ETF SECURITIES – TORR POWDER
PRODUCER DERIVATIVE FINANCE
Volumetric Production Payment 2014
A DIVERSIFIED GLOBAL RENEWABLE ENERGY
PRODUCER
DELTA GLOBAL AT A GLANCE
 Global provider of renewable energy delivered in CAPESIZE quantities to foreign and domestic markets
 BiofuelNRG biomass, manure, ag waste, wood waste, etc. Variable feedstocks
 BiohydrogenNRG solar steam assisted maglev floating shaft DC (perm mag) generator
 BiocarbonNRG torrified powder zero Mercury, zero Arsenic, zero Heavy Metals
 BiogasolineNRG small scale facilities 1-5MM Gal/yr
GLOBAL PRESENCE
THE AMERICAS
5 LOCATIONS
ASIA-PACIFIC
CO-FIRED
10% - 50%
2/CANADA
EUROPE, AFRICA
AND MIDDLE EAST
CO-FIRED
10% - 25%
MINIMATA TREATY
APRIL 2015
Ban on Hg, As, Heavy
Metals
Fixed Rates of Return
RENEWABLE/ALTERNATIVE ENERGY
COMMODITIES
Investor Pools
Pool "A"
Pool "B"
■ FIRPTA
 Energy Trading
■ Volumetric Production
Payment
 Derivative Finance
■ UPSTREAM equipment
rentals
■ Real Estate rentals at
each project location
■ 10% EU tax free return
 Derivative Risk
Management
 Hedge Book
RestrucTuring
 12% US depletion
allowance or
 Liquid H2 payments
Pool "C"
* RECs Trading, PJM and
WECC
Pool "D"
 High Yield
 BTU convertible
■Power & Acquisition
(Renewables & Fossil)
 EFP
■Real-Time Desk Services
 Creation Unit
conversion
■Power Plant Hedges
■Options, Derivatives
 Redemption Unit
conversion
■15% taxable
 BTU/Forex
 VIX benchmark
Derivative Finance Options
 VOLUMETRIC PRODUCTION PAYMENT ( VPP)
 MODIFIED VPP STRUCTURES
 PREPAYMENT (PREPAY) STRUCTURE
VPP OVERVIEW
 A Volumetric Production Payment (“VPP”) is a conversion tool whereby a specified BTU volume is
delivered to the Pool Investor (fixed) for a specified future position (floating)
 A Delta Global Structured VPP is a REPO of future hydrocarbon production and is conveyed through the
swap of a limited volumetric BTU equivalency
 In exchange for the VPP interest, the Counterparty contributes margin or eligible collateral and accepts inkind BTUs marked-to-future market for upfront option to trigger conversion/redemption
 When the total specified volume is created by Producer and available to Pool Investor(s) the fractional
VPP terminates and the convertible interests are exchanged bespoken, notionally adjusted, or Fx
reconciled
Physical BTU Equivalent
Market/Index
Floating $
VPP Proceeds
Floating BTU
volume
Fixed $
Pool
SEF
Investor
Contract Volume
Floating $
HEDGE
PROVIDER
Modified VPP Structure – Delayed Start VPP
Delayed Start VPP would allow company to
receive cash proceeds on day 1 but begin
delivery under the VPP at a later date
Delayed delivery is attractive for fields with
existing production and additional
development opportunities
 The modified structure would generate
capital for the development upfront, but
allow the deliveries to coincide with
production under the new development
project
 Company would thus retain a share of the
field’s production at all times, assuming
development stayed on schedule
Delayed Start VPP Reserves Profile
Modified VPP Structures
Any number of modified VPP structures enhance the advance rate/conversion
rate/redemption rate and mitigate operational risks. These in-kind
creation/redemption trades include:
 Volume Limited
 IRR/ROI Limited
 PDNP/PUD adjustment of iNAV through BTU Facility swapped/collateral
substituted in-kind with VPP trades
 Pool "D" Structures where VPP Counterparty on bespoken swap is responsible
for Opex and Capex related to VPP volumes
Prepay Swap Transaction Example
A Prepayment (‘Prepay’ ) is a in-kind collateral substitution tool whereby Producer hedges a
specified volume for a fixed tenor with a financial swap which is then discounted and
margin/collateral is advanced to the Producer (fixed/floating or floating/fixed)
Preferred Derivative Tool for BTU Arbitrage Transactions
Transaction Size: $50,000 US - $4,000,000 US
Physical Market
Hydrocarbon
Volume
Floating $
Fixed $
Proceeds
Pool
SEF
Investor
Floating $
BESPOKEN SWAP
Floating $
PREPAYMENT
Prepay Details
¾ Producer hedges volumes to cover LOE in case
prices drop
¾ Producer puts/calls upside on unhedged volumes.
