OIL & GAS TECHNOLOGY PARTNERS - G-Globalgroup-global.org/files/39/c051357b25560afda6bcc7cec9c5/a8.pdf · − Providers of oilfield technology have accelerated their acquisition of

OIL & GAS TECHNOLOGY PARTNERS

November 2013

AN EVOLUTION IN GROWTH CAPITAL FOR THE OIL & GAS INDUSTRY

Terms and Disclaimer

This power point presentation (the “Presentation”) is being provided to certain selectedqualified prospective investors on a confidential basis for informational and discussion purposesonly and may not be relied on in any manner as legal, tax or investment advice or as an offer tosell or a solicitation of an offer to buy an interest in the investment fund described herein (the“Fund”). A private offering of interests in the Fund will only be made pursuant to a confidentialmemorandum or presentation, a Limited Partnership Agreement and subscription documentsrelated thereto, which will be furnished to qualified investors on a confidential basis. Theinterests in the Fund have not been, nor will they be, registered under the U.S. Securities Act of1933, as amended, or qualified or registered under any applicable state, local, provincial orother statutes, rules or regulations.This Presentation (as amended or supplemented in writing from time to time), is provided on aconfidential basis solely for the information of those persons to whom it is provided and theirprofessional advisers so that they may consider an investment in the limited partnershipinterests (the “Interests”) in the Fund, and is not to be reproduced or used for any otherpurpose. This Presentation and the information contained herein may not be reproduced ordistributed nor may its contents be disclosed to persons not directly involved with theprospective Investor’s decision regarding the purchase of the offered securities without theprior written consent of Oil & Gas Technology Partners.

Oil & Gas Technology Partners – Growth Capital FundStrictly Confidential

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OGTP Mission … build the leading investment firm targeting emerging Oil & Gas technology companies

Compelling Oil & Gas Market Fundamentals

Approach Fills Structural Gap in Oil & Gas Technology Market

Premier Founding Team

Focus

Enormous North American growth, at leading edge of global unconventionals development. New technologies essential to unlock new resources. Proven market for exits.

Participation expected by multiple corporate partners. Unique bridge connecting Silicon Valley, oil & gas value chain and emerging technologies to accelerate growth and drive superior returns.

Built top corporate investment platform in energy technology. Created leading commercialization programs. Record of profitable investments. Advisory Board of industry leaders.

Oil & Gas. Technologies with large market impact. Premier partner for venture and growth stage companies.


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Market Opportunity … innovation delivers growth

• North American Oil & Gas Renaissance− Expanding technical capabilities drive production of unconventional reserves (e.g., shale,

tight oil and gas, oil sands, deepwater) to dramatically expand global supply

U.S. Domestic Oil Production(millions of bbls /day)

Tight oil

Lower 48 Onshore

Lower 48 OffshoreAlaska

U.S. Natural Gas Production (trillions of cubic feet)

Shale gas

Tight gas

Lower 48 OnshoreLower 48 Offshore

• Shifting ‘Buy vs. Build’ Approach among Industry Players− Providers of oilfield technology have accelerated their acquisition of external

technologies to keep pace with market demand

• Underlying Technology Shift in One of Largest Markets in the World− Market discontinuities create substantial window of opportunity for upstart companies− Disruptive technologies can unlock significant value and gain scale rapidly

Contribution to Total Production(% of total)

Source: EIA World Energy Outlook 2012, Schlumberger.


• E&P companies face more technically demanding reserves, tightening regulations, and challenging cost environments

• Oilfield services companies increasingly augmenting internal technology investment with acquisition of external technologies to keep pace with technological demand

• Market dynamics provide robust M&A environment predicated on strong demand for technologies that facilitate faster, cheaper, safer, more certain, and lower impact hydrocarbon production

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Technology demand and M&A activity … accelerating

Footnotes:(1) Acquisition spending and R&D data collected from SEC filings for representative major oilfield services

providers (Schlumberger, Halliburton, Baker Hughes, National Oilwell Varco, FMC Technologies,Weatherford International, and Cameron International Group).

(2) Acquisition spending data excludes individual acquisitions larger than $1B in transaction value.

