Connections for America s Energy. Investor Presentation. Presentation Title. Presentation Subtitle. March /3/2015

Transcription

1 Investor Presentation Presentation Title Presentation Subtitle March /3/2015 Crestwood Midstream Partners LP Crestwood Equity Partners LP

2 Company Information Crestwood Midstream Partners LP NYSE Ticker CMLP Market Capitalization ($MM) (1,2) $2,816 Enterprise Value ($MM) (2) $5,264 Annualized Distribution $1.64 NYSE Ticker Crestwood Equity Partners LP Corporate Headquarters 700 Louisiana Street Suite 2550 Houston, TX Contact Information CEQP Market Capitalization ($MM) (1,2) $1,181 Enterprise Value ($MM) (2) $1,564 Annualized Distribution $0.55 Investor Relations (713) Forward-Looking Statements The statements in this communication regarding future events, occurrences, circumstances, activities, performance, outcomes and results are forward-looking statements. Although these statements reflect the current views, assumptions and expectations of Crestwood s management, the matters addressed herein are subject to numerous risks and uncertainties which could cause actual activities, performance, outcomes and results to differ materially from those indicated. Such forward-looking statements include, but are not limited to, statements about the future financial and operating results, objectives, expectations and intentions and other statements that are not historical facts. Factors that could result in such differences or otherwise materially affect Crestwood s financial condition, results of operations and cash flows include, without limitation, the possibility that expected cost reductions will not be realized, or will not be realized within the expected timeframe; fluctuations in crude oil, natural gas and NGL prices (including, without limitation, lower commodity prices for sustained periods of time); the extent and success of drilling efforts, as well as the extent and quality of natural gas and crude oil volumes produced within proximity of Crestwood assets; failure or delays by customers in achieving expected production in their oil and gas projects; competitive conditions in the industry and their impact on our ability to connect supplies to Crestwood gathering, processing and transportation assets or systems; actions or inactions taken or non-performance by third parties, including suppliers, contractors, operators, processors, transporters and customers; the ability of Crestwood to consummate acquisitions, successfully integrate the acquired businesses, realize any cost savings and other synergies from any acquisition; changes in the availability and cost of capital; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond Crestwood s control; timely receipt of necessary government approvals and permits, the ability of Crestwood to control the costs of construction, including costs of materials, labor and right-of-way and other factors that may impact Crestwood s ability to complete projects within budget and on schedule; the effects of existing and future laws and governmental regulations, including environmental and climate change requirements; the effects of existing and future litigation; and risks related to the substantial indebtedness, of either company, as well as other factors disclosed in Crestwood s filings with the U.S. Securities and Exchange Commission. You should read filings made by Crestwood with the U.S. Securities and Exchange Commission, including Annual Reports on Form 10-K and the most recent Quarterly Reports and Current Reports for a more extensive list of factors that could affect results. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management s view only as of the date made. Crestwood does not assume any obligation to update these forward-looking statements. (1) Market price as of February 27, (2) Unit count and balance sheet data as of 12/31/

3 Strategy Unchanged by Current Market Volatility Two publicly traded MLPs provides strategic flexibility to enhance value Current Strategy Evolving CEQP transitioning to pure-play GP entity CMLP acquisition and organic growth vehicle 2013/14 Accomplishments Set Platform CEQP Public Unitholders ~71% Interest First Reserve/ Crestwood Holdings ~29% LP Interest 100% Non-economic GP Interest (Control) ~11% LP Interest Completed integration of Crestwood and Inergy Invested ~$1.6 BB in new assets and projects Tres Palacios transaction moved CEQP closer to de-levered pure-play GP CMLP Public Common and Class A Unitholders ~85% Interest Crestwood Equity Partners LP (NYSE: CEQP) MM units outstanding ~4% LP Interest GP / IDR Ownership Strength and Stability Going Into 2015 Expected y-o-y increases in EBITDA and DCF across the portfolio Strengthen coverage ratios and balance sheets Crestwood Midstream Partners LP (NYSE: CMLP) MM common units outstanding 17.9 MM Class A preferred units outstanding Structural simplification in 2015 with potential drop-down of CEQP operational assets Operating Subsidiaries 3

