ALTERNATIVE INVESTMENTS: OPPORTUNITIES IN ENERGY INVESTING

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A

LTERNATIVE

I

NVESTMENTS

:

O

PPORTUNITIES

IN

E

NERGY

I

NVESTING

Webinar - June 12, 2014

Panelists

Marietta Moshiashvili – TIAA-CREF

Frank Conley – Freepoint Commodities

Thomas Warren – Sutherland

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©2014 Sutherland Asbill & Brennan LLP

Presentation Overview

• Introduction

• Current and Developing Alternative Investments – the

investor’s perspective

• Teaming with Investors – the sponsor’s perspective

• Bringing the Deal Together – the lawyer’s perspective

• Questions and Answers

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©2014 Sutherland Asbill & Brennan LLP

Changing Market Place

• Institutional investors have made alternative

investments in many ways

Across several sectors – agriculture, softs, real-estate, etc.

Multiple modes of investing – ETFs, direct investments,

participations, etc.

• Energy has always been a sector of interest

Capital intensive

Attractive tax aspects

• Witnessing a paradigm shift in the way certain energy

transactions are structured, promoted and financed

Changing participation by investment banks

Disintermediation between project sponsors and investors

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©2014 Sutherland Asbill & Brennan LLP

Current and Developing Alternative

Investments

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• Alternative investments sectors in which TIAA-CREF

is active

• Recent transactions

• Common issues when TIAA-CREF makes

investments

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©2014 Sutherland Asbill & Brennan LLP

Teaming with Investors

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• Overview of Freepoint Commodities

• Recent transactions with institutional investors

• Challenges in such transactions

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June 2014

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Freepoint Commodities LLC (“Freepoint” ) is a physical commodity merchant headquartered in

Stamford, Connecticut. It was formed in early 2011 by the former principals of Sempra Energy

Trading (“SET”). Under their leadership, SET was profitable on a net income basis for 37

consecutive quarters, with an average annualized pre-tax return on capital of approximately

30%.

As of January 2014, Freepoint employs approximately 240 highly-skilled specialists worldwide.

Over 60% of these employees have worked together in the past and share a common culture

and entrepreneurial spirit.

Freepoint continues to build on the success its founders achieved at SET, and continues to

leverage the extensive experience and key relationships of David Messer and their entire

management, investment, and trading teams.

Confidential

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Building a world-class physical commodities merchant trading and finance business across a

broad range of commodity products.

Merchant Trading – Physical commodities merchant business unit with, at its core, a low-risk,

reliable customer-driven business.

Merchant Finance – Provides highly customized funding solutions for natural resource

producers.

o

Structured Finance – Portfolio of commodity-backed loans which are

amortizing/self-liquidating, with a blend of diverse credits and maturities ranging from 1-120 months.

o

Principal Investing – Reserve and asset-based commodity investment business that optimizes

off-take and optionality while leveraging the merchant trading platform.

Integration of our Merchant Finance and Merchant Trading business:

o

Commercially manage invested production assets

o

Market and trade commodities globally

o

Provide supply services to customers

o

Develop risk management products for clients

o

Provide commodity finance to clients

Confidential

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London Stamford Toronto Zug Boise Louisville Houston Los Angeles Headquarters Marketing Trading

Singapore Beijing Denver Shanghai

Confidential

6/16/2014

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Freepoint Commodities has partnered with Stone Point Capital to build a physical commodity

merchant platform. Stone Point Capital has contributed US$315 mm while senior management

and employees have contributed US$80 mm.

Stone Point Capital is a private equity firm with approximately US$10 billion under

management. Principals of Stone Point Capital include: Charles A. Davis, Stephen Freidman,

Meryl D. Hartzband, David J. Wermuth, and Nicolas D. Zerbib. Funds managed by the firm make

investments in various financial services companies.

Confidential

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NatGas Power Crude Products Coal Emissions Metals Shipping Ags Americas Canada √ √ √ US √ √ √ √ √ √ Latin America √ √ √ √ Asia Pacific China √ √ √ Other Asia √ √ √ ANZ

Europe, Middle East & Africa

Western Europe √ √ √ √ √ √ √ √ CEE √ √ √ Middle East Africa

Confidential

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Merchant Financing encompasses both principal

investing and structured commodity credit

transactions

In its simplest form, Merchant Financing provides

natural resource producers with funding in

exchange for control of commodity flows or

utilization of assets

The Merchant Finance business draws on outside

capital sources, as well as that of Freepoint and its

partners

Freepoint’s edge is defined by

o

Origination capabilities (leveraging relationships

from the merchant trading business)

o

Market knowledge (trading and logistics) and

o

Structuring Capabilities

Merchant

Financing

Structured

Finance

Investing

Principal

Syndication

What is Merchant Financing?