Major Oilfield Service Providers: R&D vs. Acquisition Spending (1,2)

($ in millions)

R&D (CAGR = 10.1%)

Acquisitions(CAGR = 30.9%)

0

25

50

75

100

2000 2005 2010 2015 2020 2025 2030 2035

Existing Supply

Base

New Supplies Required for

Existing Demand

Emerging Economies Demand Growth

Demand for New Oil Supplies(MM Bbls per day)


• Accelerating rate of disruptive technology opportunities -- we expect this to continue over next 5+ years

– Technology companies are pivoting to focus on growth opportunities in Oil & Gas

– In parallel, rapid development of transformational technologies that have substantial value in Oil & Gas

• Limited pool of financial investors targeting emerging Oil & Gas technology companies, and no established “Silicon Valley” leader in the sector

• Highly valuable relationships between emerging companies and O&G producers and service/equipment companies, but no financial investor has effectively tapped this potential

– Disruptive technologies can unlock significant value for O&G producers (often measured in billions of dollars)

– Relationships accelerate mutual value creation through field testing, validation, demonstration at commercial scale and incorporation into broader systems

– Growing realization and activities by major oil companies, but many others in industry do not have same scale or skills for a “do it yourself” approach

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OGTP opportunity … fill structural gap in O&G technology investment and commercialization market


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OGTP … creates unique and advantaged bridge between the Oil Patch, our industry partners and Silicon Valley

Deep Expertise in

Oil & Gas

Proven and Disciplined Execution

Model

Access to Premier

Investment Opportunities

Impactful and Motivated Corporate Partners

Robust insights on pain points and technology

viability to identify winners

Relationships that can accelerate value

creation for portfolio

Actively engaged to complement and

“piggyback” on OGTP deal flow and

investment expertise

Established global networks and

reputations in energy innovation and Silicon

Valley ecosystems

Corporate partnering approach addresses

unmet needs of emerging O&G tech

companies

Flexibility to match capital to opportunity

Leverages proven “playbook” used to

build top energy fund

Disciplined, analytical approach to risk, stage and company-building

Focus on building industry leaders with great teams, target

disruption & scalability

Team rooted in O&G, with broad industry

networks

Blue chip investment, strategy and

commercialization experience across entire value chain

Seasoned, industry-leading Strategic

Advisors

Equals superior ability to make great investments & build great companies


• Led GE’s venture and growth capital activities in energy industry from launch in late 2005 through Q2 2013

• Group backed ~50 emerging companies spanning energy sector, >$250mm invested. Integral personal role in >20 deals

• Led 12-person investment team covering deal origination, diligence and portfolio management. Screened >1000 deals per year

• Created & led $300mm fund with ConocoPhillips and NRG Energy (largest US power co.). Launched in Jan 2011, closed ~20 investments

• Instrumental in pioneering programs to accelerate collaborations with emerging companies, incl. $200mm Ecomagination Challenge (largest ever open innovation fund) and $20mm Accelerator Fund

• Prior career focused on oil & gas, incl. key roles in ~15 private equity and debt investments ($1.2bn total) at GE and 9 years as strategy consultant with Booz Allen Hamilton in U.S., Europe & Australia

• MBA, Stanford; B.S. Electrical Engineering, Univ. of Texas at Austin

Our founding Managing Partner, Kevin Skillern, built and led GE’s energy technology investment platform

8Oil & Gas Technology Partners – Growth Capital Fund Strictly Confidential

• Strong personal track record (top decile in conventional & clean energy tech sector)

• Proven ability to source, close & exit deals

• Experienced in raising and managing external capital

• High visibility and connectivity in global energy innovation ecosystem. Co-invested with almost every energy tech investor in Silicon Valley, oil industry & Europe

• Established numerous high impact corporate partnerships with emerging tech companies to accelerate value creation

• Experienced company builder. Active on ~15 boards while at GE

Relevant AccomplishmentsActivity Highlights

Kevin SkillernManaging Partner, Oil & Gas Technology Partners20-year career focused on energy investing and strategy development

• 4+ years as equity partner in ~$490M growth equity fund, NGP Energy Technology Partners. Sourced and evaluated opportunities to invest $10M-$20M per transaction. Served on boards of GroSolar, LedEngin, and GeoDigital

