EQUITY RESEARCH 22 October 2010

MLP QUARTERLY MONITOR IS IT TOO LATE TO INVEST IN MLPS?

Barclays Capital does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. PLEASE SEE ANALYST(S) CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 222.

Barclays Capital | MLP Quarterly Monitor

OUTLOOK

Is It Too Late To Invest In MLPs?

U.S. MLPs The AMZ Index has traded to an all-time high and currently resides126% above the trough Richard Gross set in November 2008. As of 3Q close, the sector has generated the best one-, three-, five- 1.212.526.3143 and ten-year performance across credit, equity, real estate and commodity indices. For the [email protected] past ten years, the Index delivered a compound annual return of 17.9%. We estimate MLPs BCI, New York can deliver 11.0% potential return over the next decade. On a risk-adjusted basis, we view Jim Harmon this as highly competitive in the “new normal” post subprime investing environment. 1.212.526.3225 [email protected] „ Barclays Capital Economic team has once again reduced the exit rate yields for the 10- BCI, New York Year Treasury in 2010 and 2011. Since the last publication of the “Monitor” it has made two reductions: Cumulatively, the 2010 and 2011 exit rates have been reduced by Heejung (Helen) Ryoo, CFA 145bp and 90bp to 2.40% and 3.20%, respectively. With these changes in hand we 1.212.526.0795 have raised our AMZ 12- and 24-month targets to 369 and 387.8, implying sequential [email protected] returns of 12.2% and 12.2%, respectively. BCI, New York

Brian J. Zarahn, CFA „ NGL infrastructure-levered MLPs have outperformed. Many look expensive versus 1.415.263.4762 historical valuation metrics. Almost 65% of NGL supply growth will come from three [email protected] regions: the Bakken, Marcellus and Eagle Ford plays. Two of the regions are devoid of BCI, New York infrastructure, and the third is rapidly running out of capacity. We see unannounced

Christine Cho, CFA need for pipeline, fractionation and processing capacity. Roll-off of vintage fractionation 1.212.526.8419 contracts will likely result in large price increases for existing players. We continue to [email protected] recommend EPD and OKS. BCI, New York „ M&A activity, excluding the spate of GP buy-ins, is running at a $16 billion annual rate. Jerren Holder With the exception of 2007 where just under 50% of the deals were in the start-up E&P 1.212.526.3827 segment, we expect 2010 will set a record by a wide margin. Activity has been, and we [email protected] believe will be, primarily concentrated in the natural gas and NGL areas. Multiples BCI, New York remain subdued a despite the drop in WACCs. We continue to view GP buy-ins as driven by case-specific reasons. Disparity in multiples offered is directly related to multiple of underlying LP offered as currency for purchase.

„ Our recommendations continue to focus on growth: drop-driven (CHKM, EPB, WES), capex-induced (MMP, SXL) aside from the affinity for NGL infrastructure. Generically, the opportunity set both organically and from an M&A (two thirds of deals year-to-date) perspective remains larger on the gas/NGL side of the value chain as opposed to the crude/refined products portion of the MLP space.

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CONTENTS

OUTLOOK ...... 3

IS IT TOO LATE TO INVEST IN MLPS?...... 3 Performance Review...... 19 Valuation Review...... 28 Capital Markets Review...... 36 M&A Review ...... 50 Commodity Review...... 57 AmeriGas Partners, LP (APU) ...... 86 Atlas Pipeline Partners, LP (APL) ...... 89 Blueknight Energy Partners, LP (BKEP) ...... 92 Boardwalk Pipeline Partners, LP (BWP)...... 95 Chesapeake Midstream Partners, LP (CHKM)...... 98 Copano Energy, LLC (CPNO) ...... 100 Crosstex Energy, LP (XTEX)...... 103 DCP Midstream Partners, LP (DPM) ...... 106 Duncan Energy Partners, LP (DEP)...... 109 Eagle Rock Energy Partners, LP (EROC)...... 112 El Paso Pipeline Partners, LP (EPB)...... 115 Enbridge Energy Partners, LP (EEP) ...... 118 Energy Transfer Partners, LP (ETP)...... 121 Exterran Partners, LP (EXLP) ...... 124 Ferrellgas Partners, LP (FGP)...... 127 Global Partners, LP (GLP) ...... 130 Holly Energy Partners, LP (HEP)...... 133 Inergy, LP (NRGY) ...... 136 Kinder Morgan Energy Partners (KMP)...... 139 K-Sea Transportation Partners, LP (KSP)...... 142 Magellan Midstream Partners, LP (MMP) ...... 145 Markwest Energy Partners, LP (MWE) ...... 148 Niska Gas Storage Partners, LLC (NKA) ...... 151 NuStar Energy, LP (NS) ...... 153 ONEOK Partners, LP (OKS)...... 156 Plains All American Pipeline, LP (PAA)...... 159 PAA Natural Gas Storage, LP (PNG)...... 162 Regency Energy Partners, LP (RGNC)...... 164 Spectra Energy Partners, LP (SEP)...... 167 Suburban Propane Partners, LP (SPH) ...... 170 Sunoco Logistics Partners, LP (SXL)...... 173 TC Pipelines, LP (TCLP)...... 176 Teekay Offshore Partners, LP (TOO) ...... 179 Western Gas Partners, LP (WES) ...... 182

APPENDIX...... 185

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Figure 1: Comparative Returns Across Asset Types, 2000-2010

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD 10-Year CAGR 5-Year CAGR 3-Year CAGR

Commodities Commodities MLPs Commodities Small Cap REIT Commodities REIT Commodities Bar Cap HG MLPs MLPs MLPs MLPs MLPs 49.7% 40.9% 43.7% 32.1% 47.3% 31.5% 25.6% 35.9% 32.7% -4.9% 76.4% 24.3% 17.9% 12.8% 12.6%

Non US Equity MLPs REIT BarCap HG MLPs Utilities Non US Equity Non US Equity Utilities BarCap HY BarCap HY REIT REIT Ba rCap HY BarCap HY 27.3% 45.7% 12.8% 10.1% 44.5% 21.3% 14.0% 26.9% 15.3% -26.2% 58.2% 19.6% 10.2% 8.4% 8.7%

Small Cap Utilities Ba rCap HG REIT Non US Equity Non US Equity Utilities MLPs MLPs Utilities Non US Equity BarCap HY BarCap HY Non US Equity BarCap HG 21.3% 43.6% 10.3% 3.6% 39.2% 20.7% 14.0% 26.1% 12.7% -29.9% 32.5% 11.5% 8.0% 2.4% 5.3%

S&P 500 REIT BarCap HY BarCap HY REIT Small Cap REIT Small Cap Non US Equity Small Cap REIT BarCap HG Small Cap BarCap HG Small Cap 21% 26.8% 5.3% -1.4% 36.7% 18.3% 12.1% 18.4% 11.6% -33.8% 28.6% 10.8% 4.0% 2.3% -4.3%

BarCap HY BarCap HG Small Cap MLPs BarCap HY Commodities MLPs Utilities S&P 500 MLPs Small Cap Small Cap Non US Equity REIT REIT 2.4% 9.1% 2.5% -3.4% 29.0% 17.3% 6.3% 15.8% 5.5% -36.9% 27.2% 9.1% 3.0% 1.9% -6.1%

BarCap HG Small Cap S&P 500 Non US Equity S&P 500 MLPs S&P 500 S&P 500 Ba rCap HG S&P 500 S&P 500 S&P 500 BarCap HG Small Cap S&P 500 -2.0% -3.0% -11.9% -15.7% 28.7% 16.7% 4.9% 15.8% 4.6% -37.0% 26.5% 3.9% 2.0% 1.6% -7.2%

REIT BarCap HY Utilities Small Cap Commodities BarCap HY Small Cap BarCap HY BarCap HY REIT BarCap HG Non US Equity Utilities S&P 500 Utilities -4.6% -5.9% -16.1% -20.5% 20.7% 11.1% 4.6% 11.8% 1.9% -38.0% 18.7% 1.5% 1.2% 0.6% -7.5%

MLPs S&P 500 Non US Equity Utilities Utilities S&P 500 BarCap HY BarCap HG Small Cap Non US Equity Commodities Utilities Commodities Utilit ies Non US Equity -7.8% -9.1% -21.2% -21.9% 19.5% 10.9% 2.7% 4.3% -1.6% -43.1% 13.5% 1.0% 1.2% -1.4% -9.1%

Utilities Non US Equity Commodities S&P 500 BarCap HG BarCap HG BarCap HG Commodities REIT Commodities Utilities Commodities S&P 500 Commodities Commodities -21.5% -14.0% -31.9% -22.1% 8.2% 5.4% 1.7% -15.1% -16.8% -46.5% 4.9% -3.9% -0.4% -10.2% -13.3%

Source: Bloomberg, Barclays Capital Fixed Income

Central to answering this forward-looking question is reviewing the factors that were responsible for the superior performance over the last decade. The AMZ entered the period yielding 8.9%. Distributions grew 6.9%, implying a basic value proposition of 15.8%. The yield on the AMZ fell 214bp, resulting in a terminal yield of 6.5% and a compound rate of return of 17.9%. Importantly, the end result despite the seemingly large change in yield was fairly close to the basic value proposition. The MLP benchmark index began the decade trading 313bp over the 10-Year Treasury, averaged 315bp over the government notes and closed 403bp above the 10-Year Treasury as the period closed September 30. Treasury yields dropped from 5.80% to 2.49%. Other factors that may have influenced performance include the decrease in marginal tax rates, the rise in institutional ownership, increased trading liquidity and more widespread sponsorship of the sector.

MLPs Compete Well in the “New Normal” World The majority of forecasters, including the Barclays Capital Economics team, are calling for a gentile rise in Treasury yields as the economy recovers. In fact, the Barclays Capital team has just revised its outlook for Treasury yields downward another notch, which we use to establish our AMZ targets in the latter part of this section. The actual thinking behind these forecasts is a direct function of the timing and magnitude of these recovery scenarios. Most projections, including ours, incorporate some version of “new normal” the description of the economy coined by PIMCO to describe a sluggish economic recovery and normalized growth rate burdened by consumer and governmental de-leveraging, higher marginal tax rates and regulatory burdens on corporations and individuals. The 10-Year Treasury has averaged about 4.5% over the last ten years. With this benchmark trading 4.0% or higher, the AMZ to the 10-Year spread averaged 2.5%. This implies that a reasonable target for the AMZ would be a 7.0% yield, or roughly 50bp higher than where it is trading today. As we saw in the previous discussion of what drove performance over the decade, the impact of a 214bp drop in the AMZ yield had some influence, but it was not the overriding factor, in the cumulative returns. We estimate a 50bp move over the next decade would have an even smaller influence. Less than two years of 4.5% distribution growth would nullify the impact on original principal value if the AMZ backed up 50bp. On a relative basis, it is fairly straight forward thinking that a 200bp rise in the 10-Year Treasury would have a materially different impact on credit markets. While spreads might adjust for the high-yield (HY) market given

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the implication of a strengthening economic backdrop, there would be no and minimal spread cushion for the government benchmark and IG debt markets.

…the current yield on the AMZ is Comparative Outlook Implies MLPs Very Attractive 6.5%...we arrive at a ten-year forecast of 4.5%, implying a new So where do we sit today? As noted, the current yield on the AMZ is 6.5%. The sector is value proposition of 11.0%. This larger today in several ways, which should make it more difficult to grow. Using equity figure is not as stellar as the funding as a percentage of market capitalization as a proxy for growth (over period follow- 17.9% compound return (over on offerings averaged a fairly consistent 8% of market cap) and adjusting for the creep in ten years) but the proposition is IDRs we arrive at a ten-year forecast of 4.5%, implying a new value proposition of 11.0%. no where near, implying a This figure is not as stellar as the 17.9% compound return (over ten years) but the potential collapse in valuation or proposition is no where near, implying a potential collapse in valuation or forward returns. forward returns Importantly, we think a comparison of the five-year consensus and current yield alternatives show that MLPs continue to stack up attractively versus the alternatives. We have used a mean estimate for the S&P 500 and REITs as outliers that skewed the average figures.

Figure 2: Relative Value Proposition

14.0%

12.0%

10.0% 5.6% 8.0% 6.0% 6.0% 7.8% 4.0% 8.2% 6.5% 2.0% 4.7% 1.9% 2.5% 0.0% MLPs REITs S&P 500 BarCap HY US 10 Year Treasury

Yield Growth (5-yr)

Source: Barclays Capital estimates, FactSet

The outlook for distribution The outlook for interest rates remains subdued for the next couple of years. MLPs are growth, while hard pressed to starting the next ten-year period at spreads close to one standard deviation above the norm match the last ten years, has an over the Treasury benchmark. Further, history implies spreads can close sharply versus the opportunity set centered on benchmark as yields rise. The outlook for distribution growth, while hard pressed to match shale gas, NGL infrastructure, the last ten years, has an opportunity set centered on shale gas, NGL infrastructure, migration of sources of crude, migration of sources of crude, market share gains and the continued change in the market share gains and the composition of motor gasoline. In this context we believe a 4.5% growth rate is readily continued change in the achievable. As a result despite the consistently superior results of the last ten years through composition of motor gasoline September 30, we do not think MLPs are poised for a sharp collapse. In fact, if our projections hold, the risk-adjusted outlook continues to appear competitive compared with other investments. Therefore, we believe it is fairly easy to conclude that it is not too late to invest in MLPs.

Given Link to Credit, Not Surprising MLPs at All-Time High Over the near term it is important to consider the hybrid nature of MLPs and how they are valued in the marketplace. As we have highlighted before, over the short run MLPs react more in line with the credit rather than equity market benchmarks The accompanying

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series of graphs (Figure 3) show that there has been a strong bull market in credit tied to the fact that Treasury yields are at or near an all-time low. Equity markets have lagged and both large- and small-cap indices are well off previous highs. Credit market recovery has obviously been tied to the drop in benchmark Treasury rates. At some juncture this will inevitably reverse. At that point, we expect MLP performance to decouple, as it has in the past, through spread contraction and distribution growth.

Figure 3: Index Performance

2.0% 110 2.5% 100 3.0% 3.5% 90 4.0% 80 4.5% 5.0% 70 5.5% 60 6.0% 6.5% 50 Oct-00 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-00 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10

US10YR BarCap HY

350 115 110 300 105 250 100

200 95 90 150 85 100 80 Oct-00 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-00 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10

AMZ BarCap HG

1,600 900

1,400 800 700 1,200 600 1,000 500 800 400

600 300 Oct-00 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Oct-00 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10

S&P 500 Russell 2000

Source: Bloomberg, Barclays Capital Fixed Income

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Hybrid Nature of MLPs Protects Against Reversion to the Mean Between Credit and Equities Equities were hit harder than credit by the fallout from the subprime crisis. This key event contributed heavily to the absolute and relative strength of credit and MLPs in the one-, three-, five- and ten-year rankings, including retail investors’ strong preference for bonds at the current time. Thus, we have this nagging feeling (plus are fielding many more inquiries on the subject) that as we slowly recover from this period, equities will benefit from a mean reversion to normalized values. If this occurs, how will MLPs fare in this equation? (We continually note MLPs are a hybrid security.) We believe the growth component of their value proposition will eventually result in a decoupling from bond returns. The greater the proportion of the value proposition delivered from growth, the greater the decoupling. Roughly 40% of our projection of the MLP ten-year value proposition is growth, versus the last ten-year period where it was just over 43%. In our estimation, MLPs would underperform the S&P 500 under this scenario. A key element of how close MLPs would come to the S&P is dependent on the growth rate assumed for the equities benchmark as MLPs go into the comparative period with a 460bp yield differential. Obviously, the risks of “new normal” rest much more heavily on equities, especially if this backdrop results in a very modest growth in S&P earnings. For perspective on the mean reversion idea, in Figure 4 we show the earnings yield of the S&P 500 versus the 10-Year Treasury. Looking at the roughly ten-year period post the Internet bubble, the earnings yield of the S&P 500 based on the next 12-month expectation, has been about 150-300bp above the 10-Year Treasury, with the average being 166bp. During this same period the 10-Year Treasury averaged 4.5%. Today, the S&P earnings yield to Treasury spread is 531bp. Over the next 24 months we estimate the 10-Year benchmark yield will rise to 3.50%. Applying the166bp premium to the 3.50% would result in an equity multiple of 19.4x, versus the current multiple of 13.0x. We believe estimating a 19.4x multiple in a fairly lackluster earnings growth environment could be too optimistic but conceptually we attempt to provide some perspective on MLPs’ relative performance under an equities reversion to the mean scenario.

Figure 4: S&P Earnings Yield Spread over 10-Year Treasury

9.00%

7.00%

5.00%

3.00%

1.00%

-1.00%

-3.00% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

S&P Yield Spread over US10YR Average =1.66%

Source: FactSet, Reuters estimates

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Figure 5: S&P Earnings Yield Spread over Investment Grade Credit

3.00%

1.00%

-1.00%

-3.00%

-5.00% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

S&P Yield Spread over Moody's Baa Average =-1.01%

Source: FactSet, Reuters estimates, Bloomberg

Funds Flow a Bit More Aggressive but Remains Safety, Yield Oriented …as epitomized by the rush into HY debt, investors continue to be Fund flows became slightly more aggressive as the equity market turned given signs the Fed highly yield focused and remain would use monetary policy to inject even more liquidity into the system to reduce the threat skeptical that equity markets are of a double-dip recession. However, as epitomized by the rush into HY debt, investors not a quantitative-driven mine continue to be highly yield focused and remain skeptical that equity markets are not a field. Anecdotally, we see almost quantitative-driven mine field (“highly risky”). Anecdotally (conversations with high net uniform signals that the interest worth, dedicated fund and traditional institutions/how deals are being absorbed), we see in the MLP space has not waned almost uniform signals that the interest in the MLP space has not waned. One important item to note about what is shown in Figures 6–9 beyond a casual scan of the graph lines that indicate positive of negative flows is the actual level of money being put to work. Investment grade debt continues to capture consistently high level inflows that continue to dwarf the equity and high yield markets. We believe this is also part of the body of evidence that infers MLPs remain in the middle of the fairway for attributes investors presently seek.

Figure 6: Mutual Fund Flows – Domestic Equity Figure 7: Mutual Fund Flows – All Money Market

$mm $mm 30,000 200,000 20,000 150,000 10,000 100,000 50,000 0 0 -10,000 -50,000 -20,000 -100,000 -30,000 -150,000 -40,000 -200,000 Jan-08 Aug-08 Feb-09 Aug-09 Mar-10 Sep-10 Jan-08 Aug-08 Feb-09 Aug-09 Mar-10 Sep-10

Domestic Equity All Money Market

Source: Thomson Reuters, Barclays Capital Economics Research Source: Thomson Reuters, Barclays Capital Economics Research

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Figure 8: Mutual Fund Flows –Investment Grade Corp Figure 9: Mutual Fund Flows – High Yield

$mm $mm 20,000 6,000 15,000 4,000 10,000 5,000 2,000

0 0 -5,000 -2,000 -10,000 -15,000 -4,000 Jan-08 Aug-08 Feb-09 Aug-09 Mar-10 Sep-10 Jan-08 Aug-08 Feb-09 Aug-09 Mar-10 Sep-10

Investment-Grade Corp High Yield

Source: Thomson Reuters, Barclays Capital Economics Research Source: Thomson Reuters, Barclays Capital Economics Research

Treasury Yield Assumptions Reduced Again – Form Basis for Upward The Barclays Capital Economics Revision in AMZ Targets team has reduced its outlook for the 10-Year Treasury yields The Barclays Capital Economics team has reduced its outlook for the 10-Year Treasury These changes represent a yields for the second time since we published the second quarter Monitor. These changes sizable shift in the outlook as the represent a sizable shift in the outlook as the exit rate for 2010 was cut by 145bp and the exit rate for 2010 was cut by exit rate for 2011 was shaved by 90bp. This obviously provides more running room for the 145bp and the exit rate for 2011 MLPs in the context of credit spreads and sharply reduces the likelihood of any interest rate was shaved by 90bp induced selloff in the sector. The credit team is also calling for minimal, if any, reduction in investment grade spreads versus Treasury benchmarks and modest spread tightening in components of the HY market, resulting in tightening in the overall index. This scenario bodes well for the MLPs and we have incorporated this new outlook into our AMZ price targets. In this context we have raised our 12-month spread assumption 85bp to 335bp as the 10-Year Treasury has been cut 135bp, resulting in a net contraction of 50bp. Our 24- month outlook has been increased 25bp to reflect Barclays Capital forecast of credit modestly tightening against the 10-Year benchmark. We note that the last two times the AMZ yield has reached the 6% level in November 2004 and March 2007 the 10-Year Treasury was about 4.25% and 4.5%, respectively.

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Figure 10: Alerian Price Target Assumptions 2Q 3Q Distribution growth 2010 4% 4% 2011 5% 5% 10 Year Yield Exit 2010 3.85% 2.40% Exit 12 months 4.10% 2.90% Exit 2011 4.10% 3.20% Exit 24 months 4.10% 3.50% Spread Assumptions 12 months 250bp 335bp Mid 2012 250bp 275bp AMZ Target Yield 12 months 6.60% 6.25% Mid 2012 6.60% 6.25% Source: Barclays Capital Economics Team, Barclays Capital estimates

AMZ Targets for 12 and 24 Months Raised 7.4% and 7.4%, Respectively The new inputs result in 12- and 24-month price targets for the Our distribution growth targets of 4.5% for the next 12 months and 5.0% for the following AMZ of 369.3 and 387.8, 12 months have not been changed since 2Q; the only factors that changed in the new target respectively…our implied 12- matrices are the yield assumptions and the distribution base is rolled forward by another and 24-month return for the quarter. The new inputs result in 12- and 24-month price targets for the AMZ of 369.3 and Index is still a healthy 12.2% and 387.8, respectively. These figures represent 7% increases in our present targets. Given the 24.4%, respectively AMZ has continued to perform well and is current at 349.87, our implied 12- and 24-month return for the Index is still a healthy 12.2% and 24.4%, respectively.

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Figure 11: Hypothetical Rolling 12-Months Alerian MLP Index Values – Base Case Scenario Base Case Scenario1 - Slight Spread Contraction, Modest Growth Hypothetical Rolling 12-Months Alerian MLP Index Values Assumed Distribution Growth 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 5.25% 431.3 433.4 435.5 437.6 439.7 441.8 443.9 446.0 448.1 5.50% 411.7 413.7 415.7 417.7 419.7 421.7 423.7 425.7 427.7 5.75% 393.8 395.7 397.6 399.5 401.5 403.4 405.3 407.2 409.1 6.00% 377.4 379.2 381.0 382.9 384.7 386.6 388.4 390.2 392.1 6.25% 362.3 364.0 365.8 367.6 369.3 371.1 372.9 374.6 376.4 6.50% 348.3 350.0 351.7 353.4 355.1 356.8 358.5 360.2 361.9 Target Yield Target 6.75% 335.4 337.1 338.7 340.3 342.0 343.6 345.3 346.9 348.5 7.00% 323.5 325.0 326.6 328.2 329.8 331.3 332.9 334.5 336.1 7.25% 312.3 313.8 315.3 316.9 318.4 319.9 321.4 323.0 324.5 *Base Value: AMZK =349.9, Yield 6.31%, Implied Distribution= $22.09 - as of October 15, 2010 1= 2010 Barclays Capital GDP Forecast: 2.8% (1Q10: 3.7%, 2Q10: 1.7%, 3Q10: 2.5%, 4Q10: 3.0%)

Hypothetical Rolling 12-Months Alerian MLP Index Total Return Potential Assumed Distribution Growth 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 5.25% 29.7% 30.4% 31.0% 31.6% 32.3% 32.9% 33.5% 34.2% 34.8% 5.50% 24.1% 24.7% 25.3% 26.0% 26.6% 27.2% 27.8% 28.4% 29.0% 5.75% 19.0% 19.6% 20.2% 20.8% 21.3% 21.9% 22.5% 23.1% 23.7% 6.00% 14.3% 14.9% 15.4% 16.0% 16.6% 17.1% 17.7% 18.2% 18.8% 6.25% 10.0% 10.6% 11.1% 11.6% 12.2% 12.7% 13.2% 13.8% 14.3% 6.50% 6.0% 6.5% 7.1% 7.6% 8.1% 8.6% 9.1% 9.7% 10.2% Target Yield 6.75% 2.3% 2.8% 3.3% 3.8% 4.3% 4.8% 5.3% 5.8% 6.3% 7.00% -1.1% -0.6% -0.1% 0.4% 0.9% 1.3% 1.8% 2.3% 2.8% 7.25% -4.3% -3.8% -3.3% -2.9% -2.4% -1.9% -1.5% -1.0% -0.5%

*2009 Alerian MLP Index Total Return = 61.6% Source: Barclays Capital Economics Team, Barclays Capital estimates

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Figure 12: Hypothetical Mid-2012 Alerian MLP Index Values 10 Year Held In Check Given Weak Economy Through 2012 Hypothetical rolling 24-Months Alerian MLP Index Values Assumed Distribution Growth 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 5.25% 452.9 455.1 457.3 459.5 461.7 463.9 466.1 468.3 470.5 5.50% 432.3 434.4 436.5 438.6 440.7 442.8 444.9 447.0 449.1 5.75% 413.5 415.5 417.5 419.5 421.5 423.5 425.5 427.5 429.6 6.00% 396.3 398.2 400.1 402.0 404.0 405.9 407.8 409.7 411.7 6.25% 380.4 382.3 384.1 386.0 387.8 389.7 391.5 393.3 395.2 6.50% 365.8 367.6 369.3 371.1 372.9 374.7 376.4 378.2 380.0 Target Yield Target 6.75% 352.2 353.9 355.7 357.4 359.1 360.8 362.5 364.2 365.9 7.00% 339.7 341.3 343.0 344.6 346.3 347.9 349.6 351.2 352.8 7.25% 327.9 329.5 331.1 332.7 334.3 335.9 337.5 339.1 340.7 *Base Value: AMZK =349.9, Yield 6.31%, Implied Distribution= $22.09 - as of October 15, 2010 1= 2010 Barclays Capital GDP Forecast: 2.8% (1Q10: 3.7%, 2Q10: 1.7%, 3Q10: 2.5%, 4Q10: 3.0%)

Hypothetical Rolling 24-Months Alerian MLP Index Total Return Potential Assumed Distribution Growth 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 5.25% 42.7% 43.4% 44.1% 44.8% 45.5% 46.2% 46.9% 47.6% 48.3% 5.50% 36.8% 37.5% 38.2% 38.8% 39.5% 40.1% 40.8% 41.5% 42.1% 5.75% 31.5% 32.1% 32.7% 33.4% 34.0% 34.6% 35.3% 35.9% 36.6% 6.00% 26.5% 27.1% 27.8% 28.4% 29.0% 29.6% 30.2% 30.8% 31.4% 6.25% 22.0% 22.6% 23.2% 23.8% 24.4% 25.0% 25.6% 26.1% 26.7% 6.50% 17.8% 18.4% 19.0% 19.5% 20.1% 20.7% 21.2% 21.8% 22.4% Target Yield Target 6.75% 13.9% 14.5% 15.0% 15.6% 16.2% 16.7% 17.3% 17.8% 18.4% 7.00% 10.3% 10.9% 11.4% 12.0% 12.5% 13.0% 13.6% 14.1% 14.6% 7.25% 7.0% 7.5% 8.0% 8.6% 9.1% 9.6% 10.1% 10.6% 11.2% *2009 Alerian MLP Index Total Return = 61.6% *Growth Assumptions: 4% in 2010, 5% in 2011 Source: Barclays Capital Economics Team, Barclays Capital estimates

Conservative/Aggressive Lists Catering to Wide Diversity of Investors Our MLP research simplistically reaches two distinct categories of investors: The first is conservative, income-oriented retail investors attracted to the value proposition, risk profile and portfolio diversification aspects of owning MLPs. For many, if not most, of these investors, aggressive trading of MLPs is highly tax inefficient. As a result, this portion of the investor base tends to buy and hold, treating MLPs as a very long duration asset. The second group, at the other extreme of this constituency, are institutional investors, more likely than not, holding the names in a dedicated portfolio running their fund against an index or aggressive total return funds that have bypassed the tax implications of trading (basis management) through the use of total return swaps. In this context ratings/recommendations for one constituency might be wholly inappropriate for the other group of investors. Given this dichotomy, we have migrated to the practice of providing conservative and more aggressive lists of investments, highlighting names that have more

22 October 2010 13 Barclays Capital | MLP Quarterly Monitor

current appeal than the other core names we would use in assembling portfolios with their respective conservative or aggressive characteristics. With the exclusion of the interstate gas pipelines and propane partnerships, the conservative list is principally large-cap diversified, investment grade names. Our aggressive list is more typically comprised of smaller-cap, non-investment grade partnerships with some economic or energy price sensitivity. Within this subset, we are generally looking for evidence of superior volume growth, hedged cash flows, or tangible evidence of GP support in the event energy prices, capital markets or the economy weaken, putting pressure on distribution coverage.

Portfolio Construction – Fine-Tuning Selections but Still Focused on Growth …we would continue to skew with NGL Infrastructure Skew portfolio weights toward NGL infrastructure (EPD, OKS, WES). We continue to believe growth, real or perceived in a thematic sense, will be one of the For the short run investors will primary catalysts underpinning impressive performance in the MLP space. In this context, continue to be concerned about despite very strong absolute and relative performance year-to-date and again in the third the natural gas storage business quarter, we would continue to skew portfolio weights toward NGL infrastructure (EPD, OKS, (NKA, PNG, NRGY). WES). In the commodities section herein we summarize our bottom-up supply outlook for Drop-downs will likely drive NGLs and illustrate that certain regions are almost devoid of processing and takeaway highly visible double-digit growth capacity to handle the surge in supply and most of the other regions will need considerable for a handful of MLPs (EPB, WES) additions to that which exists today. For the short run investors will continue to be and sequential timing of concerned about the natural gas storage business (NKA, PNG, NRGY). Given how much this expansion projects under group has lagged the strong performance of the sector, we are encouraged by the potential construction or for a catch-up in performance. Drop-downs will drive highly visible double-digit growth for absorption/development around a handful of MLPs (EPB, WES) and sequential timing of expansion projects under acquisitions provide another construction or absorption/development around acquisitions provide another group of group of MLPs with tangible MLPs with tangible growth through 2011 (SXL, MMP). growth through 2011 (SXL, This basic formula has worked well to date and thus we examine relative valuation in MMP). conjunction with our current highlighted names. Our drop-down picks EPB and WES trade at9bp and 69bp within their historical spread to the AMZ. For EPB, we view the delta as inconsequential. For WES, which registered very strong performance, the spread suggests the units are expensive or a fundamental change has occurred. We think it is the latter as WES’s asset base is highly exposed to the surge in liquids-rich gas drilling. A recent analyst field trip to the DJ Basin accentuated this exposure. As a result, WES is a favored name. EPD and OKS are also trade at a respective 40bp and 32bp within their historical spread to the AMZ. Both have reacted well to a spate of announcements each has made (EPD – Eagle Ford, OKS – Bakken) regarding expansion projects. Given the sizable move the NGL infrastructure MLPs made in the third quarter, we decided to shave this exposure and have taken OKS off of our highlighted list for this quarter, but believe the fundamentals remain very strong. In place of OKS we have highlighted KMP (actually KMR) and PAA. KMP trades …spread between KMP and at 38bp wide versus historical levels. One might argue that the widening is justified as the KMR is better than one standard growth rate has slowed. At issue, however, is that the spread between KMP and KMR is deviation above the historical better than one standard deviation above the historical average and that given institutional average and that given ability to own the units we think the gap will inevitably close with the incremental pickup in institutional ability to own the performance justifying the move to the highlighted list. PAA, which runs counter to the bulk units we think the gap will of our commentary throughout this report, is a valuation call. While the yield spread versus inevitably close with the historical levels is modestly wider (+18bp) than normal, we think the units have been incremental pickup in somewhat depressed by their exposure to the gas storage business through PNG. Further, performance justifying the move as is the case for Western, we believe PAA’s fundamentals are much better than in the past to the highlighted list. when the differential history had been established. Both MMP and SXL trade almost on top of their historical yield spreads (-6bp and +9bp, respectively). We have dropped NRGY from

22 October 2010 14 Barclays Capital | MLP Quarterly Monitor

the conservative highlighted group and substituted PNG to take advantage of the depressed conditions in storage as PNGs contract base is less exposed to the softness we see in storage rates in 2010 and 2011. In addition, we find it important to comment on one more of the large-cap MLPs, ETP:

Energy Transfer, from a historical Energy Transfer, from a historical standpoint, is trading very wide (+124 BP) to the AMZ. standpoint, is trading very wide This is an unusually wide delta for one of the most liquid, large-cap names in the MLP (+124 BP) to the AMZ. universe as most are +/- 40bp from their historical averages. This is partly due to the change in back-drop from strong gas prices and wide basis to a more subdued energy price The key catalyst to closure of the setting, partly due to unfounded concerns that they might slip from investment to non- spread is a resumption of growth investment grade status and also partly due to being somewhat devoid of thematic in the distribution. We forecast exposures. At this juncture the units are unquestionably cheap from this historical just 95% coverage for the perspective. While tempting, we think it is still early for a reversion to the mean trade in this distribution in 2010 and 105% name, primarily due to our belief that gas price expectations are still too high (see coverage in 2011, all else equal. commodity section commentary). We believe the fundamentals have stabilized from a Therefore, we think the primary margin exposure standpoint due to hedging plus the addition of more fee-based interstate catalyst to closure is a well-into- gas pipe assets coming on-stream. The recent equity offering and refunding of debt at ETE 2011 event. If we are wrong, we have diminished downgrade fears. The key catalyst to closure of the spread is a resumption could readily see closure of 50bp of growth in the distribution. We forecast just 95% coverage for the distribution in 2010 and to the AMZ. 105% coverage in 2011, all else equal. Therefore, we think the primary catalyst to closure is a well-into-2011 event. If we are wrong, we could readily see closure of 50bp to the AMZ.

Figure 13: Relatively Defensive MLPs 2010 2010 2010 EV / 10/18/10 10/18/10 General Credit Growth Distribution Adjusted Institutional Partnerships Ticker Yield Partner Rating Capex ($mm) Coverage EBITDA (2) Ownership Interstate Gas Pipelines Boardwalk Pipelines BWP 6.0% Loews Corp. BBB 564 106% 17.3x 21% El Paso Pipelines EPB 4.8% El Paso Corp BB 1312 149% 17.0x 30% Spectra Energy SEP 4.8% Spectra Energy NR 23 118% 18.0x 23% TC Pipelines TCLP 6.1% Transcanada NR 0 122% 11.3x 29%

Refined Products Pipelines (1) Buckeye Pipeline BPL 6.1% Kelso, ArcLight BBB 58 110% 15.7x 26% Magellan Midstream MMP 5.6% None BBB 565 112% 16.8x 44% NuStar Energy NS 6.8% Management BBB- 335 103% 16.4x 23% Sunoco Logistics SXL 5.7% Sun Inc BBB 425 130% 14.9x 31%

Propane Amerigas APU 6.1% UGI Corp. NR 59 147% 12.2x 7% Ferrellgas FGP 7.7% Management B+ 66 105% 13.9x 5% Inergy NRGY 6.8% Mgt, Private Equity BB- 418 101% 16.4x 35% Suburban Propane SPH 6.3% None BB 20 133% 12.1x 14%

Large Cap Enbridge Energy EEP 6.8% Enbridge Inc. BBB 1443 120% 13.9x 31% Energy Transfer ETP 7.2% Mgt, EPCO BBB- 1518 95% 16.1x 19% Enterprise Products EPD 5.5% EPCO BBB- 2853 128% 14.9x 21% Kinder Morgan KMP 6.1% Mgt, Private Equity BBB 2371 101% 19.0x 17% ONEOK Partners OKS 5.7% ONEOK Inc. BBB 395 101% 16.0x 25% Plains All American PAA 5.9% Mgt, Private Equity BBB- 831 104% 16.1x 36%

* all underlying pipes are investment grade (1) all partnerships in this category are diversified - purest exposures MMP, SXL (2) Adjusted EBITDA = EBITDA - Maintenance Capital - GP Cut of DCF Source: Company filings, reports and Barclays Capital estimates

22 October 2010 15 Barclays Capital | MLP Quarterly Monitor

We have added several names to the list of aggressive MLPs. The fundamentals of several of the more fee-based names (CHKM, NKA and PNG) suggest they have a lower risk profile than the connotation implied by the depiction as aggressive. We have also added MWE as it has worked through funding issues and Linn as we believe it has alleviated the distribution risk associated with the rollover of in-the-money hedges over the next year. We would note that the composition of this list tends to be smaller market cap, less liquid names with non- investment grade balance sheets and some energy price exposure (DPM, LINE, MWE, NRP). We have not included several of the highest fundamental risk profile companies in our coverage universe as we tend to view these names as being outside of the main MLP value proposition from a risk perspective. We have already reviewed WES. Since last quarter we have picked up coverage of CHKM and would put the partnership in the double-digit, highly visible drop-down bucket where the visibility of growth and implied total return are superior to the average MLP at this juncture.

Figure 14: Higher Risk MLPs 2010 2010 2010 EV / 10/18/10 10/18/10 General Credit Growth Distribution Adjusted Institutional Partnerships Ticker Yield Partner Rating Capex ($mm) Coverage EBITDA (2) Ownership Refined Products Holly Energy Partners HEP 6.5% Holly Corp BB- 77 112% 15.0x 41% NG/NGL Pipelines & Storage Niska Gas Storage NKA 7.0% Private Equity BB 73 123% 11.6x 27% Plains Natural Gas PNG 5.5% Plains All-American NR 95 111% 26.6x 23% Regency RGNC 7.2% Energy Transfer Equity BB- 541 108% 15.6x 27% Gathering & Processing Chesapeake Midstream CHKM 5.0% Chesapeake Energy NR 252 113% 20.9x 0% DCP Midstream DPM 6.9% Spectra/ COP BBB- 127 107% 16.3x 37% MarkWest MWE 6.8% None B+ 334 124% 12.3x 34% Western Gas Partners WES 4.9% Western Gas Holdings NR 757.7 145% 18.4x 41%

Other Linn Energy LINE 7.6% None B+ na 111% 13.1x 18% Natural Resource NRP 7.5% NRP (GP) LP NR na 88% 15.5x 10%

* all underlying pipes are investment grade (1) all partnerships in this category are diversified - purest exposures MMP, SXL (2) Adjusted EBITDA = EBITDA - Maintenance Capital - GP Cut of DCF Source: Company filings, reports and Barclays Capital estimates

Distribution Growth Outlook Unchanged but Current Spread to WACC and … declarations for the first three M&A Could Bolster Forecast quarters of 2010. The 4Q09 (for distribution 1Q10) was up 2.9%, We have not changed our distribution outlook since last quarter but plan to perform a 1Q10 (for distribution 2Q10) comprehensive revue of our equity cost of capital assumptions (i.e., yield at which we are was up 3.5% and 2Q10 (for issuing stock to fund capex) post this quarter’s reporting cycle, which could reduce the distribution in 3Q10) increased dilution built into our models and improve the distribution outlook. In addition, the pace of 4.1%. This progression has been acquisitions and capex attributable to the skewing of drilling to liquids-rich gas streams and in line with our expectation that crude oil could result in a more robust set of spending assumptions. However, for the time we would gradually build back being we are still crawling out of the recessionary trough projecting distribution growth at a toward trend line growth (+/- below trend 3.9% in 2010. So far we have seen the declarations for the first three quarters 5%) of 2010. The 4Q09 (for distribution 1Q10) was up 2.9%, 1Q10 (for distribution 2Q10) was up 3.5% and 2Q10 (for distribution in 3Q10) increased 4.1%. This progression has been in

22 October 2010 16 Barclays Capital | MLP Quarterly Monitor

line with our expectation that we would gradually build back toward trend line growth (+/- 5%) as capex recovered from cautious capital market induced levels and return spreads over WACCs improved with the recovery in debt and equity markets.

Figure 15: MLP Distribution Growth Cash Distribution History & Growth CAGR (actual) Partnership 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011e 2012e 3-Yr 5-Yr 10-Yr Refined Products Buckeye Partners L.P. $2.40 $2.48 $2.50 $2.56 $2.68 $2.88 $3.08 $3.23 $3.43 $3.68 $3.88 $4.08 $4.28 6.1% 6.6% 7.0% Global Partners LP na na na na na $1.70 $1.76 $1.87 $1.95 $1.95 $1.96 $2.02 $2.07 3.4% na na Holly Energy Partners L.P. na na na na $2.00 $2.35 $2.64 $2.79 $2.96 $3.16 $3.33 $3.54 $3.77 6.2% 9.6% na Kinder Morgan Energy Partners L.P. $1.71 $2.15 $2.44 $2.63 $2.87 $3.13 $3.24 $3.48 $4.02 $4.20 $4.40 $4.62 $4.85 9.0% 7.9% 17.8% Magellan Midstream Partners L.P. na na $1.00 $1.59 $1.76 $2.06 $2.37 $2.49 $2.77 $2.84 $2.96 $3.14 $3.34 6.2% 10.0% na Sunoco Logistics Partners L.P. na na $1.84 $2.05 $2.40 $2.65 $3.13 $3.33 $3.79 $4.21 $4.61 $5.02 $5.44 10.4% 11.9% na NuStar Energy L.P. na $1.20 $2.75 $2.95 $3.20 $3.37 $3.60 $3.77 $4.09 $4.25 $4.36 $4.58 $4.80 5.7% 5.8% na Sector Average Growth: 13.6% 12.0% 37.8% 15.9% 9.0% 9.8% 8.3% 7.8% 8.6% 4.8% 4.6% 5.7% 5.5% 6.2% 7.7% 10.3% Natural Gas - Gathering & Processing Atlas Pipeline Partners L.P. $2.14 $2.50 $2.14 $2.39 $2.67 $3.16 $3.40 $3.57 $3.24 $0.15 $0.00 $1.50 $1.65 -64.7% -43.8% na Copano Energy L.L.C. na na na na na $0.94 $1.41 $1.84 $2.24 $2.30 $2.30 $2.30 $2.42 17.6% na na Crosstex Energy L.P. na na na $1.25 $1.70 $1.87 $2.13 $2.33 $2.00 $0.00 $0.50 $1.05 $1.10 -100.0% -100.0% na DCP Midstream Partners L.P. na na na na na $1.40 $1.57 $2.12 $2.39 $2.40 $2.47 $2.59 $2.75 15.3% na na Eagle Rock Energy Partners L.P. na na na na na na na $1.49 $1.63 $0.10 $0.23 $0.65 $0.65 na na na Exterran Partners L.P. na na na na na na na $1.45 $1.78 $1.85 $1.85 $1.92 $2.02 na na na MarkWest Energy Partners L.P. na na na $1.01 $1.49 $1.62 $1.88 $2.16 $2.51 $2.56 $2.56 $2.69 $2.82 10.8% 11.5% na Regency Energy Partners L.P. na na na na na $1.40 $1.46 $1.55 $1.76 $1.78 $1.78 $1.87 $1.96 6.8% na na Targa Resources Partners L.P. na na na na na na na $1.41 $1.97 $2.07 $2.16 $2.27 $2.39 na na na Western Gas Partners L.P. na na na na na na na na $1.20 $1.26 $1.42 $1.56 $1.72 na na na Williams Partners L.P. na na na na na $1.40 $1.73 $2.15 $2.50 $2.54 $2.72 $2.91 $3.11 13.8% na na Sector Average Growth: 16.8% -14.4% 11.4% 31.7% 12.5% 18.3% 19.2% 12.8% -24.2% 5.2% 34.0% 5.7% -14.3% -44.1% na Natural Gas - NGL Pipelines and Storage Boardwalk Pipeline Partners L.P. na na na na na $1.40 $1.56 $1.74 $1.87 $1.97 $2.05 $2.13 $2.21 8.2% na na Duncan Energy Partners L.P. na na na na na na na $1.46 $1.68 $1.75 $1.83 $1.90 $2.00 na na na El Paso Pipeline Partners L.P. na na na na na na na na $1.20 $1.37 $1.61 $1.80 $2.02 na na na Energy Transfer Partners L.P. $1.15 $1.21 $1.28 $1.29 $1.58 $2.00 $2.74 $3.19 $3.55 $3.58 $3.58 $3.58 $3.75 9.2% 17.8% 13.6% Enterprise Products Partners L.P. $1.05 $1.19 $1.36 $1.47 $1.54 $1.70 $1.83 $1.95 $2.08 $2.20 $2.32 $2.45 $2.60 6.3% 7.3% na Niska Gas Storage Partners na na na na na na na na na na $1.22 $1.44 $1.57 na na na ONEOK Partners L.P. $2.70 $3.05 $3.20 $3.20 $3.20 $3.20 $3.78 $4.03 $4.26 $4.34 $4.50 $4.73 $4.96 4.7% 6.3% 6.9% PAA Natural Gas Storage L.P. na na na na na na na na na na $0.89 $1.44 $1.58 na na na Spectra Energy Partners L.P. na na na na na na na na $1.38 $1.56 $1.74 $1.91 $2.11 na na na TC PipeLines L.P. $1.85 $1.98 $2.08 $2.18 $2.28 $2.30 $2.35 $2.63 $2.82 $2.90 $2.98 $3.10 $3.22 7.3% 5.0% na Sector Average Growth: 8.2% 9.7% 7.3% 3.5% 7.9% 9.6% 15.2% 14.6% 8.9% 6.8% 6.3% 8.4% 7.0% 7.1% 9.1% 10.2% Crude Oil Enbridge Energy Partners L.P. $3.50 $3.50 $3.63 $3.70 $3.70 $3.70 $3.70 $3.73 $3.92 $3.96 $4.02 $4.14 $4.29 2.3% 1.4% 3.1% Plains All American Pipeline L.P. $1.84 $2.00 $2.14 $2.21 $2.35 $2.65 $2.98 $3.28 $3.54 $3.66 $3.79 $3.98 $4.20 7.1% 9.2% na Blueknight Energy Partners, L.P. na na na na na na na $1.25 $0.40 $0.00 $0.00 $0.94 $1.25 na na na Sector Average Growth: 0.1% 4.4% 5.2% 2.8% 3.2% 6.3% 6.3% 7.7% -18.3% -31.9% 2.5% 4.0% 14.1% 4.7% 5.3% 3.1% Marine Transportation K-Sea Transportation Partners L.P. na na na na $2.07 $2.26 $2.52 $2.62 $2.99 $3.08 $0.45 $0.00 $1.30 6.9% 8.3% na Teekay Offshore Partners L.P. na na na na na na na $1.44 $1.70 $1.80 $1.90 $1.98 $2.07 na na na Sector Average Growth: 9.4% 11.5% 4.0% 16.3% 4.4% -39.9% -48.0% 5.0% 6.9% na na Propane Amerigas Partners L.P. $2.20 $2.20 $2.20 $2.20 $2.20 $2.24 $2.30 $2.41 $2.53 $2.65 $2.79 $2.92 $3.05 4.8% 3.8% 1.9% Ferrellgas Partners L.P. $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 $2.00 0.0% 0.0% 0.0% Inergy L.P. na na $1.33 $1.50 $1.72 $2.01 $2.17 $2.32 $2.48 $2.64 $2.80 $2.97 $3.16 6.8% 8.9% na Suburban Propane Partners L.P. $2.11 $2.20 $2.28 $2.33 $2.44 $2.45 $2.53 $2.85 $3.14 $3.28 $3.37 $3.46 $3.56 9.1% 6.1% 5.1% Sector Average Growth: 1.4% 1.4% 1.1% 3.8% 4.8% 4.7% 3.5% 6.1% 5.5% 3.9% 3.5% 3.4% 3.5% 5.2% 4.7% 2.3% Coal Alliance Resource Partners L.P. $1.00 $1.00 $1.01 $1.07 $1.34 $1.66 $2.00 $2.21 $2.53 $2.95 $3.25 $3.55 $4.00 13.8% 17.1% na Natural Resource Partners L.P. na na na $1.07 $1.24 $1.45 $1.66 $1.84 $2.02 $2.16 $2.16 $2.50 $2.75 9.2% 11.7% na Penn Virginia Resource L.P. na na $1.00 $1.04 $1.08 $1.31 $1.50 $1.66 $1.82 $1.88 $1.95 $2.30 $2.50 7.8% 11.7% na Sector Average Growth: 0.0% 1.3% 4.8% 14.8% 20.8% 16.4% 10.7% 11.4% 8.9% 4.7% 14.3% 10.5% 10.3% 13.5% na Exploration & Production Constellation Energy Partners LLC na na na na na na na $2.10 $1.82 $0.13 $0.00 $0.00 $0.00 na na na Linn Energy LLC na na na na na na $1.72 $2.18 $2.52 $2.52 $2.52 $2.52 $2.52 13.6% na na Sector Average Growth: 26.7% 1.1% -46.4% -50.0% 0.0% 0.0% na na na MLP Average Growth: 6.4% 7.5% 12.1% 7.9% 11.4% 10.3% 11.9% 12.4% 8.1% 3.7% 3.9% 5.0% 5.0% 1.8% 1.5% 6.8% Source: Company filings, Barclays Capital estimates

22 October 2010 17 Barclays Capital | MLP Quarterly Monitor

Figure 16: MLP Cash Distribution and CAGR

14% 12.4% 12.1% 11.9% 11.4% 12% 10.4% 10.3% 9.5% 10% 9.1% 8.5% 8.1% 7.5% 7.9% 8% 6.4% 5.0% 5.0% 6% 4.5% 3.7% 3.9% 4% 3.0%

2% 1.2%

0% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011e 2012e

Average MLP Distribution Growth* 5-Yr Average Growth

Source: Company filings, Barclays Capital estimates

22 October 2010 18 Barclays Capital | MLP Quarterly Monitor

Performance Review

MLPs Trace Mirror Image of S&P with Lower Beta The S&P 500 Index traced out a bit of a roller coaster for the quarter with the AMZ going along for the ride. The S&P rose 8.8% from June 30 to August 10. The benchmark fell 6.4% from August 10 to August 31 then rallied 8.8% through September 30 to close up 10.7% for the quarter. The AMZ followed suit on a muted basis rising 8.0% from the end of 2Q through August 6 before falling 4.5% by August 31 and rallying 6.1% to close out the quarter with a 9.5% gain. Regarding dividends, the AMZ total return of 11.2% fell just short of the 11.3% delivered by the S&P 500. This period represents the first quarter since the Lehman Brothers bankruptcy that one of our principal indices across credit equities or commodities registered a negative return. Fed policy to keep rates low buoyed credit markets and helped revive equity (risk) markets as fears over a double-dip recession were alleviated. Credit certainly lagged risk assets but the hierarchy of the risk buckets showed some inconsistencies in how this rippled through the marketplace. Notably, commodities lagged the other risk categories given the weakness of the natural gas prices. The UTY with a fairly large exposure to the dark spread (spread between nuclear and coal versus natural gas) rallied as a yield vehicle as utility yield spreads versus the credit markets had reached extreme levels as the second quarter closed.

Figure 17: Alerian MLP Index Quarterly Performance (Total Return)

40% 30% 19.5% 17.3% 16.4% 15.5% 15.7%

20% 14.0% 13.0% 12.9% 12.2% 12.0% 11.5% 11.2% 11.2% 10.5% 9.6% 8.3% 8.3% 8.2% 7.3% 7.8% 6.9% 7.1% 6.9% 6.7% 5.7% 5.8% 5.3% 5.5% 5.5% 4.6% 3.9% 4.2% 3.8% 3.9% 3.3% 3.3% 3.7% 10% 3.5% 3.1% 3.1% 2.8% 2.6% 1.9% 1.3% -0.8% -0.5% -0.6% 0% -10% -1.0% -1.6% -2.0%

-20% -4.1% -6.6% -7.3% -7.3% -8.0% -30% -9.6% -12.2% -17.2%

-40% -20.3% Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10

Alerian MLP Index Quarterly Performance (Total Return)

Source: Alerian Capital Management

22 October 2010 19 Barclays Capital | MLP Quarterly Monitor

Figure 18: Absolute Total Return Between Alerian and the S&P 500 (Quarterly)

50% 40%

30% 27.3% 22.2% 21.6% 20.4% 18.3% 14.7% 14.8%

20% 13.5% 12.3% 12.2% 10.3% 10.2% 8.3% 6.9% 6.6% 5.9% 5.4% 5.7% 4.8% 5.2% 5.0% 4.7% 4.7% 4.3% 4.1% 2.9% 10% 2.7% 2.1% 1.6% 1.6% 1.5% 1.0% 1.1% 0.3% 0.6% 0.3% -1.0% -0.1% -0.2% -0.2% -0.7% -0.1% -0.4% ` 0% -10% -1.5% -20% -2.2% -4.5% -4.1% -5.0% -4.9% -5.4% -6.0% -8.3% -8.9% -30% -9.4% -10.3% -11.7% -40% -12.0% -25.4% -50% -27.1% Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10

Absolute Total Return between AMZK and S&P 500

Source: Alerian Capital Management, FactSet

Figure 19: 3Q Performance (Total Return)

14.0% 13.2%

12.0% 11.3% 11.2% 11.1%

10.0% 8.3% 8.0% 6.7%

6.0% 4.7%

4.0%

2.0%

0.0% REITs S&P 500 MLPs Utilities Commodities BarCap HY BarCap HG

Source: Bloomberg

Despite Up and Down Movement of Indices in 3Q MLP Volatility Drops Sharply for the Quarter Despite tracing out the roller coaster performance for the quarter, the AMZ recorded low volatility on both an absolute and relative basis for the period. In general, the spread to the S&P 500 was one of the lowest since the introduction of institutions (closed end funds 2004–05) and the midstream and upstream names to the space (2006–07).

22 October 2010 20 Barclays Capital | MLP Quarterly Monitor

Figure 20: Alerian MLP Index Volatility

80% 70% 60% 50% 40% 30% 20% 10% 0% Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09

Alerian MLP Index Volatility Average = 14.5%

Source: FactSet

Figure 21: Volatility Spread – S&P 500 Versus Alerian MLP Index

20% 14.8% 15.4% 14.5% 16.0% 15% 12.9% 11.0% 10.0% 9.6% 9.6% 9.6% 9.6% 9.4% 9.1% 9.1% 8.1% 8.0% 8.1% 7.8% 7.8% 10% 7.7% 6.8% 6.0% 6.0% 5.5% 5.4% 5.5% 5.1% 5.2% 3.9% 3.1% 2.7% 5% 2.5% 2.1% 2.0% 1.9% 2.0% 1.4% 1.2% 1.1% 0.5% 0.6% 0.4% -0.2% -0.3% 0% -5% -0.4% -0.9% -1.7% -1.6% -1.9% -2.1% -10% -2.5% -4.3% -5.7%

-15% -8.7% Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09

Volatility Spread - S&P 500 vs. AMZK Average Spread 4.7%

Source: FactSet

As Markets Embrace Risk, Grow Less Fearful of Economic Slide Small Caps Shine As the market has swung from caution to relief small caps outperformed the large caps in the MLP space for the quarter. In dividing the sector into market cap quintiles, there was an almost perfect correlation between size and return for the period. The smallest cap quintile typically houses the MLPs struggling fundamentally, so it exhibits wide swings in results. Notably, it included the MLPs that registered the highest (AHD +122.8%) and two worst performances for the quarter (KSP -16.9%, CEP -10.0%).

22 October 2010 21 Barclays Capital | MLP Quarterly Monitor

Figure 22: Performance by Market Caps

20.0% 17.9% 15.4% 15.0% 10.8% 10.5% 9.4% 10.0%

5.0%

0.0% 12345

Lower Market Caps to Higher Market Caps

Average Performance by Quintile

Source: FactSet, Barclays Capital estimates

The announcements to buy in GP Acquisitions Propel Subsector Returns to Top Rank for the Quarter four GPs during the quarter coupled with the The announcements to buy in four GPs during the quarter coupled with the announcements announcements of distribution of distribution reinstatement for the underlying LPs for two other GPs resulted in the reinstatement for the underlying subsector unweighted index increasing 29.4%. Energy price-sensitive groups (Coal, E&P, LPs for two other GPs resulted in G&P) significantly outperformed the more stable subsectors (Refined Products, NG/NGL the subsector unweighted index Pipelines). Through 2Q, relative performance had principally been parcelled out as a increasing 29.4%. Energy price- function of relative growth. However, this theme was completely overrun in 3Q by the sensitive groups (Coal, E&P, switch back toward names that would hold less risk to a second slide in the economy. The G&P) significantly outperformed subsector results are often skewed by one or two outlying performances as most of the the more stable subsectors groups have fewer than 10 names comprising the index. Therefore, we also consider the (Refined Products, NG/NGL subsectors to determine if the strength or weakness was more uniform by looking at the Pipelines) percentage of names above or below the AMZ or S&P 500 for the quarter. In the case of the GPs’ performance, it is no surprise that all nine publicly traded entities beat the AMZ and even of nine outperformed the S&P. In this context, coal was somewhat mixed with three partnerships outperforming the S&P and AMZ while the other two were laggards. The E&P results were much more uniform with seven of nine beating the AMZ and five of nine outdoing the S&P benchmark. The G&P results were a similar proportion as the E&P group. Crude, Propane, NG/NGL Pipeline and Marine Transport subsectors all should have low …three gas storage names (NKA over/under ratios in line with the rankings set forth in the graphic seen in Figure 23. +4.5%, PNG +1.3% and NRGY Crosscurrents existed in the NG/NGL Pipeline (and Storage) subsector as the three gas +0.3%) all registered returns storage names (NKA +4.5%, PNG +1.3% and NRGY +0.3%) all registered returns toward the toward the low end of individual low end of individual partnership rankings for the quarter as investors fretted over gas partnership rankings for the storage rates, especially the salt dome market in the Gulf Coast. There was a distinct uplift quarter as investors fretted over for NGL infrastructure exposure (OKS +16.5%, EPD +12.2%). As aforementioned, market gas storage rates, especially the cap played an important role in the quarter. Of the five largest caps only EPD outperformed salt dome market in the Gulf the AMZ. Of the next five market caps, only OKS repeated this feat. In general, our Coast overweight gas, NGL infrastructure, underweight crude, refined products partnerships position was rewarded for the quarter.

22 October 2010 22 Barclays Capital | MLP Quarterly Monitor

Figure 23: 3Q10 Subsector and Index Performance

35.0% 29.4% 30.0%

25.0% 20.3% 20.0% 17.6% 15.0% 12.1% 11.5% 11.1% 10.7% 10.0% 9.5% 9.1% 8.7% 8.1% 7.7% 10.0% 5.2% 3.2% 5.0% 2.8% 0.0% Coal PHLX / Utilities General Propane Index Partners Index Crude Oil Crude BarCap HY Marine BarCap HG MSCI REITs MSCI PHLX /E&P Processing Production Alerian MLP Terminals Gathering & Gathering and Storage and Natural Gas - Natural Gas - Exploration & Exploration NGL Pipelines S&PIndex 500 Pipelines and Transportation Refined Product

Source: FactSet, Barclays Capital Fixed Income

Risk Trade Back On - Energy Price Sensitive, Small-Caps Lead Individual Performers for 3Q …the strongest individual Aside from the obvious jump in the GP segment tied to the buy-ins, the strongest individual partnership performance was partnership performance was tied to energy price-sensitive areas. Five of the top 10 tied to energy price-sensitive individual performances were delivered by GPs. The top 10 non-GP returns came from five areas G&P, three E&P and one coal partnership. This was in spite of the fact that natural gas prices dropped sharply for the quarter (12-month strip decreased 18%) and that the EPX Index underperformed both the AMZ and S&P 500 benchmarks. The reaction of the GP names to the buy-in and the outlook for reinstatement of LP distributions drove the performance of these names. M&A activity yielded mixed results. MMP reacted favorably to the purchase of the BP Cushing storage and Houston area pipelines while NRGY’s purchase of Tres Palacios created some concerns given the weak pricing environment for Gulf Coast salt dome storage. ETE reacted favorably to the refinancing of its term debt as that uncertainty was removed from the fundamental equation. In general, however, In general, performance was performance was once again principally tied to themes (long NGL infrastructure, short gas once again principally tied to storage), or macro (long energy price sensitive / high beta, short refined products /low themes (long NGL infrastructure, beta). In a broader sense, our Quantitative Strategy group in a recent report entitled “U.S. short gas storage), or macro Equity Quantitative Strategies Market Commentary & Portfolio Rebalance,” dated October 4, (long energy price sensitive / 2010, wrote “the proportion of stock returns explainable by idiosyncratic (i.e., stock specific) high beta, short refined products factors is approximately zero and since 1950 was only lower in October 1987 and May/June /low beta) 1962. Investors trying to pick stocks (and not themes) have essentially never had a smaller investment opportunity set to work with – true stock picking today is actually nearly impossible.”

22 October 2010 23 Barclays Capital | MLP Quarterly Monitor

Figure 24: 3Q10 Performance

160% 140% 122.8% 120% 100% 81.6% 80% 60% 40% 29.7% 25.9% 25.5% 23.8% 23.3% 23.2% 22.8% 22.4% 22.1% 21.8% 20.4% 20.4% 20.4% 18.2% 17.9% 17.9% 17.1% 17.0% 16.5% 16.3% 14.3% 13.5% 13.3% 13.1% 12.4% 12.2% 11.9% 11.5%

20% 11.5% 11.0% 10.7% 10.5% 10.4% 10.3% 10.2% 10.1% 10.0% 10.0% 9.8% 9.5% 9.5% 9.5% 9.2% 8.7% 8.5% 8.4% 8.3% 8.3% 7.6% 7.6% 7.2% 6.8% 6.8% 6.7% 6.0% 5.4% 5.3% 5.3% 5.2% 4.9% 4.5% 4.1% 3.0% 1.9% 1.3% 1.3% 0.2% 0% -0.4% -20% -1.2% -2.8% -40% -3.4% -10.0% -60% -16.9% NS PSE SEP ETE EEP EPE EPB ETP KSP SXL BPL TLP EEQ CEP GEL APL EPD ENP GLP FGP PVR DEP HEP OKS SPH KGS OXF SGU APU PAA TGP NRP NSH NKA CQP VNR PVG BGH PNG TOO RNO WES LINE KMP KMR AHD WPZ BWP XTXI DPM EVEP BKEP EXLP BBEP CPLP MMP MWE TCLP ARLP XTEX LGCY NGLS EROC NMM NRGY NRGP CLMT RGNC CPNO AHGP DMLP AMZK CHKM MMLP S&P 500 Source: FactSet, Barclays Capital Fixed Income

Both EPD and OKS delivered Attribution Analysis – As Usual Large Caps Dominate with Slight Skew outsized positive contributions to Toward NGL Infrastructure 3Q AMZ results, implying a slight bias toward NGL infrastructure Both EPD and OKS delivered outsized positive contributions to 3Q AMZ results, implying a slight bias toward NGL infrastructure. EPD’s contribution was 3.5 percentage points greater LINE also delivered an outsize than its AMZ weight while OKS delivered an incremental 2.5% positive boost over its AMZ positive contribution after weight. LINE also delivered an outsize positive contribution after closing a series of closing a series of acquisitions acquisitions and reporting a series of high volume Granite Wash tests, alleviating fears of a and reporting a series of high distribution cut when high price hedges roll off. LINN’s delta was a positive 2.9%. Two volume Granite Wash tests, partnerships with ethane price exposure, CPNO and WPZ, were the only outright drags on alleviating fears of a distribution AMZ performance for the quarter. The two largest caps that contributed positive returns cut when high price hedges roll well below their respective AMZ weights were KMP and ETP. PAA, MMP and KMR off contributions were roughly in line with their relative weights. From a subsector perspective GP, E&P and Coal provided positive increments to the AMZ relative to weightings, the The two largest caps that NG/NGL Pipelines and Marine Transport segments were in line with weight s and the Crude, contributed positive returns well G&P and Propane groups generated modest drags on the Index. The Refined products below their respective AMZ subsector delivered the largest relative drag, contributing 6% below their respective weight weights were KMP and ETP in the Index.

22 October 2010 24 Barclays Capital | MLP Quarterly Monitor

Figure 25: Alerian MLP Index Attribution Analysis

% of Index Performance 25.0%

20.0% 17.4% 15.0%

10.0% 7.6% 6.0% 6.0% 4.8% 4.1% 3.5% 3.5% 5.0% 3.4% 3.1% 2.5% 2.3% 2.2% 2.0% 2.0% 2.0% 2.0% 1.9% 1.5% 1.5% 1.5% 1.4% 1.3% 1.3% 1.2% 1.2% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.7% 0.6% 0.5% 0.4% 0.4% 0.4% 0.3% 0.3% 0.3% 0.3% 0.3% 0.1% 0.0% 0.0% -0.1%

-5.0% -0.5%

-10.0%

-15.0% NS ETE EPE EEP PSE SEP ETP EPB BPL SXL GEL EEQ EPD OKS SPH PVR HEP DEP FGP ENP PAA NRP APU TGP PVG NSH VNR LINE WES TOO BGH KMP KMR BWP DML WPZ DPM EVEP MWE MMP ARLP TCLP NGLS LGCY NMM NRGY RGNC CLMT CPNO AHGP

Contribution to AMZ performance 2.0% 1.69%

1.5%

1.0% 0.74% 0.59% 0.58% 0.47%

0.5% 0.40% 0.35% 0.34% 0.33% 0.30% 0.24% 0.22% 0.21% 0.20% 0.20% 0.20% 0.19% 0.18% 0.15% 0.14% 0.14% 0.13% 0.13% 0.13% 0.12% 0.12% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.09% 0.09% 0.09% 0.06% 0.06% 0.05% 0.04% 0.04% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.01% 0.00%

0.0% -0.01%

-0.5% -0.05% NS ETE EPE EEP SEP PSE BPL ETP EPB SXL EEQ GEL SPH ENP EPD OKS PVR HEP DEP FGP TGP PAA NRP APU PVG NSH VNR WES BGH TOO LINE KMR KMP BWP DML WPZ DPM EVEP ARLP MWE MMP TCLP LGCY NGLS NMM NRGY AHGP RGNC CLMT CPNO

4.0% Sector Contribution to AMZ Performance 3.5% 3.1% 3.0% 2.5% 2.0% 2.0% 1.5% 1.1% 1.1%

1.0% 0.8% 0.5% 0.5% 0.5% 0.4% 0.2% 0.0% Coal General Propane Partners Pipelines Crude Oil Crude Marine Production Processing Terminals Gathering & Gathering Natural Gas - Exploration & Exploration Natural Gas - NGL Pipelines Pipelines and Transportation Refined Product Source: Alerian Capital Management, FactSet, Barclays Capital estimates

22 October 2010 25 Barclays Capital | MLP Quarterly Monitor

Embrace of Risk Trade Leads to Non-Core Outperformance Core and non-core relative performance has jerked back and forth as a function of the good economy and bad economy risk trade. With smaller caps outdistancing larger caps for the quarter coupled with the strong relative results registered by upstream and G&P partnerships, it is no surprise our non-core index outperformed the basic tubes and tanks group for the quarter. On an unweighted basis the non-core segment generated a return of 7.5%, while the core group was up 7.0%.

AMZ volatility dropped markedly during the quarter. Both core and non-core indices’ volatility fell sharply with the core component registering a lower number for the quarter. With yield compression and reaction to bi-directional interest rate movements abating, the volatility between these components of the MLP space should be narrowing. Unless the interest rate backdrop changes markedly, we think the relationship will track within a narrower channel moving forward.

Figure 26: Core Versus Non-Core Group One-Year Indexed Performance

180 170 160 150 140 130 120 110 100 90 80 10/06/2009 10/19/2009 10/30/2009 11/12/2009 11/25/2009 12/09/2009 12/22/2009 01/06/2010 01/20/2010 02/02/2010 02/16/2010 03/01/2010 03/12/2010 03/25/2010 04/08/2010 04/21/2010 05/04/2010 05/17/2010 05/28/2010 06/11/2010 06/24/2010 07/08/2010 07/21/2010 08/03/2010 08/16/2010 08/27/2010 09/10/2010 09/23/2010 10/06/2010

Core MLPs Non-Core MLPs AMZK S&P 500

Source: FactSet

Figure 27: Core Versus Non-Core Group Volatility Spread

Less Volatile - More Volatile 10% 6.5% 3.9% 4.5% 4.3% 4.6% 2.2% 1.5% 1.3% 1.2% 0.9% 1.1% 1.0% 0.5% 0.8% -0.4% 0.3% -0.2% -0.7% 0.0% -0.7% -0.6% 0.3% 0% -10% -1.0% -1.1% -1.2% -1.3% -1.9% -1.8% -1.9% -1.9% -2.1% -2.1% -2.4% -3.1% -2.9% -3.3% -3.3% -3.3% -4.0% -3.9% -4.6% -20% -4.4% -4.9% -5.4% -7.1% -7.4% -8.2% -9.1% -9.6% -9.7% -9.9% -10.1% -10.3%

-30% -10.9% -40% -15.4% -50% -33.9% 6/30/1997 6/30/1998 6/30/1999 6/30/2000 6/29/2001 6/28/2002 6/30/2003 6/30/2004 6/30/2005 6/30/2006 6/29/2007 6/30/2008 6/30/2009 6/30/2010 12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/29/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/30/2005 12/29/2006 12/31/2007 12/31/2008 12/31/2009

Volatility Spread = Core vs Non-Core

Source: FactSet

22 October 2010 26 Barclays Capital | MLP Quarterly Monitor

Figure 28: Core Versus Non-Core Group Five-Year Indexed Performance

160 150 140 130 120 110 100 90 80 70 60 50 10/07/2005 12/16/2005 02/24/2006 05/05/2006 07/14/2006 09/22/2006 12/01/2006 02/09/2007 04/20/2007 06/29/2007 09/07/2007 11/16/2007 01/25/2008 04/04/2008 06/13/2008 08/22/2008 10/31/2008 01/09/2009 03/20/2009 05/29/2009 08/07/2009 10/16/2009 12/24/2009 03/05/2010 05/14/2010 07/23/2010 10/01/2010

Core MLPs Non-Core MLPs S&P 500 AMZK

Source: FactSet

22 October 2010 27 Barclays Capital | MLP Quarterly Monitor

Valuation Review

Based on normalized (non-crisis MLPs Uniformly Cheap Versus Credit Market period) spreads, the AMZ is close to 1 standard deviation Both the AMZ and credit markets rallied in the third quarter. Yields fell across the board. wider than historical figures The 10-Year Treasury benchmark dropped 43bp to close at 2.52%. The HY market, as compared to the HY market captured by the Barclays Capital Index, decreased 90bp closing at 8.18%. The AMZ finished (141bp versus 149bp) and 10- the quarter at 6.52% yield after falling 50bp and the Moody’s Baa Index dropped 57bp to Year (85bp versus 90bp. At finish the quarter at a 5.58% yield. MLPs uniformly trade at historically attractive +54bp, the AMZ is modestly relationships to each component of the credit market. Based on normalized (non-crisis attractive versus investment period) spreads, the AMZ is close to 1 standard deviation wider than historical figures grade debt compared to the HY market (141bp versus 149bp) and 10-Year (85bp versus 90bp. At +54bp, the AMZ is modestly attractive versus investment grade debt using the same context (historical average spread 40bp, with 86bp representing one standard deviation from the norm).

Figure 29: Yield Compression Trade Yield Spread Basis Points 10 Yr BarCap Moody's Treasury High Yield Alerian Baa HY - 10Yr IG - 10 Yr AMZ - 10Yr HY - AMZ IG - AMZ 9/30/2008 3.83% 13.92% 9.31% 7.74% 1010 392 549 461 -157 12/31/2008 2.25% 19.43% 12.14% 8.28% 1718 603 989 729 -386 3/31/2009 2.69% 18.13% 10.90% 8.88% 1544 619 821 723 -202 6/30/2009 3.52% 12.79% 9.16% 7.39% 927 387 564 363 -177 9/30/2009 3.31% 10.40% 8.42% 6.29% 709 298 511 198 -213 12/31/2009 3.84% 9.20% 7.38% 6.48% 536 264 354 182 -90 3/31/2010 3.83% 8.66% 7.00% 6.41% 483 258 317 166 -59 6/30/2010 2.95% 9.28% 7.02% 6.13% 633 318 407 226 -89 9/30/2010 2.52% 8.18% 6.52% 5.58% 566 306 400 166 -94

Historical Averages (10 Yrs) 622 275 315 307 -40

Historical Average 10 Year Treasury > 4.0% 524 231 258 254 -41 1 Std. Deviation from midpoint 182 47 90 149 86 Source: Alerian Capital Management, FactSet, Barclays Capital Fixed Income Research

Figure 30: Quarter-to-Quarter Changes in Spreads (basis points) 10 Yr BarCap Moody's Treasury High Yield Alerian Baa HY - 10Yr IG - 10 Yr AMZ - 10Yr HY - AMZ IG - AMZ 12/31/2008 2.25% 19.43% 12.14% 8.28% 708 212 441 268 -229 3/31/2009 2.69% 18.13% 10.90% 8.88% -174 16 -168 -6 184 6/30/2009 3.52% 12.79% 9.16% 7.39% -617 -232 -257 -360 24 9/30/2009 3.31% 10.40% 8.42% 6.29% -218 -89 -53 -165 -35 12/31/2009 3.84% 9.20% 7.38% 6.48% -173 -34 -157 -15 123 3/31/2010 3.83% 8.66% 7.00% 6.41% -53 -6 -37 -16 31 6/30/2010 2.95% 9.28% 7.02% 6.13% 150 60 90 60 -30 9/30/2010 2.52% 8.18% 6.52% 5.58% -67 -12 -7 -60 -5 Source: Alerian Capital Management, FactSet, Barclays Capital Fixed Income Research

22 October 2010 28 Barclays Capital | MLP Quarterly Monitor

Important Question: How Long Will We Be in Crisis Mode? We have tended to look at valuation from an average or ex-crisis mode (i.e., without dislocations caused by Long-Term Capital - 1998, DotCom/Enron - 2001 and Lehman Brothers bankruptcy - 2008) and have divided the market neatly into “normal” and “non- normal” buckets as depicted by the following histograms in Figures 31–32 where we look at spreads when the 10-Year Treasury was below or equal to or above 4.0%.

Figure 31: Alerian MLP Index Yield Versus 10-Year Treasury (when Yields Above or Below 4%)

Basis Point Differentials - AMZ vs. US10YR > 4%(1996 to 2010) Basis Point Differentials - AMZ vs. US10YR< 4%(1996 to 2010)

30% 35% 25% 30% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% 0 to 50 200 to 300 300 to 400 400 to 500 500 to 600 600 to 700 700 to 800 800 to 900 50 to 100 900 to 1000 100 to 150 150 to 200 200 to 250 250 to 300 300 to 350 350 to 400 400 to 450 450 to 500 500 to 550 550 to 600 1000 to 1100 1100 to 1200 1200 to 1300

Average = 258 bp Average = 469 bp

Source: FactSet, Alerian Capital Management, Barclays High Yield Index

Figure 32: Alerian MLP Index Yield Versus 10-Year Treasury (when Yields are above or below 4%)

Basis Point Differentials –Barclays Capital HY vs. US10YR > 4% Basis Point Differentials -Moody's Baa vs. US10YR > 4%(2000 to 2010) (1998 to 2010)

35% 40% 30% 35% 25% 30% 20% 25% 15% 20% 10% 5% 15% 0% 10% 5% 0% 200 to 300 300 to 400 400 to 500 500 to 600 600 to 700 700 to 800 800 to 900 150 200 250 300 350 400 900 to 1000 100 to 150 to 200 to 250 to 300 to 350 to 1000 to 1100

Average = 524 bp Average = 231 bp

Source: FactSet, Alerian Capital Management, Barclays High Yield Index

22 October 2010 29 Barclays Capital | MLP Quarterly Monitor

The AMZ and credit markets have partially closed the gap from crisis spreads to “normalized” conditions. The AMZ to 10-Year Treasury as noted is currently 400bp or marginally inside of the average spread seen during the crisis periods. Overall, the spread to the 10-Year Treasury has averaged 315bp while in a non-crisis environment it averages 258bp and during the crisis periods it averaged 474bp. The non-crisis contraction of spreads is prevalent for the entire credit spectrum. In fact, the higher Treasury yields rise the tighter the spread tends to become. Credit markets (including the AMZ as a hybrid security) are priced very high, assuming a crisis condition. Treasury yields (and forecasts through 2012) on the other hand suggest a crisis. As such, we have arrived at our price targets based on the concept of spread narrowing back toward a 4.0%-plus 10-Year Treasury market. However, there is a case to be made that the shock to the financial system will have long-lasting repercussions and that the 10-Year benchmark could remain under 3.5% for the next ten years. The case for this type of environment is eloquently presented in a paper entitled After The Fall by Reinhart and Reinhart in which they examine 18 credit/leverage induced boom/bust periods. Three were global in nature (1929, 1973, 2007), 10 were confined to advanced economies between 1977 and 1997 and five took place in emerging economies between 1981 and 2001. The pattern found is that the period of retrenchment and subpar GDP is almost always as long as the period of credit expansion that led up to the crisis. This paints another version of the “new normal’” for us that would leave the Treasury market with subdued yields for a long period of time; hence, one could argue our spread contraction assumptions would be incorrect. Should a low yield environment persist, we ultimately believe the demographics of yield (income for retirement, etc.) will work to close the historical spread to Treasuries, but from a valuation perspective it is important to be mindful that of the pillars supporting our outlook is this belief of normalization.

