Perhaps it has always been this way, but it seems like there is much more uncertainty in the business environment these days. Interest rates are rising, and they may be at their peak… but then again, maybe not. Our economy still has high inflation… yet everyone’s talking recession. Many office buildings are only 50% occupied… will workers return? When? Regional banks are on uncertain footing (1) … and the national debt ceiling? … don’t even get me started! In the face of this instability, last month Five States launched its 31 st real asset energy fund (see page 9 for details), and we have been meeting with institutional and family office investors, many of whom acknowledge this state of affairs. From them we heard that while the business environment is perplexing, it hasn’t caused them to sit on the sidelines. On the contrary, they plan to be opportunistic and prepared for a coming upturn, with many believing that oil, gas, and other commodity investments will lead the way. To illustrate this point – last year, in April 2022, Five States was the only energy company invited to speak about its energy fund strategy at a well-known national conference. In comparison, at the same conference this year, April 2023, Five States was one of four energy companies invited to present. This is indicative of the level of attention oil and gas investments are now getting, especially from some of the nation’s most sophisticated investors. Some recurring themes we heard at the conference include: The dismal performance of most publicly traded equities last year left many portfolios out of balance, meaning there is now a disproportionately small fraction of value held in publicly traded securities and a higher fraction held in alternative asset classes such as private equity, real estate, and private credit. The result? A significant rebalancing of portfolios has begun, and it may take many months/years to bring some portfolios back into balance. In contrast, the exceptional performance of oil and gas assets last year, coupled with heightened sensitivity to energy security and the ongoing war in Ukraine, have revealed that many investment portfolios currently lack enough exposure to the energy industry, and specifically oil and gas. Further, most acknowledge that while conventional energy is not novel or sexy, and gets some negative publicity, oil and gas are fundamental to our economy. As such, energy assets are once again at the forefront of investor interest. Most attendees believed that many macro factors point to a coming increase in oil and gas prices, and they want to be opportunistic now with the expectation of material price increases toward the end of the year. The attention our fund strategy is getting is welcome but hardly unexpected. Why? Because investment strategies are sometimes like clothing styles; they can move in-and-out of fashion quickly and without warning. But like that navy-blue suit, the solid tee, or the black slacks in your closet, energy is an investment “essential” and should always have a place in your investment wardrobe (err… portfolio). Energy is a fundamental driver of a thriving society so it can never be ignored. So, we aren’t surprised by the attention we’re getting because as a portfolio essential, energy investments such as Five States funds have weathered many investment cycles and are a key ingredient of any imaginable future and should always remain in fashion.

2022 was a terrific year for Five States and, from a financial perspective, for the investors in Five States funds. As you will read in this issue of The Producer, distributions from our oil and gas production funds were in the double-digits, ranging from 25.5% to 54.0%. In a year that was dismal for just about every asset class in most investment portfolios, Five States funds stood out as a bright spot. 2022 also marked a year in which we closed two new funds, one being the largest production fund in Five States’ history, and the other being our first fund in the renewable energy space. To be sure, as the Five States story continues to be written in the future, when we reflect back on 2022 it will bring a smile to our faces!

