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2011 NAPTP Master Limited PartnershipInvestor Conference
1
Barry E. Davis, President & CEO
May 26, 2011
2
Forward Looking StatementsThis 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.
3
Strategically Positioned for Performance and Growth
Well positioned, high quality assets
Providing full midstream value chain
Strong organizational capabilities
Strong balance sheet with great access to capital
Poised to take advantage of the macro environment
Investing in long-term, high-return growth projects
Strong distribution and dividend growth potential
4
Midstream energy services company focused on full value chain
Assets strategically located in key producing areas and market regions
Focused Midstream Company Diversity of Services
Over 2,800 miles of natural gas gathering and transmission pipeline
9 natural gas processing plants
3 fractionators
Over 470 miles of NGL pipeline
2.4 MM barrels of NGL cavern storage
Petrochemical plants, Refineries
& Other NGL Markets
Wellhead
Gathering, Dehydration, Compression & Treating
Processing & Fractionation
Transmission Lines
NGL Transportation
Natural Gas Consumers
We Span the Value Chain
55
Crosstex GP, LLC
Public/OtherShareholders
100%
Public Unitholders
51%
2% GP Interest
100% IDRs
Crosstex Energy, Inc.(NASDAQ: XTXI)
Directors / Executive Officers
87% 13%
2%
25%
Crosstex Energy
Services, L.P.
All Assets
and Operations
Crosstex Energy, L.P.(NASDAQ: XTEX)
22%
GSO Crosstex
Holdings
Crosstex Corporate Structure
6
Strategically Positioned Assets
North Texas
~840 miles of pipeline
3 processing plants
2 treating plants
LIG
~2,100 miles of pipeline
2 processing plants
2 treating plants
PNGL ~440 miles of NGL pipeline
4 processing plants
3 fractionation facilities
$126
(49%)
$85
(35%)
$41
(16%)
2011 Segment Cash Flow*
($MM)
NTX LIG PNGL
* Represents mid-point ofguidance
Note: Segment Cash Flow is a non-GAAP financial measure. See Appendix for reconciliation to Operating income (loss)
North Texas
7
NTX: Strategically Positioned in the Barnett Shale
Well Positioned Assets (current capacity) :
NTPL – 375 MMcf/d
NTX Gathering Assets – 1 Bcf/d +
Azle plant – 50 MMcf/d
Goforth plant – 30 MMcf/d
Silvercreek plant – 200 MMcf/d
8
9
Achieved a milestone by exceeding 9 Tcf of cumulative production and currently averages 5.4 Bcf/d *
Infrastructure established in play during past 20 years will support further production growth
Rig efficiency, extensive knowledge of play, pad drilling and improved well recoveries mitigate impact of lower rig count
Producers have announced plans to maintain volumes
Barnett Shale: A Leading Unconventional Resource
* Powell Shale Digest (March 2011)
NSAI’s Barnett Shale Volume Projections
10
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
J-9
0
N-9
0
S-9
1
J-9
2
M-9
3
M-9
4
J-9
5
N-9
5
S-9
6
J-9
7
M-9
8
M-9
9
J-0
0
N-0
0
S-0
1
J-0
2
M-0
3
M-0
4
J-0
5
N-0
5
S-0
6
J-0
7
M-0
8
M-0
9
J-1
0
N-1
0
S-1
1
J-1
2
M-1
3
M-1
4
J-1
5
N-1
5
S-1
6
J-1
7
M-1
8
MM
CF
D
Barnett Volume Projection(PIRA 4/11 Fcst)
High Base Low
11
NTX: New Growth Projects
North Texas Expansion Project- Fossil Creek:
₋ New 10 yr. firm gathering & compression agreement on Fossil Creek system
₋ Minimum volume commitment of 50,000 MMbtu/d
₋ Expected capital of less than $10 million cash
₋ Expected annual run-rate cash flow of >$9 million per year
₋ Initiated service: April 1, 2011
₋ April volumes averaged 50 MMcf/d
North Texas Expansion Project- Benbrook:
₋ $25 million, 15-mile expansion project supported by volumetric commitments
₋ Seven-mile low-pressure pipeline, eight-mile high-pressure pipeline and compressor
₋ Peak flow rate in 2012 expected to be more than 100 MMbtu/d
₋ Expected annual run-rate cash flow of >$11 million per year on average for first four years
₋ Initiated service: April 17, 2011
₋ April volumes were 50 MMcf/d; May volumes averaged 66 MMcf/d
LIG
12
LIG: Strategically Located Assets
Well Positioned Assets (current capacity) :
LIG ~ 1Bcf/d (+)
Gibson Plant – 145 MMcf/d
Plaquemine Plant – 225 MMcf/d
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14
LIG: Strong Execution onHaynesville Opportunities
Haynesville Projects
Capacity MMcf/d
In Service Total Contracted
N. LIG Contracted Projects
Red River Project Q3 2007 240 240
North LIG Expansion Phase I Q4 2008 35 35
North LIG Expansion Phase II Q2 2009 100 100
Black Lake Interconnect Phase III – Part I Q4 2009 35 35
Red River Amine Unit (120 MMcf/d Capacity) Q4 2009
Black Lake Interconnect Phase III – Part II Q2 2010 25 25
LIG Phase IV Expansion- Part I Q3 2010 30 30
Total 465 465
North LIG capacity is fully contracted with a weighted average remaining contract life of five years.