Producer puts/calls the floating price each month on
the prepay volumes
¾ Producer may retain upside or downside position/leg
¾ Producer may retain COPAS overhead on operated
properties
¾ Producer EFPs the floating price each month on the
prepay volumes
¾ LOE hedges are settled monthly
¾ SEF/Option Writer for "fixing" of all BTU assets
¾ Select Counterparty is responsible for all Operating
Expenses and Taxes
Prepay Reserves Profile
Advantages
ADVANTAGES OF VPP OVER PRODUCTION PAYMENTS
 Higher Advance rate
 Term Financing
 Accelerate ordinary income to capital gains treatment (VPP only)
 Able to monetize and hedge longer tenor
 Takes advantage of the contango/backwardation in forward/futures markets
 Document Light process, with average structure execution time of approximately 3-6 weeks
 Higher Advance rate
 Term Financing
 Transacted under an ISDA agreement
 Able to execute on smaller transaction sizes
 Easy structure to unwind, collateral substitute, in-kind or like kind exchange or pay off and redeem
 No Facility Fees
 Limited Financial Covenants
Commodity/BTU Portfolio Management
ADVANTAGES OF VPP PREPAY MODIFICATIONS
 Company retains hedge management
 Producer retains operational and management control
 Potential Tax Benefits disproportionately allocated
 Counterparty credit risk mitigated
 Average Swap Fees of 2.5% - 3% plus expenses
 Average closing time of ~ T+3 converted to STP
 The commodity market is currently a buyers market
 On algo trading platform vol swings from development premium
 Auction strike prices pegged to benchmark values of exchange traded
VPP and Prepayment Approval Process
Start
BTU Reserve Engineering
Title Opinions
Physical Marketing
Contracts
Financial Operating
Statements
CPO Delivers
concise reports of
engineering
analysis, weather
derivatives
analysis and
technical due
diligence
Compliance/ Risk
Management
approves
transaction
structure and
advance amounts
Bespoken Swap of
BTU equivalence
is a binding
commitment
VPP/Prepay Legal
Documentation
Completed
SEF funds
VPP/Prepay
Disclaimer

This document does not constitute an offer to sell or a solicitation of an offer to buy any securities, commodities or
to engage in futures, forwards, forward outright, options, options on futures or options on options trade transactions.. It is an
outline of matters for discussion only. This document and its contents are confidential to the person(s) to whom it is delivered
and should not be copied or distributed, in whole or in part, or its contents disclosed by such person(s) to any other person. You
may not rely upon this document in evaluating the merits of participating in any transaction referred to herein. This document
does not constitute and should not be interpreted as either an investment recommendation or advice, including legal, tax or
accounting advice. Any decision with respect to participation in any transaction described herein should be made based solely
upon appropriate due diligence of each party. Future results are impossible to predict. Opinions and estimates offered in this
presentation constitute our judgment and are subject to change without notice, as are statements about market trends, which are
based on current market conditions. This presentation may include forward-looking statements that represent opinions,
estimates and projections, which may not be realized. We believe the information provided herein is reliable, as of the date
hereof, but do not warrant its accuracy or completeness. In preparing these materials, we have relied upon and assumed,
without independent verification, the accuracy and completeness of all information available from public sources. Nothing in this
document contains a commitment from SEF, ICAP, Forest2Market or ETF Securities to subscribe, originate, or execute
commodities or securities transactions, or to provide debt, to arrange any facility, to invest in any way in any transaction
described herein or is otherwise imposing any obligation on SEF. SEF does not guarantee the performance or return of capital
from investments. Any participation by SEF in any transaction would be subject to its internal approval process. SEF maintains
Representative Offices in certain US States, however it is not licensed to conduct certain business in the United States. With
respect to matters pertaining to US securities laws, and to the extent required by such laws, worldwide subsidiaries consult with,
and act through a registered broker-dealer and member of FINRA, or another US broker-dealer.
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