4 Key 2014 Accomplishments Fully integrated Crestwood Inergy post-merger organization Implemented combined operating culture and performance standards Integrated Arrow Midstream acquisition Consolidated Arrow, COLT Hub and crude oil and water trucking business to become major midstream player in Bakken Arrow system performing at 10x EBITDA; COLT expansions complete Continued build out of premier Marcellus midstream operations Completed major Marcellus rich-gas system expansion for Antero Consolidated NE Marcellus pipeline/storage operations Completed North-South and MARC I pipeline expansions Developed competitive position in PRB Niobrara and Permian rich-gas and crude shale plays Bucking Horse and Willow Lake facilities constructed and in-service Improved CMLP coverage ratio to 1.05x and leverage ratio to 4.5x Completed next step in CEQP strategy through Tres Palacios drop-down 4

5 Balanced and Diverse Business Mix Estimated 2015 EBITDA Contribution Operating Segments NGL & Crude Services 35% Storage & Transportation 26% Gathering & Processing 39% Balanced portfolio of crude, NGL and natural gas services Value chain services allows for multiple fees and asset optimization Regional Footprint Central 20% West West 4% 6% Rockies 32% Northeast 43% Regional focus on best US resource plays supported by strong producer drilling economics and long term supply growth potential Marcellus/Utica, Bakken, PRB Niobrara, Delaware Permian assets located on core acreage with active producers Barnett Dry Operating Assets US Salt Jackalope MARC I / North South Stagecoach Other Barnett Rich Marcellus Arrow COLT Hub NGL Supply & Logistics Diverse portfolio of operating assets and cash flow profiles 10+ different key assets generating >$15 MM of annual EBITDA 5 5

6 Leading Fixed-Fee Contract Portfolio 92% of CMLP 2015E EBITDA from take-or-pay and fixed-fee contracts Key Assets protected from commodity change and volume reduction CMLP Contract Portfolio 2015E EBITDA CMLP Take-or-Pay Contract Portfolio Variable Rate Contracts 8% Key Asset COLT Hub Rail Loading Contract Type Take-or-Pay Contract Volume 149,300 Bbls/d Weighted Avg. Tenor 2017 Take-or-Pay and Fixed-Fee Contracts 92% Marcellus G&P (Antero) PRB Niobrara G&P (CHK) Minimum Volume Commitment 15% Cost of Service fee on Cuml. Capex 450 MMcf/d 2018 ~$175MM capex to date (1) (1) 2033 >50% of EBITDA is guaranteed through takeor-pay contracts NE Marcellus S&T Firm Storage and Transportation Firm Storage: 41 Bcf Transportation: 1.1 Bcf/d Firm Storage: 2017 Transportation: 2020 (1) MVC of 425 MMcf/d in 2015, stepping up to 450 MMcf/d in Fixed fee contract extends until 12/31/

7 Core Acreage Positions Crestwood s assets are competitively positioned to benefit from industry-best producer economics which should lead to continued development activity Bakken (Fort Berthold Reservation) Top-tier development area with superior breakeven economics of $35 to $45/bbl (1) Ranks at the top of WPX, Halcon and Enerplus portfolios Bakken (COLT Hub) COLT hub is largest Bakken CBR facility by >50,000 Bbls/d (per Genscape) R&D track completed in December 2014 Loaded a daily record +180,000 Bbls/d in January 2015 PRB Niobrara (Jackalope System) Recent commissioning of Bucking Horse processing plant will drive cash flow growth Secured by 15% 20-year cost of service agreement Marcellus (G&P and S&T) NE S&T 95% contracted pipeline and storage Rich gas - Antero to resume development in 2H 2015 and 2016 Dry Gas - Enhanced completions improved results and expanded the economic core (1) Per Tudor, Pickering, Holt & Co. research January

