Wells Fargo 9 th Annual Pipeline Wells Fargo 9 th Annual Pipeline - - PowerPoint PPT Presentation

Wells Fargo 9th Annual Pipeline and MLP Symposium Wells Fargo 9th Annual Pipeline and MLP Symposium and MLP Symposium and MLP Symposium Barry E . Davis President and CE O Barry E . Davis President and CE O

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President and CE O Crosstex E nergy President and CE O Crosstex E nergy

Forward Looking Statements Forward Looking Statements Forward Looking Statements Forward Looking Statements

This presentation contains forward looking statements within the meaning of the federal securities laws. Forward looking statements are not guarantees of performance. Th i l i k t i ti d ti Th f t lt f C t They involve risks, uncertainties and assumptions. The future results of Crosstex Energy, L.P. and its affiliates (collectively known as “Crosstex”) may differ materially from those expressed in the forward‐looking statements contained throughout this presentation and in documents filed with the SEC. Many of the factors that will presentation and in documents filed with the SEC. Many of the factors that will determine these results are beyond Crosstex’s ability to control or predict. These statements are necessarily based upon various assumptions involving judgments with respect to the future, including, among others, the ability to achieve synergies and revenue growth; national, international, regional and local economic, competitive and regulatory conditions and developments; technological developments; capital markets conditions; inflation rates; interest rates; the political and economic stability of oil

• du i

atio e e y a ket eathe

• ditio

bu i e a d e ulato y o producing nations; energy markets; weather conditions; business and regulatory or legal decisions; the pace of deregulation of retail natural gas and electricity; the timing and success of business development efforts; and other uncertainties. You are cautioned not to put undue reliance on any forward looking statement. Crosstex has no obligation

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• t to put u due e ia ce o

a y o wa d oo i g state e t. C osste as

• ob igatio

to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise.

Strategically Positioned for Strategically Positioned for Performance and Growth Performance and Growth Performance and Growth Performance and Growth Well positioned assets Access to full midstream value chain Strong organizational capabilities Financially strong with access to capital Financially strong with access to capital Poised to take advantage of the macro environment

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Focused on long‐term, high‐return growth projects

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Resumption of dividends and distributions

We We Span Span the Value Chain the Value Chain

id i f d

Focused Midstream Company Focused Midstream Company Diversity of Services Diversity of Services

• Over 2 800 miles of natural gas gathering

We We Span Span the Value Chain the Value Chain

• Midstream energy services company focused
• n full value chain
• Assets strategically located in key producing
• Over 2,800 miles of natural gas gathering

and transmission pipeline

• 9 natural gas processing plants

areas and market regions

• Focus on Barnett and Haynesville shale plays
• 3 fractionators
• Over 450 miles of NGL pipeline
• 2 4 MM barrels of NGL storage capacity

2.4 MM barrels of NGL storage capacity

Transmission Lines Natural Gas Consumers Gathering, Dehydration & Compression NGL Transportation & Fractionation

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Wellhead Processing , Conditioning & Treating NGL Markets

Crosstex Corporate Structure Crosstex Corporate Structure

P bli /Oth

p

Public/Other Shareholders Public Unitholders 51% Crosstex Energy, Inc. Crosstex Energy, Inc. Directors / Executive Officers 87% 13% Crosstex Energy GP, L.P. Crosstex Energy GP, L.P. 100%

2% GP Interest

gy, (NASDAQ: XTXI) gy, (NASDAQ: XTXI) 25%

GSO Crosstex Holdings

gy

100% IDRs

2% Crosstex Energy, L.P. (NASDAQ: XTEX) Crosstex Energy, L.P. (NASDAQ: XTEX) 22%

Holdings

Crosstex Energy Services, L.P. Crosstex Energy Services, L.P.