Yield Histograms Continue to Imply MLPs Uniformly Cheap Versus Credit Alternatives The bar chart seen in Figure 33 speaks volumes. MLPs are 88bp wide versus the 10-Year Treasury, 34bp wide versus their normal relationship with investment grade debt and 69bp more attractive than the historical average versus REITs. With yield spreads on Barclays HY Index rallying 90bp versus the AMZ yield falling 50bp during the third quarter, the gap versus the HY market has narrowed to only 166bp where the historical average between the two alternative investments is 260bp. All of the relationships currently fall within one standard deviation from the norm. In particular, we find the HY comparison of interest in that historically the AMZ yield has been more correlated to the HY Index yield than any of the other alternatives. The strength of this market in the face of record net issuance (former record $27.1bn supply net of redemptions 2009, year-to-date September 30 net supply $41 billion) is indicative of the clamor for yield. Given MLPs are wide versus Treasuries and IG debt and have after-tax yields higher than the vast majority of the muni market, the sector continues to have strong relative value support from a credit perspective.

22 October 2010 30 Barclays Capital | MLP Quarterly Monitor

Figure 33: Current Yields Versus Historical Levels

Current History 450 400 400

350 312 300 261 250 221 200 166 152 150 94 100 60 50 0 AMZ - 10Yr HY - AMZ AMZ - IG AMZ - REIT

Source: FactSet, Alerian, Barclays Capital Fixed Income Research

22 October 2010 31 Barclays Capital | MLP Quarterly Monitor

Figure 34: Alerian MLP Index Yield Versus 10-Year Treasury

12.0% 40% 10.0% 30% 8.0% Current 6.0% 20% 4.0% 10% 2.0% 0.0% 0% 0 to 100 10/9/06 10/7/07 10/4/08 10/2/09 9/30/10 10/31/96 10/29/97 10/27/98 10/25/99 10/22/00 10/20/01 10/18/02 10/16/03 10/13/04 10/11/05 100 to 200 200 to 300 300 to 400 400 to 500 500 to 600 600 to 700 700 to 800 800 to 900

Alerian MLP Index Yield vs. US 10-Year Treasury Basis Point Differentials - Alerian MLP Index Yield vs. Average =3.1% US 10-Year Treasury

Source: Alerian Capital Management, FactSet

Figure 35: Barclays Capital High-Yield Index Yield Versus Alerian MLP Index Yield

12.0% 50% Current 10.0% 40% 8.0% 30% 6.0% 20% 4.0% 2.0% 10% 0.0% 0% 0 to 100 10/9/06 10/7/07 10/4/08 10/2/09 9/30/10 10/31/96 10/29/97 10/27/98 10/25/99 10/22/00 10/20/01 10/18/02 10/16/03 10/13/04 10/11/05 100 to 200 200 to 300 300 to 400 400 to 500 500 to 600 600 to 700 700 to 800 800 to 900 900 to 1000 1000 to 1100 1100 to 1200 BarCap High-Yield Index Yield vs. Alerian MLP Index Yield Basis Point Differentials - BarCap High-Yield Index Yield vs. Average =2.6% Alerian MLP Index Yield

Source: Alerian Capital Management, Barclays Capital Fixed Income

Figure 36: Alerian MLP Index Versus Moody’s Baa Corporate Bond Index Yield

4.5% 30% 3.5% 25% Current 2.5% 20% 1.5% 15% 0.5% 10% -0.5% 5% -1.5% 0% 0 to 50 10/9/06 10/7/07 10/4/08 10/2/09 9/30/10 -50 to-50 0 10/31/96 10/29/97 10/27/98 10/25/99 10/22/00 10/20/01 10/18/02 10/16/03 10/13/04 10/11/05 50 to 100 100 to 150 150 to 250 250 to 350 -100 to-100 -50 -150 to-150 -100 Alerian MLP Index Yield vs. Baa Corp Bond Index Yield Basis Point Differentials - Alerian MLP Index Yield vs. Average =.6% Baa Corp Bond Index Yield

Source: Alerian Capital Management, Bloomberg

22 October 2010 32 Barclays Capital | MLP Quarterly Monitor

Figure 37: Alerian MLP Index Versus NAREIT REIT Index Yield

5.0% 50% 4.0% 40% 3.0% Current 2.0% 30% 1.0% 20% 0.0% 10% -1.0% -2.0% 0% 0 to 100 10/9/06 10/7/07 10/4/08 10/2/09 9/30/10 -100 to 0 10/31/96 10/29/97 10/27/98 10/25/99 10/22/00 10/20/01 10/18/02 10/16/03 10/13/04 10/11/05 100 to 200 200 to 300 300 to 400 -500 to -400 -400 to -300 -300 to -200 -200 to -100 Alerian MLP Index Yield vs. REIT Index Yield Basis Point Differentials - Alerian MLP Index Yield vs. Average =1.5% REIT Index Yield

Source: Alerian Capital Management, NAREIT

Figure 38: Barclays Capital High-Yield Index Yield Versus 10-Year Treasury

20.0% 40% 17.0% 30% Current 14.0% 11.0% 20% 8.0% 10% 5.0% 2.0% 0% 10/9/06 10/7/07 10/4/08 10/2/09 9/30/10 10/31/96 10/29/97 10/27/98 10/25/99 10/22/00 10/20/01 10/18/02 10/16/03 10/13/04 10/11/05 200 to 400 400 to 600 600 to 800 800 to 1000 1000 to 1200 1200 to 1400 1400 to 1600 1600 to 1800 1800 to 2000 BarCap High-Yield Index Yield vs. US 10-Year Treasury Basis Point Differentials - BarCap High-Yield Index Yield vs. Average =5.7% US 10-Year Treasury

Source: Alerian Capital Management, FactSet

Despite Cash Flow Metrics Hover from Fair Value to Cheap strong performance, our cash flow metrics have pulled back Despite persistently strong performance, our cash flow metrics have pulled back into fair into fair value to cheap based on value to cheap based on historical valuations. Our adjusted EBITDA estimates have crept up historical valuations as M&A activity has been larger than forecast and we are seeing lower financing costs on the equity side of the ledger as yields have outstripped the conservative funding assumptions in most of our models. The parallel rally in credit markets has kept the spread between the inverted EV/EBITDA multiple yield and Baa bonds at a level wider than historical levels.

…asset values adjusted for the The MLP sector closed the quarter with an average EV/EBITDA multiple of 12.2x. This is 5% underlying cost of capital are higher than the historical average of 11.6x. However, excluding the time frame distorted by very attractive versus historical the market dislocation caused by the subprime crisis, this average is 12.2x or right in line levels with where we are today. The relationship between EBITDA/EV and the Moody’s BAA bond yield is wider than normal, closing the quarter at 262bp versus an average reading of 206bp, or a spread of 56bp. If we exclude the period surrounding the subprime period, the spread was 95bp or more than 1 standard deviation from the adjusted historical average of 167bp,

22 October 2010 33 Barclays Capital | MLP Quarterly Monitor

implying that asset values adjusted for the underlying cost of capital are very attractive versus historical levels.

Figure 39: MLP Historical EV/EBITDA Multiple

15 14 13 12 11 10 9 8 7 Jun-02 Mar-03 Dec-03 Sep-04 Jun-05 Mar-06 Dec-06 Sep-07 Jun-08 Mar-09 Dec-09 Sep-10

MLP Historical EV/ EBITDA Multiple Average Multiple = 11.6x

Source: Company filings, Barclays Capital estimates

Figure 40: MLP Historical Yield Differential

6%

5%

4%

3%

2%

1%

0% Jun-02 Mar-03 Dec-03 Sep-04 Jun-05 Mar-06 Dec-06 Sep-07 Jun-08 Mar-09 Dec-09 Sep-10

MLP Historical Yield Differential (Inverse of EV/ EBITDA - Moody's Baa) Average = 2.05%

Source: Company filings, Barclays Capital estimates Valuation Between Subsectors, Within Groups Widen – Is There a Trading Opportunity? As yield compression has declined as the primary factor driving performance and thematic investing has been increasingly used, we have seen some valuation disparities based on historical yield spreads to the AMZ develop. Part is due to thematic drivers such as virtually all the MLPs levered to NGL infrastructure trade expensive to past history. Virtually the entire Refined Products sector is cheap using this valuation metric. Propane is very expensive versus historical norms. Is this because the sector has had a secular improvement in fundamentals tied to its ability to wring costs out of operations or has there been a mad dash to safe yield? Coal is another group that looks cheap versus history. Is this because a chronically low gas price puts a lid on coal prices? While our instinct is that we should be able to take advantage of some mean reversion, we believe that it would run in the face of a market backdrop that persists in a thematic mode (see commentary in

22 October 2010 34 Barclays Capital | MLP Quarterly Monitor

performance section from Barclays Quantitative Strategy team report “U.S. Equity Quantitative Strategies Market Commentary & Portfolio Rebalance,” dated October 4, 2010. For now we do not believe the valuation anomalies are great enough to merit using these differentials to reapportion investors’ holdings. At the present the trend is tending to be favorable.

Figure 41: Differential in Subsector EV/Adjusted EBITDA Multiples (forward year) Date High Low High - Low Low / High 6/30/07 12.6x 8.3x 4.3x 66% 9/30/07 13.9x 9.8x 4.1x 71% 12/31/07 12.5x 9.4x 3.1x 75% 3/31/08 9.5x 6.5x 3.0x 68% 6/30/08 8.9x 6.1x 2.8x 69% 9/30/08 8.3x 5.4x 2.9x 65% 12/31/08 8.3x 5.8x 2.5x 70% 3/31/09 9.6x 8.3x 1.3x 86% 6/30/09 10.5x 8.4x 2.1x 80% 9/30/09 11.1x 9.4x 1.7x 85% 12/31/09 12.3x 10.6x 1.7x 86% 3/31/10 13.1x 11.6x 1.5x 89% 6/30/10 14.9x 11.8x 3.1x 79% 9/30/10 16.6x 13.2x 3.4x 80%

Source: Company filings, Barclays Capital estimates

Figure 42: MLP Subsector Valuation Multiples Data as of: 10/19/10 FCF Multiple/ EV / Adj EBITDA - Spread to AMZExpected FCF Multiple (2)Expected Return EV / EBITDA-MC Main Cap (3) Sector Yield Growth Current Avg (4) Return (1) 2009 2010e 2011e 2009 2010e 2011e 2009 2010e 2011e 2009 2010e 2011e Refined Products 6.39% 5.27% 0.06% 0.01% 11.65% 13.0x 14.0x 12.7x 1.1x 1.2x 1.1x 12.1x 14.2x 12.0x 14.5x 16.4x 14.1x Gathering and Processing 6.94% 5.83% 0.40% 1.17% 12.77% 10.2x 14.3x 11.3x 0.9x 1.3x 1.0x 11.0x 13.5x 11.1x 11.4x 13.9x 11.5x Natural Gas - NGL Pipelines and Storage 5.98% 6.42% -0.35% -0.30% 12.40% 15.9x 15.6x 13.4x 1.4x 1.3x 1.2x 13.4x 14.6x 12.0x 14.7x 15.7x 13.1x Crude Oil 6.44% 3.67% 0.11% 0.23% 10.12% 23.4x 24.3x 12.1x 1.4x 1.4x 1.4x 12.2x 12.8x 11.2x 13.2x 14.1x 12.6x Marine Transportation 7.63% 4.85% 1.30% 1.70% 12.48% 7.7x 9.1x 7.8x 1.1x 1.0x 1.0x 10.9x 10.1x 7.4x 11.5x 10.2x 7.5x Propane 6.74% 3.46% 0.41% 1.01% 10.20% 11.6x 12.6x 12.3x 1.2x 1.3x 1.3x 10.3x 12.1x 11.0x 10.6x 13.1x 11.2x Coal Sector 6.73% 10.61% 0.40% -0.33% 17.34% 11.3x 9.6x 9.1x 0.7x 0.6x 0.5x 8.6x 11.2x 9.3x na 13.0x 11.2x E&P Sector 9.01% 12.33% 2.68% 5.54% 21.34% 7.0x 7.4x 8.4x 0.4x 0.5x 0.5x 9.3x 10.9x 11.6x na 10.3x 11.6x Total LP Universe 6.63% 5.94% 0.25% 0.75% 12.57% 12.1x 13.4x 11.8x 1.1x 1.2x 1.0x 11.4x 13.2x 11.3x 13.0x 14.4x 12.2x

Large Cap LPs (> $ 1bn) 6.55% 5.94% 12.49% 12.8x 12.8x 12.2x 1.1x 1.1x 1.1x 11.3x 12.6x 11.3x 12.8x 14.1x 12.5x Small Cap LPs (< $ 1bn) 7.49% 5.52% 13.01% 8.6x 9.9x 8.8x 0.9x 1.0x 0.9x 11.2x 12.6x 10.2x 12.9x 13.4x 10.6x (1) Expected Return = Yield plus three-year expected growth rate in distributions (2) FCF Multiple = Current unit price / DCF per share (3) Adjusted EBITDA is after GP cut (4) 5-year average or since IPO. Spread to AMZ averages exclude the period from October 2008 to March 2009 Source: Company filings, Barclays Capital estimates

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Capital Markets Review

…$4.7 billion of acquisitions M&A Drives Equity Issuance were announced during the quarter. Secondary issuance As we noted in our 2Q review (MLP Quarterly Monitor,” dated July 29, 2010), the equity was $3.9 billion capital raised through June had basically covered the requirements to meet announced capital programs for 2010. We had opined at the time that the outlook for issuance in the second half would highly depend on the level of M&A. As we will cover later in the M&A section, 3Q was highly active on that front. Altogether $4.7 billion of acquisitions were In general, the proportion of announced during the quarter. Secondary issuance was $3.9 billion including two private equity raised to fund the deal placements that raised $375 million and two direct placements of stock to sellers totalling flow was about 60% of the total, $239 million. CPNO raised $300 million in one of the private placements to prefund the as partnerships have taken equity portion of projected spending in the Eagle Ford. ETP raised $505 million to bolster advantage of the rather buoyant the balance sheet as macroeconomic conditions continue to keep pressure on margins. In market conditions. general, the proportion of equity raised to fund the deal flow was about 60% of the total, as partnerships have taken advantage of the rather buoyant market conditions.

Figure 43: MLP Quarterly Equity Offerings

(in $mm) $6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$0 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3

Secondary Offerings Convertible Primary Offerings

Source: Company filings

Figure 44: MLP IPOs and Secondary Offerings

(in $mm) $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 YTD

Secondary IPO

Source: Company filings

22 October 2010 36 Barclays Capital | MLP Quarterly Monitor

Figure 45: Secondary Offerings – ex-Private Placements and Directs

(in $mm) $5,000

$4,000

$3,000

$2,000

$1,000

$0 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3

Secondary Offerings - ex-Private Placements and Directs Historical Average

Source: Company filings

For the first half of the year Institutional Allocations Rise with Start-Up of New Funds institutional allocations averaged less than 12% of equity issuance For the first half of the year institutional allocations averaged less than 12% of equity for secondary offerings. During issuance for secondary offerings. During the third quarter this jumped to roughly 25% with the third quarter this jumped to several deals being upsized 10%–15% to accommodate institutional demand. An important roughly 25% with several deals source of the demand has come from new closed end funds which have raised being upsized 10%–15% to approximately $2.4 billion year-to-date, although traditional dedicated MLP managers have accommodate institutional also seen strong money flows and have had to put these funds to work. Three IPOs came demand. during the quarter. Two were smaller coal deals (OXF and RNO) while the other was the bellwether $505 million CHKM transaction. The two gas storage IPOs in 2Q had an average The year-to-date follow-on institutional participation of 32% (PNG - 37%, NKA - 27%). CHKM was not upsized to issuance is on track to be accommodate demand and placed 55% into institutional hands including exercise of the roughly 8% of the sectors’ 15% shoe. Several new closed end funds have filed. We have also seen the start-up of a market cap. This is roughly in small cottage industry of ETNs and an ETF, which if successfully launched could add to line with the average recorded in demand. In all, despite the flow of about $1.5 billion in equity per month we see plenty of 2002–08. In 2009 the equity demand to accommodate the supply. Proportionally, the year-to-date follow-on issuance is window was open for seven on track to be roughly 8% of the sectors’ market cap. This is roughly in line with the months and the run rate was average recorded in 2002–08. In 2009 the equity window was open for seven months and 8.1%. This basically fits with a the run rate was 8.1%. This basically fits with a 50% / 50% funding model and a 4%–7% 50% / 50% funding model and a sector growth rate, with movement around this for execution on hitting return targets for 4%–7% sector growth rate the capital spent and cash flow variation (i.e., retained capital as margins fluctuate with energy prices).

22 October 2010 37 Barclays Capital | MLP Quarterly Monitor

Figure 46: MLP Historical Equity Offerings, ($ in millions)

Capital Market Activity Summary 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Equity Offerings $436 $528 $1,525 $2,573 $3,644 $6,338 $7,172 $9,314 $19,014 $6,891 $7,157 $11,877 Market Cap 12,314 16,531 27,214 29,041 44,498 54,393 60,834 83,211 135,074 86,258 151,474 215,510

Private Placement $1,425 $2,348 $8,893 $359 $467 $475 Secondary $436 $528 $1,525 $2,158 $3,644 $4,298 $3,739 $3,078 $6,904 $5,693 $6,690 $9,621 Total Public Secondary $436 $528 $1,525 $2,158 $3,644 $4,298 $5,164 $5,427 $15,798 $6,053 $7,157 $10,096

IPOs $383 $0 $418 $415 $0 $471 $1,432 $3,837 $3,217 $838 $0 $1,400 Total Equity Offerings $819 $528 $1,943 $2,573 $3,644 $4,769 $6,597 $9,264 $19,014 $6,891 $7,157 $11,497

"I-Units"/Closed end Funds $0 $0 $1,047 $300 $0 $2,352 $1,343 $352 $771 $141 $270 $3,130

Total Equity Offerings incl. I-Units $819 $528 $2,990 $2,873 $3,644 $7,121 $7,940 $9,616 $19,785 $7,032 $7,427 $14,627

Total Secondary/Market Cap 3.5% 3.2% 5.6% 7.4% 8.2% 7.9% 8.5% 6.5% 11.7% 7.0% 4.7% 6.2% Public Secondary/Market Cap 3.5% 3.2% 5.6% 7.4% 8.2% 7.9% 6.1% 4.0% 5.6% 7.2% 4.4% 6.0% Total/Market Cap 6.7% 3.2% 7.1% 8.9% 8.2% 8.8% 10.8% 12.1% 18.8% 10.7% 4.7% 7.1% Total Secondary Equity Offerings as % of MLP Market Cap Equity Offerings as % of MLP Market

14% 16%

12% 14% 12% 10% 10% 8% 8% 6% 6% 4% 4% 2% 2%

0% 0% 1999 2001 2003 2005 2007 2009 1999 2001 2003 2005 2007 2009

Source: Company filings, Barclays Capital estimates

Figure 47: IPO Summary PNG NKA OXF CHKM RNO Pricing Date 4/29/10 5/11/10 7/13/10 7/28/10 9/29/10 Size of Base Deal $251,980,000 $358,750,000 $161,875,000 $446,250,000 $66,502,000 Units Offered 11,720,000 17,500,000 8,750,000 21,250,000 3,244,000 Offering Price $21.50 $20.50 $18.50 $21.00 $20.50 Annual Distribution at IPO $1.35 $1.40 $1.75 $1.35 $1.78 Yield at Offering 6.28% 6.83% 9.46% 6.43% 8.68%

Revised Units filed 10,000,000 17,500,000 8,750,000 21,250,000 3,244,000 Revised Filing Range $19.00 - $21.00 $20.00 - $22.00 $18.00 - $20.00 $19.00 - $21.00 $19.00 - $21.00 Revised Yield Range 6.43% - 7.11% 6.36% - 7.00% 8.75% - 9.72% 6.43% - 7.11% 8.48% - 9.37%

Initial Units Filed 10,000,000 17,500,000 8,750,000 21,250,000 3,750,000 Initial Filing Range $19.00 - $21.00 $19.00 - $21.00 $19.00 - $21.00 $19.00 - $21.00 $19.00 - $21.00 Initial Yield Range 6.43% - 7.11% 6.67% - 7.37% 8.33% - 9.21% 6.43% - 7.11% 8.48% - 9.37% Source: Company filings, Barclays Capital estimates

22 October 2010 38 Barclays Capital | MLP Quarterly Monitor

Despite Robust Supply, Mixed Market Backdrop, After Issuance Trading Has Been Solid In day after trading, 14 of the 15 public follow-on transactions outperformed the AMZ in next day trading despite the fact that the AMZ traded off on 79% of those periods. Reoffer discounts averaged 3.77%, which were slightly tighter than we have seen since the beginning of 2008 (-4.19%) or year-to-date (-4.04%). Offering size relative to float was similar to the other periods, as 3Q deals averaged 25.6x ADTV compared to the 1/1/08 and 1/1/10 figures of 25.2x and 25.6x, respectively. Post transaction trading metrics were also very similar to past periods. Day after volumes averaged 62.9% of offered units, or 15.6x ADTV. For post 2008, the equivalent metrics are 64.6% and 15.8x ADTV, while the post 2010 figures are 62.9% and 15.0x ADTV, respectively.

Figure 48: MLP Secondary Offerings Trading Statistics Size of Deal Type of Price At Size of Deal Closing Price Discount to # of Units % of Units Price Performance AMZK Performance Date MLP Units (M) Deal Deal $mm Prior to Deal Prev Close Trading Day After Trading Day After Day After Day After Day After Secondary 6-Jan ETP 8.50 Secondary $44.72 $437.1 $46.10 -3.0% 1.87 22.0% $45.45 1.6% -1.0% 7-Jan EPD 9.50 Secondary $32.42 $354.2 $33.08 -2.0% 2.14 22.5% $32.42 0.0% 0.5% 12-Jan TLP 1.75 Secondary $26.60 $53.5 $28.00 -5.0% 0.30 16.9% $26.95 1.3% -0.5% 12-Jan LGCY 4.25 Secondary $20.42 $99.8 $20.70 -1.4% 0.77 18.1% $20.67 1.2% -0.5% 13-Jan NGLS 5.50 Secondary $23.14 $146.4 $24.16 -4.2% 0.80 14.6% $23.10 -0.2% 0.4% 13-Jan EPB 8.75 Secondary $24.48 $241.4 $25.50 -4.0% 1.18 13.5% $24.44 -0.2% 0.4% 20-Jan NRGY 5.00 Secondary $36.25 $208.4 $37.53 -3.4% 0.85 16.9% $36.67 1.2% 0.2% 2-Feb OKS 5.25 Secondary $60.75 $334.2 $62.80 -3.3% 0.62 11.9% $60.40 -0.6% -1.0% 2-Feb SXL 2.20 Secondary $68.85 $151.5 $71.04 -3.1% 1.10 49.8% $68.62 -0.3% -1.0% 3-Feb MMLP 1.65 Secondary $32.35 $53.4 $34.25 -5.5% 0.20 11.9% $30.36 -6.2% -3.2% 3-Feb NMM 3.50 Secondary $15.51 $62.4 $16.40 -5.4% 0.70 20.0% $14.80 -4.6% -3.2% 9-Feb EVEP 3.00 Secondary $28.08 $96.9 $29.54 -4.9% 0.41 13.7% $28.97 3.2% -1.4% 18-Feb BWP 10.00 Secondary $30.02 $345.2 $31.02 -3.2% 1.00 10.0% $29.88 -0.5% -0.1% 23-Feb CPLP 5.80 Secondary $8.85 $55.6 $9.44 -6.3% 0.33 5.7% $8.68 -1.9% 0.3% 3-Mar CPNO 6.48 Secondary $23.10 $172.0 $24.18 -4.5% 0.91 14.0% $23.27 0.7% -0.4% 16-Mar GLP 3.40 Secondary $22.75 $89.0 $24.00 -5.2% 0.44 12.9% $22.75 0.0% 0.2% 16-Mar GEL 6.25 Secondary $20.50 $147.3 $21.63 -5.2% 0.53 8.4% $20.55 0.2% 0.2% 17-Mar TOO 4.40 Secondary $19.48 $98.6 $20.50 -5.0% 0.65 14.8% $19.66 0.9% -0.2% 23-Mar LINE 15.00 Secondary $25.00 $431.3 $25.99 -3.8% 15.35 102.4% $25.00 0.0% -0.1% 26-Mar PVG 10.00 Secondary $18.45 $184.5 $19.60 -5.9% 0.56 5.6% $18.33 -0.7% 1.1% 31-Mar MWE 4.25 Secondary $30.43 $148.7 $31.61 -3.7% 0.63 14.9% $30.84 1.3% 0.9% 1-Apr NRP 4.60 Secondary $25.17 $115.2 $26.22 -4.0% 0.57 12.4% $25.24 0.3% 1.6% 9-Apr NGLS 8.50 Secondary $27.50 $233.8 $28.46 -3.4% 0.67 7.9% $27.40 -0.4% 0.3% 13-Apr EPD 13.80 Secondary $35.55 $490.6 $36.39 -2.3% 3.80 27.5% $36.07 1.5% 0.2% 30-Apr KMP 5.79 ATM $51.80 $300.0 $67.35 -23.1% 0.49 8.4% $67.60 30.5% 0.6% 30-Apr NMM 4.50 Secondary $17.84 $92.3 $18.83 -5.3% 1.19 26.5% $18.20 2.0% 0.6% 4-May KMP 6.50 Secondary $66.25 $430.6 $67.60 -2.0% 2.17 33.3% $63.51 -4.1% -3.3% 13-May WES 4.00 Secondary $22.25 $101.4 $58.92 -62.2% 0.50 12.6% $22.26 0.0% -1.0% 13-May VNR 3.30 Secondary $23.00 $74.8 $24.00 -4.2% 0.48 14.5% $22.32 -3.0% -1.0% 14-May NS 4.40 Secondary $56.55 $248.8 $58.92 -4.0% 0.69 15.7% $55.96 -1.0% -1.5% 2-Jun PVG 8.80 Block $16.08 $141.9 $17.13 -6.1% 1.01 11.5% $16.54 2.9% 2.1% 18-Jun EPB 10.00 Secondary $28.80 $331.2 $29.94 -3.8% 1.14 11.4% $28.63 -0.6% 0.1% 1-Jul KMP 1.17 Private $64.25 $75.0 $65.06 -1.2% 0.37 31.8% $64.68 0.7% -1.3% 14-Jul MMP 5.80 Secondary $46.65 $268.2 $48.24 -3.3% 0.96 16.5% $47.73 2.3% 0.0% 21-Jul CPNO 10.33 Private $29.05 $300.0 $28.04 3.6% 0.57 5.5% $27.93 -3.9% 0.0% 27-Jul EXLP 8.38 Direct $25.55 $214.0 $25.55 0.0% 0.03 0.3% $24.95 -2.3% -1.9% 2-Aug WES 1.07 Direct $23.28 $24.9 $23.96 -2.8% 0.19 17.6% $24.84 6.7% 1.1% 10-Aug CPLP 6.05 Secondary $8.63 $52.2 $9.13 -5.5% 0.62 10.3% $8.28 -4.1% -1.1% 10-Aug NGLS 7.48 Secondary $24.80 $185.4 $25.61 -3.2% 0.83 11.1% $25.25 1.8% -1.1% 11-Aug DPM 2.60 Secondary $32.57 $84.7 $33.83 -3.7% 0.36 13.8% $32.43 -0.4% -2.5% 11-Aug RGNC 17.54 Secondary $23.80 $417.4 $24.76 -3.9% 1.48 8.4% $23.73 -0.3% -2.5% 11-Aug EVEP 3.45 Secondary $33.97 $117.2 $35.44 -4.1% 0.41 11.9% $34.15 0.5% -2.5% 12-Aug MMLP 1.00 Secondary $29.13 $29.1 $30.51 -4.5% 0.26 25.8% $29.12 0.0% -0.4% 17-Aug TOO 6.04 Secondary $22.15 $133.7 $23.19 -4.5% 1.12 18.6% $22.21 0.3% 0.2% 18-Aug ETP 10.93 Secondary $46.22 $505.0 $47.41 -2.5% 1.52 14.0% $46.68 1.0% -0.2% 24-Aug SXL 2.01 Secondary $74.45 $149.8 $76.54 -2.7% 0.30 14.9% $74.48 0.0% -0.5% 1-Sep KSP 18.40 Private $4.15 $100.0 $4.45 -6.7% 0.35 1.9% $4.39 5.8% 0.7% 8-Sep NRGY 10.25 Secondary $35.60 $419.6 $36.90 -3.5% 3.34 32.6% $37.79 6.2% -0.1% 8-Sep EXLP 4.60 Secondary $21.60 $114.3 $22.69 -4.8% 0.75 16.4% $25.34 17.3% -0.1% 15-Sep EPB 11.50 Secondary $31.95 $422.5 $33.09 -3.4% 1.07 9.3% $31.95 0.0% -0.2% 23-Sep WPZ 9.25 Secondary $42.40 $392.2 $43.73 -3.0% 1.03 11.1% $42.01 -0.9% -0.5% Source: FactSet

To date there have been 49 Year-To-Date Equity Deals Have Sharply Outperformed the Market follow-on transactions and five IPOs. Roughly 75% of the To date there have been 49 follow-on transactions and five IPOs. Roughly 75% of the follow-ons have outperformed follow-ons have outperformed the S&P 500 by an average of 14.8% while the 25% that the S&P 500 by an average of have underperformed have done so by 5.1%. Admittedly, the backdrop for outperformance 14.8% while the 25% that have has been extremely conducive with credit and the AMZ sharply outperforming equities underperformed have done so by year-to-date. Further, the bulk of this advantage was built up in the first half of the year 5.1%. with 3Q being a bit more evenly matched as the S&P 500 turned in a strong performance as it registered a gain of 10.7%. Only three of the 18 deals priced in 3Q are underperforming with the average gain equating to 6.3% from time of issuance.

22 October 2010 39 Barclays Capital | MLP Quarterly Monitor

Figure 49: MLP Year-To-Date Equity Offerings’ After Market Performance Size of Deal Type of Price At Size of Deal Price Price Change SPX Price Change SPX Performance Date MLP Units (M) Deal Deal $mm 9/30/2010 Since Deal At Deal Since Deal Relative SPX Secondary 6-Jan ETP 8.50 Secondary $44.72 $437.1 $48.28 8.0% 1137 0.4% 7.6% 7-Jan EPD 9.50 Secondary $32.42 $354.2 $39.67 22.4% 1142 0.0% 22.4% 12-Jan TLP 1.75 Secondary $26.60 $53.5 $34.35 29.1% 1136 0.4% 28.7% 12-Jan LGCY 4.25 Secondary $20.42 $99.8 $24.66 20.8% 1136 0.4% 20.3% 13-Jan NGLS 5.50 Secondary $23.14 $146.4 $27.78 20.1% 1146 -0.4% 20.4% 13-Jan EPB 8.75 Secondary $24.48 $241.4 $32.07 31.0% 1146 -0.4% 31.4% 20-Jan NRGY 5.00 Secondary $36.25 $208.4 $39.65 9.4% 1138 0.3% 9.1% 2-Feb OKS 5.25 Secondary $60.75 $334.2 $74.92 23.3% 1103 3.4% 19.9% 2-Feb SXL 2.20 Secondary $68.85 $151.5 $78.65 14.2% 1103 3.4% 10.8% 3-Feb MMLP 1.65 Secondary $32.35 $53.4 $32.65 0.9% 1097 4.0% -3.1% 3-Feb NMM 3.50 Secondary $15.51 $62.4 $18.58 19.8% 1097 4.0% 15.8% 9-Feb EVEP 3.00 Secondary $28.08 $96.9 $35.07 24.9% 1071 6.6% 18.3% 18-Feb BWP 10.00 Secondary $30.02 $345.2 $32.65 8.8% 1107 3.1% 5.6% 23-Feb CPLP 5.80 Secondary $8.85 $55.6 $8.27 -6.6% 1095 4.3% -10.8% 3-Mar CPNO 6.48 Secondary $23.10 $172.0 $27.36 18.4% 1119 2.0% 16.4% 16-Mar GLP 3.40 Secondary $22.75 $89.0 $24.83 9.1% 1159 -1.6% 10.7% 16-Mar GEL 6.25 Secondary $20.50 $147.3 $23.52 14.7% 1159 -1.6% 16.3% 17-Mar TOO 4.40 Secondary $19.48 $98.6 $23.14 18.8% 1166 -2.1% 20.9% 23-Mar LINE 15.00 Secondary $25.00 $431.3 $31.96 27.8% 1174 -2.8% 30.6% 26-Mar PVG 10.00 Secondary $18.45 $184.5 $22.86 23.9% 1167 -2.2% 26.1% 31-Mar MWE 4.25 Secondary $30.43 $148.7 $35.92 18.0% 1169 -2.4% 20.5% 1-Apr NRP 4.60 Secondary $25.17 $115.2 $26.78 6.4% 1178 -3.1% 9.5% 9-Apr NGLS 8.50 Secondary $27.50 $233.8 $27.78 1.0% 1194 -4.5% 5.5% 13-Apr EPD 13.80 Secondary $35.55 $490.6 $39.67 11.6% 1197 -4.7% 16.3% 30-Apr KMP 5.79 ATM $51.80 $300.0 $68.50 32.2% 1187 -3.8% 36.1% 30-Apr NMM 4.50 Secondary $17.84 $92.3 $18.58 4.1% 1187 -3.8% 8.0% 4-May KMP 6.50 Secondary $66.25 $430.6 $68.50 3.4% 1174 -2.8% 6.2% 13-May WES 4.00 Secondary $22.25 $101.4 $27.10 21.8% 1157 -1.4% 23.2% 13-May VNR 3.30 Secondary $23.00 $74.8 $25.46 10.7% 1157 -1.4% 12.1% 14-May NS 4.40 Secondary $56.55 $248.8 $61.73 9.2% 1136 0.5% 8.7% 2-Jun PVG 8.80 Block $16.08 $141.9 $22.86 42.2% 1098 3.9% 38.3% 18-Jun EPB 10.00 Secondary $28.80 $331.2 $32.07 11.4% 1118 2.1% 9.2% 1-Jul KMP 1.17 Private $64.25 $75.0 $68.50 6.6% 1027 11.1% -4.5% 14-Jul MMP 5.80 Secondary $46.65 $268.2 $51.45 10.3% 1095 4.2% 6.1% 21-Jul CPNO 10.33 Private $29.05 $300.0 $27.36 -5.8% 1070 6.7% -12.5% 27-Jul EXLP 8.38 Direct $25.55 $214.0 $21.84 -14.5% 1114 2.5% -17.0% 2-Aug WES 1.07 Direct $23.28 $24.9 $27.10 16.4% 1126 1.4% 15.0% 10-Aug CPLP 6.05 Secondary $8.63 $52.2 $8.27 -4.2% 1121 1.8% -6.0% 10-Aug NGLS 7.48 Secondary $24.80 $185.4 $27.78 12.0% 1121 1.8% 10.2% 11-Aug DPM 2.60 Secondary $32.57 $84.7 $33.50 2.9% 1089 4.7% -1.9% 11-Aug RGNC 17.54 Secondary $23.80 $417.4 $24.48 2.9% 1089 4.7% -1.9% 11-Aug EVEP 3.45 Secondary $33.97 $117.2 $35.07 3.2% 1089 4.7% -1.5% 12-Aug MMLP 1.00 Secondary $29.13 $29.1 $32.65 12.1% 1084 5.3% 6.8% 17-Aug TOO 6.04 Secondary $22.15 $133.7 $23.14 4.5% 1093 4.5% 0.0% 18-Aug ETP 10.93 Secondary $46.22 $505.0 $48.28 4.5% 1094 4.3% 0.2% 24-Aug SXL 2.01 Secondary $74.45 $149.8 $78.65 5.6% 1052 8.5% -2.9% 1-Sep KSP 18.40 Private $4.15 $100.0 $4.09 -1.4% 1080 5.6% -7.1% 8-Sep NRGY 10.25 Secondary $35.60 $419.6 $39.65 11.4% 1099 3.9% 7.5% 8-Sep EXLP 4.60 Secondary $21.60 $114.3 $21.84 1.1% 1099 3.9% -2.7% 15-Sep EPB 11.50 Secondary $31.95 $422.5 $32.07 0.4% 1125 1.4% -1.1% 23-Sep WPZ 9.25 Secondary $42.40 $392.2 $42.40 0.0% 1125 1.5% -1.5% Secondary Offerings IPO 29-Apr PNG 13.50 IPO $21.50 $289.8 $23.83 10.8% 1207 -5.4% 16.3% 11-May NKA 17.50 IPO $20.50 $358.8 $18.56 -9.5% 1156 -1.3% -8.2% 13-Jul OXF 8.75 IPO $18.50 $161.9 $19.46 5.2% 1095 4.2% 1.0% 28-Jul CHKM 24.44 IPO $21.00 $513.2 $25.29 20.4% 1106 3.2% 17.3% 29-Sep RNO 3.73 IPO $20.50 $76.5 $21.90 6.8% 1145 -0.3% 7.1%

$ in mmPublic Secondary IPO Private Block Direct Total 1Q10$3,911 $0 $0 $0 $0 $3,911 2Q10$2,419 $649 $0 $142 $0 $3,209 3Q10$3,291 $752 $475 $0 $239 $4,757 4Q10 Total$9,621 $1,400 $475 $142 $239 $11,877 Market Share 81.0% 11.8% 4.0% 1.2% 2.0% 100.0%

$ in mm January $1,541 February $1,099 March $1,271 April $1,522 May $1,214 June $473 July $1,532 August $1,699 September $1,525 October November December Total $11,877

Source: FactSet, company filings

22 October 2010 40 Barclays Capital | MLP Quarterly Monitor

Debt Markets Rallied Significantly During the Quarter The yield on the Barclays Capital HY Index fell 107bp from 9.28% to 8.21%. The Moody’s Baa Index yield dropped 59bp from 6.13% to 5.54%. MLP publicly traded debt yields in the HY category decreased 111bp while the nine investment grade issues we track dropped 71bp. The average yield for the investment grade group was 4.16% while the cost of the HY debt has fallen to only 7.33%. After consistent widening to the group on an absolute basis, ETP bonds had the best performance for the quarter as the partnership issued $505 million in equity and refunded their debt at ETE, eliminating fears that the credit could slip into the high yield category. As a result, our ETP benchmark bond (6.70% - 7/1/18) rallied 149bp and is now trading in line with the rest of the BBB- credits in the MLP space. On the HY yield side of the equation, NGLS debt had the move, dropping 162bp during the quarter with most of the improvement coming after their $185 million equity offering in August.

Figure 50: Investment Grade MLP Bind Yields

11 10 9 8 7 6 5 4 3 Feb-08 May-08 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10

EPD KMP PAA WPZ ETP OKS EEP MMP SXL

Source: Barclays Capital Fixed Income

Figure 51: Non-Investment Grade MLP Bond Yields

20

18

16

14

12

10

8

6 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10

LINE NGLS APU FGP NRGY

Source: Barclays Capital Fixed Income

22 October 2010 41 Barclays Capital | MLP Quarterly Monitor

Figure 52: Recent MLP Debt Offerings Current Moody's Issuer Coupon Rate US 30 Yr Spread Issue Date Maturity Date Term Amount ($mm) Rating Notes EEP 5.500 3.62 1.880 09/08/10 09/15/40 30 $400 Baa2 KMP 6.550 4.402 2.148 05/12/10 09/15/40 30 $400 Baa2 EPD 6.450 4.352 2.098 05/11/10 09/01/40 30 $600 Baa3 WPZ 6.300 4.484 1.816 02/02/10 04/15/40 30 $1,250 Baa3 SXL 6.850 4.450 2.400 02/12/10 02/15/40 30 $250 Baa2 EPD 6.125 4.159 1.966 09/24/09 10/15/39 30 $600 Baa3 KMP 6.500 4.163 2.337 09/11/09 09/01/39 30 $600 Baa2 ETP 7.500 4.320 3.180 03/28/08 07/01/38 30 $550 Baa3 EEP 7.500 4.467 3.033 08/21/08 04/15/38 30 $400 Baa2 Issuer Coupon Rate US 10 Yr Spread Issue Date Maturity Date Term Amount ($mm) Rating Notes KMP 5.800 3.625 2.175 09/11/09 03/01/21 11 $400 Baa2 KMP 6.850 3.106 3.744 05/07/09 02/15/20 11 $700 Baa2 EPD 6.500 3.592 2.908 04/03/08 01/31/19 11 $700 Baa3 Issuer Coupon Rate US 10 Yr Spread Issue Date Maturity Date Term Amount ($mm) Rating Notes BBEP 8.625 2.530 6.095 10/01/10 10/15/20 10 $305 B3 ETE 7.500 2.720 4.780 09/15/10 10/15/20 10 $1,800 Ba2 LINE 7.750 2.650 5.100 09/08/10 02/01/21 10 $1,000 B2 NS 4.800 2.820 1.980 08/09/10 09/01/20 10 $450 Baa3 MMP 4.250 2.950 1.300 08/04/10 02/01/21 10 $300 Baa2 EPB 6.500 3.243 3.257 06/21/10 04/01/20 10 $110 Ba1 KMP 5.300 3.567 1.733 05/12/10 09/15/20 10 $600 Baa2 EPD 5.200 3.536 1.664 05/11/10 09/01/20 10 $1,000 Baa3 FGP 8.625 3.833 4.792 03/31/10 06/15/20 10 $280 B2 LINE 8.625 3.868 4.757 03/30/10 04/15/20 10 $1,300 B3 EPB 6.500 3.900 2.600 03/25/10 04/01/20 10 $425 Ba1 SPH 7.380 3.690 3.690 03/23/10 03/15/20 10 $250 Ba3 EEP 5.200 3.592 1.608 02/26/10 03/15/20 10 $500 Baa2 WPZ 5.250 3.634 1.616 02/02/10 03/15/20 10 $1,500 Baa3 SXL 5.500 3.590 1.910 02/12/10 02/15/20 10 $250 Baa2 EPD 5.250 3.383 1.867 09/24/09 01/31/20 10 $500 Baa3 PAA 5.750 3.363 2.387 09/01/09 01/15/20 10 $500 Baa3 BWP 5.750 3.525 2.225 08/18/09 09/15/19 10 $350 Baa2 BPL 5.500 3.670 1.830 08/11/09 08/15/19 10 $275 Baa2 MMP 6.550 3.655 2.895 08/05/09 07/15/19 10 $250 Baa2 MMP 6.550 3.792 2.758 06/19/09 06/19/19 10 $300 Baa2 PAA 8.750 2.788 5.962 04/16/09 04/15/19 10 $350 Baa3 ETP 9.000 2.907 6.093 04/07/09 04/15/19 10 $650 Baa3 ETP 9.700 2.163 7.537 12/23/08 03/15/19 10 $600 Baa3 OKS 8.675 2.939 5.736 02/26/09 03/01/19 10 $500 Baa2 EEP 9.875 2.141 7.734 12/22/08 03/01/19 10 $500 Baa2 KMP 9.000 2.130 6.870 12/19/08 02/01/19 10 $500 Baa2 ETP 6.700 3.463 3.237 03/28/08 07/01/18 10 $600 Baa3 EEP 6.500 3.836 2.664 08/21/08 04/15/18 10 $400 Baa2 KMP 5.950 3.678 2.272 02/12/08 02/15/18 10 $975 Baa2 Issuer Coupon Rate US 5 Yr Spread Issue Date Maturity Date Term Amount ($mm) Rating Notes NRGY 7.000 1.510 5.490 09/13/10 10/01/18 8 $600 Ba3 144a NGLS 7.875 1.460 6.415 08/10/10 10/15/18 8 $250 B1 144a PVR 8.250 2.540 5.710 04/22/10 04/15/18 8 $300 B2 MMLP 8.875 2.412 6.463 03/23/10 04/01/18 8 $200 Ba1 144a HEP 8.250 2.378 5.872 03/10/10 03/15/18 8 $150 B1 144a XTEX 8.875 2.402 6.473 02/03/10 02/15/18 8 $725 B3 144a FGP 9.125 2.349 6.776 09/14/09 10/01/17 8 $300 Ba2 144a NGLS 11.250 2.557 8.693 06/30/09 06/30/17 8 $250 B2 144a LINE 11.750 2.014 9.736 05/12/09 05/15/17 8 $250 B3 144a RGNC 9.380 1.983 7.397 05/15/09 05/15/16 7 $250 B1 144a KMP 5.625 2.144 3.481 05/07/09 02/15/15 6 $300 Baa2 NRGY 8.750 1.672 7.078 01/28/09 03/01/15 6 $225 B1 144a Issuer Coupon Rate US 5 Yr Spread Issue Date Maturity Date Term Amount ($mm) Rating Notes DPM 3.250 1.31 1.940 09/23/10 10/01/15 5 $250 NR PAA 3.950 1.776 2.174 07/07/10 09/15/15 5 $400 Baa3 EPD 3.700 2.249 1.451 05/11/10 06/01/15 5 $400 Baa3 WPZ 3.800 2.356 1.444 02/02/10 02/15/15 5 $750 Baa3 MWE 6.875 2.035 4.840 05/20/09 11/01/14 5 $150 B2 144a ETP 8.500 1.862 6.638 04/07/09 04/15/14 5 $350 Baa3 NRP 8.380 1.782 6.598 03/26/09 03/01/14 5 $150 - 144a NRP 8.920 1.782 7.138 03/26/09 03/01/14 5 $50 - 144a SXL 8.750 1.948 6.802 02/06/09 02/15/14 5 $175 Baa2 EPD 9.750 1.735 8.015 12/08/08 01/31/14 5 $500 Baa3 DPM 9.700 2.215 7.485 11/24/08 12/01/13 5 $250 Baa2 ETP 6.000 2.533 3.467 03/28/08 07/01/13 5 $350 Baa3 EPD 5.650 2.756 2.894 04/03/08 04/01/13 5 $400 Baa3 PAA 4.250 2.432 1.818 07/20/09 09/01/12 3 $500 Baa3 EPD 4.600 2.915 1.685 06/10/09 08/01/12 3 $500 Baa3 Source: FactSet

22 October 2010 42 Barclays Capital | MLP Quarterly Monitor

The economy is just strong HY Debt Market Setting Issuance Records enough so that the default rate Debt capital markets have been very active and remain highly accommodating for both new in the HY market has fallen but issuance and refunding. The HY market in particular has been setting new highs in not so strong that the Fed is issuance. The year-over-year comps summarize this robust level of activity. Demand for inclined to let rates rise yield remains very strong as illustrated by the funds flow into mutual funds (see Figure 8). materially over the next 18 The backdrop for debt remains very good. The economy is just strong enough so that the months. default rate in the HY market has fallen but not so strong that the Fed is inclined to let rates rise materially over the next 18 months.

Figure 53: Recent Quarterly Debt Issuance Investment Grade High Yield Total Q1 2009 500 425 925 Q2 2009 2,850 900 3,750 Q3 2009 3,975 450 4,425 Q4 2009 0 0 0 FY 2009 7,325 1,775 9,100

Q1 2010 4,500 3,330 7,830 Q2 2010 3,000 400 3,400 Q3 2010 1,550 4,205 5,755 2010 YTD 9,050 7,935 11,230

Source: FactSet

Investment grade MLPs currently Spread Between Targeted Returns and WACC Implies an Acceleration in have WACCs of 6.5%-7.5% Sector DCF Growth

Non-investment grade MLPs are The drop in WACC since the Lehman Brothers bankruptcy is remarkable. The sequential generally 8.5%-10.0%. Return graphics in Figures 53 and 54 summarize the shift for our coverage universe as well as the targets remain in of 7x–9x subsectors across the value chain. Investment grade MLPs currently have WACCs of 6.5%- EBITDA (11%–14%) for high 7.5% when considering 10-year debt costs and inclusive of several years’ growth tacked on quality stable cash flow the simplified IDR adjusted current yield on equities. Non-investment grade MLPs are generating assets and 5x–6x generally 8.5%-10.0%. Return targets remain in of 7x–9x EBITDA (11%–14%) for high EBITDA (16%–20%) for projects quality stable cash flow generating assets and 5x–6x EBITDA (16%–20%) for projects that that entail more volume or entail more volume or energy price risk. Importantly, as can be seen in the M&A review energy price risk. section herein, in looking at the trend in acquisition multiples, we have not detected a lowering of return standards to adjust for the drop in WACC. The MLP sector has just undergone a period in which large-scale capital commitments were caught in an inflationary squeeze at the same time capital markets froze raising funding costs. Capital commitments were adjusted in 2009 to navigate through this environment and now have accelerated again in 2010. Currently, our five-year models incorporate much higher than current funding costs. If current spreads between returns and WACC persist, we could readily see several percentage points accrue to our current 3%–6% growth channel that we have forecast for the next five to ten years.

22 October 2010 43 Barclays Capital | MLP Quarterly Monitor

Figure 54: MLP Adjusted Equity Cost of Capital

20%

15%

10%

5%

0% NS ETP BPL EEP SEP EPB ENP APL SXL NRP PVR PAA FGP GLP HEP OKS NKA EPD APU SPH DEP PNG CHK KMP TOO LINE RGN WES BWP WPZ DPM EXLP TCLP ARLP XTEX MWE MMP NGLS EROC NRGY CPNO

MLP Equity Cost of Capital (Adjusted for IDR Split) 12% ROCE 17% ROCE

18% 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% Coal Sector E&P Sector Marine Crude Oil Refined Gathering and Propane Natural Gas & Transportation Products Processing NGL

MLP Equity Cost of Capital (Adjusted for IDR Split) 12% ROCE 17% ROCE

Source: Barclays Capital Fixed Income, FactSet

22 October 2010 44 Barclays Capital | MLP Quarterly Monitor

Figure 55: MLP Adjusted Equity Cost of Capital (1Q09)

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% NS BPL SEP EPB ETP EEP KSP SXL APL CEP ENP PAA HEP FGP EPD OKS DEP APU SPH NRP PVR GLP BWP WES LINE KMP TOO WPZ DPM TCLP EXLP ARLP MMP XTEX MWE WMZ NGLS NRGY CPNO EROC HLND RGNC

MLP Equity Cost of Capital (Adjusted for IDR Split) 12% ROCE 17% ROCE

40%

35%

30%

25%

20%

15%

10%

5%

0% E&P Sector Gathering and Marine Coal Sector Crude Oil Refined Propane Natural Gas & Processing Transportation Products NGL

MLP Equity Cost of Capital (Adjusted for IDR Split) 12% ROCE 17% ROCE

Source: Barclays Capital Fixed Income, FactSet

Equity Needs Manageable for Remainder of Year As noted at the beginning of this section of this report, M&A has been the primary catalyst underpinning the level of equity issuance since mid-year. Our funding table suggests this relationship will persist for the rest of the year. We see only minimal needs for equity issuance barring further M&A activity for the remainder of the year. In reviewing our funding table, it would appear four names could come to market for an aggregate of about $1.1 billion in equity. However, our table is calculated on the assumption that spending is funded 50% debt/50% equity. Overcapitalized partnerships or those that have engaged in prefunding not coincident with our calendar year analyses have leeway to forego this rigidly calculated requirement. In reviewing for this issue CHKM and WES need to be excluded as they can lean into strong balance sheets to avoid issuance. The other two, DEP (to fund Haynesville project) and EEP (to fund Elk City acquisition), do not have pressing needs to raise equity immediately but given the market backdrop, we think both could readily come in 4Q10.

22 October 2010 45 Barclays Capital | MLP Quarterly Monitor

Figure 56: MLP 2010E Spending Plans, Capital Requirements, and Funding Availability, ($ in millions)

Equity Debt

Total Total Net Total Debt Funding Equity Retained To Be Total Equity Debt Debt Issued Funding Revolver (in $mm) Partnership Capex Maturing Required Issued YTD CF Raised Required Debt Issued Nee ded Required (Debt & Equity) Required Availability Refined Products BPL Buckeye Partners L.P. 58.0 - 58.0 - 30.0 (1.0) 29.0 - 29.0 29.0 - 28.0 560.0 GLP Global Partners LP 252.7 - 252.7 89.0 6.9 30.5 126.4 - 126.4 126.4 89.0 156.8 438.0 HEP Holly Energy Partners L.P. 77.1 - 77.1 - 4.1 34.5 38.6 150.0 (111.5) 38.6 150.0 (77.0) 145.0 KMP Kinder Morgan Energy Partners L.P. 2,371.4 250.0 2,621.4 1,177.7 9.8 (1.8) 1,185.7 1,000.0 435.7 1,435.7 2,177.7 433.9 1,201.4 MMP Magellan Midstream Partners L.P. 565.2 - 565.2 268.2 41.8 (27.4) 282.6 300.0 (17.4) 282.6 568.2 (44.8) 365.0 NS NuStar Energy L.P. 335.3 - 335.3 248.8 10.7 (91.9) 167.7 450.0 (282.4) 167.7 698.8 (374.2) 500.0 SXL Sunoco Logistics Partners L.P. 424.9 - 424.9 301.3 49.8 (138.7) 212.5 500.0 (287.6) 212.5 801.3 (426.2) 342.0

Gathering and Proces sing APL Atlas Pipeline Partners L.P. 135.5 - 135.5 - 67.2 0.5 67.8 - 67.8 67.8 - 68.3 87.0 CHKM Chesapeake Midstream Partners LP 252.0 - 252.0 - 8.7 117.3 126.0 - 126.0 126.0 - 243.3 750.0 CPNO Copano Energy L.L.C. 197.3 - 197.3 472.0 - (373.4) 98.7 - 98.7 98.7 472.0 (274.7) 370.0 XTEX Crosstex Energy L.P. 64.3 - 64.3 - 42.8 (10.7) 32.2 - 32.2 32.2 - 21.5 300.0 DPM DCP Midstream Partners L.P. 126.7 - 126.7 84.7 6.1 (27.5) 63.4 250.0 (186.7) 63.4 334.7 (214.1) 235.0 EROC Eagle Rock Energy Partners L.P. 24.3 - 24.3 - 58.4 (46.3) 12.2 - 12.2 12.2 - (34.1) 178.0 EXLP Exterran Partners L.P. 226.5 - 226.5 328.3 12.3 (227.4) 113.3 - 113.3 113.3 328.3 (114.1) 32.0 MWE MarkWest Ener gy Partners L.P. 334.0 - 334.0 148.7 26.3 (8.0) 167.0 - 167.0 167.0 148.7 159.0 670.0 RGNC Regency Energy Partners L.P. 540.9 - 540.9 417.4 33.7 (180.6) 270.5 - 270.5 270.5 417.4 89.8 227.3 NGLS Targa Resources Partners L.P. 340.3 - 340.3 565.6 43.5 (438.9) 170.2 250.0 (79.9) 170.2 815.6 (518.8) 410.0 WES Western Gas Partners L.P. 757.7 - 757.7 126.3 45.5 207.1 378.9 - 378.9 378.9 126.3 585.9 240.0

Natural Gas & NGL Pipelines & Storage BWP Boardwalk Pipeline Partners L.P. 564.0 - 564.0 345.2 66.2 (129.4) 282.0 - 282.0 282.0 345.2 152.6 271.5 DEP Duncan Energy Partners L.P. 419.5 - 419.5 - 26.9 182.9 209.8 - 209.8 209.8 - 392.6 260.0 EPB El Paso Pipeline Partners L.P. 1,312.1 - 1,312.1 995.1 122.0 (461.1) 656.1 16,995.0 (16,339.0) 656.1 17,990.1 (16,800.0) 215.0 ETP Energy Transfer Partners L.P. 1,518.0 - 1,518.0 942.1 - (183.1) 759.0 - 759.0 759.0 942.1 575.9 1,950.0 EPD Enterprise Products Partners L.P. 2,853.0 554.0 3,407.0 1,144.8 486.0 (204.3) 1,426.5 2,000.0 (19.5) 1,980.5 3,144.8 (223.8) 1,750.0 NKA Niska Gas Storage Partners 73.1 - 73.1 - 18.0 18.6 36.6 - 36.6 36.6 - 55.1 400.0 OKS ONEOK Partners L.P. 395.0 250.0 645.0 334.2 13.5 (150.2) 197.5 - 447.5 447.5 334.2 297.3 320.0 PNG PAA Natural Gas Storage 95.4 - 95.4 - 4.3 43.4 47.7 - 47.7 47.7 - 91.1 195.0 SEP Spectra Energy Partners L.P. 23.4 - 23.4 - 28.5 (16.8) 11.7 - 11.7 11.7 - (5.1) 260.0 TCLP TC PipeLines L.P. - 60.0 60.0 - 31.5 (31.5) - - 60.0 60.0 - 28.5 243.0

Crude Oil EEP Enbridge Energy Partners L.P. 1,442.8 - 1,442.8 40.0 48.2 633.2 721.4 900.0 (178.6) 721.4 940.0 454.6 741.0 PAA Plains All American Pipeline L.P. 831.0 - 831.0 289.8 30.6 95.1 415.5 400.0 15.5 415.5 689.8 110.6 1,200.0 BKEP Blueknight Energy Partners 17.4 - 17.4 - 6.8 1.9 8.7 - 8.7 8.7 - 10.6 10.0

Marine Transportation KSP K-Sea Transportation Partners L.P. 24.6 - 24.6 100.0 11.7 (99.4) 12.3 - 12.3 12.3 100.0 (87.1) 62.2 TOO Teekay Offshore Partners L.P. 135.6 118.6 254.2 232.3 26.4 (190.9) 67.8 - 186.4 186.4 232.3 (4.5) 144.1

Propane APU Amerigas Partners L.P. 59.2 80.0 139.2 - 79.6 (50.0) 29.6 - 109.6 109.6 - 59.6 224.3 FGP Ferrellgas Partners L.P. 66.1 - 66.1 - 19.5 13.6 33.1 280.0 (247.0) 33.1 280.0 (233.4) 185.9 NRGY Inergy L.P. 418.1 - 418.1 628.0 4.3 (423.3) 209.1 600.0 (391.0) 209.1 1,228.0 (814.2) 323.0 SPH Suburban Propane Partners L.P. 20.4 - 20.4 - 41.2 (31.0) 10.2 250.0 (239.8) 10.2 250.0 (270.8) 91.5

Equity Debt

Total Total Net Total Debt Funding Equity Retained To Be Total Equity Debt Debt Issued Funding Revolver (in $mm) Sector Capex Maturing Required Issued YTD CF Raised Required Debt Issued Nee ded Required (Debt & Equity) Required Availability Refined Products 4,026.6 250.0 4,276.6 2,085.0 123.1 (194.8) 2,013.3 2,400.0 (136.7) 2,263.3 4,485.0 (331.5) 2,991.4 Gathering and Processing 2,999.5 - 2,999.5 2,143.0 344.5 (987.7) 1,499.8 500.0 999.8 1,499.8 2,643.0 12.0 3,499.3 Natural Gas & NGL Pipelines & Storage 7,253.5 864.0 8,117.5 3,761.4 796.9 (931.5) 3,626.8 18,995.0 (14,504.3) 4,490.8 22,756.4 (15,435.8) 5,864.5 Crude Oil 2,291.2 - 2,291.2 329.8 85.6 730.2 1,145.6 1,300.0 (154.4) 1,145.6 1,629.8 575.8 1,951.0 Marine Transportation 160.2 118.6 278.8 332.3 38.1 (290.3) 80.1 - 198.7 198.7 332.3 (91.6) 206.3 Propane 563.8 80.0 643.8 628.0 144.6 (490.7) 281.9 1,130.0 (768.1) 361.9 1,758.0 (1,258.8) 824.7 Total 17,294.8 1,312.6 18,607.4 9,279.5 1,532.8 (2,164.9) 8,647.4 24,325.0 (14,365.0) 9,960.0 33,604.5 (16,529.9) 15,337.2 Source: FactSet, company filings, Barclays Capital estimates

Credit Line and Term Debt Maturity Schedules Fairly Light Through 2012 Through mid-year our coverage universe has a combined bank debt of roughly $10.5 billion. This is up slightly from the $10.4 billion level at the end of 1Q. At present the average bank line is less than half drawn and this figure fails to include a significant amount of equity raised in 3Q. We anticipate no issues surrounding the six lines of credit that come up for renewal in 2011. Term debt maturities remain very light; however, given the attractive conditions in the current market, we would not be surprised if our universe attempted to refund higher cost issues if it becomes economically feasible to do so. This potential probably warrants further study but we do not have a view on the subject at this time. Just 4.1% of debt matures between now and year-end 2011. The investment grade partnerships in particular have taken advantage of the current low rate environment and

22 October 2010 46 Barclays Capital | MLP Quarterly Monitor

have pushed maturities well out into the future. Just under 39% of all maturities are 2020 and beyond.

Figure 57: MLP Revolving Credit Facility Capacity

Available Used Remaining Ticker ($ mm) ($ mm) ($ mm) % Drawn Maturity APU $275 $51 $224 18% 2011 DEP $300 $40 $260 13% 2011 EXLP $315 $283 $32 90% 2011 $18,000 HEP $300 $155 $145 52% 2011 TCLP $725 $482 $243 66% 2011 BKEP $29 $19 $10 66% 2011 $15,000 FGP $400 $214 $186 54% 2012 BPL $580 $20 $560 3% 2012 $12,000 BWP $951 $679 $272 71% 2012 CPNO $550 $180 $370 33% 2012 DPM $850 $615 $235 72% 2012 $9,000 EPD $1,750 $0 $1,750 0% 2012 EROC $810 $632 $178 78% 2012 ETP $2,000 $50 $1,950 3% 2012 $6,000 MMP $550 $185 $365 34% 2012 NGLS $1,100 $690 $410 63% 2012 $3,000 NS $1,200 $700 $500 58% 2012 OKS $1,000 $680 $320 68% 2012 PAA $1,600 $400 $1,200 25% 2012 $0 SEP $500 $240 $260 48% 2012 2010 2011 2012 2013 2014 SXL $462 $120 $342 26% 2012 WES $450 $210 $240 47% 2012 Amount Drawn MLP Borrowing Capacity KSP $115 $53 $62 46% 2012 EPB $750 $535 $215 71% 2012 KMP $2,000 $799 $1,201 40% 2013 Available ($ mm) Used ($ mm) Remaining ($ mm) NRGY $525 $202 $323 38% 2013 2010 $0 $0 $0 APL $380 $293 $87 77% 2013 2011 $1,944 $1,030 $914 EEP $1,168 $427 $741 37% 2013 2012 $15,618 $6,203 $9,415 SPH $250 $159 $92 63% 2013 2013 $4,623 $1,984 $2,639 PNG $300 $105 $195 35% 2013 2014 $2,670 $1,305 $1,365 GLP $950 $512 $438 54% 2014 Total $24,854 $10,521 $14,333 XTEX $420 $120 $300 29% 2014 RGNC $900 $673 $227 75% 2014 NKA $400 $0 $400 0% 2014 MWE $700 $30 $670 4% 2015 CHKM $750 $0 $750 0% 2015 TOO $260 $116 $144 45% 2018 Source: Company filings, Barclays Capital estimates

22 October 2010 47 Barclays Capital | MLP Quarterly Monitor

Figure 58: MLP Revolving Credit Facility Maturity Schedule 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 2Q15 3Q15 4Q18 APL X APU X BKEP X BPL X BWP X CHKM X CPNO X DEP X DPM X EEP X EPB X EPD X EROC X ETP X EXLP X FGP X GLP X HEP X KMP X KSP X MMP X MWE X NGLS X NRGY X NS X OKS X PAA X RGNC X SEP X SPH X SXL X TCLP X TOO X WES X XTEX X Source: Company filings, Barclays Capital estimates

22 October 2010 48 Barclays Capital | MLP Quarterly Monitor

Figure 59: MLP Debt Maturity by Year

$12,000 17.9% 16.6% $10,000 13.0% $8,000

$6,000 7.9% 6.8% 6.8% 6.6% 6.9% 5.6% $4,000 5.4% 3.1% 3.1% $2,000 0.4% $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022+

MLP Debt Maturity by Year ($mn) % of Total Maturing

Source: Company filings, Barclays Capital estimates

22 October 2010 49 Barclays Capital | MLP Quarterly Monitor

M&A Review

A major controlling factor in the GP Buy-Ins Dominate 3Q M&A Activity – Trend or Not? multiples paid comes from the valuation relationship between GP buy-ins dominated the M&A landscape during the third quarter. Four transactions the GP and LP units as each of (NRGP/NRGY, EPE/EPD, NRP/NRP and PVG/PVR) totalling $13.0 billion were announced these transactions has been during the period. Coming on the heels of the BGH/BPL announcement in 2Q along with mildly to modestly dilutive. ETE buying the GP of RGNC in May, six transactions took place year-to-date totalling $14.5 billion. This compares with the four previous years of a total of five deals encompassing approximately $5 billion in costs. There has been a wide spread in multiples paid, as is summarized in Figure 59. In general, we would group the historical deals into three buckets. The two coal transactions which were done at similar current year and forward year multiples, the Magellan buy-in during the capital market dislocation early 2009 and the other eight deals. A major controlling factor in the multiples paid comes from the valuation The three low multiple relationship between the GP and LP units as each of these transactions has been mildly to transactions (MMG/MMP, modestly dilutive. In fact, in two of the 3Q buy-in offerings (EPE/EPD and NRGP/NRGY) and NRP/NRP and PVG/PVR) were certain LP unit holders will forego distributions until it is perceived the uplift from the launched by LPs trading at elimination of IDRs offsets the initial dilution from the additional units outstanding. The EV/adjusted EBITDA multiples willingness to make this accommodation or to absorb dilution through coming into the that were 55%–65% that of the transaction with excess coverage at the LP level goes a long way toward explaining majority LPs paying the higher prices. of the differentials. The three low multiple transactions (MMG/MMP, NRP/NRP and PVG/PVR) were launched by LPs trading at EV/adjusted EBITDA multiples that were 55%– 65% that of the LPs paying the higher prices.

We continue to resist the idea that this year’s spate of GP buy-ins is part of a broader (inevitable) trend based on the premise that WACCs at the LP level are too high to compete for incremental business. While a factor, we believe closer examination of the deals reveals any number of other drivers. We also think that the roll-up of a high percentage of the publicly traded GPs (which represent only 12% of the energy MLP universe) also accentuates this impression. GPs come in three generic types; individuals, private equity firms and C-Corps. In many cases the generic types are intertwined, leaving the underlying motivations for a public benchmark or a buy-in highly case-specific. Several of the buy-ins have come from LPs buying in “orphaned” GP interests where the original owner has sold their position to the public, creating the desire for an opportunistic reduction in the IDR burden as no potential conflict exists between the singular owner of both LP and GP interests (MMP/MMG). Another reason we believe the WACC-driven argument is somewhat of a stretch is that with the notable exception of EPD (where a private GP owner also holds an atypical percentage of the LP units) none of the other largest market cap MLPs, which by definition are all well up into the IDR splits, have shown any inclination to want to fold-in their GP holdings. Several have been openly skeptical and frequently invoke the idea that if WACC becomes a limiting factor for a specific deal, they can always use the time tested method of carving out cash flows from the parent on a case-by-case basis. We would also note that the rating agencies have always viewed IDRs as one more potential siphon of cash flows from bond holders into equity hands. Simplifying the corporate structure has uniformly been viewed as credit positive. Finally, we think that the potential change in carried interest taxation has been a critical factor in this year’s jump in conversions of owners migrating their holdings from GP to LP form.

22 October 2010 50 Barclays Capital | MLP Quarterly Monitor

Figure 60: GP Acquisition Multiples YTD Multiple GP Acquisitions ($mm) 2006 2007 2008 2009 2010 Current Forward BGH / BPL 1,152 20.9x 18.1x NRGP / NRGY 2,068 31.9x 29.1x NRP / NRP 882 17.0x 11.6x PVG / PVR 956 15.7x 10.7x EPE / EPD 9,100 33.8x 29.3x RGNC / ETE 300 38.5x 24.2x MMG / MMP 1,148 11.2x 9.6x EPE / ETE 1,926 28.8x 22.9x MWP / MWE 734 27.2x 14.9x SPH / SPH 76 25.3x 21.7x EPCO / TPP 1100 15.1x 13.4x Total 1,176 2,660 0 1,148 14,458 24.1x 18.7x

Source: Company reports, Barclays Capital estimates

Year-To-Date Acquisition Activity Has Surpassed Previous High by Wide Margin Year-To-Date cumulative purchases of $38.8 billion including the standard run rate of activity, singular large-scale purchase activity and GP buy-ins is almost double the previous high of $19.8 billion set in 2007. This was when the formation of the E&P sector MLPs set off a buying spree in that subsector to complement a similar ramp in the G&P space tied to the emergence of that group and readily available PIPE financing resulting from the entry of closed end funds and aggressive dedicated MLP funds into the sector.

Figure 61: MLP Annual Acquisitions

Acquisitions Including Mergers GP Buy-ins $30,000

$25,000

$20,000

$15,000

(in Millions) (in $10,000

$5,000

$0 YTD 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Barclays Capital estimates

22 October 2010 51 Barclays Capital | MLP Quarterly Monitor

Figure 62: MLP Acquisitions as a % of Market Cap (Annualized)

Acquisitions as a % of Market Cap (Annualized) Including Mergers GP Buy-ins 30%

25%

20%

15%

10%

5%

0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Barclays Capital estimates

Pace of Activity Unlikely to Abate Producers continue to watch monetization of their gathering G&P activity, as usual, has been a key driver of the steady state M&A market representing systems in many of the emerging about 40% of year-to-date transactions. Producers continue to watch monetization of their shales to help fund aggressive gathering systems in many of the emerging shales to help fund aggressive drilling drilling programs. We project programs. The continued slide in gas prices has put more pressure on cash flows to that the two large gas storage heighten this interest. Of particular interest could be the HK Eagle Ford and Fayetteville transactions will be the leading systems. Private equity start-ups abound in this arena and we expect more monetization of edge of more deals in this space systems over the next six to twenty-four months from areas such as the Marcellus, Eagle as PE has a large inventory of Ford, East Texas Haynesville and Permian Basin markets. We project that the two large gas projects that appear ripe for sale. storage transactions (Bobcat, Tres Palacios) will be the leading edge of more deals in this E&P transaction flow is likely to space as PE has a large inventory of projects (see our PAA Natural Gas Storage initiation remain strong given the desire of report dated 6/15/10, page 28) that appear ripe for sale. Current margin compression in many operators to high grade or the space could prove to slow activity in this area, but given the need to monetize some of concentrate drilling portfolios. this capacity for portfolio reasons or fund incremental development to achieve competitive scale we sense asset prices will adjust and activity levels will be fairly robust. E&P transaction flow is likely to remain strong given the desire of many operators to high grade or concentrate drilling portfolios. In many of the liquids-rich plays, smaller private The dramatic shift in gas supply companies do not have the financial or technical means to exploit these emerging plays has markedly begun to shift the and, in our estimation, have chosen and will continue to choose to sell properties to the likes value of various pipeline of LINN or other MLPs. The dramatic shift in gas supply has markedly begun to shift the corridors. We suspect as these value of various pipeline corridors. We suspect as these changes accelerate with drilling in changes accelerate with drilling the new shales and contracts begin to roll over we will see more Big Inch (inter and intra) in the new shales and contracts pipeline sale activity. It may take a while for the bid /ask spread to adjust (think about COP begin to roll over we will see pulling its ownership of REX from the auction block), but we see more activity coming more Big Inch (inter and intra) focused principally in the big “V” formed between the Rockies and Appalachian mountains pipeline sale activity. where most of the basis deterioration and displaced shale gas flows will take place over time.

Big oil continues to sit on a large network of under-utilized pipes and tanks. So far to date from this arena we have seen sale of various pieces of consortium owned pipe. Much more of this exists including big parts of large systems such as the Colonial Pipeline where purchase prices could run in the hundreds of millions of dollars. The propane group has finally begun to see the benefits of scale over the last several years as they have

22 October 2010 52 Barclays Capital | MLP Quarterly Monitor

concentrated on cost structures (especially better utilization of equipment and field personnel). While more improvement lies ahead, at some juncture the benefits will incrementally become more difficult to achieve. Of the five big players we now have two that have eliminated the IDRs (NRGY, SPH), one at the 2% split level (FGP), one barely into the 15% tier (APU) and one well into the 50% level (Heritage – ETP). Traditionally, ETP has sold at a wide enough yield disparity to the pure propane players and has had an investment grade balance sheet to offset the WACC differential in bidding for new properties. This advantage has changed with the recent closing of this yield differential and the elimination of NRGYs IDRs. With tangible evidence (i.e., benchmarks that can form the basis of negotiation for value) of how costs can be cut through consolidation, we may also be nearing the inflection point where larger-scale transactions begin to occur within this group.

Figure 63: Acquisition Activity by Subsector ($ in millions) YTD 2006 2007 2008 2009 2010

Gathering, Processing & Compression 5,898 6,188 1,092 996 4,477 NGL/NG Pipeline & Storage 3,603 1,331 2,090 1,999 4,168 Compressor 0 0 902 143 399 Crude Pipelines & Storage 532 730 1,090 132 683 Refined Products Pipeline & Storage 158 459 315 502 636 Marine Transportation 106 388 1,488 440 273 Coal 797 367 25 522 91 Propane 565 273 193 21 223 Exploration & Production 971 9,313 578 938 1,684 Subtotal 12,630 19,049 7,773 5,693 12,634 Major Acquisitions WPZ / WMB 11,728 EPD / TPP 5,894 PAA / PPX 2,390 Subtotal 15,020 19,049 7,773 11,587 24,362

GP Acquisitions 1,176 2,660 0 1,148 14,458

Total Acquisitions 16,196 21,709 7,773 12,735 38,820

Source: Company reports, Barclays Capital estimates

Dropdown Transactions Remain Steady Although Diminishing Driver of Deal Flow We have characterized the dropdown players as recurring (EPB, EXLP, NGLS, WES – recent addition CHKM), sporadic (TGP, TOO) and strategic (DPM, SEP, TCLP). With the VESCO drop NGLS has run out the string of potential drops, eliminating one of the recurring entities. Earlier in the year WMB reduced the aggregate drop-down pool considerably by selling all of their qualifying assets down to WPZ. In 2008 drop-downs represented 46% of M&A transactions. In 2009 they fell to 39% of activity. Year-to-date 2010, excluding the WPZ conversion, the figure is 32%. Over the last two quarters drop-down activity has been 25% and 23% of deal flow, respectively. While the recurring drop group will continue to base-load our M&A statistics, when looking at the limited number of MLPs in this mode and their respective pools of available assets and the outlook for third-party transactions, we estimate a diminished role in the annual league tables for the next 12-24 months from this source of activity.

22 October 2010 53 Barclays Capital | MLP Quarterly Monitor

Figure 64: M&A Transactions Summary Total Deals Drop Downs 2009 MLP M&A Transactions $mm Number Avg Size $mm Number Avg Size % Mkt Cap

Gathering & Processing 996 11 91 194 2 97 8% Nat Gas & NGL Pipes & Storage 1999 9 222 1558 4 390 4% Refined Prod Pipes & Terminals 502 7 72 0 0 1% Compression 143 1 143 143 1 143 32% Crude Pipes & Terminals 132 3 44 0 0 1% Marine Transportation 440 4 320 1 320 14% Coal 522 5 104 0 0 11% Propane 21 na 0 na 0% E&P 938 10 94 0 0 12% Total 5693 50 114 2215 8 277 4%

Drop Downs % Total 39%

Total Deals Drop Downs 2010 1Q MLP M&A Transactions $mm Number Avg Size $mm Number Avg Size % Mkt Cap (1)

Gathering & Processing 824 3 275 674 2 337 23% Nat Gas & NGL Pipes & Storage 13867 7 1981 12691 2 6346 103% Refined Prod Pipes & Terminals 386 3 129 93 1 93 4% Crude Pipes & Terminals 64 1 64 0 0 0 2% Marine Transportation 203 2 102 0 0 0 27% Coal 0 0 0 0 0 0 0% Propane 223 2 112 0 0 0 10% E&P 801 4 200 0 0 0 34% Total 16368 22 744 13458 5 2692 44% ex WMB drop 4640 21 221 1730 4 433 12% Drop Downs % Total (ex WMB 37%) 82%

Total Deals Drop Downs 2010 2Q MLP M&A Transactions $mm Number Avg Size $mm Number Avg Size % Mkt Cap (1)

Gathering & Processing 2075 2 1038 0 0 0 59% Nat Gas & NGL Pipes & Storage 812 2 406 812 2 406 5% Refined Prod Pipes & Terminals 96 2 48 0 0 0 1% Crude Pipes & Terminals 0 0 0 0 0 0 0% Marine Transportation 0 0 0 0 0 0 0% Coal 91 3 30 0 0 0 8% Propane 0 0 0 0 0 0 0% E&P 223 2 112 0 0 0 9% Total 3297 11 300 812 2 406 8%

Drop Downs % Total 25%

Total Deals Drop Downs 2010 3Q MLP M&A Transactions $mm Number Avg Size $mm Number Avg Size % Mkt Cap (1)

Gathering & Processing 1977 6 330 1100 4 275 56% Nat Gas & NGL Pipes & Storage 1217 3 406 0 0 0 8% Refined Prod Pipes & Terminals 154 2 77 0 0 0 2% Crude Pipes & Terminals 619 4 155 0 0 0 15% Marine Transportation 70 2 35 0 0 0 8% Coal 0 0 0 0 0 0 0% Propane 0 0 0 0 0 0 0% E&P 660 4 165 0 0 0 28% Total 4697 21 224 1100 4 275 12%

Drop Downs % Total 23%

Total Deals Drop Downs 2010 9 Mos MLP M&A Transactions $mm Number Avg Size $mm Number Avg Size % Mkt Cap (1)

Gathering & Processing 4876 11 443 1774 6 296 38% Nat Gas & NGL Pipes & Storage 15896 12 1325 13503 4 3376 26% Refined Prod Pipes & Terminals 636 7 91 93 1 93 2% Crude Pipes & Terminals 683 5 137 0 0 0 5% Marine Transportation 273 4 68 0 0 0 10% Coal 91 3 30 0 0 0 2% Propane 223 2 112 0 0 0 3% E&P 1684 10 168 0 0 0 21% Total 24362 54 451 15370 11 1397 17%

ex WMB drop 12634 52 243 3642 9 405 9% Drop Downs % Total (ex WMB 37%) 29% (1) annualized (2) WMB $11.728 billion drop of midstream & interstate pipes into WPZ Source: Company filings, Barclays Capital estimates

22 October 2010 54 Barclays Capital | MLP Quarterly Monitor

Given the high level of recurring Multiples Remain Bifurcated, Dependent on Development Upside transactions, the G&P subsector Multiples ebb and flow with the cost of capital and the level of competition in the is appropriate to highlight this marketplace. However, since the emergence of the repetitive, highly visible manufacturing phenomenon. Between 2000 type resource plays (initially tight gas, more recently shale plays) infrastructure developers and 2010 year-to-date, inclusive have been aggressively paying up for the perceived ramp in production and the incremental of roughly 100 transactions, the economics to be gained by filling under-utilized skeletal systems. This has brought about a average multiple has been 9.8x. consistent bifurcation in multiples and can highly influence the results in any one period The median value has been 8.5x. measured. Given the high level of recurring transactions, the G&P subsector is appropriate Drops have been 8.1x and to highlight this phenomenon. Between 2000 and 2010 year-to-date, inclusive of roughly purchases of skeletal systems 100 transactions, the average multiple has been 9.8x. The median value has been 8.5x. have averaged 21.8x. Drops have been 8.1x and purchases of skeletal systems have averaged 21.8x. In retrospect, some forays into CBM and tight gas in the Rockies have paid off. In other instances it has not. The same can be said for a series of Barnett transactions. In this vein, it will be interesting to see how the recent spate of deals in the Haynesville materializes given a persistent migration of rigs from this play to the Eagle Ford and liquids-rich portion of the Barnett.

