SO YOU THINK YOU WANT TO START AN OIL AND GAS COMPANY?

Transcription

1 SO YOU THINK YOU WANT TO START AN OIL AND GAS COMPANY? Petroleum Engineers Club of Dallas. April 11, 2014 Martin V. Fleming, Co Founder and Managing Director

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3 THE INFORMATION CONTAINED IN THIS PRESENTATION IS HIGHLY CONFIDENTIAL. EXCEPT AS REQUIRED BY LAW OR REGULATORY REQUIREMENTS, BY PARTICIPATING IN THIS PRESENTATION, YOU AGREE TO MAINTAIN THE CONFIDENTIALITY OF THE INFORMATION CONTAINED HEREIN AND AGREE THAT YOU WILL NOT REPRODUCE OR DISTRIBUTE SUCH INFORMATION TO ANY OTHER PERSON OR USE SUCH INFORMATION FOR ANY PURPOSE OTHER THAN TO EVALUATE YOUR POTENTIAL PARTICIPATION IN AN OFFERING OF THE INTERESTS OF THE FUND. ACTUAL RETURNS ON INVESTMENTS WILL DEPEND ON, AMONG OTHER FACTORS, FUTURE OPERATING RESULTS, THE VALUE OF THE ASSETS AND MARKET CONDITIONS AT THE TIME OF DISPOSITION, LEGAL AND CONTRACTUAL RESTRICTIONS ON TRANSFER THAT MAY LIMIT LIQUIDITY, FEES AND ANY RELATED TRANSACTION COSTS AND THE TIMING AND MANNER OF SALE ALL OF WHICH MAY DIFFER FROM THE ASSUMPTIONS AND CIRCUMSTANCES ON WHICH THE TARGET RETURNS CONTAINED IN THIS PRESENTATION ARE BASED. ACCORDINGLY, THE ACTUAL RETURNS ON INVESTMENT MAY DIFFER MATERIALLY FROM THE TARGET RETURNS INDICATED IN THIS PRESENTATION. IT IS ANTICIPATED THAT THERE WILL BE NO SECONDARY MARKET FOR THE INTERESTS IN THE FUND AND CERTAIN STATEMENTS CONTAINED IN THIS PRESENTATION ARE BASED ON CURRENT EXPECTATIONS, ESTIMATES, PROJECTIONS, OPINIONS AND BELIEFS OF THE SPONSORS OF THE FUND. SUCH STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS, AND UNDUE RELIANCE SHOULD NOT BE PLACED THEREON. ADDITIONALLY, THIS PRESENTATION CONTAINS FORWARD LOOKING STATEMENTS. ACTUAL EVENTS OR RESULTS OR THE ACTUAL PERFORMANCE OF THE FUND MAY DIFFER MATERIALLY FROM THOSE REFLECTED OR CONTEMPLATED IN SUCH FORWARD LOOKING STATEMENTS. CERTAIN ECONOMIC AND MARKET INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM PUBLISHED SOURCES PREPARED BY THIRD PARTIES AND IN CERTAIN CASES HAS NOT BEEN UPDATED THROUGH THE DATE HEREOF. WHILE SUCH SOURCES ARE BELIEVED TO BE RELIABLE, NEITHER THE FUND, ITS SPONSORS, ADVISORS, NOR THEIR RESPECTIVE AFFILIATES, AGENTS OR EMPLOYEES ASSUME ANY LIABILITY OR RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION AND TAKE NO RESPONSIBILITY FOR ANY LOSS OR DAMAGE SUFFERED AS A RESULT OF ANY OMISSION, INADEQUACY OR INACCURACY THEREIN. RECIPIENTS ACKNOWLEDGE THAT NO REPRESENTATION OR WARRANTY IS GIVEN AS TO THE ACCURACY OF ANY OF THE INFORMATION CONTAINED IN THIS PRESENTATION. DISCLAIMER INTERESTS IN THE FUND HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT, OR ANY STATE OR OTHER SECURITIES LAWS OR THE LAWS OF ANY NON US JURISDICTION THE INTERESTS WILL BE OFFERED AND SOLD FOR INVESTMENT ONLY TO QUALIFYING INVESTORS PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY SECTION 4(2) THEREOF AND REGULATION D OR REGULATION S PROMULGATED THEREUNDER AND IN COMPLIANCE WITH THE APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS (INCLUDING NON U.S. JURISDICTIONS) WHERE THE OFFERING WILL BE MADE. THERE WILL BE NO PUBLIC MARKET FOR INTERESTS IN THE FUND, AND THERE IS NO OBLIGATION ON THE PART OF ANY PERSON TO REGISTER THE INTERESTS UNDER THE SECURITIES ACT. INTERESTS IN THE FUND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND ANY APPLICABLE NON U.S. SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE TRANSFERABILITY OF THE INTERESTS WILL BE FURTHER RESTRICTED BY THE TERMS OF THE FUND S GOVERNING DOCUMENTS. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF AN INVESTMENT IN THE FUND FOR AN INDEFINITE PERIOD OF TIME. THIS PRESENTATION IS NOT AN OFFER OR INVITATION FOR SUBSCRIPTION OR PURCHASE OF OR A RECOMMENDATION OF SECURITIES IN ANY JURISDICTION. IT DOES NOT TAKE INTO ACCOUNT THE INVESTMENT OBJECTIVES, FINANCIAL SITUATION AND PARTICULAR NEEDS OF ANY PROSPECTIVE INVESTOR. THIS REPRESENTATION IS NOT INTENDED TO CONSTITUTE, AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONDUCT ITS OWN INDEPENDENT INVESTIGATION AND ASSESSMENT OF THE CONTENTS OF THIS PRESENTATION AND THE MERITS AND RISKS OF AN INVESTMENT IN THE FUND, AND MAKE SUCH ADDITIONAL ENQUIRIES AS IT DEEMS NECESSARY OR APPROPRIATE.

