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IPAA/COGA: Rocky Mountain Private Capital Jonathan Farber August 10, 2006 Confidential and Proprietary www.lrpartners.com Today 1. About Lime Rock 2. Three main issues in economics and governance 3. The Lime Rock Partners difference Confidential and Proprietary 2 About Lime Rock Lime Rock Manages Four Funds with $1.3 Billion in Total Capital Commitments $850 million under management in Lime Rock Partners funds Lime Rock Partners, $105 million, October 1998 inception, 12 investments Lime Rock Partners II, $320 million, August 2002 inception, 16 investments Lime Rock Partners III, $425 million, November 2004 inception, 11 investments to date $450 million under management in Lime Rock Resources fund Lime Rock Partners global network through four locations: Westport, Connecticut; Aberdeen, Scotland; Calgary, Alberta; Houston, Texas Lime Rock Partners focuses on growth equity investments of $10 million to $75 million in companies in three sectors of energy industry: exploration and production, energy service, and oil service technology Lime Rock Resources acquires, operates, and improves oil and gas properties in the United States Confidential and Proprietary 3 About Lime Rock Lime Rock Partners Invests in Growing Energy Companies That Stand Out From the Crowd Exceptional management teams Identifiable track records of meeting or exceeding goals Proven ability to adapt to changing markets History of closely aligning their interests with their shareholders. Clear growth strategy Clearly defined strategy to grow earnings through organic growth, acquisitions, or savvy asset purchases Strategies to create value upon exit Attractive business niche Competitive advantage in an attractive sub-sector of the energy industry, whether it’s a region or an oil and gas basin Strategic joint ventures Confidential and Proprietary 4 About Lime Rock Team: Deep Interdisciplinary Expertise, Global Network of Relationships, and Track Record of Success Westport Aberdeen Jonathan Farber, Managing Director Formerly at Goldman Sachs Investment Banking/Research Lawrence Ross, Managing Director Formerly Head of 3i Oil and Gas Team John Reynolds, Managing Director Formerly at Goldman Sachs Investment Research Simon Munro, Director Formerly at J.P. Morgan, Simmons Mark McCall, CFO and General Counsel Formerly at Lehman Brothers M&A Rob Willings, Director Formerly at Schlumberger, Simmons Jeffrey Scofield, Vice President Formerly at Harrison Lovegrove, Credit Suisse Lime Rock brings together a global network of relationships from its four locations worldwide. Greg Highberger, Analyst Formerly at Credit Suisse Calgary Houston John Clarkson, Senior Adviser Formerly at Renaissance Energy Tom Bates, Managing Director Formerly at Schlumberger, Weatherford (CEO) Will Franklin, Director Formerly at Riverstone, Simmons J McLane, Director Formerly at Pioneer Natural Resources Michael Teplitsky, Associate Formerly at UBS Barrett Schick, Analyst Formerly at Lehman Brothers Confidential and Proprietary 5 Economics/Governance There Are Three Main Issues in Economics/Governance Control Do the private equity private firm or firms have majority control and the right to change management? If the management team has majority control, do investors have structured control over areas such as major acquisitions or liquidity events? Management incentives Typically, management incentives are promotes based on ROI hurdles: what are the promote splits and what are the hurdles? Valuation of management’s existing share in company Security type Common shares or securities with liquidation preferences Confidential and Proprietary 6 Economics/Governance However, Economics/Governance Issues are Usually Less Important Than Soft Issues Yes, look at terms, but in many cases there won’t be a big difference in financial terms or governance structures—do the math We recommend instead five areas of focus: Look at track record: have their portfolio companies made money for investors and managers Talk to their management teams: do they value the private equity firm as a true investment partner Judge them by their due diligence: a firm doing thorough due diligence has the expertise to be good long-term partner Ask them what relationships and expertise they will bring to help you create value Check on their industry knowledge: do they understand the energy business Confidential and Proprietary 7 Lime Rock Partners Difference Lime Rock Partners is a Different Kind of Investment Partner 1. Creative and flexible approach We structure every investment differently—no “cookie cutter” deals 2. True investment partner We add value to every investment We never charge transaction or advisory fees 3. Strong track record of value creation Our investors and management teams benefit from exceptional growth 4. Global strategy Multi-sector and multi-region 5. Long-term view Investment horizon is years, not quarters Confidential and Proprietary 8