RELIABLE RESERVES A Reliable Reserves transaction provides the

RELIABLE RESERVES® A Reliable Reserves transaction provides the client with the most leverage at the lowest cost available in the industry. RESULT: Client receives more leverage at competitive costs resulting in higher returns on equity capital employed. Confidential Ø SPV purchases forward production of xx volumes of hydrocarbons (traditional pre-pay transaction) Ø Prepay volumes are valued at the forward price curve Ø Avoid FAS 133 Ø Reserves are modeled based on deterministic and probablistic analysis rather than “rules of thumb” Ø Higher advance ratio than traditional VPP or senior financing at comparative rates Example Ø Client is considering making an acquisition of proved properties with development potential Ø Reserves are long-lived, well established production Ø Proved reserves consist of 63% PDP, 7% PDNP, 30% PUD Ø Unrisked PV 10% is valued at $387 MM Ø Risked purchase price is $318 MM ( PV 15%) Ø Bank advance - $165 MM Ø Traditional VPP - $186 MM Ø Reliable Reserves - $268 MM ROE 15. 41% ROE 18. 85% ROE 17. 91% ROE 23. 89% 1 Global Risk Markets

TERM WORKING INTEREST® Enron’s Term Working Interest structure allows producers to monetize PDP reserves without selling the entire future cash flows which optimizes the time value of producing reserves. RESULT: Client hedges nearterm revenues and expenses while retaining value of future cash flows. Capital can be deployed in higher return opportunities. Confidential Ø Monetize long life PDP properties that generate a low yield on capital employed Ø Purchase xx% of working interest in specific units in a given field using forward price curve Ø Tenor: 2 to 7 years Ø Working interest will revert back to Client after tenor Ø Utilize NOLs Ø Avoid FAS 133 Ø Release capital for deployment in higher return investment opportunities Ø Lower $$/BOE cost in acquisition Ø Hedge near-term revenues and expenses while retaining value of future cash flows Example Ø Client is considering selling long-lived PDP properties. Proceeds will be used to reduce leverage Ø Gain on sale will be used to offset NOLs, increases book equity value Ø PV 10% value is $544 MM Ø SPV is created to purchase 47. 5% of Client’s working interest for 5 years for $150 MM Ø Client continues to operate and retains 52. 5% of working interest generating $215 MM of cash flow during tenor of transaction Ø After tenor of transaction, Client owns 100% working interest with a valuation of $364 MM based on today’s economics 2 Global Risk Markets