1. 1
Building an Earnings Accretive Energy Company
Review of Natural Gas Market, Production and Pricing
Mr. Miller is a strong proponent of natural gas and economical renewable energy and called the
revival of natural gas earlier this year (http://www.investorideas.com/news/122909a.asp).
However, inaccuracies being portrayed about Natural gas production, supply, and end use in and
the market required correction for the benefit of public interest.
Mr. Miller would urge a healthy dose of skepticism on the US Natural Gas prices staying at
current price levels below $4/mmbtu. Within the last ten (10) years, the US has gone from
abundant natural gas supply projections (i.e. dash to Natural Gas of late 1990's), to massive
projected shortfalls of natural gas (i.e. development and construction of multiple LNG import
terminals) and now back to projections of massive supplies of natural gas for the domestic and
potential export market. So what are the facts and what can investors expect?
Mr. Miller would like to review some of the basic problems facing the US Natural Gas market,
which will drive up prices significantly, most notably new and substantial environmental taxes
will be levied on the "gas fracking" market by individual States to appease the public and
replenish depleted State budget gaps, significant deficiencies in natural gas distribution
infrastructure, and the unknown production decline curve variables associated with shale gas
production wells.
Natural gas set the marginal cost of electricity across a large part of the United States. Natural
gas is utilized by three major class of consumers; i) the power generation industry; ii) the
industrial complex; iii) the local utilities across the U.S. which distribute natural gas to individual
homes and office buildings.
As Mr. Miller has detailed in review of the "Dash to Natural Gas" of the 1990’s through 2005, a
tremendous amount of natural gas fired power plants were constructed, some in "load centers" or
major consumption areas, some in fringe areas like the southeast U.S. and some in outright poor
locations. To put the rationale to construct all of these natural gas fired power plants in layman
terms, these natural gas fired power plants were supposed to replace the older coal fired power
plants controlled by the regulated utilities across the country, be more efficient, and emit much
less CO2.
The industry forecast and thesis at that time was for natural gas to be priced at
$3.50/$4.00/mmbtu in perpetuity, as natural gas was in oversupply, plentiful and would never in
theory be interrupted, thus always available for firm delivery.
The plants were built on a scale never seen before in U.S. History, over $500 billion of debt was
added to the top 80 utilities and natural gas companies going into 2001, and the independent
natural gas power plant market promptly crashed, went into financial distress and faded away
from the mainstream.

2. 2
The regulated utilities would not close the older, less efficient, and larger carbon emitting coal
plants, nuclear stranded cost were winding down and the owners of nuclear power plants had
substantially reduced amortized cost basis, thus could sell their power cheaper than natural gas
plants, and the U.S. never implemented a national energy plan, and natural gas was not always
available in certain regions during peak demand.
These natural gas power plants are still on the ground, some running, some mothballed. If natural
gas were truly "in permanent excess supply", the utilities would immediately shut down
hundreds of the coal plants running 24 hours a day across the country, fire up the natural gas
plants under their control, and contract with the independent power producers who control the
other natural gas plants across the country. This has not happened during the past ten (10) years,
nor will it happen anytime in the foreseeable future.
It is very positive that independent gas producers have started to discover and exploit alternative
means of extracting natural gas from within the U.S. borders, as Mr. Miller firmly believes and
has advised Washington and the industry that it will become a "bridge" fuel by default. Despite
the fact that Washington simply does not have the energy market knowledge or capacity to
implement a credible energy plan for the U.S.
However, Mr. Miller has raised the very serious point that current natural gas storage models
being utilized in the U.S. are outdated and underestimate true natural gas usage and over-
estimate deliverability of gas from storage when needed.
Mr. Miller pointed out well ahead of the market that traditional storage models are grossly
underestimating the true injections, withdrawals and deliverability of natural gas in the U.S.
leading to substantial standard deviations in analyst estimates and reported withdrawals by the
U.S. Government, through the EIA. The EIA has made adjustments, but not in sufficient detail to
close the gap in substantial errors reported to the market.
