1. adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 Headwaters Coal-to-Liquids Technologies Theo L.K. Lee Headwaters Technology Innovation Group 1501 New York Avenue Lawrenceville, NJ Nov 11/04 Washington D.C.

2. 2 adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 Corporate Vision At Headwaters Incorporated, our singular focus is to create value through innovative advancements in stewardship of natural resources throughout the world.

3. 3 adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 Headwaters at a Glance Diversification Across the Coal Value Chain

4. 4 adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 Corporate Fact Sheet Pro forma TTM revenues 30JUN04: $834 million Market capitalization >$1 billion 4,000 employees Headquartered near Salt Lake City, Utah Publicly traded company (NASDAQ symbol: HDWR) Website: www.hdwtrs.com

5. 5 adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 Headwaters Technology Innovation Heavy Oil Upgrading Efficiently upgrades heavy oils such as oil sand bitumen into light syncrude using a nanocatalyst Direct Coal Liquefaction End result of $3.6 billion US government funded R&D programs to convert coal directly into oil Indirect Coal Liquefaction Fischer-Tropsch catalyst and process for converting coal into ultra-clean transportation fuel and chemical feedstocks Nanotechnology Nanocatalysts with extraordinary performance charact- eristics used in manufacturing chemicals, fuel cells and emissions control 6 nm

6. 6 adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 Direct Coal Liquefaction Convert low cost coals to clean transportation fuels and petrochemical feedstocks 1 st license to Shenhua Group’s Inner Mongolia pioneer plant (50,000 BPSP from12,800 TPSD of coal) –$26 to 30/bbl equiv. crude oil price –$2.2 billion capex 2 nd project – feasibility study for Oil India Ltd. Enquiries include – –South Africa, Mongolia, Philippines, United States

7. 7 adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 Coal Derived Liquids PropertiesNaphthaDiesel Density, g/cm 3 (20 o C) Viscosity, mm 2 /s (20 o C) Potential Aromatic, w% S, ppm N, ppm Cetane No. Flash Point, o C Solidification Point, o C Cold Filter Plugging Point, o C Oxidation Sludge, mg/100ml 0.7641 - 68.8 <0.5 <0.3 0.8648 3.69 81.9 <5 <1 46.7 76 -26 -90

8. 8 adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 Indirect Coal Liquefaction Gasification followed by Fischer Tropsch Synthesis to form ultra clean straight hydrocarbons Lower efficiency as a standalone plant Improved efficiency with poly-generation configuration License through FT Solutions LLC. (JV with Rentech, Inc.) Completed two feasibility studies for China Started FEED of an ammonia revamp project in Illinois Two other FS in progress in U.S.

9. 9 adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 FT Diesel – an ultra clean fuel Cetane No. >70 Zero Sulfur No aromatics

10. 10 adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 FT Diesel Exhaust Emissions are Lower than Typical #2 Diesel Emissions Relative to a Typical Diesel Fuel (Percentage)

11. 11 adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 Cost Estimates for FTD FOB Diesel Cost ($ Barrel) Feedstock Cost ($/mmbtu) Natural Gas 21 42 63 Current CARB Diesel 1.002.003.000.501.502.503.50 Coal & Coke

12. adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 Under the current high oil price and unstable supply scenario, coal-to-liquids is a viable option for providing clean transportation fuels and petrochemical feedstocks in the United States

13. 13 adding value to energy™ Producing Energy: Emerging Technologies Nov 11/04 Pueblo, Colorado GTL Plant