The other arena where this buy for development mentality has taken hold is in the salt dome storage market. As incremental costs to develop capacity can drop precipitously given the acquisition of the top side, brine and water handling facilities where these sunk costs can be amortized over a much larger base of operations. Armed with this backdrop it becomes a bit easier to interpret the year-to-year or group-to-group differentials in multiples. To date this year, the basic pipes and tanks market has yielded fairly attractive multiples especially in the context of today’s WACC environment. The G&P figure for 2010 is highly influenced by the trio of Haynesville deals, which averaged 19.2x. The NGL T&F and Storage category has been highly influenced by the Overland Pass transaction, which resulted in an estimated current multiple of 20.2x based on FERC filings. As is the case of the gas gathering purchases, WMB feels it has a highly visible line of sight in filling the current underutilized facility and seeing the pipeline cheaply expanded through addition of compression. The end game is an all-in multiple of 5x–6x EBITDA. Similarly in the Natural Gas Storage category we estimate the Bobcat facility was acquired for 18x EBITDA. Future development capital equates to 45% of all-in costs and SE expects the overall multiple to drop to 9x–10x as the incremental development costs per unit are roughly half the buy-in cost. The terminal figure for 2010 has been influenced by GLP’s purchase of an underutilized facility from XOM.

22 October 2010 55 Barclays Capital | MLP Quarterly Monitor

Figure 65: Trends in Acquisition Multiples 5 Yr YTD Asset Category Avg 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Refined Products 9.2x 10.0x 8.5x 8.1x 9.9x 9.6x 9.0x NA 11.5x 6.8x 6.4x Interstate 9.7x 7.0x 7.7x 8.3x 8.5x 10.2x 9.7x 11.4x 9.5x 7.6x 9.2x Intrastate (3) 8.1x 9.2x 7.7x NA 9.4x 8.1x NA NA 6.8x 9.4x 8.1x Gathering & Processing 9.0x 7.8x 7.1x 6.6x 8.0x 7.8x 9.1x 11.2x 10.3x 6.6x 11.1x Compression 8.2x NA NA NA NA NA NA NA 10.6x 5.8x 8.0x NGL Transport, Fractionation, Storage 9.0x 7.1x 7.4x NA NA 10.3x 8.9x 10.4x NA 6.4x 18.2x Natural Gas Storage 13.6x NA NA NA NA 13.5x 15.8x 10.1x 18.9x 9.9x 11.3x Crude 9.1x 7.3x 7.1x 8.0x 8.5x NA 10.3x 8.7x 8.2x 7.1x 8.4x Terminals 8.5x 6.1x 7.0x 8.3x 4.2x 7.0x 8.6x 11.2x 8.1x 7.5x 11.2x Shipping 7.9x NA NA NA 6.9x 6.0x 9.1x 8.9x 9.6x 5.9x 8.0x Average (unweighted) 9.2x 7.8x 7.5x 7.8x 7.9x 9.1x 10.1x 10.3x 10.4x 7.3x 10.0x

Propane (1) $2.20 $0.80 $1.00 $2.68 $2.10 $2.46 $2.42 $2.36 $1.63 $2.15 $4.38 (2) Coal $0.98 $0.13 $0.78 $0.35 $0.49 $0.84 $0.82 $0.80 $1.18 $1.28 $1.77 Notes: (1) Weighted average per retail gallon (2008 single transaction includes high % heating oil) (2) Weighted average per ton (2008 single transaction includes some timber) (3) (2008 singled transaction – drop down) NA – no transactions available with multiple Source: Company reports, Barclays Capital estimates

22 October 2010 56 Barclays Capital | MLP Quarterly Monitor

Commodity Review

Gas Price Estimates Shaved as Drilling Productivity Continues to Improve We have shaved a bit more from our gas price forecast as drilling We have shaved a bit more from our gas price forecast as drilling productivity continues to productivity continues to improve with each update from all the key shale and tight gas drilling plays. Further, we improve with each update from continue to see the emergence of new shales and more of the rig count migrating to all the key shale and tight gas horizontal drilling. We have clipped a nickel off of our 2010 gas price forecast principally drilling plays. due to the fact that 2Q actuals were a bit weaker than anticipated. For the remainder of our five-year forecast through 2014 which actually includes our view of “normalized” We have clipped a nickel off of realizations in 2013 and 2014 ($5.00/mcf), we have cut our projections by 8%–9% across our 2010 gas price forecast the period. Our oil price deck has been changed a minimal amount reflecting 2Q actuals principally due to the fact that versus Forecast, with the out-year projections being kept since last quarter. Our 2Q actuals were a bit weaker “normalized” oil price forecast is $85. The resulting oil/gas ratio of 17.0x creates a robust than anticipated. For the frac spread environment for the forecast period. With the sharp collapse in the gas forward remainder of our five-year curve during 2Q (12-month strip fell 18%), we are no longer materially below this forecast through 2014 benchmark outlook for 2010 and 2011. However, the forward market, as is typical, shows a … we have cut our projections gradual escalation in prices that takes the out years 14% above our current projection for by 8%–9% across. 2014. We have the same occurrence on the oil side as well as modest escalation in the forward market outstrips our $85/bbl price by 6% in 2014.

Figure 66: Commodity Price Deck

Average Price / Ratio 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011e 2012e 2013e 2014e 00-04 05-09 10-14 Upstream HH Gas $/Mcf $4.23 $4.07 $3.33 $5.63 $5.85 $8.79 $6.76 $6.95 $8.85 $3.89 $4.45 $4.35 $5.50 $5.00 $5.00 $4.62 $7.05 $4.86 Gas $/Mcf (average) $4.07 $3.88 $3.10 $5.35 $5.69 $8.35 $6.42 $6.64 $8.36 $3.78 $4.37 $4.30 $5.40 $4.90 $4.90 $4.42 $6.71 $4.78 WTI $/BBl $29.39 $25.21 $23.23 $27.82 $38.18 $52.97 $65.92 $71.17 $100.22 $60.84 $77.34 $81.38 $85.00 $85.00 $85.00 $28.77 $70.22 $82.74

Forward Curve 10-20-10 Oil $77.55 $86.11 $87.77 $89.04 $89.57 $86.01 Gas $4.40 $4.40 $5.10 $5.41 $5.62 $4.99 17.6x 19.6x 17.2x 16.5x 15.9x $17.36 Ratio (Barclays estimate) 7.0x 6.2x 7.0x 4.9x 6.5x 6.0x 9.7x 10.2x 11.3x 15.6x 17.4x 18.7x 15.5x 17.0x 17.0x 17.1x

Processing Margins Frac Spread $/bbl $8.11 $4.55 $5.45 $3.08 $8.92 $6.58 $18.05 $25.06 $28.01 $18.21 $27.33 $27.97 $24.93 $26.55 $26.31 $6.02 $19.18 $26.62 Frac Spread $/Gal $0.19 $0.11 $0.13 $0.07 $0.21 $0.16 $0.43 $0.60 $0.67 $0.43 $0.65 $0.67 $0.59 $0.63 $0.63 $0.14 $0.46 $0.63 Oil/Gas (average) 7.2x 6.5x 7.5x 5.2x 6.7x 6.3x 10.3x 10.7x 12.0x 16.1x 17.7x 18.9x 15.7x 17.3x 17.3x $6.62 $11.08 $17.40 NGL / WTI 80.5% 76.9% 74.5% 84.5% 80.4% 72.6% 64.9% 70.8% 59.2% 54.3% 57.0% 54.6% 53.6% 53.3% 53.0% $0.79 $0.64 $0.54 NGL $/BBL $23.67 $19.39 $17.30 $23.52 $30.65 $38.46 $42.58 $50.40 $59.96 $32.65 $44.04 $44.42 $45.56 $45.28 $45.03 $22.91 $44.81 $44.87 NGL $/Gal $0.56 $0.46 $0.41 $0.56 $0.73 $0.92 $1.01 $1.20 $1.43 $0.78 $1.05 $1.06 $1.08 $1.08 $1.07 $0.55 $1.07 $1.07

Gas Basis Interregional Appalachia - Rockies $0.67 $0.73 $1.57 $1.35 $0.96 $1.91 $1.64 $3.13 $2.66 $1.01 $0.66 $0.70 $0.69 $0.64 $0.64 $1.06 $2.07 $0.67 East Texas - Permian $0.01 -$0.08 $0.10 $0.08 $0.19 $0.19 $0.29 $0.31 $0.85 $0.09 $0.09 $0.15 $0.13 $0.17 $0.17 $0.06 $0.35 $0.14 Socal Border - SJB $2.25 $4.31 $0.51 $0.38 $0.33 $0.42 $0.39 $0.31 $0.68 $0.45 $0.23 $0.20 $0.25 $0.23 $0.24 $1.56 $0.45 $0.23 TETCO M1 - E. TX $0.20 $0.04 $0.18 $0.04 $0.22 $1.05 $0.41 $0.54 $0.45 $0.37 $0.19 $0.25 $0.28 $0.25 $0.24 $0.14 $0.57 $0.24 Chicago - AECO $0.69 $0.43 $0.72 $0.80 $0.78 $1.13 $0.69 $0.65 $0.76 $0.49 $0.73 $0.74 $0.75 $0.75 $0.73 $0.68 $0.74 $0.74

Supply Areas Rockies -$0.48 -$0.53 -$1.40 -$1.13 -$0.66 -$1.59 -$1.37 -$2.87 -$2.32 -$0.85 -$0.53 -$0.60 -$0.60 -$0.60 -$0.62 -$0.84 -$1.80 -$0.59 MidCont -$0.11 -$0.12 -$0.23 -$0.28 -$0.41 -$1.23 -$0.80 -$0.82 -$1.62 -$0.51 -$0.30 -$0.37 -$0.36 -$0.36 -$0.36 -$0.23 -$1.00 -$0.35 E Texas -$0.10 -$0.20 -$0.13 -$0.20 -$0.22 -$1.04 -$0.51 -$0.51 -$0.43 -$0.37 -$0.19 -$0.22 -$0.25 -$0.24 -$0.24 -$0.17 -$0.57 -$0.23 Permian Basin -$0.11 -$0.12 -$0.23 -$0.28 -$0.41 -$1.23 -$0.80 -$0.82 -$1.28 -$0.46 -$0.28 -$0.37 -$0.38 -$0.41 -$0.41 -$0.23 -$0.92 -$0.37 San Juan Basin -$0.36 -$0.45 -$0.67 -$0.88 -$0.66 -$1.66 -$0.99 -$0.85 -$1.67 -$0.51 -$0.40 -$0.45 -$0.49 -$0.47 -$0.46 -$0.60 -$1.14 -$0.45 Appalachia $0.19 $0.20 $0.17 $0.22 $0.30 $0.32 $0.27 $0.26 $0.34 $0.16 $0.13 $0.10 $0.09 $0.04 $0.02 $0.22 $0.27 $0.08 AECO -$0.60 -$0.32 -$0.72 -$0.87 -$0.78 -$1.55 -$0.85 -$0.80 -$0.85 -$0.49 -$0.70 -$0.72 -$0.78 -$0.78 -$0.76 -$0.66 -$0.91 -$0.75 TETCO M-1 (MS) $0.10 -$0.16 $0.05 -$0.16 $0.00 $0.01 -$0.09 $0.03 $0.02 $0.00 $0.00 $0.03 $0.03 $0.01 $0.00 -$0.03 -$0.01 $0.00

End Markets Chicago $0.09 $0.11 $0.00 -$0.07 $0.00 -$0.42 -$0.16 -$0.15 -$0.09 $0.00 $0.03 $0.02 -$0.03 ($0.03) ($0.03) $0.03 -$0.16 -$0.01 New York (Transco 6) $0.67 $0.55 $0.47 $0.79 $0.93 $1.67 $1.02 $1.73 $1.71 $0.97 $0.75 $0.69 $0.64 $0.60 $0.60 $0.68 $1.42 $0.66 Dawn $0.26 $0.19 $0.15 $0.15 SoCal Border $1.89 $3.86 -$0.16 -$0.51 -$0.33 -$1.24 -$0.60 -$0.54 -$0.99 -$0.06 -$0.17 -$0.25 -$0.24 -$0.24 -$0.22 $0.95 -$0.69 -$0.22 Houston Ship Channel $0.12 -$0.17 -$0.03 -$0.31 -$0.22 -$0.84 -$0.48 -$0.38 -$0.39 -$0.20 -$0.10 -$0.12 -$0.14 -$0.15 -$0.15 -$0.12 -$0.46 -$0.13 Source: Natural Gas Week, Gas Processors Report, Bloomberg, Barclays Capital estimates

22 October 2010 57 Barclays Capital | MLP Quarterly Monitor

NGL Forecast Trimmed to Reflect Higher Ethane Content in Generic Barrel Many of the new plays, notably the Marcellus where ethane content is 55%–65% of the NGL barrel, are lighter than the current mix of domestic plant production, which is an estimated 42%. In fine-tuning our outlook for NGL supply, our bottom-up forecast implies the marginal barrel will be over 48% ethane by 2013. Reflecting this outlook, we estimate an exit rate of about 45% in 2014. We have also trimmed our propane outlook by lowering off peak prices to closer align realizations with chemical feedstock competition from ethane. These two adjustments result in a cut in our NGL/WTI (natural gas liquids/Western Texas Intermediate) ratio over the forecast period by about 1.5%–2.0% per year.

Figure 67: NGL Price Forecast

Average 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011e 2012e 2013e 2014e 00-04 05-09 10-14 NGL Prices % WTI Ethane 55.8% 54.1% 40.6% 53.5% 50.4% 44.9% 40.8% 43.8% 36.8% 32.3% 30.0% 28.0% 28.0% 28.0% 28.0% 50.9% 39.7% 28.4% Propane 82.3% 77.1% 64.6% 77.6% 74.7% 66.8% 63.5% 67.6% 59.0% 58.2% 60.0% 60.0% 60.0% 60.0% 60.0% 75.3% 63.0% 60.0% N-Butane 95.0% 88.7% 78.9% 90.8% 88.7% 79.8% 75.5% 79.6% 69.9% 74.6% 75.0% 75.0% 75.0% 75.0% 75.0% 88.4% 75.9% 75.0% I-Butane 96.6% 93.3% 85.4% 93.9% 89.0% 84.6% 77.9% 83.5% 71.9% 82.8% 80.0% 80.0% 80.0% 80.0% 80.0% 91.6% 80.1% 80.0% Natural Gasoline 99.4% 99.7% 91.7% 98.6% 99.8% 92.4% 90.6% 94.3% 86.8% 89.1% 91.0% 91.0% 91.0% 91.0% 91.0% 97.8% 90.6% 91.0% WTD Average 77.6% 74.8% 63.2% 74.9% 71.8% 65.2% 61.1% 64.4% 56.5% 55.8% 55.1% 53.9% 53.6% 53.3% 53.0% 72.5% 60.6% 53.8%

NGL % Barrel Ethane 37.5% 37.1% 37.2% 36.4% 37.9% 37.8% 38.9% 39.7% 39.3% 40.2% 40.9% 41.6% 42.3% 43.0% 43.6% 37.2% 39.2% 42.3% Propane 28.2% 28.8% 29.2% 29.4% 29.1% 29.1% 28.8% 28.4% 28.7% 28.6% 28.3% 28.0% 27.7% 27.4% 27.2% 28.9% 28.7% 27.7% N-Butane 8.4% 7.1% 7.0% 7.5% 8.4% 7.8% 7.8% 7.2% 7.5% 7.1% 7.0% 7.0% 6.9% 6.9% 6.8% 7.7% 7.5% 6.9% I-Butane 9.9% 10.6% 10.7% 10.7% 9.3% 9.8% 9.4% 9.9% 9.7% 9.9% 9.8% 9.7% 9.6% 9.5% 9.4% 10.2% 9.7% 9.6% Natural Gasoline 16.0% 16.4% 15.9% 16.0% 15.3% 15.5% 15.1% 14.7% 14.8% 14.2% 14.0% 13.7% 13.5% 13.2% 13.0% 15.9% 14.9% 13.5% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 99.9% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Source: Gas Processors Report, Barclays Capital estimates

Pace of Drilling Implies 3.8% Increase in 2010 Supply with Additional Rise of 2.1% in 2011 Without a sharp collapse in the rig count (the earliest we see weakness is 2H11), we believe wellhead gas supply will continue to grow in excess of demand. The year 2011 will be especially challenged, for demand given the weather comparisons registered in 2010 have added an estimated 400 bcf, or 1.1 bcf/d to consumption. In fact, our commodities research team is forecasting a 0.5%, or 310 mmcf/d drop in demand in 2011 with the primary cause being a 790 mmcf/d, or 4.0% drop in power demand. This continued build- up in supply lies at the heart of our subdued gas price projections and the short-term slack demand outlook supports our forecast for a slight decline in gas prices from 2010 into 2011.

Figure 68: Drilling Productivity – Forecast Gas Deliverability Lower 48 Dry Gas Bcf/d 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011e Prior Year Production 51.59 52.12 51.60 52.27 53.74 51.86 52.32 50.65 49.45 50.62 52.27 55.26 52.79 54.82 Decline -11.87 -11.99 -12.90 -12.54 -14.51 -14.52 -15.17 -15.20 -15.82 -16.70 -17.77 -19.34 -18.48 -19.74 Additions 12.40 11.47 13.57 14.02 12.63 14.98 13.50 13.99 16.99 18.35 20.76 16.88 20.51 20.90 Current Year Production 52.12 51.60 52.27 53.74 51.86 52.32 50.65 49.45 50.62 52.27 55.26 52.79 54.82 55.99 Production Growth 1.0% -1.0% 1.3% 2.8% -3.5% 0.9% -3.2% -2.4% 2.4% 3.3% 5.7% -4.5% 3.8% 2.1%

IHS Energy 1st Yr Decline 23% 23% 25% 24% 27% 28% 29% 30% 32% 33% 34% 35% 35% 36% Average Gas Rigs 560 496 720 939 691 872 1025 1186 1372 1466 1491 801 945 935 Production Adds / Rig mmcf/d 22.14 23.13 18.85 14.93 18.28 17.18 13.17 11.80 12.38 12.52 13.92 21.07 21.70 22.353 Percent Change 28.0% 4.4% -18.5% -20.8% 22.4% -6.0% -23.3% -10.4% 5.0% 1.1% 11.2% 51.3% 3.0% 3.0% Equilibrium Gas Rig Count 536 518 684 840 794 845 1152 1288 1278 1335 1276 918 851 883 Source: EIA, HIS Energy, Barclays Capital

22 October 2010 58 Barclays Capital | MLP Quarterly Monitor

Horizontal drilling has driven a remarkable improvement in drilling productivity. Figure 69 shows the significant shift toward the use of this technique as a reasonable proxy for changes in drilling productivity. Obviously, other factors such as the incremental time it takes to drill the horizontal section of a well or improvements in completion efficiencies can impact this critical economic input, but we continue to view the persistent gain in market share as one of the primary contributors to our continued bearish stance on gas prices.

Figure 69: Horizontal Rigs as a Percent of Drilling Activity

Horizontal % Change

Horizontal Total % Q /Q Yr / Yr

Q105 141 1233 11.5% 7.5% 45.8% Q205 163 1307 12.4% 15.1% 43.7% Q305 172 1355 12.7% 5.9% 32.3% Q405 196 1398 14.0% 13.7% 49.0% Year 168 1323 12.7% 42.2%

Q106 231 1505 15.4% 18.1% 63.7% Q206 258 1581 16.3% 11.4% 58.5% Q306 265 1651 16.0% 2.7% 53.8% Q406 293 1702 17.2% 10.7% 49.7% Year 262 1610 16.3% 55.8%

Q107 332 1711 19.4% 13.3% 43.6% Q207 362 1733 20.9% 9.1% 40.6% Q307 414 1760 23.5% 14.3% 56.4% Q407 445 1760 25.3% 7.5% 51.9% Year 388 1741 22.3% 48.4%

Q108 478 1766 27.1% 7.4% 43.9% Q208 534 1863 28.7% 11.7% 47.4% Q308 611 2029 30.1% 14.5% 47.6% Q408 668 1995 33.5% 9.4% 50.1% Year 573 1913 29.9% 47.5%

Q109 521 1403 37.2% -22.0% 9.0% Q209 412 973 42.4% -20.9% -22.8% Q309 431 972 44.3% 4.4% -29.6% Q409 528 1111 47.5% 22.6% -21.0% Year 473 1115 42.4% -17.4%

Q1 10 686 1309 52.4% 29.9% 31.6% Q2 10 811 1454 55.8% 18.3% 96.8% Q3 10 902 1541 58.5% 11.2% 109.5% Q4 10 Year

Source: Smith International

22 October 2010 59 Barclays Capital | MLP Quarterly Monitor

The first week of the fourth quarter has just been reported and the horizontal count has just penetrated 60% market share. Given the plays attracting the incremental rig we would not be surprised if this surpasses 70% in the next six months. We see no let-up in the productivity gains being registered by the industry across a wide variety of the plays. Two recent company presentations have captured our attention on this front and show the present mindset being employed by operators to drive costs down. In the first instance QEP has imported techniques developed in the Haynesville to improve productivity at Pinedale. For several years QEP has made efficiency gains in the bottom half of their well design while the top half has stagnated. Haynesville techniques applied to the top half of the drilling program have resulted in a sharp improvement in drilling times. In 2009 it took an average of 23 days to drill a well to date. In 2010 QEP has averaged 16.9 days with the best well coming in at just 11.7 days. Well costs, which peaked at over $8 million, have dropped to less than $4 million. The second example is how EQT has come up with a “fish hook” design in the Marcellus to capture the missed pay that typically occurs under the curved portion of a horizontal well. Using this application they have registered IP rates well above industry norms. Virtually every producer presentation we review has some variation on this theme as part of the communication. Again, this powerful anecdotal wave of “evidence” is why we have lowered our “normalized” gas price to the $5.00/mcf level.

Drilling Productivity Index Hits New High All rig activity is not created equal. Well productivity is materially different from play to play. Horizontal completions are much more productive than vertical wells. To account for the difference between wells, Bentek Energy has derived a drilling productivity index based on the relative productivity of the formation being drilled. In this last drilling cycle the traditional rig count peaked in October 2008 at 2550 rigs. The Bentek productivity rig equivalent for that date was 2483. Given the sharp skew in subsequent drilling to the Haynesville, Marcellus and Eagle Ford in particular, activity as measured in rig equivalents has dramatically outshined the recovery in the Baker Hughes traditional count. In fact, the traditional count is still 18% below the peak achieved in October 2008 while the Bentek productivity adjusted figure is up 40%. Sequentially, this average count was up 17.6% quarter-over-quarter and the exit count for the quarter was 9.4% above the 3Q average. Not surprisingly, the improvement in productivity per rig as measured by the Bentek index is rising hand in glove with the advance of the horizontal count.

Figure 70: Effective Rig Count Versus Actual Rig Count

4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 - 1/7/2005 1/7/2006 1/7/2007 1/7/2008 1/7/2009 1/7/2010

EffectiveRigCount Actual Rig Count

Source: Bentek Energy

22 October 2010 60 Barclays Capital | MLP Quarterly Monitor

Figure 71: Rig Equivalent Count

Rig Equivalent Count

Q1 09 1,842 Q1 10 2,419 31.4% Q2 09 1,675 Q2 10 2,707 61.6% Q3 09 1,758 Q3 10 3,184 81.1% Q4 09 2,007 10/1/2010 3,483

Source: Bentek Energy

EIA Production Survey Sharply Divides Market into Have and Have Nots Louisiana registers as being the primary winner and readily Production data from the EIA monthly survey of producers is beginning to show large illustrates the sharp dichotomy fissures between growing and contracting areas of supply. Markets with a mixture of between the new plays and emerging shale and higher cost conventional plays can send a somewhat mixed message conventional production. (Texas, Oklahoma) but others readily illustrate the relative strength and impact of these new Through July production is up a plays. From the government’s somewhat awkward grouping for analysis purposes, a couple startling 40%. Haynesville of winners and a definitive loser jump out from the data. Louisiana registers as being the production is in the area of 2.9 primary winner and readily illustrates the sharp dichotomy between the new plays and bcf/d, from virtually zero in conventional production. Through July production is up a startling 40%. Haynesville 2008. This includes estimates of production is in the area of 2.9 bcf/d, from virtually zero in 2008. This includes estimates of 300-plus wells awaiting 300-plus wells awaiting completion/connection out of about 750 drilled in 2010 year-to- completion/connection out of date. As of July, the year-over-year increase for the entire state was 1.8 bcf/d. In January about 750 drilled in 2010 year- 2008 Louisiana production was 3.74 bcf/d. Current production is 5.95 bcf/d, an increase of to-date. 2.21 bcf/d, implying non-Haynesville production has dropped 0.69 bcf/d, or about 18% since January 2008.

The other clear cut winner is an unfortunate aggregation of areas into the Other

Onshore/State Waters category which includes the Marcellus as well as a handful of large The clear loser is the Gulf of basins in the Rockies (Piceance, Uinta, DJ, San Juan portion of Colorado). We estimate Mexico, which was in sharp Marcellus production is in the vicinity of 1.2 bcf/d, which represents an increase decline even before the recent ofapproximately 700 mmcf/d since July 2009. In this instance the Marcellus represents drilling moratorium. Fortunately about 35% of the increase from this category. The clear loser is the Gulf of Mexico, which for the MLP sector, the group was in sharp decline even before the recent drilling moratorium. Fortunately for the MLP has little aggregate exposure to sector, the group has little aggregate exposure to volumes and the handful of generally volumes and the handful of large-cap partnerships the GOM is well under 10% of their gross margins or EBITDA. The generally large-cap partnerships other regions have many of cross currents. For instance, in Wyoming well over half the the GOM is well under 10% of state’s production comes from three fields: Pinedale, Jonah and Powder River CBM. The first their gross margins or EBITDA. field is continues to grow rapidly, the second peaked in 2008 and CBM appears to have at least temporarily peaked in early 2009 due to drilling outstripping water handling facilities and eventually succumbing to lower prices, although the resource base remains formidable. In South Texas growth in the Eagle Ford has not been able to offset the decline in traditional production; we estimate this will not take place until early 2011. Other regions are hard to read on two accounts. First, the concept of a gas or oil rig count has been muddied materially as the industry has stampeded into drilling liquids-rich gas streams. Second, in states like New Mexico with large pockets of conventional production (San Juan Basin, Southeastern New Mexico Morrow gas play) that are falling off as new plays (Avalon shale, Bone Springs) begin to produce rapidly with the statistics muddled in the aggregate reports. However, with production up year-to-date (July) by 2.7% in spite of a large Haynesville backlog, we are confident regarding the calibration of our drilling productivity model which is calling for a 3.8% year-over-year increase in gas production for 2010.

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Figure 72: U.S. Gas Production (Bcf/d)

(in Bcf/d)

Region 2Q09 2Q10 % Change Jul 09 Jul 10 % Change

Texas 21.37 20.59 -3.7% 20.84 20.47 -1.8% Wyoming 7.07 6.83 -3.5% 6.48 6.58 1.7% Oklahoma 5.16 5.06 -2.1% 5.17 5.00 -3.1% New Mexico 3.99 3.72 -7.0% 3.92 3.82 -2.5% Louisiana 4.15 5.95 43.5% 4.37 6.13 40.4% Other Onshore / State Waters 14.51 16.35 12.7% 14.49 16.51 13.9% Subtotal 56.26 58.49 4.0% 55.26 58.51 5.9% Fed Gulf of Mexico 6.95 6.25 -10.1% 7.42 5.87 -20.8% Total Lower 48 States 63.22 64.75 2.4% 62.68 64.39 2.7%

Source: EIA

Drilling Responds to Oil/Gas Ratio, Migrating Lease Expiration and Relative Cost Pressures Drilling activity is currently responding to three primary influences. First, all operators attempt to exploit the wide disparity in oil and gas prices by emphasizing the liquids content in their respective projects. This is pushing rigs into oil-oriented plays such as the Bakken, various areas in the Permian Basin and the Eagle Ford. Sequentially, each of the major shales is undergoing a maturation cycle that includes leasing, evaluation of the leasehold including time restrictions to access potential and exploitation/manufacturing phase of the ownership. The Barnett, Fayetteville and increasingly the Haynesville have reached the maturation phase where leasehold drilling pressures have abated. Emerging shales such as the Marcellus and Eagle Ford are still in the evaluation, preserve leasehold mode. Moreover, we are seeing varying degrees of cost pressures drive rigs from one area to another. It is no surprise given the driving factors that the Eagle Ford has seen the most rapid ramp in activity. The rig count was up 62% quarter-over-quarter and the 3Q exit rate was 23% above the quarterly average. Marcellus activity was up 15% quarter-over-quarter with the exit rate being 13% above 3Q levels. In addition, the Bakken was also up 15% quarter-over- quarter. The exit rate in this oil play was up 12% versus the 3Q average. While not captured in Figure 76, it is noteworthy to highlight that the rig count in the section of the Permian Basin that includes the Sprayberry/Wolfberry has been escalating at roughly the same pace as the Bakken with quarter-over-quarter activity up 13% with the exit rig count 10% higher than the 3Q average.

On the flip side we are seeing reductions in the Haynesville, Arkoma Woodford and Fayetteville plays and have actually seen one consultant forecast calling for a decline in Haynesville production in 2011 as a result of this drop. The Haynesville in particular is a cross current of influences at the present time. It’s a dry gas play that has experienced some of the larger service cost increases including difficulties in getting completion units on a timely basis. As a result we have anecdotal evidence that as many as 300 wells are awaiting completion at the present time. Given all of these factors plus overlapping operators, rigs have been pulled and are likely to continue to migrate to the Eagle Ford. This is somewhat of a repeat pattern in what we saw as the Haynesville poached rigs from the Barnett based on the necessity to evaluate and process leasehold rather than a definitive

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economic edge of the latter over the more mature play in Texas. The sequential signings and drilling maturity of a growing number of JVs will help reinforce the present trajectory of activity in each of the large shales. The dry gas Fayettteville shale looks particularly vulnerable on several fronts.

Figure 73: Summary of E&P Joint Ventures

2008 2009 2010

Play Date Partners Cash $mm Drill $mm Partners Cash $mm Drill $mm Partners Cash $mm Drill $mm

Haynesville Jul 8 PXP/ CHK 1650 1650 Jun 30 BG/ XCO 655 400 ENI/ Barnett May 18 KWK 280 Jan 4 Mitsui/ APC 0 1400 Fayetteville Sep 2 BP/ CHK 1100 800 Marcellus Jun 30 Antero/ D 347 Nov 11 STO/ CHK 2125 1250 ERF/ Aug 19 Chief 162 249 Apr 9 Reliance/ ATLS 339 1358 May 10 BG/ XCO 800 150 Aug 5 Reliance/ CRZO 340 52 Aug 31 Sumutomo/ REX 82 58 Eagle Ford Jun 24 Reliance/ PXD 263 1052 Oct 10 CNOOC/ CHK 1080 1080 Enduring/ TLM- Oct 10 STO 1325

Source: Company press releases, filings

While it would be tempting to read rig migration as a proxy for an individual area’s economics, these movements do not tell the whole story. The Barnett core consistently weighs in under most rankings as having competitive economics. Pockets of the Barnett (Montague, Johnson counties) can be very rich in liquids. Conventional dry gas drilling will continue to wither with the selloff in gas prices and the corresponding pressure on operators to high grade budgets in the face of reduced cash availability and declining wellhead economics.

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Figure 74: Rig Count Major Shale Plays Gas Shale Play Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 3Q 09 4Q 09 1Q 10 Q2 10 Q3 10 Yr / Yr Q / Q Barnett 168 173 174 166 109 69 61 68 79 84 82 34% -2% Eagle Ford 42 53 86 na 62% Fayetteville 35 43 51 54 45 44 38 33 35 38 33 -13% -13% Woodford 46 48 43 38 29 23 21 21 27 28 25 19% -11% Haynesville (La) 2 6 20 41 56 64 72 99 111 115 105 46% -9% Marcellus (Pa) 15 21 23 22 23 26 46 71 76 87 100 117% 15% Total 266 291 311 321 262 226 238 292 370 405 431 81% 6%

% Total Barnett 63% 59% 56% 52% 42% 31% 26% 23% 21% 21% 19% Eagle Ford 11% 13% 20% Fayetteville 13% 15% 16% 17% 17% 19% 16% 11% 9% 9% 8% Woodford 17% 16% 14% 12% 11% 10% 9% 7% 7% 7% 6% Haynesville (La) 1% 2% 6% 13% 21% 28% 30% 34% 30% 28% 24% Marcellus (Pa) 6% 7% 7% 7% 9% 12% 19% 24% 21% 21% 23% Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Total Rig Count (1) 1721 1869 2008 1942 1245 852 953 1102 1296 1479 1603 % Major Gas Shale 15% 16% 15% 17% 21% 27% 25% 26% 29% 27% 27%

Note: (1) Beginning 4Q 2009 LRN changed methodology capturing more rigs in the <5,000 ft category, quarters restated for 2009 not 2008 Source: Land Rig Newsletter

Figure 75: Major Shales Drilling Activity

Rig Count 500 450 400 350 300 250 200 150 100 50 0 Q1 Q2 Q3 Q4 Q1 Q2 3Q 4Q 1Q Q2 Q3 08 08 08 08 09 09 09 09 10 10 10

Barnett Eagle Ford Fayetteville Woodford Haynesville (La) Marcellus (Pa)

Source: Land Rig Newsletter

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Figure 76: Rig Count by Region Region Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 3Q 09 4Q 09 Q1 10 Q2 10 Q3 10 Yr / Yr Q / Q Shale Barnett 168 173 174 166 109 69 61 68 79 84 82 34% -2% Eagle Ford 42 53 86 na 62% Fayetteville 35 43 51 54 45 44 39 33 35 38 33 -15% -13% Woodford 46 48 43 38 29 23 21 21 27 28 25 19% -11% Haynesville (La) 2 6 20 41 56 64 72 99 111 115 105 46% -9% Marcellus (Pa) 15 21 23 22 23 26 46 71 76 87 100 117% 15% Bakken 60 64 78 82 58 33 41 57 73 94 108 163% 15% Subtotal 326 355 389 403 320 259 280 349 443 499 539 93% 8% Tight Gas DJ Basin 152219231513121416202067%0% Greater Green River54556874493132333131320%3% Piceance Basin788186824226252327303124%3% San Juan Basin181923201211136 6 7 10-23%43% Uinta Basin364042392013131418232377%0% Subtotal 201 217 238 238 138 94 95 90 98 111 116 22% 5% Other 1194 1297 1382 1301 787 499 578 663 755 869 948 64% 9% Total 1721 1869 2009 1942 1245 852 953 1102 1296 1479 1603 68% 8%

Percent Total Shale 19% 19% 19% 21% 26% 30% 29% 32% 34% 34% 34% Tight Gas 12% 12% 12% 12% 11% 11% 10% 8% 8% 8% 7% Other 69% 69% 69% 67% 63% 59% 61% 60% 58% 59% 59% Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Note: (1) Beginning 4Q 2009 LRN changed methodology capturing more rigs in the <5,000 ft category, quarters restated for 2009 not 2008 Source: Land Rig Newsletter

G&P Subsector Well Positioned to Capitalize on Current Drilling Orientation Figure 77 summarizes the geographic spread of the G&P, or pipeline, partnerships across the various basins and plays in the lower 48. While it does not capture the relative operating leverage each MLP has to these areas, it serves as a quick screen to see which partnerships are involved. By way of brief review we would offer the following comments: In the Eagle Ford the key players to date are EPD, DCP Midstream (parent of DPM) and KMP/CPNO (JV). To a lesser extent, WPZ, ETP, RGNC and XTEX have positions. In the Bakken OKS (NGL) and EEP (oil) have the most leveraged exposures. Marcellus exposure ranked by potential impact is APL, MWE, WPZ and NRGY (gas storage and pipelines), although CHKM could eventually be exposed via a dropdown. In the Haynesville, the largest exposures would be RGNC, XTEX, EPD, KMP, ETP and to a lesser extent DPM. Again, CHKM could become involved through a parent dropdown. In the DJ, the players are WES, OKS (NGL pipeline), DPM (NGL pipeline), and to a much smaller extent PAA (crude pipeline). There are several interwoven plays under production in the Permian Basin of West Texas and Southeastern New Mexico. APL and NGLS likely have the most leveraged exposure from a gathering and processing perspective at the moment (largest absolute exposure is DCP Midstream; parent is DPM). The current level of activity has filled the pipeline takeaway capacity in the region and several of the major NGL players (EPD, OKS, DCP) are likely to vie for building another line over to Mt. Belvieu along with corresponding fractionation capacity.

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Figure 77: Regional Orientation Matrix Companies Rockies Texas Louisiana Mid-Cont.GOM Eastern

MLPs Piceance / Uinta / River Bighorn Wind DJ Basin (Niobrara) / Jonah Pinedale River Green River Powder (Bakken) Basin Williston Juan San (Barnett) Texas / East North Wash Granite West Texas South Texas Ford)(Eagle Coast Gulf Texas N. (Haynesville) Louisiana Louisiana South Anadarko (Woodford) Hugoton (Fayetteville) Arkoma Mexico of Gulf Appalachia (Marcellus) Black Warrior, Alabama Michigan Atlas Pipeline Copano Energy Chesapeake Midstream Crosstex Energy DCP Midstream Enbridge Energy Energy Transfer Enterprise Products Kinder Morgan Markwest Energy Martin Midstream Oneok Penn Virginia Regency Energy Targa Resources TC Pipelines Western Gas Williams Partners

Non-shale opportunities – West Texas Sprayberry/Wolfberry, Andarko Granite Wash Source: Barclays Capital estimates

With typical seasonal strength in Processing Margins Fall from 2Q Level but Very Strong Versus Last Year NGL prices, we could see an assault on the all-time high frac Our generic processing model, based on Gulf Coast pricing, implies processing spreads fell spread margin of $4.61/mmbtu 4% to 8% quarter-over-quarter but were 13% –26% higher than year-ago levels. With gas registered in September 2008 weakening from quarter end and oil strengthening slightly the current keep whole margin is before winter weather inevitably 28% higher than the 3Q average while the POL spread has increased 12%. With typical rescues gas prices. seasonal strength in NGL prices, we could see an assault on the all-time high frac spread margin of $4.61/mmbtu registered in September 2008 before winter weather inevitably rescues gas prices.

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Figure 78: Processing Margins

Per MMcf $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 ($1.00) ($2.00) ($3.00) 1/5/98 5/5/98 9/5/98 1/5/99 5/5/99 9/5/99 1/5/00 5/5/00 9/5/00 1/5/01 5/5/01 9/5/01 1/5/02 5/5/02 9/5/02 1/5/03 5/5/03 9/5/03 1/5/04 5/5/04 9/5/04 1/5/05 5/5/05 9/5/05 1/5/06 5/5/06 9/5/06 1/5/07 5/5/07 9/5/07 1/5/08 5/5/08 9/5/08 1/5/09 5/5/09 9/5/09 1/5/10 5/5/10 9/5/10

Keep Whole POP POL

Source: Gas Processors Report

Figure 79: Processing Margins Summary KW POP POL KW POP POL Current (10/11/10) $4.36 $1.31 $1.46 Current vs 3Q10 35.5% 1.8% 16.1% 3Q10 Average $3.22 $1.29 $1.26 3Q09 Average $2.85 $1.02 $1.05 3Q10 Yr/Yr 12.9% 25.9% 20.0% 2Q10 Average $3.50 $1.34 $1.33 3Q10 Q/Q -8.1% -3.7% -5.6% Source: Gas Processors Report

Frac Spreads Projected to Duplicate Record Margin in 2011 The combination of shaving our gas price forecast and trimming our NGL to WTI ratio has left our estimates relatively unchanged compared with last quarter regarding our generic frac spread forecast. The 2010 forecast is 65 cents per gallon, or 51% above 2009 levels, while we anticipate this spread will increase another 3% in 2011. The projected 67 cents per gallon would equal the record set in 2008. This obviously bodes well for the segment of partnerships in the processing business, especially the handful that has exposure to this margin, namely CPNO, EROC, MWE, and WPZ.

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Figure 80: Historical Versus Projected Frac Spreads

$ / gallon $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011e 2012e 2013e 2014e

Source: Natural Gas Week, Bloomberg, Gas Processors Report and Barclays Capital estimates

Processing Margin Sensitivities – Partnerships Typically Long NGL Little Net Exposure to Gas While most of the partnerships Exposure to the frac spread and processing margins in general is principally confined to the hedge substantial percentages G&P group, although several of the large diversified MLPs also participate in that part of the of their energy price exposures, value chain. While most of the partnerships hedge substantial percentages of their energy we like to step back and view price exposures, we like to step back and view this potential volatility from the perspective this potential volatility from the of a long-term holder exposed to the inevitable rollover of a typical 6- to 18-month hedge perspective of a long-term position. We believe this makes sense in the context of viewing current coverage ratios holder exposed to the inevitable especially for investors that consider MLPs a long duration (i.e., hold and deplete basis rollover of a typical 6- to 18- taking maximum advantage of the tax-deferred nature of distributions). Given a typical month hedge position. We mixture of percentage of proceeds and keep whole contracts which offset opposing long believe this makes sense in the and short gas positions, most of the partnerships result in principally net long liquids. context of viewing current Unhedged, the relative sensitivity of the sector unfolds as follows: (We would also note that coverage ratios especially for there are other ways to become long and short energy prices in the gas value chain besides investors that consider MLPs a processing.) long duration. Pipelines in general use gas for compression, creating a potential short position. However, if the operators use less than their contracts specify, they can flip that position around and become net long. This is frequently the case in the intrastate pipeline sector. ETP, EPD and KMP all are long gas as a function of operating their pipes more efficiently than set forth in their respective tariffs. In most instances, FERC-regulated pipes have fuel trackers to refund the gas sales to shippers but a few older tariffs result in interstates being long gas. Interstates with straddle plants can frequently have keep whole exposures imbedded in their so-called stable tariffs. Reporting for some FERC and virtually all intrastate pipes is typically insufficient to sort out many of these more subtle exposures. Unless footnoted, Figure 81 solely summarizes the individual company exposures from the processing business.

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Figure 81: Commodity Price Sensitivities on Unhedged Basis ($ in millions)

% EBITDA impact % EBITDA impact $10 change $1 change 2010 from crude from gas in crude in gas EBITDA* movement movement

MWE 50 (28) 322 15% -9% CPNO 29 (2) 206 14% -1% EROC 30 3 150 20% 2% WPZ 193 (122) 2000 10% -6% OKS 26 11 985 3% 1% NGLS 18 8 283 6% 3% XTEX 13 (5) 187 7% -3% DPM 13 2 156 9% 1% RGNC 14 1 280 5% 0% APL 25 7 180 14% 4% ETP 26 40 1492 2% 3% EEP 49 (2) 1006 5% 0% EPD 248 n/a 3176 8% n/a KMP 20 n/a 3012 1% n/a

Notes: Based on $10/bbl crude and $1/mmbut gas price changes * EBITDA includes investment income from subsidiaries EROC using 2011 EBITDA reflecting normalized level (2010 includes large hedge loss) ETP long gas position comes from fuel retention. NGL equity volume covers net frac spread position Includes KMP NGL exposure-only and excludes KMP crude oil production activities Source: Barclays Capital estimates

Figure 82: Equity Volume by MLPs

Units M bbls MMcf M bbls M bbls MM gal (NGL)

NGL Gas Condensate Total liquids

MWE 9,000 (28,000) - 9,000 378 CPNO 3,500 (1,800) 950 4,450 147 EROC 2,082 3,243 1,870 3,952 87 OKS 3,292 10,987 837 4,129 138 NGLS 2,840 7,561 270 3,110 119 XTEX 2,325 (5,250) - 2,325 98 DPM 2,328 2,190 - 2,328 98 RGNC 1,681 527 460 2,141 71 WPZ 35,040 (121,545) - 35,040 1,472 APL (revised) 3,468 6,935 548 4,015 146 ETP 4,762 40,000 - 4,762 200 EEP 7,280 (2,151) 885 8,165 305.74152 EPD 45,005 45,005 1890.189 KMP 3,614 3,614 151.767

* Conversion assumes NGL to crude ratio of 55% Source: Barclays Capital estimates

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After Setting Records Ethane Production Pulls Back in 3Q Hot weather has also dampened With the weakness in NGL prices, especially ethane in the mid-continent, the focus has been supply as ethane extraction is on NGL supplies. After working through the inventory overhang resulting from the collapse accomplished through chilling in the economy September 2008 through February 2009, ethane production from the inlet gas through a series of processing plants stabilized in the +/- 750,000 b/d range before steadily building to a peak heat exchanges which lose of roughly 840,000 b/d based on a three-month rolling average of the EIA survey data. efficiency in extreme However, since the February 2010 through May 2010, we have seen production back off temperatures. Summer heat can about 5% to about 800,000 b/d for the last three months reported ending July. Part of the frequently cut the capacity of a drop has been caused by modest levels of ethane rejection given the backup in supplies in cryogenic processing plant by as Conway, part has been due to some plant maintenance and part has been due to the fact much as 10%. that a key pipe out of the Rockies (MAPL) feeds into the Seminole system in West Texas, which has gone on allocation given the build-up of Permian basin volumes and the need to ship barrels out of Conway to Mt. Belvieu (Seminole can take volumes from the mid- continent and terminates in Mt. Belvieu). Moreover, we suspect that hot weather has also dampened supply as ethane extraction is accomplished through chilling the inlet gas through a series of heat exchanges which lose efficiency in extreme temperatures. Summer heat can frequently cut the capacity of a cryogenic processing plant by as much as 10%. At issue is whether these lower volumes will persist through the remainder of the year. At present we estimate volumes will trough in the July/August period tied to the heat and rebound to the previous peaks by October/November.

Figure 83: U.S. Gas Plant Production of Ethane-Ethylene (‘000 bpd)

(Thousands Barrels per Day) All time 850 record 800 750 700 650 600 550 500 450 400 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Region Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 PADD 1 00000000000000000000 0 00 PADD 2 126 111 95 78 82 119 140 133 140 135 128 135 141 138 139 147 147 147 150 154 149 143 140 PADD 3 340 447 437 413 452 456 477 482 499 490 479 486 503 517 521 515 509 526 528 514 517 489 497 Texas Inland 204 263 262 251 275 265 275 273 278 272 267 268 275 284 293 282 284 293 293 290 290 279 287 Texas Gulf Coast 23 35 30 26 34 37 37 42 42 43 35 40 40 42 43 43 44 42 43 40 42 37 38 La. Gulf Coast 27 56 55 48 62 67 74 80 87 84 91 89 100 97 92 104 94 102 103 98 101 95 89 N. La., Ark 66762244555565655455 5 55 New Mexico 80 87 83 81 79 86 86 83 86 86 81 83 82 88 88 81 82 85 85 82 80 73 77 PADD 4 120 127 129 92 134 130 135 139 146 137 139 139 137 143 156 158 156 166 169 173 175 167 140 PADD 5 00000000000000000000 0 00 Total 586 685 661 583 668 705 752 754 785 762 746 760 781 799 816 820 813 840 848 841 841 799 778 Source: EIA

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Ethylene Outlook Brightens Raising Demand for Ethane Since last quarter’s review, CMAI Since last quarter’s review, CMAI has raised its outlook for U.S. ethylene production in 2010 has raised its outlook for U.S. and 2011 by 4% and 5%, respectively. The primary drivers are improved U.S. ethylene production in 2010 and competitiveness base on the wide spread between oil- and gas-based feed stocks and a 2011 by 4% and 5%, projected drop in Canadian imports tied to the reduction in ethane supply in Alberta as gas respectively. The primary drivers production has continued to slide. Short-term ethylene production should peak from a are improved U.S. traditional seasonal standpoint as operators typically build inventories as a precaution for competitiveness base on the hurricane season then reduce inventories into the end of the year for tax purposes. Light wide spread between oil- and end (ethane, propane) feeds continue to gain share based on economics through the end of gas-based feed stocks and a their forecast in 2011. As a result of the increased ethylene production, the forecast of projected drop in Canadian ethane consumption increased 14,000 b/d, or 1.6% in 2010 and 46,000 b/d, or 5.0% to imports tied to the reduction in 961,000 b/d in 2011. Importantly, the forecast for 2011 requires no more conversion as the ethane supply in Alberta as gas industry has hit the 960,000 b/d level before (4Q09). We continue to see the opportunity to production has continued to add at least another 130,000 b/d to cracker inlet capacity in the next 12-18 months, which slide. provides an outlet for growing ethane supplies. Going back to the immediate short term, however, the desire to trim inventories will cut ethane demand by 17,000 b/d from 3Q to 4Q, which should slow the recovery in ethane to crude ratio seen over the past few weeks.

Figure 84: CMAI Mix of Ethylene Feedstocks Q1 09 Q2 09 Q3 09 Q4 09 Q1 10e Q2 10e Q3 10e Q4 10e Q1 11e Q2 11e Q3 11e Q4 11e 2008 2009 2010e 2011e Capacity (mm lbs) 14,694 14,844 15,008 15,008 14,249 14,408 14,566 14,566 14,326 14,485 14,644 14,644 63,085 59,554 57,789 58,100 Operating Rate 74.3% 85.9% 87.0% 87.4% 89.3% 90.7% 92.2% 87.7% 90.6% 93.2% 92.2% 88.6% 78.8% 83.7% 90.0% 91.1% Effective Rate 90.6% 91.7% 92.4% 92.4% 96.6% 97.2% 94.1% 93.3% 96.3% 97.8% 96.0% 92.3% 88.9% 91.8% 95.3% 95.6%

Production From (mm lbs) Ethane 6,867 8,274 8,193 8,833 8,057 8,123 8,420 8,167 8,489 8,755 8,895 8,921 27,503 32,167 32,767 35,059 Propane 1,467 1,931 2,297 1,986 1,976 2,141 2,326 2,217 2,124 2,204 2,226 1,913 8,378 7,681 8,659 8,467 Butane 219 392 565 530 566 670 458 466 500 673 626 450 1,886 1,707 2,161 2,249 Naphtha 2,074 1,712 1,640 1,469 1,665 1,716 1,824 1,573 1,530 1,565 1,485 1,427 9,486 6,895 6,778 6,007 Gas Oil 298 445 353 300 461 421 404 352 337 297 270 259 2,471 1,396 1,638 1,164 SubTotal 10,925 12,754 13,048 13,118 12,725 13,071 13,432 12,775 12,980 13,494 13,502 12,970 49,724 49,846 52,003 52,946 Balance002-1-100010-10 -100-1 Total 10,925 12,754 13,050 13,117 12,724 13,071 13,432 12,775 12,981 13,494 13,501 12,970 49,723 49,846 52,003 52,945

Production From Yr /Yr % Change Ethane -9.9% 6.2% 35.4% 46.4% 17.3% -1.8% 2.8% -7.5% 5.4% 7.8% 5.6% 9.2% -6.7% 17.0% 1.9% 7.0% Propane -35.7% -26.6% 5.2% 54.6% 34.7% 10.9% 1.3% 11.6% 7.5% 2.9% -4.3% -13.7% -15.4% -8.3% 12.7% -2.2% Butane -2.7% -19.5% -31.5% 51.9% 158.4% 70.9% -18.9% -12.1% -11.7% 0.4% 36.7% -3.4% -23.7% -9.5% 26.6% 4.1% Naphtha -23.6% -25.3% -18.7% -40.3% -19.7% 0.2% 11.2% 7.1% -8.1% -8.8% -18.6% -9.3% -18.5% -27.3% -1.7% -11.4% Gas Oil -57.0% -29.6% -37.7% -48.2% 54.7% -5.4% 14.4% 17.3% -26.9% -29.5% -33.2% -26.4% -4.3% -43.5% 17.3% -28.9% Total -19.3% -7.8% 12.0% 22.5% 16.5% 2.5% 2.9% -2.6% 2.0% 3.2% 0.5% 1.5% -11.2% 0.2% 4.3% 1.8%

Production From % Total Ethane 62.9% 64.9% 62.8% 67.3% 63.3% 62.1% 62.7% 63.9% 65.4% 64.9% 65.9% 68.8% 55.3% 64.5% 63.0% 66.2% Propane 13.4% 15.1% 17.6% 15.1% 15.5% 16.4% 17.3% 17.4% 16.4% 16.3% 16.5% 14.7% 16.8% 15.4% 16.7% 16.0% Butane 2.0% 3.1% 4.3% 4.0% 4.4% 5.1% 3.4% 3.6% 3.9% 5.0% 4.6% 3.5% 3.8% 3.4% 4.2% 4.2% Naphtha 19.0% 13.4% 12.6% 11.2% 13.1% 13.1% 13.6% 12.3% 11.8% 11.6% 11.0% 11.0% 19.1% 13.8% 13.0% 11.3% Gas Oil 2.7% 3.5% 2.7% 2.3% 3.6% 3.2% 3.0% 2.8% 2.6% 2.2% 2.0% 2.0% 5.0% 2.8% 3.1% 2.2% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

NGL Feedstock (000 b/d) Ethane 763 909 891 960 895 893 915 888 923 952 967 970 754 881 898 961 Propane 209 272 320 277 281 302 324 309 296 307 310 267 294 270 304 297 Butane 31 54 77 72 79 92 62 64 68 92 85 61 65 59 74 77 Total 1,003 1,235 1,288 1,309 1,256 1,287 1,302 1,260 1,287 1,351 1,362 1,298 1,113 1,210 1,276 1,335 Memo : Conversion 1 bbl = lbs Ethane 100.0 Propane 78.0 Butane 79.7 Naphtha 72.0 Gas Oil 71.1 Source: Monomers Market Report

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NGL Prices Begin Seasonal Recovery After Hitting Trough in WTI Ratio Investors have been worried about the sharp dip in ethane prices and the seemingly endless deterioration in the NGL/WTI ratio that has bottomed recently. While ethane has its own dynamics, which we will discuss further in this commodity section, there is another factor that come into play. NGLs typically trace out an annual price pattern tied to the seasonality of end markets. It is more pronounced in propane than any of the other components of the NGL barrel due to exposure to space heating. Ethane moves in a more muted fashion in conjunction with competing with propane in the ethylene feedstock market. Moreover, all the heavier components utilized as blending stocks for motor gasoline move in concert with the driving season and winter/summer octane and RVP requirements. Figure 85 illustrates the seasonal pricing pattern for NGLs.

Figure 85: NGL Ratio Seasonality (% of WTI)

110% 100% 90% 80% 70% 60% 50% 40% 30% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Ethane Propane N-Butane I-Butane Natural Gasoline

Source: Gas Processors Report, Bloomberg

Ethane experienced the sharp drop in the April through August period for a number of reasons. First, the rapid ascent of supply added an incremental 90,000 b/d, or 12% to year- over-year comparisons. Price has and will continue to be a key factor in allowing this new supply to take share in the ethylene feedstock market. Second, beginning in May the ethylene industry was hit with a series of unscheduled plant outages, which crimped demand and let ethane inventories build to high levels. With the recent drop in processing plant level production, the return of off-line capacity and the resultant draw on inventories pricing has firmed.

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Figure 86: Liquids Ratios - Mt. Belvieu

0.90 1.30 0.80 1.20 0.70 1.10 0.60 1.00 0.50 0.90 0.40 0.80 0.30 0.70 0.20 0.60 Feb-01 Feb-04 Feb-07 Feb-10 Nov-01 Nov-04 Nov-07 Aug-02 Aug-05 Aug-08 Feb-01 Feb-04 Feb-07 Feb-10 Nov-01 Nov-04 Nov-07 May-00 May-03 May-06 May-09 Aug-02 Aug-05 Aug-08 May-00 May-03 May-06 May-09

Ethane / Crude (WTI) Ratio Average Isobutane / Crude (WTI) Ratio Average

1.20 1.30 1.10 1.20 1.00 0.90 1.10 0.80 1.00 0.70 0.90 0.60 0.50 0.80 0.40 0.70 Feb-01 Feb-04 Feb-07 Feb-10 Nov-01 Nov-04 Nov-07 Aug-02 Aug-05 Aug-08 Feb-01 Feb-04 Feb-07 Feb-10 Nov-01 Nov-04 Nov-07 May-00 May-03 May-06 May-09 Aug-02 Aug-05 Aug-08 May-00 May-03 May-06 May-09

Propane / Crude (WTI) Ratio Average Natural Gasoline / Crude (WTI) Ratio Average

1.30 1.20 1.20 1.10 1.10 1.00 1.00 0.90 0.90 0.80 0.80 0.70 0.70 0.60 0.60 0.50 0.50 0.40 Feb-01 Feb-04 Feb-07 Feb-10 Nov-01 Nov-04 Nov-07 Feb-01 Feb-04 Feb-07 Feb-10 Aug-02 Aug-05 Aug-08 Nov-01 Nov-04 Nov-07 Aug-02 Aug-05 Aug-08 May-00 May-03 May-06 May-09 May-00 May-03 May-06 May-09

Normal Butane / Crude (WTI) Ratio Average Weighted Average Price / Crude (WTI) Ratio Average

Source: Gas Processors Report, Bloomberg

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Focus on NGL Supply – Ethane Market Balances Through Blending and Canadian Exports There are many changing factors when arriving at an accurate supply estimate for the NGL market. Unlike oil and gas production, there is no set type curve one can turn to derive the outlook for liquids production coming on stream. Further, it is also very difficult to calculate the underlying decline rate of existing production. NGL production from a given well is impacted by extraction economics and the technology applied to extract the imbedded stream of liquids. This is particularly the case for ethane, the NGL component that holds the highest potential for becoming oversupplied. Also liquids production, while following the general decline of an associated gas or oil well, typically will exhibit some departure from the primary hydrocarbon being extracted from the reservoir. Having said this there is some anecdotal evidence to point toward a decline rate of about 3% per year. This is primarily derived from estimates emanating from several of the larger players (DCP Midstream, Oneok, Enterprise, etc.) that produce or handle more than 90% of annual production from all the major basins in the U.S.

At present NGL production from processing plants is roughly 2mm b/d. Ethane represents approximately 800,000 b/d of the total. Refineries contribute about 15,000 b/d of third- party ethane supply (plus about 30,000 b/d that moves directly from refineries to associated petchem plants) and 430,000 b/d of total NGLs. Net imports/exports are about awash, with LNG being a rounding error in the equation, although there is potential for this later source to have an impact of up to 80,000 b/d on sporadic, peaking basis. We can make an argument that the U.S. will become a net exporter of C3+ but for discussion purposes assume imports/exports will be a neutral influence on supply/demand balances. We see little movement in refinery runs for the foreseeable future, so incremental supply will likely be coming from processing plants. To set a baseline for our discussion, Figure 87 provides a range of estimates in the general vicinity of our 3% guesstimate.

Figure 87: NGL Decline Curve Estimates

Decline Curve - Base 2 mmb/d

-2% -3% -4% -5%

2010 2000 2000 2000 2000 2011 1960 1940 1920 1900 2012 1921 1882 1843 1805 2013 1882 1825 1769 1715 2014 1845 1771 1699 1629 2015 1808 1717 1631 1548 3 Yrs -118 -175 -231 -285 5 Yrs -192 -283 -369 -452

Source: EIA, Barclays Capital estimates

Importantly, two areas where we Regional supply from processing plants is as follows. Importantly, two areas where we see see considerable growth in NGL considerable growth in NGL production, Appalachia and the Williston Basin (Bakken) have production, Appalachia and the very little output today, implying a significant need for new infrastructure. Williston Basin (Bakken) have very little output today, implying a significant need for new infrastructure.

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Figure 88: NGL Regional Supply

mbbls / d 500

400

300

200

100

0 Other Basin S Texas Basin Rockies Permian Williston Louisiana East Texas East Appalachia MidContinent

Source: EIA

In scouring press releases, In scouring press releases, company presentations, private equity websites and some company presentations, private informal poling we have identified 34 processing plants that are under construction or have equity websites and some high likelihood of completion in 2010–13 with 5.115 bcf/d of inlet processing capacity. On informal poling we have a blended basis, we estimate these plants will have a 4.4 GPM relative to inlet capacity. identified 34 processing plants Assuming the plants are all running at capacity the cumulative run rate of incremental that are under construction or supply would be about 536,000 b/d of NGLs with an ethane content of 48% or about have high likelihood of 258,000 b/d. Further, we have identified six plants with 1.015 bcf/d of capacity that are in completion in 2010–13 with the planning stage, some of which could be on line as early as 2013. Figure 89 summarizes 5.115 bcf/d of inlet processing the current timing of the first set of plant additions. capacity. It is important to note that in addition to these new plants, previously underutilized plants in virtually every region in the country are expected to fill up in conjunction with the addition of this new capacity. Anecdotally, this could readily be an additional 1 bcf/d. Using the same 4.4 GPM figure would equate to just under105,000 b/d. Portions of this addition from improved utilization and a high percentage of the 2010 plant additions are already imbedded in the current 2 mmb/d run rate. (We are hard pressed to devise a way to estimate this amount.) If we assume half of each (production numbers areas of July) the increment is approximately 14,000 b/d, or a negligible amount is the scheme of the likely estimate error in our methodology for the three- and five-year outlook. Importantly, we do not have a very good feel for how fast these new volumes will fall as the underlying gas production from many of these plays will drop 65% in the first year of production. This is an important question in the context of adding a cumulative 536,000 b/d on the current production base of 2 mm b/d. The implicit assumption in our forecast is that drilling behind these plants will keep them full over the forecast period.

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Figure 89: Processing Plant Expansion by Year

mmcf/d 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2010 2011 2012 2013

Source: Company filings, presentations, Barclays Capital estimates

We think the most notable The graphs seen in Figures 90–91 capture the geographic spread of these new facilities takeaway is that the bulk of the from a variety of perspectives. The richness of the gas stream processed (as measured by new supply is from three areas. gallons per mcf – GPM) varies considerably from one region to the next. At the low end are The Bakken (23%), the Rockies basins such as the Piceance or Greater Green River complex which includes such Marcellus (22%) and Eagle Ford fields as Pinedale with GPMs of 2.5–3.5 all the way to the Bakken which has GPMs of 8–13. (22%) comprise two thirds of the Ethane content varies widely as well. On a nationwide basis, ethane comprises 42% of the incremental new supply. Both current NGL supply from processing plants. This is roughly the proportion we see in the the Bakken and Marcellus have Bakken, Permian and Mid-Continent regions while the Rockies is 50%–55% and the very little infrastructure, have Marcellus is at the very high end with ethane content of 55%–65% of the processed stream. traditionally handled ethane We think the most notable takeaway is that the bulk of the new supply is from three areas. through blending and exist a The Bakken (23%), the Marcellus (22%) and Eagle Ford (22%) comprise two thirds of the long way from petchem centers incremental new supply. Both the Bakken and Marcellus have very little infrastructure, have which provide the only market traditionally handled ethane through blending and exist a long way from petchem centers for ethane. which provide the only market for ethane.

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Figure 90: Processing Plant Additions by Region

Percent Total 30%

25%

20%

15%

10%

5%

0% Ford Eagle Mid Bakken Rockies Permian Marcellus Continent California

Source: Company filings, presentations, Barclays Capital estimates

Figure 91: Regional Contribution to Increase in NGL Supply

Percent of Total 25.0%

20.0%

15.0%

10.0%

5.0%

0.0% Ford Eagle Mid Bakken Rockies Permian Marcellus Continent California

Source: Company filings, presentations, Barclays Capital estimates

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…the Bakken will generate an Figure 91, which translates capacity and GPMs into a volume forecast, indicates that the increase of 123,000 b/d of new Bakken will generate an increase of 123,000 b/d of new liquids on a base of roughly 21,000 liquids on a base of roughly b/d of C3+ production at the current time. Ethane looks to represent about 53,000 b/d of 21,000 b/d of C3+ production at the total. Proportionally this would appear to fit the current sizing of Mistral’s proposed the current time. Ethane looks to ethane line to Alberta (45,000–85,000 b/d) and Oneok’s Y-grade connection (60,000 b/d) represent about 53,000 b/d of that would feed into Overland Pass. More at issue is our projection of an increase of the total. More at issue is our 120,000 b/d and 72,000 b/d of NGL and ethane respectively for the Marcellus. The projection of an increase of incremental C3+ supply will back out imports (U.S. Gulf Coast, overseas) and accommodate 120,000 b/d and 72,000 b/d of modest growth in the region. Ethane will be the primary issue. Blending will be able to NGL and ethane respectively for handle some but not all incremental ethane supply. Deriving an estimate for the blending the Marcellus. opportunity starts with the supposition that gas flowing through the pipes in the region has an average heat content similar to that of the overall U.S. market which is 1027 btu/mcf with ethane comprising roughly 3% of the gas stream.

Studies performed by the American Gas Association in past years have implied that the

upper threshold for heat content for delivered gas in the U.S. market is in the range of 1100

btu/mcf. This threshold sets the basis for estimating the amount of blending that can take

place in the region. Complicating the issue considerably is that many of the regional pipes …in a liquids stream that has have traditionally accepted unprocessed gas and already run well over 1027 btus/mcf or 50% ethane content about 75% have granted waivers (notably Texas Eastern) to accept up to 1100 btu gas. With current of the ethane can be left in the extraction of C3+ in the region running at roughly 21,000 b/d, this implies current local gas stream while meeting the blending is already in the 30,000 b/d range inclusive of other plays such as the Lower Huron 1,100 btu specification required (5 GPM – 50% ethane). Ethane’s heat content per btu is about 75% greater then methane. by the pipeline industry. In the As a result to move the heat content from 1027 to 1100 btu, the ethane content can rise case of the Marcellus where we from 3% to 11% of the delivered stream. From a practical standpoint what this means is expect 72,000 b/d of that in a liquids stream that has 50% ethane content about 75% of the ethane can be left in incremental ethane supply that the gas stream while meeting the 1,100 btu specification required by the pipeline industry. could readily blend about 54,000 In the case of the Marcellus where we expect 72,000 b/d of incremental ethane supply that b/d. could readily blend about 54,000 b/d. At issue for Marcellus producers is that blending may have to take place on pipes such as Transco as the local pipes in southwestern Pennsylvania are already near the 1,100 btu threshold.

Figure 92: Regional Increase NGL Supply

bbls / d 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Ford Eagle Mid Bakken Rockies Permian Marcellus Continent California

Source: Company filings, presentations, Barclays Capital estimates

We have summarized our outlook for ethane balances in Figure 93. For the five-year period, we show supply growing from new sources by 388,000 b/d, which represents a 50% from

22 October 2010 78 Barclays Capital | MLP Quarterly Monitor

the level of plant production recorded in 2009. Declines from existing production of 109,000 b/d will reduce this to net additions of 279,000 b/d or 36%. We are forecasting that petrochemical feedstock demand will grow by 206,000 b/d as ethylene production increases 1.7% per year. Given the strong advantage in costs we anticipate ethane will increase from 66% of the feed stock slate in 2009 to 73% in 2014. Current plants have shown the ability to process 960,000 b/d of ethane and we have identified another 100,000 b/d to 130,000 b/d that is in the process of converting, therefore we feel comfortable with our forecast in terms of being able to reflect the step-up in volumes projected. We would note that an ethylene cracker takes about four years to build and that a world-scale 1 billion pound per year facility would consume about 20,000 b/d of ethane and 10,500 b/d of propane using a typical 70%/30% EP (ethane/propane) mix for the feedstock. U.S. capacity is currently an estimated 58 billion pounds, therefore 1 billion pounds would equate to a 1.7% increase. If the oil/gas ratio remains wide, we think it is quite likely we could see another plant or two being built in the U.S. over the next five to seven years.

Figure 93: Ethane Balances 2009-2014 (mb/d)

Supply 2009 2010 2011 2012 2013 2014

Processing Plants Existing (decline) 769 746 724 702 681 660 Existing (Utilization) 55 105 105 105 105 New 73 162 220 268 268 Subtotal 769 874 991 1,027 1,054 1,033 Refineries 45 45 45 45 45 45 LNG 0 5 5 10 10 15 Imports 0 0 0 0 0 0

Total 814 924 1,041 1,082 1,109 1,093

Demand

Petrochemical 881 898 961 1,005 1,050 1,087 Other 15 15 15 15 15 15 Exports 0 0 5 45 90 90 Blending (required) 11 60 16 -46 -99

Total 896 924 1,041 1,082 1,109 1,093

Inventory -82

Blending % New Supply 15% 37% 7% -17% -37%

Source: EIA, CMAI, Barclays Capital estimates

In Aggregate Blending Balances Market but Producers Will Take a Value Hit in the Marcellus We have exports resuming in 2011 with a token amount flowing on the Cochin Pipeline, which has been reconditioned and approved to move ethane volumes into Sarnia for the first time in several years. The capacity of the line is 30,000 b/d and the market, which is

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principally heavy feed–oriented could readily take the full amount. Our forecast assumes 5,000 b/d in 2011 and 10,000 b/d thereafter. We have the Vantage Pipeline from the Bakken starting up 3Q12 and moving 80,000 b/d on an annual basis. According to the sponsors which plan to file with U.S. and Canadian regulatory agencies this fall, the pipe could be 45,000 b/d to 65,000 b/d or 65,000 b/d to 85,000 b/d, depending on the pipe diameter chosen. We have opted for the larger pipe being built given that announced new processing plants plus the amount currently being rejected in the basin could readily fill the larger pipeline and some projections have the Alberta ethane shortfall running as high as 80,000 b/d by 2014. Post 2009 the balances table shows the blending requirement to equate supply and demand. Early in the forecast period some blending is required, with the amount peaking in 2011. We suspect this oversimplifies the blending issue as the aggregate market can readily handle this accommodation of growing ethane supply but individual regions will be more problematical.

The key issue with blending is In this vein we project that the Marcellus will begin to have saturation problems as early as that pipeline buyers only pay 2012. The key issue with blending is that pipeline buyers only pay methane prices for the methane prices for the “gas” so “gas” so there is no economic uplift for the value above heat content. This is especially a there is no economic uplift for problem for Marcellus producers where the local pipes are saturated in that producers will the value above heat content. receive methane prices less the cost of extraction and transportation to the pipeline where This is especially a problem for the blending will take place and blending costs resulting is a below-methane netback price. Marcellus producers where the If this process costs a dime per gallon, the hit would be about $1.60/mmbtu. We expect local pipes are saturated in that new plant announcements to add to our supply totals for 2013 and beyond. In particular, producers will receive methane we sense we are underestimating Mid-Continent (Granite Wash/Cana shale), Permian prices less the cost of extraction (Avalon shale/Bone Springs) and Rockies (DJ Basin / Niobrara) NGL production. Whether and transportation to the low feedstock prices induce another ethylene cracker to be built, it would appear that pipeline where the blending will blending will be available to handle a sizable amount of incremental supply. take place and blending costs resulting is a below-methane 3Q Crude Oil Prices Modestly Lower as Inventory Remains High netback price. Average crude oil inventories declined slightly from 360.8 million barrels in 2Q to 357.4 million barrels in 3Q. Looking at more recent weekly data, October 1 crude oil stocks showed a sequential 3.1 million barrel build to 360.9 million barrels, which is 7% above the year-ago level and 13% above the five-year average. Days of supply are 24.6 days versus the five-year average of 21.4 days. At Cushing, OK (the designated delivery point for NYMEX crude oil future contracts), inventories remain above average with October 1 stocks at 35.1 million barrels versus the year-ago level of 25.1 million barrels and near peak inventories of 37.9 million barrels on May 14.

Light product (gasoline, distillate, jet fuel) stocks increased from an average 418.3 million barrels in 2Q to 442.4 million barrels in 3Q, primarily due to a build in distillate stock. Turning to October 1 weekly data, light product inventories showed a sequential 4.6 million barrel draw to 439.6 million barrels, but remain at above-average levels, up 1.8% year over year and 15% versus the five-year average. Looking at mix, motor gasoline inventories, the largest component of light products, increased 2.6% year over year and 9.7% above the five-year average. Distillate (diesel and heating oil) stocks increased 0.4% year over year and 22.4% above the five-year average. Jet fuel inventories increased 3.3% year over year and 16 % above the five-year average.

In 3Q, crude oil prices declined modestly due to mixed economic data and above-average inventories partially offset by a weaker USD and stabilizing refined product demand. The front-month price of WTI crude averaged $76 per barrel in 3Q10 versus $78 in 2Q but up from $68 in 3Q09. Refined products prices followed suit with crude, down sequentially but

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up year over year. Front-month gasoline prices averaged $2.00 per gallon in 3Q, down from $2.17 in 2Q but up from $1.86 in 3Q09. Front-month heating oil averaged $2.06 per gallon in 3Q versus $2.11 in 2Q but up from $1.77 in 3Q09.

Figure 94: Crude and Refined Products Inventory

Crude & Refined Products Inventory (MM barrels) 10/2/2009 10/1/2010 5 Yr Avg Yr/Yr Vs 5 Yr

Crude Oil (ex Strategic Petroleum Reserve) 337.4 360.9 319.4 7.0% 13.0% Motor Gasoline 214.4 219.9 200.5 2.6% 9.7% Distillates 171.8 172.5 140.9 0.4% 22.4% Jet Fuel 45.7 47.2 40.7 3.3% 16.0% Light Products 431.9 439.6 382.1 1.8% 15.0%

Source: EIA

Refined Product Demand Expected to Post Modest Growth in 2011 The outlook for refined petroleum product demand gives an indication of the expected throughput for the pipeline segment of the business, as MLPs have approximately 50% market share of the volumes transported. Or put another way, a key driver of pipeline volume growth is consumption growth. Regional differences and M&A/organic growth projects can skew individual partnership results, but typically this outlook captures basic trends. It is important to keep in mind, however, that refined product consumption is generally fairly stable at approximately 1.0% year-over-year growth historically.

Refined product demand is expected to increase a 1.1% in 2010 and 0.6% in 2011, due to the economic recovery, following a 3.7% decline in 2009, according to the latest U.S. Department of Energy Information Administration (EIA) estimates. Light product demand is expected to increase 0.9% in 2010 and 0.7% in 2011, following a 3.1% decline in 2009. In 2010, demand is improving across the board with full-year estimates at gasoline +0.2%, jet fuel +0.8% and distillates +2.7%. In 2009, gasoline was the only product not to post a decline, while jet fuel and distillates declined 9.4% and 8.0%, respectively. The modestly higher expected 2010 growth rates for jet fuel and distillate demand, relative to gasoline, are not surprising as the fuels are more economically sensitive than gasoline.

Besides the EIA, another data point on gasoline demand is vehicles miles traveled from the U.S. Department of Transportation Federal Highway Administration. However, it is worth noting that the DoT data are lagged compared with the EIA’s. The latest DoT data show an 0.8% year-over-year increase in vehicle miles traveled in July and a 0.2% decline year-to- date.

Figure 95: Refined Products Demand

2007 2008 2009 2010e 2011e

Motor Gasoline 0.4% -3.2% 0.1% 0.2% 0.8% Jet Fuel -0.6% -5.2% -9.4% 0.8% 0.6% Distillate 0.6% -6.0% -8.0% 2.7% 0.4% Subtotal Light Products 0.3% -4.2% -3.1% 0.9% 0.7% Other -1.0% -9.9% -5.5% 1.5% 0.4% Total 0.0% -5.7% -3.7% 1.1% 0.6%

Source: EIA Short Term Energy Outlook, October 2010

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Figure 96: Vehicle Miles Driven – Moving 12-Month Average

6% 5.0% 5% 4.5% 4.4% 3.7% 4% 3.4% 3.5% 3.3% 3.2% 3.0% 3% 2.6% 2.6% 2.2% 2.2%2.3% 2.3% 2% 1.6% 1.5% 1.2% 1.2% 0.9% 1% 0.5% 0.4% 0.4% 0% Recession: Recession: Recession: -1% Jul 1990 to Mar to Dec 2007 to -0.8% Feb 1991 Oct 2001 June 2009 -1.1% -2% 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Source: U.S. DOT

Figure 97: Vehicle Miles Driven – Monthly Basis

(billion miles) 3,050

3,025

3,000

2,975

2,950

2,925

2,900 Feb-05 Nov-05 Aug-06 May-07 Mar-08 Dec-08 Sep-09 Jun-10

Source: U.S. DOT

Crude Oil Contango Narrows Crude oil and refined product storage utilization and profitability can be affected by the shape and movements in the forward curve. When the market is in backwardation (current prices above future prices), there is less incentive to store barrels than when the market is in contango (future prices above current prices). Movements in the forward curve change the value of the barrels stored, inducing movement in and out of inventories. Company-owned barrels are also affected by these relationships. Crude gathering margins, however, react positively in backwardated markets. In general, crude gatherers are paid a premium for prompt deliveries, as current prices are higher than future prices. In 3Q10, the crude forward curve contango narrowed both sequentially and year over year. In 3Q, contango averaged $0.76 versus $1.69 in 2Q and $1.14 in 3Q09. The draw (Cushing inventory peaked May 14) in stocks contributed to the narrowing contango in 3Q.

