From: Matio Giannini (mailto:mgiannini@hamiltonlane.com] Sent: Thursday, March 06, 2008 8:51 AM To: Harts, Britt; MacDonell, Allen Subject: Jim Lee Britt and Allen: | sat down with Jim Lee the other day in NY. It was a good discussion and all macro about how public pension funds look at things or do things and what other funds are doing or thinking. We talked a lot ‘about the political or headline risk around pubic funds and ways funds get ahead of that. The only specific “deal” discussion was on Encap and Encap’s thoughts regarding Hamilton Lane’s response time. He is, as you know, a very strong supporter of your programs and initiatives and was extremely complimentary of what you are doing. That's it. Mario‘Meeting Memorandum os: EnCap Energy infrastructure Fund, LP. * oe? HAMILTON LAN To: Tnvesiment Commitee From: Due Diligence Date: November 10, 2008 Status: Internal Use Oniy Meeting Date: October 27, 2008 GP Attendees EnCap: Martin Philips and Gary Petersen Flatrock Eneray: Bil Waldrip and Billy Lemmons HL Attendees: Mike Kelly and Drew Kolb ‘Meeting Conclusions: * The Flatrock professionals are very well connected within the midstream indusiy and are experienced in advising and evaluating midstream investments. + EnCap has a strong prior track record but their expertise isin the upstream sector. For this reason, the Flatrock team will be responsible for the origination of investment opportunities and day-to-day activities. The EnCap professionals wil only spend 10%-15% of their fime on the Fund. + EnCap and Flatrock have worked together in the past but this is the first time Flalrock will be working exclusively alongside of EnCap. Although the organizations will be working together, the teams will stay separate of one another and each will perfrom their respective roles. The team's cohesiveness is unknown at this point, + The General Partner has recently made midstream investments using capital from Fund Vil. Upon closing EEiF, the General Pariner will sell two-thirds of each midstream Fund VII investment to EEIF at cost, while keeping one-third of each investment in Fund Vil. Fund Information: General Partner: EnCap Investments LP. ["EnCap)) Fund: EnCap Energy Infrastructure Fund, L.P. ("EEIF") Firm inception: 1988 Target Size: $750 milion Hard Cap: Not Provided Strategy: Energy Infrastructure Growth Capital Transaction Range: Not Provided Investment Range: $25 milion - $75 milion No. of Investments: Not Provided Geography: North America Team 19 EnCap Investment Professionals, 10 Fiatrock Investment Professionals 1 EnCap IR Professional, 5 EnCap Administrative Employees Locations: San Antonio TX, Houston, TX, Dallas, TX, and Edmond, OK Industries: Midstream Oil and Gas Competitors: Not Provided Closing Schedule: first Close: November 2008; Final Close: March 2009 Target Retums: 25% IRR and a 2.0x on invested capital The attached report is intended solely for the clients and employees of Hamilton Lane. It contains confidential and proprietary Hamilion Lane information 1‘Meeting Memorandum os: EnCap Energy Infrastructure Fund, LP. oe Prior Funds: Private Equity Fund 1994 $105 Private Equity Fund i 1996 n5 Private Equity Fund it 1997 480 Private Equity Fund iV 2001 225 Private Equity Fund V 2004 825 Private Equity Fund Vi 2006 1,500 Private Equity Fund Vi 2007 2,500 + EEIF will be EnCap's fist fund dedicated to midstream investments. EnCap’s Prior Funds have focused on upstream investments, Contact: Hallie Kim, the General Partner, 713-659-6100 Key Terms: Invesiment Period: 5 years Fund Term: 10 years; + two one-year extensions Management Fee: investment Period: 2% of committed capital Post-Investment Period: 1.5% of invested capital Fee Offset: 100% Cany/Hurdie: 20% / 8% preferred retun GP.Commitment: 2% Key Person: Not Provided “Organization: * EnCap has generally sought investment opportunities in the upstream sector of the of and gas industry and has limited experience with midstream investments. As such, EnCap has entered into an agreement with Flatrock Energy Advisors, LLC {'Flalrock’), a midstream advisory firm. + Flatrock has effectively terminated its advisory business, and the Flatrock team is expected to devote substantially all ofits fime investing and managing EEF. + EnCap and Flatrock have entered into a three fund commitment, + EnCap and Flatrock are the sole managing members of the General Partner. + EnCap owns 70% of the General Partner and holds four of the seven seats on the investment commitiee. Flatrock owns 30% of the General Partner, holds three of the seven seals on the investment committee and will manage the day-to-day operations. + Flatrock is expected to hire one or two