If you have read The Producer over the last two years, you may recall we have been reporting on different aspects of ESG as it applies to Five States. ESG (Environmental, Social and Governance) is a term used broadly to describe ethical, measurable principles and best practices for companies that seek to improve on socially conscious business behaviors. ESG has become so relevant and newsworthy over the last decade or so that we now dedicate a portion of each issue of The Producer to this topic. Some examples of ESG initiatives are shown below. Search for Selective Operator Relationships Five States is selective in choosing properties to acquire and operators with whom to work. Because of this, we can have some influence on decisions and actions taken by our operators, and we hope to make a positive impact through them. A case in point is our most recent property acquisition. Five States Energy Income 2021 made a $6.0 million acquisition of conventional proved developed producing (“PDP”) properties in Campbell County, Wyoming in the third quarter. Impact Energy Partners, LLC (“Impact”) led the acquisition process, bought a sizeable share of the properties themselves, and took over operations from the seller. Impact exemplifies the kind of operator we look for as we develop our operator network. Not only are we convinced that they know how to effectively operate a field, but they also have an ESG focus. Impact Energy Partners, LLC Impact is an Oklahoma City based family business that emphasizes good stewardship of the resources they manage (an ESG signal). Its principals Mickey Raney (CEO) and Grant Raney (VP - Land) believe in using business as a platform to impact lives (another ESG signal). Mickey’s focus has been on acquiring quality PDP properties that have potential for improving profitability using modern technology. Grant is highly relational … a highlight of his work years ago was in Appalachia where he got to know and interact with the local Amish community. The Impact group has stuck to its roots for the past 30 years, maintaining a traditional model of buying PDP properties, maintaining or increasing production and recompleting zones. Their presence in the ESG space, particularly in the Environmental (the “E” in ESG) area, is notably evidenced by their building a separate company to handle mitigation and remediation issues. Environmental Remediation Environmental Impact Solutions, LLC (“EIS”) is an Impact affiliate that provides emergency spill response services to other operators and contractors, serving as environmental remediation experts. They fix environmental problems at well sites and make the land better. In fact, their slogan is “Leaving it better for the next generation”. Environmental remediation is required when there are chemical spills (hazardous waste), oil spills, or refined petroleum product spills (diesel, gasoline, motor oils or hydraulic oils). Remediation may also be required due to water produced from a well; this is often the costliest spill a company will have, and it can be the most detrimental to the environment. If a customer has an environmental concern, EIS is ready to provide complete management of that concern. The EIS team of field personnel is capable of providing a response to most requests, and they can set in motion a containment and recovery plan that will limit the environmental impact of releases. Their services include spill containment, recovery, site delineation, remediation plan development, remediation, soil testing and closeout reporting. Their reports contain detailed steps taken, before and after photos, a site map and all sample reports, leaving the customer with a report that can be delivered to state and federal agencies. The professionals at EIS follow the strictest safety guidelines, and they are ready 24/7 to deploy emergency response trailers and personnel to a spill site. Grant Raney commented: “Like Five States, it is important that our strategic partners share our core values, understand the oil and gas industry both from a technical and sustainability side in addition to being enjoyable to work with. Five States embodies everything we look for in a partner, so we are excited to have partnered with Five States on our recent Wyoming acquisition and look forward to continued growth together on additional acquisition opportunities.” We are confident that Impact and EIS will prudently manage our most recent property acquisition in Wyoming, and it is reassuring to us at Five States to know they will be on point to address any environmental issues that might surface. We are also pleased that they have such a dedicated presence in the area of ESG. Closing Remarks As the Five States business development team focuses on building its operator network, we consider how each potential new operator emphasizes and addresses ESG issues. We feel Impact and Five States are aligned in that area. We hope you found this article both relevant and interesting. We intend to keep you informed about ESG topics and how they pertain to both market segments that are integral to our business and to your investments in our funds: energy production and investment management.