The natural gas production decline curve for shale and tight sands natural gas production is the
wild card. The decline trend in natural gas well production is dictated by natural geologic
formations, rock and fluid properties among other factors. Thus, a major advantage of decline
trend analysis is inclusion of all production and operating conditions that would influence the
performance of natural gas wells.
For illustrative purposes, Mr. Miller cited the standard declines (observed in field cases and
whose mathematical forms are derived empirically) which are:
 Exponential decline
 Harmonic decline
 Hyperbolic decline
As an example a study was done on a few specific wells for production histories of fractured low
permeability gas wells in the Piacene Basin in Northern Colorado, which are characterized by a
sharp initial decline followed by a long transition into exponential decline.

3. 3
These two decline periods correspond to linear and pseudo steady-state flow, respectively.
Predicting rates and reserves based on test data or short production Predicting decline rates and
reserves based on test data or short production histories is difficult using conventional decline
curve analysis, thus making shale gas and tight sands production curves difficult to forecast.
The usual approach to predicting reserves by decline curve analysis, in this type of well, is to
arbitrarily assign a high exponential decline rate for the first two or three years, followed by a
lower decline. Another approach is to find a hyperbolic decline curve to fit the early tine data and
extrapolate to estimate future rates. Both of these approaches can result in large errors in
calculated reserves.
Simply put, we don't know how steep the production decline curve will be for non-traditional
natural gas production will be. There is no quantitative evidence that analyst can use today to
support excess supply of natural gas in the future, further pressuring prices to the upside.
By far, the largest consumer of natural gas should be the power generation industry across the
U.S. When CO2 limits are eventually put in place by the Federal Government at some point in
the future, or individual States through the imposition of CO2 non-attainment zones, displacing
and disadvantaging coal fueled plants, and all or a large portion of the natural gas power plants
on the ground today were to be run as base load (running 24 hours a day) plants, excluding the
small gas peakers, a tremendous strain would be put on the natural gas distribution system (major
pipelines and local distribution pipelines) and diminishing any "purported permanent excess
supply. Therein lies the physical limitations and engineering constraints upon the current US
infrastructure.
Secondly, if the local utilities started pulling gas at higher rates through the City Gate (delivery
points for natural gas to major retail consuming areas like Chicago, for example), due to retail
consumers using a greater amount of natural gas as we are currently experiencing due to the
National heat wave affecting the US, a further strain would be put on the distribution system, in
addition to further diminishing any "purported permanent excess supply".
Thirdly, if the U.S. industrial complex started pulling more natural gas into their industrial
facilities (the Texas/Louisiana petrochemical/refinery complex for example) associated with the
steady recovery of the industrial base in the US a further strain would be put on the distribution
system, in addition to further diminishing any "purported permanent excess supply".
Fourthly, if we eventually start fueling truck fleets, automobiles, and other transportation
vehicles with natural gas, the question must be asked, is supply sufficient at peak heating market
demand time of the winter months and peak cooling season of the summer? Is the transmission
and distribution system in place to handle such use of natural gas that we can say with authority
that "natural gas is in permanent excess supply"?
Also, do we have the necessary "high deliverability gas storage facilities" (salt dome or depleted
fields) to handle these much larger withdrawals and swings of natural gas to meet excessive
demand, which would essentially break the current seasonal injection period during the summer
months and withdrawals during the winter months?

4. 4
There would be no injection season as the industry knows it today, and no historical statistics to
use as a benchmark, thus prices would continue to be volatile, reflecting a more real time
supply/demand ratio for physical natural gas and for future delivery (futures contract), which
they should.
Those that can pay for the physical resource in real time would set the price of natural gas, and
Mr. Miller is firmly convicted this will lead to higher prices and volatility, rather than lower
prices and volatility. This is what is commonly referred to as a "free market".
Take for example the construction of a wind park in the desert of Arizona or Nevada for
example, without a transmission line to deliver any electricity produced to the end user. The
wind park owner could say that he has excess power supply; however, he has no means of
transmitting that power supply to an end user, rendering the wind power useless.
Finally, if natural gas were in "permanent excess supply" there would be no independent natural
gas producers in business such as XTO (Exxon), EOG, DVN, CHK, APC, and many other
independent producers critical to the future of the U.S. Energy industry and overall economy.
