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Private Capital and NOCs New Competitors Around the World

Private Capital and NOCs New Competitors Around the World. Cameron Smith – Senior Managing Director, COSCO Capital Management LLC David Hobbs - CERA Director, E&P Strategies. Private Equity – Universe 30-50 Entities with $25-40 billion available. 20-25 Energy-Focused Private Equity Funds

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Private Capital and NOCs New Competitors Around the World

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  1. Private Capital and NOCsNew Competitors Around the World Cameron Smith – Senior Managing Director, COSCO Capital Management LLC David Hobbs - CERA Director, E&P Strategies

  2. Private Equity – Universe30-50 Entities with $25-40 billion available • 20-25 Energy-Focused Private Equity Funds • First Reserve, Yorktown, Natural Gas Partners, etc. • $10-15 Billion Available (Not Counting Debt) • 5-10 General Equity Funds with Significant Energy Interests • Warburg Pincus, Morgan Stanley, CSFB, etc. • $15-20 Billion Available (In Theory) • Handful of Institutions that Invest Directly in Corporations • Insurance, Endowments, Utilities, etc. • $1-5 Billion Available

  3. Private Equity – Investor Imperatives • Funds: • Investors: Pensions, Endowments, Trusts, etc. • Life: 10-12 Years • 3-7 Yr Investment Horizon • Objective: IRR/ROI to Investors (Improved Financial Returns) • Institutions: • Corporations, Pensions, Endowments • Life: 5-10 Years (but Annual Budgets) • Objective: Profitability, Strategic Income

  4. Private Equity–Investors’ Investment Criteria • Management Focus • Technical & Commercial Success Consistent with Capital Use • Business Plan • Exploration to Acquisition – Price/Cost Dependent • Scale • Need to “Move the Meter”

  5. Private Equity – Int’l Interest/Experience (Drivers) • General Funds: (Large Percentage) • Need for Scale • World-Wide Organizations • Energy Funds: (Small Percentage) • Larger Funds – Need for Scale • Smaller Funds – Strategic, Only • Institutions: (Very Small Percentage) • Larger Entities • World-Wide Organizations

  6. Algerian Investment - Generic Board Issues: • Management Experience (Technical & Business Capacity/Application) • Strategic Impact on Existing/Future Operational Focus • Effect on Monetization Appeal/Timeline (Key) • Capture Risk/Opportunity Costs • Execution Risk – Once Captured, Capacity to Manage to Conclusion • Technical/Operational Expertise Required (Internal/External) • Capacity of Financial Board Members to Assist (Industry Contacts, Financing Strategies/Execution) • For Certain, If Move – Will Enjoy Financial Credibility

  7. Conclusion • Private Capital Large, Getting Larger, Sophisticated, Entrepreneurial • Beginning to Move Internationally • Warburg Pincus, Blackstone, Lime Rock, Yorktown, etc. • Will Attract Best and Brightest • Will Expand to Meet Risk-Adjusted Financial Opportunity

  8. Contact COSCO Capital: Cameron O. SmithSenior Managing Director67 Park Avenue, Suite 530New York NY 10016212/889-0206 (phone)212/696-4343 (fax)cos@coscocap.com William E. WeidnerManaging Director30 Tower Lane, 4th FloorAvon CT 06001860/677-6345 (phone)860/677-6569 (fax)wew@coscocap.com Lane W. McKayManaging Director 501, 304-8th Avenue SWCalgary AB T2P 1C2403/237-9462 (phone)403/237-9464 (fax)lwm@coscocap.com T. Prescott (Scott) KesseyPrincipal1001 N Fannin, Suite 550Houston TX 77002713/654-8080 (phone)713/654-9090 (fax)tpk@coscocap.com Sharon L. YoungerSenior Associate5139 E. 75th St.Tulsa OK 74136918/477-9213 (phone)918/477-9214 (fax)sly@coscocap.com Reva A. WhiteAssociate1001 N Pasadena, Suite 88Mesa AZ 85201-3523480/649-5048 (phone)801/457-6177 (e-fax)reva@coscocap.com www.coscocap.com

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