Last week my wife and I met with our financial advisor to discuss the performance of our investment portfolio for the year, and you can imagine how that went. At meeting time, all major domestic stock indices were down 20% - 30% YTD and the bond funds, although better, were still awful. Even our alternative positions, that were intended to buffer market gyrations, had suffered. All the numbers in my portfolio were red… that is, except for those in the recent Five States funds, specifically FSPA 2020 and FSEI 2021. Those funds have performed exceedingly well so far in 2022 and investors in those funds will enjoy reading about them in this issue of The Producer. Now to be fair, oil and gas properties are diminishing assets and over time, as we produce and monetize reserves and distribute profits to investors, production naturally falls off and likewise we expect cash flows to decline. Because of this “behavior”, investors who enjoy cash flow generating investments like Five States’ funds may choose to reinvest some of the cash flow from one fund into future funds… essentially creating a “fund ladder”. But this strategy begs some questions. First, when will be the next opportunity to participate in a Five State fund? Our latest oil and gas fund closed to new investors in July and about 65% of its capital is deployed, but our next fund is right around the corner; we plan to issue FSEI 2023 early in the first quarter of the new year. Second, given that oil and natural gas prices have fallen off highs seen earlier this year, and in the face of a possible global slowdown, is now the right time to invest in this segment or is it too late to jump in? The answer to this depends on an investor’s perspective and risk tolerance. We believe it is still a very good time to “join the party” based on our observations of the market: There is good deal flow that is yielding high quality assets, We continue to be able to buy them at low valuations, and Oil and natural gas prices are forecast to remain at or around their current levels. With respect to items 1 and 2 above, we are still seeing a good amount of deal flow in the size and with the quality of assets we target. Case in point, the Wyoming asset package we acquired in August for FSEI 2021 was a $6 million purchase that we conservatively priced to yield an unlevered PV18. In this case, Five States was invited by an operator to buy a significant fraction of a larger package. Note that “invited” is an operative word; Five States was invited to join this deal because our funds have investment capital ready, and once we got comfortable with the asset, there was complete certainty we would have cash-in-hand at closing time. Without a doubt, it was Five States’ reputation for certainty and speed of closure that brought this opportunity to us. I have mentioned frequently in prior Producer letters and webinars about the underinvestment in oil and gas development since 2015 and the cash-starved environment it has created; this is an example of how the current environment is working to the benefit of the Five States business model. Regarding item 3 above (the sustainability of oil and natural gas prices), just about every metric used to forecast prices suggests that there is upward pressure on prices over a prolonged period of time. The one major factor currently running counter to this and putting downward pressure on prices, is the slowing of the global economy. While this cannot be ignored, a slowing economy could reduce prices, which should lower property values, which in turn could yield more and better deal flow (items 1 & 2 above), so that when the economy recovers, we are well positioned to benefit from that recovery. Our 12-year fund cycle allows our funds to weather these downturns and take advantage of the economic recovery. Having seen this many times in the past, our hope and expectation is that the Five States business model can and will prevail in the form of very good financial performance. Regardless of what the future holds, the Five States team will continue to work every day to maximize the performance of our funds on behalf of our investors. We thank you for being among them.

A friend of mine who coaches his daughter’s volleyball team once taught me an important lesson. After the team executes an excellent play, usually ending with someone “spiking the ball” to secure a point, the team briefly gathers, they give each other a high five, and say some encouraging words before they get back in position and resume play. If this was the end of a set, the celebration would last longer and be more demonstrative; nevertheless, they would get back in position and prepare for the next set until the match was over. This action looks trivial to some, but it is more important than one might think. The coach said that when his team wins a point, a set, or an entire match, its important to pause, acknowledge their achievement, and celebrate even the smallest “win” before getting back to work. That’s what this issue of The Producer is dedicated to … celebrating after spiking the ball. You see, the Five States team has a lot to celebrate: In 2021, Five States issued not one, but two energy funds; both were successfully subscribed and closed this summer. One of the funds was Five States’ first renewable energy fund. We raised over $100 million of investor capital for the funds including a sizeable co-investment in one. We welcomed the first institutional investor in Five States’ history, joined by a new single-family office investor. Combined, we have about 125 investors in the two new funds, of which over 40% are new to Five States. In FSEI 2021, we are making our first investor distribution before we make our last cash call; this is the second time we have done this for a new fund in the last two years. … and the list goes on. As stated above, the Five States team has a lot to celebrate, and we are extremely optimistic about our funds, those we just closed and those we plan to issue in the coming months. High fives all around! OK, Celebration over… Back in position. Get ready for what the world will serve up. At Five States, closing a fund represents an important shift in our business activity. For some companies, business cycles are seasonal, with business ramping up during the summer or in the months before Christmas. Other companies must manage against year end, while still others get busy before tax deadlines. But for Five States, our business cycle coincides with funds. As we close our Five States Renewable Energy and Five States Energy Income 2021 funds, and before we consider issuing the next one, the pendulum in our business cycle swings to capital deployment. In other words, our focus turns away from investor cultivation and pivots toward buying assets. This is a dramatic and important shift for the Five States team, which can involve shifting roles, reassigning tasks, and dusting off old relationships. This is why pausing for a moment after spiking the ball is such an important step. The good news is that we already have a lot of momentum. We have new assets in our sights and an aggressive team in the field turning up opportunities weekly. We look forward to sharing the results of this in the coming months when we can all celebrate together!