• First-ever Director of Commercialization & Deployment at U.S. Department of Energy

• 6+ years in private equity arm of Hillwood Development (private investment arm for Ross Perot Jr.). Oversaw investment in Russian oil company, Baitex, and Barnett Shale JV with Chief Oil & Gas

• 2+ years with leading management consulting firm, A.T. Kearney

• Currently serves as advisor on National Renewable Energy Lab (NREL) Venture Capital Board and Advanced Biofuels Technical Panel

• MBA, Stanford; B.S. Industrial Engineering, Texas A&M University

Brad Barton provides a unique blend of private equity, energy sector and government experience


• Strong personal track record

• Proven ability to source, close & exit deals

• Experienced in raising and managing external capital

• Strong connectivity in government / regulatory and US energy innovation ecosystems. Frequent speaker at major energy conferences

• Pioneered commercialization programs at US DOE, including Entrepreneur-in-Residence program and Technology Commercialization Fund


Brad BartonManaging Partner, Oil & Gas Technology Partners10 years private equity experience with deep energy sector expertise

• 3 years as Chief Marketing Officer at $4B GE Oil and Gas – Drilling and Surface upstream equipment business. Developed strategic plan, commercialized new technologies and engaged stakeholders to drive business growth.

• 14 years at Shell in various Senior strategic marketing, brand and reputation and commercialization roles. Global Marketing and Communications Director for Shell Global Solutions (technology arm of Shell Corporate) for 6 years, growing the business from $250M to $3.8B. Built a Motorsports business from $0-$20M in 2 years

• 4 years delivering Strategic Marketing Consulting Services. Brought numerous IT products and services to market.

• 8 years at Compaq Computer Corporation. Helped Compaq gain #1 PC and later regain #1 notebook manufacturer in the world.

• IMD, Executive Leadership; B.S. Engineering, Southern Methodist University

Vikki Dunn provides extensive strategic planning, brand and marketing and technology commercialization expertise in O&G


• Proven ability to identify and execute opportunities for business growth

• Pioneered commercialization programs at Shell and GE

• Deep relationships throughout the oil and gas ecosystem

• Strong record of achievement and relationship management skills

• Guest lecturer at top Universities and speaker at marketing and energy conferences


Vikki DunnPartner, Oil & Gas Technology Partners20+ years marketing and commercialization with deep energy sector expertise

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Strategic Advisory Board … leaders in industry and government

OGTP Strategic Advisory Board*

Bob Nardelli• Former CEO of Chrysler and Home Depot and one of top four executives at General Electric

• Currently focused on private, family office investment activities

Joe Barton• Chairman Emeritus, Energy & Commerce Committee; U.S. House of Representatives

• Author of Energy Policy Act of 2005

Jim Renfroe

• 40-year career in oilfield at Halliburton (incl. SVP-Strategy, led >$4bn Production Optimization Division and >$2bn Fluids Division, and SVP-Marketing & Business Development), Wood Group (executive director and CEO of Well Support Division) and GE Oil & Gas (senior advisor to CEO)

• Currently board director at Expro Group and Xtreme Drilling and Coil Services

Peter Bertone• Senior Partner, head of North American Energy Practice at Booz & Co.

• Oversees firm-wide investment activities. Led sale of Booz Allen Hamilton to Carlyle

Etienne Deffarges

• Vice Chairman, Accretive Health (highly successful healthcare services startup). Led successful IPO of the company in the NYSE, valuing the company at above $1B

• Previously led Booz Allen’s global energy practice and Accenture’s global utilities practice. Senior Partner and member of Executive Committee at both companies

• General Field Engineer at Schlumberger in multiple Latin American countries earlier in career

Paul Dickerson• Attorney at Mintz Levin specializing in energy, venture capital and international trade

• Former COO, U.S. Department of Energy, overseeing a $2 billion annual budget

Strategic LP executive(s)

• Based on final composition of partnership

* Subject to resolution of final fund partners and management of potential conflicts


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OGTP… highly distinctive in competitive landscape

