Presented by Randy Nichols, President Cheyenne Acree, Business Development Director

2. “Why Wind” for the Landman November 3, 2009 AAPL Texas Land Institute Hyatt Regency Hotel Presented by Randy Nichols, President Cheyenne Acree, Business Development Director 9235 Katy Freeway, Suite 400 Houston, Texas 77024 713.463.6009 www.cincoland.com & www.cincorenewable.com

3. Types of Renewable Energy Geothermal

4. Wind DevelopersUtility Scale

5. Why Wind? • Why Cinco created a Renewable Energy Division? • Market research: What are the needs of the Renewable Industry? • Attended Conferences • Made phone calls to contacts • Received requests from developers • Requests from other Brokers • How can Cinco fill those needs? • How to best allocate existing resources • Best ways to get our name out to the renewable community

6. Existing Services • Existing Cinco services facilitate needs of target developers • Strategic Land Advice- Scouting, line list, comprehensive reports • Title research- Surface/Mineral owners, city, county, state, federal regulations • GIS mapping- Preparation of AOIs, ownership, culture, topography, restricted areas, parks, airports, competitor activity • Field Land teams- Options, ROW easements, leases • Lease administration- Set up, maintain leases • Due Diligence- Support services, curative • Construction Support- Facilitate lease term relationship

7. Cinco’s Goal • Cross train Landman into the wind industry to meet the needs of their growing industry. • Provide land/title/negotiating professional to the wind industry • Provide education training • Diversify client base and services offered • Provide and incorporate these services utilizing our current skills Landman Goals • Diversify skill set to be more marketable • Interested in renewable energy industries • Opportunity to relocate with wind industries

8. Quote “The issues I face in the renewable business are no different than what you [in oil and gas] face today. It’s the same thing, just a different technology.” Cliff Clement Vice President, Land and Asset Management Third Planet Wind Power LLC

9. Overlapping Skill SetLandman • Skills you already possess & can transfer to another energy related industry. • Title – Primarily surface but specific emphasis on land use and restrictions zoning • Abstracting – Surface line 30 years to the policy • Negotiating – Explaining Lease terms and conditions • Lease structure –different lease structures • Lease payments – Payment schedule • Field reporting – Providing Project Management weekly with updates

10. Wind Resource Saudi Arabia of Wind

11. Wind Capacity 2009

12. Development Phases • Feasibility (Lease Check/ Scouting/Fatal Flaw/Critical Analysis) • Leasing/ Development/ Construction (Landowner negotiations/ option agreements) • Operation & Maintenance (Lease Term)

13. Our Focus • Feasibility • Scouting: surface characteristics, surface conditions or jurisdictional controls, Transmission lines, ROW, access, topography, size of parcels, division of ownership, legal issues, community support, anti-wind groups, history of wind in area, identifying “Bell Cow”, economics of the area, future development of residential developers, active wind farms in the area • Lease Check: court house, calling landowners, existing lease or previously expired leases, Identify Lessees (Developers), terms, describe lands leased • Development • Leasing:Negotiations, Community Meeting, reporting & mapping • Construction Support: Acquisition of new/ additional easements for ROW, contractor access, facility placement, amendments to existing easements and questions with landowners

14. Oil and Gas Trend Maps Marcellus Shale Haynesville Shale

15. Wind Trend Map

16. Oil & Gas Lease Check • Existing skills a Landman can use • WHO is leasing in the area? • WIND: Search of the public records; including court house, assessors offices and abstract plant. Determine existing leases (wind and/or oil & gas, coal, agricultural and grazing). Search for pipeline ROW, transmission easements, and other pre-existing agreements burdening the lands • WHAT are the terms offered? • WIND: Review the agreements acquired from your research to determine the terms of such leases and contact landowners to provide additional information on lease terms not set out in the agreements filed for public record. We know that most Wind leases filed in the public records are memorandums only with few details about the lease terms. Prepare a lease check report setting out the terms of the lease and inquire with landowners about competitor terms • WHEN will leases expire? • WHERE is the open acreage? • WIND: Use property legal description presented in Memo filed

17. Wind Scouting • Additional questions to be answered • WHO is FOR or AGAINST wind? • Determine if the community has been previously approached by wind developers and if so, were they for or against the development of wind, including commercial wind and/or community wind. • WHAT are local concerns or obstacles? • Determine the individuals or groups that will influence the community for developing a commercial wind project in their area. This may be city or county officials, organized environmental groups or business leaders, concerned with the development of real estate or agriculture. • WHEN should the company introduce itself to the community? • After you have determined from your initial scouting of the area that it is suitable for wind development and that there appears to be no major obstacles you should introduce yourself to leaders in the community regarding your tentative plans to consider their community as a site for commercial wind development project. • WHERE will existing or proposed transmission be located? • In addition to wind turbines being located on land owners property you need to discuss the build out of additional infrastructure which includes; substations and transmission lines. Also, have landowners been approached or notified by any utilities of potential transmission line builds.