8 Eagle Ford Oil Tier 1 Bakken Tier 1 TFS Tier 1 Niobrara Tier 1 Eagle Ford Oil Tier 2 Bakken Tier 2 PRB Tier 1 Delaware Bone Spring Midland Wolfcamp Tier 1 Midland Wolfcamp Tier 2 Delaware Wolfcamp Niobrara Tier 2 TFS Tier 2 MS Lime Tier 1 Midland Wolfberry Vt Tier 1 Bakken Tier 3 SCOOP Oil CTM Tier 1 PRB Tier 2 CTM Tier 2 East Texas Eagle Ford Midland Wolfcamp Tier 3 Uinta Oil Eagle Ford Oil Tier 3 CTM Tier 3 MS Lime Tier 2 Midland Wolfberry Vt Tier 2 TMS Utica Wet Tier 1 Marcellus Wet Scoop Wet Gas MS Lime Fayetteville Tier 1 Marcellus Dry Tier 1 Granite Wash Utica Dry Fayetteville Tier 2 Pinedale Barnett Tier 1 Utica Wet Tier 2 Haynesville Tier 1 Cana Tier 1 Barnett Tier 2 Piceance Tier 1 Utica Gas Marcellus Dry Tier 2 Cana Tier 2 Fayetteville Tier 3 Mancos I Haynesville Tier 2 Piceance Tier 2 Breakeven WTI Price ($/bbl) Breakeven Henry Hub Price ($/MMbtu) Producer Economics Still Support Growth Crestwood s crude oil and natural gas operations situated in some of the lowest cost producing basins $90 $6 $80 $5 $70 WTI 5yr Strip Price (1) : $69.16/Bbl $4 Henry Hub 5yr Strip Price (1) : $3.84/MMBtu $60 $50 Current WTI Price (2) : $50.75/Bbl $3 Current Henry Hub Price (2) : $2.94/MMBtu $2 $40 $30 $1 $20 $0 Source: HPDI and TPH. Note: Wells shown on the map represent only type curve wells. Assumes 10% IRR at 16:1 Oil-to-Gas ratio. (1) Per CME Group, WTI and Henry Hub 5-year strip prices as of 2/20/2015. (2) Per CME Group, current front month WTI and Henry Hub price as of 2/20/

9 Sequential Quarterly Cash Flow Growth ($ MMs) Segment Adjusted EBITDA (1) 4Q 1Q 2Q 3Q 4Q Segment EBITDA Gathering and Processing $ 46.5 $ 47.7 $ 50.5 $ 51.2 $ 49.4 Storage and Transportation $ 36.7 $ 38.0 $ 34.3 $ 33.2 $ 37.9 NGL and Crude Services $ 38.8 $ 45.0 $ 46.6 $ 58.8 $ 63.1 Total $ $ $ $ $ Operating Statistics Operating Statistics Natural gas (MMcf/d) 2,833 2,982 3,049 3,086 3,355 Crude oil (MBbls/d) Supply & logistics (MBbls/d) (1) See accompanying tables of non-gaap reconciliations. 9

10 Improving Balance Sheet and Flexibility Credit Statistics December 31, December 31, ($ in millions) CMLP Balance Sheet Profile Revolver Balance $ 415 $ 555 Total Debt $ 1,871 $ 2,016 Leverage Ratio 4.9x 4.5x Max Leverage per Covenant 5.5x 5.5x ($MM) $120 Capital Investments Drive EBITDA Growth $2,000 Invested cumulative capital of ~$1.6 billion since the merger Existing asset footprint substantially built-out with minimal future capital requirements Drives continued growth and de-leveraging in 2015 Commitment to strengthening the balance sheet; longer-term goal to reach investmentgrade rating Targeted long-term CMLP leverage ratio of 3.5x to 4.0x debt-to-ebitda Targeted long-term coverage ratio of 1.05x to 1.10x 2014 Financial Strategy Execution $100 $1,500 $80 $60 $90.9 $98.9 $109.7 $116.2 $117.7 $1,000 $500 $40 $0 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 Adjusted EBITDA Cumulative Capital Investment 10

11 Bakken Arrow Gathering System Tier 1 acreage dedication with substantial long-term growth through system build out; $75-$80 MM estimated 2015 EBITDA Summary and Major Updates 150,000 acre dedication on Fort Berthold Indian Reservation (FBIR) Ranks at the top of WPX, Halcon and Enerplus portfolios >1,200 estimated future drilling locations Bakken Asset footprint in concentrated acreage blocks with highly competitive drilling economics (1) COLT Hub Arrow Producer aid-in-construction for well connects provides drilling visibility Current crude oil gathering volumes approaching 70,000 Bbl/d Reduced flared gas by ~80% in 2014; installation of 18,000 hp compression and system expansion Outlook 2015E Net Revenue Contribution by Producer new well connects expected in E Throughput: Crude oil: MBbls/d Natural gas: MMcf/d Water: MBbls/d (1) Source: BTU Analytics LLC. 11

