Morgan Keegan MLP Conference May 18 th, PDF Free Download

Morgan Keegan MLP Conference May 18 th, 2010 1

Forward Looking Statements This presentation contains forward looking statements within the meaning of the federal securities laws. Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results of Crosstex Energy, L.P. and its affiliates (collectively known as Crosstex ) may differ materially from those expressed in the forward looking statements contained throughout this presentation and in documents filed with the SEC. Many of the factors that will determine these results are beyond Crosstex s ability to control or predict. These statements are necessarily based upon various assumptions involving judgments with respect to the future, including, among others, the ability to achieve synergies and revenue growth; national, international, regional and local economic, competitive and regulatory conditions and developments; technological developments; capital markets conditions; inflation rates; interest rates; the political and economic stability of oil producing nations; energy markets; weather conditions; business and regulatory or legal decisions; the pace of deregulation of retail natural gas and electricity; the timing and success of business development efforts; and other uncertainties. You are cautioned not to put undue reliance on any forward looking statement. Crosstex has no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise. 2

Strategically Positioned for Performance and Growth Well positioned assets Lean organization Financially strong Poised to take advantage of the macro environment Focused on long term growth 3

We Navigated the Storm $12 Crosstex Energy LP (XTEX) $10 Crosstex announces sale of Treating assets for $266 MM Crosstex announces acquisition of Intracoastal and sale of ETX assets Crosstex completes long term refinancing ($725 MM bonds & $425 MM Credit Facility) $8 Crosstex announces sale of South Texas and Miss./Ala. assets for $220 MM $6 $4 Crosstex announces $125 MM of Equity from GSO/Blackstone $2 $0 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 4

We Span the Value Chain Focused Midstream Company Midstream energy services company focused on full value chain Assets strategically located in key producing areas and market regions Focus on Barnett and Haynesville shale plays Diversity of Services Over 3,300 miles of natural gas gathering and transmission pipeline 9 natural gas processing plants 2 fractionators Over 400 miles of NGL pipeline 2.4 MM barrels of NGL storage capacity Transmission Lines Natural Gas Consumers Gathering, Dehydration & Compression NGL Transportation & Fractionation NGL Markets Wellhead Processing, Conditioning & Treating 5

Crosstex Corporate Structure GSO Crosstex Holdings Public Unitholders 51% 25% 22% Public/Other Shareholders 87% Crosstex Energy, Inc. (NASDAQ: XTXI) 100% Crosstex Energy GP, L.P. 2% Crosstex Energy, L.P. (NASDAQ: XTEX) Directors / Executive Officers 13% 2% GP Interest 100% IDRs Crosstex Energy Services, L.P. All Assets and Operations 6

Strategically Positioned Assets North Texas ~780 miles of pipeline 3 processing plants LIG ~2,100 miles of pipeline 2 processing plants Processing & NGLs ~440 miles of NGL pipeline 4 processing plants 2 fractionation facilities 2009 Operated Income ($MM) $23 $80 $113 NTX LIG PNGL 7

Strategically Positioned Organizationally Successful execution has created momentum Lean, focused organization Front line management focused on continued execution Significant acquisition and organic growth experience Board of directors provides strong support 8

Strategically Positioned Financially Strong balance sheet Disciplined financial guidelines Continue to de leverage, de risk Business Use highly predictable cash flows to set distributions Allocate capital to high return projects 9

Strategically Positioned for the Macro Environment Wide gas to crude relationship is expected to continue EIA predicts demand will grow from 53 Bcf/d in 2010 to 70 Bcf/d in 2025 Unconventional gas basins will fill this gap Shift in supply will drive need for new infrastructure XTEX is well positioned to take advantage of this trend 10

Shales will Provide Significant Opportunities $8.0 $7.0 $6.0 $5.0 $4.20 $3.90 $4.00 $4.0 $3.70 $3.50 $3.50 $3.50 $3.0 $2.0 Source: Modified from Morgan Stanley Jan. 13, 2010 E&P Research Report * NYMEX Henry Hub as of 05/04/10 $5.00 $5.40 $7.00 11 Deep Bossier (E. Texas) Granite Wash (Horizontal) Haynesville Fayetteville (2.6 Bcf) Marcellus Woodford (Anadarko) Barnett (Core/Tier 1) Eagleford Powder River (CBM) Piceance (Highlands) NYMEX Prices Needed to Achieve 10% IRR * Current 2010/2011 NYMEX Strip

