Merit Energy Company LLC

Item 5 – Fees and Compensation

The terms of the Governing Fund Documents for each Fund set forth in detail the fee structure
relevant to each such Fund and may vary by Fund. Merit typically receives compensation in the
form of management fees based on a percentage of assets under management, carried interest
allocations and certain other fees or expenses. Investors should review the Governing Fund
Documents to fully understand the total amount of fees to be paid by a Fund.

Management Fees

Each Fund pays Merit a quarterly management fee, payable in arrears, equal to a percentage of the
greater of the Fund’s (i) invested capital, or (ii) net book value of its assets. In general, this fee is
equal to 0.3125% of the greater of (i) invested capital, and (ii) the net book value of Fund assets up
to the amount of capital committed to the Fund, plus 0.25% of the net book value in excess of such
amount. The manner of calculation of such management fee is contained in the Governing Fund
Documents and the foregoing summary is qualified in its entirety by the Governing Fund
Documents.

Fund Expenses

Each Fund bears its own organizational expenses incurred in connection with its formation, in
general up to a cap set forth in the applicable Governing Fund Documents, with any excess borne
by Merit. Each Fund also bears its own expenses associated with its investment program and
operations, including, without limitation, fees, costs and expenses related to proposed and actual
purchases and sales of investments, expenses incurred in the operation of the Fund (including
attorneys, auditors, insurance, indemnity or litigation expenses), all costs of the Fund’s
administration (such as preparation of financial statements and reports to limited partners,
transaction costs associated with hedging programs, costs associated with the formation and
capitalization of any preferred limited partner in the Fund (each, a “PLP”), and holding any meetings
of limited partners), and any taxes, fees or governmental charges levied against such Fund.

Merit employs engineers, geologists, accountants, attorneys, land professionals and other office
support staff and field level personnel to carry out activities associated with the assets owned by all
Funds managed by Merit. Fund expenses that are common to more than one Fund are allocated
among the Funds as reasonably determined in good faith by Merit, generally based on relative
revenues. Field-level operating expenses are charged against the applicable property and allocated
to the Funds in proportion to their relative ownership interests in such property, and any expenses
recouped from third-party interest owners are credited back against such costs in the same
percentages as borne by the Funds.

In the ordinary course of business, Merit receives all revenues and pays all expenses associated with
the properties in which the Funds own interests and accounts for all such revenues and expenses,
including hedge settlements, on behalf of each Fund. All cash held by Merit is allocated to each
Fund on a quarterly basis in accordance with the Governing Fund Documents and reported on quarterly
financial statements delivered by Merit to each such Fund’s limited partners.

Item 7 – Types of Clients

Merit’s only clients are the Funds, all of which are subject to the direction and control of Merit. The
Investors of the Funds include, but are not limited to, large institutional investors such as
endowments, foundations, and pension funds as well as fund of funds, family offices, and high net
worth individuals. Investment in each Fund was subject to a minimum capital commitment, although
investments of lesser amounts were accepted on a case-by-case basis. Each of the Funds is exempt
from registration as an investment company under Section 3(c)(7) (and, as applicable, Section
3(c)(1)) of the Investment Company Act of 1940. Investors will be required to meet certain
suitability qualifications, such as being an “accredited investor” within the meaning set forth in Rule
501(a) of Regulation D under the Securities Act. Also, Investors will be required to make certain
representations when investing in a Fund, including, but not limited to, (i) it is acquiring an interest
for its own account, (ii) it received or had access to all information it deemed relevant to evaluate the
merits and risks of the prospective investment, and (iii) it has the ability to bear the economic risk of
an investment in the Fund. Details concerning applicable Investor suitability criteria are set forth in
the respective Governing Fund Documents and subscription materials, which are furnished to each
Investor.