$725 MM Sr. Unsecured Notes

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All Assets and Operations All Assets and Operations

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Strategically Positioned Assets Strategically Positioned Assets Strategically Positioned Assets Strategically Positioned Assets

North Texas

~780 miles of pipeline 3 processing plants 3 processing plants

Processing & NGLs

~440 miles of NGL pipeline

LIG

~2,100 miles of pipeline 2 processing plants 440 miles of NGL pipeline 4 processing plants 2 fractionation facilities

$35

2010 Guidance ($MM)

$111 (50%) $35 (16%) 6 $74 (34%)

NTX LIG PNGL

North Texas North Texas

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NTX: Strategically Positioned in the NTX: Strategically Positioned in the Barnett Shale Barnett Shale Barnett Shale Barnett Shale

Fossil Creek Fossil Creek Benbrook

Well Positioned Assets (current capacity) :

• NTPL – 375 MMcfd
• NTX Gathering Assets – 1 Bcfd +
• Azle plant – 50 MMcfd

North Texas Gathering Systems

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• Goforth plant – 30 MMcfd
• Silvercreek plant – 200 MMcfd

Systems North Texas Pipeline Processing Plant

NTX: New Long Term Gathering NTX: New Long Term Gathering Agreements Agreements

North Texas Expansion Project 1:

• N

10 t t t N TX V l it t f t l t 50

Agreements Agreements

• New 10 yr. transport agreement on N.TX Volume commitment of at least 50

MMBtu/d

• Expected capital of less than $10 million cash

Expected capital of less than $10 million cash

• Expected annual run‐rate cash flow of approximately $8 million
• System expected in operations first quarter 2011

y p p q

North Texas Expansion Project 2:

• $25 million, 15‐mile expansion project supported by volumetric commitments

$ , p p j pp y

• Seven‐mile low‐pressure pipeline, eight‐mile high‐pressure pipeline and

compressor station in southwest Tarrant County

• Peak flow rate in 2012 expected to be more than 100 MMBtu/d
• System expected in operation first quarter 2011

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Barnett Shale Volume / Undeveloped Barnett Shale Volume / Undeveloped Location Projection Location Projection Location Projection Location Projection

Barnett Volume Projection

(PIRA 2/10 Fcst)

* Approximate number of undeveloped locations remaining as of April 1, 2009

10,000 12,000 (PIRA 2/10 Fcst)

pp p g p

6,000 8,000 MMCFD

17K* 22K*

2,000 4,000 M

11K*

‐ J‐90 J‐91 J‐93 J‐94 J‐96 J‐97 J‐99 J‐00 J‐02 J‐03 J‐05 J‐06 J‐08 J‐09 J‐11 J‐12 J‐14 J‐15 J‐17 J‐18 Hi h B L

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Source: Netherland, Sewell & Associates, Inc.

High Base Low

LIG LIG

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LIG: Strategically Located Assets LIG: Strategically Located Assets LIG: Strategically Located Assets LIG: Strategically Located Assets

Well Positioned Assets (current capacity) :

• LIG ~ 1Bcfd
• Gibson Plant – 145 MMcfd

LIG System NGL System

Gibson Plant 145 MMcfd

• Plaquemine Plant – 225 MMcfd

NGL System Processing Plant

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LIG: Strong E xecution LIG: Strong E xecution Haynesville Opportunities Haynesville Opportunities Haynesville Opportunities Haynesville Opportunities

Haynesville Projects

Capacity MMcf/d

• Avg. Contract

I S i T t l C t t d T

Haynesville Projects

In Service Total Contracted Term

• N. LIG Contracted Projects

Red River Project Q3 2007 240 240 5 yr North LIG Expansion Phase I Q4 2008 35 35 10 yr North LIG Expansion Phase II Q2 2009 100 100 10 yr Black Lake Interconnect Phase III – Part I Q4 2009 35 35 3 yr Red River Amine Unit (120 MMcf/d Capacity) Q4 2009 3 yr Black Lake Interconnect Phase III – Part II Q2 2010 25 25 1.5 yr Black Lake Interconnect Phase III Part II Q2 2010 25 25 1.5 yr LIG Phase IV Expansion‐ Part I Q3 2010 30 30 5 yr Total Contracted 465 465

• Wtd. Avg. Life

5 years y

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Processing and NGL’s Processing and NGL’s

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PNGL: Strategically Located Assets PNGL: Strategically Located Assets PNGL: Strategically Located Assets PNGL: Strategically Located Assets

Truck and rail from Marcellus, Bakken, Eagle Ford, Permian Basin Well Positioned Assets (current capacity) :