Strategically Positioned for Long-Term Growth Macro environment will provide opportunities Capitalize on strategic positions around core assets Focus on high return projects Continue to reduce risk in the business Disciplined financial guidelines will guide growth Clear path to restoring distributions and dividends 12

North Texas 13

NTX: Strategically Positioned in the Barnett Shale Well Positioned Assets (current capacity) : North Texas Gathering Systems North Texas Pipeline Processing Plant NTPL 375 MMcfd NTX Gathering Assets 1 Bcfd + Azle plant 50 MMcfd Goforth plant 30 MMcfd Silvercreek plant 200 MMcfd 14

NTX: Operating Income 2007-2010 NTX G&T Op Income NTX Processing Op Income $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $ 2007 2008 2009 2010 Note: 2010 represents mid point of guidance 15

Diverse Customer Base 16

NSAI s Barnett Shale Volume Projections Source: Netherland, Sewell & Associates, Inc. 17

NTX: Strategically Positioned for Long-Term Growth Majors have moved into the Barnett Shale NSAI study projects that over 50% of future production will occur within 3 miles of our existing infrastructure To date over 12,000 successful wells have been drilled 14,000 additional locations to drill ~85% of Crosstex dedicated acres are in Core/Tier 1 Major infrastructure already in place to provide service for base case volumes 18

LIG 19

LIG: Strategically Located Assets Well Positioned Assets (current capacity) : LIG 1Bcfd+ Gibson Plant 145 MMcfd Plaquemine Plant 225 MMcfd LIG System NGL System Processing Plant 20

LIG: Operating Income 2007-2010 LIG Mktg. & Transport Op Income LIG Processing Op Income $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $ 2007 2008 2009 2010 Note: 2010 represents mid point of guidance 21

Diverse Customer Base 22

Haynesville Provides Abundant Near- Term Opportunities Haynesville Projects Capacity MMcf/d Contract In Service Total Contracted Term N. LIG Contracted Projects Red River Project Q3 2007 240 240 7 yr North LIG Expansion Phase I Q4 2008 35 35 10 yr North LIG Expansion Phase II Q2 2009 100 100 10 yr Black Lake Interconnect Phase III Part I Q4 2009 35 35 3 yr Red River Amine Unit (120 MMcf/d Capacity) Q4 2009 3yr Black Lake Interconnect Phase III Part II Q2 2010 25 25 1.5 yr LIG Phase IV Expansion Part I Q3 2010 30 30 5 yr Total Contracted 465 465 Current Expansion Project Partial System Loop; Phase IV Expansion Part II Q4 2010 est 115 Working All Projects 580 465 23

LIG: Strategically Positioned for Long-Term Growth Franchise position Exceptional connectivity to interstate markets Access to river market on S. LIG All N. LIG volumes are firm transport Highly attractive inventory of growth projects 24

Processing and NGL s 25

PNGL: Strategically Located Assets LIG System NGL System Processing Plant Intracoastal 26

PNGL: Operating Income 2007-2010 $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $ 2007 2008 2009 2010 Note: 2010 represents mid point of guidance 27

Diverse Customer Base 28

PNGL: Strategically Positioned for Long-Term Growth Favorable processing environment Improved GOM drilling and recent lease sales encouraging Potential consolidation opportunities Fractionation capacity constraints Recent Acquisitions: Eunice Intracoastal pipeline Increased rich gas production creates opportunities 29