22 October 2010 82 Barclays Capital | MLP Quarterly Monitor

Crude quality spreads are proxies for the opportunity that crude oil gathering and terminal companies must create margin from buying crude and adding value to the purchase by blending or trading supply to match refiner requirements. In essence, the wider spreads provide higher-margin opportunities. Sweet, light (WTI) crude requires less complex (expensive) refining to convert to high-value products than does sour, heavy (Maya) feedstock. Spreads rise and fall seasonally (driving versus heating season) over the short run and respond to the availability of conversion capacity to handle the poorer-quality inputs. In 3Q10, the average sweet/sour spread widened slightly to $2.19 from $1.85 in 2Q and $1.73 in 3Q09. The light/heavy (WTI/Maya) spread narrowed a bit to $8.54 in 3Q from $9.76 in 2Q but widened from $5.05 in 3Q09.

Figure 98: Forward Curve

Forward Curve (Following Month - Current Month) $3.25 1Q 2Q 3Q 4Q $2.75 2003 -$1.19 -$0.91 -$0.22 -$0.20 $2.25 $1.75 2004 -$0.76 -$0.19 -$0.31 -$0.02 $1.25 2005 $0.48 $1.22 $0.69 $0.46 $0.75 2006 $1.14 $1.08 $1.30 $1.70 $0.25 2007 $1.21 $1.31 -$0.39 -$0.70 -$0.25 2008 -$0.45 -$0.11 $0.04 $1.34 -$0.75 -$1.25 2009 $3.19 $1.25 $1.14 $0.89 2010 $0.40 $1.69 $0.76 $0.77 03 1Q 03 3Q 04 1Q 04 3Q 05 1Q 05 3Q 06 1Q 06 3Q 07 1Q 07 3Q 08 1Q 08 3Q 09 1Q 09 3Q 10 1Q 10 3Q

Average $0.52 $0.52 $0.32 $0.49 Forward Curve (Following Month - Current Month)

Source: Bloomberg

Figure 99: Spread Between Sweet and Sour Crude Oil

Spread between Sweet and Sour Crude Oil $7.00 1Q 2Q 3Q 4Q $6.00 2003 $3.66 $2.28 $2.63 $2.41 $5.00 2004 $3.54 $2.85 $3.88 $5.61 $4.00 2005 $5.09 $3.69 $4.13 $5.55 $3.00 2006 $6.53 $4.78 $4.55 $4.83 $2.00 2007 $3.98 $4.59 $5.26 $6.24 $1.00 2008 $4.66 $4.61 $2.21 $3.57 $0.00 2009 $0.91 $1.38 $1.73 $2.08 2010 $1.90 $1.85 $2.19 $2.47 03 1Q 03 3Q 04 1Q 04 3Q 05 1Q 05 3Q 06 1Q 06 3Q 07 1Q 07 3Q 08 1Q 08 3Q 09 1Q 09 3Q 10 1Q 10 3Q

Average $4.05 $3.45 $3.48 $4.33 Spread between Sweet and Sour Crude Oil

Source: Bloomberg

22 October 2010 83 Barclays Capital | MLP Quarterly Monitor

Figure 100: Spread Between WTI and Maya

Spread between WTI and Maya $25.00 1Q 2Q 3Q 4Q $20.00 2003 $7.51 $7.19 $5.97 $6.76

2004 $9.29 $8.61 $11.61 $16.02 $15.00 2005 $17.25 $13.09 $15.27 $15.99 $10.00 2006 $15.30 $15.98 $14.27 $12.61

2007 $13.13 $9.81 $12.29 $15.08 $5.00 2008 $16.78 $21.08 $11.46 $13.14 $0.00 2009 $4.66 $4.73 $5.05 $6.68 2010 $9.02 $9.76 $8.54 $8.67 03 1Q 03 3Q 04 1Q 04 3Q 05 1Q 05 3Q 06 1Q 06 3Q 07 1Q 07 3Q 08 1Q 08 3Q 09 1Q 09 3Q 10 1Q 10 3Q

Average $11.99 $11.50 $10.85 $12.32 Spread between WTI and Maya

Source: Bloomberg

22 October 2010 84 Barclays Capital | MLP Quarterly Monitor

COMPANY UPDATES

22 October 2010 85 Barclays Capital | MLP Quarterly Monitor

AmeriGas Partners, LP (APU)

Figure 101: AmeriGas Partners, LP (APU)

Sub Sector: Propane

Rating: 3-Underweight Annualized Distribution: $2.82 Price Target: $42.00 Yield: 6.09% Current Price: $46.31 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 4.83% Potential Upside to Target: -9.3% Dist. CAGR (Next 3 Yrs): 4.85% 52 Week High / Low: $46.94 - $34.88 Tax Deferral: 80% $ Millions , except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10 4Q10E FY2010E 2011E Cash Distribution Per Unit $2.53 $2.65 $0.67 $0.71 $0.71 $0.71 $2.79 $2.92 Growth (YoY) 5.0% 4.74% 4.69% 5.22% 5.22% 5.22% 5.09% 4.76%

Units Outstanding (in mm) Common units 57.04 57.08 57.11 57.12 57.09 57.09 57.10 57.09 Sub-Ordinated Units 0.000.000.000.000.000.000.000.00

Total Distribution Receiving Units 57.04 57.08 57.11 57.12 57.09 57.09 57.10 57.09 Growth (YoY) 0.3% 0.1% 0.0% 0.0%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10 4Q10E FY2010E 2011E Net Income $157.98 $224.64 $83.96 $134.48 ($12.37) ($29.67) $176.40 $189.57 Interest Expense $72.89 $70.34 $16.49 $16.71 $16.98 $15.58 $65.76 $61.84 Depreciation and Amortization $80.40 $83.79 $21.38 $21.84 $21.89 $21.60 $86.71 $87.50 Other $1.67 ($37.31) $1.17 $12.75 $0.66 $0.70 $15.28 $3.00 Adjusted EBITDA $312.94 $341.46 $123.00 $185.78 $27.16 $8.21 $344.15 $341.91 Net Interest Expense $72.89 $70.34 $16.49 $16.71 $16.98 $15.58 $65.76 $61.84 Maintenance Capital Expenditures $29.06 $37.51 $10.43 $10.85 $6.59 $9.00 $36.87 $38.00 Others $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Distributable Cash flow $210.99 $233.61 $96.08 $158.22 $3.59 ($16.37) $241.52 $242.07

General Partner Cut $4.22 $6.74 $1.41 $1.67 $1.77 $1.78 $6.62 $9.03 Distributable Cash Flow (LP) $206.77 $226.88 $94.67 $156.55 $1.82 ($18.15) $234.89 $233.04

Distributable Cash Flow Per Unit $3.62 $3.97 $1.66 $2.74 $0.03 ($0.32) $4.11 $4.08

Common Distribution Coverage 143% 150% 247% 389% 5% -45% 148% 140% Total Distribution Coverage 143% 150% 247% 389% 5% -45% 148% 140%

Business Description AmeriGas Partners, L.P., through its subsidiary, AmeriGas Propane, L.P., operates as a retail propane distributor in the United States. It serves approximately 1.3 million residential, commercial/industrial, motor fuel, agricultural, and wholesale customers from approximately 1,200 propane distribution locations in 50 states. The company also sells, installs, and services propane appliances, including heating systems. In addition, it installs and services propane fuel systems for motor vehicles. AmeriGas Propane, Inc. serves as the general partner of the company. AmeriGas Partners was founded in 1994 and is based in King of Prussia, Pennsylvania.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Amerigas Partners L.P. (APU) 11.65x 11.29x 11.49x 1.07x 1.03x 1.05x 9.00x 12.17x 11.91x Propane 11.62x 12.63x 12.32x 1.18x 1.28x 1.25x 10.55x 13.16x 11.19x Average MLPs 12.17x 13.46x 11.86x 1.12x 1.19x 1.05x 12.97x 14.45x 12.29x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $3.97 $4.11 $4.08 Debt / EBITDA 2.27x 2.53x 2.56x Distribution $2.65 $2.79 $2.92 EBITDA / Interest 5.42x 4.99x 5.28x Coverage (Total Units) 150% 148% 140% Maint Cap / EBITDA 0.11x 0.11x 0.11x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 86 Barclays Capital | MLP Quarterly Monitor

Figure 102: Historical Yield Spreads

. . Amerigas Partners L.P. (APU) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Amerigas Partners L.P. (APU) vs. 1-Year Yield Spread vs. US 10-Year Treasury Alerian MLP Index 5.0% 60% 4.0% 50% 3.0% 2.0% 40% 1.0% 30% 0.0% -1.0% 20% -2.0% 10% -3.0% 0% -4.0% -5.0% -50 to 50 to -50 50 to 150 to 50 150 to 250 to 150 350 to 250 450 to 350 550 to 450 -150 to -50 to -150 -450 to -350 to -450 -250 to -350 -150 to -250 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 .

Amerigas Partners L.P. (APU) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread Basis point differentials - Amerigas Partners L.P. (APU) vs. United. States Treasury Bond (10 Y) Yield 10.0% 30% 9.0% 25% 8.0% 20% 7.0% 6.0% 15% 5.0% 10% 4.0% 5% 3.0% 2.0% 0% 1.0% 100 to 190 to 100 280 to 190 370 to 280 460 to 370 550 to 460 640 to 550 730 to 640 820 to 730 910 to 820 910 to 1000 910 to Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10

Amerigas Partners L.P. (APU) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 10-May-10 24-May-10 . Source: FactSet

Valuation Discussion Our $42 price target on APU is based on a 12-month cash distribution run rate of $2.95 and a yield target of 7%. We believe that propane partnerships, including APU, will need to focus on maintaining lean operating cost structures over the near term to offset conservation efforts driven by a weak propane demand environment.

Investment Thesis Our view is that stronger growth partnerships will continue to be the top performers in the sector even though the propane sector possesses a lower growth/risk ratio than other groups within the MLP space. Despite our rating, we believe APU provides a healthy yield and is more attractive than comparable risk profile fixed income investments for investors seeking yield-oriented investments. However, on a relative basis, we expect APU to lag the MLP sector, as investors continue to gravitate toward growth partnerships, given that raising the distribution payment continues to be a key driver to stock performance.

Potential Catalysts / Timeline

„ Late October – Third quarter earnings release.

22 October 2010 87 Barclays Capital | MLP Quarterly Monitor

Fundamental Drivers

„ Weather conditions affect demand for propane.

„ Gross profit and EBITDA per gallon margins are affected by propane prices, procurement costs and ability to pass along costs to customer.

„ Ability to expand propane cylinder exchange business.

„ Acquisitions are required to grow the distribution payment because of limited organic growth opportunities.

Risk: Medium In general, weather conditions have a significant effect on propane demand for heating and agricultural purposes. As such, propane partnerships tend to be riskier than pipelines, given the seasonality of operations and vulnerability to warm temperatures in the winter. In addition, growth through acquisitions remains limited as APU maintains a more dominant position in the propane sector and meaningful gains in either gallons or customers would not be materially accretive in the short run, absent a large-scale acquisition.

22 October 2010 88 Barclays Capital | MLP Quarterly Monitor

Atlas Pipeline Partners, LP (APL)

Figure 103: Atlas Pipeline Partners, LP (APL)

Sub Sector: Gathering and Processing

Rating: 1-Overweight Annualized Distribution: $1.50 Price Target: $19.00 Yield: 7.70% Current Price: $19.49 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): -64.67% Potential Upside to Target: -2.5% Dist. CAGR (Next 3 Yrs): 10.00% 52 Week High / Low: $20.17 - $6.54 Tax Deferral: 100% $ Millions , except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $3.24 $0.15 $0.00 $0.00 $0.00 $0.38 $0.00 $1.50 Growth (YoY) -9.2% -95.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Units Outstanding (in mm) Common units 43.85 48.89 52.90 53.21 53.21 53.21 53.13 53.13 Sub-Ordinated Units 0.400.000.000.000.000.000.000.00

Total Distribution Receiving Units 44.25 48.89 52.90 53.21 53.21 53.21 53.13 53.13 Growth (YoY) 70% 10% 9% 0%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $77.96 $59.54 $0.56 ($0.29) $0.91 $6.20 $7.38 $31.94 Interest Expense $84.84 $104.10 $26.89 $24.73 $24.12 $12.78 $88.51 $61.23 Depreciation and Amortization $98.09 $94.45 $22.75 $22.90 $25.00 $19.00 $89.65 $70.00 Others $67.76 ($12.63) ($4.38) $5.51 $0.00 $0.00 $1.12 $0.00 Adjusted EBITDA $328.64 $245.46 $45.81 $52.84 $50.03 $37.98 $186.66 $163.17 Net Interest Expense ($84.84) ($104.10) ($26.89) ($24.73) ($24.12) ($12.78) ($88.51) ($61.23) Maintenance Capital Expenditures $0.00 ($0.90) $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Others ($2.66) $1.05 ($1.17) ($3.14) ($3.75) ($4.00) ($12.06) ($12.00) Distributable Cash flow $241.14 $141.50 $17.75 $24.97 $22.16 $21.20 $86.08 $89.94

General Partner Cut $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Distributable Cash Flow (LP) $241.14 $141.50 $17.75 $24.97 $22.16 $21.20 $86.08 $89.94

Distributable Cash Flow Per Unit $5.45 $2.89 $0.34 $0.47 $0.42 $0.40 $1.62 $1.69

Common Distribution Coverage 153% 1923% na na na 104% na 111% Total Distribution Coverage 152% 1923% na na na 104% na 111%

Business Description Atlas Pipeline Partners, L.P. is active in the gathering and processing segments of the midstream natural gas industry. In the Mid-Continent region of Oklahoma, southern Kansas, northern and western Texas and the Texas panhandle, APL owns and operates eight active gas processing plants and a treating facility, as well as approximately 10,300 miles of active intrastate gas gathering pipeline. In Appalachia, APL is a 49% joint venture partner with Williams in Laurel Mountain Midstream, LLC, which manages the natural gas gathering system in that region, namely from the Marcellus Shale in southwestern Pennsylvania.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Atlas Pipeline Partners L.P. (APL) 6.76x 11.66x 11.73x 0.38x 0.66x 0.66x 8.22x 9.61x 11.19x Gathering and Processing 10.32x 14.46x 11.46x 0.96x 1.29x 0.98x 11.37x 14.02x 11.53x Average MLPs 12.17x 13.46x 11.86x 1.12x 1.19x 1.05x 12.97x 14.45x 12.29x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $2.89 $1.62 $1.69 Debt / EBITDA 5.11x 3.41x 4.82x Distribution $0.15 $0.00 $1.50 EBITDA / Interest 2.36x 2.11x 2.66x Coverage (Total Units) 1929% na 113% Maint Cap / EBITDA 0.03x 0.06x 0.07x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 89 Barclays Capital | MLP Quarterly Monitor

Figure 104: Historical Yield Spreads

. . Atlas Pipeline Partners L.P. (APL) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Atlas Pipeline Partners L.P. (APL) vs. 1-Year Yield Spread vs. US 10-Year Treasury Alerian MLP Index 100% 118.0% 90% 80% 98.0% 70% 60% 78.0% 50% 40% 58.0% 30% 20% 38.0% 10% 0% 18.0% -2.0% -160 to 1330 -160 to 1330 to 2820 1330 to 4310 2820 to 5800 4310 to 7290 5800 to 8780 7290 to 8780 to 10270 10270 to 11760 10270 to 13250 11760 to 14740 13250 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 . Basis point differentials - Atlas Pipeline Partners L.P. (APL) vs. Atlas Pipeline Partners L.P. (APL) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . United States Treasury Bond (10 Y) Yield 141.0% 100% 90% 121.0% 80% 70% 101.0% 60% 50% 81.0% 40% 30% 61.0% 20% 10% 41.0% 0% 21.0% 1.0% 110 to 1680 to 110 1680 to 3250 to 1680 4820 to 3250 6390 to 4820 7960 to 6390 9530 to 7960 9530 to 11100 to 9530 11100 to 12670 to 11100 14240 to 12670 15810 to 14240 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09

Atlas Pipeline Partners L.P. (APL) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

270 250 230 210 190 170 150 130 110 90 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our $19 price target on APL is based on a 12 months distribution run rate of $1.50 and a target yield of 8%.

Investment Thesis We upgraded APL to 1-Overweight/2-Neutral on August 2, 2010 after the sales of its Elk City/Sweetwater assets. The transaction significantly improves APL’s balance sheet and liquidity. Pro forma for the deal, APL will have $340 million of liquidity and leverage ratio below 3.3x. APL has been capital constrained in investing in its Marcellus assets, which stand to benefit from strong drilling by ATLS. Management indicated superior return prospects from the Marcellus investment, yielding more than 25% return on capital. We believe the sale of the assets provides financial flexibility to invest in the Marcellus growth. Importantly, it should allow APL to remove capex restrictions on its credit facility, in our view. Under this condition, we estimate APL can reinstate distribution at $1.50 per year initially and grow it by 10% in 2011–14 assuming Laurel Mountain JV volume reaches 650 mmcf/d by 2014. Using management’s estimate of 1Bcf/d throughput by 2014, distribution could grow at a 14% CAGR based on our commodity price assumptions. We use crude price of $82–$85/bbl and Henry Hub gas price of $4.75–$6.00/mmbtu. Potential downside to estimates includes weak commodity prices; $10/bbl crude or $1/mmbtu gas price

22 October 2010 90 Barclays Capital | MLP Quarterly Monitor

movement can cut growth estimates to 5% compared with our base case. Importantly, given large part of APL’s growth depends on Marcellus development, any developments that limit producer activities including regulatory restrictions can pose as a risk to our thesis.

Potential Catalysts / Timeline

„ Announcement of timing and level of distribution reinstatement.

„ Successful removal of capex constraints in the credit facility.

Fundamental Drivers

„ Natural gas production and prices.

„ Ability to sustain a low operating cost structure.

„ Demand and prices of NGLs.

Risk: High We determine APL’s risk profile to be high given its exposure to commodity prices and light hedge positions. On the other hand, APL’s new hedge strategy involving usage of options can help mitigate commodity price downside if executed effectively. As a gatherer and processor of natural gas, the system’s throughput is highly dependent on drilling activity behind the systems. The continued weakness in gas prices can put pressure on APL’s assets exposed to Mid-Continent regions.

22 October 2010 91 Barclays Capital | MLP Quarterly Monitor

Blueknight Energy Partners, LP (BKEP)

Figure 105: Blueknight Energy Partners, LP (BKEP)

Sub Sector: Crude Oil

Rating: 3-Underweight Annualized Distribution: na Price Target: $9.00 Yield: na Current Price: $8.85 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): na Potential Upside to Target: 1.7% Dist. CAGR (Next 3 Yrs): na 52 Week High / Low: $11.85 - $7.5 Tax Deferral: 80% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $0.40 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.94 Growth (YoY) -68.6% -100.0% na na

Units Outstanding (in mm) Common units 20.40 21.57 21.73 21.73 21.73 21.73 21.73 38.70 Sub-Ordinated Units 12.57 12.57 12.57 12.57 12.57 12.57 12.57 0.00

Total Distribution Receiving Units 32.97 34.14 34.30 34.30 34.30 34.30 34.30 38.70 Growth (YoY) 22% 3.5% 0.5% 12.8%

Distributable Cash Flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $17.78 ($16.51) ($5.05) ($2.70) ($1.09) $0.36 ($8.49) $19.67 DD&A $21.33 $24.07 $5.51 $5.40 $5.50 $5.50 $21.91 $23.00 Interest Expense $26.95 $51.40 $12.42 $13.55 $13.09 $13.03 $52.10 $36.28 Income Tax Expense $0.29 $0.21 $0.05 $0.05 $0.10 $0.10 $0.30 $0.80 EBITDA $66.35 $59.17 $12.94 $16.30 $17.60 $18.99 $65.83 $79.75 less Interest Expense $24.69 $51.40 $12.42 $13.55 $13.09 $13.03 $52.10 $36.28 less Maintenance Capital $3.70 $3.93 $2.00 $2.30 $1.30 $1.30 $6.90 $4.30 less Other ($15.89) $1.89 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Distributable Cash Flow $53.85 $1.95 ($1.49) $0.45 $3.21 $4.66 $6.83 $39.17

General Partner Cut $0.73 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.74 Distributable Cash Flow (LP) $53.12 $1.95 ($1.49) $0.45 $3.21 $4.66 $6.83 $38.43

Distributable Cash Flow Per Unit $1.61 $0.06 ($0.04) $0.01 $0.09 $0.14 $0.20 $0.99

Common Distribution Coverage 403% na na na na na na 106% Total Distribution Coverage 403% na na na na na na 106%

Business Description Blueknight Energy Partners, L.P. provides terminalling, storage, processing, gathering, and transportation services for companies engaged in theproduction, distribution, and marketing of crude oil and liquid asphalt cement in the United States.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Blueknight Energy Partners, L.P. (BKEP) 41.95x 44.46x 8.91x na na na 12.99x 12.31x 9.71x Crude Oil 23.45x 24.33x 12.18x 1.41x 1.41x 1.37x 13.20x 14.12x 12.60x Average MLPs 12.17x 13.46x 11.86x 1.12x 1.19x 1.05x 12.97x 14.45x 12.29x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $0.06 $0.20 $0.99 Debt / EBITDA 7.06x 0.00x 5.23x Distribution $0.00 $0.00 $0.94 EBITDA / Interest 1.28x 1.26x 2.20x Coverage (Total Units) na na 106% Maint Cap / EBITDA 0.07x 0.06x 0.07x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 92 4Q

Barclays Capital | MLP Quarterly Monitor

Figure 106: Historical Yield Spreads

. . Blueknight Energy Partners (BKEP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Blueknight Energy Partners (BKEP) 1-Year Yield Spread vs. US 10-Year Treasury vs. Alerian MLP Index 14.0% 70% 12.0% 60% 10.0% 50% 8.0% 40% 6.0% 30% 4.0% 20% 2.0% 10% 0.0% 0% -2.0% -4.0% 20 to 210 -170 to 20 -170 to 210 to 400 400 to 590 590 to 780 780 to 970 970 to 1160 to 970 -360 to -170 1160 to 1350 to 1160 1540 to 1350 Jul-07 Jul-08 Jul-09 Jul-10 Jan-08 Jan-09 Jan-10 . Basis point differentials - Blueknight Energy Partners (BKEP) vs. Blueknight Energy Partners (BKEP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . United States Treasury Bond (10 Y) Yield 70% 18.0% 60% 16.0% 14.0% 50% 12.0% 40% 10.0% 30% 8.0% 20% 6.0% 10% 4.0% 0% 2.0% 0.0% -40 to 170 to -40 170 to 380 to 170 590 to 380 800 to 590 800 to 1010 to 800 Jul-07 Jul-08 Jul-09 Jul-10 1010 to 1220 to 1010 1430 to 1220 1640 to 1430 1850 to 1640 2060 to 1850 Jan-08 Jan-09 Jan-10

Blueknight Energy Partners (BKEP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 90 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our $9 price target on BKEP is based on a 10x EBITDA multiple on our 2010 EBITDA estimate of $72 million less net debt of $420 million. We use an EV/EBITDA valuation methodology because BKEP is not currently paying a distribution due to credit agreement restrictions.

Investment Thesis We carry a 3-Underweight/2-Neutral rating on BKEP. While its cash flows are fee-based, BKEP has an above-average risk profile due to recontracting and legal risks plus an expensive and restrictive credit facility.

PotentialNovvemem mberer rCatalysts / Timeline

„ November – Third100 quarter earnings release.

„ 4Q10 – Expected in-service date of Eagle North Junecrudeunenee 202 0oil111 pipeline.

„ June 2011 – Credit facility matures.

22 October 2010 93 Barclays Capital | MLP Quarterly Monitor

Fundamental Drivers

„ Pipeline cash flows will likely be driven by throughput volumes and tariffs/fees per barrel.

„ The Mid-Continent system pipeline volumes will be affected by crude oil production in Oklahoma and the Texas Panhandle. The Longview system pipeline volumes will be affected by crude oil production in East Texas.

„ The Terminalling & Storage segment’s cash flows should be primarily driven by volatility in crude oil prices and throughput at terminals. Cushing terminal cash flows will be based on refined product consumption and demand growth in the Midwest market.

Risk: High Due to the bankruptcy of BKEP’s former parent, the pipeline and terminal contractual commitments were recontracted to third parties but at somewhat less favorable terms. Prior to the bankruptcy, the former parent accounted for approximately 90% of revenues. The high risk profile is due to recontracting (at lower prices), less volume protection, high legal risk and an expensive credit facility. The exact timing of the new parent Vitol refinancing BKEP’s credit facility and reinstatement of the distribution are uncertain.

22 October 2010 94 Barclays Capital | MLP Quarterly Monitor

Boardwalk Pipeline Partners, LP (BWP)

Figure 107: Boardwalk Pipeline Partners, LP (BWP)

Boardwalk Pipeline Partners L.P. (BWP) Sub Sector: Natural Gas & NGL

Rating: 2-Equal Weight Annualized Distribution: $2.04 Price Target: $32.00 Yield: 6.04% Current Price: $33.77 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 8.20% Potential Upside to Target: -5.2% Dist. CAGR (Next 3 Yrs): 3.91% 52 Week High / Low: $34.23 - $14.49 Tax Deferral: 80% $ Millions , except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $1.89 $1.97 $0.51 $0.51 $0.52 $0.52 $2.05 $2.13 Growth (YoY) 6.2%4.2%4.1%4.1%4.0%4.0%4.1%3.9%

Units Outstanding (in mm) Common units 104.20 161.60 169.70 169.70 169.70 169.70 169.70 169.70 Class B units 15.24 22.87 22.87 22.87 22.87 22.87 22.87 22.87 Sub-Ordinated Units 28.70

Total Distribution Receiving Units 148.14 184.47 192.57 192.57 192.57 192.57 192.57 192.57 Growth (YoY) 28.1% 24.5% 8.3% 8.0% 1.9% 0.0% 4.4% 0.0%

Distributable Cash Flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $294.00 $162.70 $90.30 $54.40 $62.31 $77.40 $284.41 $312.58 DD&A $124.80 $203.10 $53.40 $53.70 $57.34 $57.61 $222.05 $230.98 Interest Expense $57.70 $132.10 $37.20 $37.70 $38.18 $38.74 $151.81 $176.09 Income Tax Expense $1.00 $0.30 $0.10 $0.10 $0.25 $0.25 $0.70 $1.00 Interest Income ($2.80) ($0.20) ($0.10) ($0.20) ($0.20) ($0.20) ($0.70) ($2.00) Other $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Total EBITDA $474.70 $498.00 $180.90 $145.70 $157.87 $173.80 $658.27 $718.64 Interest Expense ($57.70) ($132.10) ($44.70) ($28.60) ($38.18) ($38.74) ($150.21) ($176.09) Capitalized Interest ($71.10) ($10.20) $0.00 $0.00 ($1.50) ($1.50) ($3.00) ($2.36) Maintenance Capital ($50.50) ($58.90) ($2.20) ($7.30) ($15.00) ($37.50) ($62.00) ($65.00) Other ($0.10) $0.00 $0.00 $0.00 ($0.10) $0.00 Distributable Cash Flow $295.40 $296.80 $133.90 $109.80 $103.20 $96.06 $442.96 $475.19

General Partner Cut $13.30 $20.12 $5.98 $6.26 $6.54 $6.83 $25.61 $31.26 Distributable Cash Flow (LP) $282.10 $276.68 $127.92 $103.54 $96.66 $89.24 $417.35 $443.93

Distributable Cash Flow Per Unit $1.90 $1.50 $0.66 $0.54 $0.50 $0.46 $2.17 $2.31

Common Distribution Coverage 143% 87% 149% 120% 111% 101% 120% 123% Total Distribution Coverage 101% 76% 132% 105% 97% 89% 106% 108%

Business Description Boardwalk Pipeline Partners, LP, through its subsidiaries, engages in the interstate transportation and storage of natural gas in the United States. The company owns and operates 3 natural gas pipeline systems to transport and store natural gas for local distribution companies, municipalities, interstate and intrastate pipelines, direct industrial users, electric power generation plants, marketers, and producers. As of December 31, 2009, the company owned and operated approximately 14,200 miles of pipeline directly serving customers in 12 states and indirectly serving customers in the northeastern and southeastern United States; and owned 11 underground storage fields in 4 states with working gas capacity of approximately 163.0 billion cubic feet. Boardwalk GP, LP serves as the general partner of the company. The company was founded in 2003 and is headquartered in Houston, Texas. Boardwalk Pipeline Partners, LP is a subsidiary of Boardwalk Pipelines Holding Corp.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Boardwalk Pipeline Partners L.P. (BWP) 22.51x 15.58x 14.65x 2.26x 1.57x 1.47x 20.90x 17.27x 15.82x Natural Gas & NGL 15.89x 15.59x 13.41x 1.43x 1.33x 1.15x 14.68x 15.70x 13.07x Average MLPs 12.08x 13.35x 11.77x 1.11x 1.18x 1.04x 12.97x 14.37x 12.23x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $1.50 $2.17 $2.31 Debt / EBITDA 6.22x 5.13x 4.70x Distribution $1.97 $2.05 $2.13 EBITDA / Interest 3.77x 4.38x 4.08x Coverage (Total Units) 76% 106% 108% Maint Cap / EBITDA 0.12x 0.09x 0.09x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 95 Barclays Capital | MLP Quarterly Monitor

Figure 108: Historical Yield Spreads

. . Boardwalk Pipeline Partners L.P. (BWP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Boardwalk Pipeline Partners L.P. 1-Year Yield Spread vs. US 10-Year Treasury (BWP) vs. Alerian MLP Index 2.0% 40% 1.0% 35% 30% 0.0% 25% -1.0% 20% 15% -2.0% 10% -3.0% 5% -4.0% 0% -5.0% -30 to 40 to -30 40 to 110 to 40 110 to 180 to 110 -100 to -30 to -100 -520 to -450 to -520 -380 to -450 -310 to -380 -240 to -310 -170 to -240 -100 to -170 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 . Basis point differentials - Boardwalk Pipeline Partners L.P. (BWP) Boardwalk Pipeline Partners L.P. (BWP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . vs. United States Treasury Bond (10 Y) Yield 25% 8.0% 20% 6.0% 15% 4.0% 10% 2.0% 5%

0.0% 0% -2.0% 10 to 130 -110 to 10 -110 to 130 to 250 130 to 370 250 to 490 370 to 610 490 to 730 610 to 850 730 to 970 850 to -230 to -110 -230 to Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09

Boardwalk Pipeline Partners L.P. (BWP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our current target price of $32 on BWP is predicated on the units trading at a 6.6% yield on a 12-month distribution run rate of $2.12. Our present forecast assumes that Boardwalk Pipeline will be successful in completing its current $265 million expansion project backlog by 2011.

Investment Thesis Our current assessment is for distribution growth of approximately 3.7% over the duration of our forecast with potential upside if the company is successful at layering in additional growth projects around current operations which access high-growth supply areas including the Barnett, Woodford and Fayetteville Shales, and Bossier Sands with recent projects targeting development out of Haynesville and the Eagle Ford.

Potential Catalysts / Timeline As a result of its entry into the Eagle Ford shale with Southcross Energy, BWP will convert the portion of the Gulf South pipeline (it is currently only able to accept pipeline quality gas) between Imperial, TX and Wharton County, TX to accommodate condensate-rich gas associated with the play. With a number of other players in the shale, the competitive positioning for this projects depends on 1) the ethane recovery levels at the Gregory

22 October 2010 96 Barclays Capital | MLP Quarterly Monitor

processing plant, which we estimate to be over 80%; 2) the ability of the plant to process 4+ GPM gas efficiently; 3) available fractionation capacity for the NGL stream; and 4) the producer’s netbacks for the products. It remains to be seen how prolific the Eagle Ford shale is and in the event that the output from the shale exceeds current takeaway capacity planned for the region, we think BWP stands to benefit from small expansions. In addition to any incremental developments around this project, we expect to hear on the progress made on any potential opportunities within their transportation and storage business.

With approximately $25 million in revenue up for renewal in 4Q10 and another $100 million in 2011, we think investors will be interested in updates around the progress made in re- contracting expiring capacity and where the basis spreads are trending. Contracts that were extended earlier this year have tracked at a 15% discount compared with original rates, and the key to a recovery in spreads would be additional increases in shale production in BWP’s geographic footprint, which would increase the value of takeaway capacity.

Fundamental Drivers

„ Level of natural gas price and drilling activities behind the pipelines.

„ Ability to recontract capacity.

„ Demand for natural gas in the north and southeastern regions of the United States.

„ Ability to develop and integrate expansion projects.

„ Basis differentials between natural gas markets.

Risk Profile: Low Our low risk is related to the partnership’s asset base generating stable cash flows and the ability to capture synergies between the Texas Gas and Gulf South Systems. In addition, expansion projects under development are supported by long-term customer contracts. We believe the partnership’s low risk profile is further underpinned by a strong management team and credit profile, and solid support from its general partner.

22 October 2010 97 Barclays Capital | MLP Quarterly Monitor

Chesapeake Midstream Partners, LP (CHKM)

Figure 109: Chesapeake Midstream Partners, LP (CHKM)

Sub Sector: Gathering and Processing

Rating: 1-Overweight Annualized Distribution: $1.35 Price Target: $26.00 Yield: 5.01% Current Price: $26.97 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): na Potential Upside to Target: -3.6% Dist. CAGR (Next 3 Yrs): 9.00% 52 Week High / Low: $27.45 - $21.25 Tax Deferral: 0% $Millions, except per unit amounts

Cash Flow Summary 2009 PF 1Q2010 2Q2010 3Q2010E 4Q2010E 2010E 2011E 2012E Cash Distribution Per Unit na na na $0.23 $0.34 $0.56 $1.43 $1.57

Units Outstanding (in mm) Total Distribution Receiving Units na 140.97 140.97 140.97 140.97 140.97 140.97 145.56

Distributable Cash flow Calculation 2009 PF 1Q2010 2Q2010 3Q2010E 4Q2010E 2010E 2011E 2012E Net Income $34.9 $37.0 $37.3 $38.8 $147.9 $212.2 $231.6 DD&A $22.0 $23.4 $24.4 $25.7 $95.5 $116.5 $140.0 Interest expense $0.6 $0.5 $0.5 $0.5 $2.1 $7.9 $8.1 Gain (loss) on asset sales $0.0 ($0.0) $0.0 $0.0 $0.0 $0.0 $0.0 Others $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 EBITDA $57.5 $60.9 $62.3 $64.9 $245.5 $336.5 $379.8 Maintenance capex $13.2 $17.5 $17.5 $17.5 $65.7 $77.4 $83.5 Interest expense $0.6 $0.5 $0.5 $0.5 $2.1 $7.9 $8.1 DCF calculation $43.6 $42.9 $44.3 $46.9 $177.7 $251.3 $288.1 GP cut ($0.6) ($1.0) ($1.6) ($4.1) ($5.0) GP cut % $0.0 $0.0 $0.0 $0.0 $0.0 DCF for LP 43.61 45.96 89.57 247.17 283.08 DCF per unit $0.31 $0.33 $0.64 $1.75 $1.94 Distribution coverage $1.38 $0.97 $1.13 $1.23 $1.24

Business Description Chesapeake Midstream Partners LP owns, operates, develops and acquires natural gas gathering systems and other midstream energy assets. Headquartered in Oklahoma City, the Partnership's operations are focused on the Barnett Shale and Mid-Continent regions of the U.S.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 PF 2010E 2011E 2009 PF 2010E 2011E 2009 PF 2010E 2011E Chesapeake Midstream Partners L.P. (C na 42.24x 15.31x na 3.01x 1.09x na 20.78x 14.52x Gathering and Processing 10.29x 14.40x 11.40x 0.96x 1.29x 0.98x 11.37x 13.99x 11.50x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 PF 2010E 2011E Coverage Ratios 2009 PF 2010E 2011E DCF Per Unit na $0.64 $1.75 Debt / EBITDA na na na Distribution na $0.56 $1.43 EBITDA / Interest na 114.77x 42.86x Coverage (Total Units) na 113% 123% Maint Cap / EBITDA 0.00x 0.00x 0.00x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

Valuation Discussion We maintain our price target of $26 on CHKM, which was based on a 12 months distribution run rate of $1.49 and a yield of 5.8%.

Investment Thesis We believe Chesapeake Midstream can grow distribution at a 9% CAGR, putting it among the top-tier growth MLPs. This leads to total return prospects of 14%–15% per year. Our growth estimate is based on $300 million per year growth investment, which may be

22 October 2010 98 Barclays Capital | MLP Quarterly Monitor

conservative. Spending of $500 million per year translates to an 11% CAGR, or 16%–17% total return prospect. The partnership’s growth strategy is driven by acquisitions (asset drop-down from parent), organic projects, and imbedded growth from gathering contracts with CHK, and the parent has sizable midstream assets available for drop-down. The inventory of asset is growing rapidly given large investments around CHK’s production in key shale plays. Importantly, contracts have minimum volume commitments, fee- escalators, and periodic fee-redetermination agreements, which not only protect return on investments but should lead to revenue and margin growth over time. CHKM currently has over $1 billion of liquidity, providing ample financial flexibility. The partnership has a $750 million five-year revolving credit facility fully available and no outstanding debt, and $295 million of IPO proceeds to support growth activity. Strong liquidity helps facilitate projects/acquisitions in the next few years without having to access the capital market. Existing assets have superior cash flow quality compared with G&P peers and gathering pipelines have 20-year agreements with Chesapeake (CHK) and generate 100% fixed fee- based cash flow with little direct commodity price exposure. Its assets are located in the Barnett shale and Mid-Continent. The GP is Chesapeake Midstream LLC, which is a 50/50 JV between CHK and Global Infrastructure Partners (GIP), a $5.6-billion infrastructure fund.

Potential Catalysts / Timeline

„ Announcement of asset drop-down by CHKM.

Fundamental Drivers

„ Ability to grow customer base with the support of acquisitions.

Risk: Low/Medium CHKM carries a below-average risk profile related to commodity price given fee-based contract structure and minimum volume guarantee and fee redetermination agreements on its producer contract. However, CHKM has indirect exposure to natural gas price as weak gas price can result in less drilling activities and limit organic growth opportunities.

22 October 2010 99 Barclays Capital | MLP Quarterly Monitor

Copano Energy, LLC (CPNO)

Figure 110: Copano Energy, LLC (CPNO)

Sub Sector: Gathering and Processing

Rating: 2-Equal Weight Annualized Distribution: $2.30 Price Target: $29.00 Yield: 8.03% Current Price: $28.63 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 17.65% Potential Upside to Target: 1.3% Dist. CAGR (Next 3 Yrs): 1.64% 52 Week High / Low: $29.85 - $15.95 Tax Deferral: 90% $ Millions , except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $2.24 $2.30 $0.58 $0.58 $0.58 $0.58 $2.30 $2.30 Growth (YoY) 21% 3% 0% 0% 0% 0% 0% 0%

Total Distribution Receiving Units 48.30 54.39 66.77 66.77 65.61 65.61 65.61 65.61 Growth (YoY) 13% 15% 24% 23% 20% 20% 21% 0%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $58.21 $24.97 ($1.26) ($21.11) $5.59 $10.65 ($6.14) $15.90 Interest Expense $64.98 $55.84 $14.95 $13.35 $11.24 $11.24 $50.78 $60.36 Depreciation and Amortization $53.15 $57.53 $15.20 $15.58 $16.00 $16.00 $62.78 $66.00 Others $26.23 $24.18 $6.42 $31.85 $2.25 $2.25 $42.76 $28.00 Adjusted EBITDA $202.57 $162.51 $35.30 $39.67 $35.08 $40.14 $150.18 $170.26 Net Interest Expense ($64.98) ($55.84) ($14.95) ($13.35) ($11.24) ($11.24) ($50.78) ($60.36) Maintenance Capital Expenditures ($11.77) ($9.73) ($1.43) ($1.65) ($2.60) ($3.50) ($9.18) ($12.00) Others $20.80 $35.49 $11.93 $8.80 $13.75 $13.75 $48.23 $42.66 Distributable Cash flow $146.63 $132.44 $30.85 $33.47 $34.99 $39.15 $138.46 $140.56

General Partner Cut $0.00 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 Distributable Cash Flow (LP) $146.63 $132.44 $29.85 $31.47 $31.99 $35.15 $133.46 $134.56

Distributable Cash Flow Per Unit $3.44 $2.43 $0.46 $0.50 $0.53 $0.60 $2.09 $2.14

Total Distribution Coverage 154% 106% 80% 87% 93% 104% 91% 93%

Business Description Copano Energy, L.L.C. owns and operates natural gas gathering and intrastate transmission pipeline assets, and natural gas processing facilities in central and eastern Oklahoma, Texas, Wyoming, and Louisiana. It provides natural gas gathering, compression, dehydration, treating, transportation, processing, and conditioning services to natural gas producers.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Copano Energy L.L.C. (CPNO) 11.76x 13.68x 12.34x 1.22x 1.41x 1.28x 12.50x 15.51x 12.87x Gathering and Processing 10.22x 14.32x 11.33x 0.94x 1.27x 0.96x 11.37x 13.93x 11.45x Average MLPs 12.08x 13.35x 11.77x 1.11x 1.18x 1.04x 12.97x 14.37x 12.23x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $2.43 $2.09 $2.14 Debt / EBITDA 4.28x 3.96x 4.18x Distribution $2.30 $2.30 $2.30 EBITDA / Interest 3.44x 3.16x 2.83x Coverage (Total Units) 106% 91% 93% Maint Cap / EBITDA 0.04x 0.05x 0.06x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 100 Barclays Capital | MLP Quarterly Monitor

Figure 111: Historical Yield Spreads

. . Copano Energy L.L.C. (CPNO) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Copano Energy L.L.C. (CPNO) vs. 1-Year Yield Spread vs. US 10-Year Treasury Alerian MLP Index 60% 10.0% 50% 8.0% 40% 6.0% 30% 4.0% 20% 2.0% 10% 0.0% 0% -2.0% -4.0% -70 to 90 -70 to 90 to 250 250 to 410 410 to 570 570 to 730 730 to 890 -230 to -70 -230 to 890 to 1050 to 890 -390 to -230 1050 to 1210 to 1050 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 . Basis point differentials - Copano Energy L.L.C. (CPNO) vs. United Copano Energy L.L.C. (CPNO) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . States Treasury Bond (10 Y) Yield 50% 45% 18.0% 40% 35% 30% 13.0% 25% 20% 8.0% 15% 10% 5% 3.0% 0%

-2.0% 60 to 310 to 60 -190 to 60 -190 to 310 to 560 to 310 810 to 560 810 to 1060 to 810 1060 to 1310 to 1060 1560 to 1310 1810 to 1560 2060 to 1810 2310 to 2060 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09

Copano Energy L.L.C. (CPNO) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

155 145 135 125 115 105 95 85 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $29 on CPNO is based on a $2.30 distribution and an 8% yield.

Investment Thesis Copano Energy announced the issuance of $300 million convertible preferred equity to TPG Capital. While the cost of capital was higher than that of its common equity and high yield bond, the transaction has merits and we believe it is incrementally positive to CPNO's long- term growth prospects. The transaction pre-funds up to $600 million in growth capital without burdening balance sheet or distribution coverage. We also believe strong liquidity will facilitate CPNO's commercial efforts in new shale plays as the partnership actively pursues expansion projects in Eagle Ford and North Texas. However, we estimate CPNO’s coverage will remain light for 2010 and 2011 and it will not be in a position to raise distribution until 2012. Our model indicates 2%–5% growth in 2012–14 based on $150 million–$200 million per year growth spending at 5x; lower spending can lead to slower growth. Our estimates are based on normalized commodity price assumption of $85/crude and $5.00–$5.50/mmbtu gas. CPNO has greater sensitivity to crude and NGL prices and order of magnitude $10/bbl crude price can affect EBITDA by 14% while $1/mmbtu gas price can affect EBITDA by 1%. CPNO is fully hedged for 2010 and 2011 (70%–80% on C3+)

22 October 2010 101 Barclays Capital | MLP Quarterly Monitor

but less than half hedged on 2012. The company is focused on adding hedges for 2012 and beyond.

Potential Catalysts / Timeline

„ Ability to identify and close accretive acquisitions.

Fundamental Drivers

„ Natural gas drilling in the Mid-Continent, North Texas (Barnett Combo play), South Texas and Powder River basin of Rockies.

„ Commodity prices – Higher NGL and lower gas price leads to increase in frac spread that benefit processing margins.

Risk: Medium/High CPNO carries an above-average risk profile related to the exposure to commodity prices. A sharp decline in natural gas prices could impair drilling programs and volumes on the gathering systems. On the other hand, CPNO was able to lower its commodity risk profile through substantial hedge position in 2010–11.

22 October 2010 102 Barclays Capital | MLP Quarterly Monitor

Crosstex Energy, LP (XTEX)

Figure 112: Crosstex Energy, LP (XTEX)

Sub Sector: Gathering and Processing

Rating: 2-Equal Weight Annualized Distribution: $1.00 Price Target: $13.00 Yield: 7.60% Current Price: $13.16 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): -100.00% Potential Upside to Target: -1.2% Dist. CAGR (Next 3 Yrs): na 52 Week High / Low: $14.04 - $5.25 Tax Deferral: 90% $ Millions , except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $2.00 $0.00 $0.00 $0.00 $0.25 $0.25 $0.50 $1.05 Growth (YoY) -14% 0% 0% 0% 0% 0% 0% 5%

Total Distribution Receiving Units 45.11 49.15 49.75 49.75 49.75 49.75 49.75 72.45 Growth (YoY) 52% 152% 252% 352% 452% 552% 652% 752%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $10.77 $104.41 -$17.33 -$2.47 -$4.47 -$4.92 -$29.18 -$10.77 Interest Expense $82.25 $127.15 $26.86 $20.00 $18.72 $19.47 $85.04 $72.87 Depreciation and Amortization $132.69 $132.34 $28.02 $27.06 $28.28 $28.28 $111.64 $120.00 Others $24.61 ($161.31) $6.24 $0.57 $0.00 $0.00 $6.81 $0.00 Adjusted EBITDA $250.33 $202.58 $43.78 $45.16 $42.53 $42.83 $174.30 $182.10 Net Interest Expense ($82.25) ($118.04) ($23.21) ($20.00) ($18.72) ($19.47) ($81.39) ($72.87) Maintenance Capital Expenditures ($18.31) ($10.94) ($2.17) ($2.15) ($3.50) ($4.00) ($11.82) ($14.00) Others $0.00 ($5.69) ($0.70) ($0.20) ($0.75) ($0.75) ($2.40) $0.00 Distributable Cash flow $149.77 $67.91 $17.71 $22.82 $19.56 $18.61 $78.70 $95.23

General Partner Cut $31.76 $0.00 $0.00 $0.00 $0.00 $0.25 $0.00 $2.12 Distributable Cash Flow (LP) $118.01 $67.91 $17.71 $22.82 $19.56 $18.36 $78.70 $93.11

Distributable Cash Flow Per Unit $2.62 $1.38 $0.36 $0.46 $0.39 $0.37 $1.58 $1.29

Total Distribution Coverage 165% na na na 157% 148% na 122%

Business Description Crosstex Energy, L.P., a midstream natural gas company headquartered in Dallas, operates approximately 3,300 miles of pipeline, nine processing plants and three fractionators. The Partnership currently provides services for 3.2 billion cubic feet of natural gas per day, or approximately six percent of marketed U.S. daily production.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Crosstex Energy L.P. (XTEX) 9.51x 8.32x 10.24x na na na 9.28x 8.80x 8.62x Gathering and Processing 10.22x 14.32x 11.33x 0.94x 1.27x 0.96x 11.37x 13.93x 11.45x Average MLPs 12.08x 13.35x 11.77x 1.11x 1.18x 1.04x 12.97x 14.37x 12.23x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $1.38 $1.58 $1.29 Debt / EBITDA 4.17x 4.42x 3.96x Distribution $0.00 $0.50 $1.05 EBITDA / Interest 1.59x 2.05x 2.50x Coverage (Total Units) na 316% 122% Maint Cap / EBITDA 0.05x 0.07x 0.08x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 103 Barclays Capital | MLP Quarterly Monitor

Figure 113: Historical Yield Spreads

. . Crosstex Energy L.P. (XTEX) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Crosstex Energy L.P. (XTEX) vs. 1-Year Yield Spread vs. US 10-Year Treasury Alerian MLP Index 100% 138.0% 90% 80% 118.0% 70% 60% 98.0% 50% 78.0% 40% 30% 58.0% 20% 10% 38.0% 0% 18.0% -2.0% -190 to 1510 -190 to 1510 to 3210 1510 to 4910 3210 to 6610 4910 to 8310 6610 to 8310 to 10010 10010 to 11710 10010 to 13410 11710 to 15110 13410 to 16810 15110 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 . Basis point differentials - Crosstex Energy L.P. (XTEX) vs. United Crosstex Energy L.P. (XTEX) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . States Treasury Bond (10 Y) Yield 160.0% 100% 90% 140.0% 80% 120.0% 70% 60% 100.0% 50% 40% 80.0% 30% 60.0% 20% 10% 40.0% 0% 20.0% 0.0% -10 to 1780 -10 to 1780 to 3570 to 1780 5360 to 3570 7150 to 5360 8940 to 7150 8940 to 10730 to 8940 10730 to 12520 to 10730 14310 to 12520 16100 to 14310 17890 to 16100 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09

Crosstex Energy L.P. (XTEX) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

255 235 215 195 175 155 135 115 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $13 on XTEX is based on a 12 months distribution run rate of $1.05 and a target yield of 8%.

Investment Thesis Crosstex Energy reported solid results and plans to pay a $0.25 per quarter distribution in 3Q. This is ahead of 4Q timing and slightly below the high end of the range ($0.30). This $0.25 distribution reflects 1.3x coverage on 2Q results, including 14.7 million preferred, which is convertible to common on a 1:1 basis. Leverage was reduced to 4.3x and the target remains below 4.0x. We estimate XTEX can raise distribution by over 5% annually based on an estimated $70 million per year growth capex spending generating strong double-digit returns. XTEX benefits from low IDR split (currently 2%). We believe XTEX has low-cost, high return expansion opportunities around its asset base to achieve higher growth. Key examples are the two North Texas projects that are expected to generate $18 million in cash flow on its $35 million investment. Key risks are a drilling slowdown in the Barnett shale (48% of gross margin) and commodity prices (25% of gross margin) as well as relatively high leverage ratio and lower covenant limit (4.5x by September 2011) compared with peers, which could be alleviated with equity issuance, in our view.

22 October 2010 104 Barclays Capital | MLP Quarterly Monitor

Potential Catalysts / Timeline

„ Execution of accretive organic projects or acquisitions.

Fundamental Drivers

„ Level of natural gas and drilling activities behind the pipelines.

„ Ability to secure new well connects.

„ Basis differentials between natural gas markets.

„ Competition in core markets.

„ Integration of acquisitions and organic growth projects.

Risk: High Crosstex carries an above-average risk profile given the state of its balance sheet, liquidity position and commodity price exposure. While we have seen improvements, the leverage ratio remains high compared with peers and allowed leverage ratio on its debt covenant is lower than peers (4.5x versus peer average of 5.0x). A sharp decline in natural gas prices could impair volumes on gathering systems and a drop in NGL prices would crimp processing margins.

22 October 2010 105 Barclays Capital | MLP Quarterly Monitor

DCP Midstream Partners, LP (DPM)

Figure 114: DCP Midstream Partners, LP (DPM)

Sub Sector: Gathering and Processing

Rating: 1-Overweight Annualized Distribution: $2.44 Price Target: $37.00 Yield: 6.91% Current Price: $35.29 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 15.32% Potential Upside to Target: 4.8% Dist. CAGR (Next 3 Yrs): 4.63% 52 Week High / Low: $36.66 - $24.9 Tax Deferral: 80% $ Millions , except per unit amounts

Cash Flow Summary 2008 2009 1Q010 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $2.39 $2.40 $0.60 $0.61 $0.62 $0.64 $2.47 $2.59 Growth (YoY) 13% 0% 0% 2% 3% 7% 3% 5%

Units Outstanding (in mm) Total Distribution Receiving Units 28.23 31.48 34.63 34.63 34.63 34.63 34.63 38.97 Growth (YoY) 30% 12% 0% 0% 0% 0% 10% 13%

Distributable Cash flow Calculation 2008 2009 1Q010 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $128.20 ($18.10) $25.80 $26.00 $8.97 $16.62 $77.39 $87.63 Interest Expense $27.20 $28.00 $7.20 $7.30 $7.64 $8.11 $30.25 $43.73 Depreciation and Amortization $36.50 $52.00 $14.90 $15.20 $16.00 $16.00 $62.10 $65.00 Others ($101.30) $83.40 ($7.80) ($22.30) $0.00 $0.00 $0.00 $0.00 Adjusted EBITDA $90.60 $145.30 $40.10 $26.20 $32.61 $40.72 $169.73 $196.35 Net Interest Expense ($27.20) ($28.00) ($7.20) ($7.30) ($7.64) ($8.11) ($30.25) ($43.73) Maintenance Capital Expenditures ($11.00) ($12.40) ($3.00) ($0.90) ($2.00) ($3.00) ($8.90) ($12.00) Others $28.30 $2.70 $1.80 $3.60 $0.50 $0.50 $6.40 $3.00 Distributable Cash flow $80.70 $107.60 $31.70 $21.60 $23.47 $30.12 $136.99 $143.63

General Partner Cut $12.39 $14.42 $4.06 $4.45 $4.80 $5.49 $18.80 $26.02 Distributable Cash Flow (LP) $68.31 $93.18 $27.64 $17.15 $18.68 $24.62 $118.19 $117.61

Distributable Cash Flow Per Unit $2.42 $2.96 $0.80 $0.59 $0.54 $0.71 $2.64 $3.02

Total Distribution Coverage 101% 123% 133% 99% 87% 111% 107% 116%

Business Description DCP Midstream Partners, LP is a midstream master limited partnership that gathers, treats, processes, transports and markets natural gas, transports and markets natural gas liquids, and is a leading wholesale distributor of propane. DCP Midstream Partners, LP is managed by its general partner, DCP Midstream GP, LLC, which is wholly owned by DCP Midstream, LLC, a joint venture between Spectra Energy and ConocoPhillips.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E DCP Midstream Partners L.P. (DPM) 11.91x 13.37x 11.69x 1.03x 1.16x 1.01x 15.24x 16.19x 11.88x Gathering and Processing 10.22x 14.32x 11.33x 0.94x 1.27x 0.96x 11.37x 13.93x 11.45x Average MLPs 12.08x 13.35x 11.77x 1.11x 1.18x 1.04x 12.97x 14.37x 12.23x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $2.96 $2.64 $3.02 Debt / EBITDA 3.73x 4.55x 3.63x Distribution $2.40 $2.47 $2.59 EBITDA / Interest 5.19x 4.62x 4.49x Coverage (Total Units) 123% 107% 116% Maint Cap / EBITDA 0.09x 0.06x 0.06x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 106 Barclays Capital | MLP Quarterly Monitor

Figure 115: Historical Yield Spreads

. . DCP Midstream Partners L.P. (DPM) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - DCP Midstream Partners L.P. (DPM) 1-Year Yield Spread vs. US 10-Year Treasury vs. Alerian MLP Index 80% 24.0% 70% 19.0% 60% 50% 14.0% 40% 9.0% 30% 20% 4.0% 10% -1.0% 0% -6.0% 150 to 510 510 to 870 -210 to 150 870 to 1230 to 870 -570 to -210 1230 to 1590 to 1230 1950 to 1590 2310 to 1950 2670 to 2310 3030 to 2670 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 . Basis point differentials - DCP Midstream Partners L.P. (DPM) vs. DCP Midstream Partners L.P. (DPM) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . United States Treasury Bond (10 Y) Yield 40% 36.0% 35% 31.0% 30% 26.0% 25% 21.0% 20% 16.0% 15% 11.0% 10% 5% 6.0% 0% 1.0% -4.0% 70 to 540 to 70 -400 to 70 -400 to 540 to 1010 to 540 1010 to 1480 to 1010 1950 to 1480 2420 to 1950 2890 to 2420 3360 to 2890 3830 to 3360 4300 to 3830 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09

DCP Midstream Partners L.P. (DPM) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

145 140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $37 on DPM is based on a 12-month distribution of $2.56 and a target yield of 7%.

Investment Thesis DCP Midstream Partners resumed its distribution growth in 2Q (after keeping it flat in 2009), bumping the quarterly distribution by 1.7% quarter over quarter and year over year. We continue to view DPM as a high quality G&P MLP with 5%-plus annual distribution growth prospects, capable of executing its goal of 12%–15% annual total return. DPM has relatively low commodity price sensitivity, strong parent sponsorship, and investment grade credit rating from S&P and Fitch, which differentiate the partnership from many pure-play G&P MLPs that do not have investment grade credit. During 3Q DPM successfully completed its first bond offering, raising $250 million at 3.25%, which represents 195bp over Treasury. DPM was able to lower its already-low cost of debt (all-in cost of 4.6%) and free up revolver capacity. In terms of growth prospects, DPM has jointly entered into an EQT joint venture with its GP, gaining exposure to the Marcellus/Huron shale. DPM also completed a number of acquisitions including the Black Lake NGL pipeline, Wattenberg NGL pipeline and propane assets, which we believe will provide immediate accretion as well as long-term growth prospects. Importantly, the Black Lake and the Wattenberg NGL pipelines

22 October 2010 107 Barclays Capital | MLP Quarterly Monitor

will benefit from volume contributions from the GP. Management raised full-year DCF guidance by $3 million reflecting the acquisition benefits. Management’s DCF guidance implies 1.05x–1.15x distribution coverage.

Potential Catalysts / Timeline

„ Organic project announcements.

„ Ability to source and close accretive acquisitions.

Fundamental Drivers

„ Commodity prices and production activities.

„ Ability to grow customer base with the support of acquisitions.

Risk: Medium/Low DCP Midstream carries an average risk profile associated with movements in natural gas and NGL prices. A sharp decline in natural gas prices could impair volumes on gathering systems and a drop in NGL prices would crimp processing margins. Other risks include successfully making and integrating acquisitions. On the other hand, DPM has reduced its risk profile by diversifying its asset base through acquisitions, achieving investment grade credit rating (reduces funding risk) and adding hedges into its processing contract mix. After hedges, 10% of the partnership’s 2009 gross margin is exposed to commodity price movement, which we believe is lower than the G&P peer group.

22 October 2010 108 Barclays Capital | MLP Quarterly Monitor

Duncan Energy Partners, LP (DEP)

Figure 116: Duncan Energy Partners, LP (DEP)

Sub Sector: Natural Gas & NGL

Rating: 2-Equal Weight Annualized Distribution: $1.80 Price Target: $29.00 Yield: 5.64% Current Price: $31.92 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): na Potential Upside to Target: -9.1% Dist. CAGR (Next 3 Yrs): 4.48% 52 Week High / Low: $33.39 - $20.25 Tax Deferral: 80% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $1.68 $1.75 $0.45 $0.45 $0.46 $0.46 $1.81 $1.87 Growth (YoY) n/a 4.3% 4.1% 3.4% 3.4% 3.4% 3.6% 3.1%

Units Outstanding (in mm) Common units 22.8 57.7 57.7 57.7 57.7 63.5 59.2 75.7 Sub-Ordinated Units 0.0 0.0 0.0 1.0 2.0 3.0 4.0 0.0

Total Distribution Receiving Units 22.8 57.7 57.7 58.7 59.7 66.5 63.2 75.7 Growth (YoY) n/a 153.5% 184.1% 284.1% 384.1% 484.1% 584.1% 19.9%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $47.9 $91.1 $21.3 $23.3 $24.0 $27.1 $95.8 $110.7 Depreciation, Depletion & Amortization $167.8 $188.3 $48.2 $52.3 $51.0 $51.0 $202.5 $209.1 Other $12.5 $15.1 $2.9 $3.5 $3.0 $2.2 $11.6 $15.9 Adjusted EBITDA $228.3 $294.5 $72.4 $79.1 $78.0 $80.3 $309.8 $335.7 Net Interest Expense ($11.4) ($13.8) ($3.1) ($3.2) ($2.7) ($1.9) ($10.8) ($14.9) Maintenance Capital Expenditures ($54.2) ($48.3) ($11.1) ($17.9) ($13.0) ($13.0) ($55.0) ($57.0) Other ($0.9) $101.5 $26.1 $25.2 $29.3 $28.3 $108.9 $98.0 Distributable Cash flow $163.6 $130.9 $32.1 $32.8 $33.0 $37.1 $135.1 $165.8

General Partner Cut ($0.7) ($0.7) ($0.2) ($0.2) ($0.3) ($0.3) ($1.1) ($1.4) Distributable Cash Flow (LP) $162.85 $130.20 $31.87 $32.60 $32.78 $36.84 $133.98 $164.37

Distributable Cash Flow Per Unit $7.16 $1.86 $0.55 $0.56 $0.57 $0.58 $2.26 $2.17

Total Distribution Coverage 427% 106% 123% 126% 125% 126% 125% 116%

Business Description Duncan Energy Partners is a publicly traded partnership that provides midstream energy services, including gathering, transportation, marketing and storage of natural gas, in addition to NGL fractionation (or separation), transportation and storage and petrochemical transportation and storage. Duncan Energy Partners owns interests in assets located primarily in Texas and Louisiana, including interests in approximately 9,400 miles of natural gas pipelines with a transportation capacity aggregating approximately 7.9 billion cubic feet (“Bcf”) per day; more than 1,600 miles of NGL and petrochemical pipelines featuring access to one of the world’s largest fractionation complexes at Mont Belvieu, Texas; two NGL fractionation facilities located in south Texas; approximately 18 million barrels (“MMBbls”) of leased NGL storage capacity; 8.1 Bcf of leased natural gas storage capacity; and 34 underground salt dome caverns with more than 100 MMBbls of NGL storage capacity at Mont Belvieu.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Duncan Energy Partners L.P. (DEP) 14.14x 14.74x 13.50x 1.40x 1.46x 1.34x 16.59x 8.99x 9.03x Natural Gas & NGL 15.89x 15.59x 13.41x 1.43x 1.33x 1.15x 14.68x 15.70x 13.07x Average MLPs 12.08x 13.35x 11.77x 1.11x 1.18x 1.04x 12.97x 14.37x 12.23x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $1.86 $2.26 $2.17 Debt / EBITDA 1.56x 1.46x 1.46x Distribution $1.75 $1.81 $1.87 EBITDA / Interest 21.30x 22.95x 15.48x Coverage (Total Units) 106% 125% 116% Maint Cap / EBITDA 0.16x 0.18x 0.18x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 109 Barclays Capital | MLP Quarterly Monitor

Figure 117: Historical Yield Spreads

. . Duncan Energy Partners L.P. (DEP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Duncan Energy Partners L.P. (DEP) 1-Year Yield Spread vs. US 10-Year Treasury vs. Alerian MLP Index 2.0% 25% 1.5% 20% 1.0% 0.5% 15% 0.0% 10% -0.5% 5% -1.0% -1.5% 0% -2.0% 2070 to -30 to 20 to -30 70 to 120 to 70 -80 to -30 -80 to 120 to 170 to 120 220 to 170 270 to 220 -130 to -80 to -130 -230 to -180 to -230 -130 to -180 Feb-07 Feb-08 Feb-09 Feb-10 Aug-07 Aug-08 Aug-09 Aug-10 . Basis point differentials - Duncan Energy Partners L.P. (DEP) vs. Duncan Energy Partners L.P. (DEP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . United States Treasury Bond (10 Y) Yield 40% 12.0% 35% 10.0% 30% 8.0% 25% 20% 6.0% 15% 4.0% 10% 2.0% 5% 0.0% 0% -2.0% -20 to 140 to -20 140 to 300 to 140 460 to 300 620 to 460 780 to 620 940 to 780 -180 to -20 940 to 1100 to 940 1100 to 1260 to 1100 1420 to 1260 Feb-07 Feb-08 Feb-09 Feb-10 Aug-07 Aug-08 Aug-09 Aug-10

Duncan Energy Partners L.P. (DEP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

165 155 145 135 125 115 105 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our $29 price target on DEP is based on a 12-month cash distribution run rate of $1.87 and a target yield of 6.5%. Unlike the majority of partnerships, DEP does not have incentive distribution rights (IDRs). The general partner distribution is permanently capped at 2% of total distributions. Ultimately, this results in a materially lower cost of equity capital for limited partnership unit holders, as units are unencumbered by the rising level of GP splits, which, for most partnerships, tops out at 50% of incrementally distributed cash flow. DEP assets are part of Enterprise Products’ (EPD) integrated midstream energy network that spans across a wide spectrum of the midstream value chain. As such, DEP benefits from the approximately $1.5 billion–$2 billion in annual spending by EPD to expand operations both up and downstream of partnership operations.

Investment Thesis We rate DEP 2-Equal Weight/2-Neutral. The partnership was created to facilitate the growth of Enterprise Products (EPD). We believe DEP offers a distinctive value proposition in the Enterprise family of MLPs as this partnership is focused on investors with a higher-yield, lower-risk orientation than either EPD or its publicly traded general partner Enterprise GP Holdings (EPE). We expect DEP to be valued as a high-quality, low-risk, modest-growth MLP. Importantly, we believe that units will have a low cost call option on the possibility

22 October 2010 110 Barclays Capital | MLP Quarterly Monitor

that DEP makes accretive acquisitions, given the low cost of capital. As such, we expect performance to be lumpy, given the difficulty of gauging the magnitude and timing of such events.

Potential Catalysts / Timeline

„ October 26 – Third quarter earnings release.

„ 3Q11 – Expected completion of Haynesville Extension natural gas pipeline project.

Fundamental Drivers

„ Natural gas and natural gas liquids supply and demand.

„ Asset drop-downs from general partner.

Risk: Medium Medium risk profile is based on primary fee-based cash flow structure some commodity price exposure. DEP is principally an NGL services and natural gas pipeline company. Operations are centered on NGLs (ethane, propane, butane) as opposed to crude-based petrochemical feedstock. Therefore, the overall competitiveness of the U.S. petrochemical and refining industries drive demand for services. The relative value of NGL versus crude- based feedstock and general level of economic activity will create modest cyclicality in demand as well.

22 October 2010 111 Barclays Capital | MLP Quarterly Monitor

Eagle Rock Energy Partners, LP (EROC)

Figure 118: Eagle Rock Energy Partners, LP (EROC)

Sub Sector: Gathering and Processing

Rating: 2-Equal Weight Annualized Distribution: $0.60 Price Target: $7.00 Yield: 9.05% Current Price: $6.63 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): na Potential Upside to Target: 5.6% Dist. CAGR (Next 3 Yrs): 30.00% 52 Week High / Low: $7.42 - $4.41 Tax Deferral: 100% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $1.63 $0.10 $0.03 $0.03 $0.03 $0.15 $0.23 $0.65 Growth (YoY) 9.8% -93.9% 0.0% 0.0% 0.0% 0.0% 125.0% 188.9%

Units Outstanding (in mm) Common units 51.70 55.09 54.42 54.42 83.29 83.29 68.85 95.07 Sub-Ordinated Units 20.84 0.84 0.85 0.85 0.00 0.00 0.56 0.00

Total Distribution Receiving Units 72.54 55.93 55.27 55.27 83.29 83.29 69.42 95.07 Growth (YoY) 23% 0% 0% 0% 0% 0% 24% 37%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $87.52 ($171.31) $3.95 $28.67 $5.46 $5.39 $17.56 $24.48 Interest Expense $38.26 $41.35 $9.30 $9.16 $7.10 $7.10 $14.19 $28.24 Depreciation and Amortization $116.75 $116.26 $29.44 $28.05 $22.50 $22.50 $102.49 $90.00 Others $6.69 $180.07 ($5.89) ($36.93) ($2.38) ($1.88) ($7.31) ($3.00) Adjusted EBITDA $249.23 $188.44 $36.81 $32.09 $32.68 $33.11 $134.68 $139.72 Net Interest Expense ($38.76) ($41.35) ($9.30) ($9.16) ($7.10) ($7.10) ($32.66) ($28.24) Maintenance Capital Expenditures ($27.49) ($19.69) ($5.18) ($6.88) ($6.00) ($7.00) ($25.07) ($28.00) Others $0.00 ($1.59) ($0.42) ($0.57) $0.00 $0.00 ($0.98) $0.00 Distributable Cash flow $182.98 $125.81 $21.90 $15.47 $19.59 $19.01 $75.98 $83.48

General Partner Cut $2.35 $0.11 $0.03 $0.03 $0.00 $0.00 $0.06 $0.00 Distributable Cash Flow (LP) $180.63 $125.70 $21.87 $15.45 $19.59 $19.01 $75.92 $83.48

Distributable Cash Flow Per Unit $2.49 $2.25 $0.40 $0.28 $0.24 $0.23 $1.09 $0.88

Total Distribution Coverage 153% 2247% 1583% 1118% 941% 152% 486% 135%

Business Description Eagle Rock Energy Partners, L.P.is a growth-oriented master limited partnership engaged in two businesses: a) midstream, which includes (i) gathering, compressing, treating, processing and transporting natural gas; (ii) fractionating and transporting natural gas liquids; and (iii) marketing natural gas, condensate and NGLs; b) upstream, which includes acquiring, exploiting, developing, and producing hydrocarbons in oil and natural gas properties. Its corporate office is located in Houston, Texas.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Eagle Rock Energy Partners L.P. (EROC) 2.95x 6.06x 7.55x na na na 7.37x 9.02x 8.84x Gathering and Processing 10.22x 14.32x 11.33x 0.94x 1.27x 0.96x 11.37x 13.93x 11.45x Average MLPs 12.08x 13.35x 11.77x 1.11x 1.18x 1.04x 12.97x 14.37x 12.23x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $2.25 $1.09 $0.88 Debt / EBITDA 4.60x 3.40x 3.29x Distribution $0.10 $0.23 $0.65 EBITDA / Interest 4.56x 4.12x 4.95x Coverage (Total Units) 2247% 486% 135% Maint Cap / EBITDA 0.10x 0.19x 0.20x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 112 Barclays Capital | MLP Quarterly Monitor

Figure 119: Historical Yield Spreads

. . Eagle Rock Energy Partners L.P. (EROC) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Eagle Rock Energy Partners L.P. 1-Year Yield Spread vs. US 10-Year Treasury (EROC) vs. Alerian MLP Index 44.0% 50% 45% 40% 34.0% 35% 30% 24.0% 25% 20% 14.0% 15% 10% 5% 4.0% 0%

-6.0% -30 to 550 -610 to -30 -610 to 550 to 1130 to 550 1130 to 1710 to 1130 2290 to 1710 2870 to 2290 3450 to 2870 4030 to 3450 4610 to 4030 5190 to 4610 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-07 Apr-08 Apr-09 Apr-10 . Basis point differentials - Eagle Rock Energy Partners L.P. (EROC) Eagle Rock Energy Partners L.P. (EROC) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . vs. United States Treasury Bond (10 Y) Yield 60% 47.0% 50%

37.0% 40%

30% 27.0% 20% 17.0% 10%

7.0% 0%

-3.0% 350 to 950 to 350 -250 to 350 -250 to 950 to 1550 to 950 1550 to 2150 to 1550 2750 to 2150 3350 to 2750 3950 to 3350 4550 to 3950 5150 to 4550 5750 to 5150 Oct-06 Oct-07 Oct-08 Oct-09 Apr-07 Apr-08 Apr-09 Apr-10

Eagle Rock Energy Partners L.P. (EROC) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

155 145 135 125 115 105 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $7.00 on EROC is based on a 12 months distribution run rate of $0.65 and a target yield of 8.75%.

Investment Thesis With the global restructuring transaction successfully completed, Eagle Rock reduced its leverage ratio (3.55x from 4.5x) and improved liquidity ($178 million, from $61 million). EROC also exercised its option to acquire the GP units, simplifying the corporate structure and eliminating the IDR. EROC plans to pay out $0.60 distribution in 4Q, at the high end of the $0.40-0.60 guidance. We estimate $0.60 level of distribution will allow EROC to maintain its long term coverage goal of 1.2–1.3x. Going forward, the level of distribution increase will depend on EROC's ability to execute projects at a return above its cost of capital as well as commodity price environment. While EROC has a strong hedge position for 2010/2011, its hedge position declines gradually in the out years. Ex-hedges, EROC has the highest leverage to liquids prices among G&P MLP peers, by our estimate. EROC revised its distribution policy which will not include variable component based on commodity prices.

22 October 2010 113 Barclays Capital | MLP Quarterly Monitor

Potential Catalysts / Timeline

„ Execution of organic projects or accretive acquisitions.

Fundamental Drivers

„ Level of drilling activity supporting the gathering systems.

„ Commodity prices and production activities.

Risk: High Eagle Rock carries an above-average risk profile associated with movements in natural gas and NGL prices. A sharp decline in natural gas prices could impair production activities on its E&P assets and affect volumes on gathering systems. A drop in NGL prices would crimp processing margins, although part of its commodity risk is hedged through derivative contracts. Other risks include successfully sourcing, closing and integrating acquisitions, which is a key growth driver to its long term distribution growth.

22 October 2010 114 Barclays Capital | MLP Quarterly Monitor

El Paso Pipeline Partners, LP (EPB)

Figure 120: El Paso Pipeline Partners, LP (EPB)

Sub Sector: Natural Gas & NGL

Rating: 1-Overweight Annualized Distribution: $1.60 Price Target: $34.00 Yield: 4.85% Current Price: $32.97 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): na Potential Upside to Target: 3.1% Dist. CAGR (Next 3 Yrs): 13.95% 52 Week High / Low: $33.84 - $20.2 Tax Deferral: 80% $ Millions ,except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $1.20 $1.37 $0.38 $0.40 $0.41 $0.42 $1.61 $1.80 Growth (YoY) n/a 13.5% 16.9% 21.2% 17.1% 16.7% 17.9% 12.0%

Units Outstanding (in mm) Common units 64.13 91.80 105.63 113.70 124.30 128.76 118.10 168.73 Sub-Ordinated Units 27.70 27.70 27.70 27.70 27.70 27.70 27.70

Total Distribution Receiving Units 91.83 119.50 133.33 141.40 152.00 156.46 145.80 168.73 Growth (YoY) na 30% 18% 24% 21% 24% 22% 15%

Distributable Cash Flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $114.45 $279.50 $127.70 $98.47 $110.99 $135.36 $472.51 $554.58 Net Income Attributable to NCI ($66.00) ($38.40) ($31.40) ($32.21) ($40.80) ($142.81) ($144.83) Net Income Attributable to EPB $114.45 $213.50 $89.30 $67.07 $78.78 $94.55 $329.70 $409.75 Add: Income Tax Expense $2.40 $0.00 $0.00 $0.00 $2.40 $0.00 Add: Interest Expense $22.90 $73.70 $18.90 $31.90 $32.50 $34.63 $117.93 $178.63 Less: Affiliated Interest Income ($1.70) ($0.60) ($0.20) ($1.25) ($1.25) ($3.30) ($5.00) Add: DD&A $26.10 $67.00 $19.60 $24.30 $26.25 $26.89 $97.04 $128.51 Add: Distributions $67.87 $58.40 $17.45 $24.65 $23.28 $22.12 $87.50 $116.60 Add: Net Income Attributable to NCI $66.00 $38.40 $31.40 $32.21 $40.80 $142.81 $144.83 Less: Equity Earnings ($58.75) ($53.40) ($19.70) ($16.37) ($26.43) ($29.23) ($91.73) ($125.83) Less: CIG declared distributions to EP ($68.10) ($23.50) ($15.80) ($14.82) ($17.34) ($71.45) ($73.64) Less: SLNG declared distributions to EP ($7.40) ($18.50) ($19.97) ($24.28) ($70.15) ($84.00) Adjusted EBITDA $172.57 $355.40 $134.85 $128.45 $130.55 $146.91 $540.76 $689.85 Interest Expense ($22.90) ($71.30) ($22.60) ($31.30) ($32.50) ($34.63) ($121.03) ($178.63) Maintenance Capital ($1.30) ($25.80) ($4.00) ($3.90) ($10.01) ($13.46) ($31.37) ($47.51) Other Income ($2.20) ($17.10) ($20.60) ($4.70) ($0.40) ($0.40) ($26.10) ($2.00)

Distributable Cash Flow 146.17 241.20 87.65 88.55 87.65 98.42 362.26 461.72

General Partner Cut $1.92 $3.60 $1.60 $2.64 $3.85 $4.49 $12.61 $29.19 Distributable Cash Flow (LP) 144.25 237.60 86.05 85.90 83.79 93.93 349.65 432.52

Distributable Cash Flow Per Unit $1.57 $1.99 $0.65 $0.61 $0.55 $0.60 $2.40 $2.56

Common Distribution Coverage 187% 190% 214% 189% 164% 174% 184% 170% Total Distribution Coverage 131% 146% 170% 152% 134% 143% 149% 142%

Business Description El Paso Pipeline Partners, L.P. is a Delaware limited partnership formed by El Paso Corporation to own and operate natural gas transportation pipelines and storage assets. El Paso Corporation owns an approximate 54 percent limited partner interest and the 2 percent general partner interest in the partnership. El Paso Pipeline Partners, L.P. owns Wyoming Interstate Company, L.L.C., an interstate pipeline system serving the Rocky Mountain region; a 58 percent interest in Colorado Interstate Gas Company, which operates in the Rocky Mountain region; a 51 percent interest in Southern LNG Company, L.L.C., which owns the Elba Island LNG storage and regasification terminal near Savannah, Georgia; a 51 percent interest in El Paso Elba Express Company, L.L.C.; and a 45 percent interest in Southern Natural Gas Company. Both El Paso Elba Express Company, L.L.C. and Southern Natural Gas Company are interstate pipeline systems serving the southeastern region of the United States.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E El Paso Pipeline Partners L.P. (EPB) 16.58x 13.75x 12.86x 0.88x 0.73x 0.68x 14.96x 16.93x 13.11x Natural Gas & NGL 15.89x 15.59x 13.41x 1.43x 1.33x 1.15x 14.68x 15.70x 13.07x Average MLPs 12.08x 13.35x 11.77x 1.11x 1.18x 1.04x 12.97x 14.37x 12.23x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $1.99 $2.40 $2.56 Debt / EBITDA 3.96x 4.34x 3.69x Distribution $1.37 $1.61 $1.80 EBITDA / Interest 4.94x 4.49x 3.99x Coverage (Total Units) 146% 149% 142% Maint Cap / EBITDA 0.07x 0.06x 0.07x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 115 Barclays Capital | MLP Quarterly Monitor

Figure 121: Historical Yield Spreads

. . El Paso Pipeline Partners LP (EPB) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - El Paso Pipeline Partners LP (EPB) vs. 1-Year Yield Spread vs. US 10-Year Treasury Alerian MLP Index -2.0% 40% -2.5% 35% -3.0% 30% -3.5% 25% -4.0% 20% -4.5% 15% -5.0% 10% -5.5% 5% -6.0% 0% -6.5% -7.0% -730 to -670 to -730 -610 to -670 -550 to -610 -490 to -550 -430 to -490 -370 to -430 -310 to -370 -250 to -310 -190 to -250 -130 to -190 Jul-08 Jul-09 Jul-10 Jan-08 Jan-09 Jan-10 . Basis point differentials - El Paso Pipeline Partners LP (EPB) vs. El Paso Pipeline Partners LP (EPB) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . United States Treasury Bond (10 Y) Yield 6.0% 35% 5.0% 30% 4.0% 25% 3.0% 20% 2.0% 15% 1.0% 10% 0.0% 5% -1.0% 0% -2.0% -20 to 70 to -20 70 to 160 70 to 160 to 250 160 to 340 250 to 430 340 to 520 430 to 610 520 to 700 610 to -110 to -20 to -110 Jul-08 Jul-09 Jul-10 -200 to -110 to -200 Jan-08 Jan-09 Jan-10

El Paso Pipeline Partners LP (EPB) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

155 145 135 125 115 105 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $34 on EPB is based on a 12-month distribution run rate of $1.72 and a target yield of 5.0%. Our assumptions embed a sequence of drop-downs over the duration of our forecast. Our model has assumed the completion of six projects through 2013.