• Eunice – 1.2 Bcf/d; 50,000 Bbls/d

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; ,

• Pelican – 600 MMcf/d
• Sabine – 300 MMcf/d
• Riverside ‐ 20,000 Bbls/d

PNGL: E unice PNGL: E unice Frac Frac Restart Restart PNGL: E unice PNGL: E unice Frac Frac Restart Restart Restarting 15,000 Bbls/d of existing 36,000 Bbls/d frac Capex ‐ $9.3MM with op income contribution of $3.3MM

annually

Economics supported by volume commitments and expense

savings

Project will connect Plaquemine fractionation into our

NGL system

Upside – additional capacity to bring liquids from other

plays

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Growth Opportunities Growth Opportunities

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Shale Opportunities Shale Opportunities Shale Opportunities Shale Opportunities Shale Opportunities Shale Opportunities Shale Opportunities Shale Opportunities

Key Macro Trends:

• Crude/gas ratio

driving focus to wet

Montana Thrust Belt Williston Basin Gammon Cody Appalachian Michigan Devonian (Ohio)

driving focus to wet gas/crude

• pportunities
• Continued low gas

prices could impact dry

Hilliard-Baxter Mancos Hermosa Mancos Excello- Antrim New Appalachian Basin Michigan Basin Illinois Basin Forest City Basin Piceance Basin Unita Basin Greater Green River Basin

Marcellus

Utica

prices could impact dry gas development

• Producers sale of

undivided property i te e t i etu fo

Lewis Pierre

Barnett Woodford Fayetteville

Mulky Albany Chattanooga Conasauga Valley and Ridge Province Black Warrior Basin Floyd- Neal Texas- Louisiana Arkoma Basin Cherokee Platform Anadarko Basin Ardmore Basin Permian Palo Duro Basin Bend Raton Basin San Juan Basin Marfa Basin Paradox Basin

interest in return for drilling carry has provided near‐term growth cap ex for drilling

Barnett- Woodford Pearsall- Eagle Ford

Eagle Ford Haynesville

• Bossier

Ridge Province Louisiana- Mississippi Salt Basin

• Ft. Worth

Basin Maverick Sub-Basin Rio Grande Embayment Basin

drilling

• Lack of NGL

infrastructure (RM transport and fractionation) will be

Basins Shale Gas Plays Shallowest / Youngest Deepest / Oldest

fractionation) will be key for continued development

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Source: EIA

Growth, Focus and Prioritization Growth, Focus and Prioritization Growth, Focus and Prioritization Growth, Focus and Prioritization Growth, Focus and Prioritization Growth, Focus and Prioritization Growth, Focus and Prioritization Growth, Focus and Prioritization Company’s strategic advantages include:

E f ti ti ith il d b

– Excess fractionation with rail and barge access – NGL market knowledge through PNGL – Experience with large shale developments

p g p

– Regional experience (i.e., Texas and Louisiana) – Producer relationships/customer service

Targeted areas include:

– Emerging shale plays focusing on wet gas/crude – NGL opportunities utilizing existing infrastructure – Large scale gathering, processing and take‐away

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Financial Overview Financial Overview

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Current Current Financial Focus Financial Focus Current Current Financial Focus Financial Focus

Maintaining strong liquidity position for flexibility – No near term debt maturities – Over $300 million available on revolver Deleveraging balance sheet Improving cash flows Focusing on high return investments Focusing on high return investments

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Conservative Financial Guidelines Conservative Financial Guidelines Conservative Financial Guidelines Conservative Financial Guidelines

• Fund organic growth and strategic opportunities with internal cash

flows and a balanced mix of debt and equity flows and a balanced mi of debt and equity

• Maintain a balanced contract mix and an active commodity price

hedging program consistent with risk management guidelines N l i h d i i i i f ki

– No speculative hedging positions, no compensation for taking

positions

– Utilization of product‐specific swaps

• Maintain adequate liquidity to manage business cash flow

requirements, margin requirements and business risks

• Maintain a conser ati e capital structure and le erage ratios
• Maintain a conservative capital structure and leverage ratios

– Achieve a ratio of Debt/EBITDA of 4.0x

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Operating Income Summary & Operating Income Summary & Operating Income Mix ($ MM) Operating Income Mix ($ MM) Operating Income Mix ($ MM) Operating Income Mix ($ MM)

2008 2009 2010 (3)

$100 $120 $140 NTX G&T NTX Fee Based NTX Commodity Based

North Texas $103 $113 $111 LIG $82 $80 $74

$‐ $20 $40 $60 $80 2006 2007 2008 2009 2010

PNGL (1) $12 $23 $35 Shared Services & Other ($14) ($14) ($13)