15
Exposure to multiple plays with growing producer activity targeting liquids
Active leasing programs have been publicized
Drilling programs at early stage in several parishes around LIG
LIG has recently completed gathering and processing agreements on several new rich wells
LIG and PNGL infrastructure has existing and expandable capacity
New Strategic Potential for LIG/PNGL
Processing and NGL’s
16
PNGL : Strategically Positioned
Ultra deep
shelf
Ultra Deep
Eunice & Sabine
Corridor Pelican Corridor
17
Riverside
Fractionator
and Terminal
Eunice
Fractionator
and Terminal
Southern Louisiana
& Gulf of Mexico
18
Available processing capacity is well positioned for increasing liquids rich production
Improved NGL capacity and capabilities attract volume growth from developing rich shale plays
₋ NGL volumes received via truck and rail up over 75% since 2008
Pursuing pipeline access to NGL supply in Mt. Belvieuarea
Developing crude oil terminal opportunities
PNGL: Strategically Positioned for Long-Term Growth
PNGL: Eunice Frac Restart
19
Restarted 15,000 Bbls/d of existing 36,000 Bbls/d frac
Capex - $9.3MM with expected operating income contribution of $3.3MM annually
Contract commitments expected to add more than 10,000 Bbls/d by Q3 2011
Upside – additional capacity to bring liquids from other plays
Growth Opportunities
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21
Growth Opportunities –Shale / Resource Plays
Robust Industry Environment:
₋ Shale plays drive midstream infrastructure and services needs
₋ Forecasted $6-10B per year of midstream infrastructure
Crosstex Key Capabilities:
₋ Excess fractionation with rail, truck and barge access
₋ NGL market knowledge through PNGL
₋ Experience with large shale developments
₋ Access to Louisiana Gulf Coast crude (LLS) and NGL markets
Primary Growth Strategies Outside Existing Core Areas:
– Acquire existing assets to serve as platform for growth in target areas
– Organic build of new infrastructure in emerging shale plays
Strategic advantages:
– Immediate NGL/crude solutions for producers with pipeline or market constraints
– Connecting our NGL frac capacity in Louisiana to liquids supply in Mt. Belvieu
– Enhance crude oil marketing and logistics capabilities to provide midstream solutions for all producers 22
Strategic Growth Opportunities
Unconventional resource plays driving substantial increase in US crude production
– In 2009, U.S. crude production increased for the first time in 30 years
– Crude rig counts have increased from ~165 to almost 1000 since 2004
Regional infrastructure bottlenecks have created substantial differentials to Louisiana Gulf Coast Crude (LLS) markets
Eunice and Riverside have rail, truck, pipeline, and barge facilities that are being modified for use as crude oil terminal
– Facilities currently being modified to receive up to 5,000 Bbls/d in Phase 1 with margin potential of up to $10 mm/year and initial flow targeted for August 1
– Potential expansion to handle up to 50,000 Bbls/d
23
Crude Terminal Opportunity
Financial Overview
24
Current Financial Focus
Maintaining strong liquidity position for flexibility
₋ No near term debt maturities
₋ Over $370 million available on revolver
Maintaining conservative capital structure and leverage ratios
₋ High coverage of distribution continues to reduce leverage
Improving cash flows by:
₋ Investing in high-return projects
₋ Improving efficiencies of existing assets
25
Solid Performance in 3 Key Areas
Note: Segment Cash Flow is a non-GAAP financial measure See Appendix for a reconciliation to Segment Profit* 2011 represents mid-point of guidance 26
CAGR (2007 – 2011) for total segment cash flows of 9.4%
Shows the strength of the core business
PNGL’s focus on NGL opportunities has provided fee-based diversified cash flows
