RBC Capital Markets MLP Conference November 16, 2006
Forward Looking Statements NASDAQ: RGNC This presentation may contain statements about future events and Regency Energy Partners LP s ( Regency, the Company or the Partnership ) outlook and expectations, which are forward-looking statements. Although Regency believes that the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect Regency s business prospects and performance, causing actual results to differ from those discussed during this presentation. Any forward-looking statements made are subject to all of the risks and uncertainties, many of which are beyond management s control, involved in gathering, processing, marketing and transporting natural gas and natural gas liquids, or NGLs. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Regency s actual results and plans could differ materially from those expressed in any forward-looking statements. These risk and uncertainties are discussed in more detail in Regency s filings with the Securities and Exchange Commission, copies of which are available to the public. The Partnership undertakes no obligation to update any forward-looking statements, whether as a result of new information or future events. 1
Regency Energy Partners Overview 2
Regency s Formation and History August 2006 April 2003 Regency established as a standalone company to house assets once owned by much larger companies March 2004 Acquired certain West Texas midstream assets from Duke Energy Field Services January 2005 Conceived and developed the Regency Intrastate Enhancement Project October 2005 Entered into strategic alliance with major producer in Hugoton area to develop new gathering infrastructure Approved the construction of greenfield processing facilities in North Louisiana to manage gas dewpoint specifications 2005 February 2006 Completed initial public offering Acquired TexStar Field Services LP 2006 October 2006 Completed Phase I of Bossier Loop 2003 June 2003 Purchased certain Mid-Continent and North Louisiana midstream assets from El Paso Field Services 2004 December 2004 HM Capital Partners acquired Regency and implemented comprehensive risk management strategy May 2005 Began construction on Enhancement Project December 2005 Completed construction of Enhancement Project May 2006 Completed Elm Grove dewpoint control facility Approved 2 new organic growth projects September 2006 Completed private equity placement totaling $60 million 3
Regency Operating Structure Gathering and Processing Segment Represents approx 70% of gross margin Simplified Organizational Chart 5 geographic regions Over 4,700 miles of gathering pipelines Eight active processing plants with 575 MMcf/d throughput capacity 1 One treating facility with 100 MMcf/d throughput capacity HM Capital Partners LLC 3,953,896 Common Units 5,173,189 Class B Units 19,103,896 Subordinated Units 61.8% L.P. Interest 2.0% G.P. Interest Public Unit Holders 15,150,000 Common Units 2,857,143 Class C Units 38.2% L.P. Interest 2 processing plants scheduled to be in service in Q4 2006 with 205 MMcf/d throughput capacity Regency Energy Partners LP NASDAQ: RGNC Transportation Segment Represents approx 30% of gross margin 320 mile intrastate system moving from near the TX/LA border to Winnsboro, LA 35 MMcf/d refrigeration plant By end of the fourth quarter, design capacity will be 910 MMcf/d Includes Gulf States Transmission, a 10 mile 20-inch interstate pipeline that extends from Harrison County, Texas to Caddo Parish, Louisiana Transportation Segment Gathering & Processing Segment 1 Includes one processing plant that is scheduled to be taken out of service in early 2007 4
35% Increase Since the IPO 10/28/06 10/13/06 9/28/06 5 Unit Price Performance Since IPO (through 11/7/06) $29.00 $27.00 $25.00 $23.00 $21.00 $19.00 $17.00 $15.00 9/13/06 8/29/06 8/14/06 7/30/06 7/15/06 6/30/06 6/15/06 5/31/06 5/16/06 5/1/06 4/16/06 4/1/06 3/17/06 3/2/06 2/15/06 1/31/06