$50 $60 $70 $80 $90 LIG Mktg. & Trans. LIG Fee Based LIG Commodity Based

Total Continuing Operations $183 $202 $207 …. Discontinued Operations(2) $91 $50 $0

$‐ $10 $20 $30 $40 $50 2007 2008 2009 2010

Total $274 $252 $207

(1) Includes impact of Eunice lease buy‐out in 2009 and Intracoastal acquisition‐‐ $2 MM

$20 $25 $30 $35 $40 $45 PNGL Fee Based PNGL Commodity Based

impact in 2009 and $13 MM impact in 2010 (2) Includes contributions from sold assets (STX, Miss, Ala, Treating, Seminole interest, Arkoma, and ETX) (3) 2010 represents mid‐point of guidance

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$‐ $5 $10 $15 $20 2007 2008 2009 2010

Gross Gross Margin By Contract Type Margin By Contract Type Gross Gross Margin By Contract Type Margin By Contract Type

2008 (1) 2009 (1)

• Non‐commodity based margins have increased from ~68% in 2008 to greater than 81% in 2010 (in Guidance)

2010 (Guidance)

15% G& T Fee POL Proc Margin 13% 9% G& T Fee POL Proc Margin 14% 5% G& T Fee POL Proc Margin 58% 10% 17% 66% 12% 65% 16%

YTD 09/30/10

G& T Fee POL Proc Margin 11% 12%

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63% 14%

(1) Excludes Discontinued Operations

Guidance for 2010 Guidance for 2010

Total Year 2010 Low High

Net income $ (41) $ (10)

Guidance for 2010 Guidance for 2010

Depreciation and amortization 113 113 Stock‐based compensation 6 6 LOC Fees & Interest 80 79 Taxes and other 2 2 Adjusted EBITDA $ 160 $ 190 Adjusted EBITDA $ 160 $ 190 Taxes and other $ (3) $ (3) LOC Fees & Interest $ (80) $ (79) Maintenance capital expenditures $ (12) $ (10) Distributable cash flow $ 62 $ 96 Growth Capital $ 35 $ 35 Key Assumptions for Forecast Weighted Average Liquids Price ($/gallon) $ 0.80 $ 1.09 Crude ($/Bbl) $ 69.37 $ 94.52 Natural Gas ($/MMBtu) $ 6.00 $ 5.00 Natural Gas Liquids to Gas Ratio 149 9% 245 0% 25 Natural Gas Liquids to Gas Ratio 149.9% 245.0% XTEX Distribution per Unit $ 0.30 XTXI Dividends per Share $ 0.10 25

Appendix Appendix

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Reconciliation to Net Income Reconciliation to Net Income Reconciliation to Net Income Reconciliation to Net Income

Net Income to DCF Reconciliation:

Years Ended

($ in millions)

December 31 2009 2008 (Unaudited) ( ) Net income (loss) attributable to Crosstex Energy, L.P. $ 104 $ 11 Depreciation, amortization and impairments (1) 132 163 Stock‐based compensation 9 11 Interest expense, net (2) 130 105 L ti i h t f d bt 5 Loss on extinguishment of debt 5 ‐ Gain on sale of property (184) (51) Taxes and other 8 6 Adjusted EBITDA 204 245 ‐ ‐ Interest (2)(3)(4) (121) (83) Cash taxes and other (5) (3) (3) Maintenance capital expenditures (11) (18) Distributable cash flow $ 68 $ 141

(1) Excludes minority interest share of depreciation and amortization of $290 and $286K for the year ended 2009 and the year ended 2008 respectively. Includes depreciation, amortization and impairments related to discontinued operations of $10.7 and $26.4 million for the year ended 2009 and the year ended 2008 respectively. (2) Includes interest expense allocated to discontinued operations of $34.9 and $30.0 million for the year ended 2009 and the year ended 2008, respectively. (3) Excludes $4.3 million of debt issuance cost amortization, and $5.2 million of senior secured note make‐whole and call premium paid‐in‐kind interest resulting from repayment of such notes from the proceeds of asset sales for the year ended 2009

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resulting from repayment of such notes from the proceeds of asset sales, for the year ended 2009. (4) Excludes noncash interest rate swap mark to market of ($797K) for the year ended 2009, and $22.1 million for the year ended 2008. (5) Includes Seminole Adjustment of $39 million for the year ended 2008.