12 Bakken COLT Hub and Connector COLT Hub is the leading Bakken CBR facility linking Bakken crude supply to prime refinery markets; $75-80 MM estimated 2015 EBITDA Summary and Major Updates The COLT Hub operations include a 160 MBbls/d crude by rail facility, 1.2 MMBbls storage capacity and the COLT connector pipeline CBR to Gulf Coast squeezed out by 2018 with new pipeline; No pipeline capacity to service West Coast and East Coast refinery demand $6.30/bbl Additional release and departure tracks at COLT completed in Dec K Bbl/d rail loading anchored by long-term take-or-pay contracts primarily with refiners Markets: 73% West Coast, 27% East Coast Bakken Transportation Colt Hub Contracted Capacity Mix Bakken Price Differentials ANS ($22.26) WTI ($16.08) Brent ($27.16) LLS ($21.16) Bakken Crude by Rail Loading Facilities Sources: Genscape January 2015, BTU Analytics LLC., Plains Marketing Bulletin, CME Group, Alaska Department of Revenue Tax Division as of 2/27/

13 PRB Niobrara Gathering, Processing & CBR Actively developing a leading position in the PRB to handle both crude and gas; ~$20-25MM estimated 2015 EBITDA contribution to CMLP from Jackalope JV Summary and Major Updates 120 MMcf/d processing plant completed in January 2015 Significant volume ramp expected in 1Q 2015 filling much of Bucking Horse capacity Increased Chesapeake drilling activity leading to potential 2 nd JGGS plant in 2018/2019 Chesapeake to run 3 to 4 rigs and one frac crew in 2015; $400-$450 million estimated capital expenditures in PRB Niobrara new well connects in 2015 ~90 MMcf/d average gathering and processing volumes in 2015 Douglas Terminal Expanded crude-by-rail facility to 20 MBbls/d and new 120 MBbls storage tank Bucking Horse Plant 13

14 NE Marcellus Storage and Transportation Strategically located NE assets provide significant level of contracted cash flows and growth opportunities; ~$ MM estimated 2015 EBITDA Summary and Major Updates Northeast assets consist of ~41 Bcf of natural gas storage and pipeline throughput capacity of ~1.8 Bcf/d 200 MMcf/d North-South Expansion Storage facilities continue to reflect favorable market dynamics ~40% of total firm storage capacity up for renewal in 2015; majority re-contracted at existing rates Storage assets 95% subscribed at a weighted average term of 2.6 yrs Transportation capacity fully contracted with weighted average contract term of 4 years North/South Pipeline 200 MMcf/d expansion completed in 2014; expansion fully contracted 2015 and Long-Term Outlook New ~700 MMcf/d receipt point at Wilmont Wilmot Receipt Point MARC I Pipeline 100 MMcf/d anchor contract executed on connection to Transco Binding open season underway for up to an additional 200 MMcf/d of capacity MARC I / Transco Meter MARC II Non-binding indications of interest >700 MMcf/d in Q414 support potential 30 mile lateral connecting MARC I with PennEast 14

15 SW Marcellus (Antero) Gathering & Compression Long-term fee-based contracts in southwest Marcellus core production window; ~$85-90 MM estimated 2015 EBITDA Summary and Major Updates 20-year, fixed-fee gathering and compression services w/ Antero Resources ( Antero ) 7-year increasing MVC s on gathering volumes >1,850 total drilling locations on Crestwood acreage; ~800 drilling locations in Greenbrier richgas area (>40% of total dedicated drilling locations) Antero Midstream Dedication Area Crestwood Dedication Area Multi-year system expansion completed in 2014; increased system capacity to 875 MMcf/d 2015 and Long-Term Outlook 2015 average gathering volumes of ~600 MMcfd Antero has ~30 drilled but uncompleted wells on the CMLP system; ~10 expected to be connected in 2015 Antero activity expected to resume as downstream takeaway constraints are lifted with new 1.4 Bcf/d regional pipeline scheduled for 4Q 2015 Markwest Sherwood Processing Greenbrier Rich Gas Area Dry Gas Area Expect Antero to fill out existing capacity over next 3 to 4 years with incremental takeaway capacity and improving gas prices Marcellus Compressor Station 15