18. Scouting Issues • MET locations-Demonstrates activity in the area • Influential landowners-Those which own large amounts of acreage within the wind farm footprint or are political or communityleaders • Existing surface agreements • Existing County PILOT(Payment in Lieu of Taxes) orRoad Maintenance Agreements • Taking GPS points-Its necessary to have a hand held GPS unit while conducting scouting operations in order to accurately locate MET towers, substations, transmission lines, roads, etc. This information will be up loaded in the GIS map provided to the client as part of the scouting report • Driving Roads-Obstructions in area, bridges, weight limits • Photographs-Reporting • FAA restrictions-Check with the regional FAA office having jurisdiction over the wind farm area to determine what restriction and or permits are necessary to erect wind turbines in the area. • CRP (Conservation Reserve Program) or conditional use land- FSA (Farm Service Agency) program • Flood areas-Check with county/ state engineers, FEMA or corps of engineers for flood plans, etc. • County ordinances • Zoning & Economic Development Boards-commission meeting minutes & contacts • Permits/ Applications-Obtain copies from appropriate offices. Provide local permitting matrix

19. Scouting Goals • Provide client with a comprehensive view of their target footprint area. • With the information provided by the Landman, project managers will coordinate with the GIS department to construct a map of the target area including; all tracts, ownership, existing leases, met towers, substations, transmission lines, highways, rivers, lakes, streams, state or national forest/ parks or national preserves, airports, etc.As well as written recommendations. • Cultivate positive relationship between stakeholders and client. • The development of a positive and fruitful relationship between the wind developer (your client) and the community is a slow and deliberate dialogue about the plans for commercial wind project in their community which is based on honesty and integrity. This dialogue will include your client meeting with community leaders, land owners attorneys, state and local officials in order to acquire their support, necessary permits and approvals to develop the project. • Move into the leasing phase with this information. • A lease form will be presented to all the land owners within the wind farm boundaries. All lease forms with be identical. As the Landman discusses the terms of the lease with each land owner and/or their attorneys, suggested changes or amendments to the leases will be forwarded on to the client. The process of amending and reviewing the lease may take 30-60 days depending on the size of the wind farm project, client response time, sophistication of landowners, and/or involvement by community leaders.

20. Scouting Phase Map

21. Development (Leasing approaches) • Different levels of client participation: This is a major difference between the job for an Oil & Gas Landman negotiating a lease for an Oil & Gas Company and a wind Landman negotiating a lease for its Wind Developer. The Wind Developer will be intimately involved , Wind Developer will help instruct the Landman to follow their internal corporate structure. • Negotiating lease within specified parameters:Provided Landman upfront limitations on a range of payment • Presenting the lease without negotiating responsibilities:Present the terms of the lease to the land owner and if there are any questions regarding the interpretive nature of any of the provisions the Landman will request the land owner seek legal or other counsel to determine their interpretation of the lease. Four Corners idea. • Client may be present at landowner meetings:The client will most likely attend several landowner meetings in the community and individually. Due to the long term nature of wind farms, (50 years or more) the land owners and community decision to support the development will be based on, in large part, the strength and reputation of the wind developing company. The Landman will in all situations collect any and all concerns, changes, modifications, questions, regarding the lease and provide to the Wind Developer for its consideration.

22. Additional Responsibilities • Provide client corporate literature to landowners • The wind developer the Landman with such information as annual reports, website links, business and financial references, to familiarize the landowners and the community with the company. • Scheduling meetings with client and county officials • Once the key officials and landowners in the community are identified, meetings will be set up with the Landman and representatives from the Wind Developer. • Attend local events • Church, county fairs, etc. • Schedule & facilitate community meetings • Discuss Local economic benefits • Jobs, infrastructure, schools, fire, etc.

