source: Baker Hughes, BTU Analytics, EIA.gov

Successful Leadership – Successful Business What BNSF Carried in 2015 (000) Units CONSUMER PRODUCTS COAL 5,066 2,286 Y/Y CHANGE +0.7% Y/Y CHANGE +0.5% INDUSTRIAL PRODUCTS AGRICULTURAL PRODUCTS 1,044 1,873 (thousands of units) Y/Y CHANGE -5.9% Y/Y CHANGE +7.2% 24

Agricultural Products Commodity Breakdown Grain Bulk Foods Other Grain Products Wheat Sweeteners Oils Barley Syrups Feeds Corn Animal Products Flour Soybeans Starch Specialty Grains Milo Oilseeds & Meals Malt Ethanol Fertilizer 25

BNSF Network – Agricultural Products 2015 BNSF Agricultural Products Density Flow 26

Agricultural Products U.S. grain supplies are at their highest levels in almost 30 years after three consecutive large crops, incenting farmers to store grain Grain exports remain challenged due to the strong U.S. dollar and high domestic/global supplies Global demand continues to outpace supply 27