and improved business profitability
NTX growth projects (Benbrook and Fossil Creek) drive solid growth in 2011
Segment Cash Flow 2007 2008 2009 2010 2011*
($ in Millions)
NTX $62 $103 $113 $114 $126
LIG 72 82 80 82 85
PNGL 42 12 21 38 41
Total Asset Segments 176 197 214 235 252
Years Ended December 31,
(Unaudited)
Fee Based FocusNon-commodity based margins increased from ~68% in 2008 to an estimated 78% in 2011 (in Guidance)
(1) 2008 excludes Discontinued Operations (2) 2011 represents mid-point of Guidance
58%
10%
17%
15%
2008 (1)
66%
12%
13%
9%
2009
62%14%
11%
13%
2010
63%15%
13%
9%
2011 (2)
27
Gathering & Transmission Fee Based Processing & Fractionation Percent of Liquids Processing Processing Margin
28
Guidance for 2011
Low High
$ (27) $ 4
119 119
8 8
83 82
2 2
$ 185 $ 215
(2) (2)
(83) (82)
(14) (11)
$ 86 $ 120
$ 50 $ 150
$ 0.83 $ 1.18
$ 60.21 $ 85.69
$ 4.50 $ 3.50
208.5% 381.6%
$ 1.04 $ 1.20
$ 0.32 $ 0.40 XTXI Dividends per Share
Total Year 2011
Key Assumptions for Forecast
Weighted Average Liquids Price
Crude ($/bbl)
Natural Gas ($/MMbtu)
Natural Gas Liquids to Gas Ratio
XTEX Distribution per Unit
Adjusted EBITDA*
Taxes and other
LOC Fees & Interest
Maintenance capital expenditures
Distributable cash flow*
Growth Capital
Net income
Depreciation and amortization
Stock-based compensation
LOC Fees & Interest
Taxes and other
* Adjusted EBITDA and Distributable cash flow are non-GAAP measures
29
Hedging Process and Policy
Maintain a balanced contract mix and an active commodity price hedging program consistent with risk management guidelines
₋ No speculative hedging positions, no compensation for taking positions
₋ Utilization of product-specific swaps and put options
Committee meets on regular basis to assess exposure and hedge consistent with our policies
₋ Hedge no more than 80% of hedgeable exposure
₋ Ensure hedging instruments are correlated to the underlying commodity
₋ Can only be executed to close on open physical position
Certain contracts structured by setting a floor fee to further eliminate risk
30
2011 Commodity Sensitivity Annual Impacts
₋ ± $.10 NGL Pricing (POL)- $3.6 MM (Net of Hedges)
₋ ± 5% NGL- Gas Ratios(Proc Margin)- $3.2 MM (Net of Hedges)
Note: all volumes are in millions of gallons
Hedged Volume as a % of Hedgeable Volume
2011
Q1 Q2 Q3 Q4
POL
Total VAR Volumes 10.65 12.32 12.16 12.20
Total Hedgeable Volumes 4.09 5.14 4.98 5.12
Total Hedged Volumes 3.09 2.95 3.89 4.78
Hedged Percentage 75% 57% 78% 93%
Proc Margin
Total VAR Volumes 18.24 18.52 18.76 18.85
Total Hedgeable Volumes 6.90 6.93 6.92 6.86
Total Hedged Volumes 5.53 5.17 3.36 2.90
Hedged Percentage 80% 75% 49% 42%
2012 Commodity Sensitivity
* All volumes are in millions of gallons** All hedged positions shown are as of May 18, 2011 and are subject to change.
Hedged Volume as a % of Hedgeable Volume
2012
Q1 Q2 Q3 Q4
POL
Total VAR Volumes 11.97 12.62 12.35 12.01
Total Hedgeable Volumes 5.03 5.76 5.54 5.31
Total Hedged Volumes 2.43 2.31 .65 .80
Hedged Percentage 48% 40% 12% 15%
Proc Margin
Total VAR Volumes 17.91 18.19 18.37 18.42
Total Hedgeable Volumes 6.68 6.69 6.69 6.63
Total Hedged Volumes 3.53 3.24 0 0
Hedged Percentage 53% 48% 0% 0%
3232
Credit FacilityBorrower: Crosstex Energy, L.P.
Facility: $485 MM Senior Secured Revolving Credit Facility
Maturity: 5 Years (May 2016)
Pricing:
Financial Covenants: Maximum Total Leverage Ratio of 5.00x with step-downs to 4.75x
Maximum Senior Secured Leverage Ratio of 2.75x
Minimum Interest Coverage Ratio of 2.00x with step-ups to 2.50x
Liquidity:LC’s Liquidity
Borrowing Outstanding Available
$42 MM $72 MM $371 MM
Applicable Margin
≥ 4.5x 3.00% 2.00% 0.50%
≥ 4.0x 2.75% 1.75% 0.50%
≥ 3.5x 2.50% 1.50% 0.50%
≥ 3.0x 2.25% 1.25% 0.50%
< 3.0x 2.00% 1.00% 0.38%
Funded Debt /
EBITDALIBOR+ ABR+
Commit
Fee
33