Investment Thesis Over the duration of our forecast, we conservatively estimate that EPB will be able to grow distributions at a double-digit clip, driven by a large inventory of organic growth and regular dropdowns from the GP (El Paso) whose asset base is comprised of the largest interstate pipeline network in North America and possesses highly visible, superior organic growth potential relative to most other MLPs. EPB’s asset base is regulated at the federal level (FERC) and possesses minimal exposure to commodity prices while potential gains at EP on transfers can be sheltered given the possession of $3 billion worth of NOLs at the parent. We also estimate a growing inventory of projects should replenish EBITDA dropped down to EPB and that the potential drop-down DCF housed at the GP is well over 10 times that of EPB.

22 October 2010 116 Barclays Capital | MLP Quarterly Monitor

Potential Catalysts / Timeline EPB issued 13.225 million common units in September 2010 at $31.95, with net proceeds totalling approximately $415 million. We think this offering affirms our expectation for one more drop-down transaction to take place prior to year-end. We estimate the partnership has captured 25%–30% of the parent’s pipeline EBITDA before the addition of the big projects in the current backlog such as Ruby, Gulf LNG, and TGP’s Line 300 expansion. Given the breadth and stability of the current portfolio, it remains to be seen if the GP decides to drop down portions of EPNG, which has large portions of capacity up for expiration in the near term, and TGP, which has the lowest proportion of revenues tied to capacity payments. Collectively, the two pipelines contribute approximately 40% of untapped EBITDA.

The GP has affirmed its intent to pursue two to three drop-downs per year depending on the market’s continued ability to absorb equity and with distribution payouts having crossed into the third tier in 2Q10; EP is incentivized for additional drop-downs as it goes deeper into the splits. We estimate that Tier 4 can be reached by 2011. In addition to the annual drop-downs we have assumed over 2010–14, organic opportunities across EPB’s pipeline base is high as we expect one project to be placed into service in 4Q10, four in 2011, one in 2012. Please refer to our model for a project schedule.

The subordinated units are on track to be converted into common units on January 11, 2011. Assuming no additional equity issuances for the remainder of 2010, El Paso would own 52% of the common units subsequent to the conversion.

Fundamental Drivers

„ Level of natural gas price and drilling activities behind the pipelines.

„ Ability to recontract capacity.

„ Sustainability of demand pull from high-growth markets.

„ Ability to develop and integrate expansion projects.

„ Basis differentials between natural gas markets.

„ Timing of asset drop-downs from the GP.

Risk Profile: Low Our risk profile is supported by 1) a strong GP with a large inventory of high-quality assets suitable for drop-downs; 2) minimal exposure to commodity markets with capacity payments exceeding 95% of revenues while the average life of contracts exceeds the typical three- to five-year duration evidenced in competitive or declining markets; 3) exposure to high-growth markets with an abundance of organic growth opportunities; and 4) a strong management team that has demonstrated an ability to manage construction and labor costs.

22 October 2010 117 Barclays Capital | MLP Quarterly Monitor

Enbridge Energy Partners, LP (EEP)

Figure 122: Enbridge Energy Partners, LP (EEP)

Sub Sector: Crude Oil

Rating: 2-Equal Weight Annualized Distribution: $4.11 Price Target: $58.00 Yield: 6.90% Current Price: $59.55 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 2.29% Potential Upside to Target: -2.6% Dist. CAGR (Next 3 Yrs): 2.67% 52 Week High / Low: $60.2 - $38.02 Tax Deferral: 90% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $3.92 $3.96 $1.00 $1.03 $1.03 $1.03 $4.09 $4.17 Growth (YoY) -195.8% -95.8% 4.2% 104.2% 204.2% 304.2% 404.2% 2.0%

Units Outstanding (in mm) Common units 82.9 100.6 101.2 101.2 101.6 107.1 102.8 108.8 I-units 14.2 15.8 16.7 17.0 17.3 17.7 17.2 18.5

Total Distribution Receiving Units 97.1 116.4 117.9 118.2 119.0 124.8 120.0 127.3 Growth (YoY) 19.9% 3.1% 6.1%

Distributable Cash flow Calculation 2008 2009 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E Operating Income $540.3 $613.5 $157.4 $206.7 $166.2 $180.3 $710.6 $829.4 Depreciation, Depletion & Amortization $223.4 $261.4 $67.9 $77.6 $78.4 $79.4 $303.2 $321.7 Other $2.9 $13.5 $6.1 ($14.6) ($15.0) ($15.0) ($38.5) ($53.0) Adjusted EBITDA $766.6 $888.4 $231.4 $269.7 $229.5 $244.6 $975.3 $1,098.1 Net Interest Expense ($180.4) ($231.4) ($58.8) ($69.6) ($75.2) ($76.4) ($280.0) ($316.4) Maintenance Capital Expenditures ($62.1) ($68.9) ($8.4) ($20.0) ($29.0) ($38.0) ($95.4) ($110.0) Other ($7.5) ($10.9) ($2.2) ($6.6) $0.0 $0.0 ($8.8) $0.0 Distributable Cash flow $516.6 $577.2 $162.0 $173.5 $125.4 $130.2 $591.1 $671.7

General Partner Cut ($43.7) ($59.9) ($16.6) ($16.8) ($16.8) ($17.7) ($68.0) ($78.1) Distributable Cash Flow (LP) $472.9 $517.3 $145.4 $156.7 $108.6 $112.5 $523.2 $593.6

Distributable Cash Flow Per Unit $4.87 $4.44 $1.23 $1.33 $0.91 $0.90 $4.36 $4.66

Total Distribution Coverage 124% 112% 123% 129% 89% 88% 107% 112%

Business Description Enbridge Energy Partners, L.P. owns and operates a diversified portfolio of crude oil and natural gas transportation systems in the United States. Its principal crude oil system is the largest transporter of growing oil production from western Canada. The system's deliveries to refining centers and connected carriers in the United States account for approximately 12 percent of total U.S. oil imports; while deliveries to Ontario, Canada satisfy approximately 60 percent of refinery demand in that region. The Partnership's natural gas gathering, treating, processing and transmission assets, which are principally located onshore in the active U.S. Mid-Continent and Gulf Coast area, deliver approximately 2 billion cubic feet of natural gas daily.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Enbridge Energy Partners L.P. (EEP) 13.40x 12.31x 12.68x 1.40x 1.29x 1.32x 13.29x 13.82x 13.25x Crude Oil 23.38x 24.25x 12.11x 1.39x 1.39x 1.35x 13.20x 14.07x 12.55x Average MLPs 12.08x 13.35x 11.77x 1.11x 1.18x 1.04x 12.97x 14.37x 12.23x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $4.44 $4.36 $4.66 Debt / EBITDA 4.36x 4.42x 4.35x Distribution $3.96 $4.09 $4.17 EBITDA / Interest 3.87x 3.90x 3.62x Coverage (Total Units) 112% 107% 112% Maint Cap / EBITDA 0.08x 0.09x 0.09x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 118 Barclays Capital | MLP Quarterly Monitor

Figure 123: Historical Yield Spreads

. . Enbridge Energy Partners L.P. (Cl A) (EEP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Enbridge Energy Partners L.P. (Cl A) 1-Year Yield Spread vs. US 10-Year Treasury (EEP) vs. Alerian MLP Index 4.0% 45% 3.5% 40% 3.0% 35% 2.5% 30% 2.0% 25% 1.5% 20% 1.0% 15% 0.5% 10% 0.0% 5% -0.5% 0% -1.0% 10 to 60 10 to -40 to 10 -40 to 60110 to -90 to -40 110 to 160 to 110 210 to 160 260 to 210 310 to 260 360 to 310 410 to 360 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 . Basis point differentials - Enbridge Energy Partners L.P. (Cl A) Enbridge Energy Partners L.P. (Cl A) (EEP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . (EEP) vs. United States Treasury Bond (10 Y) Yield 60% 13.0% 50% 11.0% 40%

9.0% 30%

7.0% 20% 5.0% 10% 3.0% 0% 1.0% 120 to 260 to 120 400 to 260 540 to 400 680 to 540 820 to 680 960 to 820 960 to 1100 to 960 1100 to 1240 to 1100 1380 to 1240 1520 to 1380 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10

Enbridge Energy Partners L.P. (Cl A) (EEP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our $58 price target on EEP is based on a 12-month cash distribution run rate of $4.12 and a target yield of 7.1%. Given the combined cash flow generation from its completed four- year, $5 billion organic growth program and recently closed $686 million Granite Wash gathering and processing acquisition, Enbridge Energy’s distribution growth visibility is improving. We expect 2.5% distribution CAGR over the next three years, as completed midstream oil, gas and NGL organic growth projects generate cash flow. Our estimate is at the low end of EEP’s 2%–5% distribution growth guidance through 2013.

Investment Thesis We rate EEP 2-Equal Weight/2-Neutral. While we expect EEP to post modestly below- average distribution growth versus peers, EEP offers a healthy yield. EEP’s growth prospects are supported by strategically located pipeline assets with exposure to the oil production in the Bakken and Alberta oil sands and natural gas production in the Haynesville Shale and Granite Wash. In addition, the general partner has a supply of potential midstream asset drop-downs.

22 October 2010 119 Barclays Capital | MLP Quarterly Monitor

Potential Catalysts / Timeline

„ October 28 – Third quarter earnings release.

„ 1H11 – Expected completion of 900 MMcf/d South Haynesville Shale natural gas pipeline expansion and 150 MMcf/d Anadarko natural gas processing plant projects.

„ 1Q13 – Expected completion of 145,000 bpd North Dakota Phase VII crude oil pipeline expansion.

Fundamental Drivers

„ Growth in western Canadian oil sands production, specifically Alberta Oil Sands.

„ Growth in refining demand and imports into the Midwest market.

„ Cash flows on natural gas gathering systems in Texas and Oklahoma will be driven by gas production and prices in the region.

„ Natural gas processing spread and gas prices affect gathering and processing cash flows.

Risk: Medium EEP has increased the diversification of cash flows, with the growth of the natural gas business partially reducing the vulnerability to changes in Lakehead crude oil volumes. However, natural gas gathering systems in Texas are typically more volatile than other MLP assets, such as crude oil/refined product pipelines. Higher volatility stems from the exposure to natural gas prices and production in the region. Lakehead pipeline volumes tend to be less stable than the average crude oil trunk pipeline as a result of the more volatile production profile in western Canada. The competing Keystone crude oil pipeline from TransCanada, which is expected to be fully constructed in 2013, will provide competition for EEP’s Lakehead system.

22 October 2010 120 Barclays Capital | MLP Quarterly Monitor

Energy Transfer Partners, LP (ETP)

Figure 124: Energy Transfer Partners, (ETP)

Sub Sector: Natural Gas & NGL

Rating: 1-Overweight Annualized Distribution: $3.58 Price Target: $48.00 Yield: 7.21% Current Price: $49.56 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 9.22% Potential Upside to Target: -3.1% Dist. CAGR (Next 3 Yrs): 1.64% 52 Week High / Low: $51.95 - $40.06 Tax Deferral: 80% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $3.55 $3.58 $0.89 $0.89 $0.89 $0.89 $3.58 $3.58 Growth (YoY) 11% 1% 0% 0% 0% 0% 0% 0%

Total Distribution Receiving Units 149.63 169.66 189.13 186.65 174.38 174.38 181.13 179.58 Growth (YoY) 0%0%0%0%0%0%7%-1%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Operating Income $1,117.53 $1,127.63 $344.37 $199.18 $219.05 $306.55 $1,069.15 $1,330.30

Depreciation and Amortization $262.15 $311.08 $83.28 $83.88 $81.00 $81.00 $329.15 $330.14 Others $23.35 $59.82 $20.59 $48.49 $7.00 $7.00 $83.08 $25.00 Adjusted EBITDA $1,403.04 $1,498.52 $448.23 $331.55 $307.05 $394.55 $1,481.38 $1,685.44 Net Interest Expense ($265.70) ($394.27) ($104.96) ($103.01) ($113.26) ($118.26) ($439.50) ($533.08) Maintenance Capital Expenditures ($147.00) ($102.97) ($19.64) ($24.22) ($25.00) ($25.00) ($93.86) ($95.00) Others ($0.57) $38.00 ($14.60) ($8.37) ($1.80) ($1.80) ($26.57) ($7.00) Distributable Cash flow $989.76 $1,039.28 $309.04 $195.95 $166.98 $249.49 $921.45 $1,050.36

General Partner Cut $311.26 $356.99 $99.49 $98.18 $91.73 $91.73 $381.12 $377.87 Distributable Cash Flow (LP) $678.51 $682.30 $209.55 $97.77 $75.26 $157.76 $540.33 $672.49

Distributable Cash Flow Per Unit $4.53 $4.02 $1.11 $0.52 $0.43 $0.90 $2.98 $3.74

Total Distribution Coverage 128% 100% 164% 61% 48% 101% 95% 105%

Business Description Energy Transfer Partners, L.P.is a publicly traded partnership owning and operating a diversified portfolio of energy assets. ETP has pipeline operations in Arizona, Colorado, Louisiana, New Mexico and Utah, and owns the largest intrastate pipeline system in Texas. ETP currently has natural gas operations that include approximately 17,500 miles of gathering and transportation pipelines, treating and processing assets, and three storage facilities located in Texas. ETP also is one of the three largest retail marketers of propane in the United States, serving more than one million customers across the country.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Energy Transfer Partners L.P. (ETP) 13.90x 14.67x 13.23x 1.57x 1.66x 1.49x 14.24x 16.03x 13.44x Natural Gas & NGL 15.89x 15.59x 13.41x 1.43x 1.33x 1.15x 14.68x 15.70x 13.07x Average MLPs 12.08x 13.35x 11.77x 1.11x 1.18x 1.04x 12.97x 14.37x 12.23x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $4.02 $2.98 $3.74 Debt / EBITDA 4.12x 4.69x 4.30x Distribution $3.58 $3.58 $3.58 EBITDA / Interest 3.82x 3.39x 3.16x Coverage (Total Units) 112% 83% 105% Maint Cap / EBITDA 0.07x 0.06x 0.06x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 121 Barclays Capital | MLP Quarterly Monitor

Figure 125: Historical Yield Spreads

. . Energy Transfer Partners L.P. (ETP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Energy Transfer Partners L.P. (ETP) 1-Year Yield Spread vs. US 10-Year Treasury vs. Alerian MLP Index 3.0% 30% 2.5% 25% 2.0% 1.5% 20% 1.0% 15% 0.5% 0.0% 10% -0.5% 5% -1.0% 0% -1.5% -2.0% 0 to 60 0 to -60 to 0 -60 to 60 to 120 to 60 120 to 180 to 120 240 to 180 300 to 240 360 to 300 -120 to -60 to -120 -240 to -180 to -240 -120 to -180 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 . Basis point differentials - Energy Transfer Partners L.P. (ETP) vs. Energy Transfer Partners L.P. (ETP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . United States Treasury Bond (10 Y) Yield 25% 10.0% 20% 8.0% 15% 6.0% 10%

4.0% 5%

2.0% 0%

0.0% -20 to 100 to -20 100 to 220 to 100 340 to 220 460 to 340 580 to 460 700 to 580 820 to 700 940 to 820 940 to 1060 to 940 1060 to 1180 to 1060 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10

Energy Transfer Partners L.P. (ETP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $48 on ETP is based on a 12-month distribution of $3.575 and a target yield of 7.4%.

Investment Thesis While we reduced 2011 distribution estimates, leaving it flat year over year, our view is that ETP can resume distribution growth higher than our estimates if it is able to execute larger- scale, high-return projects in Marcellus/Eagle Ford, leveraging its presence in the fast- growing shale play. ETP is the largest Texas intrastate pipeline operator with pipeline and processing capacity (third party) in the Eagle Ford shale.

The reduction of 2011 distribution estimates was driven by continued challenges in its intrastate segment, which accounts for 55% of its total business. The intrastate EBITDA declined 14% year over year in 2Q driven by a 15% reduction in volume and narrowing of East/West Texas basis, which reached $0.12 compared with $0.45 one year ago. The segment is also long gas on its fuel retention margins and continued reduction in gas price forecast works as a negative headwind. On the positive note, ETP will see the benefits of two large interstate pipeline projects in 2011 including FEP and Tiger, which have cash flow backed by 10-year shipper agreements. Importantly the projects should yield strong return given ETP’s ability to reduce construction cost. We forecast 5% distribution growth longer

22 October 2010 122 Barclays Capital | MLP Quarterly Monitor

term supported by organic projects. Execution of accretive acquisitions could lead to potential upside to our estimates.

Potential Catalysts / Timeline

„ Increase in natural gas price and Texas market basis differentials.

„ Announcement of large projects with attractive returns.

„ Accretive acquisitions.

Fundamental Drivers

„ Volatility and spread in the basis differential between Waha and Katy hub natural gas prices, which affects cash flows on the Oasis pipeline.

„ Natural gas prices and drilling activities in Texas.

„ Integrating recent acquisitions and organic growth projects (opportunity to reduce operating cost structure).

„ Cold weather, which drives propane gallon sales growth.

„ Ability to pass along higher propane prices to customers and procurement costs, which affects gross profit and EBITDA per retail gallon margins.

Risk: Medium Our medium risk rating on ETP is related to various factors in its interstate and propane business. As aforementioned, ETP’s intrastate business has exposure to Texas gas basis and absolutely the level of gas price. Both factors have worked as a negative headwind for the company leading to year-over-year EBITDA declines despite addition of new projects. Weather conditions have a significant effect on propane demand for heating and agricultural purposes. Expansive scope of operations partially dampens regional weather risks, but the propane business is still vulnerable to warm weather and is more volatile than other midstream assets. With the completion of new interstate pipelines (FEP and Tiger), we believe ETP’s risk profile will reduce given the larger contribution of EBITDA from stable fee- based business with long-term contracts.

22 October 2010 123 Barclays Capital | MLP Quarterly Monitor

Exterran Partners, LP (EXLP)

Figure 126: Exterran Partners, LP (EXLP)

Sub Sector: Gathering and Processing

Rating: 2-Equal Weight Annualized Distribution: $1.85 Price Target: $27.00 Yield: 7.96% Current Price: $23.25 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): na Potential Upside to Target: 16.1% Dist. CAGR (Next 3 Yrs): 2.98% 52 Week High / Low: $26.62 - $15.56 Tax Deferral: 100% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $1.78 $1.85 $0.46 $0.46 $0.46 $0.46 $1.85 $1.92 Growth (YoY) 4.2% 0.0% 4.0%

Units Outstanding (in mm) Common units 11.36 13.48 17.55 17.56 25.94 25.94 21.75 29.97 Sub-Ordinated Units 6.336.336.336.336.336.336.336.33

Total Distribution Receiving Units 17.69 19.80 23.88 23.89 32.26 32.26 28.07 36.29 Growth (YoY) na 11.9% 20.6% 0.0% 35.1% 0.0% -13.0% 29.3%

Distributable Cash Flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Operating Income $48.15 $35.63 $7.29 $4.55 $13.21 $16.74 $41.80 $77.02 Depreciation and Amortization $27.05 $36.45 $11.88 $11.76 $12.00 $12.00 $47.64 $47.64 Others $10.80 $8.77 $3.22 $6.63 $1.70 $1.70 $13.25 $6.80

Adjusted EBITDA $86.01 $80.85 $22.38 $22.95 $26.91 $30.44 $102.69 $131.46 Net Interest Expense $18.04 $20.30 $5.69 $5.72 $5.38 $5.38 $22.18 $25.83 Maintenance Capital Expenditures $10.52 $12.59 $2.15 $4.37 $5.00 $5.50 $17.01 $17.01 Others $0.43 ($1.60) $0.42 $0.34 $0.00 $0.00 $0.76 $0.00 Distributable Cash flow $57.02 $49.56 $14.13 $12.52 $16.53 $19.56 $62.73 $88.62

General Partner Cut $1.15 $2.11 $0.54 $0.54 $0.54 $0.73 $2.36 $4.19 Distributable Cash Flow (LP) $55.87 $47.44 $13.58 $11.97 $15.99 $18.83 $60.37 $84.43

Distributable Cash Flow Per Unit $3.16 $2.40 $0.57 $0.50 $0.50 $0.58 $2.15 $2.33

Total Distribution Coverage 177% 134% 124% 110% 143% 125% 124% 120%

Business Description Exterran Partners, L.P. provides natural gas compression services in the United States. The company offers contract operations services, which include designing, sourcing, owning, installing, operating, servicing, repairing, and maintaining equipment for oil and gas production, processing, and transportation applications. It serves oil and natural gas industry, including natural gas producers, processors, gatherers, and transporters. The company was formerly known as Universal Compression Partners, L.P. and changed its name to Exterran Partners, L.P. as a result of its merger with Hanover Compressor Company and Universal Compression Holdings, Inc. in August 2007. Exterran Partners, L.P. is based in Houston, Texas.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Exterran Partners L.P. (EXLP) 9.70x 10.84x 9.99x 0.89x 0.99x 0.91x 11.57x 15.92x 12.01x Gathering and Processing 10.22x 14.32x 11.33x 0.94x 1.27x 0.96x 11.37x 13.93x 11.45x Average MLPs 12.08x 13.35x 11.77x 1.11x 1.18x 1.04x 12.97x 14.37x 12.23x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $2.40 $2.15 $2.33 Debt / EBITDA 4.79x 4.19x 3.27x Distribution $1.85 $1.85 $1.92 EBITDA / Interest 3.98x 4.63x 5.09x Coverage (Total Units) 130% 116% 121% Maint Cap / EBITDA 0.16x 0.17x 0.13x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 124 Barclays Capital | MLP Quarterly Monitor

Figure 127: Historical Yield Spreads

. . Exterran Partners L.P. (EXLP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Exterran Partners L.P. (EXLP) vs. 1-Year Yield Spread vs. US 10-Year Treasury Alerian MLP Index 35% 7.0% 30% 5.0% 25% 20% 3.0% 15% 1.0% 10% 5% -1.0% 0%

-3.0% -50 to 60 to -50 60 to 170 to 60 170 to 280 to 170 390 to 280 500 to 390 610 to 500 720 to 610 830 to 720 -160 to -50 to -160 -270 to -160 to -270 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-07 Apr-08 Apr-09 Apr-10 . Basis point differentials - Exterran Partners L.P. (EXLP) vs. United Exterran Partners L.P. (EXLP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . States Treasury Bond (10 Y) Yield 18.0% 30% 16.0% 25% 14.0% 12.0% 20% 10.0% 15% 8.0% 10% 6.0% 4.0% 5% 2.0% 0% 0.0% -2.0% -10 to 210 -10 to 210 to 430 to 210 650 to 430 870 to 650 -230 to -10 870 to 1090 to 870 1090 to 1310 to 1090 1530 to 1310 1750 to 1530 1970 to 1750 Oct-06 Oct-07 Oct-08 Oct-09 Apr-07 Apr-08 Apr-09 Apr-10

Exterran Partners L.P. (EXLP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 90 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our $27 price target on EXLP is based on a 12-month cash distribution run-rate of $1.92 and a target yield of 7%. Given the abundant supply of acquisition opportunities with the support of a general partner possessing a significant amount of assets that could be placed into a MLP, we believe Exterran has a substantial opportunity set to grow the distribution payment over the long term.

Investment Thesis We expect EXLP to continue to face pressures on its compression equipment utilization and pricing in the near term, but the recently announced acquisition by the parent should improve the balance sheet and support 4% distribution growth in 2011, in our view. Based on a $200 million per year asset drop-down estimate by the parent EXH, we believe EXLP can grow distribution 5% in 2012 and 2013.

Potential Catalysts / Timeline

„ Early November – Third quarter earnings release.

Fundamental Drivers

„ Level of drilling activities and consumption rates.

22 October 2010 125 Barclays Capital | MLP Quarterly Monitor

„ Commodity prices and production activities.

„ Ability to grow customer base with the support of acquisitions.

„ Integrating acquisitions and securing additional services contracts.

„ Consistent drop-downs to provide sustainable growth.

Risk: Medium In our view, there are three primary risks, including: 1) severe drop in natural gas prices reducing drilling activities or light consumption rates, which would impair demand for natural gas supplies; 2) integrating acquisitions and securing additional services contracts; and 3) producers or pipeline transporters consolidating the amount of compressor assets in the field to reduce costs. In our view, all three risks are dampened by the support of the partnership’s synergistic relationship with the sponsor, which could mitigate a temporary drop in demand for compressors, with the ability to make accretive acquisitions.

22 October 2010 126 Barclays Capital | MLP Quarterly Monitor

Ferrellgas Partners, LP (FGP)

Figure 128: Ferrellgas Partners, LP (FGP)

Sub Sector: Propane

Rating: 3-Underweight Annualized Distribution: $2.00 Price Target: $24.00 Yield: 7.72% Current Price: $25.90 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): na Potential Upside to Target: -7.3% Dist. CAGR (Next 3 Yrs): na 52 Week High / Low: $26.8 - $19.05 Tax Deferral: 98% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $2.00 $2.00 $0.50 $0.50 $0.50 $0.50 $2.00 $2.00 Growth (YoY) 0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%

Units Outstanding (in mm) Total Common Units 63.0 65.5 68.5 69.5 69.5 69.5 68.2 68.2 Senior Common Units 2.72.72.72.72.72.72.72.7 General Partner Units 0.80.80.70.70.70.70.80.8 Total Distribution Receiving Units 66.5 69.1 71.9 72.9 72.9 72.9 71.7 71.7 Growth (YoY) na3.9%4.2%1.4%0.0%0.0%-1.7%0.0%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $24.69 $52.57 ($15.56) $77.01 $28.86 ($40.50) $49.82 $73.27 Interest Expense $86.71 $89.52 $22.70 $26.22 $25.93 $26.44 $101.28 $108.45 Depreciation and Amortization $85.52 $82.49 $20.53 $20.65 $20.85 $20.47 $82.49 $83.60 Others $23.96 $26.50 $5.61 $6.18 $12.51 $8.59 $32.90 $19.00 Adjusted EBITDA $220.89 $251.09 $33.28 $130.05 $88.15 $15.00 $266.49 $284.32 Net Interest Expense $85.67 $88.92 $21.32 $25.36 $26.42 $21.81 $94.91 $109.45 Maintenance Capital Expenditures $18.50 $21.77 $10.11 $1.30 $4.17 $4.39 $19.97 $22.00 Others ($1.69) ($7.33) ($1.93) ($0.90) ($0.83) ($4.02) ($7.67) $0.00 Distributable Cash flow $118.40 $147.73 $3.77 $104.30 $58.38 ($7.18) $159.28 $152.87

General Partner Cut $2.54 $2.65 $0.69 $0.70 $0.70 $0.70 $2.80 $2.83 Distributable Cash Flow (LP) $115.85 $145.08 $3.09 $103.60 $57.68 ($7.89) $156.48 $150.04

Distributable Cash Flow Per Unit $1.74 $2.10 $0.04 $1.42 $0.79 ($0.11) $2.18 $2.09

Total Distribution Coverage 87% 111% 9% 298% 166% -23% 113% 108%

Business Description Ferrellgas Partners, L.P. engages in the distribution and sale of propane and related equipment primarily in the United States. It transports propane purchased from third parties to propane distribution locations, and then to tanks on customers' premises or to portable propane tanks delivered to nationwide and local retailers. The company conducts its portable tank exchange operations under the brand name Blue Rhino through a network of independent and partnership-owned distribution outlets. Its propane is used for various applications, including space heating, water heating, and cooking in the residential and industrial/commercial markets; for outdoor cooking using gas grills in the portable tank exchange market; for crop drying, space heating, irrigation, and weed control in the agricultural market; and as an engine fuel. In addition, the company involves in wholesale marketing of propane appliances; the sale of refined fuels; and provides common carrier services.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Ferrellgas Partners L.P. (FGP) 12.33x 12.74x 12.58x 1.60x 1.65x 1.63x 11.04x 12.02x 11.58x Propane 11.55x 12.55x 12.25x 1.17x 1.27x 1.25x 10.55x 13.08x 11.15x Average MLPs 12.08x 13.35x 11.77x 1.11x 1.18x 1.04x 12.97x 14.37x 12.23x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $2.10 $2.18 $2.09 Debt / EBITDA 4.02x 4.12x 4.07x Distribution $2.00 $2.00 $2.00 EBITDA / Interest 2.82x 2.79x 2.81x Coverage (Total Units) 111% 113% 108% Maint Cap / EBITDA 0.09x 0.09x 0.09x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 127 Barclays Capital | MLP Quarterly Monitor

Figure 129: Historical Yield Spreads

. . Ferrellgas Partners L.P. (FGP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Ferrellgas Partners L.P. (FGP) vs. 1-Year Yield Spread vs. US 10-Year Treasury Alerian MLP Index 7.0% 30%

6.0% 25%

5.0% 20% 15% 4.0% 10% 3.0% 5% 2.0% 0% 1.0% 60120 to 120 to 180 to 120 240 to 180 300 to 240 360 to 300 420 to 360 480 to 420 540 to 480 600 to 540 660 to 600 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 . Basis point differentials - Ferrellgas Partners L.P. (FGP) vs. United Ferrellgas Partners L.P. (FGP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . States Treasury Bond (10 Y) Yield 15.0% 60%

13.0% 50% 40% 11.0% 30% 9.0% 20%

7.0% 10% 5.0% 0%

3.0% 300 to 430 to 300 560 to 430 690 to 560 820 to 690 950 to 820 950 to 1080 to 950 1080 to 1210 to 1080 1340 to 1210 1470 to 1340 1600 to 1470 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10

Ferrellgas Partners L.P. (FGP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our $24 price target on FGP is based on a 12-month cash distribution run-rate of $2.00 and a target yield of 8.25%. Given limited organic growth opportunities, our price target does not assume any distribution growth given that management has yet to bump the distribution payment since the partnership’s inception. We note that Ferrellgas concluded FY10 with a distribution coverage ratio of 1.1x and we expect coverage in FY11 to be 1.1x. While management has yet to provide any encouraging signs of an increase in its quarterly distribution payment, it has expressed interest in pursuing growth opportunities through acquisitions. FGP will need to achieve at least a coverage ratio of 1.2x before considering any distribution increase.

Investment Thesis We believe the partnership will lag the sector as investors gravitate toward growth MLPs. However, with the support of improvements in FGP’s business model, we believe FGP could deliver an attractive return with the support of a healthy yield at a materially lower risk profile relative to comparable yield investments. In the longer term, growth opportunities should improve with potential market share gains and contributions from the Blue Rhino segment lessening seasonality of operations.

22 October 2010 128 Barclays Capital | MLP Quarterly Monitor

Potential Catalysts / Timeline

„ Early December – First quarter earnings release.

„ Growth and expansion of the Blue Rhino segment..

Fundamental Drivers

„ Cold weather drives retail gallon sales growth.

„ Gross profit and EBITDA per retail gallon margins are affected by propane prices and procurement costs.

„ Contributions from the renaissance technology program.

„ Dampened seasonality effects due to strong sales growth within the Blue Rhino segment.

Risk: Medium In general, weather conditions have a significant effect on propane demand for heating and agricultural purposes. As such, propane partnerships tend to be more risky than pipelines, given the seasonality of operations and vulnerability to warm temperatures in the winter. The Blue Rhino segment reduces FGP’s risk profile, given that the assets partially dampen the seasonality of operations and diversify cash flows. Contributions from Blue Rhino should dampen the seasonality of cash flows, as the bulk of its earnings are generated from products that are utilized more extensively in warm weather, such as barbeque grills, patio heaters, and mosquito elimination devices.

22 October 2010 129 Barclays Capital | MLP Quarterly Monitor

Global Partners, LP (GLP)

Figure 130: Global Partners, LP (GLP)

Sub Sector: Refined Products

Rating: 2-Equal Weight Annualized Distribution: $1.95 Price Target: $24.00 Yield: 7.69% Current Price: $25.37 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 3.43% Potential Upside to Target: -5.4% Dist. CAGR (Next 3 Yrs): 2.02% 52 Week High / Low: $27.4 - $18 Tax Deferral: 70% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $1.95 $1.95 $0.49 $0.49 $0.49 $0.50 $1.96 $2.02 Growth (YoY) 2.4%0.0%0.0%0.0%0.0%2.1%0.5%3.1%

Units Outstanding (in mm) Common units 7.4 7.6 8.2 11.5 11.5 13.5 11.2 21.2 Sub-Ordinated Units 5.6 5.6 5.6 5.6 5.6 5.6 5.6 0.0

Total Distribution Receiving Units 13.1 13.3 13.8 17.2 17.2 19.2 16.8 21.2 Growth (YoY) 5.1%1.6%0.0%0.0%0.0%0.0%-12.2%26.0%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $21.1 $34.1 $15.0 ($1.1) ($2.0) $15.3 $27.2 $52.7 Depreciation, Depletion & Amortization $15.1 $15.9 $4.0 $4.5 $4.0 $4.0 $16.5 $17.3 Interest Expense & OtherOther $22.0 $16.6 $4.5 $4.4 $5.0 $6.8 $20.7 $28.8 Adjusted EBITDA $58.1 $66.7 $23.5 $7.8 $6.9 $26.0 $64.3 $98.8 Interest Expense ($20.8) ($15.2) ($4.1) ($4.4) ($4.9) ($6.4) ($19.8) ($26.8) Maintenance Capital Expenditures ($2.1) ($4.6) ($0.5) ($0.6) ($1.3) ($1.6) ($4.0) ($10.0) Other ($1.2) ($1.4) ($0.4) $0.0 ($0.1) ($0.4) ($0.9) $0.0 Distributable Cash flow $34.1 $45.4 $18.6 $2.9 $0.6 $17.6 $39.7 $60.0

General Partner Cut ($0.6) ($0.6) ($0.2) ($0.2) ($0.2) ($0.2) ($0.8) ($1.3) Distributable Cash Flow (LP) $33.4 $44.8 $18.4 $2.7 $0.4 $17.4 $38.8 $58.7

Distributable Cash Flow Per Unit $2.56 $3.37 $1.33 $0.16 $0.02 $0.91 $2.31 $2.77

Total Distribution Coverage 131% 173% 273% 32% 5% 182% 118% 137%

Business Description Global Partners LP is a publicly traded master limited partnership based in Waltham, Massachusetts, owns, controls or has access to one of the largest terminal networks of refined petroleum products in the Northeast. The Partnership is one of the largest wholesale distributors of gasoline, distillates (such as home heating oil, diesel and kerosene) and residual oil to wholesalers, retailers and commercial customers in the New England states and New York. In addition, the Partnership owns and supplies fuel to 190 Mobil branded retail gas stations in New England, and also supplies Mobil branded fuel to 31 independently-owned stations.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Global Partners LP (GLP) 7.52x 10.99x 9.17x 0.78x 1.13x 0.94x 11.54x 17.39x 11.83x Refined Products 13.04x 14.03x 12.69x 1.13x 1.22x 1.10x 14.53x 16.40x 14.08x Average MLPs 12.08x 13.35x 11.77x 1.11x 1.18x 1.04x 12.97x 14.37x 12.23x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $3.37 $2.31 $2.77 Debt / EBITDA 8.01x 9.31x 6.16x Distribution $1.95 $1.96 $2.02 EBITDA / Interest 4.39x 3.25x 3.69x Coverage (Total Units) 173% 118% 137% Maint Cap / EBITDA 0.07x 0.06x 0.10x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 130 Barclays Capital | MLP Quarterly Monitor

Figure 131: Historical Yield Spreads

. . Global Partners LP (GLP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Global Partners LP (GLP) vs. Alerian 1-Year Yield Spread vs. US 10-Year Treasury MLP Index 40% 15.0% 35% 13.0% 30% 11.0% 25% 9.0% 20% 7.0% 15% 5.0% 10% 5% 3.0% 0% 1.0% -1.0% 80 to 260 -100 to 80 -100 to 260 to 440 440 to 620 620 to 800 800 to 980 980 to 1160 to 980 1160 to 1340 to 1160 1520 to 1340 1700 to 1520 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 . Basis point differentials - Global Partners LP (GLP) vs. United Global Partners LP (GLP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . States Treasury Bond (10 Y) Yield 45% 25.0% 40% 35% 20.0% 30% 25% 15.0% 20% 15% 10.0% 10% 5% 5.0% 0%

0.0% -30 to 250 to -30 250 to 530 to 250 810 to 530 810 to 1090 to 810 1090 to 1370 to 1090 1650 to 1370 1930 to 1650 2210 to 1930 2490 to 2210 2770 to 2490 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10

Global Partners LP (GLP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 130 120 110 100 90 80 70 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our $24 price target on GLP is based on a 12-month cash distribution run rate of $2.03 and a target yield of 8.5%. We are assuming no distribution increases until 4Q10 as Global Partners enters its seasonally strong winter season and integrates its recently closed acquisition of 190 retail gas stations in New England from ExxonMobil. Our 8.5% target yield reflects GLP’s above-average risk profile relative to refined product peers due to cash flow seasonality, inventory financing exposure and small size.

Investment Thesis Over the long run, we estimate GLP can grow its distribution at a 2%–3% CAGR while maintaining a conservative distribution coverage ratio. We believe GLP should not be viewed as traditional propane MLP based on a stronger growth profile and better stability in cash flows. Although GLP does have an above-average risk profile related to weather risks, we believe the partnership’s risk profile is lower than traditional propane MLPs due to its more diverse product mix of non-weather–related operations (such as motor gasoline and bunker fuel) and usage of fixed price forward contracts. On a longer-term basis, we believe management will continue to build non-weather–related businesses to further dampen the seasonality of operations. Investors have the opportunity to invest in the early stages of developing growth MLP, with an interesting call option.

22 October 2010 131 Barclays Capital | MLP Quarterly Monitor

Potential Catalysts / Timeline

„ November – Third quarter earnings release.

Fundamental Drivers

„ Weather affects demand for heating products.

„ Gasoline demand.

„ Ability to re-contract leases at storage systems and manage margins.

„ Acquisitions will be required to grow the distribution given limited organic growth opportunities.

Risk: Medium/High Our medium/high risk rating is associated with weather-related risks impairing volumes. The three primary risks include: 1) warm weather conditions that could have a negative impact on cash flows; 2) re-contracting leases at storage systems; 3) exposure to commodity and credit risks. We estimate 50% of gross profits are subject to weather risks. GLP has seasonal cash flows, with higher earnings in 1Q and 4Q heating season and lower earnings in 2Q and 3Q.

22 October 2010 132 Barclays Capital | MLP Quarterly Monitor

Holly Energy Partners, LP (HEP)

Figure 132: Holly Energy Partners, LP (HEP)

Sub Sector: Refined Products

Rating: 2-Equal Weight Annualized Distribution: $3.30 Price Target: $48.00 Yield: 6.55% Current Price: $50.35 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 6.24% Potential Upside to Target: -4.7% Dist. CAGR (Next 3 Yrs): 6.04% 52 Week High / Low: $53.74 - $35.21 Tax Deferral: 80% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $3.00 $3.16 $0.82 $0.83 $0.84 $0.85 $3.32 $3.49 Growth (YoY) 5.82% 5.3% 5.2% 5.1% 5.0% 5.0% 5.1% 5.0%

Units Outstanding (in mm) Common units 8.4 10.3 21.1 22.1 22.1 22.1 21.8 23.3 Sub-Ordinated Units 7.9 7.9 0.9 0.0 0.0 0.0 0.2 0.0

Total Distribution Receiving Units 16.3 18.3 22.1 22.1 22.1 22.1 22.1 23.3 Growth (YoY) 0.0% 12.1% 35.2% 24.1% 19.2% 8.1% 20.9% 5.7%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Operating Income $47.6 $73.6 $17.9 $22.5 $23.5 $24.0 $87.9 $113.3 Depreciation, Depletion & Amortization $22.9 $27.4 $7.2 $7.6 $7.6 $7.7 $30.1 $32.6 Other ($0.2) ($0.3) $0.5 $0.5 $0.4 $0.5 $1.9 $2.0 Adjusted EBITDA $70.2 $100.7 $25.5 $30.6 $31.5 $32.2 $119.9 $147.9 Net Interest Expense ($21.5) ($21.5) ($7.5) ($9.5) ($8.2) ($8.8) ($34.0) ($39.6) Maintenance Capital Expenditures ($3.1) ($3.6) ($0.7) ($1.3) ($1.5) ($1.5) ($5.0) ($5.6) Other $14.8 ($3.6) $2.9 $2.9 $1.0 $1.0 $7.7 $0.0 Distributable Cash flow $60.4 $72.0 $20.2 $22.7 $22.9 $22.9 $88.6 $102.7

General Partner Cut ($4.5) ($8.1) ($2.9) ($3.1) ($3.3) ($3.6) ($12.9) ($17.5) Distributable Cash Flow (LP) $55.8 $63.9 $17.3 $19.6 $19.5 $19.4 $75.7 $85.2

Distributable Cash Flow Per Unit $3.43 $3.50 $0.78 $0.89 $0.88 $0.88 $3.43 $3.65

Total Distribution Coverage 114% 111% 96% 107% 106% 104% 103% 105%

Business Description Holly Energy Partners, L.P. provides petroleum product transportation and terminal services to the petroleum industry, including Holly Corporation, which owns a 34% interest in the Partnership. The Partnership owns and operates product pipelines and terminals primarily in Texas, New Mexico, Oklahoma, Arizona, Washington, Idaho and Utah.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Holly Energy Partners L.P. (HEP) 14.07x 13.55x 11.76x 1.12x 1.08x 0.93x 11.99x 14.94x 12.48x Refined Products 13.05x 14.05x 12.70x 1.13x 1.22x 1.10x 14.53x 16.41x 14.08x Average MLPs 12.10x 13.38x 11.79x 1.11x 1.18x 1.04x 12.97x 14.39x 12.25x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $3.50 $3.43 $3.65 Debt / EBITDA 4.40x 4.39x 3.72x Distribution $3.16 $3.32 $3.49 EBITDA / Interest 4.61x 3.93x 4.30x Coverage (Total Units) 111% 103% 105% Maint Cap / EBITDA 0.04x 0.04x 0.03x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 133 Barclays Capital | MLP Quarterly Monitor

Figure 133: Historical Yield Spreads

. . Holly Energy Partners L.P. (HEP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Holly Energy Partners L.P. (HEP) vs. 1-Year Yield Spread vs. US 10-Year Treasury Alerian MLP Index 5.0% 40% 4.0% 35% 30% 3.0% 25% 2.0% 20% 15% 1.0% 10% 0.0% 5% -1.0% 0% -2.0% 1080 to -60 to 10 to -60 80 to 150 to 80 150 to 220 to 150 290 to 220 360 to 290 430 to 360 500 to 430 -130 to -60 to -130 -200 to -130 to -200 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 . Basis point differentials - Holly Energy Partners L.P. (HEP) vs. Holly Energy Partners L.P. (HEP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . United States Treasury Bond (10 Y) Yield 45% 14.0% 40% 12.0% 35% 30% 10.0% 25% 8.0% 20% 15% 6.0% 10% 4.0% 5% 2.0% 0% 0.0% -10 to 160 to -10 160 to 330 to 160 500 to 330 670 to 500 840 to 670 840 to 1010 to 840 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 1010 to 1180 to 1010 1350 to 1180 1520 to 1350 1690 to 1520 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

Holly Energy Partners L.P. (HEP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 90 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our $48 price target on HEP is based on a 12-month cash distribution run rate of $3.46 and a target yield of 7.2%. Holly Energy’s distribution growth prospects remain fairly healthy with the support of accretion contributed by organic growth projects and acquisitions. The next potential asset drop-down is the $240 million Salt Lake City-Las Vegas refined product pipeline.

Investment Thesis We rate HEP 2-Equal Weight/2-Neutral. We believe the partnership’s value proposition is underpinned by a solid yield and healthy distribution growth rate. Given the high-quality asset base (we view refined product assets to be the highest quality, in terms of stability, in the sector), we believe HEP could continue to trade in line with the pipeline sector. We believe there is a likely call option providing potential upside above the indicated value proposition, given our view that management remains committed to growing the partnership. In addition, HEP does not need a significant amount of capital to inject a catalyst, improving the visibility into growth prospects given its relatively small cash flow base, low cost of capital and few units outstanding. However, turbulent capital markets would be a headwind for HEP’s growth prospects.

22 October 2010 134 Barclays Capital | MLP Quarterly Monitor

Potential Catalysts / Timeline

„ October 28 – Third quarter earnings release.

„ 1H11 – Expected in-service date of UNEV refined product pipeline from Salt Lake City to Las Vegas.

Fundamental Drivers

„ Production at the Navajo, Woods Cross, Big Springs and Tulsa refineries.

„ Refined product consumption rates in the Southwest and Midcontinent region.

„ Progress on completing Salt Lake City-Las Vegas pipeline and terminal project.

„ Ability to sustain a low operating cost structure.

Risk: Low Stable cash flows are underpinned by a high-quality asset base that serves growing markets and contractual revenue commitments with large customers. The partnership encounters minimal direct competition as a result of contractual commitments and physical integration of assets with served refineries (Holly Corporation and Alon). Cash flows are secured by a 15-year Pipeline and Terminal agreement with the GP. Adequate liquidity, a strong management team and healthy distribution coverage ratio further support the low risk profile.

22 October 2010 135 Barclays Capital | MLP Quarterly Monitor

Inergy, LP (NRGY)

Figure 134: Inergy, LP (NRGY)

Sub Sector: Propane

Rating: 1-Overweight Annualized Distribution: $2.82 Price Target: $45.00 Yield: 7.05% Current Price: $40.00 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 6.75% Potential Upside to Target: 12.5% Dist. CAGR (Next 3 Yrs): 6.18% 52 Week High / Low: $43.95 - $30.31 Tax Deferral: 80% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10E 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $2.48 $2.64 $0.69 $0.70 $0.71 $0.71 $2.79 $2.92 Growth (YoY) 6.9%6.5%6.2%6.1%6.0%4.4%5.7%4.7%

Units Outstanding (in mm) Common units 47.88 53.74 59.89 64.25 65.88 68.55 64.64 113.67 Sub-Ordinated Units 0.000.001.002.003.004.005.000.00

Total Distribution Receiving Units 47.88 53.74 60.89 66.25 68.88 72.55 69.64 113.67 Growth (YoY) na 12.2% 13.3% 8.8% 4.0% 5.3% -4.0% 63.2%

Distributable Cash Flow Calculation 2008 2009 1Q10 2Q10E 3Q10E 4Q10E 2010E 2011E Operating Income $131.20 $173.10 $67.60 $111.10 ($13.00) ($1.76) $163.94 $310.71 Depreciation and Amortization $98.00 $115.80 $37.10 $40.10 $40.50 $40.50 $158.20 $168.00 Other $9.80 $7.90 $1.60 $3.80 $6.00 $5.50 $16.90 $0.00 Adjusted EBITDA $239.00 $296.80 $106.30 $155.00 $33.50 $44.24 $339.04 $478.71

Net Interest Expense $59.70 $66.37 $20.00 $21.60 $21.70 $17.71 $81.01 $114.88 Maintenance Capital Expenditures $5.40 $8.03 $2.30 $1.80 $3.00 $1.00 $8.10 $9.30 Others ($0.40) $0.24 ($0.40) ($0.30) ($0.80) ($0.50) ($0.50) ($1.00) Distributable Cash flow $174.30 $222.16 $84.40 $131.90 $9.60 $26.03 $250.43 $355.53

General Partner Cut $36.40 $48.10 $16.60 $17.60 $17.30 $14.89 $66.39 $0.00 Distributable Cash Flow (LP) $137.90 $174.06 $67.80 $114.30 ($7.70) $11.13 $184.03 $355.53

Distributable Cash Flow Per Unit $2.75 $3.23 $1.15 $1.78 ($0.12) $0.12 $2.84 $2.96

Total Distribution Coverage 111% 122% 168% 257% -17% 16% 102% 101%

Business Description Inergy, L.P. operations include the retail marketing, sale, and distribution of propane to residential, commercial, industrial, and agricultural customers. Today, Inergy serves nearly 800,000 retail customers from over 300 customer service centers throughout the United States. The Company also operates a natural gas storage business and a supply logistics, transportation, and wholesale marketing business that serves independent dealers and multi-state marketers in the United States and Canada.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Inergy L.P. (NRGY) 12.38x 14.08x 12.79x 0.94x 1.06x 0.97x 12.65x 16.00x 8.84x Propane 11.58x 12.58x 12.28x 1.18x 1.28x 1.25x 10.55x 13.11x 11.18x Average MLPs 12.13x 13.40x 11.82x 1.12x 1.19x 1.05x 12.97x 14.41x 12.26x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $3.23 $2.84 $2.96 Debt / EBITDA 3.68x 3.02x 3.44x Distribution $2.64 $2.79 $2.92 EBITDA / Interest 4.47x 4.18x 4.33x Coverage (Total Units) 122% 102% 101% Maint Cap / EBITDA 0.03x 0.02x 0.02x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 136 Barclays Capital | MLP Quarterly Monitor

Figure 135: Historical Yield Spreads

. . Inergy L.P. (NRGY) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Inergy L.P. (NRGY) vs. Alerian MLP 1-Year Yield Spread vs. US 10-Year Treasury Index 5.0% 45% 4.0% 40% 35% 3.0% 30% 25% 2.0% 20% 1.0% 15% 10% 0.0% 5% -1.0% 0% -2.0% -50 to 30 to -50 30 to 110 to 30 110 to 190 to 110 270 to 190 350 to 270 430 to 350 510 to 430 590 to 510 -130 to -50 to -130 -210 to -130 to -210 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 . Basis point differentials - Inergy L.P. (NRGY) vs. United States Inergy L.P. (NRGY) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . Treasury Bond (10 Y) Yield 16.0% 50% 45% 14.0% 40% 12.0% 35% 30% 10.0% 25% 8.0% 20% 15% 6.0% 10% 4.0% 5% 0% 2.0% 0.0% 0 to 170 0 to 170 to 340 to 170 510 to 340 680 to 510 850 to 680 850 to 1020 to 850 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 1020 to 1190 to 1020 1360 to 1190 1530 to 1360 1700 to 1530 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

Inergy L.P. (NRGY) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

145 140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our $45 price target on NRGY is based on a 12-month cash distribution run-rate of $3 and a target yield of 6.65%.

Investment Thesis We believe Inergy will be able to sustain solid distributable cash flow growth supported by its strong track record of growth through acquisitions and organic growth projects and cash flow diversification, balancing the weather-sensitive propane business with stable cash flows from the natural gas storage business. The pending LP-GP merger appears favorable for NRGY by lowering its cost of equity capital and enhancing distribution growth prospects. Also, the recent purchase of Tres Palacios gas storage will double NRGY’s position in the storage business increasing working gas capacity from 39.7 bcf to 78.1 bcf. The pro forma expectation is that storage will represent 50% of EBITDA in FY12.

Potential Catalysts / Timeline

„ Early November – Fourth quarter earnings release.

„ November 2 – NRGP unit holder vote on LP-GP merger

22 October 2010 137 Barclays Capital | MLP Quarterly Monitor

„ April 2011 – Expected in-service date of Finger Lakes LPG storage expansion project at US Salt.

„ Spring 2011 and Fall 2011 – The North-South project and Marc I Hub Line located in the Marcellus shale is expected to be online in fall 2011 and spring 2011, respectively. The combined costs of the projects are expected to be $330 million–$340 million.

Fundamental Drivers

„ Cold weather drives retail gallon sales growth.

„ Gross profit and EBITDA per retail gallon margins are affected by movements in propane prices, procurement costs, and ability to pass through costs to customers.

„ Ability to make and integrate acquisitions.

Risk: Medium Recent acquisitions have significantly reduced the partnership’s risk profile. Both propane and midstream acquisitions help broaden and diversify the sources of cash flows, geographic scope of operations and business mix, which significantly improves the durability of growth prospects. Notably, the addition of fee-based revenues from natural gas storage projects should reduce the seasonality of operations and vulnerability to warm weather in the winter, and should provide further stability to cash flows. However, we believe the partnership is still vulnerable to warm weather in the winter that could impair cash flows.

22 October 2010 138 Barclays Capital | MLP Quarterly Monitor

Kinder Morgan Energy Partners (KMP)

Figure 136: Kinder Morgan Energy Partners (KMP)

Sub Sector: Refined Products

Rating: 1-Overweight Annualized Distribution: $4.36 Price Target: $72.00 Yield: 6.11% Current Price: $71.39 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 9.04% Potential Upside to Target: 0.9% Dist. CAGR (Next 3 Yrs): 4.92% 52 Week High / Low: $71.28 - $53.25 Tax Deferral: 90% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10 4Q10E 2010E 2011E Cash Distribution Per Unit $4.02 $4.20 $1.07 $1.09 $1.11 $1.13 $4.40 $4.62 Growth (YoY) 15.5% 4.5% 1.9% 3.8% 5.7% 7.6% 4.8% 5.0%

Units Outstanding (in mm) Common units 257.2 281.5 298.8 304.5 310.7 313.8 306.9 323.1 Sub-Ordinated Units

Total Distribution Receiving Units 257.2 281.5 298.8 304.5 310.7 313.8 306.9 323.1 Growth (YoY) 8.6% 9.4% 10.2% 10.0% 7.3% 6.4% 9.0% 5.2%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10 4Q10E 2010E 2011E EBIT $1,763.3 $1,814.5 $497.8 $503.9 $476.7 $554.9 $2,033.2 $2,368.4 Depreciation, Depletion & Amortization $701.5 $856.6 $228.7 $224.7 $225.5 $228.2 $907.1 $935.5 Other $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Adjusted EBITDA $2,464.8 $2,671.1 $726.5 $728.6 $702.2 $783.1 $2,940.3 $3,303.9 Net Interest Expense ($402.5) ($425.3) ($115.9) ($123.6) ($133.6) ($128.4) ($501.5) ($539.1) Maintenance Capital Expenditures ($180.7) ($172.2) ($32.7) ($47.7) ($40.5) ($61.0) ($181.9) ($197.8) Other $8.3 ($58.8) ($26.5) ($24.2) ($57.3) ($42.3) ($149.3) ($130.0) Distributable Cash flow $1,873.3 $2,132.4 $604.4 $581.5 $585.4 $635.9 $2,406.2 $2,697.0

General Partner Cut ($806.1) ($936.4) ($250.7) ($259.2) ($267.5) ($277.5) ($1,054.9) ($1,194.4) Distributable Cash Flow (LP) $1,067.2 $1,196.0 $353.7 $322.3 $317.9 $358.4 $1,351.3 $1,502.7

Distributable Cash Flow Per Unit $4.15 $4.25 $1.18 $1.06 $1.02 $1.14 $4.40 $4.65

Total Distribution Coverage 103% 101% 111% 97% 92% 101% 100% 101%

Business Description Kinder Morgan Energy Partners, L.P. is a leading pipeline transportation and energy storage company in North America. KMP owns an interest in or operates more than 28,000 miles of pipelines and 180 terminals. Its pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals and handle bulk materials like coal and petroleum coke. KMP is also the leading provider of CO2 for enhanced oil recovery projects in North America.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Kinder Morgan Energy Partners L.P. (K 16.80x 16.11x 15.38x 1.52x 1.46x 1.39x 17.19x 18.99x 17.55x Refined Products 13.13x 14.13x 12.78x 1.14x 1.23x 1.11x 14.53x 16.47x 14.14x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $4.25 $4.40 $4.65 Debt / EBITDA 3.97x 3.69x 3.50x Distribution $4.20 $4.40 $4.62 EBITDA / Interest 6.28x 6.11x 6.20x Coverage (Total Units) 101% 100% 101% Maint Cap / EBITDA 0.06x 0.07x 0.06x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 139 Barclays Capital | MLP Quarterly Monitor

Figure 137: Historical Yield Spreads

. . Kinder Morgan Energy Partners L.P. (KMP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Kinder Morgan Energy Partners L.P. 1-Year Yield Spread vs. US 10-Year Treasury (KMP) vs. Alerian MLP Index 1.0% 40% 0.0% 35% 30% -1.0% 25% -2.0% 20% 15% -3.0% 10% -4.0% 5% -5.0% 0% -6.0% 1090 to -70 to 10 to -70 90 to 170 to 90 -150 to -70 to -150 -630 to -550 to -630 -470 to -550 -390 to -470 -310 to -390 -230 to -310 -150 to -230 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Sep-06 Sep-07 Sep-08 Sep-09 Mar-07 Mar-08 Mar-09 Mar-10 .

Kinder Morgan Energy Partners L.P. (KMP) - Yield to United States Treasury Bond (10 Y) Yield Basis point differentials - Kinder Morgan Energy Partners L.P.. Avg. Spread (KMP) vs. United States Treasury Bond (10 Y) Yield 7.0% 40% 6.0% 35% 30% 5.0% 25% 4.0% 20% 3.0% 15% 2.0% 10% 5% 1.0% 0% 0.0% -30 to 50 50 to 130 50 to Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 130 to 210 130 to 290 210 to 370 290 to 450 370 to 530 450 to 610 530 to 690 610 to 770 690 to Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10

Kinder Morgan Energy Partners L.P. (KMP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our $72 price target on KMP is based on a 12-month cash distribution run rate of $4.57 and a target yield of 6.35%. Kinder Morgan’s growth is expected to be driven by natural gas pipeline projects, terminal acquisitions/growth projects and higher crude oil prices (hedged and unhedged) in the CO2 business. Given the combination of organic projects under development, potential growth from acquisitions and management’s strong track record, we believe KMP can deliver sustainable 4%–5% distribution growth over the long run.

Investment Thesis We rate KMP 1-Overweight/2-Neutral. We believe the partnership is a core holding in a diversified MLP portfolio and is capable of delivering a healthy total return driven by an attractive value proposition at a relatively low risk level. Superior diversification of cash flows, which is underpinned by leading positions in the natural gas, crude oil, terminals and refined product businesses, provides an expansive organic growth opportunity set. Although we do not expect KMP to regain its status as one of the strongest growth partnerships in the sector, we believe the KMP’s low risk profile and consistent growth rate should drive attractive long-term returns for investors.

22 October 2010 140 Barclays Capital | MLP Quarterly Monitor

Potential Catalysts / Timeline

„ 4Q10 – Expected update on potential Marcellus Lateral NGL pipeline project.

„ 4Q10 – Expected in-service date of Fayetteville Express natural gas pipeline project.

Fundamental Drivers

„ Natural gas drilling activities in Rocky Mountains, Texas and Louisiana.

„ Refinery production rates, refined product consumption and import levels.

„ Crude oil production in Permian Basin.

„ Recontracting capacity on pipeline and terminal assets.

„ Ability to sustain low operating cost structure plus integration of recent acquisitions and growth projects.

Risk: Low/Medium Broad geographic and product mix provides well-diversified cash flows. The primary risks stem from the exposure to crude oil prices in the CO2 business. However, KMP hedges the majority of its crude oil production. Other risks include reduction in refined product consumption rates, narrow natural gas basis in Texas, integrating acquisitions and construction cost overruns on organic growth projects.

22 October 2010 141 Barclays Capital | MLP Quarterly Monitor

K-Sea Transportation Partners, LP (KSP)

Figure 138: K-Sea Transportation Partners, LP (KSP)

Sub Sector: Marine Transportation

Rating: 3-Underweight Annualized Distribution: na Price Target: $5.00 Yield: na Current Price: $3.97 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 6.92% Potential Upside to Target: 25.9% Dist. CAGR (Next 3 Yrs): na 52 Week High / Low: $23.5 - $3.9 Tax Deferral: 80% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10 4Q10 2010 2011E Cash Distribution Per Unit $2.99 $3.08 $0.45 $0.00 $0.00 $0.00 $0.45 $0.00 Growth (YoY) 14.1% 3.0% -41.6% -100.0% -100.0% -100.0% -85.4% 0.0%

Units Outstanding (in mm) Common units 9.81 13.23 19.07 19.07 19.19 19.19 19.13 19.19 Sub-Ordinated Units 3.122.340.000.000.000.000.000.00

Total Distribution Receiving Units 12.93 15.57 19.07 19.07 19.19 19.19 19.13 19.19 Growth (YoY) 29% 20.4% -0.3% 0.3%

Distributable Cash Flow Calculation 2008 2009 1Q10 2Q10 3Q10 4Q10 2010 2011E Operating Income $45.65 $36.46 $4.63 $1.32 ($5.30) ($59.64) ($59.00) $9.38 Depreciation and Amortization $48.31 $53.58 $19.08 $13.82 $14.69 $18.00 $65.60 $46.17 Others $2.18 $0.00 ($5.55) $0.76 $0.00 $54.06 $49.27 $0.00

Adjusted EBITDA $96.13 $90.04 $18.16 $15.90 $9.39 $12.42 $55.87 $55.55 Net Interest Expense $21.28 $21.50 $4.18 $5.34 $6.28 $6.79 $22.59 $24.42 Maintenance Capital Expenditures $22.00 $21.43 $5.75 $5.75 $5.33 $5.99 $22.83 $23.00 Others ($1.58) ($2.89) $0.16 ($1.49) $0.05 $0.00 ($1.28) $0.00 Distributable Cash flow $54.44 $50.00 $8.07 $6.30 ($2.27) ($0.36) $11.74 $8.13

General Partner Cut $3.69 $5.37 $0.18 $0.00 $0.00 $0.00 $0.18 $0.00 Distributable Cash Flow (LP) $50.75 $44.62 $7.90 $6.30 ($2.27) ($0.36) $11.56 $8.13

Distributable Cash Flow Per Unit $3.92 $2.87 $0.41 $0.33 ($0.12) ($0.02) $0.60 $0.42

Common Distribution Coverage 178% 118% 66% 0% 0% 0% 56% 0% Total Distribution Coverage 135% 100% 92% 0% 0% 0% 134% 0%

Business Description K-Sea Transportation Partners L.P. is one of the largest coastwise tank barge operators in the United States. The Company provides refined petroleum products transportation, distribution and logistics services in the U.S. domestic marine transportation market.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E K-Sea Transportation Partners L.P. (KSP) 1.58x 5.13x 3.00x na na na 10.28x 12.34x 8.52x Marine Transportation 7.70x 9.12x 7.80x 1.11x 1.05x 1.01x 11.54x 10.23x 7.53x Average MLPs 12.15x 13.42x 11.83x 1.12x 1.19x 1.05x 12.97x 14.43x 12.27x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $2.87 $0.60 $0.42 Debt / EBITDA 3.76x 5.00x 4.39x Distribution $3.08 $0.45 $0.00 EBITDA / Interest 4.18x 2.60x 2.78x Coverage (Total Units) 93% 134% na Maint Cap / EBITDA 0.24x 0.39x 0.30x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 142 Barclays Capital | MLP Quarterly Monitor

Figure 139: Historical Yield Spreads

. . K-Sea Transportation Partners L.P. (KSP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - K-Sea Transportation Partners L.P. 1-Year Yield Spread vs. US 10-Year Treasury (KSP) vs. Alerian MLP Index 70% 19.0% 60% 50% 14.0% 40% 30% 9.0% 20% 10% 4.0% 0%

-1.0% 130 to 380 380 to 630 630 to 880 -120 to 130 880 to 1130 to 880 1130 to 1380 to 1130 1630 to 1380 1880 to 1630 2130 to 1880 2380 to 2130 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 . Basis point differentials - K-Sea Transportation Partners L.P. K-Sea Transportation Partners L.P. (KSP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . (KSP) vs. United States Treasury Bond (10 Y) Yield 26.0% 70% 60% 21.0% 50% 40% 16.0% 30% 11.0% 20% 10% 6.0% 0%

1.0% 50 to 330 to 50 330 to 610 to 330 890 to 610 890 to 1170 to 890 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 1170 to 1450 to 1170 1730 to 1450 2010 to 1730 2290 to 2010 2570 to 2290 2850 to 2570 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

K-Sea Transportation Partners L.P. (KSP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

135 115 95 75 55 35 15 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our $5 price target on KSP is based on a cash distribution run rate of $0.60 capitalized at 10% yield discounted for two years. We estimate that K-Sea Transportation can reinstate distribution in FY13, providing strengthening in U.S. refinery utilization over this period.

Investment Thesis In light of the recent $100 million equity investment from KA First Reserve, we believe the short-term covenant violation risk has been alleviated. Assuming a moderate pick-up in utilization levels and daily rates over the three years, we believe KSP can reinstate distribution at $0.60 per unit. Should we see a less robust operating environment that leads to modest EBITDA growth in the next two tot three years, we estimate KSP will just have $0.10 per unit or less available for distribution in 2013.

Potential Catalysts / Timeline

„ Late October – First quarter earnings release.

Fundamental Drivers

„ Vessel utilization and average daily rates.

22 October 2010 143 Barclays Capital | MLP Quarterly Monitor

„ Supply and demand balance of vessels in the industry. A growing supply/demand imbalance of vessels in the industry due to newbuilding programs to meet compliance with OPA-90 requirements affects both average daily rates and vessel utilization.

„ Refined product consumption rates. Strength in petroleum imports could provide an additional catalyst to utilization rates.

„ Ability to sustain a low operating cost structure and integrate acquisitions.

Risk: High Our high risk rating is associated with the overall weakness in the U.S. refinery market and debt covenant risk. Continued low U.S. refinery utilization will continue to pressure average daily rates as well as generate low vessel utilization. Further, while the recent $100 million equity investment from KA First Reserve alleviates the short-term covenant risk, a continued weak operating environment poses risks longer term as well as pushes out the timing of a distribution reinstatement.

22 October 2010 144 Barclays Capital | MLP Quarterly Monitor

Magellan Midstream Partners, LP (MMP)

Figure 140: Magellan Midstream Partners, LP (MMP)

Sub Sector: Refined Products

Rating: 2-Equal Weight Annualized Distribution: $2.93 Price Target: $52.00 Yield: 5.56% Current Price: $52.67 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 6.25% Potential Upside to Target: -1.3% Dist. CAGR (Next 3 Yrs): 5.59% 52 Week High / Low: $53.6 - $37.81 Tax Deferral: 80% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $2.77 $2.84 $0.72 $0.73 $0.75 $0.76 $2.96 $3.14 Growth (YoY) 8.8%2.4%1.4%3.2%4.9%6.7%4.0%6.3%

Units Outstanding (in mm) Common units 66.9 78.6 106.8 106.9 111.7 112.6 109.5 114.6

Total Distribution Receiving Units 66.9 78.6 106.8 106.9 111.7 112.6 109.5 114.6 Growth (YoY) 0.1% 17.4% 35.9% 0.0% 4.5% 0.8% -2.7% 4.6%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Operating Income $373.0 $298.4 $86.3 $124.7 $84.3 $105.3 $400.6 $447.6 Depreciation, Depletion & Amortization $71.2 $97.2 $26.3 $25.7 $27.5 $28.6 $108.2 $116.0 Other $0.7 ($2.8) $0.4 $0.3 $0.3 $0.3 $1.2 $0.0 Adjusted EBITDA $444.9 $392.8 $113.0 $150.7 $112.1 $134.2 $510.0 $563.6 Net Interest Expense ($56.8) ($73.4) ($21.8) ($22.5) ($23.0) ($24.1) ($91.4) ($105.3) Maintenance Capital Expenditures ($43.2) ($38.0) ($6.0) ($9.0) ($13.0) ($17.0) ($45.0) ($48.0) Other ($6.7) $47.0 $0.0 ($18.5) $0.0 $5.0 ($13.5) $0.0 Distributable Cash flow $338.2 $328.4 $85.2 $100.7 $76.1 $98.1 $360.1 $410.3

General Partner Cut ($89.2) ($70.4) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Distributable Cash Flow (LP) $249.0 $258.0 $85.2 $100.7 $76.1 $98.1 $360.1 $410.3

Distributable Cash Flow Per Unit $3.72 $3.28 $0.80 $0.94 $0.68 $0.87 $3.29 $3.58

Common Distribution Coverage 134% 116% 111% 129% 91% 115% 111% 114% Total Distribution Coverage 134% 116% 111% 129% 91% 115% 111% 114%

Business Description Magellan Midstream Partners, L.P.is a publicly traded partnership formed to own, operate and acquire a diversified portfolio of energy assets. The partnership primarily transports, stores and distributes refined petroleum products, such as gasoline and diesel fuel, and crude oil.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Magellan Midstream Partners L.P. (MMP) 16.05x 15.97x 14.63x 1.44x 1.43x 1.31x 21.00x 16.87x 15.22x Refined Products 13.13x 14.13x 12.78x 1.14x 1.23x 1.11x 14.53x 16.47x 14.14x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $3.28 $3.29 $3.58 Debt / EBITDA 4.15x 3.78x 3.54x Distribution $2.84 $2.96 $3.14 EBITDA / Interest 5.42x 5.60x 5.54x Coverage (Total Units) 116% 111% 114% Maint Cap / EBITDA 0.10x 0.09x 0.09x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 145 Barclays Capital | MLP Quarterly Monitor

Figure 141: Historical Yield Spreads

. . Magellan Midstream Partners L.P. (MMP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Magellan Midstream Partners L.P. 1-Year Yield Spread vs. US 10-Year Treasury (MMP) vs. Alerian MLP Index 1.0% 50% 45% 0.0% 40% 35% -1.0% 30% 25% -2.0% 20% 15% -3.0% 10% 5% -4.0% 0%

-5.0% -10 to 40 to -10 -60 to -10 -60 to -110 to -60 to -110 -460 to -410 to -460 -360 to -410 -310 to -360 -260 to -310 -210 to -260 -160 to -210 -110 to -160 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 . Basis point differentials - Magellan Midstream Partners L.P. Magellan Midstream Partners L.P. (MMP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . (MMP) vs. United States Treasury Bond (10 Y) Yield 40% 8.0% 35% 30% 6.0% 25% 4.0% 20% 15% 2.0% 10% 5% 0.0% 0% -2.0% -80 to 40 to -80 40 to 160 to 40 160 to 280 to 160 400 to 280 520 to 400 640 to 520 760 to 640 880 to 760 -200 to -80 to -200 880 to 1000 880 to Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10

Magellan Midstream Partners L.P. (MMP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our $52 price target on MMP is based on a 12-month cash distribution run rate of $3.11 and a target yield of 6%. In our view, Magellan Midstream has reasonable visibility into growth prospects. Long-term distribution growth prospects are supported by healthy distribution coverage, ample supply of organic growth projects, strong balance sheet and a low cost of capital through IDR elimination.

Investment Thesis We rate MMP 2-Equal Weight/2-Neutral. The partnership provides a healthy yield with mid- single-digit growth at a relatively low risk profile. A lower cost of capital provides a potential catalyst for MMP’s long-term growth prospects.

Potential Catalysts / Timeline

„ November 2 - Third quarter earnings release.

„ 4Q10 – Update on potential reversal/conversion of Longhorn refined products pipeline and dedicated interstate ethanol pipeline projects.

22 October 2010 146 Barclays Capital | MLP Quarterly Monitor

Fundamental Drivers

„ Refined product consumption and demand growth in the Midwest market.

„ Tariff rates on Magellan Pipeline and fees charged on terminal assets.

„ The level of petroleum product imports affects the profitability of marine terminals, such as New Haven, Galena Park, and Wilmington.

„ The forward slope of crude oil prices affects storage rates.

„ The price of natural gas (the principal raw material utilized in ammonia production), crop prices, and weather affect the ammonia segment. Natural gas comprises approximately 80% of the raw material costs in ammonia-based fertilizer production.

„ Integrating and ramping up utilization rates on acquired assets.

Risk: Low/Medium Cash flows are driven by fee-based businesses serving stable refined product markets. However, a key risk is a decline in refined product consumption. It is worth noting that refined product demand is fairly stable historically. A second risk is the Ammonia Pipeline segment. Risks in this segment are tied to weak volumes stemming from high natural gas prices impairing demand levels. However, the Ammonia Pipeline segment comprises just 1% of EBITDA.

22 October 2010 147 Barclays Capital | MLP Quarterly Monitor

Markwest Energy Partners, LP (MWE)

Figure 142: Markwest Energy Partners, LP (MWE)

Sub Sector: Gathering and Processing

Rating: 1-Overweight Annualized Distribution: $2.56 Price Target: $36.00 Yield: 6.81% Current Price: $37.62 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 10.84% Potential Upside to Target: -4.3% Dist. CAGR (Next 3 Yrs): 3.31% 52 Week High / Low: $38.82 - $20.96 Tax Deferral: 75% $ Millions , except per unit amounts

Cash Flow Summary 2008 2009 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $2.51 $2.56 $0.64 $0.64 $0.64 $0.64 $2.56 $2.69 Growth (YoY) 2% -75% 0% 0% 0% 300% 5%

Units Outstanding (in mm) Common units 56.69 62.42 66.42 71.08 71.43 71.43 70.09 76.04 Sub-Ordinated Units 0.000.000.000.000.000.000.000.00

Total Distribution Receiving Units 56.69 62.42 66.42 71.08 71.43 71.43 70.09 76.04 Growth (YoY) 10% 17% 18% 8% 8% 12% 8%

Distributable Cash flow Calculation 2008 2009 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E Net Income $276.90 ($150.23) $26.00 $82.99 $18.84 $26.86 $154.69 $138.44 Interest Expense $65.64 $93.24 $24.21 $25.76 $24.56 $25.31 $99.82 $93.49 Depreciation and Amortization $111.37 $144.41 $38.59 $40.01 $40.00 $40.00 $158.60 $160.00 Others ($162.92) $223.74 $9.46 ($69.59) ($4.40) ($4.40) ($68.93) ($18.91) Adjusted EBITDA $290.99 $287.59 $88.46 $72.72 $78.99 $87.77 $327.94 $373.03 Net Interest Expense ($65.64) ($93.24) ($24.21) ($25.76) ($24.56) ($25.31) ($99.82) ($93.49) Maintenance Capital Expenditures ($7.16) ($7.48) ($0.84) ($2.48) ($4.00) ($5.00) ($12.31) ($15.00) Others $0.48 ($2.55) $0.00 ($0.43) $1.50 $1.50 $2.57 $0.00 Distributable Cash flow $198.05 $192.38 $64.32 $52.88 $49.16 $56.18 $222.54 $252.13

General Partner Cut $0.00 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 Distributable Cash Flow (LP) $198.05 $192.38 $64.32 $52.88 $49.16 $56.18 $222.54 $252.13

Distributable Cash Flow Per Unit $3.49 $3.08 $0.97 $0.74 $0.69 $0.79 $3.18 $3.32

Common Distribution Coverage 139% 120% 151% 116% 108% 123% 124% 123% Total Distribution Coverage 139% 120% 151% 116% 108% 123% 124% 123%

Business Description MarkWest Energy Partners, L.P. is a master limited partnership engaged in the gathering, transportation, and processing of natural gas; the transportation, fractionation, marketing, and storage of natural gas liquids; and the gathering and transportation of crude oil. MarkWest has extensive natural gas gathering, processing, and transmission operations in the southwest, Gulf Coast, and northeast regions of the United States, including the Marcellus Shale, and is the largest natural gas processor in the Appalachian region.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E MarkWest Energy Partners L.P. (MWE) 12.21x 11.85x 11.34x 1.21x 1.17x 1.12x 10.90x 12.36x 10.90x Gathering and Processing 10.29x 14.40x 11.40x 0.96x 1.29x 0.98x 11.37x 13.99x 11.50x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $3.08 $3.18 $3.32 Debt / EBITDA 4.07x 4.16x 4.10x Distribution $2.56 $2.56 $2.69 EBITDA / Interest 3.08x 3.74x 3.57x Coverage (Total Units) 120% 124% 123% Maint Cap / EBITDA 0.03x 0.04x 0.04x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 148 Barclays Capital | MLP Quarterly Monitor

Figure 143: Historical Yield Spreads

. . MarkWest Energy Partners L.P. (MWE) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - MarkWest Energy Partners L.P. 1-Year Yield Spread vs. US 10-Year Treasury (MWE) vs. Alerian MLP Index 90% 20.0% 80% 70% 15.0% 60% 50% 10.0% 40% 30% 5.0% 20% 10% 0.0% 0%

-5.0% 130 to 440 440 to 750 -180 to 130 750 to 1060 to 750 -490 to -180 1060 to 1370 to 1060 1680 to 1370 1990 to 1680 2300 to 1990 2610 to 2300 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 . Basis point differentials - MarkWest Energy Partners L.P. (MWE) MarkWest Energy Partners L.P. (MWE) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . vs. United States Treasury Bond (10 Y) Yield 70% 29.0% 60% 24.0% 50% 40% 19.0% 30% 14.0% 20% 9.0% 10% 4.0% 0% -1.0% -50 to 310 to -50 310 to 670 to 310 670 to 1030 to 670 1030 to 1390 to 1030 1750 to 1390 2110 to 1750 2470 to 2110 2830 to 2470 3190 to 2830 3550 to 3190 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10

MarkWest Energy Partners L.P. (MWE) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

150 140 130 120 110 100 90 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $36 on MWE is based on a 12-month distribution run rate of $2.68 and target yield of 7.5%.