Also, natural gas producers signing long term contracts with end users to lock in a percentage of
their natural gas production is a long standing practice in the industry; alternatively locking in
the price the natural gas producer receives through a long term natural gas swap.
These are a positive event for the industry, as long term contracts allow producers to gain
financing of their production operations, not a negative sign or downward price signal. In fact,
history has shown that the higher percentage of long term contracts put in place, the scarcity of
supply principle takes over, and prices become more volatile and sensitive to supply/demand
events, given a larger portion of the commodity is locked up and a smaller portion is available
for the spot market or for future delivery. Thus prices rise.
There was a time in the 1980's when independent natural gas producers could not even get
financing to produce the gas in the ground that they owned under conventional drilling and
recovery methods, that's why we as an industry invented the gas bank deal structure, to help
finance these producers and bring natural gas to market. We opened up the natural gas pipelines,
deregulated the industry and created "open access", thus a free market.
If the U.S. were awash in natural gas, we would shut down the coal industry, stop building wind
farms and solar farms, and there would be no need for a comprehensive energy plan for the U.S.
to gain energy independence. We would simply flat-line natural gas prices. This however will
not happen anytime in the near future.
Natural gas is a fuel of the future, but price volatility will rise, therefore adding significant value
to natural gas and coal fueled electricity production assets, as natural gas prices set the marginal
clearing price of electricity across the US. This is also a sign of a healthy, vibrant, and credible
asset class, "natural gas" which needs a massive amount of new capital to expand pipeline
infrastructure, expand storage facilities, and construct new more efficient natural gas power
plants and eventually conversion of the US transportation fleets to this cleaner fuel.

5. 5
Energy Investment Strategy
The Company’s acquisition and investment strategy should be driven by the strategic, operating, and
financial skills of “New Management Team”. Strategy, collective experience, substantial capabilities,
and deep market relationships should be a significant competitive advantage. The core elements of the
Company’s strategy should include:
 A primary geographic focus on targets in the Western U.S. where the highest growth potential is
prevalent, where management should have extensive experience and expertise and have identified
unique acquisition and investment opportunities;
 Developing negotiated and private proprietary deal flow as a result of the Company’s experienced
team, target sector knowledge, value creation capabilities, and extensive network of global
relationships;
 Employing an opportunistic investment style in order to take advantage of current attractive
energy and energy-related opportunities sourced from a number of different industries and asset
types;
 Focusing on capital preservation through solid, diligence investments with strong cash flow
characteristics or the ability to be restructured to generate positive cash flow;
 Acquiring and investing in a number of targeted asset types within the energy sector in which the
New Management Team” can clearly identify a strategy for value creation that will drive superior
returns for investors, including existing assets, small- and mid-sized assets, orphan or non-core
assets, renewable and “green” assets, and niche-based assets;
 Investing and trading in the carbon credit commodity market in order to effectively capture value
around our core strategy of acquiring assets with attractive operating and cash flow
characteristics;
 Focusing on acquisitions and investments that emphasize flexibility and creativity in structuring
across a number of transaction and target types, including asset-based investments, private
operating company investments, and public company investments, and;
 Targeting assets and companies that will benefit from high-impact value creation strategies, such
as ensuring appropriate resources, right-sizing cost structures, and investing in managers and
employees.

6. 6
Investment Process
Rigorous acquisition and investment process should capitalize on the “New Management Team’s”
breadth and depth of energy industry knowledge, relationships, and extensive experience. The Company
believes that we will derive a competitive advantage from our process which will enable us to
opportunistically generate a continuous flow of high-quality, proprietary opportunities and efficiently
evaluate, diligence, and creatively structure transactions with the flexibility and speed that are required in
the current market environment. In addition, we believe that our post-acquisition strategic, operational,
and financial guidance will add substantial value to our portfolio of energy assets. We believe our
investment process will produce high-quality acquisition and investment opportunities while significantly
mitigating risk, driving strong returns.