23. Leasing Phase Status Map

24. Landowner FAQs • Will I get a turbine? • Will the energy be used locally? • How much money will I receive? • How much money does a wind farm make? • What happens when no wind blows? • What happens at the end of the lease? • Does a wind farm affect my property value? • What happens when I want to sell my property? • What if I want to build something on my property? • What does the noise exactly sound like? • What happens to my crops if have to cut them down? • Can they use eminent domain? • How far away from cell towers do they have to be? • Do I have a say in deciding where the turbines are placed? • Can I stipulate in the lease that nothing be built around a certain area? • Do we get reimbursed for the attorney’s fees? • How far do MET towers & turbines have to be away from a house? • How far down are the turbines anchored? • Is there any kind of tax credits? • Will we add more turbines at a later time? • Does this prevent me from putting up my own personal wind turbine? • Can I get power directly from the wind farm? • Do developers higher people locally for jobs?

25. Quote “Landmen, with their diverse array of land and business expertise, are an important component to the wind energy development process. They serve as invaluable partners because they offer great on-the-ground knowledge in the regions where they do business.” Andres Arbizu Development Director, Wind Energy GDF Suez N.A.

26. Resume Tips • Know that you have the knowledge they need • Know your audience: Broker or direct for Developer? • Job of the Broker Director or PM to secure and discuss issues about expertise or “O&G fears” with client • Developers say Oil & Gas is ok (Quotes) • Many many people in wind came from Oil & Gas • Public Relations is tricky but- Seismic shoot support, Indian Tribal Counsel approvals, County Commissions and utility negotiations • Classes are beneficial when searching for a direct hire with developer- Cinco offers classes • Brokerage should provide you the training you need when hired • AWEA job board for industry terms- It’s how you phrase the skills you have, everyone must use industry specific terms when applicable • Term Examples- Land Agent,community development, stakeholder, footprint, etc.

27. Wind Farm Photos, Spearville, Kansas Photos provided by Emporia State University, Emporia, Kansas Department of Earth Sciences Kite Aerial Photography Dr. James Aber & Dr. Susie Aber

28. Wind Farm Photos, Spearville, Kansas 100 MW, GE 1.5MW Turbine, 2006

29. Wind Farm Photos, Spearville, Kansas

30. Wind Farm Photos, Spearville, Kansas

31. Lease Structure Wind & Oil and Gas Similarities • Production royalty payments • Signing Bonus • Per Acre payments • Option to Extend • Easements • Approved land uses

32. Lease Structure Wind & Oil and Gas Differences • Favored Nations Clause • Everyone within a certain area receives the same deal • No “Standard” Wind Lease • Not a Producers 88 • Option term 3-10 yrs • 20-99 year Lease Term • Surface only • Decommissioning • Restore “in-kind” condition

33. Payments, • Option Payment (Feasibility to Development/ Construction) • $1-$5 per acre • Possible Signing bonus • One time damages payment during construction $2-6k • Rental or Purchase of Substation area • Staging area payment per year ( 10-20 ac) • Possible Escalating payments per year • Per foot one time payment for easements $1-4

34. Payments • Lease Payment (Lease Term, Operation & Maintenance) • Fixed lump sum payment: Flat fee per year • Royalty % on production: Based on generation • 2-7% of yearly aggregate production • Best case payment example: 1, 2MW Turbine operating at 35% capacity (power purchase price assumed at $50)= 10k landowner yrly payment @ 3.5% royalty rate • 2 most common, other combinations exist

35. Wind Facts & Figures • Wind Basics • Market • Wind Technologies Market Report, July 2009 • “ 2008 continued a string of record-breaking years for the U.S. wind industry, which has put the U.S. ahead of schedule vis-à-vis the deployment path laid out by the U.S. Department of Energy (2008) to reach 20% wind penetration by 2030. Looking ahead, expectations are for a slower year in 2009, in large part due to the impact of the global recession. Projections among industry prognosticators range from 4,400 MW to 6,800 MW of wind likely to be installed in the U.S. in 2009 (AWEA has already reported that more than 2,800 MW came online in the first quarter of 2009). After a slower 2009, most predictions show market resurgence in 2010 and continuing for the immediate future, as the ARRA 2009 policy changes come into full swing, and as financing constraints are relieved. If realized, these near-term projections would maintain the nation’s early progress towards meeting 20% of its electricity demand with wind power by 2030.” • Funding • Heavily reliant on bank funding • 20% by 2030 • Wind power can play a major role in meeting America’s increasing demand for electricity, according to a groundbreaking technical report, 20% Wind Energy by 2030: Increasing Wind Energy’s Contribution to U.S. Electricity Supply, prepared by the U.S. Department of Energy with contributions from the National Renewable Energy Laboratory, the American Wind Energy Association others. • The report explores one scenario for reaching 20% wind electricity by 2030. It examines costs, major impacts and challenges associated with the 20% Wind Scenario. The report finds that the Nation possesses affordable wind energy resources far in excess of those needed to enable a 20% scenario.