Investment Thesis We believe Markwest Energy offers a distinctive investment opportunity given no incentive distribution rights (IDRs) and assets exposed to regions with strong gas production growth including Marcellus, Granite Wash, and Woodford. Especially in Marcellus, MWE is the largest midstream operator executing a number of organic projects. On September 27 MWE completed its Majorsville processing plant in West Virginia, which is fully contracted out by producers. With the 120 mmcf/d plant completion, MWE currently has about 275 mmcf/d of cryogenic processing capacity in Marcellus. By the end of 2011, MWE will have 625–745 mmf/d capacity, depending on the timing of the Smithfield plant construction. We estimate 5%-plus per year distribution growth starting in 2011, based on $300 million per year spending assumption. MWE amended its revolver and currently has over $670 million capacity available, compared with less than a $200 million remaining capex spending commitment for 2010. The April 2010 equity raise brings debt to EBTDA down to 3.6x. While MWE has above-average exposure to commodity price (long NGL and short gas, ex- hedge), about 70% of its commodity exposure is hedged in 2010/2011. Price exposure

22 October 2010 149 Barclays Capital | MLP Quarterly Monitor

should decline with increased contribution from fee-based business in Marcellus and Woodford, with 50% target in 2012 from 36% currently. Our growth estimates are based on $85/bbl crude and $5.50–$6.00/mmbtu normalized gas price environment. Given healthy coverage assumed on our 5% growth estimate, we believe MWE can grow distribution at approximately $75/bbl crude (1.05x–1.15x coverage) and maintain current distribution at $60–$70/bbl.

Potential Catalysts / Timeline

„ Ability to execute lucrative projects with returns above cost of capital.

„ Increase in crude and NGL prices.

„ Fundamental drivers

„ Natural gas production and prices.

„ Demand and prices of NGLs.

Risk: Medium Markwest carries an above-average risk profile related to movements in natural gas and NGL prices. A sharp decline in natural gas prices could impair volumes on gathering systems and a drop in NGL prices would crimp processing margins. While majority of its commodity exposure is hedged and effectively mitigates commodity price sensitivities, roll- over risk remains. MWE is 50% hedged in 2010 and 40% hedged in 2011. Other risks include successfully executing organic projects and funding large capex projects committed in key shale plays.

22 October 2010 150 Barclays Capital | MLP Quarterly Monitor

Niska Gas Storage Partners, LLC (NKA)

Figure 144: Niska Gas Storage Partners, LLC (NKA)

Sub Sector: Natural Gas & NGL

Rating: 1-Overweight Annualized Distribution: $1.40 Price Target: $22.00 Yield: 7.00% Current Price: $20.00 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): na Potential Upside to Target: 10.0% Dist. CAGR (Next 3 Yrs): 10.51% 52 Week High / Low: $20.18 - $17.01 Tax Deferral: 0% $ Millions , except per unit amounts

Cash Flow Summary 2010 1Q2011 2Q2011E 3Q2011E 4Q2011E 2011E 2012E 2013E Cash Distribution Per Unit na $0.17 $0.35 $0.35 $0.35 $1.22 $1.44 $1.57 Growth (YoY) na na 17.9% 9.0%

Units Outstanding (in mm) Common units 33.80 33.80 33.80 33.80 33.80 33.80 33.80 33.80 Sub-Ordinated Units 33.80 33.80 33.80 33.80 33.80 33.80 33.80 33.80 GP units 1.381.381.381.381.381.381.381.38 Total Distribution Receiving Units 68.99 68.99 68.99 68.99 68.99 68.99 68.99 68.99 Growth (YoY) na 0% 0% 0%

Distributable Cash flow Calculation 2010 1Q2011 2Q2011E 3Q2011E 4Q2011E 2011E 2012E 2013E Net Income $53.21 $0.53 ($4.09) $0.33 $23.73 $20.51 $70.09 $83.35 Interest Expense $38.12 $18.76 $17.75 $17.75 $17.75 $72.01 $76.00 $77.00 Depreciation and Amortization $43.06 $10.10 $11.23 $11.23 $11.23 $43.77 $53.00 $55.00 Others $89.42 $5.86 $15.40 $15.98 $17.48 $54.71 $8.80 $13.40 Adjusted EBITDA $223.81 $35.24 $40.29 $45.28 $70.18 $190.99 $207.89 $228.75 Net Interest Expense ($38.12) ($18.76) ($17.75) ($17.75) ($17.75) ($72.01) ($76.00) ($77.00) Maintenance Capital Expenditures ($0.90) ($0.10) ($0.70) ($0.70) ($0.20) ($1.70) ($1.80) ($1.80) Others $0.00 ($0.07) ($2.93) ($3.50) ($5.00) ($11.49) ($8.80) ($13.40) Distributable Cash flow $184.79 $16.32 $18.91 $23.33 $47.23 $105.79 $121.29 $136.55

General Partner Cut na ($0.24) ($0.49) ($0.49) ($0.49) ($1.72) ($2.03) ($2.21) Distributable Cash Flow (LP) na $16.56 $19.41 $23.82 $47.72 $107.51 $123.32 $138.76

Distributable Cash Flow Per Unit na $0.23 $0.27 $0.33 $0.68 $1.51 $1.73 $1.95

Common Distribution Coverage na 275% 156% 193% 395% 252% 245% 253% Total Distribution Coverage na 134% 77% 95% 192% 123% 119% 123%

Business Description

Niska is the largest independent owner and operator of natural gas storage in North America, with strategically located assets in key natural gas producing and consuming regions. Niska owns and operates three facilities, including the AECO Hub(TM )in Alberta, Canada; Wild Goose in Northern California; and Salt Plains in Oklahoma. Niska also contracts for natural gas storage capacity on the Natural Gas Pipeline Company of America system. In total, Niska owns or contracts for approximately 185.5 Bcf of natural gas storage capacity.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Niska Gas Storage Partners (NKA) na 13.26x 11.57x na 0.76x 0.66x na 11.62x 10.68x Natural Gas & NGL 15.96x 15.65x 13.46x 1.44x 1.33x 1.16x 14.68x 15.75x 13.11x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary F2009 F2010 F2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit na na $1.51 Debt / EBITDA na 4.19x 4.33x Distribution na na $1.22 EBITDA / Interest na 2.65x 2.74x Coverage (Total Units) na na 123% Maint Cap / EBITDA na 0.01x 0.01x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

Valuation Discussion Our price target of $22 on NKA is based on a 12-month distribution of $1.44 and a target yield of 6.5%.

22 October 2010 151 Barclays Capital | MLP Quarterly Monitor

Investment Thesis While 11 results were light, Niska management maintained fiscal year EBITDA guidance of $204 million and indicated the partnership has 75%–80% of full-year revenue locked in. Even with minimum optimization margin contribution, this implies NKA can cover its full year distribution, in our view. Although we believe optimization will make meaningful contribution to fiscal year EBITDA, majority of the contribution will not be realized until 4Q11, which may lead to light coverage in the next two quarters. NKA reported 1Q11 (ending June 2010) EBITDA of $35.2 million. LTF contract revenue reached $30 million, or 71% of total revenue, representing 6% growth in average fees. Revenue from STF was down 35% as management diverted more capacity for optimization which generates higher margin in the current environment. CPUC approval for Wild Goose expansion is expected in the fall and management reiterated it is on track to add 15 Bcf of capacity in 2010.

At the end of 2Q NKA had $60 million in cash and $400 million of revolver capacity fully available.

Potential Catalysts / Timeline

„ Timing of project announcements and completions.

„ Ability to source and close accretive acquisitions.

Fundamental Drivers

„ Summer/winter gas price spreads.

„ Demand for gas storage services in Aeco Hub (Canada) and North California.

Risk: Medium NKA carries an average risk profile associated with volatility in summer/winter gas price spreads. A sharp decline in gas price spreads can reduce margins on its optimization business and short-term contracts. Other risks include successfully executing organic projects, which will be required to sustain the distribution growth rate in the longer-term basis. On a positive note, NKA has a diversified asset base exposed to three geographic regions, including Aeco Hub Canada, North California, and Mid-Continent.

22 October 2010 152 Barclays Capital | MLP Quarterly Monitor

NuStar Energy, LP (NS)

Figure 145: NuStar Energy, LP (NS)

Sub Sector: Refined Products

Rating: 2-Equal Weight Annualized Distribution: $4.26 Price Target: $65.00 Yield: 6.74% Current Price: $63.20 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 5.69% Potential Upside to Target: 2.8% Dist. CAGR (Next 3 Yrs): 4.15% 52 Week High / Low: $64.99 - $51.49 Tax Deferral: 80% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $4.09 $4.25 $1.07 $1.07 $1.12 $1.12 $4.36 $4.58 Growth (YoY) 6.5%3.9%0.7%0.7%4.7%4.7%2.7%5.0%

Units Outstanding (in mm) Common units 53.2 55.2 60.2 62.3 64.6 64.6 62.9 64.5

Total Distribution Receiving Units 53.2 55.2 60.2 62.3 64.6 64.6 62.9 64.5 Growth (YoY) 12.8% 3.8% 13.9% 2.4%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Operating Income $310.1 $273.3 $39.8 $102.0 $73.1 $67.4 $282.2 $344.3 Depreciation, Depletion & Amortization $135.7 $145.7 $37.9 $38.2 $38.8 $38.9 $153.8 $155.9 Other $37.7 $22.7 $3.3 $16.9 $2.6 $3.0 $25.8 $14.3 Adjusted EBITDA $483.5 $441.8 $81.0 $157.1 $114.5 $109.3 $461.9 $514.5 Net Interest Expense ($90.9) ($79.4) ($18.6) ($18.9) ($17.4) ($18.5) ($73.4) ($79.8) Maintenance Capital Expenditures ($55.7) ($45.2) ($12.4) ($12.1) ($14.0) ($16.0) ($54.5) ($56.5) Other ($17.9) $9.5 ($18.0) ($9.0) $7.5 $9.1 ($10.4) $0.7 Distributable Cash flow $319.1 $326.8 $32.0 $117.1 $90.5 $83.9 $323.6 $378.9

General Partner Cut ($30.4) ($34.1) ($9.3) ($9.9) ($11.0) ($11.0) ($41.3) ($46.5) Distributable Cash Flow (LP) $288.7 $292.6 $22.8 $107.2 $79.5 $72.9 $282.3 $332.4

Distributable Cash Flow Per Unit $5.43 $5.30 $0.38 $1.72 $1.23 $1.13 $4.49 $5.16

Total Distribution Coverage 133% 125% 36% 162% 110% 101% 103% 113%

Business Description NuStar Energy L.P. is a publicly traded, limited partnership based in San Antonio, with 8,417 miles of crude oil and refined product pipelines; 89 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids; and two asphalt refineries with a combined throughput capacity of 104,000 barrels per day. The partnership’s combined system has over 93 million barrels of storage capacity. One of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation, NuStar has operations in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E NuStar Energy L.P. (NS) 11.93x 14.09x 12.20x 1.10x 1.29x 1.12x 14.29x 16.47x 14.60x Refined Products 13.13x 14.13x 12.78x 1.14x 1.23x 1.11x 14.53x 16.47x 14.14x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $5.30 $4.49 $5.16 Debt / EBITDA 4.19x 4.22x 3.97x Distribution $4.25 $4.36 $4.58 EBITDA / Interest 5.57x 6.29x 6.46x Coverage (Total Units) 125% 103% 113% Maint Cap / EBITDA 0.10x 0.12x 0.11x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 153 Barclays Capital | MLP Quarterly Monitor

Figure 146: Historical Yield Spreads

. . NuSTAR Energy L.P. (NS) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - NuSTAR Energy L.P. (NS) vs. Alerian 1-Year Yield Spread vs. US 10-Year Treasury MLP Index 2.0% 30% 1.5% 25% 1.0% 0.5% 20% 0.0% 15% -0.5% -1.0% 10% -1.5% 5% -2.0% 0% -2.5% -3.0% 1060 to -40 to 10 to -40 60 to 110 to 60 -90 to -40 -90 to 110 to 160 to 110 -140 to -90 to -140 -340 to -290 to -340 -240 to -290 -190 to -240 -140 to -190 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 . Basis point differentials - NuSTAR Energy L.P. (NS) vs. United NuSTAR Energy L.P. (NS) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . States Treasury Bond (10 Y) Yield 9.0% 35% 8.0% 30% 7.0% 25% 6.0% 20% 5.0% 15% 4.0% 3.0% 10% 2.0% 5% 1.0% 0% 0.0% -20 to 80 80 to 180 80 to 180 to 280 180 to 380 280 to 480 380 to 580 480 to 680 580 to 780 680 to 880 780 to 980 880 to Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10

NuSTAR Energy L.P. (NS) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $65 on NS is based on a 12-month cash distribution run rate of $4.54 and a target yield of 7%. NuStar’s distribution growth prospects are supported by organic growth projects, expected improvement in refined product demand and a healthy coverage ratio. Over the long run, we expect management to further build out the partnership’s storage capabilities through a combination of acquisition and organic growth spending. In our view, the 25% cap on the GP incentive distribution split should support the partnership’s long-term growth prospects.

Investment Thesis We rate NS 2-Equal Weight/2-Neutral. The majority of cash flows are supported by fee- based contracts (pipeline and storage businesses), while the remainder is exposed to commodity price risk (asphalt refining business). In addition, NS has an experienced management team. In our view, NS contains an inherent call option related to NS capturing a premium valuation level relative to the sector with the support of management’s ability to make accretive acquisitions and continue ramping-up organic growth projects. We view the refined product sector to be the most stable asset class in the MLP industry given the minimal exposure to commodity prices coupled with fairly stable consumption rates.

22 October 2010 154 Barclays Capital | MLP Quarterly Monitor

Potential Catalysts / Timeline

„ October 25 – Third quarter earnings release.

„ October 27 – NS analyst day.

„ 2H11 – Expected capacity expansion of crude oil/refined product terminals in Turkey.

Fundamental Drivers

„ Refined product demand and refinery utilization rates.

„ Asphalt refining margins.

„ Manage pipeline and terminal integrity costs.

„ Integrating acquisitions.

„ Storage contract rates.

Risk: Medium The partnership’s fair risk profile is supported by stable cash flows generated from fee- based businesses plus the broad scope of operations, customer and product mix. Importantly, there is minimal competition in many of the partnership’s core markets given the synergistic relationship serving Valero Energy refineries. Further, we view refined product assets to be the highest quality in the MLP industry. The main risk centers on the asphalt refining business, which adds cash flow volatility due to the seasonal nature of the asphalt business (the majority of cash flows 2Q and 3Q) and crude oil price exposure. However, management is expected to retain (not pay out as distribution) just half of the asphalt business cash flow to account for the higher risk of the business.

22 October 2010 155 Barclays Capital | MLP Quarterly Monitor

ONEOK Partners, LP (OKS)

Figure 147: ONEOK Partners, LP (OKS)

Sub Sector: Natural Gas & NGL

Rating: 1-Overweight Annualized Distribution: $4.48 Price Target: $79.00 Yield: 5.69% Current Price: $78.77 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 4.71% Potential Upside to Target: 0.3% Dist. CAGR (Next 3 Yrs): 4.48% 52 Week High / Low: $79.24 - $25.57 Tax Deferral: 80% $ Millions , except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $4.03 $4.26 $1.08 $1.08 $1.09 $1.10 $4.35 $4.50 Growth (YoY) 9%6%4%2%1%2%2%3%

Total Distribution Receiving Units 82.89 90.86 90.92 91.42 96.40 96.40 93.78 101.36 Growth (YoY) 12%10%0%1%6%6%3%8%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $625.62 $434.59 $83.87 $105.02 $130.90 $141.39 $461.17 $600.35 Interest Expense $151.06 $206.02 $54.15 $53.33 $48.48 $49.33 $205.29 $197.73 Depreciation and Amortization $124.77 $164.14 $43.87 $43.99 $45.00 $45.00 $177.86 $190.00 Others ($38.13) ($13.79) $4.77 $4.70 $3.63 $3.63 $16.71 $15.50 Adjusted EBITDA $863.31 $790.95 $186.66 $207.03 $228.00 $239.34 $861.03 $1,003.58 Net Interest Expense ($151.06) ($206.02) ($54.15) ($53.33) ($48.48) ($49.33) ($205.29) ($197.73) Maintenance Capital Expenditures ($81.85) ($59.26) ($9.39) ($17.10) ($21.00) ($34.00) ($81.48) ($90.00) Others $6.38 $32.38 ($0.79) $2.90 $2.50 $2.50 $7.11 $8.00 Distributable Cash flow $636.78 $558.06 $122.33 $139.51 $161.02 $158.52 $581.37 $723.85

General Partner Cut $85.47 $97.84 $28.54 $29.56 $30.58 $31.60 $120.29 $146.19 Distributable Cash Flow (LP) $551.31 $460.22 $93.78 $109.95 $130.44 $126.92 $461.09 $577.66

Distributable Cash Flow Per Unit $6.65 $5.07 $1.03 $1.20 $1.35 $1.32 $4.92 $5.70

Total Distribution Coverage 165% 113% 85% 96% 113% 109% 101% 118%

Business Description ONEOK Partners, L.P. is one of the largest publicly traded master limited partnerships, and is a leader in the gathering, processing, storage and transportation of natural gas in the U.S. and owns one of the nation's premier natural gas liquids (NGL) systems, connecting NGL supply in the Mid-Continent and Rocky Mountain regions with key market centers.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E ONEOK Partners L.P. (OKS) 16.05x 17.32x 14.18x 1.58x 1.70x 1.40x 13.54x 15.95x 13.70x Natural Gas & NGL 15.96x 15.65x 13.46x 1.44x 1.33x 1.16x 14.68x 15.75x 13.11x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $5.07 $4.92 $5.70 Debt / EBITDA 3.57x 3.96x 3.08x Distribution $4.26 $4.35 $4.50 EBITDA / Interest 3.84x 4.19x 5.08x Coverage (Total Units) 113% 101% 118% Maint Cap / EBITDA 0.07x 0.09x 0.09x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 156 Barclays Capital | MLP Quarterly Monitor

Figure 148: Historical Yield Spreads

. . ONEOK Partners L.P. (OKS) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - ONEOK Partners L.P. (OKS) vs. 1-Year Yield Spread vs. US 10-Year Treasury Alerian MLP Index 2.0% 50% 45% 1.0% 40% 0.0% 35% 30% -1.0% 25% 20% -2.0% 15% -3.0% 10% 5% -4.0% 0% -5.0% -20 to 50 to -20 50 to 120 to 50 -90 to -20 -90 to 120 to 190 to 120 -160 to -90 to -160 -510 to -440 to -510 -370 to -440 -300 to -370 -230 to -300 -160 to -230 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 . Basis point differentials - ONEOK Partners L.P. (OKS) vs. United ONEOK Partners L.P. (OKS) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . States Treasury Bond (10 Y) Yield 10.0% 35% 9.0% 30% 8.0% 25% 7.0% 6.0% 20% 5.0% 15% 4.0% 10% 3.0% 5% 2.0% 1.0% 0% 0.0% 40 to 140 to 40 140 to 240 to 140 340 to 240 440 to 340 540 to 440 640 to 540 740 to 640 840 to 740 940 to 840 940 to 1040 940 to Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10

ONEOK Partners L.P. (OKS) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $79 on OKS is based on a 12-month distribution run rate of $4.72 and a target yield of 6%.

Investment Thesis We believe ONEOK is well positioned to show consistent distribution growth over a multi- year horizon driven by opportunities across its natural gas and NGL infrastructure. Importantly, OKS has strong leverage on its extensive NGL infrastructure network that stands to benefit from increased NGL production in the U.S. Management plans to raise distribution by $0.01per quarter in 2010/2011, which implies 3.4% distribution growth in 2010 and 3.6% growth in 2011. Included in the management outlook is distribution growth of 5%–10% per year in 2012 and 2013 driven by contributions from new projects mostly from the Bakken shale. Distribution growth of 5%–10% puts OKS growth among the highest in the MLP space. Key growth driver in the next two to three years will be new project contributions in the Bakken shale where OKS has dominant midstream position. Recently, OKS announced another $300 million–$355 million investment in the shale, bringing its total Bakken investment to nearly $1.4 billion. The capital will be spent in the next two to three years and adds additional EBITDA. Bakken drilling is expected to remain strong even in a weak gas price environment given oil-driven economics. New Bakken

22 October 2010 157 Barclays Capital | MLP Quarterly Monitor

volume will have synergies with OKS’s downstream infrastructure. Potential expansions should yield strong returns, better than management’s goal of 5x–7x. A key risk includes a slowdown in NGL production and commodity prices. While roughly 70% of earnings are fee-based, OKS margins have positive leverage to higher crude, NGL and gas prices through its predominantly POP processing contracts. More importantly, it has volumetric exposure to NGLs. While we believe NGL volume growth will remain strong given drilling activity concentrated in NGL-rich basins, a decline in NGL production would pose a key risk to our thesis.

Potential Catalysts / Timeline

„ Announcement of large growth projects or acquisitions that provide improved visibility into distribution growth.

Fundamental Drivers

„ Drilling activities behind its systems including Mid-Continent and Rockies.

„ Natural gas and NGL prices affect the gas processing business.

Risk: Medium The medium risk profile is supported by the stability of the partnership’s legacy interstate natural gas pipeline assets, balanced with cash flow volatility in the NGL gathering and fractionation segment. However, we believe the significantly improved product and geographic diversification of cash flows will partially dampen the risks associated with commodity prices and concerns with securing contracts on the Northern Border Pipeline.

22 October 2010 158 Barclays Capital | MLP Quarterly Monitor

Plains All American Pipeline, LP (PAA)

Figure 149: Plains All American Pipeline, LP (PAA)

Sub Sector: Crude Oil

Rating: 1-Overweight Annualized Distribution: $3.77 Price Target: $64.00 Yield: 5.96% Current Price: $63.30 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 7.06% Potential Upside to Target: 1.1% Dist. CAGR (Next 3 Yrs): 4.68% 52 Week High / Low: $64.85 - $44.12 Tax Deferral: 80% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $3.54 $3.66 $0.94 $0.94 $0.95 $0.95 $3.78 $3.95 Growth (YoY) 6.15% 3.39% 3.31% 4.14% 3.26% 2.51% 3.30% 4.5%

Units Outstanding (in mm) Common units 121.8 131.0 137.0 137.0 137.0 141.9 138.2 142.6 Sub-Ordinated Units 0.00.00.00.00.00.00.00.0

Total Distribution Receiving Units 121.8 131.0 137.0 137.0 137.0 141.9 138.2 142.6 Growth (YoY) 7.0% 7.6% 5.5% 3.1%

Distributable Cash Flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Operating Income $655.0 $778.0 $211.0 $183.0 $183.1 $227.1 $804.2 $933.8 Depreciation, Depletion & Amortization $210.0 $236.0 $67.0 $64.0 $63.0 $62.0 $256.0 $264.0 Other $22.1 $7.5 ($6.0) $1.0 $2.0 $2.0 ($1.0) $3.0 Adjusted EBITDA $887.1 $1,021.5 $272.0 $248.0 $248.1 $291.1 $1,059.2 $1,200.8 Net Interest Expense ($196.0) ($224.0) ($58.0) ($62.0) ($62.0) ($61.6) ($243.6) ($256.9) Maintenance Capital Expenditures ($81.0) ($81.0) ($11.0) ($22.0) ($23.0) ($29.0) ($85.0) ($89.0) Other ($13.0) ($25.0) ($2.0) ($3.0) ($3.0) ($4.0) ($12.0) ($14.0) Distributable Cash flow $597.1 $691.5 $201.0 $161.0 $160.1 $196.5 $718.5 $840.8

General Partner Cut ($114.0) ($137.0) ($41.0) ($41.6) ($42.3) ($44.8) ($169.7) ($209.7) Distributable Cash Flow (LP) $483.1 $554.5 $160.0 $119.4 $117.7 $151.7 $548.8 $631.1

Distributable Cash Flow Per Unit $3.97 $4.23 $1.17 $0.87 $0.86 $1.07 $3.97 $4.43

Total Distribution Coverage 112% 116% 125% 92% 90% 112% 105% 112%

Business Description Plains All American Pipeline, L.P.is a publicly-traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products. Through its general partner interest and majority equity ownership position in PAA Natural Gas Storage, L.P., PAA is also engaged in the development and operation of natural gas storage facilities.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Plains All American Pipeline L.P. (PAA) 14.87x 16.07x 14.82x 1.40x 1.51x 1.39x 13.31x 16.12x 14.75x Crude Oil 23.43x 24.30x 12.16x 1.41x 1.40x 1.36x 13.20x 14.10x 12.58x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $4.23 $3.97 $4.43 Debt / EBITDA 4.05x 4.10x 3.91x Distribution $3.66 $3.78 $3.95 EBITDA / Interest 4.56x 4.26x 4.60x Coverage (Total Units) 116% 105% 112% Maint Cap / EBITDA 0.08x 0.08x 0.08x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 159 Barclays Capital | MLP Quarterly Monitor

Figure 150: Historical Yield Spreads

. . Plains All American Pipeline L.P. (PAA) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Plains All American Pipeline L.P. 1-Year Yield Spread vs. US 10-Year Treasury (PAA) vs. Alerian MLP Index 2.0% 35% 1.5% 30% 1.0% 25% 0.5% 20% 0.0% 15% -0.5% 10% -1.0% 5% -1.5% 0% -2.0% 1050 to 5090 to -30 to 10 to -30 90 to 130 to 90 -70 to -30 -70 to 130 to 170 to 130 -110 to -70 to -110 -230 to -190 to -230 -150 to -190 -110 to -150 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 . Basis point differentials - Plains All American Pipeline L.P. (PAA) Plains All American Pipeline L.P. (PAA) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . vs. United States Treasury Bond (10 Y) Yield 40% 10.0% 35% 30% 8.0% 25% 20% 6.0% 15% 4.0% 10% 5% 2.0% 0%

0.0% -20 to 100 to -20 100 to 220 to 100 340 to 220 460 to 340 580 to 460 700 to 580 820 to 700 940 to 820 940 to 1060 to 940 1060 to 1180 to 1060 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10

Plains All American Pipeline L.P. (PAA) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $64 on PAA is based on a 12-month cash distribution run rate of $3.95 and a target yield of 6.2%. We estimate distribution growth of 4% in 2010. Recent acquisitions and organic growth projects provide visible distribution growth prospects. Combining strategically located assets, a solid balance sheet and strong management, we believe Plains All American is well positioned to grow 4%–5% over the long-term.

Investment Thesis We rate PAA 1-Overweight/2-Neutral. We believe that the partnership has a solid organic growth profile, strong track record of growth through acquisition and a healthy distribution coverage ratio. In addition, we believe PAA deserves to capture a premium valuation relative to the pipeline index based on its dominant position in the crude oil industry, an expansive growth opportunity set and a strong management team.

Potential Catalysts / Timeline

„ November 3 – Third quarter earnings release.

„ 2011 – Expected completion of crude oil storage expansions in Cushing, OK and Patoka, IL.

22 October 2010 160 Barclays Capital | MLP Quarterly Monitor

Fundamental Drivers

„ Pipeline cash flows will likely be driven by throughput volumes and fees per barrel.

„ Capline, Capwood, western Canadian pipelines, and Cushing Terminal cash flows to be based on refined product consumption and demand growth in the Midwest market.

„ Capline’s volumes also should be driven by foreign crude oil imports into the Louisiana

„ Offshore Oil Port and crude oil production in the Gulf Coast region.

„ Crude oil production in the California OCS region.

„ Volatility in crude oil prices, lease volumes, margins, rental fees, and throughput at terminals.

„ Weather conditions affect LPG demand.

Risk: Medium Management’s ability to construct a countercyclical asset base, balancing gathering pipelines and terminals, and acquisitions of fee-based pipelines reduces its overall risk profile. However, PAA is still exposed to the risk of a flat forward slope of crude oil prices impacting pipeline and terminal assets. Although recent acquisitions have effectively diversified cash flows, PAA continues to be exposed to declining crude oil production in California. Moreover, the partnership’s capacity on the Capline System provides the swing volumes into the Midwest region, which makes it vulnerable to high levels of downtime at refineries or a ramp-up in western Canadian crude oil production displacing crude oil volumes imported from the Gulf Coast.

22 October 2010 161 Barclays Capital | MLP Quarterly Monitor

PAA Natural Gas Storage, LP (PNG)

Figure 151: PAA Natural Gas Storage, LP (PNG)

Sub Sector: Natural Gas & NGL

Rating: 1-Overweight Annualized Distribution: $1.35 Price Target: $27.00 Yield: 5.51% Current Price: $24.50 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): na Potential Upside to Target: 10.2% Dist. CAGR (Next 3 Yrs): 8.36% 52 Week High / Low: $26.68 - $22.25 Tax Deferral: 80% $Millions, except per unit amounts

Cash Flow Summary 2009 PF 1Q10 2Q10 3Q10e 4Q10e 2010e 2011E 2012E Cash Distribution Per Unit $0.00 $0.21 $0.34 $0.34 $0.89 $1.44 $1.58 Growth (YoY) 9.9%

Units Outstanding (in mm) Common units 31.6 31.6 31.6 31.6 31.6 31.6 33.5 35.4 Sub-Ordinated Units 13.9 13.9 13.9 11.9 11.9 12.9 13.2 17.4

Total Distribution Receiving Units 45.5 45.5 45.5 43.5 43.5 44.5 46.7 52.7 Growth (YoY) -2.2% 4.9% 12.9%

Distributable Cash Flow Calculation 2009 PF 1Q10 2Q10 3Q10e 4Q10e 2010e 2011E 2012E Operating Income $24.8 $6.0 $10.6 $11.1 $11.3 $38.9 $69.3 $106.9 Depreciation, Depletion & Amortization $12.2 $2.9 $3.5 $3.6 $3.6 $13.7 $16.1 $17.1 Other $2.6 ($0.0) ($0.0) $0.0 $0.0 ($0.0) $0.0 $0.0 Adjusted EBITDA $39.6 $8.9 $14.2 $14.7 $14.9 $52.6 $85.4 $124.0 Net Interest Expense ($0.8) ($3.0) ($2.8) ($0.9) ($0.9) ($7.5) ($6.2) ($17.8) Maintenance Capital Expenditures ($0.7) ($0.2) ($0.0) ($0.2) ($0.2) ($0.5) ($0.8) ($0.9) Other ($0.4) ($0.0) ($0.2) ($0.2) ($0.2) ($0.5) ($0.7) ($0.8) Distributable Cash flow $37.8 $5.7 $11.2 $13.5 $13.7 $44.1 $77.7 $104.5

General Partner Cut $0.0 ($0.2) ($0.3) ($0.3) ($0.8) ($2.1) ($4.3) Distributable Cash Flow (LP) $5.7 $11.0 $13.2 $13.4 $43.3 $75.5 $100.2

Distributable Cash Flow Per Unit $0.12 $0.24 $0.30 $0.31 $0.97 $1.62 $1.90

Common Distribution Coverage 0% 114% 90% 91% 111% 112% 119%

Business Description PNG is a publicly traded master limited partnership engaged in the development, acquisition, operation and commercial management of natural gas storage facilities. The Partnership currently owns and operates two natural gas storage facilities located in Louisiana and Michigan, which together have an aggregate working gas storage capacity of approximately 50 BCF. The Partnership’s general partner, as well as the majority of the Partnership’s limited partner interests is owned by Plains All American Pipeline, L.P.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E PAA Natural Gas Storage L.P. (PNG) na 25.18x 15.15x na 1.82x 1.09x na 26.61x 16.54x Natural Gas & NGL 15.96x 15.65x 13.46x 1.44x 1.33x 1.16x 14.68x 15.75x 13.11x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit na $0.97 $1.62 Debt / EBITDA na 4.73x 4.76x Distribution na $0.89 $1.44 EBITDA / Interest na 7.02x 13.69x Coverage (Total Units) na 110% 113% Maint Cap / EBITDA na 0.01x 0.01x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 162 Barclays Capital | MLP Quarterly Monitor

Valuation Discussion Our price target of $27 on PNG is based on a $1.42 distribution run rate and 5.25% target yield. Visible organic growth should drive 8% distribution growth CAGR through 2013. We view PAA Natural Gas as a high-quality, high-growth, relatively low-risk MLP with an attractive total return value proposition of approximately 14%.

Investment Thesis We rate PNG 1-Overweight/2-Neutral. The partnership is a pure-play natural gas storage MLP with visible growth prospects, a relatively low risk profile, strategically located assets and a strong management team. PNG offers an attractive total return value proposition of approximately 14%. We believe PNG offers potential growth upside from storage acquisition opportunities and commercial asset optimization. PNG was spun off from PAA (primarily a crude oil pipeline and storage MLP) to unlock the value of the gas storage business and provide a low-cost currency to expand PNG’s robust growth opportunity set. In terms of unlocking value, natural gas storage assets trade at 50–75bp premium to crude oil/refined product pipelines, due to a relatively lower risk profile from capacity payments under multi-year contracts. In terms of low-cost currency, the valuation premium for gas storage and the lower incentive distribution rights (IDRs) provide PNG with a lower cost of equity capital to finance its growth program

Potential Catalysts / Timeline

„ November 3 – Third quarter earnings release.

„ April 2011 – Expected completion of 8 Bcf expansion of Pine Prairie, LA natural gas storage facility.

Fundamental Drivers

„ Natural gas demand is driven by economic growth, weather conditions, fuel switching (from coal), population growth and environmental regulation.

„ Natural gas demand from electric power, industrial, residential and commercial segments.

„ Level of domestic natural gas production, LNG imports.

„ Capacity utilization of domestic natural gas storage.

„ Natural gas price volatility and winter-summer spreads.

Risk: Low PNG has a low risk profile due its stable, fee-based cash flow stream. In 2009, approximately 99% of revenues were fee-based, comprised of 92% from fixed-capacity payments (regardless of capacity used) and 7% from hub service fees. PNG has minimal direct commodity price exposure. Cash flow stability is also supported by multi-year term contracts with a diverse customer base. The average Pine Prairie contract is 3.7 years, while Bluewater average is 2.2 years. The diverse customer base includes utilities, pipelines, producers, marketers, industrial users and LNG importers. While PNG does not yet have a credit rating, it was part of investment grade rated PAA. Combining the parent’s BBB- credit rating and PNG’s high cash flow stability, we view PNG effectively as an investment grade credit. PNG’s average debt/EBITDA is expected at 3.5x.

22 October 2010 163 Barclays Capital | MLP Quarterly Monitor

Regency Energy Partners, LP (RGNC)

Figure 152: Regency Energy Partners, LP (RGNC)

Sub Sector: Gathering and Processing

Rating: 1-Overweight Annualized Distribution: $1.78 Price Target: $27.00 Yield: 7.25% Current Price: $24.55 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 6.83% Potential Upside to Target: 10.0% Dist. CAGR (Next 3 Yrs): 3.31% 52 Week High / Low: $26.58 - $18.56 Tax Deferral: 100%

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $1.76 $1.78 $0.45 $0.45 $0.45 $0.45 $1.78 $1.78 Growth (YoY) 13% 1% 1% 0%

Total Distribution Receiving Units 71.58 83.94 81.19 81.19 81.19 92.19 83.94 123.83 Growth (YoY) 34% 17% 17% 48%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $101.02 $140.39 ($0.45) ($9.39) ($3.38) $0.19 ($13.03) $32.72 Interest Expense $63.24 $78.00 $22.35 $22.22 $20.46 $21.83 $86.86 $98.01 Depreciation and Amortization $102.57 $109.89 $27.48 $29.60 $30.00 $32.00 $119.08 $136.00 Others $23.69 ($120.98) $10.33 $31.13 $33.29 $33.29 $97.62 $119.50 Adjusted EBITDA $290.52 $207.30 $59.70 $73.56 $80.36 $87.31 $290.53 $386.23 Net Interest Expense ($62.87) ($73.69) ($21.19) ($19.49) ($20.46) ($21.83) ($82.97) ($98.01) Maintenance Capital Expenditures ($18.15) ($20.32) ($3.94) ($4.07) ($5.50) ($6.00) ($19.51) ($21.00) Others $4.31 $6.01 $1.64 $0.00 $18.29 $18.29 $1.64 $79.50 Distributable Cash flow $213.81 $119.30 $36.20 $50.01 $72.69 $77.76 $189.69 $346.72

General Partner Cut $4.02 $5.67 $1.56 $2.08 $2.33 $2.33 $8.29 $13.87 Distributable Cash Flow (LP) $209.78 $113.63 $34.65 $47.93 $70.36 $75.43 $181.40 $332.84

Distributable Cash Flow Per Unit $2.93 $1.35 $0.43 $0.59 $0.87 $0.82 $2.16 $2.69

Total Distribution Coverage 122% 87% 107% 108% 107% 115% 108% 109%

Business Description Regency Energy Partners LP is a growth-oriented, midstream energy partnership engaged in the gathering and processing, contract compression, marketing and transporting of natural gas and natural gas liquids. Regency's general partner is owned by Energy Transfer Equity, L.P.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Regency Energy Partners L.P. (RGNC) 15.87x 12.73x 12.07x 1.50x 1.21x 1.14x 14.96x 15.46x 12.31x Gathering and Processing 10.29x 14.40x 11.40x 0.96x 1.29x 0.98x 11.37x 13.99x 11.50x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $1.35 $2.16 $2.69 Debt / EBITDA 4.07x 3.82x 3.57x Distribution $1.78 $1.78 $1.78 EBITDA / Interest 2.64x 3.48x 3.95x Coverage (Total Units) 87% 108% 109% Maint Cap / EBITDA 0.10x 0.06x 0.05x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 164 Barclays Capital | MLP Quarterly Monitor

Figure 153: Historical Yield Spreads

. . Regency Energy Partners L.P. (RGNC) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Regency Energy Partners L.P. (RGNC) 1-Year Yield Spread vs. US 10-Year Treasury vs. Alerian MLP Index 17.0% 45% 15.0% 40% 13.0% 35% 11.0% 30% 9.0% 25% 7.0% 20% 15% 5.0% 10% 3.0% 5% 1.0% 0% -1.0% -3.0% 100 to 310 310 to 520 520 to 730 730 to 940 -110 to 100 940 to 1150 to 940 -320 to -110 1150 to 1360 to 1150 1570 to 1360 1780 to 1570 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 . Basis point differentials - Regency Energy Partners L.P. (RGNC) Regency Energy Partners L.P. (RGNC) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . vs. United States Treasury Bond (10 Y) Yield 29.0% 45% 40% 24.0% 35% 30% 19.0% 25% 20% 14.0% 15% 9.0% 10% 5% 4.0% 0%

-1.0% 190 to 520 to 190 850 to 520 -140 to 190 -140 to 850 to 1180 to 850 1180 to 1510 to 1180 1840 to 1510 2170 to 1840 2500 to 2170 2830 to 2500 3160 to 2830 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10

Regency Energy Partners L.P. (RGNC) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 90 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $27 on RGNC is based on a $1.87 12-month cash distribution and a 7% target yield.

Investment Thesis We believe Regency Energy has effectively executed its strategy of achieving scale and improving cash flow quality. Due to the effects of three acquisitions (approximately $900 million) year-to-date, we estimate 2011 EBITDA will reach more than $420 million with 80% of cash flow from fee-based business. This is higher than the $375 million–$400 million EBITDA and 80% fee-based mix management targeted to reach investment grade credit rating. Importantly, we estimate nearly 50% of EBITDA will come from interstate and intrastate pipeline assets that have over 10-year firm transporation agreements. Given significant transformation of asset mix from predominantly G&P to pipelines in the last two years, we believe RGNC will trade in line with diversified pipeline MLP group which trades at 140bp premium to the G&P MLP group. While RGNC’s current yield of 7.1% puts it 90bp above group average, we believe RGNC can trade toward the group average given its growth profile and cash flow stability. We estimate a three-year distribution CAGR of 5%.

22 October 2010 165 Barclays Capital | MLP Quarterly Monitor

Potential Catalysts / Timeline

„ Timing and size of acquisitions.

„ Timing of large organic projects.

Fundamental Drivers

„ Level of natural gas prices and drilling activities behind the pipelines.

„ Ability to diversify supply of growth opportunities.

„ Basis differentials between natural gas markets.

„ Ability to secure new well connections.

Risk: Medium Regency carries an average risk profile related to movements in natural gas and NGL prices. A sharp decline in natural gas prices could impair volumes on gathering systems and a drop in NGL prices would crimp processing margins. While pure-play G&P MLPs carry higher- than-average risk, Regency has lower-than-average exposure to commodity prices in the group, which supports our medium risk rating. With the recent acquisitions that added substantial fee-based contracts (including CDM Resources), approximately 30% of the partnership’s cash flow is exposed to commodity price movement. Other risks include level of drilling activities, successfully identifying and executing accretive organic projects, and ability to raise capital to fund projects and acquisitions.

22 October 2010 166 Barclays Capital | MLP Quarterly Monitor

Spectra Energy Partners, LP (SEP)

Figure 154: Spectra Energy Partners, LP (SEP)

Sub Sector: Natural Gas & NGL

Rating: 1-Overweight Annualized Distribution: $1.72 Price Target: $34.00 Yield: 4.88% Current Price: $35.26 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): na Potential Upside to Target: -3.6% Dist. CAGR (Next 3 Yrs): 10.51% 52 Week High / Low: $36.31 - $22.58 Tax Deferral: 80% $ Millions , except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $1.38 $1.56 $0.42 $0.43 $0.44 $0.45 $1.74 $1.91 Growth (YoY) 11.3% 13.0% 13.5% 13.2% 10.0% 9.8% 11.5% 10.0%

Units Outstanding (in mm) Common units 47.80 54.70 58.70 58.70 80.30 80.30 69.50 86.57 Sub-Ordinated Units 21.60 21.60 21.60 21.60 0.00 0.00 10.80 0.00

Total Distribution Receiving Units 69.40 76.30 80.30 80.30 80.30 80.30 80.30 86.57 Growth (YoY) 5% 10% 14% 8% 0% 0% 5% 8%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $101.25 $135.88 $39.09 $33.22 $38.68 $34.29 $145.28 $182.08 Interest Expense $17.80 $16.70 $4.00 $3.90 $5.44 $5.44 $18.78 $30.77 Depreciation and Amortization $26.30 $28.50 $7.40 $7.40 $7.40 $7.30 $29.50 $31.43 Others ($0.81) $9.66 $7.95 ($0.35) $8.16 ($0.81) $15.02 $29.58 Adjusted EBITDA $144.54 $190.74 $58.44 $44.17 $59.68 $46.22 $208.58 $273.85 Net Interest Expense ($14.30) ($16.20) ($1.70) ($6.00) ($1.50) ($8.88) ($18.08) ($26.77) Cash Paid for Income Tax $0.00 ($0.10) $0.00 ($0.45) $0.00 $0.00 ($0.45) $0.00 Maintenance Capital Expenditures ($11.28) ($16.30) ($1.00) ($4.30) ($2.80) ($7.04) ($15.14) ($16.49)

Distributable Cash flow $118.96 $158.14 $55.74 $33.42 $55.38 $30.30 $174.91 $230.60

General Partner Cut ($2.18) ($5.43) ($2.19) ($2.46) ($2.73) ($3.00) ($10.39) ($22.80) Distributable Cash Flow (LP) $116.78 $152.71 $53.54 $30.96 $52.65 $27.30 $164.52 $207.80

Distributable Cash Flow Per Unit $1.68 $2.00 $0.67 $0.39 $0.66 $0.34 $2.05 $2.40

Common Distribution Coverage 177% 179% 217% 123% 204% 103% 161% 167% Total Distribution Coverage 122% 128% 158% 90% 149% 76% 118% 125%

Business Description Spectra Energy Partners, LP is a Houston-based master limited partnership, formed by Spectra Energy Corp , that owns interests in natural gas transportation and storage assets in the United States, including more than 3,100 miles of transmission and gathering pipeline and approximately 49 billion cubic feet (Bcf) of natural gas storage. These assets are capable of transporting 3.26 Bcf of natural gas per day from growing supply areas to high demand markets.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Spectra Energy Partners L.P. (SEP) 17.65x 17.22x 14.69x 1.15x 1.12x 0.95x 15.28x 17.91x 14.47x Natural Gas & NGL 15.96x 15.65x 13.46x 1.44x 1.33x 1.16x 14.68x 15.75x 13.11x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $2.00 $2.05 $2.40 Debt / EBITDA 1.85x 1.82x 2.43x Distribution $1.56 $1.74 $1.91 EBITDA / Interest 12.65x 12.14x 9.56x Coverage (Total Units) 128% 118% 125% Maint Cap / EBITDA 0.09x 0.07x 0.08x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 167 Barclays Capital | MLP Quarterly Monitor

Figure 155: Historical Yield Spreads

. . Spectra Energy Partners L.P. (SEP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Spectra Energy Partners L.P. (SEP) vs. 1-Year Yield Spread vs. US 10-Year Treasury Alerian MLP Index -2.0% 45% -2.5% 40% -3.0% 35% -3.5% 30% -4.0% 25% -4.5% 20% -5.0% 15% 10% -5.5% 5% -6.0% 0% -6.5% -7.0% -130 to -70 to -130 -670 to -610 to -670 -550 to -610 -490 to -550 -430 to -490 -370 to -430 -310 to -370 -250 to -310 -190 to -250 -130 to -190 Jul-07 Jul-08 Jul-09 Jul-10 Jan-08 Jan-09 Jan-10 . Basis point differentials - Spectra Energy Partners L.P. (SEP) vs. Spectra Energy Partners L.P. (SEP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . United States Treasury Bond (10 Y) Yield 6.0% 30% 5.5% 25% 5.0% 4.5% 20% 4.0% 15% 3.5% 3.0% 10% 2.5% 5% 2.0% 1.5% 0% 1.0% 80 to 130 to 80 Jul-07 Jul-08 Jul-09 Jul-10 130 to 180 to 130 230 to 180 280 to 230 330 to 280 380 to 330 430 to 380 480 to 430 530 to 480 580 to 530 Jan-08 Jan-09 Jan-10

Spectra Energy Partners L.P. (SEP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

145 140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $34 on SEP is based on a 12-month distribution run rate of $1.89 and a yield of 5.6%. Our present forecast on Spectra Energy incorporates organic growth tied to expansions for Egan, Moss Bluff and Gulfstream as well as our expectations for annual third party acquisitions over the 2011–14 to drive double-digit distribution growth.

Investment Thesis Spectra Energy Partners was formed by Spectra Energy for strategic purposes and should benefit from SE’s scale, physical footprint and relationships. SE’s asset base serves as a gateway to premium priced, growing gas markets, which sets up an extensive array of organic growth opportunities that we believe are capable of driving unit distribution growth at high single digits and/or low double-digit growth with annual third-party acquisitions.

Potential Catalysts / Timeline SEP has indicated that the growth strategy employed by the MLP is underpinned by 1) organic expansions, 2) M&A activity at the MLP level, and 3) drop-downs from the general partner. To date, all three drivers have contributed to the increase in distributions, which has risen 37% since its 2007 IPO. We think the MLP will continue with this approach and

22 October 2010 168 Barclays Capital | MLP Quarterly Monitor

have assumed annual transactions that range from $300 million to $600 million in 2011–14, pushing the IDR splits into the 50% level by 1H11.

In August, Spectra Energy completed its $540 acquisition of Bobcat Gas Storage. Due to the large size and considerable development costs of the project, we think the deal took place at the parent level but believe the assets are likely candidates for future drop-downs into the MLP. Such transactions would accelerate distribution growth while development of additional expansion caverns at the MLP would boost ultimate transaction returns given SEP’s superior cost of capital.

Subsequent to the second quarter cash distribution, 21.6 million subordinated units held by SE were converted into common units on a one-for-one basis, effective August 13, 2010. The general partner and its affiliates own 73% of the outstanding common units.

Fundamental Drivers

„ Level of natural gas price and drilling activities behind the pipelines.

„ Drop-downs from the GP.

„ Ability to recontract capacity

„ Ability to develop and integrate expansion projects.

„ Basis differentials between natural gas markets.

Risk Profile: Low Our low risk profile is supported by several items including a strong GP with a large inventory of high-quality assets suitable for drop-downs and exposure to high-growth markets. Interstate pipeline assets have a blended contract life of over 12 years, exceeding the typical three- to five-year duration shown by competitive or declining markets. Capacity payments comprise over 90% of cash flows. We expect capacity expansion opportunities to arise beyond current projects under development given SEP’s strategic locations in high- growth areas.

22 October 2010 169 Barclays Capital | MLP Quarterly Monitor

Suburban Propane Partners, LP (SPH)

Figure 156: Suburban Propane Partners, LP (SPH)

Sub Sector: Propane

Rating: 3-Underweight Annualized Distribution: $3.38 Price Target: $46.00 Yield: 6.18% Current Price: $54.65 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 9.11% Potential Upside to Target: -15.8% Dist. CAGR (Next 3 Yrs): 2.80% 52 Week High / Low: $57.24 - $39.16 Tax Deferral: 80% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10 4Q10E 2010E 2011E Cash Distribution Per Unit $3.15 $3.28 $0.84 $0.84 $0.85 $0.85 $3.37 $3.46 Growth (YoY) 12.9% 4.3% -74.5% 0.6% 0.6% 0.6% 296.5% 2.7%

Units Outstanding (in mm) Common units 32.79 33.13 35.54 35.54 35.54 35.54 35.54 35.54 Sub-Ordinated Units 0.00 0.00 1.00 2.00 3.00 4.00 5.00 0.00

Total Distribution Receiving Units 32.79 33.13 36.54 37.54 38.54 39.54 40.54 35.54 Growth (YoY) na 1.0% 10.3% 2.7% 2.7% 2.6% 2.5% -12.3%

Distributable Cash Flow Calculation 2008 2009 1Q10 2Q10 3Q10 4Q10E 2010E 2011E EBIT $150.13 $210.62 $55.76 $114.80 $0.56 ($8.77) $162.34 $166.47 Depreciation and Amortization $28.39 $30.34 $7.08 $7.14 $8.87 $8.30 $31.39 $31.00 Restructuring Charges $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Others $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Adjusted EBITDA $178.52 $240.96 $62.84 $121.94 $9.42 ($0.47) $193.73 $197.47 Net Interest Expense $37.05 $38.27 $7.18 $6.61 $6.81 $6.52 $27.12 $26.09 Maintenance Capital Expenditures $12.05 $12.20 $1.15 $2.82 $2.94 $5.00 $11.91 $13.00 Others $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Distributable Cash flow $129.43 $190.49 $54.51 $112.51 ($0.32) ($11.99) $154.70 $158.38

Distributable Cash Flow (LP) $129.43 $190.49 $54.51 $112.51 ($0.32) ($11.99) $154.70 $158.38

Distributable Cash Flow Per Unit $3.95 $5.75 $1.49 $3.00 ($0.01) ($0.30) $3.82 $4.46

Common Distribution Coverage 126% 175% 179% 357% -1% -36% 113% 129% Total Distribution Coverage 126% 175% 179% 357% -1% -36% 113% 129%

Business Description Suburban Propane Partners, L.P., through its subsidiaries, engages in the retail marketing and distribution of propane, fuel oil, and refined fuels, and the marketing of natural gas and electricity in the United States. The Partnership serves the energy needs of approximately 850,000 residential, commercial, industrial and agricultural customers through more than 300 locations in 30 states

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Suburban Propane Partners L.P. (SP 9.89x 12.15x 12.21x 1.10x 1.35x 1.36x 9.52x 12.20x 12.35x Propane 11.61x 12.62x 12.32x 1.18x 1.28x 1.26x 10.55x 13.14x 11.21x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $5.75 $3.82 $4.46 Debt / EBITDA 1.49x 1.75x 1.76x Distribution $3.28 $3.37 $3.46 EBITDA / Interest 6.13x 7.32x 7.57x Coverage (Total Units) 175% 113% 129% Maint Cap / EBITDA 0.05x 0.06x 0.07x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 170 Barclays Capital | MLP Quarterly Monitor

Figure 157: Historical Yield Spreads

. . Suburban Propane Partners L.P. (SPH) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Suburban Propane Partners L.P. 1-Year Yield Spread vs. US 10-Year Treasury (SPH) vs. Alerian MLP Index 4.0% 45% 3.0% 40% 35% 2.0% 30% 25% 1.0% 20% 0.0% 15% 10% -1.0% 5% -2.0% 0% -3.0% 2090 to -50 to 20 to -50 90 to 160 to 90 160 to 230 to 160 300 to 230 370 to 300 -120 to -50 to -120 -330 to -260 to -330 -190 to -260 -120 to -190 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 . Basis point differentials - Suburban Propane Partners L.P. (SPH) Suburban Propane Partners L.P. (SPH) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . vs. United States Treasury Bond (10 Y) Yield 11.0% 50% 10.0% 45% 9.0% 40% 35% 8.0% 30% 7.0% 25% 6.0% 20% 5.0% 15% 4.0% 10% 5% 3.0% 0% 2.0% 1.0% 50 to 160 to 50 160 to 270 to 160 380 to 270 490 to 380 600 to 490 710 to 600 820 to 710 930 to 820 930 to 1040 to 930 1040 to 1150 to 1040 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10

Suburban Propane Partners L.P. (SPH) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $46 on SPH is based on a 12-month cash distribution run rate of $3.46 and a target yield of 7.5%. We believe that propane partnerships, including Suburban Propane, will need to focus on maintaining lean operating cost structures over the near term to offset conservation efforts driven by a weak propane demand environment.

Investment Thesis In our view, the partnership has ample liquidity to weather a challenging propane demand environment and capitalize on growth opportunities by acquiring incremental gallons from mom and pop propane distributors. The partnership still has potential to expand growth opportunities, as the fragmented propane industry provides for growth via acquisition. However, on a relative basis, we expect SPH to lag the MLP sector on a total return basis, as investors continue to gravitate toward growth partnerships, given that raising the distribution payment continues to be a key driver to stock performance.

Potential Catalysts / Timeline

„ Early November – Fourth quarter earnings release

22 October 2010 171 Barclays Capital | MLP Quarterly Monitor

„ Potential acquisitions that would provide both economies of scale and operating synergies.

Fundamental Drivers

„ Cold weather drives propane and heating oil sales.

„ Gross profit and EBITDA per retail gallon margins are affected by propane prices and procurement costs.

„ Customer retention rates and ability to expand margins in heating oil business.

Risk: Medium In general, weather conditions have a significant effect on propane demand for heating and agricultural purposes. As such, propane partnerships tend to have a higher risk profile than pipelines, given propane’s seasonality of operations and vulnerability to warm temperatures in the winter.

22 October 2010 172 Barclays Capital | MLP Quarterly Monitor

Sunoco Logistics Partners, LP (SXL)

Figure 158: Sunoco Logistics Partners, LP (SXL)

Sub Sector: Refined Products

Rating: 2-Equal Weight Annualized Distribution: $4.56 Price Target: $80.00 Yield: 5.73% Current Price: $79.52 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 10.44% Potential Upside to Target: 0.6% Dist. CAGR (Next 3 Yrs): 8.92% 52 Week High / Low: $80.49 - $50.37 Tax Deferral: 75% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $3.79 $4.21 $1.12 $1.14 $1.17 $1.19 $4.61 $5.02 Growth (YoY) 11.9% 11.2% 9.9% 9.6% 9.4% 9.4% 9.5% 8.9%

Units Outstanding (in mm) Common units 28.8 30.5 31.2 31.2 32.6 33.9 32.2 34.7 Sub-Ordinated Units 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total Distribution Receiving Units 28.8 30.5 31.2 31.2 32.6 33.9 32.2 34.7 Growth (YoY) 0.4% 5.8% 5.6% 7.9%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Operating Income $251.2 $295.0 $90.5 $78.3 $59.9 $66.4 $295.0 $330.7 Depreciation, Depletion & Amortization $40.1 $48.0 $11.6 $11.5 $12.2 $12.7 $48.0 $64.1 Other $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Adjusted EBITDA $291.3 $343.1 $102.0 $89.8 $72.1 $79.1 $343.1 $394.8 Net Interest Expense $31.1 $44.7 $9.5 $11.7 $11.4 $12.0 $44.7 $79.4 Maintenance Capital Expenditures $25.7 $32.2 $2.7 $6.4 $6.3 $16.8 $32.2 $34.0 Other $232.1 $266.2 $89.8 $71.8 $54.4 $50.2 $266.2 $281.4 Distributable Cash flow $2.5 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

General Partner Cut ($198.7) ($214.9) ($78.0) ($59.2) ($41.1) ($36.6) ($214.9) ($223.9) Distributable Cash Flow (LP) $201.2 $214.9 $78.0 $59.2 $41.1 $36.6 $214.9 $223.9

Distributable Cash Flow Per Unit $6.98 $7.04 $2.70 $1.92 $1.32 $1.17 $7.04 $6.45

Total Distribution Coverage 184% 167% 242% 169% 113% 98% 153% 128%

Business Description Sunoco Logistics Partners L.P. is a master limited partnership formed to acquire, own and operate refined products and crude oil pipelines and terminal facilities. The Refined Products Pipeline System consists of approximately 2,200 miles of refined products pipelines located in the northeast, midwest and southwest United States and equity interests in four refined products pipelines. The Terminal Facilities consist of approximately 10 million shell barrels of refined products terminal capacity and approximately 23 million shell barrels of crude oil terminal capacity (including approximately 20 million shell barrels of capacity at the Nederland Terminal on the Gulf Coast of Texas). The Crude Oil Pipeline System consists of approximately 3,850 miles of crude oil pipelines, located principally in Oklahoma and Texas, and majority ownership interests in two crude oil pipelines.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Sunoco Logistics Partners L.P. (SXL) 11.32x 13.26x 12.34x 0.77x 0.90x 0.84x 10.86x 14.84x 13.03x Refined Products 13.13x 14.13x 12.78x 1.14x 1.23x 1.11x 14.53x 16.47x 14.14x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $7.04 $7.04 $6.45 Debt / EBITDA 2.53x 3.89x 3.54x Distribution $4.21 $4.61 $5.02 EBITDA / Interest 7.68x 4.72x 4.97x Coverage (Total Units) 167% 153% 128% Maint Cap / EBITDA 0.09x 0.10x 0.09x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 173 Barclays Capital | MLP Quarterly Monitor

Figure 159: Historical Yield Spreads

. . Sunoco Logistics Partners L.P. (SXL) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Sunoco Logistics Partners L.P. (SXL) 1-Year Yield Spread vs. US 10-Year Treasury vs. Alerian MLP Index 1.0% 35% 0.5% 30% 0.0% 25% -0.5% -1.0% 20% -1.5% 15% -2.0% 10% -2.5% 5% -3.0% 0% -3.5% -4.0% -20 to 40 to -20 40 to 100 to 40 -80 to -20 -80 to 100 to 160 to 100 -140 to -80 to -140 -440 to -380 to -440 -320 to -380 -260 to -320 -200 to -260 -140 to -200 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 . Basis point differentials - Sunoco Logistics Partners L.P. (SXL) vs. Sunoco Logistics Partners L.P. (SXL) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . United States Treasury Bond (10 Y) Yield 9.0% 35% 8.0% 30% 7.0% 25% 6.0% 20% 5.0% 15% 4.0% 3.0% 10% 2.0% 5% 1.0% 0% 0.0% -20 to 80 80 to 180 80 to 180 to 280 180 to 380 280 to 480 380 to 580 480 to 680 580 to 780 680 to 880 780 to 980 880 to Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10

Sunoco Logistics Partners L.P. (SXL) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

140 135 130 125 120 115 110 105 100 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $80 on SXL is based on a 12-month cash distribution run rate of $4.97 and a target yield of 6.25%. With the support of a primarily stable, fee-based businesses and low cost of capital (investment grade credit rating and reduction in IDRs), we believe Sunoco Logistics has solid long-term growth prospects.

Investment Thesis We rate SXL 2-Equal Weight/2-Neutral. The partnership has one of the highest distribution growth rates in our coverage universe and a relatively low risk profile. We view acquisitions as a likely call option that could drive stronger-than-targeted distribution growth and upside to our expected value proposition return.

Potential Catalysts / Timeline

„ Late October – Third quarter earnings release.

„ 2H10 – Nederland, TX crude oil storage expansion and MagTex refined product pipeline organic growth project.

22 October 2010 174 Barclays Capital | MLP Quarterly Monitor

Fundamental Drivers

„ Refined product consumption/refinery utilization rates drive pipeline and terminal volumes.

„ Tariff rates on pipelines and terminals.

„ Third-party demand for crude oil storage.

„ Lease gathering and marketing operations are driven by the volatility and forward slope of crude oil prices.

„ Acquisitions and organic growth projects drive distribution growth.

Risk: Low The low risk profile is supported by a high-quality asset base serving core refining markets and strategically located storage assets primarily under long-term contracts. The growing need for crude oil imports, given the supply/demand imbalance in the Northeast and Midwest markets, underpins stable demand levels for products on its systems. The strategic relationship with independent refiner Sunoco adds to SXL’s low risk profile, in our view. A key risk is a decline in refined product consumption. It is worth noting that refined product demand is fairly stable historically. Although cash flows generated from the Crude Oil Pipeline Segment could be volatile on a quarterly basis, management’s ability to successfully integrate acquisitions has dampened the volatility in this business, which is the only segment in its portfolio that carries an above-average risk profile.

22 October 2010 175 Barclays Capital | MLP Quarterly Monitor

TC Pipelines, LP (TCLP)

Figure 160: TC Pipelines, LP (TCLP)

Sub Sector: Natural Gas & NGL

Rating: 2-Equal Weight Annualized Distribution: $2.92 Price Target: $43.00 Yield: 6.02% Current Price: $48.49 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): 7.26% Potential Upside to Target: -11.3% Dist. CAGR (Next 3 Yrs): 3.64% 52 Week High / Low: $49.09 - $33.51 Tax Deferral: 80%

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $2.82 $2.90 $0.73 $0.73 $0.76 $0.76 $2.98 $3.10 Growth (YoY) 7.0%2.8%3.5%0.0%4.1%4.1%2.9%4.0%

Units Outstanding (in mm) Common units 34.86 38.70 46.20 46.20 46.20 46.20 46.20 46.20 Sub-Ordinated Units

Total Distribution Receiving Units 34.86 38.70 46.20 46.20 46.20 46.20 46.20 46.20 Growth (YoY) 8% 11% 33% 33% 12% 6% 19% 0%

Distributable Cash flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income $107.66 $97.78 $33.70 $27.75 $30.58 $28.20 $120.22 $120.52 Cash Flows Provided by Tuscarora $22.13 $23.70 $7.20 $4.80 $14.08 $12.72 $38.80 $52.06 Cash Distribution from Great Lakes $73.93 $72.49 $15.68 $18.01 $17.88 $16.34 $67.92 $75.10 Cash Distribution from Northern Border $90.65 $75.68 $16.44 $21.50 $19.95 $21.81 $79.70 $81.42 Cash Distributions from North Baja $15.70 $4.70 $9.20 $0.00 $0.00 $13.90 $0.00 $294.38 $285.35 $77.71 $81.26 $82.50 $79.07 $320.54 $329.10 Tuscarora's Net Income ($15.03) ($16.40) ($3.90) ($4.00) ($10.38) ($9.02) ($27.30) ($37.26) $0.00 ($11.60) ($5.40) ($5.00) $0.00 $0.00 ($10.40) $0.00 Equity Income from Great Lakes ($57.33) ($59.13) ($16.26) ($13.15) ($12.99) ($13.69) ($56.08) ($57.25) Equity Income from Northern Border ($65.20) ($40.29) ($14.64) ($12.20) ($15.16) ($13.55) ($55.55) ($51.81) Distributable Cash flow $156.81 $157.93 $37.52 $46.91 $43.96 $42.82 $171.21 $182.77

General Partner Cut $11.84 $7.84 $0.73 $0.73 $0.83 $1.08 $3.37 $4.55 Distributable Cash Flow (LP) $144.97 $150.09 $36.78 $46.18 $43.13 $41.74 $167.84 $178.23

Distributable Cash Flow Per Unit $4.16 $3.88 $0.80 $1.00 $0.93 $0.90 $3.63 $3.86

Total Distribution Coverage 148% 134% 109% 137% 123% 119% 122% 124%

Business Description TC PipeLines, LP was formed by TransCanada Pipelines Limited to acquire, own and participate in the management of U.S. based natural gas pipelines and related assets. It has interests in approximately 3,700 miles of federally regulated U.S. interstate natural gas pipelines, including Great Lakes Gas Transmission Limited Partnership (46.45 per cent ownership), Northern Border Pipeline Company (50 per cent ownership), North Baja Pipeline, LLC (100 per cent ownership) and Tuscarora Gas Transmission Company (100 per cent ownership).

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E TC PipeLines L.P. (TCLP) 12.50x 13.35x 12.57x 1.29x 1.38x 1.30x 8.78x 11.32x 11.35x Natural Gas & NGL 15.96x 15.65x 13.46x 1.44x 1.33x 1.16x 14.68x 15.75x 13.11x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $3.88 $3.63 $3.86 Debt / EBITDA 2.30x 2.16x 2.04x Distribution $2.90 $2.98 $3.10 EBITDA / Interest 8.55x 9.50x 10.08x Coverage (Total Units) 134% 122% 124% Maint Cap / EBITDA 0.03x 0.02x 0.02x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 176 Barclays Capital | MLP Quarterly Monitor

Figure 161: Historical Yield Spreads

. . TC PipeLines L.P. (TCLP) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - TC PipeLines L.P. (TCLP) vs. Alerian 1-Year Yield Spread vs. US 10-Year Treasury MLP Index 2.0% 25% 1.5% 20% 1.0% 0.5% 15% 0.0% 10% -0.5% 5% -1.0% -1.5% 0% -2.0% 0 to 30 0 to -30 to 0 -30 to 3060 to 6090 to 90 to 120 to 90 -90 to -60 -90 to -30 -60 to 120 to 150 to 120 -120 to -90 to -120 -150 to -120 to -150 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 . Basis point differentials - TC PipeLines L.P. (TCLP) vs. United TC PipeLines L.P. (TCLP) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . States Treasury Bond (10 Y) Yield 45% 11.0% 40% 35% 9.0% 30% 25% 7.0% 20% 15% 5.0% 10% 5% 3.0% 0%

1.0% 80 to 200 to 80 200 to 320 to 200 440 to 320 560 to 440 680 to 560 800 to 680 920 to 800 920 to 1040 to 920 1040 to 1160 to 1040 1280 to 1160 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10

TC PipeLines L.P. (TCLP) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

135 125 115 105 95 85 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $43 on TCLP is based on a 12-month distribution run rate of $3.04 and a target yield of 7.0%.

Investment Thesis We estimate the current asset base can support TC Pipelines’ organic distribution growth of 4% over the duration of our forecast given niche expansion projects and the maintenance of a healthy coverage ratio. There remains an attractive call option connected to TCLP acquiring additional assets from the general partner’s (TransCanada) portfolio as evidenced by the purchase of the North Baja Pipeline during 2Q.

Potential Catalysts / Timeline Results in 2Q surprised to the upside due to an expected surge in volumes transported on the Northern Border system. On the conference call, management disclosed that the pipeline was fully contracted out until October 2010, which should bode well for 3Q results but still leaves some uncertainty as to how 4Q results will pan out. While the Bison project scheduled to start in mid-November and provide some support for Northern Border, the in- service date has now been pushed back by at least a month to mid-December. The approvals tied to the project were received later than the company had anticipated which

22 October 2010 177 Barclays Capital | MLP Quarterly Monitor

resulted in a delay for construction to commence in addition to some lost time as the company found itself having to comply with the Migratory Bird Treaty Act of 1918. As a result, we think Northern Border operations may be subject to some short-term volatility during the transitional period between the expiration of contracted capacity and the postponed start-up of the Bison pipeline. On a going forward basis, we expect the trend of re-contracting capacity for shorter durations to continue as the market dynamics have shifted in favor of the demand markets due to the partnership’s access to ample transmission from various production regions.

Fundamental Drivers

„ Natural gas production levels in western Canada.

„ Natural gas consumption levels in the Midwest and Pacific Northwest regions which are driven by weather (heating/cooling load), economic conditions, conservation and potential fuel switching.

„ We believe acquisitions or potential drop-downs from GP are required to drive growth as on-system expansions appear relatively limited.

Risk Profile: Low/Medium Strong balance sheet and distribution coverage ratio, highly stable cash flows secured by fee-based contracts, and synergistic relationship with its GP underpin the historically low risk profile. The medium taint reflects the higher risks related to exposure to natural gas imports from Western Canada although developing shale plays should help to alleviate this dynamic. Although the Midwest region continues to sustain its historical average market share of natural gas imports, there are concerns connected to the drilling activities in western Canada and the level of imports given a growing percentage of supplies retained in the region for the production of crude oil.

22 October 2010 178 Barclays Capital | MLP Quarterly Monitor

Teekay Offshore Partners, LP (TOO)

Figure 162: Teekay Offshore Partners, LP (TOO)

Sub Sector: Marine Transportation

Rating: 2-Equal Weight Annualized Distribution: $1.90 Price Target: $23.00 Yield: 7.61% Current Price: $24.97 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): na Potential Upside to Target: -7.9% Dist. CAGR (Next 3 Yrs): 4.85% 52 Week High / Low: $25.5 - $14.9 Tax Deferral: 30% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $1.70 $1.80 $0.48 $0.48 $0.48 $0.48 $1.90 $1.98 Growth (YoY) 14.5% 5.9% 5.6% 5.6% 5.6% 5.6% 5.6% 5.0%

Units Outstanding (in mm) Common units 15.43 23.48 42.76 42.76 45.78 48.80 45.02 53.67 Sub-Ordinated Units 9.809.800.000.000.000.000.000.00

Total Distribution Receiving Units 25.23 33.28 42.76 42.76 45.78 48.80 45.02 53.67 Growth (YoY) 32% 35% 19%

Distributable Cash Flow Calculation 2008 2009 1Q10 2Q10 3Q10E 4Q10E 2010E 2011E Net Income ($18.44) $58.18 $14.88 ($2.83) $14.68 $18.99 $45.71 $79.18 Depreciation and Amortization $138.38 $155.08 $41.24 $44.15 $45.75 $45.96 $177.10 $189.72 Interest Expense $211.64 $37.36 $7.82 $7.08 $9.98 $11.08 $35.96 $62.56 Income taxes ($56.70) $7.05 ($7.26) ($10.38) $0.00 $0.00 ($17.64) $0.00 Adjusted EBITDA $274.88 $257.67 $56.67 $38.02 $70.41 $76.03 $241.13 $331.47

General Partner Cut ($0.82) ($2.52) ($1.15) ($1.15) ($1.31) ($1.31) ($4.92) ($7.13) Distributable Cash Flow (LP) $47.29 $48.06 $26.48 $26.91 $23.74 $29.40 $107.03 $114.15

Distributable Cash Flow Per Unit $1.83 $1.39 $0.62 $0.63 $0.52 $0.60 $2.38 $2.13

Common Distribution Coverage 177% 120% 136% 138% 115% 133% 131% 114% Total Distribution Coverage 110% 80% 130% 132% 109% 127% 125% 108%

Business Description

Teekay Offshore Partners L.P.is an international provider of marine transportation, production and storage services to the offshore oil industry. Teekay Offshore owns a 51 percent interest in and controls Teekay Offshore Operating L.P., a Marshall Islands limited partnership with a fleet of 33 shuttle tankers (including six chartered-in vessels), four FSO units, eleven conventional oil tankers. Teekay Offshore Operating L.P has also agreed to acquire two newbuilding shuttle tankers from Teekay Corporation upon the commencement of their respective time-charter contracts in 2011. In addition, Teekay Offshore has direct ownership interests in two shuttle tankers, two FSO units, and two FPSO units.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Teekay Offshore Partners L.P. (TOO) 13.87x 13.14x 12.64x 1.11x 1.05x 1.01x 12.80x 8.12x 6.55x Marine Transportation 7.72x 9.14x 7.82x 1.11x 1.05x 1.01x 11.54x 10.23x 7.53x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $1.39 $2.38 $2.13 Debt / EBITDA 6.74x 6.73x 5.11x Distribution $1.80 $1.90 $1.98 EBITDA / Interest 6.90x 6.65x 5.54x Coverage (Total Units) 80% 125% 108% Maint Cap / EBITDA -0.33x -0.39x -0.28x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 179 Barclays Capital | MLP Quarterly Monitor

Figure 163: Historical Yield Spreads

. . Teekay Offshore Partners L. P. (TOO) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Teekay Offshore Partners L. P. (TOO) 1-Year Yield Spread vs. US 10-Year Treasury vs. Alerian MLP Index 30% 11.0% 9.0% 25% 7.0% 20% 5.0% 15% 3.0% 10% 1.0% 5% -1.0% 0% -3.0% -5.0% 20 to 200 -160 to 20 -160 to 200 to 380 380 to 560 560 to 740 740 to 920 920 to 1100 to 920 -520 to -340 -340 to -160 1100 to 1280 to 1100 Jun-07 Jun-08 Jun-09 Jun-10 Dec-06 Dec-07 Dec-08 Dec-09 . Basis point differentials - Teekay Offshore Partners L. P. (TOO) Teekay Offshore Partners L. P. (TOO) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . vs. United States Treasury Bond (10 Y) Yield 35% 20.0% 30% 15.0% 25% 20% 10.0% 15% 5.0% 10% 5% 0.0% 0%

-5.0% 100 to 380 to 100 660 to 380 940 to 660 -180 to 100 -180 to 940 to 1220 to 940 -460 to -180 1220 to 1500 to 1220 1780 to 1500 2060 to 1780 2340 to 2060 Jun-07 Jun-08 Jun-09 Jun-10 Dec-06 Dec-07 Dec-08 Dec-09

Teekay Offshore Partners L. P. (TOO) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

145 135 125 115 105 95 85 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion Our price target of $23 on TOO is based on a 12-month cash distribution run rate of $1.90 and a target yield of 9%.

Investment Thesis Teekay Offshore delivered strong 2Q results driven by its recent asset drop-down and better shuttle tanker performance. Also, the recent acquisition announcement of four vessels supports the partnership’s growth profile. We maintain our view that TOO can grow distribution 5% going forward assuming $200 million per year asset drop-down acquisitions at a 6x–7x multiple (in line with recent transactions) funded with cost of capital of 9%.

Potential Catalysts / Timeline

„ Early November – Second quarter earnings release.

„ January 2011 and July 2011 – Completion of acquisitions of new building shuttle tanker vessels.

22 October 2010 180 Barclays Capital | MLP Quarterly Monitor

Fundamental Drivers

„ Growth in deepwater exploration and development.

„ Visible acquisition-driven growth prospects.

„ Strong sponsorship from Teekay Corporation.

„ Solid Customer Base: TOO’s customers include ExxonMobil, Statoil, Shell, Marathon, Chevron, ConocoPhillips, Petroliero Brasiliero (Petrobras), among others.

Risk: Medium While cash flows are supported by long-term, fixed rate service contracts that limits cash flow risk, our view is that limited information in the sector provides an additional risk in the space. While parent Teekay Corporation provides growth opportunities through drop- downs of vessels with servicing contracts, we believe the partnership is vulnerable to a rise in debt costs, which can mitigate the effect of transactions.