Investment Highlights
The Company represents an attractive growth opportunity for the following reasons:
Compelling Market Opportunity – Due to prevailing market dynamics in the US energy sector,
including the current credit and banking crisis and a flawed government renewable energy strategy, we
believe that an unprecedented pipeline of portfolio and individual asset acquisition and investment
opportunities exist in the distressed energy markets in the United States.
Mr. Miller believes the current market environment presents a unique and optimal opportunity for us to
leverage “New Management Team” backgrounds, skills, and experiences to acquire and invest in energy
assets that will generate strong returns.
Installation of a Seasoned Management Team –The Company should be managed by a team of
seasoned, industry-recognized executives “New Management Team”, with proven track records of
identifying and creating value in energy and energy-related assets and distressed companies. The
complementary skills should combine substantial experience in financial analysis, commodity pricing,
management, operations, and transaction execution extending from front-end acquisition and restructuring
to back-end asset optimization and risk management. This skill set, combined with a vast network of
extensive personal relationships, will allow the Company to add substantial value in all areas of the
investment process. The strength of the New Management Team experience should be unique and
represents a key competitive advantage.
Breadth and Depth of Energy Sector Expertise – The Company should acquire and invest in energy
sectors in which the New Management Team have professional expertise and enjoy strong reputations,
should have developed substantial breadth and depth of energy-focused financial and operating expertise
throughout a diverse array of asset types and across a number of different business, economic, credit, and
capital markets cycles. The Company should leverage this distinctive industry knowledge as well as
relationships with managers, owners, and advisors from these sectors to achieve superior results.
Proprietary Deal Flow – The Company should generate attractive proprietary opportunities through a
high degree of industry credibility and a vast network of professional relationships. “New Management
Team” should leverage these factors to source negotiated and private acquisition and investment
opportunities from senior operating executives, investment and commercial banks, investment fund
managers, law and accounting firms, consulting firms, and other private investment firms. Effectiveness
in transaction sourcing strategy will result in getting both “early looks” and the “last look” at attractively
priced investment opportunities.

7. 7
Flexible, Opportunistic Investment Style – In the current market environment, attractive energy and
energy-related acquisition and investment opportunities may come from a number of different industries
due to their substantial size, fragmented structure, and industry dynamics featuring numerous and
disparate asset types. Nimbleness is essential to effectively taking advantage of interesting opportunities
as they emerge. Therefore, we will employ an opportunistic investment style in order to quickly diligence
and execute acquisitions and investments in a timely and efficient manner.
Unique Value Creation Capabilities –The Company should focus on acquisitions and investments in
energy assets and companies that can benefit from financial, operational, strategic, or management change
driven by our demonstrable expertise, insight, and senior-level advice. Utilizing our complementary
skills, the team will continue to build its track record of value creation by developing strong management
teams, re-focusing strategic plans, and energizing organic growth.
Unique Competitive Positioning
The Company should be uniquely positioned to take advantage of the current market disruption due to its
existing assets on the ground, market information flow and should benefit from the following factors:
 Reduced Competition for Assets – Demand for energy industry assets have not yet fully
recovered. As a result of the industry’s financial difficulties, many of the traditional buyers of
energy assets have experienced financial distress, forcing them to become net sellers of energy
assets. While potential investors exist, few possess the depth of experience at the financial and
operational level as does the Company.
 Strong Positioning Relative to Competitors –“New Management Team “ should provide
Company with a competitive operating advantage. The Company should have a unique blend of
experience and skills that it will be able to leverage to improve profit margins and strengthen risk
management of target assets, differentiating it from other investors.
Attractive Target Sectors
The energy sector has seen high levels of consolidation and rationalization over the last few years. Much
of this restructuring resulted from originally flawed fundamentals and unrealistic expectations. As a
result, market participants are in many cases being forced to restructure their balance sheets and divest
assets. The Company assets are currently being priced below fair value.
Potential opportunities in the following assets and industries, listed below in order of priority:
 Power Generation – This asset type will be the Company’s primary focus. Power generation
assets include coal, natural gas, wind, hydroelectric, waste-fuels, and other resource-based
facilities. Investments will be considered in both base load or peaking facilities and both
merchant and contracted output.

