January 14, 2009

Charting New Territory

2

Strength and Stability

Wells Fargo continues to be one of the strongest and best capitalized banks

Our unchanging vision, values and time-tested business model will guide us into the future and are—now more than ever—a competitive advantage as our industry evolves

Our capital ratios and credit ratings are among the strongest of our industry peers

Our average products per retail and commercial customer are at record highs

We’re known and admired for our conservative financial position As a testament to our strength, Wells Fargo was able to raise

$12.6 billion of equity in the largest non-IPO offer ever

Based on third quarter results for peers.

About Wells Fargo Energy Group

Year Established: Lending to the Energy industry for 30+ years

Office Locations: Houston, Dallas, Denver, Charlotte, New York

13 in-house engineers and technicians

Total Commitments: exceed $20B

Complimentary Strengths:

Investment Banking Capabilities

Strong Private Capital Focus

Powerful Combined Platform

5

Risk/Return MatrixTa

rget

Rat

e of

Ret

urn

%

5

10

15

20

25

30

35+

0

Equity

Mezzanine Debt(including sub debt and

development loans)

Bank Loan

----------- Development/Exploitation -----------(Engineering Risk)

----------- Exploration ------------(Geologic/Geophysical Risk)

PDP PDNP PUD Probable PossibleReserve Risk

Source: Various news articles

Current Market Update

Sub-prime mortgage crisis hits CLO market in June / July, causing one of the largest corrections in 20 years

Bear Stearns, BNP and other institutions freeze funds; bank run on Northern Rock Strong credit borrowers tap CP back-up facilities as a result of instability in the credit markets Banks report billion dollars of write-downs, with UBS and Merrill leading the pack, and raise

capital from foreign sovereign funds, hedge funds and money managers to bolster their capital bases

Crude= $82.80/ NatGas= $6.57 (Average) Bear Stearns, once the fifth largest investment bank in the U.S., collapses and the Fed

intervenes to support JPMorgan’s purchase of the failed institution Fed cuts the Federal Funds target rate by another 200 bps collectively over three occasions and

opens the discount window to investment banks Banks continue to report huge write-downs, with Citi’s $18 billion and UBS’s $18.4 billion write-

downs sending shock waves to the financial markets Auction rate security market fails, sending both holders and issuers of ARS scrambling for funds Crude= $97.91/NatGas= $8.66 (Average)

Loan defaults rise to 2.58% as of June 30, up 232 bps since end of 2007 Financial institutions sell off assets at prices significantly below par, cut dividends, and raise

more capital to shore up their capital bases Credit ratings of Morgan Stanley, Merrill, Lehman, MBIA and AMBAC get cut Crude oil prices rise exponentially (up 44.55% YTD), as investors flee to the commodities

market to combat inflation, causing more stress on the U.S. economy Crude= $124.06/NatGas= $11.39 (Average)

2nd Half 2007

Panic and Losses Start

to Show

Q1 2008Losses

continue to rise

Q2 2008Officially in

Bear Territory

Source: Various news articles

Current Market Update

Third quarter will be remembered for the final weeks of September: Sept. 9th the government bails out Fannie Mae and Freddie Mac Sept. 15th Lehman files for bankruptcy Sept. 15th Bank of America acquires Merrill Lynch Sept. 16th the Fed lends $85 billion to AIG Sept. 18th Lloyds acquires HBOS Sept. 19th U.S. Treasury announced a temporary guarantee on money market mutual funds

Wells Fargo agrees to buy Wachovia Failure to pass $700 billion Troubled Asset Repurchase Plan (“TARP”) causes

unprecedented turmoil in the financial markets. Crude= $124.06/ NatGas= $11.39 (Average)

Fourth quarter began with Congress passing the $700 billion Troubled Asset Repurchase Plan

Passing of the TARP lead to the end of the Investment Bank era as Goldman Sachs and Morgan Stanley applied to become bank holding companies in order to tap in to the government funds

In a coordinated move, the Federal Reserve and other central banks reduced lending rates around the world

The Fed’s benchmark interest rate was cut to the lowest in history at 0.0% to 0.25% S&P downgraded credit ratings of eleven top global banks Autos look to tap into TARP plan, with GMAC receiving $5 billion in funds Primary loan syndication market essentially closed Wells Fargo officially acquires Wachovia as of December 31, 2008 Crude= $60.44/ NatGas= $6.67 (Average)

Q3 2008A Bad

Market gets Worse

Q4 2008A Bad

Market gets Worse

U.S. Overall Syndicated Loan Issuance by Purpose1Q05-4Q08

Credit CrisisEffect

Pro-rata (primarily bank only) volume. With institutional volume trending downward even more quickly than overall activity, pro rata loans grabbed 61% of total loan volume in the fourth quarter –up from 53% in the third quarter and from 53% during the first half. For the full year, the pro rata loan share jumped to a six-year high of 53%, from a record-low 28% last year.

Institutional volume -down 94%. For all of 2008, institutional activity dropped 82%, to a six-year low of $71 billion, from the record $387 billion established in 2007.

LBO transaction volume. Total transaction volume fell to $3.2 billion in the fourth quarter, a 97% drop from the final three months of 2007

Amendments. While new-issue volume has fallen, amendment activity has exploded. Amendments have caused spreads to increase by an average of 200.0 bps.

Current Market Update

Source: LCD Quarterly Review

Crude Oil Price Deck Comparison Top 5 Banks

Natural Gas Price Deck Comparison Top 5 Banks

Of the 23 banks we spoke to: Only 14 are in the market for new deals

Of those 14, 10 say that they are open to deals only if priced “very well”

Comments heard across the board include: “More selective on first lien names, needs to be middle of fairway, no to stretch”

“Accommodate existing loans and not encouraged to grow book for new lenders until gets more direction in 2009”

“Can't see anything changing/improving until at least the second half 2009 (not like in past where each January gets a clean slate and a new budget)

“Concerned about next Borrowing Base Redetermination season and tight liquidity for some borrowers.”

“Very high hurdles”

“Even if return meets hurdle, needs ancillary business out of the blocks; leaning more to public deals since more capital markets opportunities

Bank Market Update (as of 2008)

Where we are today:

Hearing much of the same from last month

Many lenders are conserving their capital to support only existing clients

It is now “an understood” that pricing will go up

Lenders with more levered borrowing bases being told that the price deck

could severely limit availability in 2009

Beginning to see expected covenant breaches for 2nd and 3rd quarters

Relative value continues to be a hot topic

Our View on the 2009 Bank Market

What we are expecting from lenders still doing new money deals in 2009: 3 year is the max on E&P (and likely for midstream) due to tenor premiums

Big unknown unused commitment fees due to tenor premiums: Euro banks are expecting 20-30% of drawn margin….37.5 to 50 bps may be the new floor.

Price Decks for crude are down approximately 30% from September and 17% for natural gas.

For next redetermination season, we expect significant decreases in borrowing bases…some

property sets will be hit more than others.

E&P up front expectations are in the 75-125 range

Pricing grids for E&P companies based on usage are up 75-100bps for new money deals

(L+200-300 for lenders that can actually do new money).

Expect midstream to range from 350-450 bps

Upfront fee for E&P 75-125 bps, Midstream 100-200 bps upfront

Undrawn fees are up.

Other structural aspects have tightened across the board (i.e. more and tighter covenants).

Conclusion