EnCap Investments L.P. 1 IPAA Midyear Meeting 2008 Denver, Colorado July 21, 2008 Jason DeLorenzo, Managing Director

EnCap Investments L.P. 2  Provided over 150 companies with growth capital  Managed aggregate capital commitments of $6.5 billion  EnCap acts as a fiduciary for institutional investors and is responsible for investment decisions and management of the portfolio (no LP influence)  Consistent returns across multiple industry price cycles  Commencing fundraising efforts for EnCap Energy Infrastructure Fund, L.P., a midstream-focused fund Overview Leading provider of capital to the independent sector of the U.S. oil and gas industry since 1988

EnCap Investments L.P. 3 Organization Brent Bechtol Mng. Dir. Jason DeLorenzoMng. Dir. Murphy Markham Mng. Dir. Jason McMahonMng. Dir. Sean SmithMng. Dir. Wynne Snoots Mng. Dir. Doug SwansonMng. Dir. Mark BurroughsVice Pres. Mitch HovendickVice Pres. Brad ThielemannVice Pres. Mark Welsh Vice Pres. Matt Crystal Assoc. Ryan DevlinAssoc. Kyle Kafka Assoc. Scott Smetko Assoc. UPSTREAM FUND ENCAP INVESTMENT STAFF ADMINISTRATIVE STAFF Bobby HaierCFO Melissa StandleyTax Manager Donna WrightController John Stricker Sen. Acct. Audrey White Sen. Acct. David Miller Partner Gary PetersenPartner Marty PhillipsPartner Bob ZorichPartner PRINCIPALS INVESTOR RELATIONS Hallie KimMng. Dir. INFRASTRUCTURE FUND FLATROCK INVESTMENT STAFF Billy Lemmons Partner Dennis JaggiPartner Bill Waldrip Partner Dennis McCanlessMng. Dir. Bryan DanmierSen. Eng. Cat McMindes Engineer Eric WinscherEngineer Pam JauerEng. Analyst Tommy WaldripAnalyst Jana JacksonAnalyst Raji Hoffman Admin. Manager

EnCap Investments L.P. EnCap Energy Capital Fund VII  Fund Size: $2.5 billion  150+ limited partners  Consists of public pensions, insurance companies, university endowments, energy banks, foundations and wealthy family trusts  Investment Mandate  Private Equity  Transaction Size: $40MM to $200MM  Upstream Sector  Focused on North America (select international investments) 4

EnCap Investments L.P.  Honesty, Integrity and Forthrightness  Strong technical and operational backgrounds  Well-defined business plan / value creation strategy consistent with experience  Adaptability  Common understanding of risk management  Receptive to “partnership” relationship Management Team Attributes 5

EnCap Investments L.P. Alignment of interests:  Skin in the game  Incentive structure - they make money when we do  Involved in everything they are doing Competitive advantages:  Geographic focus  Land position  Technical/operational niche  Business development/relationships 6 EnCap Investments L.P. EnCap Considerations

EnCap Investments L.P. 7 Management Considerations Economic considerations:  Terms  Capital available (size of provider)  Required management contribution (skin in the game) Relationship considerations:  Cultural “fit”  Track record / reputation  Understanding of the industry (seen both up and down cycles)  Source of deal flow

EnCap Investments L.P.  Lower-risk drilling strategies  Resource plays / unconventional gas  Acquisition of acreage in known producing provinces with limited initial capital exposure. As drilling success warrants and as hard value is created the capital program is “ramped up” for acreage and drilling.  Joint venture partnerships with large independents and majors with “long” land positions  Value creation through the application of new technologies to conventional reservoirs with inconsistent production histories  Traditional acquire and exploit strategies  Infrastructure opportunities related to successful development drilling Private Equity Company Strategies 8 EnCap Investments L.P.

Equal emphasis on capital preservation and value creation Investment Strategy / Philosophy  Back seasoned management teams with compelling business plans and like-minded approach to risk management  Multi-basin strategy provides asset diversification  Capital generally advanced in tranches as attractive opportunities are presented and proof of concept is established  Engineerable reserve value substantially underpins invested capital  Sell assets when the market will pay a premium 9

EnCap Investments L.P.  Proven money-makers have demonstrable track record of creating value  Initial commitments typically larger  Receive somewhat more favorable terms  Greater upfront spending flexibility  Unproven teams  Typically betting on a strong technical / business development team coming out of a large independent or major  Early focus on strategy and risk management Differentiation between Proven and Unproven Teams 10

EnCap Investments L.P. Private Equity Myths  Over involved in business  Exercise too much control / influence  Board representation is a function of size of investment  19 out of 20 times we say “yes”  Do not tell people who to... what to... when to...  Generally do not require anything more than banks  Impatient money 11

EnCap Investments L.P. Deal Structure / Management Incentive  EnCap generally contributes 95%+ of equity capital  Company is organized as a tax efficient flow-through vehicle, usually an LLC  Capital structure incorporates senior bank debt in addition to private equity  Multi-tiered “waterfall” back-in arrangement positions management to earn a blended 20%-25% of the company  Structure produces alignment of interest between EnCap and management  Both EnCap and management have board representation 12

EnCap Investments L.P.  Drilling success  Category shifting  Premium for size  Public/private market arbitrage  Being someone’s “strategic acquisition”  Running room  Captured sufficient land  Repeatability of proven concept Value Creation – About more than buying low and selling high 13 EnCap Investments L.P.

What makes a quality asset? Hard to generalize, but… 14  Operated – control your destiny  High value drilling economics  Long life  Abundance of upside opportunities  Multiple pay horizons, infill drilling, field extensions…  High margin  Low transportation costs/differentials (infrastructure)  High btu gas/sweet crude  High net revenue interest (NRI)  Bottom line: is someone else going to want to buy it from you? EnCap Investments L.P.

15 EnCap Investments L.P. EnCap Energy Infrastructure Fund, L.P.  EnCap has had success with midstream investments in the past  Flatrock principals average nearly 30 years of experience each, working as a team  Provide technical expertise and deal flow  Significant investment opportunity in midstream as a result of large E&P budgets, particularly in the resource plays  Will adhere to EnCap’s core philosophies  Value creation and capital preservation  Partner with seasoned management teams  Alignment of interest  Risk management A midstream focused fund with a dedicated investment staff of midstream professionals

EnCap Investments L.P. 16 EnCap Investments L.P. Flatrock’s Extensive Industry Contacts – Over 125 Clients Eagle Rock Energy, inc.

Jason DeLorenzo, Managing Director Copyright EnCap Investments L.P 2007 Houston Office 1100 Louisiana Suite 3150 Houston, TX (713) Dallas Office 3811 Turtle Creek Blvd. Suite 1080 Dallas, TX (214)