8. 8
 Power Transmission and Distribution – Primarily includes electricity transmission and
distribution assets. In addition, recent regulatory changes have forced some entities to divest
themselves of non-core transmission infrastructure assets.
 Natural Gas Infrastructure – Includes gas transportation, pipelines, gas local distribution
companies (“LDC’s”), compression stations, storage facilities, and liquefied natural gas (“LNG”)
terminals.
Power and Natural Gas Supply – Includes electricity and natural gas supply companies.
INVESTMENT STRATEGY
The Company should leverage the skills and experience of its “New Management Team” and employees
to achieve superior returns for investors. The Company should seek to acquire energy and energy-related
assets and companies, and, in some cases, invest in the debt of such assets or companies. The Company
should acquire and invest in assets that can benefit from the Company’s financial, operational, and
management expertise as well as insight, relationship network, and “New Senior-Level Guidance”.
The Company should generate returns through a combination of long-term capital appreciation and
current returns through structured transactions that seek to maximize returns while managing risk
exposure.
Geographically, the Company should primarily focus on opportunities in the Western U.S. Despite being
one of the largest energy consuming States in the U.S., California is heavily dependent on electricity
imports from other Western States leaving it vulnerable to critically low (<5% peak day) reserve
requirements. The neighboring states of Arizona and Nevada are experiencing explosive load growth,
further reducing their reserve power and limiting their export capabilities to California.
Furthermore, transmission constraints limit the ability of hydroelectric and coal/nuclear resources to meet
California and the rest of the Western U.S.’s energy and reliability needs. We believe that the current
environment in the Western U.S. will provide the Company with numerous acquisition and investment
opportunities at attractive valuations.
In addition to the Western U.S., the Company should consider acquisitions and investments in other
regions of the U.S. targets on an opportunistic basis. Up to 20% of investment capital should be invested
in such non-core regions, with the support of “New Capital Partners”.
Investment Philosophy
 Develop Proprietary Deal Flow – The Company should be an attractive partner to energy assets
and companies as a result of its experienced team, target sector knowledge, value creation
capabilities, and extensive network of global relationships. The Company should embrace a
proactive transaction generation strategy and believes that its relationship network in both the
public and private sectors will promote the sourcing of attractively-priced, negotiated and private
investment opportunities.
 Employ an Opportunistic Investment Style – In the current market environment, attractive
energy and energy-related acquisition and investment opportunities may come from a number of
different industries due to their substantial size, fragmented structure, and industry dynamics
featuring numerous and disparate asset types. The Company should exploit that nimbleness,

9. 9
which is essential to effectively taking advantage of interesting opportunities as they emerge.
Therefore, the Company should employ an opportunistic investment style in order to quickly
diligence and execute acquisitions and investments in a timely and efficient manner.
 Invest in Growth – Energy and energy-related assets and companies in the target geographic
regions offer substantial opportunity for growth and that the appropriate strategic initiatives can
unlock that potential. The Company should identify investments with significant growth potential
in which the skills, experience, judgment, and relationship networks of “New Management” will
act as catalysts for earnings growth.
 Integrate Operations and Risk Management – The Company should focus on the risk
components of each investment to ensure that they can be quantified and mitigated prior to
making an investment, including existing assets. The Company should develop advance plans for
managing risks, rather than reacting when unforeseen events to occur. Post acquisition, the
Company’s risk management function should be designed to manage the price exposure of its
asset mix and execute appropriate hedging strategies.
 Focus on Capital Preservation – An important goal of the Company’s acquisition strategy
should be to preserve capital. The Company should not make speculative investments, but should
rather focus on pursuing superior returns by acquiring and investing in assets and companies with
strong cash flow characteristics and properly managing the risks associated with its asset
portfolio.
Target AssetTypes
The Company should invest in a number of targeted asset types in which the “New Management” can
clearly identify a strategy for value creation that will drive superior returns for investors, including:
 Existing Assets – The Company should target existing energy assets, both operational and non-
operational, in order to maximize environmental emission and green credits as well as fuel
efficiency. As a segment of focus, the Company should seek projects that are within close
proximity to industrial facilities with heavy steam/power requirements. The Company should
also look for late stage development projects that have gained site control and are moving through
the permitting process.
