Shenandoah Energy Management LLC

Item 5       Fees and Compensation

A. Compensation for Advisory Services

    The description below of Shenandoah Energy Management’s fees and compensation is
intended to provide a brief summary of the more typical fee structures shared by certain types of
Advisory Clients and is not intended to depict every scenario where such structures may differ.
Please refer to Advisory Clients’ Governing Documents for specific details regarding all fees and
expenses for specific accounts.

(1) Management Fees

         As investment adviser of the Funds, Shenandoah Energy Management or its affiliates
generally receives management fees on a monthly or quarterly basis based on annual fee rates, the
amount of which varies depending upon the relevant Fund and is set forth within the terms of the
relevant governing document or investment management agreement of such Fund. Management
fees during the investment period of such Funds are typically calculated as a fixed percentage
based on total committed capital. During the liquidation period of closed-end Funds, the
management fee generally is reduced by a fixed amount but applied against capital commitments.
Shenandoah Energy Management’s right to receive management fees from a closed-end Fund
typically ends or reduces after 10 or 11 years from the start of such fund’s investment period, even
if assets remain to be liquidated.

         Shenandoah Energy Management has afforded, and may in the future in its sole discretion
and without disclosure to any other investors, afford certain investors in Funds more favorable
economic terms than other investors in the same Fund within the same or similar investment
strategy, including (without limitation) with respect to both management and performance-based
fees, generally based on the timing and aggregate size of commitments of such investor or client,
as applicable, to one or more accounts managed by Shenandoah Energy Management or its
affiliates. Any fees are permitted to be reduced or waived entirely by Shenandoah Energy
Management or its affiliates in their sole discretion.

(2) Performance-Based Fees

       Shenandoah Energy Management and its affiliates have the potential to earn performance-
based compensation in the form of performance fees or profit/incentive allocations from the
closed-end Funds. The amount of such performance-based compensation and the calculation and

timing of payment of such compensation are set forth in the terms of the Governing Documents of
such Fund. Generally, for closed-end Funds, Shenandoah Energy Management is entitled to
receive up to 20% of the realized profits of a Fund’s aggregate investments after such Fund first
distributes all contributed capital from the inception of the Fund plus an annual preferred return to
its investors. As a result, Shenandoah Energy Management generally receives a profit or incentive
allocation from a closed-end Fund, if any, in the latter part of a Fund's life, although earlier in such
fund's term Shenandoah Energy Management may receive tax distributions to cover its allocable
share of income taxes.

        Generally, any eligible employee, officer or director of Shenandoah Energy Management
and its affiliates (or their respective family trusts or other estate planning vehicles which they
control), who invests his or her own capital in a Fund or receives ownership in a particular
investment or Fund as compensation is not subject to paying any performance-based fees and/or
management fees to Shenandoah Energy Management or its affiliates.

B. Deduction of Fees

        Management Fees. For Funds, the management fees are typically deducted from the assets
of the Fund.

        Performance-Based Compensation. For Funds, performance-based compensation is
allocated and paid to Shenandoah Energy Management or its affiliates from the assets of the Fund.

        Timing. For Funds, management fees may be charged quarterly. To the extent that an
Advisory Client is in existence less than a full payment period, the respective management fee will
be pro-rated. Generally, performance-based fees for closed-end Funds, if any, are charged in the
latter part of such Fund’s life after it has distributed all contributed capital and preferred return
distributions to the investors.

C. Expenses

         Subject to its Governing Documents, a Fund is expected to also bear out-of-pocket costs,
fees, expenses and liabilities that are incurred by, or arise out of the operation and activities of or
are allocable or otherwise are related to, such account, or any other vehicle created to facilitate the
Fund’s investment program, including those incurred by Shenandoah Energy Management or its
affiliates on behalf of or that are allocable to such account, including: third party out of pocket
costs and expenses, salaries of key persons, direct and indirect operating and overhead costs of
Shenandoah Energy Management and the Fund’s advisory committee, reasonably allocated to the
services performed for the Fund as determined by Shenandoah Energy Management, including an
allocable portion of salaries, wages and other compensation paid by Shenandoah Energy
Management to its employees, members and managers, and including an allocable portion of rent,
equipment leasing and other similar overhead expenses of Shenandoah Energy Management and
the Funds’ advisory committee.

        Each Fund will pay (or shall reimburse Shenandoah Energy Management for) all other
costs and expenses relating to its activities, including, since the Fund’s date of formation,
management fees, expenditures on account of third party diligence and other reports, travel,
expenses incurred in investigating and evaluating investment opportunities for the Fund (including
travel expenses incurred by key persons or the Fund’s advisory committee in connection with
investigation and due diligence for Fund transactions), engineering consulting, geotechnical
...

Item 7 Types of Clients
        Shenandoah Energy Management provides investment advisory services to pooled
investment vehicles operating as private investment funds and certain special purpose entities, as
described in Item 4. Each investor in an Advisory Client is reasonably believed by Shenandoah
Energy Management to be an “accredited investor” under Rule 501 of Regulation D of the
Securities Act of 1933 and a “Qualified Client” under Rule 205-3 of the Investment Advisers Act
of 1940.

        The minimum capital commitment of an investor in each of the Funds is $250,000 although
lesser commitment amounts may be accepted at the discretion of an Advisory Client.