Financial Overview 30

Summary Operating Income Operating Income ($ MM) 2008 2009 2010 (3) North Texas $103 $113 $111 LIG $82 $80 $74 PNGL (1) $12 $23 $35 Shared Operating Exp. & Other ($14) ($14) ($13) Total Continuing Operations $183 $202 $207(4) Discontinued Operations(2) $91 $50 $0 Total $274 $252 $207 (1) Includes impact of Eunice lease buy out in 2009 and Intracoastal acquisition $2 MM impact in 2009 and $13 MM impact in 2010 (2) Includes contributions from sold assets (STX, Miss, Ala, Treating, Seminole interest, Arkoma, and ETX) (3) 2010 represents mid point of guidance (4) 2010 continuing operations includes ~$8MM in LC Fee s that are re classed as interest expense 31

Gross Margin By Contract Type Ex Discontinued Ops 2008-2010 Non commodity based margins have increased from ~68% in 2008 to ~87% in 2010 2008 G& T Fee POL Proc Margin 2009 G& T Fee POL Proc Margin 2010 G& T Fee POL Proc Margin 15% 9% 11% 2% 13% 17% 16% 58% 12% 10% 66% 71% 32

Growth & Maintenance Capital Crosstex has significantly scaled back growth capital spending Focused on execution of projects within the operating footprint Scalable nature of current asset base generates high return projects Low maintenance requirements on existing assets Historical and Projected Growth Capital Expenditures ($ in millions) $500 $400 $404 Historical and Projected Maintenance Capital Expenditures ($ in millions) $20 $16 $18 $15 * $300 $259 $12 $11 $11 $200 $136 $8 $100 $ $25 2007 2008 2009 2010 * Represents low end of 2010 guidance * $4 $ 2007 2008 2009 33 2010 33

Guidance for 2010 Total Year 2010 Low High Net income $ (41) $ (10) Depreciation and amortization 113 113 Stock based compensation 6 6 LOC Fees & Interest 80 79 Taxes and other 2 2 Adjusted EBITDA $ 160 $ 190 Taxes and other $ (3) $ (3) LOC Fees & Interest $ (80) $ (79) Maintenance capital expenditures $ (15) $ (12) Distributable cash flow $ 62 $ 96 Growth Capital $ 25 $ 30 Key Assumptions for Forecast Weighted Average Liquids Price ($/gallon) $ 0.80 $ 1.09 Crude ($/Bbl) $ 69.37 $ 94.52 Natural Gas ($/MMBtu) $ 6.00 $ 5.00 Natural Gas Liquids to Gas Ratio 149.9% 245.0% XTEX Distribution per Unit $ 0.30 XTXI Dividends per Share $ 0.10 34 34

Conservative Financial Guidelines Maintain a conservative capital structure and leverage ratios Maintain adequate liquidity Fund organic growth and strategic opportunities with internal cash flows and a balanced mix of debt and equity Maintain a balanced contract mix and an active commodity price hedging program 35

Q & A 37

Appendix 38

Reconciliation to Net Income Net Income to DCF Reconciliation: Years Ended ($ in millions) December 31 2009 2008 (Unaudited) Net income (loss) attributable to Crosstex Energy, L.P. $ 104 $ 11 Depreciation, amortization and impairments (1) 132 163 Stock based compensation 9 11 Interest expense, net (2) 130 105 Loss on extinguishment of debt 5 Gain on sale of property (184) (51) Taxes and other 8 6 Adjusted EBITDA 204 245 Interest (2)(3)(4) (121) (83) Cash taxes and other (5) (3) (3) Maintenance capital expenditures (11) (18) Distributable cash flow $ 68 $ 141 (1) Excludes minority interest share of depreciation and amortization of $290 and $286K for the year ended 2009 and the year ended 2008 respectively. Includes depreciation, amortization and impairments related to discontinued operations of $10.7 and $26.4 million for the year ended 2009 and the year ended 2008 respectively. (2) Includes interest expense allocated to discontinued operations of $34.9 and $30.0 million for the year ended 2009 and the year ended 2008, respectively. (3) Excludes $4.3 million of debt issuance cost amortization, and $5.2 million of senior secured note make whole and call premium paid in kind interest resulting from repayment of such notes from the proceeds of asset sales, for the year ended 2009. (4) Excludes noncash interest rate swap mark to market of ($797K) for the year ended 2009, and $22.1 million for the year ended 2008. (5) Includes Seminole Adjustment of $39 million for the year ended 2008. 39 39