 Small- and Mid-Sized Assets – There are currently existing small- and mid-sized assets coming
off long-term power contracts that need refurbishment and re-powering to meet changing
efficiency and environmental standards. New large base-load electricity generation assets are
difficult to construct due to the difficulty in obtaining the necessary permits, rights, and
connections, leaving smaller assets to fill the gap. In addition, many management teams of
smaller assets are unable to compete in a rapidly changing and complicated energy market and
require assistance.
 Orphan or Non-Core Assets – The Company should seek opportunities within small public and
private companies that may contain or represent orphan or non-core assets due to weak
management or capital constraints. These assets fall below the investment criteria of large-
capitalized buyers and feature attractive valuations relative to core assets.

10. 10
 Niche Based Assets – Given the regulatory, environmental, and efficiency factors impacting the
generation and transmission of electric power, the Company should focus on niche-based assets
that contain significant inherent value and require the structuring and operational expertise of the
Company’s “New Management Team” to unlock value.
 Carbon Credits – In addition to hard assets, the Company should invest in and trade carbon
commodity credits. The carbon market’s infrastructure is currently going through a stage of rapid
development, featuring product standardization and lifecycle tracking services as well as new
advances in specialized brokerage and accounting services. Despite the current state of flux and
the lack of defined industry rules and regulations in the carbon commodity market, the Company
believes that it is uniquely positioned to successfully invest in carbon credits due to its extensive
experience in the sector. The Company should employ an opportunistic investment strategy and
seek to adapt to the carbon commodity market as it develops to a point where we can effectively
capture value around our core strategy of acquiring assets with strong operating and cash flow
characteristics.
Other opportunities the Company plans to pursue will include utilities in the Southwest that have issued
multiple requests for proposals for all renewable power to satisfy RPS standards and joint ventures with
other renewable project developers.
The Company should consider the effect of portfolio diversification when evaluating acquisition and
investment opportunities in target asset types. Diversification may be achieved via fuel mix and resource
requirements, geographic focus, industry, or risk profile of investments.
The Company should invest up to 20% of its investment capital in other opportunistic energy acquisitions
and investments in non-core areas, such as oil, oil-related services, and new energy technologies with the
backing and support of “New Capital Partners”.
Investment Types
The Company should focus on acquisitions and investments that emphasize flexibility and creativity in
structuring across a number of transaction and target types, including:
 Asset-Based Investments – Real assets will serve as collateral for asset-based acquisitions and
equity or debt securities that are purchased by the Company. The Company’s target should be to
acquire at least 25% economic interests in, and significant management control of, these types of
investments, through equity or equity-like securities.
 Private Operating Company Investments – Equity or other investments in private companies
that have experienced management teams seeking to execute developed business plans.
 Public Company Investments – Equity or other investment types in public entities, including
purchase of debt securities, at a discount in the secondary market. The Company should utilize
its financial stake in target companies as leverage to pursue operational and balance sheet
restructuring plans, enabling it to obtain significant control of a portion or all of the real assets
underlying such financial investments.

11. 11
INVESTMENT PROCESS
The Company should enforce a rigorous investment process capitalizes on the “New Management Team”
breadth and depth of energy industry knowledge, relationships, and extensive experience.
The Company should derive a competitive advantage from this process which will enable a continuous
flow of high-quality, proprietary acquisition and investment opportunities and efficiently evaluate,
diligence, and creatively structure transactions. In addition, post-acquisition strategic, operational, and
financial guidance should add substantial value to energy assets and companies acquired and controlled.
The Company's investment process should consist of six steps that will produce high-quality
opportunities, significantly mitigate risk, and generate strong returns.
Investment Process
Proprietary Deal Sourcing
The Company should generate attractive acquisition and investment opportunities through a high degree
of industry credibility from the “New Management Team”, established as a function of three key factors.