22 October 2010 181 Barclays Capital | MLP Quarterly Monitor

Western Gas Partners, LP (WES)

Figure 164: Western Gas Partners, LP (WES)

Sub Sector: Gathering and Processing

Rating: 1-Overweight Annualized Distribution: $1.40 Price Target: $29.00 Yield: 4.83% Current Price: $29.01 (as of 10/18/10) Dist. CAGR (Prev. 3 Yrs): na Potential Upside to Target: 0.0% Dist. CAGR (Next 3 Yrs): 10.89% 52 Week High / Low: $29.24 - $17.11 Tax Deferral: 75% $Millions, except per unit amounts

Cash Flow Summary 2008 2009 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E Cash Distribution Per Unit $1.20 $1.26 $0.34 $0.35 $0.36 $0.37 $1.42 $1.56 Growth (YoY)

Total Distribution Receiving Units 54.79 58.82 64.78 70.37 71.44 71.44 69.51 77.50 Growth (YoY)

Distributable Cash flow Calculation 2008 2009 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E Net Income $59.6 $71.4 $22.9 $23.4 $35.0 $35.0 $116.3 $154.4 Interest Expense $2.7 $8.2 $0.0 $0.0 $8.9 $8.9 $17.8 $47.1 Interest Income - APC Note ($10.7) ($15.1) $0.0 ($0.6) ($4.2) ($4.2) ($9.1) ($16.9) Depreciation and Amortization $28.6 $36.7 $13.0 $12.8 $10.5 $10.5 $46.8 $50.0 Others $9.7 $6.3 $1.9 $4.1 $1.0 $1.0 $8.1 $4.0 Adjusted EBITDA $89.9 $107.5 $37.8 $39.8 $51.1 $51.1 $179.9 $238.6 Net Interest Expense $2.1 ($8.2) $0.0 $0.0 ($8.9) ($8.9) ($17.8) ($47.1) Maintenance Capital Expenditures ($20.1) ($16.0) ($3.9) ($3.7) ($9.5) ($9.5) ($26.6) ($36.0) Interest Income - APC Note $10.7 $15.1 $0.0 $0.6 $4.2 $4.2 $9.1 $16.9 Others ($0.3) ($0.0) $0.6 $0.0 $0.0 $0.0 $0.6 $0.0 Distributable Cash flow $82.2 $98.4 $34.6 $36.6 $37.0 $37.0 $145.1 $172.4

General Partner Cut $1.53 $1.52 $0.45 $0.56 $0.69 $0.82 $2.52 $5.43 Distributable Cash Flow (LP) $80.71 $96.84 $34.11 $36.09 $36.28 $36.15 $142.63 $167.01

Distributable Cash Flow Per Unit $1.47 $1.65 $0.53 $0.51 $0.51 $0.51 $2.05 $2.15

Total Distribution Coverage 127% 129% 152% 144% 144% 139% 145% 140%

Business Description Western Gas Partners LP is a growth-oriented Delaware limited partnership formed by Anadarko Petroleum Corporation to own, operate, acquire and develop midstream energy assets. With midstream assets in East and West Texas, the Rocky Mountains and the Mid-Continent, the Partnership is engaged in the business of gathering, compressing, treating, processing and transporting natural gas for Anadarko and other producers and customers.

FCF Multiple FCF Multiple / Expected Return EV / EBITDA-Maintenance Capital Comp Set 2009 2010E 2011E 2009 2010E 2011E 2009 2010E 2011E Western Gas Partners L.P. (WES) 17.92x 14.12x 13.23x 1.14x 0.90x 0.84x 15.50x 18.57x 13.95x Gathering and Processing 10.29x 14.40x 11.40x 0.96x 1.29x 0.98x 11.37x 13.99x 11.50x Average MLPs 12.15x 13.43x 11.84x 1.12x 1.19x 1.05x 12.97x 14.43x 12.28x $ Millions , except per unit amounts Distribution Summary 2009 2010E 2011E Coverage Ratios 2009 2010E 2011E DCF Per Unit $1.65 $2.05 $2.15 Debt / EBITDA 1.68x 4.14x 3.71x Distribution $1.26 $1.42 $1.56 EBITDA / Interest 0.00x 9.96x 5.07x Coverage (Total Units) 129% 145% 140% Maint Cap / EBITDA 0.15x 0.15x 0.15x Sector View: 2-Neutral Source: Company filings, FactSet, Barclays Capital estimates

22 October 2010 182 Barclays Capital | MLP Quarterly Monitor

Figure 165: Historical Yield Spreads

. . Western Gas Partners L.P. (WES) - Yield to Alerian MLP Index Avg. Spread Basis point differentials - Western Gas Partners L.P. (WES) vs. 1-Year Yield Spread vs. US 10-Year Treasury Alerian MLP Index -1.0% 60% -2.0% 50% -3.0% 40% -4.0% -5.0% 30% -6.0% 20% -7.0% 10% -8.0% 0% -9.0% -10.0% -100 to 0 -900 to -800 to -900 -700 to -800 -600 to -700 -500 to -600 -400 to -500 -300 to -400 -200 to -300 -100 to -200 -1000 to -900 to -1000 Nov-08 Nov-09 May-08 May-09 May-10 . Basis point differentials - Western Gas Partners L.P. (WES) vs. Western Gas Partners L.P. (WES) - Yield to United States Treasury Bond (10 Y) Yield Avg. Spread . United States Treasury Bond (10 Y) Yield 7.0% 35% 6.0% 30% 5.0% 25% 20% 4.0% 15% 3.0% 10% 2.0% 5% 1.0% 0% 0.0% 30 to 100 to 30 100 to 170 to 100 240 to 170 310 to 240 380 to 310 450 to 380 520 to 450 590 to 520 660 to 590 730 to 660 Nov-08 Nov-09 May-08 May-09 May-10

Western Gas Partners L.P. (WES) - Indexed Price NYSE Alerian MLP Index - Indexed Price Base 100 . .

155 145 135 125 115 105 95 5-Jul-10 4-Jan-10 7-Jun-10 1-Feb-10 19-Jul-10 7-Dec-09 9-Nov-09 1-Mar-10 2-Aug-10 18-Jan-10 21-Jun-10 12-Oct-09 26-Oct-09 15-Feb-10 11-Oct-10 12-Apr-10 26-Apr-10 13-Sep-10 27-Sep-10 21-Dec-09 23-Nov-09 15-Mar-10 29-Mar-10 16-Aug-10 30-Aug-10 . 10-May-10 24-May-10 Source: FactSet

Valuation Discussion We maintain our price target of $29 on WES, which was based on a 12-month distribution run rate of $1.59 and target yield of 5.5%.

Investment Thesis We continue to believe Western Gas can grow its 2010 distribution by 13% year over year and at a 10% CAGR going forward while maintaining strong coverage, given potential asset drop-downs, organic expansion opportunity at Chipeta plant, and benefits of the Wattenberg acquisition. Our recent trip to the Wattenberg field renewed our confidence that Wattenberg assets have solid organic growth potential. The Wattenberg field has strong producer economics and potential upside from the development of the Niobrara shale, which is currently at its infancy but possess impressive development potential as a significant oil play. WES has excess processing capacity at its Fort Lupton plant to accommodate volume growth. We believe some of the near-term organic expansion opportunities include expanding gathering footprint and adding capacity to the White Cliff crude pipeline (WES has 10% ownership interest). The pipeline is running 25,000 b/d on 30,000 b/d capacity and can be expanded up to 70,000 b/d. Organic growth opportunity should supplement distribution growth from asset drop-downs from Anadarko.

22 October 2010 183 Barclays Capital | MLP Quarterly Monitor

Potential Catalysts / Timeline

„ Announcement of asset drop-down by APC.

Fundamental Drivers

„ Ability to grow customer base with the support of acquisitions.

Risk: Low/Medium Western Gas carries a below-average risk profile related to commodity price given it has limited direct exposure to natural gas and NGL price movement on its margins. Majority of the cash flow is based on fixed-fee contracts leading to relatively modest commodity price exposure. However, WES has indirect exposure to the natural gas price, as weak gas prices can result in less drilling activities that can negatively impact volume flow into the system.

22 October 2010 184 Barclays Capital | MLP Quarterly Monitor

APPENDIX

Figure 166: MLP Valuation Comps (Sector View: 2-Neutral)

MLP Valuation Comps (Sector View = 2-Neutral) 10/19/10 FCF Multiple/ EV / Adj EBITDA - Price CurrentSpread to AMZ Expected FCF Multiple (2) Expected Return EV / EBITDA-MC Main Cap (3) Company Rating (5) Ticker 10/19/10 Dist. Yield Current Avg (4) Return (1) 2009 2010e 2011e 2009 2010e 2011e 2009 2010e 2011e 2009 2010e 2011e Refined Products Global Partners LP 2-EW GLP $25.59 $1.95 7.62% 1.29% 1.45% 9.64% 7.6 11.1 9.2 0.8 1.2 1.0 11.4 17.2 11.7 11.5 17.5 11.9 Holly Energy Partners L.P. 2-EW HEP $50.25 $3.30 6.57% 0.24% 0.04% 12.61% 14.0 13.5 11.7 1.1 1.1 0.9 11.1 13.4 11.0 12.0 14.9 12.5 Kinder Morgan Energy Partners L.P 1-OW KMP $71.56 $4.36 6.09% -0.24% -0.24% 11.01% 16.8 16.1 15.4 1.5 1.5 1.4 10.7 11.8 10.8 17.2 19.0 17.6 Magellan Midstream Partners L.P. 2-EW MMP $52.90 $2.93 5.54% -0.79% -0.56% 11.13% 16.1 16.0 14.7 1.4 1.4 1.3 16.7 16.9 15.3 21.0 16.9 15.3 Sunoco Logistics Partners L.P. 2-EW SXL $79.54 $4.56 5.73% -0.60% -0.46% 14.66% 11.3 13.3 12.3 0.8 0.9 0.8 9.1 12.7 11.0 10.9 14.8 13.0 NuStar Energy L.P. 2-EW NS $63.35 $4.26 6.72% 0.40% 0.04% 10.87% 12.0 14.1 12.2 1.1 1.3 1.1 12.9 14.8 13.1 14.3 16.5 14.6 Average Sub Sector 6.35% 0.02% 0.02% 11.61% 13.1x 14.1x 12.8x 1.1x 1.2x 1.1x 12.1x 14.3x 12.1x 14.5x 16.5x 14.1x Gathering, Processing & Compression Atlas Pipeline Partners L.P. 1-OW APL $19.40 $1.50 7.73% na na 17.73% 6.7 11.6 11.7 0.4 0.7 0.7 8.2 9.6 11.0 8.2 9.6 11.2 Chesapeake Midstream Partners L. 1-OW CHKM $26.85 $1.35 5.03% -1.30% na 14.03% na 42.3 15.3 na 3.0 1.1 na 20.6 14.3 na 20.8 14.5 Copano Energy L.L.C. 2-EW CPNO $28.87 $2.30 7.97% 1.64% 0.05% 9.61% 11.9 13.8 12.4 1.2 1.4 1.3 12.5 15.6 12.9 12.5 15.6 12.9 Crosstex Energy L.P. 2-EW XTEX $13.38 $1.00 7.47% na na na 9.7 8.5 10.4 na na na 9.3 8.9 8.6 9.3 8.9 8.7 DCP Midstream Partners L.P. 1-OW DPM $35.57 $2.44 6.86% 0.53% -0.28% 11.49% 12.0 13.5 11.8 1.0 1.2 1.0 13.4 14.0 10.3 15.2 16.3 11.9 Eagle Rock Energy Partners L.P. 2-EW EROC $6.74 $0.60 na na na na 3.0 6.2 7.7 na na na 7.4 9.1 8.9 7.4 9.1 8.9 Exterran Partners L.P. 2-EW EXLP $23.53 $1.85 7.86% 1.53% 0.41% 10.84% 9.8 11.0 10.1 0.9 1.0 0.9 11.2 15.6 11.7 11.6 16.1 12.1 MarkWest Energy Partners L.P. 1-OW MWE $37.78 $2.56 6.78% 0.45% 0.98% 10.08% 12.3 11.9 11.4 1.2 1.2 1.1 10.8 12.4 10.9 10.9 12.4 10.9 Targa Resources Partners L.P. 1-OW NGLS $28.99 $2.15 7.42% 1.09% 1.24% 12.27% 9.6 11.5 10.2 0.8 0.9 0.8 11.1 11.9 9.1 11.8 12.8 10.0 Western Gas Partners L.P. 1-OW WES $28.70 $1.40 4.88% -1.45% -0.50% 15.77% 17.7 14.0 13.1 1.1 0.9 0.8 15.2 18.1 13.5 15.5 18.4 13.8 Average Sub Sector 6.89% 0.36% 0.32% 12.73% 10.3x 14.4x 11.4x 1.0x 1.3x 1.0x 11.0x 13.6x 11.1x 11.4x 14.0x 11.5x Natural Gas - NGL Pipelines and Storage Boardwalk Pipeline Partners L.P. 2-EW BWP $33.89 $2.04 6.02% -0.31% -0.75% 9.93% 22.6 15.6 14.7 2.3 1.6 1.5 20.1 16.6 15.2 20.9 17.3 15.9 Duncan Energy Partners L.P. 2-EW DEP $31.93 $1.80 5.64% -0.69% 0.56% 10.11% 14.1 14.7 13.5 1.4 1.5 1.3 16.4 8.9 8.9 16.6 9.0 9.0 El Paso Pipeline Partners L.P. 1-OW EPB $32.90 $1.60 4.86% -1.47% -2.20% 18.81% 16.5 13.7 12.8 0.9 0.7 0.7 13.7 16.5 12.5 15.0 16.9 13.1 Energy Transfer Partners L.P. 1-OW ETP $50.14 $3.58 7.13% 0.80% -0.16% 8.77% 14.1 14.8 13.4 1.6 1.7 1.5 10.3 11.7 10.3 14.2 16.1 13.5 Enterprise Products Partners L.P. 0-RS EPD $41.88 $2.30 5.49% -0.84% -0.27% 11.30% 14.2 14.1 13.3 1.3 1.2 1.2 11.8 13.6 12.3 12.9 14.9 13.6 Niska Gas Storage Partners 1-OW NKA $19.93 $1.40 7.02% 0.70% na 17.53% na 13.2 11.5 na 0.8 0.7 na 11.5 10.6 na 11.6 10.7 ONEOK Partners L.P. 1-OW OKS $78.74 $4.48 5.69% -0.64% -0.09% 10.17% 16.0 17.3 14.2 1.6 1.7 1.4 11.8 13.5 11.5 13.5 15.9 13.7 PAA Natural Gas Storage L.P. 1-OW PNG $24.54 $1.35 5.50% -0.83% na 13.86% na 25.2 15.2 na 1.8 1.1 na 26.2 16.1 na 26.6 16.6 Regency Energy Partners L.P. 1-OW RGNC $24.59 $1.78 7.24% 0.91% -0.02% 10.54% 15.9 12.8 12.1 1.5 1.2 1.1 14.5 15.1 11.9 15.0 15.5 12.3 Spectra Energy Partners L.P. 1-OW SEP $35.25 $1.72 4.88% -1.45% -1.43% 15.39% 17.6 17.2 14.7 1.1 1.1 1.0 13.7 15.7 12.2 15.3 17.9 14.5 TC PipeLines L.P. 2-EW TCLP $48.16 $2.92 6.06% -0.27% 0.28% 9.71% 12.4 13.3 12.5 1.3 1.4 1.3 8.5 11.1 11.1 8.8 11.3 11.3 Average Sub Sector 5.96% -0.37% -0.45% 12.37% 15.9x 15.6x 13.4x 1.4x 1.3x 1.2x 13.4x 14.6x 12.1x 14.7x 15.7x 13.1x Crude Oil Enbridge Energy Partners L.P. 2-EW EEP $60.25 $4.11 6.82% 0.49% 0.87% 9.49% 13.6 12.5 12.8 1.4 1.3 1.4 12.3 12.9 12.1 13.3 13.9 13.3 Plains All American Pipeline L.P. 1-OW PAA $63.36 $3.77 5.95% -0.38% -0.46% 10.63% 14.9 16.1 14.8 1.4 1.5 1.4 11.4 13.3 11.9 13.3 16.1 14.8 Blueknight Energy Partners, L.P. 3-UW BKEP $8.85 na na na na na 41.9 44.5 8.9 na na na 13.0 12.3 9.6 13.0 12.3 9.7 Average Sub Sector 6.39% 0.06% 0.20% 10.06% 23.5x 24.3x 12.2x 1.4x 1.4x 1.4x 12.2x 12.9x 11.2x 13.2x 14.1x 12.6x Marine Transportation K-Sea Transportation Partners L.P. 3-UW KSP $3.98 na na na na na 1.6 5.1 3.0 na na na 9.5 12.3 8.5 10.3 12.3 8.5 Teekay Offshore Partners L.P. 2-EW TOO $24.72 $1.90 7.69% 1.36% 1.66% 12.54% 13.7 13.0 12.5 1.1 1.0 1.0 12.3 8.0 6.3 12.8 8.1 6.5 Average Sub Sector 7.69% 1.36% 1.66% 12.54% 7.7x 9.1x 7.8x 1.1x 1.0x 1.0x 10.9x 10.1x 7.4x 11.5x 10.2x 7.5x Propane Amerigas Partners L.P. 3-UW APU $46.55 $2.82 6.06% -0.27% 0.51% 10.91% 11.7 11.4 11.5 1.1 1.0 1.1 8.9 11.5 11.6 9.0 12.2 12.0 Ferrellgas Partners L.P. 3-UW FGP $25.94 $2.00 7.71% 1.38% 2.34% 7.71% 12.3 12.8 12.6 1.6 1.7 1.6 11.9 12.1 11.6 11.0 12.0 11.6 Inergy L.P. 1-OW NRGY $39.74 $2.82 7.10% 0.77% 0.95% 13.27% 12.3 14.0 12.7 0.9 1.1 1.0 10.8 12.4 8.4 12.6 15.9 8.8 Suburban Propane Partners L.P. 3-UW SPH $54.56 $3.38 6.20% -0.13% 0.39% 9.00% 9.9 12.1 12.2 1.1 1.3 1.4 9.5 12.2 12.3 9.5 12.2 12.3 Average Sub Sector 6.76% 0.44% 1.04% 10.22% 11.6x 12.6x 12.3x 1.2x 1.3x 1.3x 10.3x 12.0x 11.0x 10.6x 13.1x 11.2x Coal Sector Alliance Resource Partners L.P. 2-EW ARLP $60.77 $3.24 5.33% -1.00% -0.98% 15.53% 10.9 8.8 8.3 0.7 0.6 0.5 10.5 9.3 8.8 na 12.3 11.9 Natural Resource Partners L.P. 1-OW NRP $29.01 $2.16 7.45% 1.12% -0.18% 16.10% 13.4 13.4 13.4 0.8 0.8 0.8 5.6 14.7 10.8 na 15.6 11.3 Penn Virginia Resource L.P. 2-EW PVR $25.93 $1.88 7.25% 0.92% 0.30% 20.23% 9.9 7.0 6.0 0.5 0.3 0.3 9.8 9.8 8.5 na 11.5 10.6 Average Sub Sector 6.68% 0.35% -0.29% 17.29% 11.4x 9.7x 9.2x 0.7x 0.6x 0.6x 8.6x 11.3x 9.4x na 13.1x 11.3x E&P Sector Constellation Energy Partners LLC 3-UW CEP $3.05 na na na -0.84% na 2.5 2.8 3.2 na na na 5.0 7.8 8.3 na 7.8 8.3 Linn Energy LLC 1-OW LINE $32.49 $2.52 7.76% 1.43% 1.05% 19.42% 10.8 11.6 14.4 0.6 0.6 0.7 11.0 12.9 14.9 na 12.9 14.9 Average Sub Sector 8.90% 2.57% 0.63% 21.23% 7.1x 7.5x 8.5x 0.4x 0.5x 0.5x 9.3x 11.0x 11.7x na 10.4x 11.6x Total Universe 6.60% 0.21% 0.15% 12.54% 12.1x 13.4x 11.8x 1.1x 1.2x 1.0x 11.4x 13.3x 11.3x 13.0x 14.4x 12.3x

Data as of: 10/19/10 FCF Multiple/ EV / Adj EBITDA - Spread to AMZExpected FCF Multiple (2)Expected Return EV / EBITDA-MC Main Cap (3) Sector Yield Growth Current Avg (4) Return (1) 2009 2010e 2011e 2009 2010e 2011e 2009 2010e 2011e 2009 2010e 2011e Refined Products 6.35% 5.27% 0.02% 0.02% 11.61% 13.1x 14.1x 12.8x 1.1x 1.2x 1.1x 12.1x 14.3x 12.1x 14.5x 16.5x 14.1x Gathering and Processing 6.89% 5.84% 0.36% 0.32% 12.73% 10.3x 14.4x 11.4x 1.0x 1.3x 1.0x 11.0x 13.6x 11.1x 11.4x 14.0x 11.5x Natural Gas - NGL Pipelines and Storage 5.96% 6.42% -0.37% -0.45% 12.37% 15.9x 15.6x 13.4x 1.4x 1.3x 1.2x 13.4x 14.6x 12.1x 14.7x 15.7x 13.1x Crude Oil 6.39% 3.67% 0.06% 0.20% 10.06% 23.5x 24.3x 12.2x 1.4x 1.4x 1.4x 12.2x 12.9x 11.2x 13.2x 14.1x 12.6x Marine Transportation 7.69% 4.85% 1.36% 1.66% 12.54% 7.7x 9.1x 7.8x 1.1x 1.0x 1.0x 10.9x 10.1x 7.4x 11.5x 10.2x 7.5x Propane 6.76% 3.46% 0.44% 1.04% 10.22% 11.6x 12.6x 12.3x 1.2x 1.3x 1.3x 10.3x 12.0x 11.0x 10.6x 13.1x 11.2x Coal Sector 6.68% 10.61% 0.35% -0.29% 17.29% 11.4x 9.7x 9.2x 0.7x 0.6x 0.6x 8.6x 11.3x 9.4x na 13.1x 11.3x E&P Sector 8.90% 12.33% 2.57% 0.63% 21.23% 7.1x 7.5x 8.5x 0.4x 0.5x 0.5x 9.3x 11.0x 11.7x na 10.4x 11.6x Total LP Universe 6.60% 5.94% 0.21% 0.15% 12.54% 12.1x 13.4x 11.8x 1.1x 1.2x 1.0x 11.4x 13.3x 11.3x 13.0x 14.4x 12.3x

Large Cap LPs (> $ 1bn) 6.51% 5.95% 12.45% 12.9x 12.9x 12.3x 1.2x 1.2x 1.1x 11.3x 12.7x 11.3x 12.8x 14.1x 12.6x Small Cap LPs (< $ 1bn) 7.43% 5.52% 12.96% 8.7x 10.0x 8.8x 0.9x 1.0x 0.9x 11.3x 12.7x 10.3x 12.9x 13.4x 10.6x

(1) Expected Return = Yield plus 3-year expected growth rate in distributions (2) FCF Multiple = Current unit price / DCF per share (3) Adjusted EBITDA is after GP cut (4) 5 yr average or since IPO; average excludes October 2008 to March 2009 (5) 1-OW = 1-Overweight; 2-EW = 2-Equal Weight; 3-UW = 3-Underweight Source: FactSet, Barclays Capital estimates

22 October 2010 185 Barclays Capital | MLP Quarterly Monitor

Figure 167: MLP per Share Comps, $ per unit

MLP Per Share Comps 10/19/10 Units Outstanding (2) EBITDA (1) Interest Maintenance Capital Distributable Cash Flow Company Common Sub Total 2009 2010e 2011e 2009 2010e 2011e 2009 2010e 2011e 2009 2010e 2011e Refined Products Global Partners LP 11.19 5.64 16.83 5.02 3.82 4.66 1.14 1.18 1.26 0.35 0.24 0.47 3.37 2.31 2.77 Holly Energy Partners L.P. 21.38 0.00 21.38 5.84 6.07 6.94 1.27 1.55 1.61 0.20 0.22 0.24 3.58 3.72 4.28 Kinder Morgan Energy Partners L.P. 309.75 0.00 309.75 9.49 9.70 10.23 1.51 1.59 1.65 0.61 0.64 0.65 4.25 4.43 4.64 Magellan Midstream Partners L.P. 109.52 0.00 109.52 5.06 4.66 4.92 0.93 0.82 0.90 0.48 0.41 0.42 3.28 3.30 3.60 Sunoco Logistics Partners L.P. 32.21 0.00 32.21 11.24 10.73 11.36 1.46 2.27 2.29 1.05 1.05 0.98 7.03 6.00 6.44 NuStar Energy L.P. 62.93 0.00 62.93 8.00 7.34 8.01 1.44 1.17 1.24 0.82 0.87 0.88 5.30 4.49 5.18 Average Sub Sector 7.42 7.12 7.74 1.32 1.46 1.53 0.57 0.57 0.60 4.47 4.07 4.49 Gathering and Processing Atlas Pipeline Partners L.P. 53.13 0.00 53.13 5.02 3.51 3.07 2.13 1.67 1.15 0.14 0.23 0.23 2.88 1.67 1.66 Chesapeake Midstream Partners L.P. 69.08 69.00 140.97 na 1.74 2.39 na 0.02 0.06 na 0.47 0.55 na 0.64 1.75 Copano Energy L.L.C. 66.77 0.00 66.77 4.21 3.15 3.52 1.22 1.00 1.25 0.18 0.16 0.19 2.43 2.09 2.32 Crosstex Energy L.P. 49.75 0.00 49.75 4.12 3.50 2.51 2.59 1.71 1.01 0.22 0.24 0.19 1.38 1.58 1.29 DCP Midstream Partners L.P. 34.63 0.00 34.63 4.62 4.03 5.04 0.89 0.87 1.12 0.39 0.26 0.31 2.96 2.64 3.02 Eagle Rock Energy Partners L.P.* 68.85 0.00 69.42 3.37 1.94 1.47 0.74 0.47 0.30 0.35 0.36 0.29 2.25 1.09 0.88 Exterran Partners L.P. 21.75 6.33 28.07 4.08 3.66 3.62 1.03 0.79 0.71 0.64 0.61 0.47 2.40 2.14 2.33 MarkWest Energy Partners L.P. 70.09 0.00 70.09 4.65 4.69 4.91 1.51 1.43 1.23 0.12 0.18 0.20 3.08 3.18 3.32 Targa Resources Partners L.P. 72.27 0.00 72.27 4.42 4.29 4.90 1.19 1.05 1.18 0.31 0.48 0.49 3.03 2.53 2.84 Western Gas Partners L.P. 41.66 26.54 69.51 1.77 2.55 3.08 na 0.26 0.61 0.27 0.38 0.46 1.62 2.05 2.19 Average Sub Sector 4.03 3.31 3.45 1.41 0.93 0.86 0.29 0.34 0.34 2.45 1.96 2.16 Natural Gas - NGL Pipelines and Storage Boardwalk Pipeline Partners L.P. 169.70 22.87 192.57 2.70 3.42 3.73 0.72 0.78 0.91 0.32 0.32 0.34 1.50 2.17 2.31 Duncan Energy Partners L.P. 57.68 0.00 57.68 5.10 5.42 5.44 0.24 0.24 0.35 0.84 0.95 0.99 2.26 2.16 2.36 El Paso Pipeline Partners L.P. 118.10 27.70 145.80 2.95 3.73 4.22 0.60 0.83 1.06 0.22 0.22 0.28 1.99 2.40 2.56 Energy Transfer Partners L.P. 181.13 0.00 181.13 8.88 8.24 9.39 2.32 2.43 2.97 0.61 0.52 0.53 3.57 3.38 3.74 Enterprise Products Partners L.P. 634.45 0.00 641.97 5.51 4.87 5.03 1.32 1.01 1.06 0.34 0.37 0.33 2.95 2.97 3.14 Niska Gas Storage Partners 33.80 35.10 68.99 na 2.77 3.01 na 1.04 1.10 na 0.02 0.03 na 1.51 1.73 ONEOK Partners L.P. 101.36 0.00 101.36 8.43 8.49 9.65 2.20 2.03 1.90 0.63 0.80 0.87 4.91 4.55 5.55 PAA Natural Gas Storage 31.59 12.93 44.52 na 1.18 1.83 na 0.17 0.13 na 0.01 0.02 na 0.97 1.62 Regency Energy Partners L.P. 119.24 0.00 123.83 2.46 2.72 2.96 0.93 0.78 0.75 0.24 0.16 0.15 1.55 1.93 2.03 Spectra Energy Partners L.P. 58.70 21.60 80.30 2.77 2.84 3.40 0.22 0.23 0.36 0.24 0.21 0.27 2.00 2.05 2.40 TC PipeLines L.P. 46.20 0.00 46.20 6.08 5.40 5.41 0.71 0.57 0.54 0.18 0.11 0.11 3.88 3.63 3.86 Average Sub Sector 4.98 4.70 5.21 1.04 0.95 1.05 0.40 0.41 0.45 2.79 2.62 2.96 Crude Oil Enbridge Energy Partners L.P. (Cl A) 97.44 0.00 118.60 7.66 8.18 8.47 1.98 2.10 2.34 0.59 0.72 0.74 4.44 4.84 4.70 Plains All American Pipeline L.P. 138.22 0.00 138.22 7.80 7.66 8.30 1.71 1.80 1.80 0.62 0.61 0.62 4.26 3.94 4.27 Blueknight Energy Partners, L.P. 21.73 12.60 34.30 1.73 1.92 2.06 1.35 1.52 0.94 0.11 0.20 0.11 0.21 0.20 0.99 Average Sub Sector 5.73 5.92 6.27 1.68 1.80 1.69 0.44 0.51 0.49 2.97 2.99 3.32 Marine Transportation K-Sea Transportation Partners L.P. 16.84 2.08 19.13 5.78 3.11 3.94 1.38 1.20 1.42 1.38 1.20 1.20 2.52 0.77 1.33 Teekay Offshore Partners L.P. 45.02 0.00 45.02 7.74 5.27 6.36 1.12 0.79 1.15 -2.52 -2.07 -1.76 1.80 1.90 1.98 Average Sub Sector 6.76 4.19 5.15 1.25 0.99 1.28 -0.57 -0.43 -0.28 2.16 1.34 1.65 Propane Amerigas Partners L.P. 57.10 0.00 57.10 5.98 6.03 5.99 1.10 1.21 1.13 0.66 0.65 0.67 3.97 4.10 4.03 Ferrellgas Partners L.P. 68.18 0.00 71.69 3.64 3.66 3.82 1.29 1.31 1.36 0.32 0.33 0.36 2.10 2.03 2.06 Inergy L.P. 64.64 0.00 64.64 5.52 5.24 4.85 1.24 1.25 1.12 0.15 0.13 0.09 3.23 2.84 3.13 Suburban Propane Partners L.P. 35.54 0.00 35.48 7.04 5.60 5.58 1.15 0.76 0.74 0.37 0.34 0.37 5.53 4.50 4.48 Average Sub Sector 5.55 5.13 5.06 1.19 1.13 1.09 0.37 0.36 0.37 3.71 3.37 3.42 Coal Sector Alliance Resource Partners L.P. 36.95 0.00 36.95 9.20 11.21 11.94 0.81 0.94 0.98 2.75 3.27 3.53 5.56 6.90 7.32 Natural Resource Partners L.P. 69.45 0.00 69.45 3.08 3.66 4.98 0.59 0.58 0.67 0.00 0.00 0.00 2.17 2.17 2.17 Penn Virginia Resource L.P. 51.85 0.00 51.85 2.76 4.18 4.81 0.49 0.48 0.51 0.18 0.23 0.23 2.63 3.70 4.33 Average Sub Sector 5.01 6.35 7.24 0.63 0.66 0.72 0.98 1.17 1.25 3.45 4.25 4.61 E&P Sector Constellation Energy Partners LLC 22.67 0.00 22.67 3.00 2.85 2.75 0.57 0.53 0.53 1.30 1.30 1.30 1.20 1.10 0.95 Linn Energy LLC 129.91 0.00 129.91 4.70 4.55 4.05 0.87 1.15 1.16 0.81 0.77 0.77 3.00 2.80 2.25 Average Sub Sector 3.68 3.53 3.37 0.58 0.66 0.66 0.87 0.83 0.83 2.25 2.12 1.92 Total Universe 5.29 4.90 5.28 1.17 1.06 1.09 0.44 0.46 0.49 3.08 2.81 3.07 (1) adjusted for non cash items (2) uses 2010 estimated units; Units in mm * Note: Total units represent distribution paying units. Source: FactSet, Barclays Capital estimates, company filings

22 October 2010 186 Barclays Capital | MLP Quarterly Monitor

Figure 168: MLP Balance Sheet Comps, $ in millions

MLP Balance Sheet Comps 10/19/10 Debt & Debt & Common Debt & Book Pfd / Equity Enterprise Pfd / Common Dist Coverage Total Dist Coverage EBITDA / Interest Debt / EBITDA S&P Company Equity Preferred Cap Cap Mkt Cap Value EV 2009 2010e 2011e 2009 2010e 2011e 2009 2010e 2011e 2009 2010e 2011e Rating Refined Products Global Partners LP $228 $598 $826 72.4% $440 $1,039 57.6% 309% 182% 137% 173% 118% 137% 4.4 3.2 3.7 8.0 9.3 6.2 NR Holly Energy Partners L.P. $186 $570 $766 74.4% $1,109 $1,679 33.9% 203% 112% 121% 113% 112% 121% 4.6 3.9 4.3 4.4 4.4 3.7 BB- Kinder Morgan Energy Partners L. $7,811 $11,090 $18,901 58.7% $22,097 $33,187 33.4% 101% 101% 101% 101% 101% 101% 6.3 6.1 6.2 4.0 3.7 3.5 BBB Magellan Midstream Partners L.P $1,439 $1,921 $3,360 57.2% $5,927 $7,848 24.5% 116% 112% 115% 116% 112% 115% 5.4 5.6 5.5 4.2 3.8 3.6 BBB Sunoco Logistics Partners L.P. $860 $1,344 $2,203 61.0% $2,596 $3,940 34.1% 167% 130% 128% 167% 130% 128% 7.7 4.7 5.0 2.5 3.9 3.5 BBB NuStar Energy L.P. $2,616 $1,947 $4,563 42.7% $4,082 $6,029 32.3% 125% 103% 113% 125% 103% 113% 5.6 6.3 6.5 4.2 4.2 4.0 BBB- Total Sub Sector $14,296 $18,995 $33,362 56.9% $39,474 $58,469 32.5% 163% 121% 118% 131% 112% 118% 5.6x 4.9x 5.1x 4.5x 4.7x 4.0x Gathering, Processing & Compression Atlas Pipeline Partners L.P. $756 $636 $1,392 45.7% $1,036 $1,672 38.0% 1923% 0% 111% 1923% 0% 111% 2.4 2.1 2.7 5.1 3.4 4.8 B- Chesapeake Midstream Partners L na $0 $1,871 na $3,727 $3,727 na na 113% 123% na 113% 123% na 114.8 42.9 na na na NR Copano Energy L.L.C. $884 $718 $1,602 44.8% $1,898 $2,616 27.4% 106% 91% 101% 106% 91% 101% 3.4 3.2 2.8 4.3 4.0 4.2 BB- Crosstex Energy L.P. $946 $771 $1,717 44.9% $675 $1,445 53.3% 0% 0% 0% 0% 0% 122% 1.6 2.0 2.5 4.2 4.4 4.0 B+ DCP Midstream Partners L.P. $351 $695 $1,046 66.4% $1,240 $1,935 35.9% 160% 135% 142% 123% 107% 116% 5.2 4.6 4.5 3.7 4.5 3.6 BBB- Eagle Rock Energy Partners L.P. $661 $515 $1,177 43.8% $476 $992 52.0% 2282% 490% 135% 2247% 486% 135% 4.6 4.1 4.9 4.6 3.4 3.3 NR Exterran Partners L.P. $464 $431 $920 46.8% $896 $1,327 32.4% 134% 115% 120% 134% 115% 120% 4.0 4.6 5.1 4.8 4.2 3.3 NR MarkWest Energy Partners L.P. $1,572 $1,214 $2,786 43.6% $2,702 $3,916 31.0% 120% 124% 123% 120% 124% 123% 3.1 3.3 4.0 4.1 3.7 3.7 B+ Targa Resources Partners L.P. $1,064 $1,269 $2,334 54.4% $2,012 $3,281 38.7% 174% 119% 127% 147% 117% 125% 3.7 4.1 4.1 3.1 3.6 3.7 BB- Western Gas Partners L.P. $1,090 $735 $1,825 40.3% $2,009 $2,744 26.8% 238% 237% 215% 129% 145% 140% 0.0 10.0 5.1 1.7 4.1 3.7 NR Total Sub Sector $7,789 $6,983 $16,669 41.9% $16,671 $23,654 29.5% 571% 142% 120% 548% 130% 122% 3.1x 15.3x 7.9x 3.9x 3.9x 3.8x Natural Gas - NGL Pipelines and Storage Boardwalk Pipeline Partners L.P. $3,251 $3,376 $6,627 50.9% $6,519 $9,895 34.1% 87% 120% 123% 76% 106% 108% 3.8 4.4 4.1 6.2 5.1 4.7 BBB Duncan Energy Partners L.P. $757 $457 $1,214 37.7% $1,842 $2,299 19.9% 129% 118% 124% 129% 118% 124% 21.3 22.9 15.5 1.6 1.5 1.5 NR El Paso Pipeline Partners L.P. $2,161 $3,124 $4,524 69.1% $5,034 $8,158 38.3% 190% 184% 170% 146% 149% 142% 4.9 4.5 4.0 4.0 4.3 3.7 BB Energy Transfer Partners L.P. $4,222 $6,949 $11,212 62.0% $9,426 $16,376 42.4% 100% 95% 105% 100% 95% 105% 3.8 3.4 3.2 4.1 4.7 4.3 BBB- Enterprise Products Partners L.P. $10,244 $12,508 $22,752 55.0% $26,598 $39,105 32.0% 123% 128% 128% 123% 128% 128% 4.2 4.8 4.8 4.0 3.9 3.8 BBB- Niska Gas Storage Partners $837 $800 $1,637 48.9% $1,374 $2,174 36.8% na 252% 245% na 123% 119% na 2.7 2.7 na 4.2 4.3 BB ONEOK Partners L.P. $2,903 $2,489 $5,393 46.2% $8,020 $10,509 23.7% 113% 101% 118% 113% 101% 118% 3.8 4.2 5.1 3.6 4.0 3.1 BBB PAA Natural Gas Storage $724 $249 $973 25.5% $1,118 $1,366 18.2% na 122% 232% na 111% 112% na 7.0 13.7 na 4.7 4.8 NR Regency Energy Partners L.P. $3,247 $1,287 $4,533 28.4% $3,496 $4,782 26.9% 87% 112% 112% 87% 108% 109% 2.6 3.5 4.0 4.1 3.8 3.6 BB- Spectra Energy Partners L.P. $1,424 $701 $1,839 38.1% $2,893 $3,594 19.5% 179% 161% 167% 128% 118% 125% 12.7 12.1 9.6 1.8 1.8 2.4 NR TC PipeLines L.P. $1,108 $538 $1,647 32.7% $2,218 $2,757 19.5% 134% 122% 124% 134% 122% 124% 8.5 9.5 10.1 2.3 2.2 2.0 NR Total Sub Sector $30,879 $32,478 $62,351 52.1% $68,539 $101,017 32.2% 127% 138% 150% 115% 116% 120% 7.3x 7.2x 7.0x 3.5x 3.7x 3.5x Crude Oil Enbridge Energy Partners L.P. (Cl $4,181 $4,292 $8,473 50.7% $7,149 $11,441 37.5% 112% 120% 113% 112% 120% 113% 3.9 3.9 3.6 4.4 4.4 4.4 BBB Plains All American Pipeline L.P. $4,650 $4,342 $9,977 43.5% $8,616 $12,958 33.5% 116% 104% 107% 116% 104% 107% 4.6 4.3 4.6 4.1 4.1 3.9 BBB- Blueknight Energy Partners, L.P. -$136 $422 $287 147.2% $303 $725 58.3% 0% 0% 106% 0% 0% 106% 1.3 1.3 2.2 7.1 0.0 5.2 NR Total Sub Sector $8,695 $9,056 $18,737 48.3% $15,765 $24,399 37.1% 76% 75% 109% 76% 75% 109% 3.2x 3.1x 3.5x 5.2x 2.8x 4.5x Marine Transportation K-Sea Transportation Partners L.P $303 $373 $675 55.2% $76 $449 83.0% 115% 81% 0% 98% 172% 0% 4.2 2.6 2.8 3.8 5.0 4.4 NR Teekay Offshore Partners L.P. $443 $1,595 $2,038 78.3% $1,045 $2,640 60.4% 120% 126% 118% 80% 120% 111% 6.9 6.6 5.5 6.7 6.7 5.1 NR Total Sub Sector $746 $1,968 $2,714 72.5% $1,121 $3,089 63.7% 118% 104% 59% 89% 146% 56% 5.5x 4.6x 4.2x 5.2x 5.9x 4.8x Propane Amerigas Partners L.P. $390 $869 $1,259 69.0% $2,672 $3,541 24.6% 150% 147% 138% 150% 147% 138% 5.4 5.0 5.3 2.3 2.5 2.6 NR Ferrellgas Partners L.P. $90 $1,080 $1,171 92.3% $1,803 $2,883 37.5% 137% 138% 140% 111% 105% 106% 2.8 2.8 2.8 4.0 4.1 4.1 B+ Inergy L.P. $1,161 $1,025 $2,186 46.9% $3,104 $4,129 24.8% 122% 101% 105% 122% 101% 105% 4.5 4.2 4.3 3.7 3.0 3.4 BB- Suburban Propane Partners L.P. $371 $348 $719 48.4% $1,927 $2,275 15.3% 169% 133% 129% 169% 133% 129% 6.1 7.3 7.6 1.5 1.8 1.8 BB Total Sub Sector $2,013 $3,322 $5,335 62.3% $9,506 $12,828 25.9% 145% 130% 128% 138% 122% 120% 4.7x 4.8x 5.0x 2.9x 2.9x 3.0x Coal Sector Alliance Resource Partners L.P. $365 $510 $471 108.2% $2,238 $2,748 18.6% 125% 137% 130% 125% 137% 130% 11.4 12.0 12.2 0.5 0.4 0.3 NR Natural Resource Partners L.P. $759 $669 $1,094 61.2% $3,066 $3,736 17.9% 76% 88% 111% 76% 88% 111% 5.2 6.4 7.5 3.1 2.6 2.3 NR Penn Virginia Resource L.P. $489 $654 $1,144 57.2% $1,354 $2,008 32.6% 92% 149% 137% 92% 149% 137% 5.7 8.6 9.4 4.0 2.9 2.4 NR Total Sub Sector $1,614 $1,834 $2,709 67.7% $6,659 $8,492 21.6% 98% 125% 126% 98% 125% 126% 7.4x 9.0x 9.7x 2.5x 2.0x 1.7x E&P Sector Constellation Energy Partners LLC $458 $200 $658 30.4% $75 $275 72.8% 86% 79% 82% 86% 79% 82% 5.2 5.4 5.2 3.0 3.1 3.2 NR Linn Energy LLC $2,414 $1,558 $3,972 39.2% $4,801 $6,359 24.5% 120% 111% 90% 120% 111% 90% 5.4 4.0 3.5 2.8 2.6 3.0 B+ Total Sub Sector $3,080 $1,909 $4,990 38.3% $5,785 $7,695 24.8% 110% 104% 99% 110% 104% 99% 7.4x 6.8x 6.7x 2.4x 2.4x 2.6x Total Universe $69,248 $76,124 $146,578 51.9% $163,520 $239,643 31.8% 230% 129% 124% 215% 121% 116% 5.5x 8.3x 6.6x 3.7x 3.7x 3.5x Note: Distribution Coverage Ratio = DCF per LP Unit / Distribution per LP Unit Source: FactSet, Barclays Capital estimates, company filings

22 October 2010 187 Barclays Capital | MLP Quarterly Monitor

Figure 169: MLP Sharpe Ratios

0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 EPB SEP SXL ENP NRGY PAA APU NS MMP EPD TCLP BWP DEP WPZ TOO DPM EXLP CPNO GLP

MLP Sharpe Ratios

0.50 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 E&P Sector Natural Gas & Coal Sector Refined Crude Oil Propane Gathering and Marine NGL Products Processing Transportation

MLP Sub-Sector Sharpe Ratios

Source: FactSet, Barclays Capital estimates

22 October 2010 188 Barclays Capital | MLP Quarterly Monitor

Figure 170: Alerian MLP Index Performance and Credit Spread History

Date AMZK AMZK Yield US 10 YR BarCap HY Credit Spreads* CBOE VIX Moodys Baa Moodys Spread*Alerian Spread* 2-Oct-09 245.67 8.31% 3.22% 10.52% 7.30% 28.68 6.29% 3.07% 5.09% 9-Oct-09 256.00 7.98% 3.38% 10.41% 7.02% 23.10 6.39% 3.01% 4.60% 16-Oct-09 262.14 7.79% 3.42% 10.25% 6.84% 21.43 6.59% 3.17% 4.37% 23-Oct-09 265.36 7.69% 3.48% 10.09% 6.61% 22.27 6.45% 2.98% 4.22% 30-Oct-09 254.09 8.01% 3.39% 10.11% 6.72% 30.69 6.54% 3.15% 4.62% 6-Nov-09 257.93 7.89% 3.50% 9.98% 6.48% 24.19 6.56% 3.06% 4.39% 13-Nov-09 261.57 8.05% 3.43% 9.87% 6.44% 23.36 6.54% 3.11% 4.62% 20-Nov-09 261.95 8.04% 3.36% 9.82% 6.46% 22.19 6.42% 3.06% 4.69% 27-Nov-09 267.90 7.86% 3.21% 9.78% 6.57% 24.85 6.39% 3.18% 4.65% 4-Dec-09 266.51 7.91% 3.48% 9.61% 6.12% 21.25 6.46% 2.98% 4.43% 11-Dec-09 275.01 7.67% 3.54% 9.45% 5.92% 21.60 6.52% 2.98% 4.13% 18-Dec-09 274.60 7.67% 3.55% 9.31% 5.76% 21.68 6.34% 2.79% 4.13% 24-Dec-09 287.74 7.32% 3.81% 9.26% 5.46% 19.47 6.49% 2.68% 3.51% 31-Dec-09 285.39 7.38% 3.84% 9.20% 5.36% 21.68 6.48% 2.64% 3.54% 8-Jan-10 294.09 7.16% 3.81% 8.80% 4.99% 18.13 6.38% 2.57% 3.35% 15-Jan-10 293.46 7.20% 3.68% 8.79% 5.11% 17.91 6.30% 2.62% 3.52% 22-Jan-10 293.90 7.20% 3.60% 8.96% 5.37% 27.31 6.23% 2.63% 3.60% 29-Jan-10 284.72 7.45% 3.61% 9.09% 5.48% 24.62 6.36% 2.75% 3.84% 5-Feb-10 276.09 7.69% 3.55% 9.29% 5.74% 26.11 6.35% 2.80% 4.14% 12-Feb-10 283.29 7.50% 3.69% 9.63% 5.94% 22.73 6.53% 2.84% 3.80% 19-Feb-10 291.15 7.29% 3.78% 9.31% 5.53% 20.02 6.58% 2.80% 3.51% 26-Feb-10 295.23 7.20% 3.59% 9.27% 5.68% 19.50 6.35% 2.76% 3.61% 5-Mar-10 298.41 7.12% 3.68% 9.01% 5.33% 17.42 6.28% 2.60% 3.44% 12-Mar-10 305.34 6.96% 3.71% 8.82% 5.11% 17.58 6.33% 2.62% 3.25% 19-Mar-10 298.62 7.12% 3.69% 8.73% 5.04% 16.97 6.24% 2.56% 3.43% 26-Mar-10 296.84 7.17% 3.85% 8.68% 4.82% 17.77 6.44% 2.59% 3.32% 7-Apr-10 310.85 6.85% 3.86% 8.56% 4.70% 16.62 6.50% 2.64% 2.99% 14-Apr-10 313.26 6.81% 3.86% 8.43% 4.57% 15.59 6.30% 2.45% 2.96% 21-Apr-10 314.97 6.80% 3.74% 8.35% 4.62% 16.32 6.31% 2.57% 3.06% 28-Apr-10 311.15 6.92% 3.77% 8.35% 4.58% 21.08 6.17% 2.40% 3.15% 5-May-10 296.50 7.27% 3.55% 8.54% 4.99% 24.91 6.09% 2.54% 3.72% 12-May-10 303.57 7.10% 3.57% 8.82% 5.25% 25.52 6.23% 2.66% 3.54% 19-May-10 285.44 7.55% 3.36% 9.09% 5.72% 35.32 6.05% 2.69% 4.19% 26-May-10 285.54 7.55% 3.22% 9.50% 6.28% 35.02 6.07% 2.85% 4.33% 2-Jun-10 291.24 7.40% 3.34% 9.47% 6.13% 30.17 6.25% 2.91% 4.07% 9-Jun-10 292.28 7.38% 3.19% 9.56% 6.37% 33.73 6.21% 3.02% 4.19% 16-Jun-10 305.53 7.06% 3.28% 9.39% 6.11% 25.92 6.42% 3.14% 3.77% 23-Jun-10 302.04 7.17% 3.12% 9.13% 6.01% 26.91 6.25% 3.14% 4.05% 30-Jun-10 308.40 7.02% 2.95% 9.28% 6.33% 34.54 6.13% 3.18% 4.07% 7-Jul-10 314.87 6.88% 2.98% 9.22% 6.24% 26.84 6.01% 3.03% 3.90% 14-Jul-10 323.51 6.71% 3.05% 8.91% 5.86% 25.14 6.10% 3.05% 3.66% 21-Jul-10 330.39 6.57% 2.89% 8.81% 5.92% 25.64 6.02% 3.13% 3.68% 28-Jul-10 326.16 6.70% 3.00% 8.60% 5.60% 24.13 6.01% 3.01% 3.70% 4-Aug-10 333.24 6.56% 2.95% 8.54% 5.59% 22.21 5.95% 3.00% 3.61% 11-Aug-10 317.54 6.89% 2.69% 8.62% 5.94% 25.39 5.94% 3.25% 4.20% 18-Aug-10 322.91 6.77% 2.64% 8.62% 5.98% 24.59 5.76% 3.12% 4.13% 25-Aug-10 319.48 6.85% 2.54% 8.71% 6.17% 26.70 5.48% 2.94% 4.31% 1-Sep-10 323.07 6.79% 2.58% 8.69% 6.11% 23.89 5.59% 3.01% 4.21% 8-Sep-10 325.95 6.74% 2.65% 8.57% 5.92% 23.25 5.61% 2.96% 4.09% 15-Sep-10 329.40 6.67% 2.72% 8.37% 5.65% 22.10 5.74% 3.02% 3.95% 22-Sep-10 332.65 6.61% 2.55% 8.28% 5.73% 22.51 5.61% 3.06% 4.06% 29-Sep-10 336.35 6.54% 2.51% 8.21% 5.70% 23.25 5.58% 3.07% 4.03% 6-Oct-10 344.08 6.40% 2.40% 8.04% 5.64% 21.49 5.54% 3.14% 4.00%

10 Year Statistics Current 344.08 6.40% 2.40% 8.04% 5.64% 21.49 5.54% 3.14% 4.00% Average 227.90 7.38% 4.23% 10.45% 6.22% 22.02 6.98% 2.75% 3.15% Median 231.87 7.06% 4.23% 9.31% 5.73% 11.59 6.75% 2.63% 2.74% Low 118.69 5.37% 2.13% 7.24% 2.75% 10.02 5.48% 1.19% 0.26% High 344.08 15.25% 5.82% 22.98% 20.40% 79.13 9.77% 6.44% 12.07% Std. Deviation 55.99 1.31% 0.71% 2.95% 3.18% 9.96 0.79% 0.98% 1.69% Curr. vs. 1 SD 1.21 0.74 0.49 0.60 0.60 0.67 0.71 0.84 0.83 Source: FactSet, Alerian Capital Management, Barclays Capital Fixed Income

22 October 2010 189 Barclays Capital | MLP Quarterly Monitor

Figure 171: Quarterly Distribution Increases, 2009

Quarterly Distribution Increases (2009) First Quarter Second Quarter Third Quarter Fourth Quarter LPs New Old Growth LPs New Old Growth LPs New Old Growth LPs New Old Growth EPB $0.3200 $0.3000 6.67% APU $0.6700 $0.6400 4.69% TCLP $0.7300 $0.7050 3.55% EPB $0.3500 $0.3300 6.06% KGS $0.3700 $0.3500 5.71% SEP $0.3700 $0.3600 2.78% WES $0.3100 $0.3000 3.33% KGS $0.3900 $0.3700 5.41% NMM $0.4000 $0.3850 3.90% SXL $1.0150 $0.9900 2.53% SEP $0.3800 $0.3700 2.70% SEP $0.4000 $0.3800 5.26% KMP $1.0500 $1.0200 2.94% GEL $0.3375 $0.3300 2.27% ENP $0.5125 $0.5000 2.50% ENP $0.5375 $0.5125 4.88% SEP $0.3600 $0.3500 2.86% ARLP $0.7300 $0.7150 2.10% SXL $1.0400 $1.0150 2.46% WES $0.3200 $0.3100 3.23% SXL $0.9900 $0.9650 2.59% EPB $0.3250 $0.3200 1.56% GEL $0.3450 $0.3375 2.22% SXL $1.0650 $1.0400 2.40% GEL $0.3300 $0.3225 2.33% WMZ $0.3250 $0.3200 1.56% ARLP $0.7450 $0.7300 2.05% GEL $0.3525 $0.3450 2.17% ARLP $0.7150 $0.7000 2.14% NRGY $0.6550 $0.6450 1.55% EPB $0.3300 $0.3250 1.54% ARLP $0.7600 $0.7450 2.01% NRP $0.5350 $0.5250 1.90% EPD $0.5375 $0.5300 1.42% WMZ $0.3300 $0.3250 1.54% PAA $0.9200 $0.9050 1.66% DEP $0.4275 $0.4200 1.79% BPL $0.9000 $0.8875 1.41% NRGY $0.6650 $0.6550 1.53% WMZ $0.3350 $0.3300 1.52% WMZ $0.3200 $0.3150 1.59% PAA $0.9050 $0.8925 1.40% EPD $0.5450 $0.5375 1.40% NRGY $0.6750 $0.6650 1.50% NRGY $0.6450 $0.6350 1.57% HEP $0.7750 $0.7650 1.31% BPL $0.9125 $0.9000 1.39% EPD $0.5525 $0.5450 1.38% EPD $0.5300 $0.5225 1.44% BWP $0.4850 $0.4800 1.04% HEP $0.7850 $0.7750 1.29% BPL $0.9250 $0.9125 1.37% BPL $0.8875 $0.8750 1.43% NRP $0.5400 $0.5350 0.93% SPH $0.8250 $0.8150 1.23% HEP $0.7950 $0.7850 1.27% HEP $0.7650 $0.7550 1.32% SPH $0.8150 $0.8100 0.62% DEP $0.4350 $0.4300 1.16% NMM $0.4050 $0.4000 1.25% MMP $0.7100 $0.7025 1.07% DEP $0.4300 $0.4275 0.58% BWP $0.4900 $0.4850 1.03% DEP $0.4400 $0.4350 1.15% BWP $0.4800 $0.4750 1.05% EVEP $0.7520 $0.7510 0.13% EVEP $0.7530 $0.7520 0.13% BWP $0.4950 $0.4900 1.02% CPNO $0.5750 $0.5700 0.88% OKS $1.0900 $1.0800 0.93% SPH $0.8100 $0.8050 0.62% NS $1.0650 $1.0575 0.71% EVEP $0.7510 $0.7500 0.13% SPH $0.8300 $0.8250 0.61%

Average: 2.2% Average: 1.6% Average: 1.8% Average: 2.3%

GPs New Old Growth GPs New Old Growth GPs New Old Growth GPs New Old Growth ETE $0.5100 $0.4800 6.25% NRGP $0.7500 $0.6750 11.11% AHGP $0.4275 $0.4150 3.01% NRGP $0.8500 $0.7800 8.97% NRGP $0.6750 $0.6500 3.85% EPE $0.4850 $0.4700 3.19% BGH $0.3700 $0.3500 5.71% BGH $0.3900 $0.3700 5.41% EPE $0.4700 $0.4550 3.30% AHGP $0.4150 $0.4025 3.11% EPE $0.5000 $0.4850 3.09% EPE $0.5150 $0.5000 3.00% AHGP $0.4025 $0.3900 3.21% NRGP $0.7800 $0.7500 4.00% AHGP $0.4400 $0.4275 2.92% BGH $0.3300 $0.3200 3.13% NSH $0.4350 $0.4300 1.16% MGG $1.4360 $1.4160 1.41%

Average: 3.5% Average: 5.8% Average: 4.0% Average: 4.3%

Source: Company filings

22 October 2010 190 Barclays Capital | MLP Quarterly Monitor

Figure 172: Quarterly Distribution Increases, 2010

Quarterly Distribution Increases (2010) First Quarter Second Quarter Third Quarter LPs New Old Growth LPs New Old Growth LPs New Old Growth SGU $0.0725 $0.0675 7.41% EPB $0.3800 $0.3600 5.56% KGS $0.4200 $0.3900 7.69% VNR $0.5250 $0.5000 5.00% TOO $0.4750 $0.4500 5.56% EPB $0.4000 $0.3800 5.26% WES $0.3300 $0.3200 3.13% TGP $0.6000 $0.5700 5.26% VNR $0.5500 $0.5250 4.76% EPB $0.3600 $0.3500 2.86% APU $0.7050 $0.6700 5.22% WES $0.3500 $0.3400 2.94% SEP $0.4100 $0.4000 2.50% WPZ $0.6575 $0.6350 3.54% ARLP $0.8100 $0.7900 2.53% SXL $1.0900 $1.0650 2.35% WES $0.3400 $0.3300 3.03% EEP $1.0275 $1.0025 2.49% GEL $0.3600 $0.3525 2.13% SEP $0.4200 $0.4100 2.44% SEP $0.4300 $0.4200 2.38% ARLP $0.7750 $0.7600 1.97% SXL $1.1150 $1.0900 2.29% WPZ $0.6725 $0.6575 2.28% NRGY $0.6850 $0.6750 1.48% GEL $0.3675 $0.3600 2.08% SXL $1.1400 $1.1150 2.24% EPD $0.5600 $0.5525 1.36% ARLP $0.7900 $0.7750 1.94% GEL $0.3750 $0.3675 2.04% BPL $0.9375 $0.9250 1.35% KMP $1.0700 $1.0500 1.90% BBEP $0.3825 $0.3750 2.00% HEP $0.8050 $0.7950 1.26% TLP $0.6000 $0.5900 1.69% NGLS $0.5275 $0.5175 1.93% NMM $0.4100 $0.4050 1.23% NRGY $0.6950 $0.6850 1.46% KMP $1.0900 $1.0700 1.87% DEP $0.4450 $0.4400 1.14% MMP $0.7200 $0.7100 1.41% MMP $0.7325 $0.7200 1.74% CLMT $0.4550 $0.4500 1.11% EPD $0.5675 $0.5600 1.34% DPM $0.6100 $0.6000 1.67% BWP $0.5000 $0.4950 1.01% BPL $0.9500 $0.9375 1.33% NRGY $0.7050 $0.6950 1.44% OKS $1.1000 $1.0900 0.92% EEP $1.0025 $0.9900 1.26% EPD $0.5750 $0.5675 1.32% PAA $0.9275 $0.9200 0.82% HEP $0.8150 $0.8050 1.24% BPL $0.9625 $0.9500 1.32% SPH $0.8350 $0.8300 0.60% NMM $0.4150 $0.4100 1.22% HEP $0.8250 $0.8150 1.23% EVEP $0.7550 $0.7540 0.13% BWP $0.5050 $0.5000 1.00% NMM $0.4200 $0.4150 1.20% OKS $1.1100 $1.1000 0.91% BWP $0.5100 $0.5050 0.99% PAA $0.9350 $0.9275 0.81% OKS $1.1200 $1.1100 0.90% SPH $0.8400 $0.8350 0.60% PAA $0.9425 $0.9350 0.80% DEP $0.4475 $0.4450 0.56% SPH $0.8450 $0.8400 0.60% EVEP $0.7560 $0.7550 0.13% DEP $0.4500 $0.4475 0.56% EVEP $0.7570 $0.7560 0.13%

Average: 2.0% Average: 2.2% Average: 2.1%

GPs New Old Growth GPs New Old Growth GPs New Old Growth NRGP $0.9400 $0.8500 10.59% BGH $0.4300 $0.4100 4.88% BGH $0.4500 $0.4300 4.65% BGH $0.4100 $0.3900 5.13% NRGP $0.9750 $0.9400 3.72% NRGP $0.3400 $0.3250 4.62% EPE $0.5300 $0.5150 2.91% NSH $0.4500 $0.4350 3.45% AHGP $0.4825 $0.4650 3.76% AHGP $0.4525 $0.4400 2.84% EPE $0.5450 $0.5300 2.83% EPE $0.5600 $0.5450 2.75% ETE $0.5400 $0.5350 0.93% AHGP $0.4650 $0.4525 2.76% NSH $0.4600 $0.4500 2.22% PVG $0.3900 $0.3800 2.63%

Average: 4.5% Average: 3.4% Average: 3.6%

Source: Company filings

22 October 2010 191 Barclays Capital | MLP Quarterly Monitor

Figure 173: Natural Gas Price ($/MMbtu)

Short Term Forecast 2004 2005 2006 2007 2008 2009 Yr/Yr 2010e Yr/Yr First Quarter $5.32 $6.27 $7.32 $6.85 $8.39 $4.27 -49.0% $5.15 20.4% Second Quarter $5.97 $6.72 $6.19 $7.15 $10.77 $3.49 -67.6% $4.22 20.8% Third Quarter $5.34 $9.24 $5.88 $5.89 $8.46 $3.09 -63.5% $4.18 35.2% Fourth Quarter $6.12 $11.15 $6.29 $6.66 $5.83 $4.26 -27.0% $3.95 -7.2% Full Year $5.69 $8.35 $6.42 $6.64 $8.36 $3.78 -54.8% $4.37 15.8%

Long Term Forecast

$10.00

$9.00 ANNUAL 3 YEAR AVERAGE $8.00

$7.00

$6.00

$5.00

$4.00

$3.00

$2.00 2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e

U.S. Average 2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e $5.35 $5.69 $8.35 $6.42 $6.64 $8.36 $3.78 $4.37 $4.30 $5.40 $4.90 Basis Rockies ($0.66) ($1.59) ($1.37) ($2.87) ($2.32) ($0.85) ($0.53) ($0.60) ($0.60) ($0.60) MidCon ($0.41) ($1.23) ($0.80) ($0.82) ($1.62) ($0.51) ($0.30) ($0.37) ($0.36) ($0.36) E. Texas ($0.22) ($1.04) ($0.51) ($0.51) ($0.43) ($0.37) ($0.19) ($0.22) ($0.25) ($0.24)

Source: Natural Gas Week, Barclays Capital estimates

22 October 2010 192 Barclays Capital | MLP Quarterly Monitor

Figure 174: WTI Posted Price ($/bbl)

Short Term Forecast 2004 2005 2006 2007 2008 2009 Yr/Yr 2010e Yr/Yr First Quarter $31.95 $46.05 $62.65 $57.98 $96.87 $41.84 -56.8% $78.29 87.1% Second Quarter $35.08 $49.59 $69.63 $64.46 $121.34 $57.77 -52.4% $78.41 35.7% Third Quarter $40.58 $59.91 $71.32 $74.02 $120.86 $68.68 -43.2% $74.83 9.0% Fourth Quarter $45.11 $56.31 $60.08 $88.20 $61.80 $75.09 21.5% $77.84 3.7% Full Year $38.18 $52.97 $65.92 $71.17 $100.22 $60.84 -39.3% $77.34 27.1%

Long Term Forecast

$115

$105

$95

$85

$75

$65

$55 ANNUAL $45 3 YEAR AVERAGE $35

$25

$15 2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e

2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e $27.82 $38.18 $52.97 $65.92 $71.17 $100.22 $60.84 $77.34 $81.38 $85.00 $85.00

Henry Hub 2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e $5.63 $5.85 $8.79 $6.76 $6.95 $8.85 $3.89 $4.45 $4.35 $5.50 $5.00

Source: Haver Analytics, Barclays Capital estimates

22 October 2010 193 Barclays Capital | MLP Quarterly Monitor

Figure 175: Natural Gas / Oil Ratio (%)

Short Term Forecast 2004 2005 2006 2007 2008 2009 Yr/Yr 2010e Yr/Yr First Quarter 16.7% 13.6% 11.7% 11.8% 8.7% 10.2% 18.0% 6.6% -35.6% Second Quarter 17.0% 13.6% 8.9% 11.1% 8.9% 6.0% -31.9% 5.4% -11.0% Third Quarter 13.2% 15.4% 8.2% 8.0% 7.0% 4.5% -35.7% 5.6% 24.1% Fourth Quarter 13.6% 19.8% 10.5% 7.6% 9.4% 5.7% -39.9% 5.1% -10.5% Full Year 14.9% 15.8% 9.7% 9.3% 8.3% 6.2% -25.6% 5.7% -8.9%

Long Term Forecast

20%

18%

ANNUAL 16% 3 YEAR AVERAGE 14%

12%

10%

8%

6%

4% 2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e

2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e 19.2% 14.9% 15.8% 9.7% 9.3% 8.3% 6.2% 5.7% 5.3% 6.4% 5.8%

Source: Barclays Capital estimates

22 October 2010 194 Barclays Capital | MLP Quarterly Monitor

Figure 176: Mt. Belvieu NGL Price Forecast ($/ Gal)

Short Term Forecast 2004 2005 2006 2007 2008 2009 Yr/Yr 2010e Yr/Yr First Quarter $0.64 $0.80 $0.96 $0.95 $1.51 $0.61 -59.7% $1.14 87.6% Second Quarter $0.66 $0.82 $1.05 $1.14 $1.72 $0.69 -59.9% $1.04 50.4% Third Quarter $0.78 $0.98 $1.10 $1.21 $1.72 $0.80 -53.7% $0.97 21.5% Fourth Quarter $0.85 $1.06 $0.95 $1.50 $0.76 $1.01 34.1% $1.05 3.2% Full Year $0.73 $0.92 $1.01 $1.20 $1.43 $0.78 -45.5% $1.05 34.9%

Long Term Forecast

$2.00 ANNUAL $1.90 3 YEAR AVERAGE $1.80 $1.70 $1.60 $1.50 $1.40 $1.30 $1.20 $1.10 $1.00 $0.90 $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e

2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e $0.56 $0.73 $0.92 $1.01 $1.20 $1.43 $0.78 $1.05 $1.06 $1.08 $1.08

Source: Gas Processors Report, Barclays Capital estimates

22 October 2010 195 Barclays Capital | MLP Quarterly Monitor

Figure 177: NGLs / Oil Ratio (%)

Short Term Forecast 2004 2005 2006 2007 2008 2009 Yr/Yr 2010e Yr/Yr First Quarter 84.1% 73.2% 64.2% 68.9% 65.4% 61.0% -6.7% 61.1% 0.3% Second Quarter 78.6% 69.5% 63.1% 74.5% 59.7% 50.3% -15.8% 55.7% 10.8% Third Quarter 80.4% 68.5% 65.0% 68.6% 59.9% 48.8% -18.5% 54.4% 11.5% Fourth Quarter 78.9% 79.2% 66.3% 71.4% 51.3% 56.6% 10.4% 56.4% -0.4% Full Year 80.3% 72.6% 64.6% 70.9% 59.8% 53.7% -10.3% 56.9% 6.1%

Long Term Forecast

85%

80% ANNUAL

3 YEAR AVERAGE 75%

70%

65%

60%

55%

50% 2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e

2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e 84.5% 80.3% 72.6% 64.6% 70.8% 59.8% 53.7% 56.9% 54.6% 53.6% 53.3%

Source: Barclays Capital estimates

22 October 2010 196 Barclays Capital | MLP Quarterly Monitor

Figure 178: Mt. Belvieu Frac Spread ($ / Gal)

Short Term Forecast 2004 2005 2006 2007 2008 2009 Yr/Yr 2010e Yr/Yr First Quarter $0.16 $0.23 $0.29 $0.33 $0.74 $0.22 -70.6% $0.67 207.0% Second Quarter $0.11 $0.21 $0.48 $0.49 $0.75 $0.37 -49.8% $0.66 75.5% Third Quarter $0.29 $0.14 $0.57 $0.67 $0.95 $0.52 -45.8% $0.59 14.1% Fourth Quarter $0.29 $0.05 $0.38 $0.89 $0.22 $0.63 178.3% $0.69 9.7% Full Year $0.21 $0.16 $0.43 $0.60 $0.67 $0.43 -35.0% $0.65 50.1%

Long Term Forecast

$1.00 $0.95 $0.90 ANNUAL $0.85 $0.80 3 YEAR AVERAGE $0.75 $0.70 $0.65 $0.60 $0.55 $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $0.00 2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e

2003 2004 2005 2006 2007 2008 2009e 2010e 2011e 2012e 2013e $0.07 $0.21 $0.16 $0.43 $0.60 $0.67 $0.43 $0.65 $0.67 $0.59 $0.63

Source: Gas Processors Report, Barclays Capital estimates

22 October 2010 197 Barclays Capital | MLP Quarterly Monitor

Figure 179: Nat Gas / Crude Oil Forward Curves

$14

$12

$10

$8

$6

$4

$2

$0 Jan-15 Jan-14 Jan-13 Jan-12 Jan-11 Jan-10 Jan-09 Jan-08 Jan-07 Sep-15 Sep-14 Sep-13 Sep-12 Sep-11 Sep-10 Sep-09 Sep-08 Sep-07 May-15 May-14 May-13 May-12 May-11 May-10 May-09 May-08 May-07

$160 $140 $120 $100 $80 $60 $40 $20 $0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14 May-15

30.0

25.0

20.0

15.0

10.0

5.0

0.0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 May-07 May-08 May-09 May-10 May-11 May-12 May-13 May-14 May-15

Source: NYMEX

22 October 2010 198 Barclays Capital | MLP Quarterly Monitor

Figure 180: Rockies Gas Basis

Rockies Basis Rockies Basis (Opal Wyoming - Henry Hub) (San Juan Basin - Henry Hub)

$ mmbtu $ mmbtu $1.00 $1.00 $0.00 $0.00 -$1.00 -$1.00 -$2.00 -$2.00 -$3.00 -$3.00 -$4.00 -$4.00 -$5.00 -$6.00 -$5.00 -$7.00 -$6.00 -$8.00 -$7.00 1/1/01 5/1/01 9/1/01 1/1/02 5/1/02 9/1/02 1/1/03 5/1/03 9/1/03 1/1/04 5/1/04 9/1/04 1/1/05 5/1/05 9/1/05 1/1/06 5/1/06 9/1/06 1/1/07 5/1/07 9/1/07 1/1/08 5/1/08 9/1/08 1/1/09 5/1/09 9/1/09 1/1/10 5/1/10 9/1/10 1/1/01 5/1/01 9/1/01 1/1/02 5/1/02 9/1/02 1/1/03 5/1/03 9/1/03 1/1/04 5/1/04 9/1/04 1/1/05 5/1/05 9/1/05 1/1/06 5/1/06 9/1/06 1/1/07 5/1/07 9/1/07 1/1/08 5/1/08 9/1/08 1/1/09 5/1/09 9/1/09 1/1/10 5/1/10 9/1/10

Rockies Basis Rockies Basis (Opal Wyoming - San Juan Basin) (Opal Wyoming - PEPL)

$ mmbtu $ mmbtu $1.00 $1.00 $0.00 $0.00 -$1.00 -$1.00 -$2.00 -$2.00 -$3.00 -$3.00 -$4.00 -$5.00 -$4.00 -$6.00 -$5.00 -$7.00 -$6.00 -$8.00 1/1/01 5/1/01 9/1/01 1/1/02 5/1/02 9/1/02 1/1/03 5/1/03 9/1/03 1/1/04 5/1/04 9/1/04 1/1/05 5/1/05 9/1/05 1/1/06 5/1/06 9/1/06 1/1/07 5/1/07 9/1/07 1/1/08 5/1/08 9/1/08 1/1/09 5/1/09 9/1/09 1/1/10 5/1/10 9/1/10 1/1/01 5/1/01 9/1/01 1/1/02 5/1/02 9/1/02 1/1/03 5/1/03 9/1/03 1/1/04 5/1/04 9/1/04 1/1/05 5/1/05 9/1/05 1/1/06 5/1/06 9/1/06 1/1/07 5/1/07 9/1/07 1/1/08 5/1/08 9/1/08 1/1/09 5/1/09 9/1/09 1/1/10 5/1/10 9/1/10

Source: Natural Gas Week

22 October 2010 199 Barclays Capital | MLP Quarterly Monitor

Figure 181: MLP Cash Distribution History

Refined Product Pipelines and Terminals

BPL Buckeye Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 1995 $0.350 $0.350 $0.350 $0.350 $1.400 1996 $0.375 $0.375 $0.375 $0.375 $1.500 7.1% 1997 $0.375 $0.375 $0.440 $0.525 $1.715 14.3% 1998 $0.525 $0.525 $0.525 $0.525 $2.100 22.4% 1999 $0.525 $0.550 $0.550 $0.550 $2.175 3.6% 2000 $0.600 $0.600 $0.600 $0.600 $2.400 10.3% 2001 $0.600 $0.600 $0.625 $0.625 $2.450 2.1% 2002 $0.625 $0.625 $0.625 $0.625 $2.500 2.0% 2003 $0.625 $0.638 $0.638 $0.638 $2.538 1.5% 2004 $0.650 $0.650 $0.663 $0.675 $2.638 3.9% 2005 $0.688 $0.700 $0.713 $0.725 $2.825 7.1% 2006 $0.738 $0.750 $0.763 $0.775 $3.025 7.1% 2007 $0.788 $0.800 $0.813 $0.825 $3.225 6.6% 2008 $0.838 $0.850 $0.863 $0.875 $3.425 6.2% 2009 $0.888 $0.900 $0.913 $0.925 $3.625 5.8% 2010 $0.938 $0.950 $0.963

CLMT Calumet Specialty Products Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2006 - $0.300 $0.450 $0.550 $1.300 2007 $0.600 $0.600 $0.630 $0.630 $2.460 89.2% 2008 $0.630 $0.450 $0.450 $0.450 $1.980 -19.5% 2009 $0.450 $0.450 $0.450 $0.450 $1.800 -9.1% 2010 $0.455 $0.455 $0.455

GLP Global Partners LP Q1 Q2 Q3 Q4 Annual Growth YoY 2006 $0.411 $0.425 $0.438 $0.445 $1.719 2007 $0.455 $0.465 $0.473 $0.480 $1.873 9.0% 2008 $0.488 $0.488 $0.488 $0.488 $1.950 4.1% 2009 $0.488 $0.488 $0.488 $0.488 $1.950 0.0% 2010 $0.488 $0.488 $0.488

HEP Holly Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2004 - - - $0.435 $0.435 2005 $0.500 $0.550 $0.575 $0.600 $2.225 2006 $0.625 $0.640 $0.655 $0.665 $2.585 16.2% 2007 $0.675 $0.690 $0.705 $0.715 $2.785 7.7% 2008 $0.725 $0.735 $0.745 $0.755 $2.960 6.3% 2009 $0.765 $0.775 $0.785 $0.795 $3.120 5.4% 2010 $0.805 $0.815 $0.825

KMP Kinder Morgan Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 1995 $0.158 $0.158 $0.158 $0.158 $0.630 1996 $0.158 $0.158 $0.158 $0.158 $0.630 0.0% 1997 $0.158 $0.158 $0.250 $0.250 $0.815 29.4% 1998 $0.281 $0.281 $0.315 $0.315 $1.193 46.3% 1999 $0.325 $0.350 $0.350 $0.363 $1.388 16.4% 2000 $0.363 $0.388 $0.425 $0.425 $1.600 15.3% 2001 $0.475 $0.525 $0.525 $0.550 $2.075 29.7% 2002 $0.550 $0.590 $0.610 $0.610 $2.360 13.7% 2003 $0.625 $0.640 $0.650 $0.660 $2.575 9.1% 2004 $0.680 $0.690 $0.710 $0.730 $2.810 9.1% 2005 $0.740 $0.760 $0.780 $0.790 $3.070 9.3% 2006 $0.800 $0.810 $0.810 $0.810 $3.230 5.2% 2007 $0.830 $0.830 $0.850 $0.880 $3.390 5.0% 2008 $0.920 $0.960 $0.990 $1.020 $3.890 14.7% 2009 $1.050 $1.050 $1.050 $1.050 $4.200 8.0% 2010 $1.050 $1.070 $1.090 Source: FactSet, company filings

22 October 2010 200 Barclays Capital | MLP Quarterly Monitor

Figure 182: MLP Cash Distribution History (continued)

MMP Magellan Midstream Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2001 $0.146 $0.281 $0.289 $0.295 $1.011 2002 $0.306 $0.338 $0.350 $0.363 $1.356 34.1% 2003 $0.375 $0.390 $0.405 $0.415 $1.585 16.9% 2004 $0.425 $0.435 $0.445 $0.456 $1.761 11.1% 2005 $0.480 $0.498 $0.531 $0.553 $2.061 17.0% 2006 $0.565 $0.610 $0.590 $0.603 $2.368 14.9% 2007 $0.616 $0.630 $0.644 $0.658 $2.547 7.6% 2008 $0.673 $0.688 $0.703 $0.710 $2.773 8.8% 2009 $0.710 $0.710 $0.710 $0.710 $2.840 2.4% 2010 $0.710 $0.720 $0.733