Regency Business Strategy Implement Cost-Effective Organic Growth Opportunities Build gathering, processing and transportation assets that enhance existing systems Emphasize projects that increase volume throughput and are expected to generate attractive returns Continue to Enhance Profitability of Existing Assets Develop and expand ancillary services Identify new business opportunities and adding new volumes of natural gas supplies Pursue Acquisitions of Complementary Assets Pursue strategic acquisitions of midstream assets in or near Regency s current areas of operation Pursue anchor acquisitions in new regions with significant natural gas reserves and high levels of drilling activity Continue to Reduce Exposure to Commodity Price Risk Reduce impact of large swings in commodity prices through financial hedges Maximize cash flow stability by optimizing contract mix 6
Existing Asset Base Regency s core operations are located in Texas, Louisiana, Kansas and Oklahoma Mid-Continent North Louisiana Assets: 1,600 miles of gathering pipeline 2 processing plants 1 Basin (Hugoton/Anadarko): Discovered in 1930s Key Producers: BP, Oxy, EOG, & Anadarko Petroleum Assets: 320 miles of intrastate pipeline 600 miles of gathering pipeline 5 processing plants 2 Basin (TX-LA-MS Salt Province): Discovered in 1940s Key Producers: Anadarko Petroleum, Chesapeake, Devon, Petrohawk & Samson West Texas Assets: 750 miles of gathering pipeline 1 processing plant Basin (Permian): Discovered in 1950s Key producers: Exxon Mobil, Apache, Chevron & Duke Assets: 1,048 miles of gathering pipeline 2 processing/treating plants South Texas Basin (Western Gulf Basin): Discovered in 1960s Key producers: BlackBrush, Escondido, Lewis, The Exploration Company Corporate Office Regional Office Regency Gas System Gas Treating / Processing Facility Notes: 1 Includes one active plant and one currently inactive plant 2 Includes Dubberly plant which is scheduled for service in Q4 2006 3 Includes the Como processing plant which is scheduled to be taken out of service in early 2007 Assets: 428 miles of gathering pipeline 2 processing/treating plants 3 East Texas Basin (East Texas Basin): Discovered in 1950s Key producers: Valence, Redmond 7
RIGS Enhancement Project (a transforming event) 8
Regency Intrastate Enhancement Project Original North Louisiana Asset Note: The blue section of pipeline denotes Gulf States Transmission, our 10 mile interstate pipeline 9
Regency Intrastate Enhancement Project Enhancement Project Overview Haughton to Sibley Sibley to Mainline Mainline Compression Note: The blue section of pipeline denotes Gulf States Transmission, our 10 mile interstate pipeline 10
Regency Intrastate Enhancement Project Major Supply Areas ADA SLIGO SIBLEY ELM GROVE DRISCOLL VERNON VIXON Note: The blue section of pipeline denotes Gulf States Transmission, our 10 mile interstate pipeline 11
Intrastate Pipeline Advantage Transportation throughput volumes provide stable, fee-based cash flow Access to 5 of the 8 most prolific fields in Louisiana, including Vernon, Elm Grove, Sligo, Ada and Sibley Fields Producers in North Louisiana are able to access premium markets Market Access Louisiana Basis Differential Market Access Post-Enhancement Projects Texas Eastern Transmission Tennessee Gas 100 Southern Natural Intrastate Market Texas Gas Transmission¹ Columbia Gulf Tennessee Gas 800 ANR Texas Gas Transmission² Trunkline WASKOM CARTHAGE Centerpoint Market Nat Gas Price/MMBtu 2005: $7.80 2006 YTD:$5.96 SLIGO SIBLEY ELM GROVE ADA DRISCOLL VERNON Columbia Gulf Market Nat Gas Price/MMBtu 2005: $8.90 2006 YTD:$6.66 VIXON 2005 Basis Differential: $1.10 2006 YTD Basis Differential:$0.70 Notes: 1,2 Represents two different pipelines owned by Texas Gas Transmission. One pipeline is adjacent to RGNC s Dubach extension and the other is connected to the Winnsboro Extension Source: Gas Daily Note: Prices reflect the average over the stated period; YTD through 10/19/06 12
Organic Growth Projects 13
