Alternative Investments Division Click to edit Master subtitle style TCW Asset Management Company A...

Alternative Investments Division

Click to edit Master subtitle style

TCW Asset Management Company

A Market Leader in Energy & Infrastructure Investing

TCW ENERGY & INFRASTRUCTURE GROUP Alternative Investments Division

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TCW Overview

• Established in 1971 in Los Angeles, California

• Approximately $120 billion under management or committed to management as of September 30, 2008

• Approximately 1,430 institutional and private clients

• TCW Staff of over 655 individuals, including 390 investment and administrative professionals

• The TCW Group, Inc. (TCW) is an indirect subsidiary of Société Générale, S.A., and a member of the Société Générale Asset Management (SGAM) division

• Offices:

Los Angeles

New York

Houston

London

Sydney


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TCW Energy & Infrastructure Group

• Among the leading institutional providers of capital to the energy sector globally

– Singular focus on energy and energy-related infrastructure

– Broad offering of capital to industry (senior debt through equity)

– Global investment focus (invested in 30 countries on 6 continents)

– TCW’s first alternative product (1982)

• 27-year track record; the longest in the industry

– 14 prior funds

– Current assets under management of $7 billion in energy globally

– 260+ portfolio investments

– Demonstrated investment performance through multiple commodity and business cycles

• Strong and consistent performance over 27 years

• Global investment platform

– 35 investment professionals

– Operate from offices in Los Angeles, Houston, New York, London and Sydney


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Target Market

• Actively investing throughout the energy value chain on a global basis

Upstream Infrastructure Midstream Gas to Liquids Transportation Gas to Electrons

Reserve-based DevelopmentProduction Payments

Forward Oil Sales

PipelineGathering Systems

Processing FacilitiesGas StorageBunkering

LNG TankersSpecialty Tankers

VLCC Vessels

Production PlatformsDrill Ships

FPSOsDrilling Rigs

LNGSynfuels

Processed Gas(methanol, fertilizer, DME)

LNG Regasification TerminalsGas Sales, Pipelines,

Gas-Fired Power Plants,Electricity T&D

Renewables

WindSolar

BiofuelsGeothermal


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EIG History

• Capital Raised: $10 billion

• # Funds: Currently investing 14th fund

• Invested Capital: $9.7 billion

• # Investments: 260+ Investments

• Current Outstanding: $4 billion

• Capital Available Today: $1.2 billion

TCW’s Energy & Infrastructure Group has had a consistent presence in the energy markets over the last 27 years.

The TCW Energy & Infrastructure Group’s History of Success in all Markets


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EIG Product Platform

Product Platform Active Funds

Mezzanine and Equity Fund XIV, Cogen & ECEF

Senior Debt GPF III

High Yield Senior GPF II

Special Situations TEP and Separate Accounts

Broad offering of capital to industry, offering senior debt through to equity

Breakdown of Committed Funds (as at December 2008)

Senior Debt,

$2,734.0

Mezzanine and

Equity, $6,821.0

Special

Situations,

$502.0


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EIG Investment Breakdown – FYE 2008 $2.2 Billion

Upstream

O&G $841.8

Other Infra.

$15.0 Midstream

O&G $236.5

Other O&G

$40.0

Power

$489.1

Transport.

$95.0

Mining

$235.0

Other

Energy

$30.0

Investments By Sub-Sector

As at Dec 2008, In $ Millions

Investments By Ranking

As at Dec 2008, In $ Millions

Investment

Grade $186

Mezzanine

$1,584

Equity $110

High Yield

$351

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Oil and Gas Risk/Return Profile

EquityEquity

Pref. EquityPref. Equity

MezzanineMezzanine

VPPVPP

Senior DebtSenior Debt

TCW Sweet Spot

Risk

Return

PDP PDNP PUD PROB/POSS Exploration Prospects

Engineering Risk Geological/Geophysical Risk

TCW’s focus is on engineering and development risk, not geological and exploration risk

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Capital Markets

Relative Equity Performance

0%

50%100%

150%

200%

250%300%

350%

2004 2005 2006 2007 2008

DJIA S&P 500 DJ Energy Sector

Oil and Gas Prices

$0

$40

$80

$120

$160

2004 2005 2006 2007 2008

$0$2$4$6$8$10$12$14$16

WTI Oil HH Gas

Credit Spreads

0

24

68

10

1214

16

2004 2005 2006 2007 2008

%

BBB BB B

2008 Issuance

$0

$10

$20

$30

$40

$50

Jan-08

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Jul-08

Aug-08

Sep-08

Oct-08

Nov -08

Dec-08

bln

High Yield Issuance Leveraged Loan Issuance

Source: Bloomberg, Morgan Stanley

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Recent Trends

Last Few Years:

• Great time to be an issuer of capital

• Abundance of private equity, public equity, and cheap debt capital

• Widely syndicated debt issuances with generous credit terms

• New and less experienced investors/lenders

• Active M&A market with increasing asset valuations

Today:

• M&A and capital markets have dried up

• Bank re-determinations putting pressure on corporate balance sheets

– Borrowing Base reductions and overadvances coming due with little or no ability to refinance

– Unappealing prospects of obtaining amendments from broad group of lenders with limited E&P experience

• E&P companies forced to high grade projects and live within cash flow

• Resource play economics largely depend on entry/acreage costs

• Investors/Lenders presented with appealing risk/return opportunities in the high yield debt markets


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Disciplined, Value-Oriented Approach to Investing

• TCW’s Current Investment Bias• Stay the course: continue to focus on quality management teams and assets

• Presented with opportunities that historically we would not have seen

• Investment Size: $100-200 million

• Patience

• Keys to EIG investment style• Hard assets with long useful life

• Bottom-up internal technical analysis

• Secured by shares or assets

• Transparency to cash flow

• Active management through covenants and board presentation

• Upside potential through equity participation

• Experienced E&P Staff• Based in Houston

• 12 professionals with 5 petroleum engineers

• Senior people each have over 25 years of E&P experience

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Recent TCW Deals (Q4 2008)

• California Steam Flood

– $250 million senior secured debt facility

– Interest Rate + Variable NPI

• Resource Play Development

– $200 million senior secured debt facility

– Interest Rate + NPI

• Australian Offshore Development

– $100 million subordinated debt facility

– Interest Rate + Warrants


TCW Contact Information

Houston Office:333 Clay Street, Suite 4150Houston, TX 77002713-615-7400 Main713-615-7460 Fax

Kurt Talbot 713-615-7426 [email protected] Hickey 713-615-7413 [email protected] Taylor 713-615-7410 [email protected] Taylor 713-615-7423 [email protected] Tharp 713-615-7437 [email protected] Meador 713-615-7425 [email protected] Punches 713-615-7415 [email protected]

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