NS NuStar Energy L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2001 - $0.501 $0.600 $0.600 $1.701 2002 $0.650 $0.700 $0.700 $0.700 $2.750 61.7% 2003 $0.700 $0.750 $0.750 $0.750 $2.950 7.3% 2004 $0.800 $0.800 $0.800 $0.800 $3.200 8.5% 2005 $0.800 $0.860 $0.855 $0.855 $3.370 5.3% 2006 $0.885 $0.885 $0.915 $0.915 $3.600 6.8% 2007 $0.915 $0.950 $0.985 $0.985 $3.835 6.5% 2008 $0.985 $0.985 $1.058 $1.058 $4.085 13.5% 2009 $1.058 $1.058 $1.058 $1.065 $4.238 10.5% 2010 $1.065 $1.065 $1.065

SXL Sunoco Logistics Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2002 - $0.2600 $0.4500 $0.4500 $1.160 2003 $0.4875 $0.4875 $0.5000 $0.5125 $1.988 71.3% 2004 $0.5500 $0.5700 $0.5875 $0.6125 $2.320 16.7% 2005 $0.6250 $0.6250 $0.6400 $0.6750 $2.565 10.6% 2006 $0.7125 $0.7500 $0.7750 $0.7875 $3.025 17.9% 2007 $0.8125 $0.8250 $0.8375 $0.8500 $3.325 9.9% 2008 $0.870 $0.895 $0.935 $0.965 $3.665 10.2% 2009 $0.990 $1.015 $1.040 $1.065 $4.110 12.1% 2010 $1.090 $1.115 $1.140

TLP Transmontaigne Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2005 - - $0.150 $0.400 $0.55 2006 $0.400 $0.430 $0.430 $0.430 $1.69 207.3% 2007 $0.430 $0.470 $0.500 $0.500 $1.90 12.4% 2008 $0.520 $0.570 $0.580 $0.590 $2.260 18.9% 2009 $0.590 $0.590 $0.590 $0.590 $2.360 4.4% 2010 $0.590 $0.600 $0.600 Source: FactSet, company filings

22 October 2010 201 Barclays Capital | MLP Quarterly Monitor

Figure 183: MLP Cash Distribution History (continued)

Natural Gas - Gathering and Processing

APL Atlas Pipeline Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2000 - $0.295 $0.450 $0.535 $1.280 2001 $0.560 $0.650 $0.670 $0.600 $2.480 93.7% 2002 $0.580 $0.520 $0.535 $0.540 $2.175 -12.3% 2003 $0.540 $0.560 $0.580 $0.620 $2.300 5.7% 2004 $0.625 $0.630 $0.630 $0.690 $2.575 12.0% 2005 $0.720 $0.750 $0.770 $0.810 $3.050 18.4% 2006 $0.830 $0.840 $0.850 $0.850 $3.370 10.5% 2007 $0.860 $0.860 $0.870 $0.910 $3.500 3.9% 2008 $0.930 $0.940 $0.960 $0.960 $3.790 8.3% 2009 $0.380 $0.150 $0.000 $0.000 $0.530 -86.0% 2010 $0.000 $0.000 $0.000

CPNO Copano Energy L.L.C. Q1 Q2 Q3 Q4 Annual Growth YoY 2005 $0.100 $0.210 $0.225 $0.250 $0.785 2006 $0.275 $0.300 $0.338 $0.375 $1.288 64.0% 2007 $0.400 $0.420 $0.440 $0.470 $1.730 34.4% 2008 $0.510 $0.530 $0.560 $0.570 $2.170 25.4% 2009 $0.575 $0.575 $0.575 $0.575 $2.300 6.0% 2010 $0.575 $0.575 $0.575

XTEX Crosstex Energy L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2003 $0.288 $0.275 $0.350 $1.400 2004 $0.375 $0.400 $0.420 $0.430 $1.625 16.1% 2005 $0.450 $0.460 $0.470 $0.490 $1.870 15.1% 2006 $0.510 $0.530 $0.540 $0.550 $2.130 13.9% 2007 $0.560 $0.560 $0.570 $0.590 $2.280 7.0% 2008 $0.610 $0.620 $0.630 $0.500 $2.360 3.5% 2009 $0.250 $0.000 $0.000 $0.000 $0.25 -89.4% 2010 $0.000 $0.000 $0.000

DPM DCP Midstream Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2006 $0.095 $0.350 $0.380 $0.405 $1.230 2007 $0.430 $0.465 $0.530 $0.550 $1.975 60.6% 2008 $0.570 $0.590 $0.600 $0.600 $2.360 19.5% 2009 $0.600 $0.600 $0.600 $0.600 $2.40 1.7% 2010 $0.600 $0.600 $0.610

EROC Eagle Rock Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 $0.268 $0.363 $0.363 $0.368 $1.360 2008 $0.393 $0.400 $0.410 $0.410 $1.613 18.5% 2009 $0.410 $0.025 $0.025 $0.025 $0.49 -69.9% 2010 $0.025 $0.025 $0.025

EXLP Exterran Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 $0.278 $0.350 $0.350 $0.400 $1.378 2008 $0.425 $0.425 $0.425 $0.463 $1.738 26.1% 2009 $0.463 $0.463 $0.463 $0.463 $1.850 6.5% 2010 $0.463 $0.463 $0.463 Source: FactSet, company filings

22 October 2010 202 Barclays Capital | MLP Quarterly Monitor

Figure 184: MLP Cash Distribution History (continued)

MWE MarkWest Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2002 - - $0.105 $0.250 $0.355 2003 $0.260 $0.290 $0.290 $0.320 $1.280 260.6% 2004 $0.335 $0.345 $0.370 $0.380 $1.430 11.7% 2005 $0.390 $0.400 $0.400 $0.410 $1.600 11.9% 2006 $0.410 $0.435 $0.460 $0.485 $1.790 11.9% 2007 $0.500 $0.510 $0.530 $0.550 $2.090 16.8% 2008 $0.570 $0.600 $0.630 $0.640 $2.440 16.7% 2009 $0.640 $0.640 $0.640 $0.640 $2.560 4.9% 2010 $0.640 $0.640 $0.640

MMLP Martin Midstream Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2003 $0.308 $0.500 $0.500 $0.500 $2.000 2004 $0.525 $0.525 $0.525 $0.525 $2.100 5.0% 2005 $0.535 $0.535 $0.550 $0.570 $2.190 4.3% 2006 $0.610 $0.610 $0.610 $0.610 $2.440 11.4% 2007 $0.620 $0.640 $0.660 $0.680 $2.600 6.6% 2008 $0.700 $0.720 $0.740 $0.750 $2.910 11.9% 2009 $0.750 $0.750 $0.750 $0.750 $3.000 3.1% 2010 $0.750 $0.750 $0.750

KGS Quicksilver Gas Services L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 - - - $0.168 $0.168 2008 $0.300 $0.315 $0.350 $0.350 $1.315 2009 $0.370 $0.370 $0.370 $0.390 $1.500 14.1% 2010 $0.390 $0.390 $0.420

RGNC Regency Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2006 - $0.222 $0.350 $0.370 $0.942 2007 $0.370 $0.380 $0.380 $0.390 $1.520 61.4% 2008 $0.400 $0.420 $0.445 $0.445 $1.710 12.5% 2009 $0.445 $0.445 $0.445 $0.445 $1.780 4.1% 2010 $0.445 $0.445 $0.445

NGLS Targa Resources Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 - $0.169 $0.338 $0.338 $0.844 2008 $0.398 $0.418 $0.513 $0.518 $1.846 118.7% 2009 $0.518 $0.518 $0.518 $0.518 $2.070 12.2% 2010 $0.518 $0.518 $0.528

WES Western Gas Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2008 - - $0.158 $0.300 $0.458 2009 $0.300 $0.300 $0.310 $0.320 $1.230 168.4% 2010 $0.330 $0.340 $0.350

WPZ Williams Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2005 - - - $0.148 $0.148 2006 $0.350 $0.380 $0.425 $0.450 $1.605 2007 $0.470 $0.500 $0.525 $0.550 $2.045 27.4% 2008 $0.575 $0.600 $0.625 $0.635 $2.435 19.1% 2009 $0.635 $0.635 $0.635 $0.635 $2.540 4.3% 2010 $0.635 $0.658 $0.673 Source: FactSet, company filings

22 October 2010 203 Barclays Capital | MLP Quarterly Monitor

Figure 185: MLP Cash Distribution History (continued)

Natural Gas - NGL Pipelines

BWP Boardwalk Pipeline Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2006 $0.179 $0.360 $0.380 $0.400 $1.319 2007 $0.415 $0.430 $0.440 $0.450 $1.735 31.6% 2008 $0.460 $0.465 $0.470 $0.475 $1.870 7.8% 2009 $0.480 $0.485 $0.490 $0.495 $1.950 4.3% 2010 $0.500 $0.505 $0.510

CQP Cheniere Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 - $0.028 $0.425 $0.425 $0.878 2008 $0.425 $0.425 $0.425 $0.425 $1.700 2009 $0.425 $0.425 $0.425 $0.425 $1.700 0.0% 2010 $0.425 $0.425 $0.425

DEP Duncan Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 - $0.244 $0.400 $0.410 $1.054 2008 $0.410 $0.410 $0.420 $0.420 $1.660 2009 $0.428 $0.430 $0.435 $0.440 $1.733 4.4% 2010 $0.445 $0.448 $0.450

EPB El Paso Pipeline Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2008 $0.128 $0.288 $0.295 $0.300 $1.011 2009 $0.320 $0.325 $0.330 $0.350 $1.325 31.1% 2010 $0.360 $0.380 $0.400

ETP Energy Transfer Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 1996 - - - $0.177 $0.177 1997 $0.250 $0.250 $0.250 $0.250 $1.000 1998 $0.250 $0.250 $0.250 $0.250 $1.000 0.0% 1999 $0.256 $0.281 $0.281 $0.281 $1.100 10.0% 2000 $0.281 $0.281 $0.281 $0.288 $1.131 2.8% 2001 $0.294 $0.300 $0.306 $0.313 $1.213 7.2% 2002 $0.319 $0.319 $0.319 $0.319 $1.275 5.2% 2003 $0.319 $0.319 $0.319 $0.325 $1.281 0.5% 2004 $0.325 $0.350 $0.375 $0.413 $1.463 14.1% 2005 $0.438 $0.463 $0.488 $0.500 $1.888 29.1% 2006 $0.550 $0.588 $0.670 $0.750 $2.558 35.5% 2007 $0.769 $0.788 $0.806 $0.825 $3.188 24.6% 2008 $1.125 $0.869 $0.894 $0.894 $3.781 18.6% 2009 $0.894 $0.894 $0.894 $0.894 $3.575 -5.5% 2010 $0.894 $0.894 $0.894

EPD Enterprise Products Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 1998 - - - $0.160 $0.160 1999 $0.225 $0.225 $0.225 $0.225 $0.900 2000 $0.250 $0.250 $0.263 $0.263 $1.025 13.9% 2001 $0.275 $0.275 $0.294 $0.313 $1.156 12.8% 2002 $0.313 $0.335 $0.335 $0.345 $1.328 14.8% 2003 $0.345 $0.363 $0.363 $0.373 $1.443 8.7% 2004 $0.373 $0.373 $0.373 $0.395 $1.513 4.9% 2005 $0.400 $0.410 $0.420 $0.430 $1.660 9.8% 2006 $0.438 $0.445 $0.453 $0.460 $1.795 8.1% 2007 $0.468 $0.475 $0.483 $0.490 $1.916 6.7% 2008 $0.500 $0.508 $0.515 $0.523 $2.045 6.8% 2009 $0.530 $0.538 $0.545 $0.553 $2.165 5.9% 2010 $0.560 $0.568 $0.575 Source: FactSet, company filings

22 October 2010 204 Barclays Capital | MLP Quarterly Monitor

Figure 186: MLP Cash Distribution History (continued)

OKS ONEOK Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 1994 $0.550 $0.550 $0.550 $0.550 $2.200 1995 $0.550 $0.550 $0.550 $0.550 $2.200 0.0% 1996 $0.550 $0.550 $0.550 $0.550 $2.200 0.0% 1997 $0.550 $0.550 $0.550 $0.550 $2.200 0.0% 1998 $0.575 $0.575 $0.575 $0.575 $2.300 4.5% 1999 $0.610 $0.610 $0.610 $0.610 $2.440 6.1% 2000 $0.650 $0.650 $0.650 $0.700 $2.650 8.6% 2001 $0.700 $0.763 $0.763 $0.763 $2.988 12.7% 2002 $0.800 $0.800 $0.800 $0.800 $3.200 7.1% 2003 $0.800 $0.800 $0.800 $0.800 $3.200 0.0% 2004 $0.800 $0.800 $0.800 $0.800 $3.200 0.0% 2005 $0.800 $0.800 $0.800 $0.800 $3.200 0.0% 2006 $0.800 $0.880 $0.950 $0.970 $3.600 12.5% 2007 $0.980 $0.990 $1.000 $1.010 $3.980 10.6% 2008 $1.025 $1.040 $1.060 $1.080 $4.205 5.7% 2009 $1.080 $1.080 $1.080 $1.090 $4.330 3.0% 2010 $1.100 $1.110 $1.120

SEP Spectra Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 - - - $0.300 $0.300 2008 $0.320 $0.330 $0.340 $0.350 $1.340 2009 $0.360 $0.370 $0.380 $0.400 $1.510 12.7% 2010 $0.410 $0.420 $0.430

TCLP TC PipeLines L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 1999 - - $0.168 $0.000 $0.17 2000 $0.450 $0.450 $0.450 $0.475 $1.83 2001 $0.475 $0.475 $0.500 $0.500 $1.95 6.8% 2002 $0.500 $0.500 $0.525 $0.525 $2.050 5.1% 2003 $0.525 $0.525 $0.550 $0.550 $2.150 4.9% 2004 $0.550 $0.550 $0.575 $0.575 $2.250 4.7% 2005 $0.575 $0.575 $0.575 $0.575 $2.300 2.2% 2006 $0.575 $0.575 $0.575 $0.600 $2.325 1.1% 2007 $0.600 $0.650 $0.655 $0.660 $2.565 10.3% 2008 $0.665 $0.700 $0.705 $0.705 $2.775 8.2% 2009 $0.705 $0.705 $0.730 $0.730 $2.870 3.4% 2010 $0.730 $0.730 $0.730

WMZ Williams Pipeline Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2008 - $0.224 $0.310 $0.315 $0.849 2009 $0.320 $0.325 $0.330 $0.335 $1.310 2010 $0.335 $0.335 $0.335 Source: FactSet, company filings

22 October 2010 205 Barclays Capital | MLP Quarterly Monitor

Figure 187: MLP Cash Distribution History (continued)

Crude Oil

EEP Enbridge Energy Partners L.P. (Cl A) Q1 Q2 Q3 Q4 Annual Growth YoY 1993 $0.59 $0.59 $0.59 $0.59 $2.360 1994 $0.59 $0.64 $0.64 $0.64 $2.510 6.4% 1995 $0.64 $0.64 $0.64 $0.64 $2.560 2.0% 1996 $0.640 $0.640 $0.640 $0.680 $2.600 1.6% 1997 $0.680 $0.680 $0.780 $0.780 $2.920 12.3% 1998 $0.780 $0.860 $0.860 $0.860 $3.360 15.1% 1999 $0.860 $0.875 $0.875 $0.875 $3.485 3.7% 2000 $0.875 $0.875 $0.875 $0.875 $3.500 0.4% 2001 $0.875 $0.875 $0.875 $0.875 $3.500 0.0% 2002 $0.900 $0.900 $0.900 $0.900 $3.600 2.9% 2003 $0.925 $0.925 $0.925 $0.925 $3.700 2.8% 2004 $0.925 $0.925 $0.925 $0.925 $3.700 0.0% 2005 $0.925 $0.925 $0.925 $0.925 $3.700 0.0% 2006 $0.925 $0.925 $0.925 $0.925 $3.700 0.0% 2007 $0.925 $0.925 $0.925 $0.950 $3.725 0.7% 2008 $0.950 $0.950 $0.990 $0.990 $3.880 4.2% 2009 $0.990 $0.990 $0.990 $0.990 $3.960 2.1% 2010 $0.990 $1.003 $1.028

GEL Genesis Energy L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 1997 - $0.660 $0.500 $0.500 $1.660 1998 $0.500 $0.500 $0.500 $0.500 $2.000 1999 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2000 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2001 $0.500 $0.500 $0.500 $0.280 $1.780 -11.0% 2002 $0.200 $0.200 $0.200 $0.200 $0.800 -55.1% 2003 $0.200 $0.050 $0.050 $0.050 $0.350 -56.3% 2004 $0.150 $0.150 $0.150 $0.150 $0.600 71.4% 2005 $0.150 $0.150 $0.150 $0.160 $0.610 1.7% 2006 $0.170 $0.180 $0.190 $0.200 $0.740 21.3% 2007 $0.210 $0.220 $0.230 $0.270 $0.930 25.7% 2008 $0.285 $0.300 $0.315 $0.323 $1.223 31.5% 2009 $0.330 $0.338 $0.345 $0.353 $1.365 11.7% 2010 $0.360 $0.368 $0.375

PAA Plains All American Pipeline L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 1999 $0.193 $0.450 $0.463 $0.481 $1.587 2000 $0.450 $0.450 $0.463 $0.463 $1.826 15.1% 2001 $0.463 $0.475 $0.500 $0.513 $1.950 6.8% 2002 $0.513 $0.525 $0.538 $0.538 $2.113 8.3% 2003 $0.538 $0.550 $0.550 $0.550 $2.188 3.6% 2004 $0.563 $0.563 $0.578 $0.600 $2.303 5.3% 2005 $0.613 $0.638 $0.650 $0.675 $2.575 11.8% 2006 $0.688 $0.708 $0.725 $0.750 $2.870 11.5% 2007 $0.800 $0.813 $0.830 $0.840 $3.283 14.4% 2008 $0.850 $0.865 $0.888 $0.893 $3.495 6.5% 2009 $0.893 $0.905 $0.905 $0.920 $3.623 3.6% 2010 $0.928 $0.935 $0.943

BKEP Blueknight Energy Partners, L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 - - - $0.24 2008 $0.34 $0.40 $0.00 $0.00 $0.738 Source: FactSet, company filings

22 October 2010 206 Barclays Capital | MLP Quarterly Monitor

Figure 188: MLP Cash Distribution History (continued)

Marine Transportation

CPLP Capital Product Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 - - $0.36 $0.39 $0.75 2008 $0.40 $0.40 $0.41 $0.41 $1.62 2009 $1.05 $0.41 $0.41 $0.41 $2.28 41.2% 2010 $0.410 $0.225 $0.225

KSP K-Sea Transportation Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2004 - $0.43 $0.53 $0.54 $1.50 2005 $0.54 $0.54 $0.56 $0.57 $2.21 2006 $0.59 $0.60 $0.62 $0.64 $2.45 10.9% 2007 $0.66 $0.68 $0.70 $0.72 $2.76 12.7% 2008 $0.74 $0.76 $0.77 $0.77 $3.04 10.1% 2009 $0.77 $0.77 $0.77 $0.45 $2.76 -9.2% 2010 $0.000 $0.000 $0.000

NMM Navios Maritime Partners, L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2008 $0.18 $0.35 $0.35 $0.39 $1.26 2009 $0.40 $0.40 $0.40 $0.41 $1.61 27.4% 2010 $0.410 $0.415 $0.420

TGP Teekay LNG Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2005 - - $0.24 $0.41 $0.65 2006 $0.41 $0.46 $0.46 $0.46 $1.80 2007 $0.46 $0.46 $0.53 $0.53 $1.99 10.3% 2008 $0.53 $0.53 $0.55 $0.57 $2.18 9.8% 2009 $0.57 $0.57 $0.57 $0.57 $2.28 4.6% 2010 $0.570 $0.600 $0.600

TOO Teekay Offshore Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 $0.050 $0.350 $0.350 $0.385 $1.14 2008 $0.400 $0.400 $0.400 $0.450 $1.65 45.4% 2009 $0.450 $0.450 $0.450 $0.450 $1.80 9.1% 2010 $0.450 $0.475 $0.475 Source: FactSet, company filings

22 October 2010 207 Barclays Capital | MLP Quarterly Monitor

Figure 189: MLP Cash Distribution History (continued)

Propane

APU Amerigas Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 1996 $0.550 $0.550 $0.550 $0.550 $2.200 1997 $0.550 $0.550 $0.550 $0.550 $2.200 0.0% 1998 $0.550 $0.550 $0.550 $0.550 $2.200 0.0% 1999 $0.550 $0.550 $0.550 $0.550 $2.200 0.0% 2000 $0.550 $0.550 $0.550 $0.550 $2.200 0.0% 2001 $0.550 $0.550 $0.550 $0.550 $2.200 0.0% 2002 $0.550 $0.550 $0.550 $0.550 $2.200 0.0% 2003 $0.550 $0.550 $0.550 $0.550 $2.200 0.0% 2004 $0.550 $0.550 $0.550 $0.550 $2.200 0.0% 2005 $0.550 $0.560 $0.560 $0.560 $2.230 1.4% 2006 $0.560 $0.580 $0.580 $0.580 $2.300 3.1% 2007 $0.580 $0.610 $0.610 $0.610 $2.410 4.8% 2008 $0.610 $0.640 $0.640 $0.640 $2.530 5.0% 2009 $0.640 $0.670 $0.840 $0.670 $2.820 11.5% 2010 $0.670 $0.705 $0.705

FGP Ferrellgas Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 1996 $0.500 $0.500 $0.500 $0.500 $2.000 1997 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 1998 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 1999 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2000 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2001 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2002 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2003 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2004 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2005 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2006 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2007 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2008 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2009 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 2010 $0.500 $0.500 $0.500

NRGY Inergy L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2002 $0.313 $0.330 $0.338 $0.350 $1.330 2003 $0.358 $0.365 $0.375 $0.385 $1.483 11.5% 2004 $0.395 $0.405 $0.415 $0.425 $1.640 10.6% 2005 $0.475 $0.500 $0.510 $0.520 $2.005 22.3% 2006 $0.530 $0.540 $0.545 $0.555 $2.170 8.2% 2007 $0.565 $0.575 $0.585 $0.595 $2.320 6.9% 2008 $0.605 $0.615 $0.625 $0.635 $2.480 6.9% 2009 $0.645 $0.655 $0.665 $0.675 $2.640 6.5% 2010 $0.685 $0.695 $0.705

SPH Suburban Propane Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 1997 $0.500 $0.500 $0.500 $0.500 $2.000 1998 $0.500 $0.500 $0.500 $0.500 $2.000 0.0% 1999 $0.500 $0.500 $0.500 $0.513 $2.013 0.6% 2000 $0.513 $0.525 $0.525 $0.525 $2.088 3.7% 2001 $0.538 $0.550 $0.550 $0.563 $2.200 5.4% 2002 $0.563 $0.563 $0.575 $0.575 $2.275 3.4% 2003 $0.575 $0.575 $0.588 $0.588 $2.325 2.2% 2004 $0.588 $0.600 $0.613 $0.613 $2.413 3.8% 2005 $0.613 $0.613 $0.613 $0.613 $2.450 1.6% 2006 $0.613 $0.613 $0.638 $0.663 $2.525 3.1% 2007 $0.688 $0.700 $0.713 $0.750 $2.850 12.9% 2008 $0.763 $0.775 $0.800 $0.805 $3.143 10.3% 2009 $0.810 $0.815 $0.825 $0.830 $3.280 4.4% 2010 $0.835 $0.840 $0.845 Source: FactSet, company filings

22 October 2010 208 Barclays Capital | MLP Quarterly Monitor

Figure 190: MLP Cash Distribution History (continued)

Coal

ARLP Alliance Resource Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 1999 - - - $0.115 $0.115 2000 $0.250 $0.250 $0.250 $0.250 $1.000 2001 $0.250 $0.250 $0.250 $0.250 $1.000 0.0% 2002 $0.250 $0.250 $0.250 $0.250 $1.000 0.0% 2003 $0.263 $0.263 $0.263 $0.263 $1.050 5.0% 2004 $0.281 $0.313 $0.325 $0.325 $1.244 18.5% 2005 $0.375 $0.375 $0.413 $0.413 $1.575 26.6% 2006 $0.460 $0.460 $0.500 $0.500 $1.920 21.9% 2007 $0.540 $0.540 $0.560 $0.560 $2.200 14.6% 2008 $0.585 $0.585 $0.660 $0.700 $2.530 15.0% 2009 $0.715 $0.730 $0.745 $0.760 $2.950 16.6% 2010 $0.775 $0.790 $0.810

NRP Natural Resource Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2003 $0.212 $0.261 $0.261 $0.269 $1.003 2004 $0.281 $0.288 $0.300 $0.319 $1.188 18.4% 2005 $0.331 $0.344 $0.356 $0.369 $1.400 17.9% 2006 $0.381 $0.395 $0.410 $0.425 $1.611 15.1% 2007 $0.440 $0.455 $0.465 $0.475 $1.835 13.9% 2008 $0.485 $0.495 $0.515 $0.525 $2.020 10.1% 2009 $0.535 $0.540 $0.540 $0.540 $2.155 6.7% 2010 $0.540 $0.540 $0.540

PVR Penn Virginia Resource L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2002 $0.170 $0.250 $0.250 $0.250 $0.920 2003 $0.250 $0.260 $0.260 $0.260 $1.030 12.0% 2004 $0.260 $0.260 $0.270 $0.270 $1.060 2.9% 2005 $0.281 $0.310 $0.325 $0.325 $1.241 17.1% 2006 $0.350 $0.350 $0.375 $0.400 $1.475 18.8% 2007 $0.400 $0.410 $0.420 $0.430 $1.660 12.5% 2008 $0.440 $0.450 $0.460 $0.470 $1.820 9.6% 2009 $0.470 $0.470 $0.470 $0.470 $1.880 3.3% 2010 $0.470 $0.470 $0.470 Source: FactSet, company filings

22 October 2010 209 Barclays Capital | MLP Quarterly Monitor

Figure 191: MLP Cash Distribution History (continued)

Exploration & Production

BBEP BreitBurn Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 $0.399 $0.413 $0.423 $0.443 $1.677 2008 $0.453 $0.500 $0.520 $0.520 $1.993 18.8% 2009 $0.520 $0.000 $0.000 $0.000 $0.520 -73.9%

CEP Constellation Energy Partners LLC Q1 Q2 Q3 Q4 Annual Growth YoY 2007 $0.211 $0.463 $0.463 $0.563 $1.699 2008 $0.563 $0.563 $0.563 $0.563 $2.250 32.5% 2009 $0.130 $0.130 $0.000 $0.000 $0.260 -88.4%

ENP Encore Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 - - - $0.053 $0.053 2008 $0.388 $0.576 $0.688 $0.660 $2.311 2009 $0.500 $0.500 $0.513 $0.538 $2.050 -11.3% 2010 $0.538 $0.500 $0.500

EVEP EV Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 $0.400 $0.460 $0.500 $0.560 $1.920 2008 $0.600 $0.620 $0.700 $0.750 $2.670 39.1% 2009 $0.751 $0.752 $0.753 $0.754 $3.010 12.7% 2010 $0.755 $0.756 $0.757

LGCY Legacy Reserves L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 - $0.410 $0.420 $0.430 $1.260 2008 $0.450 $0.490 $0.520 $0.520 $1.980 57.1% 2009 $0.520 $0.520 $0.520 $0.520 $2.080 5.1% 2010 $0.520 $0.520 $0.520

LINE Linn Energy LLC Q1 Q2 Q3 Q4 Annual Growth YoY 2006 - $0.320 $0.400 $0.430 $1.150 2007 $0.520 $0.520 $0.570 $0.570 $2.18 89.6% 2008 $0.630 $0.630 $0.630 $0.630 $2.52 15.6% 2009 $0.630 $0.630 $0.630 $0.630 $2.520 0.0% 2010 $0.630 $0.630 $0.630

PSE Pioneer Southwest Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2008 - - $0.310 $0.500 $0.810 2009 $0.500 $0.500 $0.500 $0.500 $2.000 146.9% 2010 $0.500 $0.500 $0.500

QELP Quest Energy Partners L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2008 $0.204 $0.410 $0.430 $0.400 $1.444 2009 $0.000 $0.000 $0.000 $0.000 $0.000 -100.0%

VNR Vanguard Natural Resources LLP Q1 Q2 Q3 Q4 Annual Growth YoY 2008 $0.291 $0.445 $0.445 $0.500 $1.681 2009 $0.500 $0.500 $0.500 $0.500 $2.000 19.0% 2010 $0.525 $0.525 $0.550 Source: FactSet, company filings

22 October 2010 210 Barclays Capital | MLP Quarterly Monitor

Figure 192: MLP Cash Distribution History (continued)

General Partners

AHGP Alliance Holdings GP L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2006 - - $0.215 $0.215 $0.430 2007 $0.250 $0.250 $0.265 $0.265 $1.030 2008 $0.288 $0.288 $0.353 $0.390 $1.318 27.9% 2009 $0.403 $0.415 $0.428 $0.440 $1.685 27.9% 2010 $0.453 $0.465 $0.483

AHD Atlas Pipeline Holdings L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2006 - - - $0.170 $0.170 2007 $0.250 $0.250 $0.260 $0.320 $1.080 2008 $0.340 $0.430 $0.510 $0.510 $1.790 65.7% 2009 $0.060 $0.000 $0.000 $0.000 $0.060 -96.6% 2010 $0.000 $0.000 $0.000

BGH Buckeye GP Holdings L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2006 - - - $0.217 $0.217 2007 $0.225 $0.240 $0.250 $0.265 $0.980 2008 $0.285 $0.300 $0.310 $0.320 $1.215 24.0% 2009 $0.330 $0.350 $0.370 $0.390 $1.440 18.5% 2010 $0.410 $0.430 $0.450

XTXI Crosstex Energy Inc. Q1 Q2 Q3 Q4 Annual Growth YoY 2004 - $0.100 $0.110 $0.117 $0.327 2005 $0.130 $0.137 $0.143 $0.153 $0.563 2006 $0.187 $0.200 $0.207 $0.213 $0.807 43.2% 2007 $0.220 $0.220 $0.230 $0.240 $0.910 12.8% 2008 $0.260 $0.360 $0.380 $0.320 $1.320 45.1% 2009 $0.090 $0.000 $0.000 $0.000 $0.090 -93.2% 2010 $0.000 $0.000 $0.000

ETE Energy Transfer Equity L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2006 - $0.058 $0.238 $0.313 $0.608 2007 $0.340 $0.356 $0.373 $0.390 $1.459 2008 $0.550 $0.440 $0.480 $0.480 $1.950 33.7% 2009 $0.510 $0.525 $0.535 $0.535 $2.105 7.9% 2010 $0.540 $0.540 $0.540

EPE Enterprise GP Holdings L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2005 - - - $0.265 $0.265 2006 $0.280 $0.295 $0.310 $0.335 $1.220 2007 $0.350 $0.365 $0.380 $0.395 $1.490 22.1% 2008 $0.410 $0.425 $0.440 $0.455 $1.730 16.1% 2009 $0.470 $0.485 $0.500 $0.515 $1.970 13.9% 2010 $0.530 $0.545 $0.560

NRGP Inergy Holdings L.P. Q1 Q2 Q3* Q4 Annual Growth YoY 2005 - - - $0.285 $0.285 2006 $0.290 $0.320 $0.350 $0.375 $1.335 2007 $0.400 $0.480 $0.510 $0.535 $1.925 44.2% 2008 $0.560 $0.585 $0.610 $0.650 $2.405 24.9% 2009 $0.675 $0.750 $0.780 $0.850 $3.055 27.0% 2010 $0.940 $0.975 $0.340 *Note: NRGP had a 3 for 1 unit split in Q3 2010

NSH NuSTAR GP Holdings LLC Q1 Q2 Q3 Q4 Annual Growth YoY 2006 - - - $0.257 $0.257 2007 $0.320 $0.320 $0.340 $0.360 $1.340 2008 $0.360 $0.360 $0.360 $0.430 $1.510 12.7% 2009 $0.430 $0.430 $0.430 $0.435 $1.725 14.2% 2010 $0.435 $0.450 $0.460

PVG Penn Virginia GP Holdings L.P. Q1 Q2 Q3 Q4 Annual Growth YoY 2007 $0.070 $0.260 $0.280 $0.300 $0.910 2008 $0.320 $0.340 $0.360 $0.380 $1.400 53.8% 2009 $0.380 $0.380 $0.380 $0.380 $1.520 8.6% 2010 $0.380 $0.390 $0.390 Source: FactSet, company filings

22 October 2010 211 Barclays Capital | MLP Quarterly Monitor

Figure 193: Commodity Price Deck

Average Price / Ratio 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011e 2012e 2013e 2014e 00-04 05-09 10-14 Upstream HH Gas $/Mcf $4.23 $4.07 $3.33 $5.63 $5.85 $8.79 $6.76 $6.95 $8.85 $3.89 $4.45 $4.35 $5.50 $5.00 $5.00 $4.62 $7.05 $4.86 Gas $/Mcf (average) $4.07 $3.88 $3.10 $5.35 $5.69 $8.35 $6.42 $6.64 $8.36 $3.78 $4.37 $4.30 $5.40 $4.90 $4.90 $4.42 $6.71 $4.78 WTI $/BBl $29.39 $25.21 $23.23 $27.82 $38.18 $52.97 $65.92 $71.17 $100.22 $60.84 $77.34 $81.38 $85.00 $85.00 $85.00 $28.77 $70.22 $82.74

Forward Curve 10-20-10 Oil $77.55 $86.11 $87.77 $89.04 $89.57 $86.01 Gas $4.40 $4.40 $5.10 $5.41 $5.62 $4.99 17.6x 19.6x 17.2x 16.5x 15.9x $17.36 Ratio (Barclays estimate) 7.0x 6.2x 7.0x 4.9x 6.5x 6.0x 9.7x 10.2x 11.3x 15.6x 17.4x 18.7x 15.5x 17.0x 17.0x 17.1x

Processing Margins Frac Spread $/bbl $8.11 $4.55 $5.45 $3.08 $8.92 $6.58 $18.05 $25.06 $28.01 $18.21 $27.33 $27.97 $24.93 $26.55 $26.31 $6.02 $19.18 $26.62 Frac Spread $/Gal $0.19 $0.11 $0.13 $0.07 $0.21 $0.16 $0.43 $0.60 $0.67 $0.43 $0.65 $0.67 $0.59 $0.63 $0.63 $0.14 $0.46 $0.63 Oil/Gas (average) 7.2x 6.5x 7.5x 5.2x 6.7x 6.3x 10.3x 10.7x 12.0x 16.1x 17.7x 18.9x 15.7x 17.3x 17.3x $6.62 $11.08 $17.40 NGL / WTI 80.5% 76.9% 74.5% 84.5% 80.4% 72.6% 64.9% 70.8% 59.2% 54.3% 57.0% 54.6% 53.6% 53.3% 53.0% $0.79 $0.64 $0.54 NGL $/BBL $23.67 $19.39 $17.30 $23.52 $30.65 $38.46 $42.58 $50.40 $59.96 $32.65 $44.04 $44.42 $45.56 $45.28 $45.03 $22.91 $44.81 $44.87 NGL $/Gal $0.56 $0.46 $0.41 $0.56 $0.73 $0.92 $1.01 $1.20 $1.43 $0.78 $1.05 $1.06 $1.08 $1.08 $1.07 $0.55 $1.07 $1.07

Gas Basis Interregional Appalachia - Rockies $0.67 $0.73 $1.57 $1.35 $0.96 $1.91 $1.64 $3.13 $2.66 $1.01 $0.66 $0.70 $0.69 $0.64 $0.64 $1.06 $2.07 $0.67 East Texas - Permian $0.01 -$0.08 $0.10 $0.08 $0.19 $0.19 $0.29 $0.31 $0.85 $0.09 $0.09 $0.15 $0.13 $0.17 $0.17 $0.06 $0.35 $0.14 Socal Border - SJB $2.25 $4.31 $0.51 $0.38 $0.33 $0.42 $0.39 $0.31 $0.68 $0.45 $0.23 $0.20 $0.25 $0.23 $0.24 $1.56 $0.45 $0.23 TETCO M1 - E. TX $0.20 $0.04 $0.18 $0.04 $0.22 $1.05 $0.41 $0.54 $0.45 $0.37 $0.19 $0.25 $0.28 $0.25 $0.24 $0.14 $0.57 $0.24 Chicago - AECO $0.69 $0.43 $0.72 $0.80 $0.78 $1.13 $0.69 $0.65 $0.76 $0.49 $0.73 $0.74 $0.75 $0.75 $0.73 $0.68 $0.74 $0.74

Supply Areas Rockies -$0.48 -$0.53 -$1.40 -$1.13 -$0.66 -$1.59 -$1.37 -$2.87 -$2.32 -$0.85 -$0.53 -$0.60 -$0.60 -$0.60 -$0.62 -$0.84 -$1.80 -$0.59 MidCont -$0.11 -$0.12 -$0.23 -$0.28 -$0.41 -$1.23 -$0.80 -$0.82 -$1.62 -$0.51 -$0.30 -$0.37 -$0.36 -$0.36 -$0.36 -$0.23 -$1.00 -$0.35 E Texas -$0.10 -$0.20 -$0.13 -$0.20 -$0.22 -$1.04 -$0.51 -$0.51 -$0.43 -$0.37 -$0.19 -$0.22 -$0.25 -$0.24 -$0.24 -$0.17 -$0.57 -$0.23 Permian Basin -$0.11 -$0.12 -$0.23 -$0.28 -$0.41 -$1.23 -$0.80 -$0.82 -$1.28 -$0.46 -$0.28 -$0.37 -$0.38 -$0.41 -$0.41 -$0.23 -$0.92 -$0.37 San Juan Basin -$0.36 -$0.45 -$0.67 -$0.88 -$0.66 -$1.66 -$0.99 -$0.85 -$1.67 -$0.51 -$0.40 -$0.45 -$0.49 -$0.47 -$0.46 -$0.60 -$1.14 -$0.45 Appalachia $0.19 $0.20 $0.17 $0.22 $0.30 $0.32 $0.27 $0.26 $0.34 $0.16 $0.13 $0.10 $0.09 $0.04 $0.02 $0.22 $0.27 $0.08 AECO -$0.60 -$0.32 -$0.72 -$0.87 -$0.78 -$1.55 -$0.85 -$0.80 -$0.85 -$0.49 -$0.70 -$0.72 -$0.78 -$0.78 -$0.76 -$0.66 -$0.91 -$0.75 TETCO M-1 (MS) $0.10 -$0.16 $0.05 -$0.16 $0.00 $0.01 -$0.09 $0.03 $0.02 $0.00 $0.00 $0.03 $0.03 $0.01 $0.00 -$0.03 -$0.01 $0.00

End Markets Chicago $0.09 $0.11 $0.00 -$0.07 $0.00 -$0.42 -$0.16 -$0.15 -$0.09 $0.00 $0.03 $0.02 -$0.03 ($0.03) ($0.03) $0.03 -$0.16 -$0.01 New York (Transco 6) $0.67 $0.55 $0.47 $0.79 $0.93 $1.67 $1.02 $1.73 $1.71 $0.97 $0.75 $0.69 $0.64 $0.60 $0.60 $0.68 $1.42 $0.66 Dawn $0.26 $0.19 $0.15 $0.15 SoCal Border $1.89 $3.86 -$0.16 -$0.51 -$0.33 -$1.24 -$0.60 -$0.54 -$0.99 -$0.06 -$0.17 -$0.25 -$0.24 -$0.24 -$0.22 $0.95 -$0.69 -$0.22 Houston Ship Channel $0.12 -$0.17 -$0.03 -$0.31 -$0.22 -$0.84 -$0.48 -$0.38 -$0.39 -$0.20 -$0.10 -$0.12 -$0.14 -$0.15 -$0.15 -$0.12 -$0.46 -$0.13 Source: Natural Gas Week, Gas Processors Report, Bloomberg, Barclays Capital estimates

22 October 2010 212 Barclays Capital | MLP Quarterly Monitor

Figure 194: One-Year Spread History

Credit Spreads Average Credit Spread Alerian MLP Index Yield Average Alerian Yield 8.0% 9.0%

7.0% 8.0%

7.0% 6.0%

6.0% 5.0% 5.0% 4.0% 4.0% AMZ Yield

Credit Spreads Credit 3.0% 3.0%

2.0% 2.0%

1.0% 1.0%

0.0% 0.0% Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10

Source: FactSet, Alerian Capital Management

22 October 2010 213 Barclays Capital | MLP Quarterly Monitor

Figure 195: MLP Peaks and Troughs

NYSE Alerian MLP Index Yield BarCap High Yield Index

23.0% 15.0% 21.0% 13.0% 19.0% 17.0% 11.0% 15.0% 9.0%

AMZK Yield 13.0%

11.0% BarCap HY Index 7.0% 9.0% 5.0% 7.0% Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10

Ups AMZK Chg From To AMZK Beg AMZK End AMZK Chg US10YR Beg US10YR End US10YR Chg HY Beg HY End HY Chg Num. Days per Day 12/30/99 1/19/00 94.75 110.51 16.6% 6.38 6.73 0.36 na na na 20 0.832% 4/17/00 10/2/00 101.98 128.38 25.9% 6.00 5.82 -0.18 na na na 168 0.154% 11/30/00 8/22/01 119.44 180.75 51.3% 5.45 4.90 -0.55 14.57% 12.25% -2.33% 265 0.194% 11/11/02 4/1/04 152.22 220.60 44.9% 3.84 3.90 0.06 13.85% 7.68% -6.17% 507 0.089% 5/10/04 8/2/05 186.27 271.66 45.8% 4.78 4.34 -0.45 8.46% 7.88% -0.59% 449 0.102% 12/27/05 7/13/07 238.68 342.14 43.3% 4.34 5.11 0.77 8.44% 8.36% -0.07% 563 0.077% 10/3/07 10/31/07 291.01 313.23 7.6% 4.54 4.47 -0.08 8.68% 8.81% 0.13% 28 0.273% 3/20/08 5/21/08 266.01 300.25 12.9% 3.33 3.83 0.50 11.06% 9.93% -1.13% 62 0.208% 8/13/08 8/29/08 264.80 273.31 3.2% 3.94 3.81 -0.13 11.53% 11.60% 0.06% 16 0.201% 10/10/08 10/31/08 163.22 223.43 36.9% 3.85 3.98 0.13 17.94% 18.68% 0.73% 21 1.757% 11/21/08 12/10/08 152.68 182.34 19.4% 3.18 2.69 -0.49 22.04% 22.36% 0.32% 19 1.022% 12/24/08 2/13/09 166.70 205.18 23.1% 2.19 2.88 0.69 21.37% 17.65% -3.72% 51 0.453% 3/9/09 8/3/09 166.27 251.85 51.5% 2.89 3.64 0.75 20.52% 11.44% -9.08% 147 0.350% 9/2/09 10/22/09 233.27 266.69 14.3% 3.30 3.42 0.12 11.58% 10.13% -1.45% 50 0.287% 11/4/09 1/20/10 255.72 300.04 17.3% 3.55 3.66 0.11 10.01% 8.84% -1.17% 77 0.225% 2/5/10 3/17/10 276.09 305.42 10.6% 3.55 3.64 0.10 9.29% 8.79% -0.50% 40 0.265% 3/26/10 4/26/10 296.84 318.11 7.2% 3.85 3.82 -0.04 8.68% 8.32% -0.36% 31 0.231% 5/6/10 5/12/10 281.92 303.57 7.7% 3.40 3.57 0.17 8.75% 8.82% 0.07% 6 1.280% 5/20/10 7/26/10 274.89 334.15 21.6% 3.26 2.99 -0.27 9.34% 8.67% -0.66% 67 0.322% 7/29/10 8/5/10 323.48 334.19 3.3% 3.00 2.91 -0.09 8.60% 8.54% -0.06% 7 0.473% 8/25/10 10/07/10 319.48 346.74 8.5% 2.54 2.40 -0.14 8.71% 8.01% -0.71% 43 0.198%

Average Run-up Days: 126 Downs AMZK From To AMZK Beg AMZK End AMZK Chg US10YR Beg US10YR End US10YR Chg HY Beg HY End HY Chg Num. Days Chg / Day 8/26/99 12/30/99 122.07 94.75 -22.4% 5.75 6.38 0.63 na na na 126 -0.178% 4/24/02 7/23/02 177.99 139.69 -21.5% 5.10 4.43 -0.67 11.53% 12.97% 1.44% 90 -0.239% 4/1/04 5/10/04 220.60 186.27 -15.6% 3.90 4.78 0.88 7.68% 8.46% 0.79% 39 -0.399% 8/2/05 12/27/05 271.66 238.68 -12.1% 4.34 4.34 0.01 7.88% 8.44% 0.56% 147 -0.083% 7/13/07 8/16/07 342.14 290.88 -15.0% 5.11 4.60 -0.51 8.36% 9.23% 0.86% 34 -0.441% 10/31/07 12/21/07 313.23 293.63 -6.3% 4.47 4.17 -0.30 8.81% 9.67% 0.85% 51 -0.123% 1/3/08 3/20/08 303.99 266.01 -12.5% 3.90 3.33 -0.58 9.74% 11.06% 1.32% 77 -0.162% 5/21/08 8/12/08 300.25 262.18 -12.7% 3.83 3.92 0.09 9.93% 11.52% 1.59% 83 -0.153% 8/29/08 10/10/08 273.31 163.22 -40.3% 3.81 3.85 0.03 11.60% 17.94% 6.35% 42 -0.959% 10/31/08 11/21/08 223.43 152.68 -31.7% 3.98 3.18 -0.80 18.68% 22.04% 3.36% 21 -1.508% 12/10/08 12/24/08 182.34 166.70 -8.6% 2.69 2.19 -0.50 22.36% 21.37% -0.99% 14 -0.613% 2/13/09 3/9/09 205.18 166.27 -19.0% 2.88 2.89 0.01 17.65% 20.52% 2.87% 24 -0.790% 8/3/09 9/2/09 251.85 233.27 -7.4% 3.64 3.30 -0.34 11.44% 11.58% 0.14% 30 -0.246% 10/22/09 11/4/09 266.69 255.72 -4.1% 3.42 3.55 0.13 10.13% 10.01% -0.12% 13 -0.316% 1/20/10 2/5/10 300.04 276.09 -8.0% 3.66 3.55 -0.11 8.84% 9.29% 0.45% 16 -0.499% 3/17/10 3/26/10 305.42 296.84 -2.8% 3.64 3.85 0.21 8.79% 8.68% -0.11% 9 -0.312% 4/26/10 5/6/10 318.11 281.92 -11.4% 3.82 3.40 -0.42 8.32% 8.75% 0.43% 10 -1.138% 5/12/10 5/20/10 303.57 274.89 -9.4% 3.57 3.26 -0.31 8.82% 9.34% 0.52% 8 -1.181% 7/26/10 7/29/10 334.15 323.48 -3.2% 2.99 3.00 0.01 8.67% 8.60% -0.07% 3 -1.065% 8/5/10 8/25/10 334.19 319.48 -4.4% 2.91 2.54 -0.37 8.54% 8.71% 0.18% 20 -0.220%

Average Run-down Days: 43 Average Rebound Cycle Days: 83 Source: FactSet, Alerian Capital Management

22 October 2010 214 Barclays Capital | MLP Quarterly Monitor

Figure 196: Alerian MLP Index Attribution Analysis

% of Index Performance 25.0%

20.0% 17.4% 15.0%

10.0% 7.6% 6.0% 6.0% 4.8% 4.1% 3.5% 3.5% 5.0% 3.4% 3.1% 2.5% 2.3% 2.2% 2.0% 2.0% 2.0% 2.0% 1.9% 1.5% 1.5% 1.5% 1.4% 1.3% 1.3% 1.2% 1.2% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 0.9% 0.7% 0.6% 0.5% 0.4% 0.4% 0.4% 0.3% 0.3% 0.3% 0.3% 0.3% 0.1% 0.0% 0.0% -0.1%

-5.0% -0.5%

-10.0%

-15.0% NS ETE EPE EEP PSE SEP ETP EPB BPL SXL GEL EEQ EPD OKS SPH PVR HEP DEP FGP ENP PAA NRP APU TGP PVG NSH VNR LINE WES TOO BGH KMP KMR BWP DML WPZ DPM EVEP MWE MMP ARLP TCLP NGLS LGCY NMM NRGY RGNC CLMT CPNO AHGP

Contribution to AMZ performance 2.0% 1.69%

1.5%

1.0% 0.74% 0.59% 0.58% 0.47%

0.5% 0.40% 0.35% 0.34% 0.33% 0.30% 0.24% 0.22% 0.21% 0.20% 0.20% 0.20% 0.19% 0.18% 0.15% 0.14% 0.14% 0.13% 0.13% 0.13% 0.12% 0.12% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.09% 0.09% 0.09% 0.06% 0.06% 0.05% 0.04% 0.04% 0.03% 0.03% 0.03% 0.03% 0.03% 0.03% 0.01% 0.00%

0.0% -0.01%

-0.5% -0.05% NS ETE EPE EEP SEP PSE BPL ETP EPB SXL EEQ GEL SPH ENP EPD OKS PVR HEP DEP FGP TGP PAA NRP APU PVG NSH VNR WES BGH TOO LINE KMR KMP BWP DML WPZ DPM EVEP ARLP MWE MMP TCLP LGCY NGLS NMM NRGY AHGP RGNC CLMT CPNO

4.0% Sector Contribution to AMZ Performance 3.5% 3.1% 3.0% 2.5% 2.0% 2.0% 1.5% 1.1% 1.1%

1.0% 0.8% 0.5% 0.5% 0.5% 0.4% 0.2% 0.0% Coal General Propane Partners Pipelines Crude Oil Crude Marine Production Processing Terminals Gathering & Gathering Natural Gas - Exploration & Exploration Natural Gas - NGL Pipelines Pipelines and Transportation Refined Product Source: Alerian Capital Management, FactSet, Barclays Capital estimates

22 October 2010 215 Barclays Capital | MLP Quarterly Monitor

Figure 197: Distribution Tiers and Current Splits

GP Incentive Distribution Split GP Incentive Distribution Split Distribution Distribution Pipeline Tiers GP Cut Pipeline Tiers GP Cut Atlas Pipeline Partners < $.42 2% Inergy < $.33 2% $.42 to $.52 15% $.33 to $.375 15% $.52 to $.60 25% $.375 to $.45 25% > $0.60 50% > $.45 50% Amerigas Partners <$.605 2% Kinder Morgan Energy < $.1513 2% $.605 to $.696 15% $.1514 to $.1786 15% $.696 to $.904 25% $.1787 to $.2338 25% >$0.904 50% >$.2338 50% Boardwalk Pipelines < $.4025 2% K-Sea Transportation Partners <$.55 2% $.4026 to $.4375 15% $.55 to $.625 15% $.4375 to $.525 25% $.625 to $.75 25% > $0.525 50% >$.75 50% Blue Knight Energy Partners < $0.3594 2% Magellan Midstream Partners < $0.2625 2% $0.3594 to $0.3906 15% $0.2625 to $0.289 2% $0.3906 to $0.4688 25% $0.289 to $0.328 15% >$.4688 50% $0.328 to $0.394 25% Buckeye Partners < $.325 2% > $0.394 50% $.326 to $.350 15% NuStar Energy < $0.60 2% $.351 to $.375 25% $0.61 to $0.66 10% $0.376 to $0.40 30% $0.67 to $0.90 25% $.401 to $.425 35% ONEOK Partners <$.605 2% $.426 to $.525 40% $.606 to $.715 15% >$.526 45% $.716 to $.935 25% Crosstex Energy Partners < $.25 2% >$.935 50% $.26 to $.3125 15% Plains All American Pipelines <$0.45 2% $.3125 to $.374 25% $0.451 to $0.495 15% >$.375 50% $0.496 to $0.675 25% DCP Midstream Partners < $.4025 2% > $0.676 50% $.4025 to $.4375 15% Regency Energy Partners <$0.4025 2% $.4375 to $.525 25% $0.4026 to $0.4375 15% >$.525 50% $0.4376 to $0.525 25% Eagle Rock Energy Partners < $0.4169 2% > $0.525 50% $.4169 to $.4531 15% Spectra Energy Partners L.P. <$0.345 2% $.4531 to $.5438 25% $0.346 to $0.375 15% >$.5438 50% $0.376 to $0.45 25% El Paso Pipeline Partners L.P. <$0.33063 2% > $0.45 50% $0.33064 to $0.35938 15% Sunoco Logistics <$0.50 2% $0.35939 to $0.43125 25% $0.51 to $0.575 15% > $0.43125 50% $0.576 to $1.5825 37% Enbridge Energy Partners < $0.59 2% > $1.5825 50% $0.59 to $0.70 15% Targa Resources Partners <$.3881 2% $0.70 to $0.99 25% $.3881 to $.4219 15% >$.99 50% $.4219 to $.5063 25% Energy Transfer Partners < $.27 2% >.$5063 50% $.275 to $.3175 15% TC Pipelines <$0.45 2% $.318 to $.4125 25% $0.45 to $0.81 2% > $.413 50% $0.81 to $0.88 15% Enterprise Products < $.253 2% > $0.88 25% .253 to $.3085 15% Teekay Offshore Partners <$0.45 2% > $.3085 25% $0.45 to $0.81 2% Exterran Partners < $0.4025 2% $0.81 to $0.88 15% $.4025 to $.4375 15% > $0.88 25% $.4375 to $.525 25% Western Gas Partners <$0.345 2% >$.525 50% $0.346 to $0.375 15% Ferrellgas Partners <$.55 2% $0.376 to $0.45 25% $.56 to $.63 15% > $0.45 50% $.64 to $.82 25% William Pipeline Partners <$0.33063 2% >$.82 50% $0.33064 to $0.35938 15% Global Partners < $0.4625 1.73% $0.35939 to $0.43125 25% $0.4626 to $0.5375 14.73% > $0.43125 50% $0.5376 to $0.6625 24.73% Williams Partners < $0.4025 2% >$.6625 49.73% $0.4025 to $0.4375 15% Holly Energy Partners < $.549 2% $0.4375 to $0.525 25% $.55 to $.6249 15% >$.525 50% $.625 to $.75 25% >$.75 50% Note: CPNO, DEP, MWE and SPH have no IDRs. Source: Company filings

22 October 2010 216 Barclays Capital | MLP Quarterly Monitor

FIGURES

Figure 1: Comparative Returns Across Asset Types, 2000-2010...... 5 Figure 2: Relative Value Proposition ...... 6 Figure 3: Index Performance...... 7 Figure 4: S&P Earnings Yield Spread over 10-Year Treasury...... 8 Figure 5: S&P Earnings Yield Spread over Investment Grade Credit...... 9 Figure 6: Mutual Fund Flows – Domestic Equity...... 9 Figure 7: Mutual Fund Flows – All Money Market...... 9 Figure 8: Mutual Fund Flows –Investment Grade Corp...... 10 Figure 9: Mutual Fund Flows – High Yield ...... 10 Figure 10: Alerian Price Target Assumptions ...... 11 Figure 11: Hypothetical Rolling 12-Months Alerian MLP Index Values – Base Case Scenario12 Figure 12: Hypothetical Mid-2012 Alerian MLP Index Values ...... 13 Figure 13: Relatively Defensive MLPs ...... 15 Figure 14: Higher Risk MLPs...... 16 Figure 15: MLP Distribution Growth...... 17 Figure 16: MLP Cash Distribution and CAGR...... 18 Figure 17: Alerian MLP Index Quarterly Performance (Total Return)...... 19 Figure 18: Absolute Total Return Between Alerian and the S&P 500 (Quarterly)...... 20 Figure 19: 3Q Performance (Total Return)...... 20 Figure 20: Alerian MLP Index Volatility ...... 21 Figure 21: Volatility Spread – S&P 500 Versus Alerian MLP Index...... 21 Figure 22: Performance by Market Caps...... 22 Figure 23: 3Q10 Subsector and Index Performance ...... 23 Figure 24: 3Q10 Performance ...... 24 Figure 25: Alerian MLP Index Attribution Analysis...... 25 Figure 26: Core Versus Non-Core Group One-Year Indexed Performance...... 26 Figure 27: Core Versus Non-Core Group Volatility Spread...... 26 Figure 28: Core Versus Non-Core Group Five-Year Indexed Performance ...... 27 Figure 29: Yield Compression Trade ...... 28 Figure 30: Quarter-to-Quarter Changes in Spreads (basis points)...... 28 Figure 31: Alerian MLP Index Yield Versus 10-Year Treasury (when Yields Above or Below 4%)...... 29 Figure 32: Alerian MLP Index Yield Versus 10-Year Treasury (when Yields are above or below 4%)...... 29 Figure 33: Current Yields Versus Historical Levels...... 31 Figure 34: Alerian MLP Index Yield Versus 10-Year Treasury...... 32 Figure 35: Barclays Capital High-Yield Index Yield Versus Alerian MLP Index Yield...... 32 Figure 36: Alerian MLP Index Versus Moody’s Baa Corporate Bond Index Yield ...... 32 Figure 37: Alerian MLP Index Versus NAREIT REIT Index Yield...... 33 Figure 38: Barclays Capital High-Yield Index Yield Versus 10-Year Treasury ...... 33 Figure 39: MLP Historical EV/EBITDA Multiple ...... 34 Figure 40: MLP Historical Yield Differential...... 34 Figure 41: Differential in Subsector EV/Adjusted EBITDA Multiples (forward year)...... 35 Figure 42: MLP Subsector Valuation Multiples ...... 35 Figure 43: MLP Quarterly Equity Offerings...... 36 Figure 44: MLP IPOs and Secondary Offerings...... 36 Figure 45: Secondary Offerings – ex-Private Placements and Directs ...... 37 Figure 46: MLP Historical Equity Offerings, ($ in millions) ...... 38

22 October 2010 217 Barclays Capital | MLP Quarterly Monitor

Figure 47: IPO Summary...... 38 Figure 48: MLP Secondary Offerings Trading Statistics...... 39 Figure 49: MLP Year-To-Date Equity Offerings’ After Market Performance ...... 40 Figure 50: Investment Grade MLP Bind Yields...... 41 Figure 51: Non-Investment Grade MLP Bond Yields...... 41 Figure 52: Recent MLP Debt Offerings...... 42 Figure 53: Recent Quarterly Debt Issuance...... 43 Figure 54: MLP Adjusted Equity Cost of Capital...... 44 Figure 55: MLP Adjusted Equity Cost of Capital (1Q09) ...... 45 Figure 56: MLP 2010E Spending Plans, Capital Requirements, and Funding Availability, ($ in millions)...... 46 Figure 57: MLP Revolving Credit Facility Capacity...... 47 Figure 58: MLP Revolving Credit Facility Maturity Schedule...... 48 Figure 59: MLP Debt Maturity by Year ...... 49 Figure 60: GP Acquisition Multiples...... 51 Figure 61: MLP Annual Acquisitions...... 51 Figure 62: MLP Acquisitions as a % of Market Cap (Annualized)...... 52 Figure 63: Acquisition Activity by Subsector ($ in millions)...... 53 Figure 64: M&A Transactions Summary...... 54 Figure 65: Trends in Acquisition Multiples...... 56 Figure 66: Commodity Price Deck...... 57 Figure 67: NGL Price Forecast ...... 58 Figure 68: Drilling Productivity – Forecast Gas Deliverability Lower 48 ...... 58 Figure 69: Horizontal Rigs as a Percent of Drilling Activity...... 59 Figure 70: Effective Rig Count Versus Actual Rig Count ...... 60 Figure 71: Rig Equivalent Count...... 61 Figure 72: U.S. Gas Production (Bcf/d) ...... 62 Figure 73: Summary of E&P Joint Ventures...... 63 Figure 74: Rig Count Major Shale Plays ...... 64 Figure 75: Major Shales Drilling Activity ...... 64 Figure 76: Rig Count by Region...... 65 Figure 77: Regional Orientation Matrix ...... 66 Figure 78: Processing Margins...... 67 Figure 79: Processing Margins Summary...... 67 Figure 80: Historical Versus Projected Frac Spreads...... 68 Figure 81: Commodity Price Sensitivities on Unhedged Basis ($ in millions)...... 69 Figure 82: Equity Volume by MLPs...... 69 Figure 83: U.S. Gas Plant Production of Ethane-Ethylene (‘000 bpd) ...... 70 Figure 84: CMAI Mix of Ethylene Feedstocks...... 71 Figure 85: NGL Ratio Seasonality (% of WTI) ...... 72 Figure 86: Liquids Ratios - Mt. Belvieu ...... 73 Figure 87: NGL Decline Curve Estimates...... 74 Figure 88: NGL Regional Supply...... 75 Figure 89: Processing Plant Expansion by Year...... 76 Figure 90: Processing Plant Additions by Region ...... 77 Figure 91: Regional Contribution to Increase in NGL Supply ...... 77 Figure 92: Regional Increase NGL Supply...... 78 Figure 93: Ethane Balances 2009-2014 (mb/d) ...... 79 Figure 94: Crude and Refined Products Inventory...... 81 Figure 95: Refined Products Demand...... 81

22 October 2010 218 Barclays Capital | MLP Quarterly Monitor

Figure 96: Vehicle Miles Driven – Moving 12-Month Average ...... 82 Figure 97: Vehicle Miles Driven – Monthly Basis...... 82 Figure 98: Forward Curve...... 83 Figure 99: Spread Between Sweet and Sour Crude Oil...... 83 Figure 100: Spread Between WTI and Maya...... 84 Figure 101: AmeriGas Partners, LP (APU) ...... 86 Figure 102: Historical Yield Spreads...... 87 Figure 103: Atlas Pipeline Partners, LP (APL) ...... 89 Figure 104: Historical Yield Spreads...... 90 Figure 105: Blueknight Energy Partners, LP (BKEP)...... 92 Figure 106: Historical Yield Spreads...... 93 Figure 107: Boardwalk Pipeline Partners, LP (BWP)...... 95 Figure 108: Historical Yield Spreads...... 96 Figure 109: Chesapeake Midstream Partners, LP (CHKM) ...... 98 Figure 110: Copano Energy, LLC (CPNO) ...... 100 Figure 111: Historical Yield Spreads...... 101 Figure 112: Crosstex Energy, LP (XTEX) ...... 103 Figure 113: Historical Yield Spreads...... 104 Figure 114: DCP Midstream Partners, LP (DPM) ...... 106 Figure 115: Historical Yield Spreads...... 107 Figure 116: Duncan Energy Partners, LP (DEP)...... 109 Figure 117: Historical Yield Spreads...... 110 Figure 118: Eagle Rock Energy Partners, LP (EROC) ...... 112 Figure 119: Historical Yield Spreads...... 113 Figure 120: El Paso Pipeline Partners, LP (EPB)...... 115 Figure 121: Historical Yield Spreads...... 116 Figure 122: Enbridge Energy Partners, LP (EEP)...... 118 Figure 123: Historical Yield Spreads...... 119 Figure 124: Energy Transfer Partners, (ETP)...... 121 Figure 125: Historical Yield Spreads...... 122 Figure 126: Exterran Partners, LP (EXLP)...... 124 Figure 127: Historical Yield Spreads...... 125 Figure 128: Ferrellgas Partners, LP (FGP) ...... 127 Figure 129: Historical Yield Spreads...... 128 Figure 130: Global Partners, LP (GLP) ...... 130 Figure 131: Historical Yield Spreads...... 131 Figure 132: Holly Energy Partners, LP (HEP)...... 133 Figure 133: Historical Yield Spreads...... 134 Figure 134: Inergy, LP (NRGY)...... 136 Figure 135: Historical Yield Spreads...... 137 Figure 136: Kinder Morgan Energy Partners (KMP) ...... 139 Figure 137: Historical Yield Spreads...... 140 Figure 138: K-Sea Transportation Partners, LP (KSP)...... 142 Figure 139: Historical Yield Spreads...... 143 Figure 140: Magellan Midstream Partners, LP (MMP) ...... 145 Figure 141: Historical Yield Spreads...... 146 Figure 142: Markwest Energy Partners, LP (MWE) ...... 148 Figure 143: Historical Yield Spreads...... 149 Figure 144: Niska Gas Storage Partners, LLC (NKA) ...... 151 Figure 145: NuStar Energy, LP (NS) ...... 153

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Figure 146: Historical Yield Spreads...... 154 Figure 147: ONEOK Partners, LP (OKS)...... 156 Figure 148: Historical Yield Spreads...... 157 Figure 149: Plains All American Pipeline, LP (PAA)...... 159 Figure 150: Historical Yield Spreads...... 160 Figure 151: PAA Natural Gas Storage, LP (PNG)...... 162 Figure 152: Regency Energy Partners, LP (RGNC)...... 164 Figure 153: Historical Yield Spreads...... 165 Figure 154: Spectra Energy Partners, LP (SEP)...... 167 Figure 155: Historical Yield Spreads...... 168 Figure 156: Suburban Propane Partners, LP (SPH) ...... 170 Figure 157: Historical Yield Spreads...... 171 Figure 158: Sunoco Logistics Partners, LP (SXL)...... 173 Figure 159: Historical Yield Spreads...... 174 Figure 160: TC Pipelines, LP (TCLP)...... 176 Figure 161: Historical Yield Spreads...... 177 Figure 162: Teekay Offshore Partners, LP (TOO) ...... 179 Figure 163: Historical Yield Spreads...... 180 Figure 164: Western Gas Partners, LP (WES)...... 182 Figure 165: Historical Yield Spreads...... 183 Figure 166: MLP Valuation Comps (Sector View: 2-Neutral)...... 185 Figure 167: MLP per Share Comps, $ per unit...... 186 Figure 168: MLP Balance Sheet Comps, $ in millions ...... 187 Figure 169: MLP Sharpe Ratios ...... 188 Figure 170: Alerian MLP Index Performance and Credit Spread History...... 189 Figure 171: Quarterly Distribution Increases, 2009...... 190 Figure 172: Quarterly Distribution Increases, 2010...... 191 Figure 173: Natural Gas Price ($/MMbtu)...... 192 Figure 174: WTI Posted Price ($/bbl)...... 193 Figure 175: Natural Gas / Oil Ratio (%) ...... 194 Figure 176: Mt. Belvieu NGL Price Forecast ($/ Gal)...... 195 Figure 177: NGLs / Oil Ratio (%)...... 196 Figure 178: Mt. Belvieu Frac Spread ($ / Gal)...... 197 Figure 179: Nat Gas / Crude Oil Forward Curves...... 198 Figure 180: Rockies Gas Basis ...... 199 Figure 181: MLP Cash Distribution History ...... 200 Figure 182: MLP Cash Distribution History (continued) ...... 201 Figure 183: MLP Cash Distribution History (continued) ...... 202 Figure 184: MLP Cash Distribution History (continued) ...... 203 Figure 185: MLP Cash Distribution History (continued) ...... 204 Figure 186: MLP Cash Distribution History (continued) ...... 205 Figure 187: MLP Cash Distribution History (continued) ...... 206 Figure 188: MLP Cash Distribution History (continued) ...... 207 Figure 189: MLP Cash Distribution History (continued) ...... 208 Figure 190: MLP Cash Distribution History (continued) ...... 209 Figure 191: MLP Cash Distribution History (continued) ...... 210 Figure 192: MLP Cash Distribution History (continued) ...... 211 Figure 193: Commodity Price Deck...... 212 Figure 194: One-Year Spread History...... 213 Figure 195: MLP Peaks and Troughs...... 214

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Figure 196: Alerian MLP Index Attribution Analysis...... 215 Figure 197: Distribution Tiers and Current Splits...... 216

22 October 2010 221 Barclays Capital | MLP Quarterly Monitor

ANALYST(S) CERTIFICATION(S) We, Richard Gross, Jim Harmon, Heejung (Helen) Ryoo, CFA and Brian J. Zarahn, CFA, hereby certify (1) that the views expressed in this research report accurately reflect our personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of our compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.

IMPORTANT DISCLOSURES CONTINUED

For current important disclosures, including, where relevant, price target charts, regarding companies that are the subject of this research report, please send a written request to: Barclays Capital Research Compliance, 745 Seventh Avenue, 17th Floor, New York, NY 10019 or refer to http://publicresearch.barcap.com or call 1-212-526-1072. The analysts responsible for preparing this research report have received compensation based upon various factors including the firm's total revenues, a portion of which is generated by investment banking activities. On September 20, 2008, Barclays Capital acquired Lehman Brothers' North American investment banking, capital markets, and private investment management businesses. All ratings and price targets prior to this date relate to coverage under Lehman Brothers Inc. Barclays Capital produces a variety of research products including, but not limited to, fundamental analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or otherwise. Primary Stocks (Ticker, Date, Price) AmeriGas Partners, L.P. (APU, 20-Oct-2010, USD 46.54), 3-Underweight/2-Neutral Atlas Pipeline Partners LP (APL, 20-Oct-2010, USD 19.40), 1-Overweight/2-Neutral Blueknight Energy Partners, L.P. (BKEP, 20-Oct-2010, USD 8.85), 3-Underweight/2-Neutral Boardwalk Pipeline Partners LP (BWP, 20-Oct-2010, USD 33.95), 2-Equal Weight/2-Neutral Chesapeake Midstream Partners LP (CHKM, 20-Oct-2010, USD 26.78), 1-Overweight/2-Neutral Copano Energy LLC (CPNO, 20-Oct-2010, USD 28.80), 2-Equal Weight/2-Neutral Crosstex Energy LP (XTEX, 20-Oct-2010, USD 13.33), 2-Equal Weight/2-Neutral DCP Midstream Partners LP (DPM, 20-Oct-2010, USD 35.48), 1-Overweight/2-Neutral Duncan Energy Partners LP (DEP, 20-Oct-2010, USD 31.81), 2-Equal Weight/2-Neutral Eagle Rock Energy Partners LP (EROC, 20-Oct-2010, USD 6.77), 2-Equal Weight/2-Neutral El Paso Pipeline Partners, L.P. (EPB, 20-Oct-2010, USD 32.83), 1-Overweight/2-Neutral Enbridge Energy Partners (EEP, 20-Oct-2010, USD 60.22), 2-Equal Weight/2-Neutral Energy Transfer Partners LP (ETP, 20-Oct-2010, USD 50.09), 1-Overweight/2-Neutral Exterran Partners LP (EXLP, 20-Oct-2010, USD 23.43), 2-Equal Weight/2-Neutral Ferrellgas Partners (FGP, 20-Oct-2010, USD 25.95), 3-Underweight/2-Neutral Global Partners LP (GLP, 20-Oct-2010, USD 25.58), 2-Equal Weight/2-Neutral Holly Energy Partners LP (HEP, 20-Oct-2010, USD 50.20), 2-Equal Weight/2-Neutral Inergy L.P. (NRGY, 20-Oct-2010, USD 39.65), 1-Overweight/2-Neutral K-Sea Transportation Partners (KSP, 20-Oct-2010, USD 3.97), 3-Underweight/2-Neutral Kinder Morgan Energy Prtnrs LP (KMP, 20-Oct-2010, USD 71.39), 1-Overweight/2-Neutral Magellan Midstream Partners, LP (MMP, 20-Oct-2010, USD 52.87), 2-Equal Weight/2-Neutral Markwest Energy Partners, LP (MWE, 20-Oct-2010, USD 37.62), 1-Overweight/2-Neutral Niska Gas Storage Partners LLC (NKA, 20-Oct-2010, USD 19.94), 1-Overweight/2-Neutral NuStar Energy LP (NS, 20-Oct-2010, USD 63.10), 2-Equal Weight/2-Neutral ONEOK Partners LP (OKS, 20-Oct-2010, USD 78.53), 1-Overweight/2-Neutral PAA Natural Gas Storage LP (PNG, 20-Oct-2010, USD 24.46), 1-Overweight/2-Neutral Plains All American Pipeline (PAA, 20-Oct-2010, USD 63.25), 1-Overweight/2-Neutral Regency Energy Partners LP (RGNC, 20-Oct-2010, USD 24.65), 1-Overweight/2-Neutral Spectra Energy Partners, LP (SEP, 20-Oct-2010, USD 35.19), 1-Overweight/2-Neutral Suburban Propane Partners (SPH, 20-Oct-2010, USD 54.58), 3-Underweight/2-Neutral Sunoco Logistics Partners L.P. (SXL, 20-Oct-2010, USD 79.71), 2-Equal Weight/2-Neutral TC Pipelines, LP (TCLP, 20-Oct-2010, USD 47.98), 2-Equal Weight/2-Neutral

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IMPORTANT DISCLOSURES CONTINUED Teekay Offshore Partners LP (TOO, 20-Oct-2010, USD 24.74), 2-Equal Weight/2-Neutral Western Gas Partners LP (WES, 20-Oct-2010, USD 28.81), 1-Overweight/2-Neutral Other Material Conflicts Barclays Capital is acting as financial advisor to Buckeye Partners, L.P. in their potential merger with Buckeye GP Holdings L.P. The rating, price target and estimates on Buckeye Partners have been temporarily suspended due to Barclays Capital's role in this potential transaction. Barclays Capital is acting as financial advisor to Enterprise Products Partners LP (EPD) in their potential merger with Enterprise GP Holdings LP (EPE). The rating, price target and estimates on Enterprise Products Partners LP have been temporarily suspended due to Barclays Capital's role in this potential transaction. One of the analysts on the coverage team owns shares of the common stock of Kinder Morgan Management LLC, which offers an equivalent interest as the units of Kinder Morgan Energy Partners LP. Barclays Capital is acting as financial advisor to Tres Palacios Gas Storage LLC in the company’s acquisition by Inergy Midstream, LLC, a wholly owned subsidiary of Inergy, LP (NRGY). Barclays Capital is also providing financing to Inergy in connection with this potential transaction. Guide to the Barclays Capital Fundamental Equity Research Rating System: Our coverage analysts use a relative rating system in which they rate stocks as 1-Overweight, 2-Equal Weight or 3-Underweight (see definitions below) relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry sector (the “sector coverage universe”). In addition to the stock rating, we provide sector views which rate the outlook for the sector coverage universe as 1-Positive, 2-Neutral or 3- Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investors should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone. Stock Rating 1-Overweight - The stock is expected to outperform the unweighted expected total return of the sector coverage universe over a 12-month investment horizon. 2-Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the sector coverage universe over a 12- month investment horizon. 3-Underweight - The stock is expected to underperform the unweighted expected total return of the sector coverage universe over a 12-month investment horizon. RS-Rating Suspended - The rating and target price have been suspended temporarily due to market events that made coverage impracticable or to comply with applicable regulations and/or firm policies in certain circumstances including when Barclays Capital is acting in an advisory capacity in a merger or strategic transaction involving the company. Sector View 1-Positive - sector coverage universe fundamentals/valuations are improving. 2-Neutral - sector coverage universe fundamentals/valuations are steady, neither improving nor deteriorating. 3-Negative - sector coverage universe fundamentals/valuations are deteriorating. Below is the list of companies that constitute the "sector coverage universe":

U.S. MLPs AmeriGas Partners, L.P. (APU) Atlas Pipeline Partners LP (APL) Blueknight Energy Partners, L.P. (BKEP) Boardwalk Pipeline Partners LP (BWP) Buckeye Partners, L.P. (BPL) Chesapeake Midstream Partners LP (CHKM) Constellation Energy Partners LLC (CEP) Copano Energy LLC (CPNO) Crosstex Energy LP (XTEX) DCP Midstream Partners LP (DPM) Duncan Energy Partners LP (DEP) Eagle Rock Energy Partners LP (EROC) El Paso Pipeline Partners, L.P. (EPB) Enbridge Energy Partners (EEP) Encore Energy Partners LP (ENP) Energy Transfer Partners LP (ETP) Enterprise Products Prtns LP (EPD) Exterran Partners LP (EXLP) Ferrellgas Partners (FGP) Global Partners LP (GLP) Holly Energy Partners LP (HEP) Inergy L.P. (NRGY) K-Sea Transportation Partners (KSP) Kinder Morgan Energy Prtnrs LP (KMP) Linn Energy LLC (LINE) Magellan Midstream Partners, LP (MMP) Markwest Energy Partners, LP (MWE) Niska Gas Storage Partners LLC (NKA) NuStar Energy LP (NS) ONEOK Partners LP (OKS) PAA Natural Gas Storage LP (PNG) Plains All American Pipeline (PAA) Regency Energy Partners LP (RGNC) Spectra Energy Partners, LP (SEP) Suburban Propane Partners (SPH) Sunoco Logistics Partners L.P. (SXL) Targa Resources Partners LP (NGLS) TC Pipelines, LP (TCLP) Teekay Offshore Partners LP (TOO) Western Gas Partners LP (WES) Williams Partners LP (WPZ)

22 October 2010 223 Barclays Capital | MLP Quarterly Monitor

IMPORTANT DISCLOSURES CONTINUED Distribution of Ratings: Barclays Capital Inc. Equity Research has 1604 companies under coverage. 42% have been assigned a 1-Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 53% of companies with this rating are investment banking clients of the Firm. 44% have been assigned a 2-Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 46% of companies with this rating are investment banking clients of the Firm. 11% have been assigned a 3-Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 37% of companies with this rating are investment banking clients of the Firm. Barclays Capital offices involved in the production of equity research: London Barclays Capital, the investment banking division of Barclays Bank PLC (Barclays Capital, London) New York Barclays Capital Inc. (BCI, New York) Tokyo Barclays Capital Japan Limited (BCJL, Tokyo) São Paulo Banco Barclays S.A. (BBSA, São Paulo) Hong Kong Barclays Bank PLC, Hong Kong branch (Barclays Bank, Hong Kong) Toronto Barclays Capital Canada Inc. (BCC, Toronto) Johannesburg Absa Capital, a division of Absa Bank Limited (Absa Capital, Johannesburg)

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