Simmons L E & Associates Inc: investment adviser

SCF Partners, Incorporated (“SCF”) was formed on February 7, 1989 and began providing advisory services later that year. Since that time, SCF has provided only investment supervisory services and does not refer to its services as financial planning or some similar service. SCF became a Registered Investment Advisor in 1995. SCF provides advisory services on equity securities, including mainly privately-held but occasionally exchange-listed securities. It also provides advice on warrants and corporate debt securities (other than commercial paper). SCF does not hold itself out as a specialist in any particular type of advisory service. However, since it began providing advisory services, it has focused the vast majority of its work on the energy service and equipment industry.

SCF charges fees, as stated below, to each investment fund it manages. The fees charged are not negotiable. With the exception of SCF-VII(A), L.P. SCF-V, L.P. and SCF-VI, L.P., for all other investment partnerships, SCF indirectly receives a fixed fee of 2% per annum of the original amount committed to an investment partnership reduced by the distributions from the investment partnership which are attributable to the distribution, sale or other disposition of any portfolio investment (provided that such distributions are to be deemed for such purposes not to exceed the cost of such investment) (the “returned capital amount”). For SCF-VII(A), L.P., the fixed fee per annum is 1%. For SCF-V, L.P. and SCF VI, L.P., SCF no longer charges any fees starting the fourth quarter of 2019.

As described in Item 5 above, SCF is entitled to performance-based compensation (that is, compensation based on a share of capital gains on or capital appreciation of the assets of a client) in that once contributed capital plus an agreed return is distributed to the limited partners in the various investment partnerships, then in respect of its carried interest the general partner becomes entitled to (i) 99% of the distributions from the investment partnership until the general partner receives distributions which equal 20% of the aggregate distributions from the investment partnership since its inception in excess of contributed capital, and (ii) thereafter 20% of all future distributions from the partnership.

SCF’s clients are investment funds which are organized as limited partnerships. SCF does not perform investment supervisory services for the limited partners in these partnerships. The limited partners are typically investment companies that are not registered under the Investment Company Act of 1940 because they are privately owned, governmental entities, charitable organizations, trusts, estates, pension or profit-sharing plans, or high net worth individuals. In general, SCF has established a minimum investment for investments in each of its investment partnerships which range from $100,000 to $1,000,000. SCF has granted exceptions, however, in circumstances in which SCF deemed an exception to be appropriate.

SCF uses various analysis methods to review securities under investment consideration. Such methods include fundamental and cyclical analysis. Specifically, SCF obtains an in-depth working knowledge of a company’s operations, internal strengths and weaknesses, market, industry-niche, competitors, financial structure and management personnel. There is a risk that the analysis methods employed will fail to identify all information which, if known, could result in either deciding to not make the investment or pursuing a substantially different investment structure. Therefore, returns could be lower than expected and a loss on the investment could occur.

There have been no legal or disciplinary events with respect to the Company or its employees.

Neither SCF nor any of its management persons is actively engaged in a business other than giving investment advice. It is the policy of SCF that without prior approval from its chief compliance officer neither it nor its supervised persons shall transact in the securities owned for SCF’s clients in any way other than as a direct or indirect partner in the client partnership so that the interests of SCF, its supervised persons and the clients are aligned. Management persons of SCF have invested at times for their personal accounts in some of the same securities in which client accounts are invested. In all such cases, SCF follows policies that have been established to provide preference to clients with respect to the trading of such securities.

SCF has a written Code of Ethics which applies to all management personnel and employees. A copy of the Code of Ethics will be provided upon request. The core principles of the Code of Ethics of SCF include the following: (1) The interests of clients will be placed ahead of the investment interests of SCF, all management persons and all employees. (2) Employees and management persons are expected to conduct their personal securities transactions in accordance with the SCF’s Insider Information and Trading Policy and are to strive to avoid any actual or perceived conflict of interest with the clients. (3) Employees and management persons are expected to act in the best interest of each client.

SCF rarely engages broker-dealers, with exceptions being (1) taking an investment public via an Initial Public Offering or (2) liquidating any shares held of an exchange-listed company. When selecting a broker-dealer to pursue an Initial Public Offering, SCF considers prior experience with a broker-dealer and its knowledge of the industry. When selecting a brokerdealer to sell publicly-traded shares, SCF evaluates a broker-dealer’s experience in trading shares of the specific company (such as whether it is a market maker in said security) and SCF’s prior public-share trading experience with the broker-dealer. SCF does not receive any hard dollar benefits from any broker-dealer but, may occasionally receive benefits in the form of research. SCF has no formal soft dollar relationships.

On a quarterly basis, written reports are provided to all of the limited partners in each investment partnership. Such reports include a brief industry overview, a discussion of any major investments, liquidations or other transactions, valuations of each investor account, the recent and historical comparative financial statements for each company underlying the investment securities and a brief narrative describing the related financial results and major initiatives. Reviews of accounts and pertinent financial and operating reports are performed regularly by officers of SCF. Various reports are reviewed daily by individuals and summary reports are reviewed weekly by the officer group. SCF is constantly monitoring operations performance, financial performance and the strategic direction of each investment.

SCF does not receive any compensation for any referrals it may make. In addition, it does not pay compensation for any referrals it may receive.

Custody of client funds and assets is held by third party institutions, either transfer agents, banks or large brokerage houses. Such custodians send quarterly statements of holdings to the general partner of each investment fund. SCF, on a quarterly basis, provides a listing of client funds and assets, and the related values to each limited partner in an investment partnership. As we have power to withdraw or move funds or securities of clients, SCF is deemed to have custody of client funds and securities. Because SCF is the general partner for the funds it manages, it is deemed having custody of those assets (in addition to the fact that third party institutions actually hold many of the assets and funds).

SCF has discretionary authority to manage its client’s accounts. However, there are certain limitations stated in the related investment fund agreements such as: concentration limits, industry focus, and geographic limitations. Currently, the legal agreement governing each investment fund limits the industry in which monies may be invested to the worldwide energy services and equipment industry.

SCF votes client securities in accordance with SCF’s written proxy voting policy. A copy of this proxy voting policy may be obtained by a client upon request. In general, a voting decision requires the concurrence of a majority of the officers of SCF. Neither clients nor investors in the funds may direct the voting of client securities in a particular solicitation. Upon verbal or written request, we will communicate such votes and provide our proxy voting policy to our clients and limited partners.

The disclosures required by Item 18 do not apply to SCF Partners, Incorporated. The firm is in sound financial condition, and we are confident that we can meet future contractual commitments to our clients. The firm does not require, solicit or permit prepayment of fees six or more months in advance. Neither the Company nor any of our affiliates has ever filed a bankruptcy petition.