16 Tres Palacios Organic Growth Opportunities Crestwood partnership with Brookfield improves near-term contracted cash flow and supports Crestwood s ability for future business development Summary and Major Updates 38.4 Bcf multi-cycle salt dome gas storage facility located in Texas and includes a 61 mile, 24-inch diameter header system that interconnects with 10 South Texas natural gas pipeline systems NGL / Olefin Storage and Pipeline Hub Alternative to Mont Belvieu for markets west of the Houston Ship Channel to Corpus Christi >9.0 Bcf/d New Project Potential Power Gen connectivity NGL / Olefin storage targeting growing Gulf Coast markets Approximately 70% of storage capacity is now under FSS contracts through March 2016 Crestwood continues to pursue FERC abandonment efforts 2015 and Long-Term Outlook Substantial upside through cyclical return to normalized gas storage markets in South Texas >$1.0 billion capital investment opportunity around Tres Palacios platform >9 Bcf/day of new projects accessible from Tres Palacios 16

17 Barnett Gathering and Processing Fee-based contracts in core production zones of the Barnett provide stable cash flows; ~$85-90 MM estimated 2015 EBITDA Quicksilver Resources ( KWKA ) Update KWKA remains current on all payments to Crestwood Crestwood positioned well in the event of a bankruptcy situation Critical Vendor we believe amounts owing for service at the time of petition should be paid on a timely basis A substantial portion of KWKA s revenues are derived from the Barnett Shale CMLP is integral to KWKA s Barnett operation with ~1,000 wells connected to our gathering and processing system Post-Petition Services We expect that amounts owing for post-petition services will be paid in accordance with terms of our agreements Post-Restructuring We believe that the existing gathering and processing agreements will continue after a potential bankruptcy filing All of KWKA and its working interest partners acreage is dedicated to Crestwood during the term of those agreements CMLP Barnett Region Revenue % by Customer 14% 9% 17% 7% 53% KWKA Toyko Gas ENI Devon Other Est. KWKA %-Total 2015E CMLP Adj. EBITDA 91% 9% KWKA Other (1) Toyko Gas owns 25% undivided interest in KWKA s Barnett acreage. ENI owns 27.5% undivided interest in KWKA s Alliance acreage. (1) (1) 17

18 Crestwood NGL Services Premier NGL supply and logistics platform servicing the value chain to connect NGL supplies to NGL demand markets; ~$65-70 MM estimated 2015 EBITDA Summary 2015E EBITDA Contribution 25 MMcf/d natural gas processing capacity 12 MBbls/d NGL fractionation; 8 MBbls/d isomerization 2.8 MMBbls of NGL storage capacity >500 NGL trucking units; >1,600 NGL railcars Terminals & Storage 15% NGL Transportation 20% NGL Marketing & Logistics 34% Sources, transports, stores and delivers NGLs to domestic and export markets; > 350 customers West Coast 31% Servicing Blue Chip Customers Across the Full Energy Value Chain 18

19 Financial Guidance Summary Statistic FY2014A FY2015E 2015E EBITDA Mix $ MM Adjusted EBITDA $443 $480 - $ % 80% NGL & Crude Services CMLP Distributable Cash Flow (1) $328 $335 - $365 Growth Capital (2) $535 $115 - $125 60% 40% 20% Storage & Transportation Gathering & Processing 2015E Distribution $1.64 0% Statistic FY2014A FY2015E $ MM CEQP Consolidated Adj. EBITDA $496 $540 - $575 Adj. Distributable Cash Flow (3) $70 $80 - $ E Distribution $0.55 (1) 2015 DCF includes approximately $15 million of cash to be paid to the holders of the Crestwood Niobrara preferred units. (2) Includes joint venture contributions and acquisitions. (3) Represents DCF attributable to the operating assets of CEQP plus cash received by CEQP for the 7.2MM LP units and GP / IDR interest that CEQP owns in CMLP. 19

20 Key Investment Highlights Diversified US midstream platform established since 2010 Substantial operations across the entire midstream value chain Critical mass in natural gas, natural gas liquids and crude oil operations Strategically located assets in the most economic US shale plays 2015 distributions supported by: YOY volume growth from capex Industry leading fixed-fee contract portfolio Continued cost savings initiatives Upside potential through strategic opportunities Transition GP sponsorship Acquire additional high quality assets and operations at reasonable market values 20