36. Wind Facts & Figures • Wind Systems & Issues • Utility Scale • 250+ kW, Up to 400Ft. turbines • Grid distribution power • Community & Small Wind • Up to 250kW , Up to 200 Ft. turbines • Single home or small community • Severing Wind Rights? • Retaining wind royalty payments • Horizontal Severance Clause (Similar to Depth Severance Clause): End of construction, terminates 10ft above tallest blade height • Vertical Severance Clause (Similar to a Pugh Clause): End of construction, release a portion of land back to landowner • Spacing: 5-10 rotor blades apart, approx. 1 MW per 100 Ac of land • Pickens Plan? • Create millions of new jobs by building out the capacity to generate up to 22 percent of our electricity from wind. Solar as well • Building a 21st century electrical transmission grid; • Providing incentives for homeowners and the owners of commercial buildings to upgrade their insulation and other energy saving options; and • Using America's natural gas to replace imported oil as a transportation fuel in addition to its other uses in power generation, chemicals, etc. • Faltering?

37. Turbine Scale * A 150 MW Windfarm can produce enough electricity to power 74,000 homes

38. Turbine Photos

42. Wind Facts & Figures • Policy • Production Tax Credit (PTC) • The American Recovery and Reinvestment Act of 2009 (H.R. 1), signed into law by President Obama on February 17, 2009, extended the production tax credits (PTC) and investment tax credits (ITC), which have been critical to the growth of the renewable energy sector, and added a new a new incentive, Treasury grants taken in lieu of tax credits, designed to promote the growth of renewables despite the economic downturn. • The PTC for wind, which as the largest producer of renewable energy has the greatest impact on the budget, was extended an additional two years, until the end of 2012. • RES (Renewable Energy Standards) & RPS (Renewable Portfolio Standards) • National or State • REC (Renewable Energy Credits) are commodities of the RES/ RPS system • Reliability • Variability • Storage • Transmission Constraints • Grid update • Texas CREZ • Competitive Renewable Energy Zones (see map slide)

43. Texas CREZ: Competitive Renewable Energy Zones

44. Wind Facts & Figures • Environment • Sound/ Light • Aesthetics: FPL Lawsuit: Horse Hollow Wind Farm (Texas) • FPL wins • Flicker/ Shadow and Set Backs • Videos • Habitat/ Wildlife • Birds • EIA (Environmental Impact Assessment) • NIMBY • Property Values • Anti-Wind groups • www.wind-watch.org • www.windaction.org

45. Video Links • FLICKER • http://www.youtube.com/watch?v=6Ub1SS7SCVw • http://www.youtube.com/watch?v=ssG_BjKKtVI • http://www.youtube.com/watch?v=f22buN-Mt9k • NOISE • http://www.youtube.com/watch?v=JD0v9_zV2uk • http://www.youtube.com/watch?v=Ld_CWGYkdng&feature=related • AWEA • http://www.youtube.com/watch?v=DSdGNnlJBh4 • Developer Videos • http://www.youtube.com/watch?v=DrRdjb4d1is

46. Conclusions • Industry predicted to grow • Increase need for land and title services • Utilize existing skills • Diversify skill set • Become more marketable

47. Questions? Comments? • www.AWEA.org • www.NREL.gov • www.CincoRenewable.com • www.CincoLand.com

48. List of Acronyms • ARRA The American Recovery and Reinvestment Act of 2009 • AWEA American Wind Energy Association • COD commercial operation date • CREZ competitive renewable energy zone • DOE U.S. Department of Energy • EESA Emergency Economic Stabilization Act of 2008 • EIA Energy Information Administration • ERCOT Electric Reliability Council of Texas • FERC Federal Energy Regulatory Commission I • OU investor-owned utility • ITC investment tax credit • NERC North American Electric Reliability Corporation • NREL National Renewable Energy Laboratory • O&M operations and maintenance • POU publicly owned utility • PPA power purchase agreement • PTC Production Tax Credit • R&D research and development • REC renewable energy certificate • REPI renewable energy production incentive • RPS renewable portfolio standard • RTO regional transmission organization • SPP Southwest Power Pool

49. PowerPoint Presentation and Related Materials Available for Download @ www.CINCOLAND.com 9235 Katy Freeway Suite 400 Houston, Texas 7724 713.463.6009 cacree@cincoland.com