Rick Roberge, Mike Collier, John McConomy Transaction Services November 29, 2001

1. Rick Roberge, Mike Collier, John McConomy Transaction Services November 29, 2001 Energy and Utilities Learning and Education Session

2. Energy Transaction Expertise • Rick Roberge • Houston Partner • Oil & Gas Corporate Clients Direct Line: 713-356-8285 • Mike Collier • Houston Partner • Energy Private Equity Direct Line: 713-356-8133 • John McConomy • Philadelphia Partner • Utility and Power Clients Direct Line: 267-330-3001

3. energy transaction expertise

4. energy transaction expertise

5. energy transaction expertiseOil and Gas Corporate Clients • Large Global Integrated Companies • Large Independents • Midstream Companies • Oilfield Service Companies • Integrated • Drilling • Seismic

6. energy transaction expertiseOil and Gas Corporate Clients • Buy – Side Diligence • Independent look at historical & projected results. Clients teams often have too much emotional capital to examine the target objectively • Ability to assemble large teams very quickly • Globalization is very important. Our European clients often utilize a more extensive full suite of services • All we do are deals; we bring that collective experience to all transactions • Sell – Side Diligence • We bring our buy – side experience to our clients sale transaction. Uncover the problems; anticipate buyer concerns; sale process maximizes value; streamline the buyers & limit the advisors.

7. energy transaction expertiseOil and Gas Corporate Clients • Post – Deal Services • Very effective proposition; not high level strategic consulting; but rather implementation to assist in synergy realization. • Need to think about possibility specific energy experienced people in this area. • Structuring • FAS 141 & 142 offers opportunities in transaction structuring. • Downstream likely to push for large goodwill on deals; although incredibly the upstream companies are also recording significant goodwill charges • Off balance-sheet financing may be less popular in light of “Enron” situation.

8. energy transaction expertiseOil and Gas Corporate Clients Wins Upstream • Assisted British Gas with purchase of large oil & gas fields in India from Enron; identified PSA issues & reviewed post – closing adjustment period. • Reviewed U.S. equity portfolio of various upstream investments of a UK public entity; buy-side client in Aberdeen. • Due diligence on public E&P company for a strategic buyer. Target had many complex hedges in place; as well as out sourcing arrangements on all aspects of the corporation. • Assisted large local E&P Company with analysis of large Russian oil field. Involved working with our Moscow office and their tax knowledge as well as knowledge of the Yukos culture when selling assets.

9. energy transaction expertise Wins Downstream • Assisted Shell in its buy-out of Texaco’s interest in the Equilon & Motiva joint ventures. • Assisted large local company with analysis of projections and scenarios surrounding various purchases or joint venture options • Assisted BP Amoco with sell – side due diligence on the Yorktown and Alliance refineries.

10. energy transaction expertise Wins Oilfield Services • Assisted local drilling company with Global acquisition in Russia; included visits to the site and working with our Moscow office Midstream • Assisted Hanover Compressor with its due diligence on purchase of Schlumberger’s gas compressor business. • Assisted Plains All American with its acquisition of Murphy Oil Assets in Canada.

11. energy private equity - issue • Private equity funds are forming to invest in energy deals • Perceived need for private investment capital • Deregulation in power sector • Consolidation in O&G and power • Technology-drive investments in both sectors • International opportunities • To win, service providers must have • energy expertise across multiple sectors • private equity transaction expertise • International capability

12. Energy Transaction Expertise • Rick Roberge • Houston Partner • Oil & Gas Corporate Clients Direct Line: 713-356-8285 • Mike Collier • Houston Partner • Energy Private Equity Direct Line: 713-356-8133 • John McConomy • Philadelphia Partner • Utility and Power Clients Direct Line: 267-330-3001

13. energy private equity - action Transaction Services Group created The Energy Private Equity Team • Deal execution skills (private equity) married with energy expertise • A cross LOS, cross geography practice • No other Big 5 firm has take up the challenge

14. energy private equity - impact • Substantial improvement in deal economics, speed • Anticipate operating as well as financial issues • Full support for portfolio companies / help accomplish fund return objectives • Potentially facilitate deal flow

15. energy private equity Energy Private Equity Team clients: • Carlyle / RiverStone • First Reserve Corporation • DLJ / CSFB • ABB Equity Ventures