Organic Growth Projects Will Support Growth RIGS Enhancement Project kicked us off in 2005 Expect to spend $120 million in 2006 and early 2007 Key Projects Regency Intrastate Enhancement Project ($157 million) Description 40-mile expansion and 80-mile extension of our Regency Intrastate Pipeline, supported by approximately 9,500 horsepower of additional compression Status Completed in 2005 Elm Grove Dewpoint Control Facility ($8 million) Construction of new 200 MMcf/d refrigeration/dewpoint control facility in the Elm Grove field in north Louisiana Completed in May Bossier Loop ($30 million) Dubberly Dewpoint Control Facility ($8 million) North Louisiana Growth Project ($17 million) LaSalle County Project ($8 million) Expansion of the Regency Intrastate Pipeline west of Haughton Phase I: 16-miles of 24 inch pipe completed Phase II: additional compression added. Phase II will add an additional 100,000 mmbtu/d of capacity, resulting in total capacity of 910,000 mmbtu/d 200 MMcf/d Dubberly dewpoint control facility Expand existing compression and gathering capacity in north Louisiana Allows separation of sweet, rich gas packages for processing rather than blending with surrounding lean, sour gas Completed phase I Phase II scheduled to be in service in Q4 Scheduled to be in service in Q4 In process Completed early November 14
Additional Processing Capability New Bossier Loop Additional Compression New 200 MMcf/d Dubberly Dewpoint Control Facility Additional Compression New 200 MMcf/d Elm Grove Dewpoint Control Facility Note: The blue section of pipeline denotes Gulf States Transmission, our 10 mile interstate pipeline 15
Financial Overview 16
Attractive Cash Flow Characteristics Long-Term Commodity Hedges Regency has in place a comprehensive risk management program which includes hedging a significant percentage of its projected commodity price exposure through 2008 Regency actively manages its exposure to commodity prices through an integrated strategy 2006 Pro Forma Volumetric Contracted Mix KW 3.4% POP 20.3% As a result of Regency s portfolio of contracts, we are a net seller of NGLs and maintain a relatively flat natural gas position Fee 76.3% Hedged NGL Position: 2006 to 2008 We have hedged our projected NGL exposure via the use of swap contracts (%) 100 75 50 95% 85% 60% 25 0 2006 2007 2008 17
Summary Historical Financials Regency Energy Partners Three Months Ended Sept. 30, Nine Months Ended Sept. 30, ($ in thousands) 2006 2005 2006 2005 Net loss ($ 11,272) ($ 3,906) ($ 13,831) ($ 12,440) Interest expense, net 10,929 4,490 27,319 12,717 Depreciation and amortization 9,759 5,521 28,306 16,076 EBITDA (a) $ 9,416 $ 6,105 $ 41,794 $ 16,353 Unrealized loss (gain) from risk management activities (1,725) (327) (4,346) 12,712 Non-cash put option expiration 960 582 2,652 1,293 Acquisition expenses 1,201-1,885 - Loss on debt financing 12,447 7,724 12,447 7,724 Management services termination fee 3,542-12,542 - Management fee 88 253 360 760 Adjusted EBITDA $ 25,929 $ 14,337 $ 67,334 $ 38,842 a) Earnings before interest, taxes, depreciation and amortization 18
Forecast Regency s expected 2007 adjusted EBITDA will be between $145 - $155 million Based on an assumed price curve for 2007 of $60 crude oil and $6.00 gas Regency s expected 2006 adjusted EBITDA will be reduced from our prior projection ($95 - $100 million) to be between $90 - $95 million Based on significant drop in price curves since our last guidance Adjusted EBITDA will be higher than our revised guidance by $7.5 million in 2006 due to pooling of interest accounting treatment Will incorporate TexStar s results for all of 2006 19
Non-GAAP Reconciliation Reconciliation of forecasted twelve months ended 12/31/06 net income to forecasted adjusted EBITDA $90 MM $95 MM Estimate Estimate Forecasted net loss $ (6.5) $ (1.5) Add: Depreciation and amortization 38.3 38.3 Interest expense 39.1 39.1 EBITDA 70.9 75.9 Add (deduct): Unrealized gain from risk management activities (4.3) (4.3) Non-cash put option expiration 3.7 3.7 Acquisition expenses 1.9 1.9 Loss on debt refinancing 12.4 12.4 Management services fees and termination fees 12.9 12.9 Adjusted EBITDA 97.5 102.5 TexStar Pre-acquisition EBITDA (7.5) (7.5) Forecasted adjusted EBITDA 90.0 95.0 20
Key Investment Highlights Regency has several key competitive strengths Active fields across asset footprint Attractive cash flow characteristics Intrastate pipeline advantage Organic growth projects will support growth Experienced and knowledgeable management team 21
RBC Capital Markets MLP Conference November 16, 2006