First, the Company should focus on energy sectors in which the “New Management Team” have
substantial professional experience and enjoy strong reputation, understands each of these sectors well
and knows many of the relevant people and opportunities. Secondly, the “New Management Team”
should have extensive relationships across a broad array of service industries and job functions, including
the ability to source transactions from senior operating executives, investment and commercial banks,
investment fund managers, law and accounting firms, consulting firms, and other private investment
firms. Lastly, the “New Management Team” should use systematic, proactive prospecting, employing
hands-on research.
Together, these elements will provide the Company with a strong reputation and high industry profile,
making it a highly desirable partner to potential targets. The effectiveness of our sourcing strategy will
result in getting both “early looks” and the “last look” at attractively-priced negotiated and private
investment opportunities.
Rigorous and Analytical Due Diligence
The Company’s due diligence process should be designed to provide a comprehensive understanding of
the fundamental attractiveness of a target asset or company. The “New Management Team” should have
significant experience evaluating acquisition and investment opportunities and consider rigorous due
diligence a critical component of the investment process, not only of opportunity identification, but also
Proprietary
Deal
Sourcing
Rigorous &
Analytical
Due Diligence
Creative &
Flexible
Transaction
Structuring
Investment
Approval
Proactive
Value
Enhancement
Opportunistic
Realization

12. 12
of risk management. The Company’s due diligence should develop a strong understanding of a target
asset or company’s investment thesis through comprehensive top-down and bottom-up analyses.
“New Management Team” should begin due diligence with an assessment of the target asset or
company’s industry by conducting an independent analysis, which may include discussions with industry
experts, competitors, and a review of any relevant external research. Once industry analysis is complete,
the Company should focus on the target asset or company.
The “New Management Team” should conduct meetings with target management to understand their
experience, operating philosophies, and growth plans, perform an analysis of the operating company’s
historical performance, and a review of its actual performance versus budget. An assessment of
construction and operational/commercial and related risks of the target will be performed including a
review of construction, supply and off take agreements, likely permitting period, and construction and
operations “ramp up” periods. In addition, the reputation, resources, experience and credit capacity of
project participants (e.g., contractors and project sponsors) will be thoroughly evaluated. Furthermore,
the Company should independently develop detailed financial models in order to evaluate the
attractiveness of the investment under different operating and capital structure assumptions. In general,
the Company should address numerous pertinent issues with respect to each proposed investment,
including:
Key Due Diligence Items
General Items
 Regulatory climate
 Environmental issues and
concerns
 Size
 Competitive landscape
 Cross-border risk with respect
to investments in Europe
 Capital structure
 Financial controls and
systems
 Exit strategy and timing
Project Investment Items
 Political and legal environment
 Feasibility studies
 Contractual framework
 Risk management programs
 Estimated time to commence
and implement
 Experience and resources of
project participants
 Credit capacity of project
 Off take/supply arrangements
 Likely “ramp up” period
Target Investment Items
 Technology risk
 Terms of operating contracts
 Depth at executive and
operating levels
 Market structure
 Experience, expertise, and
references
 Incentive structure
 Cost structure
 Historical financial
performance.
At this point, the Company should initiate its pre-transaction risk management program with an
evaluation of the existing contractual portfolio relating to an asset, including fuel supply, transport,
physical power sales and financial gas and/or power hedges. The Company should apply a proprietary
and market-based modeling approach to quantify the risk profile of each transaction utilizing forward fuel
and power prices and volatilities to produce scenario analyses for the potential transaction as well as the
existing portfolio.
In addition to the “New Management Team”, other members of the Company should be fully engaged
and participate in due diligence process to add critical functional or industry experience and judgment.
Additionally, we will include outside experts as appropriate, including relevant industry executives,
attorneys, accountants, and consultants to evaluate specific issues related to each target. The experience
and skills of “New Management Team” combined with the depth of due diligence review process, will
allow the Company to accurately assess, avoid, and/or mitigate the risks of a potential investment.

13. 13
Creative and Flexible Transaction Execution
The Company should to use creative structuring techniques to enhance returns, provide liquidity, limit
risk, and maximize operating flexibility. The “New Management Team” should utilize their extensive
experience in transaction structuring and should utilize such expertise to maximize the risk-adjusted
return of the Company’s investments.
