The StoneCap Group Enters Power and Gas Arena.

Energy Editors/Business Editors

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HOUSTON--(BUSINESS WIRE)--March 12, 2003

StoneCap Management, LLC 

-- Former senior energy industry executives, Tarpley and Scott, to head StoneCap Group, LP.

-- Company plans to purchase and operate energy assets.

StoneCap Management, LLC, today announced the formation of The StoneCap Group, L.P., a limited partnership established to acquire and control power and natural gas assets in the United States.

StoneCap's principals include Hugh Tarpley and Milton Scott. Both are former executive vice presidents at Houston-based Dynegy Inc., where, between them, they were responsible for mergers and acquisitions, strategic investments, financial planning, risk management, corporate compliance and administration.

The firm is targeting energy assets which produce, transport or deliver energy products. StoneCap also will provide value-added services, such as logistics and risk management and procurement, for wholesale, industrial and retail customers.

According to Tarpley, the time is right for industry "insiders" with experience in both regulated and unregulated natural gas and electricity markets to purchase and operate undervalued energy assets. "Following an unprecedented roller-coaster year in the merchant energy business, and the short-term failure of electricity deregulation in certain regions of the U.S.," Tarpley said, "the 'incumbent' companies are finding it necessary to divest assets in order to improve their balance sheets and enhance liquidity. We believe this environment signals an ideal opportunity to acquire assets, maximize their operating efficiencies through sound economic and management practices, provide solid returns to investors in the near-term, while positioning the assets to benefit when the industry recovers," he added.

Scott noted that today's stakeholders -- investors, employees and regulatory officials -- expect the highest standards in corporate accountability and financial performance. "Our intention is to assemble a top-flight group of seasoned professionals with the knowledge, motivation and ability to extract value from underperforming or non-strategic energy assets," said Scott. "However, our objectives extend beyond financial performance. We also intend to make customer service a top priority," he added.

Milton Scott most recently was executive president and chief administrative officer at Dynegy Inc., where he managed corporate planning, risk management, compliance and internal audit, human resources, global facilities and supply chain management. In addition to those responsibilities, he also was the liaison between Dynegy's senior management team and the board of directors, and in particular, helped develop and enhance the company's corporate governance model for accountability. Scott joined Dynegy after 22 years with the Houston office of Arthur Andersen, LLP, where he was a partner and headed the firm's Southwest Region technology and telecommunications practice. A graduate of Southern University in Baton Rouge, Scott serves on the board, is lead director and chairs the audit committee of W-H Energy Services, a NASDAQ-listed public company.

Hugh Tarpley previously was executive vice president, Strategic Investments, for Dynegy Inc., one of the leading merchant energy companies in the United States. In that role, he was responsible for mergers and acquisitions and corporate strategy, both domestically and abroad. Prior to joining Dynegy, he was president of British Gas Americas, and before that, he was treasurer of VICO (previously known as Roy M. Huffington Inc.), an exploration and production company and liquefied natural gas producer in Asia. He graduated from the University of Notre Dame.

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