Confidential

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Brazahav: Brazilian Gold Mine,

12/28/2012

- Structured commodity financing to fund the development and expansion of a producing gold mine in

Western Brazil. Freepoint will market 100% of the mine’s output for gold and silver.

Arrowhead:

Wyoming Gas Wells,

2/28/2013

- Principal investments in sixty-six natural gas producing wells located in Southwest Wyoming.

Covenant:

Kentucky Coal Mine,

5/31/2013

- Structured commodity financing backed by coal off-take agreement associated with mine in

Kentucky

Whistler: Gulf of Mexico Offshore Oil Platform, 7/11/2013

- Principal investment in offshore oil and gas reserves and offshore platform in the Gulf of Mexico.

Freepoint will market the production of crude oil from the field.

Elm Ridge: San Juan Basin Gas Volumetric Production Payment,

7/17/2013

- Structured commodity financing backed by natural gas and oil production from nearly a thousand wells

located in New Mexico and Colorado.

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• This document does not constitute an offer to sell or solicitation to subscribe or purchase an interest in any investment or an offer to

enter into any contract. The contents of this Presentation are presented for informational purposes only. While Freepoint

Commodities LLC (“Freepoint”) believes the information presented in this Presentation is reasonable, this Presentation is provided “AS IS” and without warranty of any kind, either expressed or implied, including, but not limited to, the implied warranty of merchantability, fitness for a particular purpose, or non-infringement. Freepoint assumes no responsibility for errors or omissions in this Presentation or other documents which may be contained in, referenced, or linked to this Presentation. Freepoint may currently have, and may in the future have, positions in the markets referenced in this Presentation. Any such positions may be consistent with, or contrary to, any information presented herein and may ultimately have some effect on the price of commodities or other assets described in this Presentation. Any recipient of this Presentation is expressly responsible to seek out its own professional advice with respect to the information contained herein. Freepoint is not acting as a fiduciary, investment or commodity trading advisor or in any other advisory context with respect to any such recipient. Suitability and eligibility criteria may apply.

• Some assumptions on which the Presentation is based inevitably will not materialize, and unanticipated events and circumstances will

occur. Moreover, as the Presentation contains information pertaining to periods farther in the future, the assumptions become more vulnerable to change, thereby making information contained therein for such periods more speculative. Therefore, the actual events that may occur may vary from the projections contained in this Presentation, and the variations may be material. Freepoint is not obligated to notify you of any changes to the information contained herein.

• The information contained in this Presentation is based on estimates and assumptions about circumstances and events that have not

yet taken place, may not have an empirical basis, are subject to variation and are inherently unpredictable. Accordingly, there can be no assurance that information relied upon in preparing this Presentation will prove accurate of that any of the projections will be realized. It is expected that there will be differences between actual and projected occurrences, and actual occurrences may be materially greater or less than those contained in this presentation.

• By accepting this Presentation, the recipient hereof agrees to keep it confidential and not to use it or the information contained herein

for any purpose other than discussing its contents with Freepoint.

Confidential

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©2014 Sutherland Asbill & Brennan LLP

Bringing the Deal Together

• Recent transactions representing a sponsor or an

institutional investor

• Common or significant issues in such deals

• Potential legal changes which might affect the market

for alternative investments

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©2014 Sutherland Asbill & Brennan LLP

Questions and Answers

?

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©2014 Sutherland Asbill & Brennan LLP

Panelist Information

Marietta Moshiashvili

Managing Director | Head of Direct

Equity Originations | Natural

Resources and Infrastructure

TIAA-CREF

730 Third Avenue, 4th Floor

New York, NY 10017

Tel: 212.916.4530

mmoshias@tiaa-cref.org

Frank Conley

Managing Director

Structured Commodity Finance

Freepoint Commodities LLC

58 Commerce Road

Stamford, CT 06902

Tel: 203.542.6724

fconley@freepoint.com

Thomas Warren

Partner

Sutherland Asbill & Brennan LLP

999 Peachtree Street NE

Atlanta, GA 30309

Tel: 404.853.8548

thomas.warren@sutherland.com

David T. McIndoe

Partner

Sutherland Asbill & Brennan LLP

700 Sixth Street, NW, Suite 700

Washington, DC 20001-3980

Tel: 202.383.0920

david.mcindoe@sutherland.com

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