16. energy private equity Energy Private Equity Team targets: • Highstar Capital • ArcLight Capital • Madison Dearborn Partners • Energy Spectrum • SCF Partners

17. Energy Transaction Expertise • Rick Roberge • Houston Partner • Oil & Gas Corporate Clients Direct Line: 713-356-8285 • Mike Collier • Houston Partner • Energy Private Equity Direct Line: 713-356-8133 • John McConomy • Philadelphia Partner • Utility and Power Clients Direct Line: 267-330-3001

18. Trustedadvisor Loyal client Steady, reliable expert Satisfied client Expert Baseline expectation of clients how we work • We strive to have an ongoing relationship with the client as a trusted business advisor • We work in conjunction with the assurance engagement team in attest client circumstances • We emphasize our deep industry credentials and transaction expertise • We need your help to introduce us

19. issue • A utility is evaluating strategic options, including acquiring another utility • Senior management team unable to use internal resources to undertake evaluation of the economic impact of potential acquisition because of a significant need for confidentiality

20. action • We assisted the management of the Company in: • Reviewing an economic model to determine preliminary economic value of target utility and financial impact of acquisition (i.e., earnings and capitalization) • Undertaking limited due diligence (limited to public information) • Our project team consisted of X-LOS specialists including individuals with: • In-depth industry knowledge • Valuation expertise • Due diligence expertise (transaction services)

21. impact • Identified pros and cons of target • Executive Management was able to determine the potential financial impact of its strategic options • The deal did not happen • The Company has switched strategies and may well negotiate a sale of its assets

22. typical engagements • 1 to 2 months to complete our work • $150,000 to $450,000 • Confidential client Contact John McConomy for the name of the partner reference if required.

23. issue • A technology company is planning on developing a new enterprise data center facility in California • Company “leases” space in the data center to its customers to maintain and protect its mission critical enterprise systems and guarantees “five nines” (99.999%) availability/reliability to its customers • Energy services (electricity and chilled water) are to be provided by a third-party, through a dedicated on-site facility

24. action • We assisted Management in: • Reviewing an economic model to support pricing for electricity and chilled water services • Interfacing with outside consultants retained by the project participants • Reviewing and advising on terms and conditions of the operative documents, including the energy services agreement • Identifying expert regulatory counsel • Our project team was comprised of specialists who have an in-depth knowledge of the industry and project issues, through a combination of industry and PwC experience

25. impact • Identification and resolution of unique business and other risks related to the proposed project • Provided significant knowledge transfer to Management team • Identified the benefits and risks of long-term energy services agreement to Management

26. typical engagements • 3 to 6 months to complete our work • $50,000 to $100,000 • Reference Bob Kittredge, Sacramento

27. issue • An electric and gas utility was early in the development phase of a gas-fired cogeneration project, which would also produce steam and chilled water for sale to a state entity • This was the first significant non-regulated investment made by this utility • Credibility of the executive management team and the Company at risk if the project was not an operational and financial success

28. action • We assisted Management of the Company in: • Reviewing an economic model to support preliminary pricing for electricity, steam and chilled water • Interfacing with outside consultants retained by the project participants • Evaluating the business, financial and tax implications of alternative project structures and financing alternatives • Reviewing Memorandum of Understandings with project participants • Our project team was comprised of specialists who have an in-depth knowledge of the industry and project issues, through a combination of industry and PwC experience

29. impact • Our background and expertise quickly won the confidence of Management • Our involvement resulted in the early identification of business and economic issues • Management is more comfortable that the key project risks are being timely identified and addressed

30. typical engagements • Requires the buy-in of the engagement partner • Focusing on the development of long-term relationship is key • 1 to 2 years to complete our work • Fees of $150,000 to $300,000 • Reference-John Gillen, Philadelphia

31. recent wins (non-confidential) • Wisconsin Energy • Madison Gas and Electric • United Illuminating • RGS Energy • Allegheny Energy • Exelon Corporation • CLECO • Long Island Power Authority • Consolidated Edison • CalEnergy

32. who to call • John McConomy Philadelphia 267-330-3001 john.mcconomy@us.pwcglobal.com • Don Claar Houston 713-356-6099 don.claar@us.pwcglobal.com