As our readers know by now, Five States issued two new funds last fall – Five States Energy Income 2021 and Five States Renewable Energy Fund. These funds will be closing to new investment by mid-year, and we have been pleased by the response from investors this spring. A reminder… call us right away to get into either or both of these funds! Marketing new funds is always an eye-opening experience. Meeting with prospective investors, many of whom are new to Five States, gives us first-hand exposure to what is on their mind. Having returned from a number of investor meetings/events, some with standing-room-only audiences, and others where our meeting slots were oversubscribed, we have reason to believe that our funds today are highly aligned with investor interests and our message is resonating. Why is that? And… what are investors thinking about energy investments today? The short answer – They are wondering about the macro-factors of: Commodity Prices Deal Valuation Inflation And… they are wondering how these factors will affect Investment Performance.

We continue here in our series of articles about “ESG”, which stands for Environmental, Social and Governance. ESG is a term used broadly to describe ethical, measurable principles and best practices for companies that seek to improve on socially conscious business behaviors. While Five States has emphasized ESG-type practices over our 36-year history, we are now reporting on specific ESG initiatives and measurable outcomes. Environmental To recap what has been mentioned in earlier editions of The Producer, the “E” in ESG stands for Environmental , which focuses on the performance of a business within the broader, shared natural environment. Criteria include behaviors such as the use of renewable energy, corporate policies around waste management and pollution, compliance with environmental regulations, minimizing environmental liabilities, and investing in (or working with) companies pursuing sustainable technologies. Last year, we identified an opportunity that we deemed worthy of being the basis for a Five States fund and we subsequently launched our Five States Renewable Energy Fund last fall. This fund will develop a diversified portfolio of wind royalty interests underlying commercial-scale wind projects. The target for this $36.5 million fund will be the acquisition of royalties from ~300 wind turbines. Social In the last edition of The Producer, we focused on the “S” in ESG. This stands for Social , which focuses on a company’s relationships with vendors and suppliers, the community, employees and investors. It emphasizes diversity, fairness, conflict discovery and resolution, and other social issues. The following two “Social” initiatives are currently being implemented: We are offering a new employee benefit with Cariloop, a support provider for individual caregivers of the elderly, school children, and even family pets! We will soon “go live” with a new Customer Relationship Management (“CRM”) platform to better respond to investor inquiries, add enhanced information and education capabilities to our investor relations department, and further improve our personal interactions that Five States investors have come to expect. Governance In this edition of The Producer, we focus on the “G” in ESG. This stands for Governance , which refers to the rules, roles and processes through which a company and its Board of Directors is run. The purpose of the company, the role and makeup of the Board, the level of transparency, and oversight of top executives have emerged as core issues in companies’ governance structures. Throughout our history, Five States has been a small company run by reputable Managers who have relied on a qualified and engaged Advisory Board, external auditors, published principles of compliance, and frequent use of legal counsel to manage the company honestly, fairly, and profitably. The long tenure of many Five States employees means that there is a tangible link between their actions and the company’s performance; in short, we can’t shirk accountability for our decisions, behavior and actions. But there is a downside to having a long-tenured, stable culture - it can leave us susceptible to blind spots. Five States management acknowledges the risk of relying only on familiar voices, and it believes that the views of younger generations are important to the long-term success of the company, our investors and our funds. After all, members of the younger generation will be running Five States some day! To address this, Five States has begun working with the Maguire Energy Institute in the Cox School of Business at Southern Methodist University to design a program that will create a “Shadow Board” of mid-to-senior level executive MBA students. The board will include young professionals with perspectives formed outside our company, beyond our sphere of personal/business relationships, and even from other industries. The board will be directed to work on specific Five States business challenges with the intent of identifying actionable steps that we can infuse into our business today, steps that will also shape our direction in the future. It is early in the life of our Shadow Board initiative, but we look forward to reporting on the deliverables generated in the months ahead. Closing Remarks We will continue to report periodically on our efforts with regard to ESG. We are curious about your thoughts and ideas. What do you want us to do in this area? We would welcome your comments and suggestions about ESG. Please let us know what is on your mind by contacting us at: InvestorRelations@fivestates.com (214) 560-2572