• Unique combination of strategic insight from industry players + discipline, sophistication of financial investors

• Deal sourcing and evaluation requires specialized networks and integrated financial and technical skill sets

• Fund size and stage neutrality provide flexibility to target asset classes with disproportionate potential upside

Venture Growth Small Buyouts Large Buyouts

Stra

tegi

cs(M

ost

act

ive)

Fin

anci

als

Energy Technology Ventures

Landscape of Representative Oil and Gas Investors:

Corporate funds are established in the industry

but tend to move slowly and operate

with significant constraints

($5-20mm investments; minority / non-control; differentiated technology emphasis)

($20-200mm investments; control)

($200mm – 1Bn investments; control)


OGTP Differentiators:

OGTP will function as a traditional growth capital fund with benefits of close working relationships with key industry partners

Enhanced insight into key market &

technology developments

Exposure to more leading-edge companies

than via same funds invested directly

Financial returns, direct on LP

investment plus impact on core

business activities

Early and better partnerships with

breakthrough companies that can assist core business

Industry Partners

Benefits to Industry Partners from Participation in OGTPOGTP / Industry Partner Relationship Model

• Multiple corporate partners, expected to be mix of equipment/service, engineering and oil & gas producers

• $10-20MM LP commitments (each). Can invest additional capital alongside OGTP in select companies where co-investment opportunity exists

• Commercial/Technical resource to assist in evaluating prospects and developing commercial relationships

• Senior executive to participate on Strategic Advisory Board

• Support and participate in showcase events organized by OGTP to assist companies in working our partners

“Piggybacking” on OGTP complements internal R&D activities, can be much more effective than “Do It Yourself” approach and allows industry partners to focus on deploying top technologies

Deal Flow, Capital, Insight and Accelerated Value Creation

13Oil & Gas Technology Partners – Growth Capital FundStrictly Confidential

UnconventionalsDeepwater /

Harsh Settings Oil Sands / Heavy Oil

Gas Conversion

•Directional drilling: Accuracy and precision; uptime

•Hydraulic fracturing: Bigger,more efficient fracks;chemistries & proppants

•Completions: Packers, slotted liners, enhanced cements, etc

•Water: Flowback treatment & frac recycling; logistics & infrastructure; discovery

•Production: Better efficiency through artificial lift;downhole sensing

•Non-traditional in-field power: Gas turbines; electrified drilling; waste heat; renewables

•Next-gen enhanced recovery: biological, CO2, slim-hole,pressure pulses

•Air Quality management

•Well safety & integrity

•Materials: High strength/temp,lightweight, anti-corrosion

•Subsea fluid separation & boosting

•Unconventional risers

•Underwater tools for inspection & seismic surveying

•Field upgrading SAGD: Solvents/non-aqueous extraction; electrothermal; in-situ combustion; geothermal

•Water & tailings management

•Non-traditional steam generation

•Demand generation: CNG/LNG infrastructure,fleets; fuel cells

•Floating/Small LNG, GTL, CNG

•Gas compression, treating, extraction

•Pipeline inspection & safety

Reservoir Imaging Digital Oilfield Other Leading-Edge

Technologies

•Shale characterization: Digital rock physics; microseismic

•Permanent monitoring

•Ocean bottom seismic

•Remote discovery

•Communications systems

•Field automation and remote operation systems

•Big data analytics

•Cybersecurity

•Lasers

•Robotics

•Industrial drones

•3D/additive manufacturing

Oil & Gas technical innovation … broad landscape of opportunity


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Selected Technology Opportunity Examples: Earthwater, ConXTech

• Based in Hayward, CA

• Technology: “Full Scale Erector Set” approach to efficiently build structures

• O&G Applications & Impact: faster, cheaper and safer structures for pipe rack & pipelines, faster time-to O&G production. Reduces need for skilled labor (Field assembly >75%, steel fabrication 50%)

As Used in Water Processing Plant on

Central California Oil Field

Uses patented connector system precision-manufactured with robotics in a factory environment

Thesis: The O&G industry realizes sizeable rewards from faster and less expensive field construction technologies that reduce skilled labor requirements in remote locations

Growth Stage


• Based in Alexandria, VA

• Technology: Water exploration and development company leveraging satellite and geologic imaging to develop large-scale fresh groundwater resources

• O&G Applications: Source new, low cost sources of water essential to large-scale use of hydraulic fracturing

Thesis: Fracking uses <2% of overall US water resources but is heavily used in regions facing water stress. Fracking’s growth and increased regulation will drive higher water prices and rapid growth of alternative technologies.

