Corporate Banking Overview Current Market Dynamics and the Effect on the Energy Sector 2004 OGIS Private Capital Conference April 19, 2004

Corporate Banking – Transition Overview  Significant changes to global Banking marketplace over the last decade  Consolidation and stratification of Banks  Sophistication/specialization in product offerings  Increased outside competition -- “Disintermediation”  Change in Risk/Return metrics  Result: Positive for Energy sector

Corporate Banking – Recent History  Commercial Banking: Early-to-mid ’90s –Over capacity; ample liquidity (+international flows) –Declining returns –Higher rate environment -- expensive capital structures –Creeping credit quality issues  ’97/’98 Inflection point –Asian crisis –Product price cyclical downturn –Result: Retrenchment Increased pricing (both IGrade and non-IGrade) Overall improvement in bank terms/conditions

Corporate Banking – Recent History  2000/2001 Inflection point –“Enron, etc., etc.” problem –Exposure limits issue becomes paramount –Basel – Return on “economic” v. “regulatory” capital –Result: Capital rationalization Reduced hold levels – “Concentration risk” realization Pricing is market driven – versus “competing” markets More risk layoff – Product pricing / hedging Reduced tenors Better risk/return fits  2004 – “It was the best of times,…….” –Post “recession” boom mentality –Strong market appetite for debt –Capital availability – “Buckets and buckets”

Corporate Banking – Current Situation  1Q04 – General Bank market conditions –Debt market mentality – from moderate/optimistic to very aggressive –Strong pressure in all layers – senior, sub/2 nd lien, mezzanine, convertibles –Highly leveraged deals have moved from the margin to the mainstream –Tolerance for collateral shortfalls has increased –Pricing has been pressured due to ample liquidity –Institutional sector (Term B) has steadily increased share – not yet in Energy

Corporate Banking – Transition Overview  Evolutionary changes to Bank market –Consolidation of players –Composition of players – “Core” v. “Non-Core” –Changed objectives –“Cheap” capital v. “Scarce” capital  Stratification of Banks –Leverage expertise/position into other services –Corporate Bank  I-Bank –Product specialization

Energy Corporate Banking – Recent Trends  Slow deal flow

Domestic M&A Deal Flow Source: John S. Herold M&A Database * 1Q04 annualized *

Energy Corporate Banking – Recent Trends  Slow deal flow  Price decks – capacity inflation

Collateral Value Growth -- Bank Average Price Deck

Energy Corporate Banking – Recent Trends  Slow deal flow  Price decks – capacity inflation  Borrower liquidity – low utilization  Commodity hedging  Low interest rate environment  competition  B Term loans  Bridge commitments  Focused “Micro-cap” market players

Energy Corporate Banking – Summary  Big evolutionary changes last decade  Changes in players, products, credit availability  More to come with continued consolidation and granularity of markets  Ample supply of capital – Public/Private  Core Energy Banks remain focused, committed and competitive

Energy Finance Group Dallas / Houston

Comerica Energy Banking Profile Comerica Bank  One of the nation’s largest bank holding companies, with over $53 billion in assets  Headquartered in Detroit, #1 Bank in Michigan  1st in the nation in commercial and industrial loans as a percentage of assets  Major growth markets are Texas and California

Comerica Energy Banking Profile  Focused on the North American energy market as a core line of business  Long, established track record -- Dedicated to the industry  Focus on upstream, midstream and energy services  Target market is the micro- to mid-cap energy company, both private and public  Creative and Flexible Approach  Strong Technical Expertise

Comerica Energy Banking Profile  Strong, historical growth trends  Commitments to sector up +25% p.a. over last 7 years  Senior, Experienced Team in Place  Added to professional staff to support growth and uptiering objectives  Relationship Driven  Responsive and Timely  Increasing lead and administrative agency assignments, elevating our profile in the sector

Comerica Energy Banking Team Mark Fuqua Energy Finance Dallas (214) Charles Hall Energy Finance Houston (713) Mona Foch Energy Services Houston (281)

We Listen. We Understand. We Make It Work. ® Energy Finance Group

We Listen. We Understand. We Make It Work. ® Energy Finance Group