Regarding the use of leverage, the Company should structure transactions to address a target asset or
company’s strategic and operating objectives as well as possible downside scenarios. Although the
Company should utilize debt to increase purchasing power and enhance return on equity, “New
Management Team” should emphasize a philosophy of prudence, conservatively capitalizing assets to
enable them to grow organically and better withstand cyclical downturns and unforeseen events. The
Company should be focused on risk-adjusted returns and capital preservation; we will emphasize
flexibility in each investment’s capital structure.
Investment Approval
Once the Company investment team has completed its due diligence, including the formulation of a
complete financing structure, it should make a formal presentation to the investment committee
(“Investment Committee”). The team will prepare a preliminary investment memorandum (an
“Investment Memo”) that will present a summary of the proposed acquisition or investment to the
Investment Committee for their review and counsel. The Investment Memo will summarize the principal
investment considerations, including: (i) the type, location and structure of the investment under
consideration; (ii) proposed exit strategies; (iii) preliminary projected returns; (iv) investment risks and
possible mitigants; (v) in the case of a project investment, the anticipated project participants and the
nature of their respective undertakings; and (vi) a proposed budget for the transaction.
The Investment Committee should be comprised of a broad cross-section of world-class business leaders
with great depth and breadth of capability, and experience in operating and advising energy and energy-
related companies around the globe. Related decisions, such as add-on acquisitions, follow-on
investments, and refinancing, recapitalizations, and realization events will be evaluated in much the same
manner as new acquisitions and investments, and similarly, will be presented to the Investment
Committee for final approval.
Proactive Value Enhancement
“New Management Team” should have significant, unique experience in leading and managing energy
companies over multiple, varied economic and business cycles. Utilizing their complementary skills, the
Company’s “New Management Team” will take an active role in transforming assets and companies by
re-focusing strategic plans, energizing organic growth, and realizing operating efficiencies to create long-
term value. plans to utilize our network of senior-level relationships to provide strategic insight, counsel
and operational oversight to our energy assets. “New Management Team” should also promote the use of
outside experts to assist in effecting beneficial change, most importantly focused on rebuilding the
morale, spirit and creativity of the Company employees. “New Management Team” should provide the
operational, financial, and governance support necessary to maximize the opportunity for each asset.
Consistent improvement in growth and profitability is critical to superior investment results. The
Company should assess each asset’s potential and develop a strategic plan, formulating specific strategic,
operational, and organizational initiatives. After completing an acquisition or investment, the “New
Management Team” should ensure expeditious and effective implementation. The Company should
closely monitor the progress of each asset through weekly business metric reviews and regular meetings

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to review progress relative to the asset’s strategic plan.
 Disciplined Post-Acquisition Risk Management – Proactive risk mitigation is an essential
function in preserving the value of assets. The Company should establish policies, procedures
and risk limits to balance the risk/reward relationship of physical and financial assets, and intends
to take a disciplined approach to the execution of these policies to assist in achieving value
preservation.
Post-transaction, the Company should implement a comprehensive hedging program as an
overlay to the contract portfolio. Power and fuel hedging transactions may include any
combination of physical, financial forward, and derivative power sales and fuel purchases. Such
hedging transactions may consist of static transactions intended to meet budgetary and/or risk
mitigation objectives, or more dynamic strategies intended to realize both the intrinsic and
extrinsic value of a power or gas asset. In all cases, the primary purpose of the trading operation
is to manage the market risk associated with the Company’s anticipated physical assets.
Opportunistic Profit Realization
The Company should continuously review the progress of each of its assets to determine the optimal
timing for exit. Because the Company is intimately familiar with each asset, we are best-positioned to
identify attractive exits.
“New Management Team” frequent evaluations of potential realization opportunities, including
consideration of each asset’s prospects as well as external factors such as prevailing economic and capital
markets conditions.
Exit strategies should be discussed during regular internal meetings and formal asset reviews.
Considerable thought will be given to the positioning of the asset or company both for a strategic sale and
a public offering. Final decisions should be made with only be made with the approval of the Investment
Committee and full Board of Directors.