21 Non-GAAP Reconciliations 21 21

22 CMLP Non-GAAP Reconciliations CRESTWOOD MIDSTREAM PARTNERS LP Reconciliation of Non-GAAP Financial Measures (in millions) (unaudited) Three Months Ended December 31, Year Ended December 31, EBITDA Net income (loss) $ (60.4) $ (42.3) $ (21.9) $ (15.1) Interest and debt expense, net Provision for income taxes (0.1) (0.3) Depreciation, amortization and accretion EBITDA (a) $ 26.6 $ 33.7 $ $ Significant items impacting EBITDA: Unit-based compensation charges (Gain) loss on long-lived assets, net 34.3 (1.0) 33.6 (5.4) Goodwill impairment Loss on contingent consideration (Earnings) loss from unconsolidated affiliates, net (0.6) (0.3) Adjusted EBITDA from unconsolidated affiliates, net Significant transaction and environmental related costs and other items Adjusted EBITDA (a) $ $ 90.9 $ $ Distributable Cash Flow Adjusted EBITDA (a) $ $ 90.9 $ $ Cash interest expense (b) (24.8) (21.9) (104.1) (62.3) Maintenance capital expenditures (c) (7.4) (5.0) (20.3) (11.6) (Provision) benefit for income taxes (0.7) (0.7) Deficiency payments Other adjustments 0.1 Distributable cash flow attributable to CMLP (d) $ 89.1 $ 64.3 $ $ (a) EBITDA is defined as income before income taxes, plus net interest and debt expense, and depreciation, amortization and accretion expense. In addition, Adjusted EBITDA considers the adjusted earnings impact of our unconsolidated affiliates by adjusting our equity earnings or losses from our unconsolidated affiliates for our proportionate share of their depreciation and interest and the impact of certain significant items, such as unit- based compensation charges, gains and impairments of long- lived assets and goodwill, gains and losses on acquisition- related contingencies, third party costs incurred related to potential and completed acquisitions, certain environmental remediation costs, and other transactions identified in a specific reporting period. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, as they do not include deductions for items such as depreciation, amortization and accretion, interest and income taxes, which are necessary to maintain our business. EBITDA and Adjusted EBITDA should not be considered an alternative to net income, operating cash flow or any other measure of financial performance presented in accordance with GAAP. EBITDA and Adjusted EBITDA calculations may vary among entities, so our computation may not be comparable to measures used by other companies. (b) Cash interest expense is book interest expense less amortization of deferred financing costs plus bond premium amortization. (c) (d) Maintenance capital expenditures are defined as those capital expenditures which do not increase operating capacity or revenues from existing levels. The year ended December 31, 2014, includes $1.5 million of maintenance capital expenditures for January 1, 2014 to September 30, 2014 that was reclassified from growth capital expenditures to maintenance capital expenditures. Distributable cash flow is defined as Adjusted EBITDA, less cash interest expense, maintenance capital expenditures, income taxes, deficiency payments (primarily related to deferred revenue), and other adjustments. Distributable cash flow should not be considered an alternative to cash flows from operating activities or any other measure of financial performance calculated in accordance with generally accepted accounting principles as those items are used to measure operating performance, liquidity, or the ability to service debt obligations. We believe that distributable cash flow provides additional information for evaluating our ability to declare and pay distributions to unitholders. Distributable cash flow, as we define it, may not be comparable to distributable cash flow or similarly titled measures used by other corporations and partnerships. 22

23 CMLP Non-GAAP Reconciliations CRESTWOOD MIDSTREAM PARTNERS LP Full Year 2015 Adjusted EBITDA and Distributable Cash Flow Guidance Reconciliation to Net Income (in m illions) (unaudited) Expected 2015 Range Low - High Net income $73 - $113 Interest and debt expense, net 125 Depreciation, amortization and accretion Unit-based compensation charges 20 Earnings from unconsolidated affiliates (13) - (18) Adjusted EBITDA from unconsolidated affiliates Adjusted EBITDA $480 - $510 Cash interest expense (a) (118) Maintenance capital expenditures (b) (22) - (25) Other adjustments (c) (2) Distributable cash flow attributable to CMLP $335 - $365 (a) Cash interest expense is book interest expense less amortization of deferred financing costs plus bond premium amortization. (b) M aintenance capital expenditures are defined as those capital expenditures which do not increase operating capacity or revenues from existing levels. (c) Represents the change in deferred revenues related to deficiency payments in