•Mountains are fractured and leak

•High percentage of precipitation infiltrates into pervasive fracture systems and under adjacent basins

•Water flows long distances from mountain rainfall through fractures in Earth’s crust

The Megawatershed Model

Venture Stage

The opportunity … become a partner at the forefront of the oil & gas industry


• Help drive and profit from the O&G renaissance through investing in strategic technology innovations

• Shape the O&G technology future landscape

• Gain access to some of the most innovative products developed for the O&G industry or applied to this market for the first time

• Participate in the launch and commercialization of next generation technologies

• Support technologies that reduce the environmental impact of O&G activities

• Be part of an industry that makes people’s lives better by providing access to energy and clean water through application of technology

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OGTP Fund Summary

Fund Name Oil & Gas Technology Partners

The General Partner OGTP Management, LLC, a Delaware limited liability company

The GP’s Commitment 2% of aggregate Limited Partner commitments

Fund Target Size $150 to 200 million

Minimum Commitment $5 million

Strategic Limited PartnersMultiple leading corporate partners (e.g., equipment, service and engineering companies, oil

& gas producers) representing $30-50mm total capital

Target Portfolio

Composition, Ownership

and Structures

10 to 15 total companies, $5-20mm investments per company (10-40% stakes); Equity

instruments, typically preferred securities; 80% oil & gas technologies, 20% advanced

energy; 50% early-stage, 50% growth-stage; N. America focus (75+%), opportunistic outside;

3 to 7 year holding timeframes

Investment PeriodFive years from the final closing, or with approval from the Advisory Committee, six years

from the final closing

Fund Term Ten years, subject to three one-year extensions.

Management Fee2% per annum during the Investment Period; Reduced by 25% following the Investment

Period

Carried Interest20% of profits (20% to the General Partner), subject to 8% preferred return with standard

catch-up mechanics

Co-Investment RightsCo-investment priority given to limited partners based on pro rata commitment. GP to

maintain sole discretion to manage potential conflicts with portfolio companies

Timing 1st close in Q1 2014. Final close by Q4 2014


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Contact Information

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Kevin Skillern

Managing Partner, San Francisco

Phone: (617) 794-8820E-mail: [email protected]

Brad Barton

Managing Partner, Dallas



Vikki Dunn

Partner, Houston


APPENDIX: SELECTED CASE STUDY EXAMPLES ON ACCELERATED VALUE FROM CORPORATE PARTNERSHIPS


Selected Case Study Examples from Our Experience:

Accelerated Value from Corporate Partnerships

Company Technology Examples of Value Creation / Acceleration with Corporate Partnerships

Foro Energy High power lasers • Multiple partnerships to develop and market next-gen oilfield products

Glori EnergyEnhanced oil

recovery

• Customer contract to deploy in field as precursor to multi-field program

• Technical expertise contribution to guide system development strategy

Zilift Artificial lift• Alpha and beta testing in downhole environments

• Non-equity joint development funding to accelerate time-to-market

Ciris Energy Coal bioconversion• Access to large-scale asset development pipeline

• Unique, hybrid deal structure to facilitate early field testing

On-Ramp Wireless

Industrial

communications

networks

• Global sales distribution partnership

• Joint strategic review to assess market potential in oil & gas

Oblong IndustriesData visualization

software

• Launched joint product in partnership with multiple beta customers

• Customer contracts to deploy in flagship, high visibility facilities


Additional benefits to emerging companies from technical validation, enhanced visibility in industry and improved access to follow-on investors, customers and partners

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Documents

OIL & GAS TECHNOLOGY PARTNERS - G-Globalgroup-global.org/files/39/c051357b25560afda6bcc7cec9c5/a8.pdf · − Providers of oilfield technology have accelerated their acquisition of