Energy Trust Partners LP IPAA Oil Gas

Energy Trust Partners LP IPAA Oil & Gas Investment Symposium Private Capital Conference April 18, 2005

Energy Trust Partners Overview Private equity fund manager with exclusive focus on the exploration and production sector of the energy industry Mission is to generate high financial returns by teaming with capable operators to build oil and gas reserve value at the lowest cost possible, and exiting opportunistically

Energy Trust Partners LP ($112 MM) Fund I • Formed in February 2002 • Seven portfolio investments with equity commitments ranging from $10 to $22 MM • Investment period now closed • Most portfolio companies continue in their growth phases Overview Energy Trust Partners II LP (projected $250 -$300 MM) Fund II • Initial closing in March 2005 with $220 MM in commitments • Plan to invest in 8 -12 portfolio companies • Investment range of $15 -$50 MM per transaction

Energy Trust Partners Investment Strategy Objective to achieve high returns through drilling, property acquisitions and/or exploitation strategies – Work with experienced management teams with strong records of success – Exit opportunistically through company or asset sales Sinception of Fund I, have favored “drillbit” strategies over “reserve acquisition” strategies – Highly competitive acquisition market; strong “seller” marketplace – Drilling economics are attractive; service costs are rising but margins remain strong due to high product prices Through selection of portfolio companies we want to diversify risk: – By area (geographically, geologically) – By prospect type (exploratory, development)

Energy Trust Partners Fund I – Summary Energy Trust Partners LP $112 Million Hackberry Partners Ballard/ETP Denali Oil & Gas Suemaur/ETP Infinity Resources Avalon Oil & Gas Orion Energy Resources Inception Date 6/02 10/02 6/03 9/03 2/04 6/04 8/04 ETP Ownership 90% 28. 1% 97. 5% 33. 3% 76. 9% 80% Partner Mayne & Mertz, Ballard Expl. Houston/Midland Company, Houston Denali Mgmt. Team, Houston Suemaur Expl. & Prod. , Corpus Christi Infinity Mgmt. Team, Oklahoma City Avalon Mgmt. Team, Tulsa Orion Mgmt. Team Tulsa Operating Area S. LA, AL/FL Panhandle Area S. TX and N. LA S. TX KS, OK, TX, NM, S. LA OK Arkoma Basin CBM in OK Onshore Gulf Coast, TX/LA

Energy Trust Partners Identify Opportunities Evaluate & Analyze Structure, Close and Manage Investment Process We conduct proactive calling efforts, and research active operators in target areas. We thoroughly review track records by examining historic full cycle costs (land, seismic and drilling) against economic returns (net cash flows and remaining reserves) over a 3 -5 year period. Business plan is to repeat success in similar activities and areas. We negotiate an investment structure based on risk/reward profile with meaningful performance incentives for the operators. We build business as a partner, with management handling day to day decisions and ETP active in all strategic and capital decisions. Exit We remain attune to market conditions and opportunities for successful exits.

Energy Trust Partners Accelerate our process by: Investment Process – Presenting us a focused business plan that describes succinctly how you plan to build value – Tell us specifically how your past experience and expertise ties to your business plan. Is your expertise and past experience relevant to your future plan? – Introduce the full management team to us. Is your track record associated directly with this team? – Show us your actual prospect or acquisition inventory Why some deals don’t work – Proposed business plan departs from historic “core competency” of the management team (different areas or techniques) – Management team too incomplete – Management’s proposal doesn’t allow us to align our interests closely enough

Energy Trust Partners Typical deal structure: Investment Structure – Management contributes existing assets (and/or cash), and ETP contributes cash, to an existing or newly formed pass through entity on a “side by side” basis. – Fair valuation of existing assets (leases, seismic, reserves) to determine initial equity ownership; proved reserves require independent engineering. – Distributions shared ratably on an unpromoted basis until first payout achieved (generally return of capital plus interest factor). – Thereafter, management receives incentive distributions in form of back in interests. Typical governance provisions: – ETP functions as active board participant with approval rights on budget authorizations (capital expenditures, G&A, etc. ), asset sales, issuance of debt or other equity securities, hedges, etc. – ETP retains unilateral “drag-along” exit rights after a certain period of time.

Energy Trust Partners Investment Structure Typical reporting or communication: – Communication is key – good news or bad – Drilling reports, production reports, quarterly and annual financial reports – Annual financial audits and annual independent engineering reports – Quarterly Board meetings/reviews in person or conference call – Periodic technical reviews of new prospects/projects

Energy Trust Partners Capital for Exploration not well understood by institutional investors – Perceived as very high risk – Institutions more accustomed to acquisitions/exploitation Nature of exploration makes participation more difficult – Business requires long lead times and heavy front end costs; G&G assets (seismic, leasehold) often difficult to value – Exploration cycle is continuous; does not easily fit discreet time periods for “build up and sale transaction” that institutions prefer Nature of Explorationists – Accustomed to industry participants, and thus prefer “project” investment over “company” investment structures – Often unwilling to share company ownership; complicates alignment of interest and exit objectives of institutions

Energy Trust Partners Why Us? ETP has experience working with exploration teams – Success in working with smaller, niche operators – History with Fund I companies – Objective to support more drill-bit strategies in Fund II We understand the risks associated with the business – Knowledgeable energy investor with in house technical expertise – Will invest side by side with operator; not in a preferred or senior position

Energy Trust Partners General Partner Dedicated GP team includes Alan Hsia, Leland White, Karla Mercer and Patrick Swearingen, with support from 19 other members of Energy Spectrum (Dallas, TX) and Energy Trust, LLC (New York, NY). Experienced in private oil and gas investments, energy financing and asset acquisitions and divestitures.

Energy Trust Partners General Partner Located in two offices: 551 Fifth Avenue, 37 th Floor New York, NY 10176 5956 Sherry Lane, Suite 900 Dallas, TX 75225 Alan Hsia 212 -557 -0868 Leland White 214 -987 -6104 alan. hsia@energytrustllc. com leland. white@energyspectrum. com Patrick Swearingen 212 -557 -0869 Karla Mercer 214 -987 -6121 patrick. swearingen@energytrustllc. com karla. mercer@energyspectrum. com