24 CEQP Non-GAAP Reconciliations CRESTWOOD EQUITY PARTNERS LP Reconciliation of Non-GAAP Financial Measures (in millions ) (unaudited ) Three Months Ended December 31, Year Ended December 31, EBITDA Net income (loss) $ (30.7) $ (42.1) $ (10.4) $ (50.6) Interest and debt expense, net Provision for income taxes (0.2) Depreciation, amortization and accretion EBITDA (a) $ 76.7 $ 51.5 $ $ Significant items impacting EBITDA: Unit-based compensation charges (Gain) loss on long-lived assets, net 2.7 (0.9) 1.9 (5.3) Goodwill impairment Loss on contingent consideration Earnings (loss) from unconsolidated affiliates, net (0.6) (0.3) Adjusted EBITDA from unconsolidated affiliates, net Change in fair value of commodity inventory-related derivative contracts (3.5) (0.6) (10.3) 10.7 Significant transaction and environmental related costs and other items Adjusted EBITDA (a) $ $ $ $ Distributable Cash Flow Adjusted EBITDA (a) $ $ $ $ Cash interest expense (b) (29.4) (26.1) (121.3) (70.4) Maintenance capital expenditures (c) (9.4) (5.9) (27.6) (13.4) Provision for income taxes 0.2 (1.1) (1.0) Deficiency payments Public Crestwood Midstream LP unitholders interest in CMLP distributable cash flow (d) (78.4) (54.5) (286.7) (161.1) Other adjustments Distributable cash flow attributable to CEQP (e) $ 19.0 $ 24.3 $ 69.9 $ 53.4 (a) (b) Cash interest expense less amortization of deferred financing costs plus bond premium amortization plus or minus fair value adjustment of interest rate swaps. (c) (d) Crestwood Midstream distributable cash flow less incentive distributions paid to the general partner and the public LP ownership interest in Crestwood Midstream. (e) EBITDA is defined as income before income taxes, plus net interest and debt expense, and depreciation, amortization and accretion expense. In addition, Adjusted EBITDA considers the adjusted earnings impact of our unconsolidated affiliates by adjusting our equity earnings or losses from our unconsolidated affiliates for our proportionate share of their depreciation and interest and the impact of certain significant items, such as unit- based compensation charges, gains and impairments of long- lived assets and goodwill, gains and losses on acquisition- related contingencies, third party costs incurred related to potential and completed acquisitions, certain environmental remediation costs, change in fair value of certain commodity derivative contracts, and other transactions identified in a specific reporting period. EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, as they do not include deductions for items such as depreciation, amortization and accretion, interest and income taxes, which are necessary to maintain our business. EBITDA and Adjusted EBITDA should not be considered an alternative to net income, operating cash flow or any other measure of financial performance presented in accordance with GAAP. EBITDA and Adjusted EBITDA calculations may vary among entities, so our computation may not be comparable to measures used by other companies. Maintenance capital expenditures are defined as those capital expenditures which do not increase operating capacity or revenues from existing levels. The year ended December 31, 2014, includes $1.5 million of maintenance capital expenditures for January 1, 2014 to September 30, 2014 that was reclassified from growth capital expenditures to maintenance capital expenditures. Distributable cash flow is defined as Adjusted EBITDA, less cash interest expense, maintenance capital expenditures, income taxes, deficiency payments (primarily related to deferred revenue), and public Crestwood Midstream LP unitholders interest in CMLP distributable cash flow. Distributable cash flow should not be considered an alternative to cash flows from operating activities or any other measure of financial performance calculated in accordance with generally accepted accounting principles as those items are used to measure operating performance, liquidity, or the ability to service debt obligations. We believe that distributable cash flow provides additional information for evaluating our ability to declare and pay distributions to unitholders. Distributable cash flow, as we define it, may not be comparable to distributable cash flow or similarly titled measures used by other corporations and partnerships. 24