additional investment professionals. The attached report is intended solely for the clients and employees of Hamilton Lane, It contains confidential and proprietary Hamilton Lane information 2Meeting Memorandum EnCap Energy Infrastructure Fund, L.P. ‘Organization (cont'd): Senior Partners: Davia Miler Eneap Prneipal/Co- 20. « Present of PMC Reserve Acaqustion Company [17881996] founder 3 Co-CEO of MAZE Exploration (1981-198), Gory Peterion| Encop Prneipal/ Co: 70 Serior VP of ne Corporate Finance Divo ofthe Eneroy Bonking Toone Group for Repub Bank (1985-1988) 1 Biacutve VP for Niles Ox ond Gos Company (1979-1984), Mastin Pais Encap _Pincipal_-«=«1_—_ Senior VPin he Energy Banking Group of Naonsank (1987-1969 Robert Zovich Encop Principal Co- 20. * Seri VP Inst Company of the West. « pension fund manoger Tounder + Co-CEO ond co-founder of MAZE Exploration, Dennis Joost Florock fxacuve YP /—7—# COO for Enogex Senior Poner \VP ond Regional Manager wih Delhi Fipoine Corporation (198- 1997, Willam Lemmons. Flokock Executive VB & —» VP wh frvon Corporation (1992-2002) Senior Parner + Project Development Enginger for Texos Oi & Gos Corporation (1987 981 Villar Woldkip ——Flahock President Senior 7» COO for he Lows Energy Group (1998-2000) Posner / Founder Heldvaious postions a! Dah Pipeline Corporaon (980-1997) Track Record: = EnCap’s Prior Funds have consisted mainly of invesimenis in the upstream sector + EnCap's track record within the midstream space includes four transactions totaling $103.2 milion of capital invested for realized proceeds of $208.1 million and unrealized value of $396.3 million, generating a 5.9x ROI and a 63.8% Gross IRR. cn) ae Rr pare SE ed Berea rot) cee) ee hears Private Equity Fund | 1994 $198 19x Private Equity Fund 1996 a2 0 12 Private Equity Fund! 1997 980 326 29% Private Equity Fund Iv 01 529 365 157 2.9% Private Equity Fund V 2004 792 404 1.261 21x 50% Private Equity Fund vi 2006 610 134 671 32% Private Equity Fund vi 207 3 236 1.2 N/A Total $2,801 33.225 $2617 21x N/A * Flatrock has not invested capital through a fund structure in the past, but does have a track record of investing capital on behalf of large midstream companies. ‘he attached report is intended solely for the clients and employees of Hamilton Lane. If contains confidential and proprietary Hamilton Lane information, 3‘Meeting Memorandum EnCap Energy Infrastructure Fund, L Track Record (cont'd): ‘Strategy & Market: * ELIF seeks to be a lead investor in midstream oi! and gas opportunities, In most Cases EEIF will be the sole investor and have board contol + EEIF will provide growth capital to proven midstream management teams but on occasion will buy a business and restructure management. * The Flatrock team will be responsible for the origination of investment opportunities stemming from their prior midstream relationships developed over the past 30 years. * According to the General Partner, deal flow is expected to originate from 50 upstream-focused companies that EnCap currently is invested in. These companies are actively investing in opportunities ‘across the oil and gas provinces of North America and many of these opportunities require midstream and infrastructure investment, + EEIFs capital will be used to invest in greenfield development projects or used to make acquisitions. + EnCap invests differently than a typical private equity fund in that it commits capital fo each investment through tranches rather than in one lump sum at the beginning of the investment, The General Poriner believes that this allows EnCap to exit from a poorly performing investment and reduces the entire risk of the portfolio. Recommendation: Decline the investment opportunity. The attached report is intended solely for the clients and employees of Hamilton Lane. It contains confidential and proprietary Hamilton Lane information 4‘Meeting Memorandum os: EnCap Energy Infrastructure Fund, L.P. a EnCap Energy Infrastructure Fund, LP. Team 5 4 Competitive Positioning Track Record ‘Score 33 35 Competitive Positioning a Weighted Average aa The GPRS is a proprietary model developed by Hamilton Lane to evaluate each General Partner and provide a means to compare one fund to another on a more quantitative basis. Each of the three categories (Team, Track Record, and Competitive Positioning) is comprised of several subcategories which ore weighted and totaled to create an overall value for the fund. The ratings for each category and subcategory are 1 through 5, with 5 being the best. ‘The attached report is intended solely for the clients and employees of Hamilton Lane, It contains confidential and proprietary Hamilton Lane information. 5