4 Since engineers love facts, let s start with a little evidence. 2014

5 GMF Energy strategically acquires and manages non-operated oil and natural gas working interest that has: 1) Current income based on the purchase of predominantly producing Interests with the opportunity for growth through additional future development; GMF ENERGY OBJECTIVES 2) Superior returns due to strategic asset access and selection; and 3) Long-term value based on reserve replacement through new drilling opportunities and strong management.

6 Garrett S. Mayer Garrett S. Mayer Co Founder and Managing Director. Garrett Mayer is Co Founder and Managing Director of the Manager, heading business development and acquisition strategy. Prior to founding the Manager, Garrett joined Five States Energy, LLC in July 2012 as Director of Business Development. With a knack for networking, he s well connected and is typically introduced as one of those people who knows everybody. His primary responsibilities at Five States involved planning, implementing and leading business development, sales and marketing efforts for the firm. He provided sales leadership and strategic direction for the business development team, and he also kept current on market trends and competitive activity. Prior to joining Five States, Garrett was President of GSM Interests, Inc. where he managed oil and gas properties and evaluated and identified new investment opportunities. There he managed minerals underlying 80,000 gross acres and more than 1,000 producing wells, and monitored surface operations on more than 21,000 acres of family owned ranch land. Before GSM Interests, Garrett was Director of Industry Relations at Drillinginfo. During his nine year tenure, he created and managed sales and customer support teams, launched a Denver office and played a key role in growing the company s revenue from $1 million to $25 million. Martin V. Fleming Martin V. Fleming Co Founder and Managing Director. Martin Fleming is a Co Founder and Managing Director of the Manager, with principal responsibilities for Partnership development, partner relations and corporate administration. Previously, Martin served as a Senior Vice President at Noble Royalties, Inc., with roles in investor relations, acquisitions, communications, government affairs and fund management. At Noble, Martin served on the Investment Committee and over seven years was affiliated with more than $1 billion in fund placements. Prior to joining Noble, Martin served as Executive Vice President of the Texas Independent Producers and Royalty Owners Association, the country s largest state trade organization representing independent oil and gas operators. He began his career in the oil and gas industry serving as a Special Assistant to U.S. Secretary of Energy Bill Richardson. He also serves as a partner with Sophis Energy, LLC. Martin holds a BA in Latin American Studies from the University of Texas at Austin and a MA in Latin American Studies from Tulane University. He is a past fellow of the National Endowment for the Humanities. Martin serves on numerous industry boards including Petroleum Engineering Advisory Board at the University of Texas at Austin, Texas Energy Council, National Association of Royalty Owners ( NARO ), NARO TX, Western Energy Alliance and the Louisiana Oil and Gas Association. MANAGEMENT TEAM In his spare time, Garrett can be found doing one of three things: spending time with his wife and daughter, watching sports any sport, or playing golf. Martin has been married for 20 years and has two children aged 17 and 14. He is an Eagle Scout and continues to be active in leadership roles in his son s Boy Scout Troop. He enjoys traveling, golf and tennis in his free time.

7 Get the right people on the bus...

8 ... But sometimes it is cheaper to rent than own

9 CLEARLY ARTICULATE VALUE PROPOSITION

10 GMF ENERGY BENEFITS INCOME

11 UNIQUE RELATIONSHIPS AND ACCESS TO DEAL FLOW GMF ENERGY BENEFITS GMF s unique, deep relationships mean superior access to deals that are not available on the market.

12 GMF ENERGY BENEFITS INFLATION HEDGE

13 TAX ADVANTAGED GMF ENERGY BENEFITS Please consult your own tax professional for a complete discussion of the tax Implications for you.

14 GMF ENERGY BENEFITS GROWING OPPORTUNITY SET

15 GMF ENERGY BENEFITS CRITICAL POINT OF DIFFERENCE

16 A FEW PERHAPS WITTY OBSERVATIONS FROM THE FIRST YEAR

17 Everyone loves your idea, until you ask for money

18 So, It will take way longer than you wish or need

19 You must capitalize in a way that allows you to make it

20 RAISING THE MONEY

21 Which comes first, money or property? A few observations regarding raising money today.

22 You are going to have to Start here.

23 The pitch...

24 The pitch...

25 The pitch...

26 The reality... Equity providers love names they already know. MONEY LIKES TEAMSTHEY KNOW

27 The reality... Equity providers will prefer less return with companies they know MONEY LIKES NAMES THEY KNOW

28 So, how do you find the right partners?

29 Afew more realities Your first couple of raises will have to be friends and family Your partners will make money, but you probably won t on your first couple of deals Institutional investors rarely invest in new teams, no matter how good the asset Family offices are conservative and take patience A good partnership brings strengths to the table that you don t have on your team You will have to teach your partners oil and gas They might know spreadsheets and public equities, but no matter what they say they don t understand decline curve math

30 STRATEGY FOR SUCCESS

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32 No matter what, you are going to be wrong

33 There is a tremendous opportunity in front of us

34 Match the opportunity to your capital providers needs

35 Guard against strategy drift but be willing to adapt

36 A FEW ADDITIONAL OBSERVATIONS

37 Spend the time (AND MONEY) to structure properly

38 Be an expert at accounting, finance and management

39 Stay focused on the things the drive value Messing

40 Stay focused on the big picture. It will be worth it!

41 SO YOU THINK YOU WANT TO START AN OIL AND GAS COMPANY? Petroleum Engineers Club of Dallas. April 11, 2014 Martin V. Fleming, Co Founder and Managing Director