25 CEQP Non-GAAP Reconciliations (in millions); (unaudited) 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr Gathering and Processing Revenues $ 84.3 $ 85.3 $ 83.4 $ 79.5 $ 76.6 Costs of product/services sold Operations and maintenance expense Gain (loss) on long-lived assets, net (32.8) (0.9) Goodwill impairment (18.5) Loss on contingent consideration (6.5) (2.1) (31.4) Earnings (loss) from unconsolidated affiliate (0.6) EBITDA $ (1.9) $ 50.3 $ 44.5 $ 46.1 $ 16.1 Significant items impacting EBITDA: (Gain) loss on long-lived assets, net (0.5) (0.5) (1.0) Goodwill impairment 18.5 Loss on contingent consideration Adjusted EBITDA $ 49.4 $ 51.2 $ 50.5 $ 47.7 $ 46.5 Storage and Transportation Revenues $ 47.5 $ 46.6 $ 47.8 $ 51.0 $ 49.1 Costs of product/services sold Operations and maintenance expense Gain on long-lived assets Earnings (loss) from unconsolidated affiliate 0.2 EBITDA $ 72.7 $ 33.2 $ 34.9 $ 38.0 $ 36.7 Significant items impacting EBITDA: (Gain) loss on long-lived assets, net (33.2) (0.6) Expenses related to pre-acquisition matters (1.6) Adjusted EBITDA $ 37.9 $ 33.2 $ 34.3 $ 38.0 $ 36.7 NGL and Crude Services Revenues $ $ $ $ $ Costs of product/services sold Operations and maintenance expense Gain (loss) on long-lived assets (3.1) 0.1 (0.1) Goodwill impairment (30.3) Loss from unconsolidated affiliate (0.1) (0.9) (0.4) (0.2) EBITDA $ 32.5 $ 52.9 $ 43.8 $ 55.7 $ 39.3 Significant items impacting EBITDA: (Gain) loss on long-lived assets, net 3.1 (0.1) 0.1 Goodwill impairment 30.3 Change in fair value of commodity inventory-related derivative (3.5) (10.7) (0.6) Expenses related to environmental and pre-acquisition matters Adjusted EBITDA $ 63.1 $ 58.8 $ 46.6 $ 45.0 $ 38.8 Total Segment Adjusted EBITDA $ $ $ $ $ Significant items impacting EBITDA (a) (47.1) (6.8) (8.2) 9.1 (29.9) Total Segment EBITDA $ $ $ $ $ 92.1 Corporate (26.6) (21.2) (24.0) (27.8) (40.6) EBITDA $ 76.7 $ $ 99.2 $ $ 51.5 (a) Significant items impacting EBITDA represents gains and impairments of long-lived assets and goodwill, gains and losses on acquisition-related contingencies, certain environmental remediation costs, change in fair value of commodity inventory-related derivative contracts and pre-acquisition matters. 25

26 CEQP Non-GAAP Reconciliations CRESTWOOD EQUITY PARTNERS LP Full Year 2015 Adjusted EBITDA and Distributable Cash Flow Guidance Reconciliation to Net Income (in millions) (unaudited) Expected 2015 Range Low - High Net income $56 - $101 Interest and debt expense, net 142 Depreciation, amortization and accretion Unit-based compensation charges 20 Earnings from unconsolidated affiliates (13) - (18) Adjusted EBITDA from unconsolidated affiliates Adjusted EBITDA $540 - $575 Cash interest expense (a) (135) Maintenance capital expenditures (b) (25) - (28) Public Crestwood Midstream LP unitholders interest in CMLP distributable cash flow (c) (300) - (330) Distributable cash flow attributable to CEQP (d) $80 - $85 (a) Cash interest expense less amortization of deferred financing costs plus bond premium amortization plus or minus fair value adjustment of interest rate swaps. (b) M aintenance capital expenditures are defined as those capital expenditures which do not increase operating capacity or revenues from existing levels. (c) Crestwood M idstream distributable cash flow less incentive distributions paid to the general partner and the public LP ownership interest in Crestwood M idstream. (d) Distributable cash flow is defined as Adjusted EBITDA, less cash interest expense, maintenance capital expenditures, income taxes, deficiency payments (primarily related to deferred revenue), and public Crestwood M idstream LP unitholders interest in CM LP distributable cash flow. Distributable cash flow should not be considered an alternative to cash flows from operating activities or any other measure of financial performance calculated in accordance with generally accepted accounting principles as those items are used to measure operating performance, liquidity, or the ability to service debt obligations. We believe that distributable cash flow provides additional information for evaluating our ability to declare and pay distributions to unitholders. Distributable cash flow, as we define it, may not be comparable to distributable cash flow or similarly titled measures used by other corporations and partnerships. 26