WHB Energy

Partners, L.P.

Fund Investment Objectives

It is the intent of the General Partner to establish an energy hedge fund that provides investors with a diversified array of risk, with the goal of generating overall long-term positive returns for the Partnership. At the relatively conservative end of the risk curve will be long-term, long positions in large-capitalization, well-managed energy companies where unit growth is anticipated to be greater than for the industry as a whole. Next on the risk curve would be long/short trading positions in a variety of energy equities, depending upon relative valuation. Finally, of greatest risk on the curve would be leveraged commodity positions that may be established independently or is part of an overall portfolio hedging strategy, as described later. Through managing an energy portfolio representing a diversity of investment/trading positions that imply varying degrees of risk, the General Partner anticipates, but cannot guarantee, that total portfolio returns will generally be characterized by relatively low volatility, and yet the fund will have the structure in place to capitalize on major industry and market trends. The General Partner will invest in and trade energy securities listed primarily on the New York Stock Exchange, the American Stock Exchange, and the NASDAQ. The Partnership intends to take a fundamental approach in making buy or sell decisions with regard to energy equities. The General Partner, William H. Brown III, has analyzed the fundamentals and operations of the major integrated oil and gas companies, independent producers, and other energy companies for well over twenty years. He has constructed detailed earnings and valuation models which provide the foundation for investment decisions. Integral to the decision-making process will be Mr. Brown's 30 years of experience in forecasting oil and gas prices and refining margins. In this regard, Mr. Brown has developed a number of detailed models of the world petroleum market and its various sectors which provide input to developing a fundamental forecast of oil and gas prices and refining margins. In addition, over the past 30 years Mr. Brown has established high level contacts within various producing and consuming governments worldwide which periodically provide valuable insight into the political factors that often influence the international oil and gas industry. Such contacts include, but are not limited to, senior officials in both the United States and Saudi Arabian governments. With regard to the refining sector, Mr. Brown has constructed models of merchant refining companies, whose underlying equities may also be included in the portfolio, depending upon valuation. Mr. Brown also has several years of experience in the international shipping industry, and thus would be qualified to buy or sell equities in this sector from time to time, once again depending upon valuation. Mr. Brown has constructed detailed models of the drilling and service sector companies. Equities within this sector may also be bought or sold. It is the broad long-term strategy of the Partnership to be long the strongest energy companies and short the weakest energy companies within the international energy equity universe, and not simply be gross long energy equities when oil and gas prices are expected to rise or gross short energy equities when oil and gas prices are expected to decline. Such a strategy would substantially contribute to volatility and risk of the returns. There is also no historical evidence of a consistent, positive correlation between energy equities in general and the underlying commodities. The criteria used by the General Partner to determine in his own judgment whether a company is relatively strong or relatively weak would include, but not be limited to, quality of management, quality of assets, underlying cost structure, and market position. The ratio of long to short energy equity positions may and will vary over time, depending upon a variety of factors including, but not limited to, the General Partner's outlook for oil and gas prices and refining margins, the rule that no single equity will represent more than 5.0% of the net asset value of the equity portion of the fund, and through the periodic opening and closing of new positions when attractive opportunities present themselves. It is therefore the strategy and goal of the Partnership to generate positive returns in the equity portion of the fund whether oil and gas prices and refining margins, and therefore operating earnings, are rising, falling, or stagnating.