The high oil and natural gas prices we are experiencing right now make us look really smart. Many of the properties we bought when prices were low are generating cash flows for investors at a faster rate than we had expected, and for that we might be tempted to take a lot of credit. Certainly, there is a benefit to being in the right place, at the right time, with the right amount of money, but we need to “tap the brakes” on congratulating ourselves too much. The fact is, buying an oil/gas property is a singular event, an arms-length transaction that occurs at the end of a lengthy due diligence process. Timed right, it can make you look brilliant; timed wrong, and you may have buyer’s remorse. But senior leaders at established companies know that during the decade(s)-long period of owning a producing property, it is the many small decisions made and actions taken that decide the ultimate outcome of a purchase. These decisions and actions don’t make headlines and may be so small that they go unnoticed, but nevertheless, they can make as much difference to the success of an acquisition as the purchase price does. Because most of these decisions and actions occur in the background, allow me to pull back the curtains a bit and mention a few to help put this in perspective. Some key behaviors, decisions, and actions include: Assessing the risks of ownership and the steps we should take to mitigate those risks. Reacting to unforeseen factors that cause reduced asset performance and the steps we take to course correct. Identifying and exploiting upside potential for which we allocated no value or a small fraction of the purchase price. Managing and improving the relationships we inherit with a property (e.g. operators) and leveraging those into additional investment opportunities. Speaking of leverage … using bank debt wisely to add a few percentage points of additional yield to our funds and in turn, to our investors. Adding value by contributing experience and expertise in field operations, engineering evaluation, oil and gas marketing, technological enhancements, or exposure and access to capital. Infusing strategic planning, financial/technical modeling, and forecasting into the property management. Bringing the discipline to look forward, over the horizon, to anticipate challenges and recognize opportunities before they arrive, then influencing our operating partners to have that same discipline. To be sure, these actions take a lot of time, commitment, and work; but that’s what Five States investors pay us to do … it’s the role we signed up for when we asked you to invest in our funds. It’s a role we have been playing for 36 years and one in which we are always striving to get better. As of this writing, NYMEX crude oil postings are hovering around $90 per barrel … the highest level we’ve seen in over six years. Similarly, Henry Hub natural gas postings recently rose above $6 per mmbtu, approaching the highest level in over 11 years. Of course, we are excited about the effect these prices have on the performance of our fund portfolios, but we are also aware that much of the work we do, and the value we add to our investments, won’t change with commodity price movements. So regardless of whether oil and natural gas prices edge still higher (like we expect through 2Q 2022) or we see a measured return to normal (like we might expect in 2023), the Five States team will be busy working to ensure that the dozens of little decisions, behaviors, and actions we take will extract the most value out of our assets for our funds and our investors.

I am extremely pleased to report that on October 22 nd , Five States closed the largest oil and gas property acquisition in its 36-year history. It was big enough in fact, to warrant splitting the acquisition between two funds and allowed us to complete full deployment of the FSPA 2020 fund capital less than 16 months after the fund was closed. Given that the fund started when the pandemic brought our industry to an abrupt halt, this speaks to just how quickly our industry has come roaring back.  The six acquisitions for FSPA 2020 occurred during the complicated market environment we face right now; one that looks much different than any in our recollection. To say that our industry is complex is an understatement, but to imply it has gotten even more complicated requires some explanation. Five States Business Pressures With the benefit of hindsight into the Five States business model in the late 20 th century, our business environment looked straightforward and the pressures we felt were relatively few.