Pipeline Plans in the Permian

Developing the Midland Basin

Michael J. Latchem | Fort Worth, Texas

May 20, 2014

Crude Takeaway Concerns

• Midland and Colorado City

provided early liquidity

• Constraints at Midland have

provided new opportunities

• New projects completed and

others underway

Pipeline Plans in the Permian

Gas Takeaway Concerns

• Adequate Gas Transmission to

west, north & east markets

• Early limitations on NGL

Transportation to Gulf Coast

• Producers and Processors

supported new projects

Crude from the Permian

CORPUS

HOUSTON

NEDERLAND

ST. JAMES MIDLAND

CUSHING

WICHITA FALLS

HOUMA -

500

1,000

1,500

2,000

2,500

3,000

2009 2010 2011 2012 2013 2014E 2015E 2016E

Refinery Demand Basin Pipeline

West Texas Gulf Pipeline Centurion Pipeline

Other Pipelines Longhorn Pipeline

Permian Express Pipeline Bridge Tex Pipeline

Cactus Pipeline Wink Pipeline

Rail & Other Total Production

Crude Oil Growth

source: Jefferies

MB

PD

Paths Out of Permian

PORT NECHES

Existing Infrastructure

Expansion Project

Gas & NGLs from the Permian

-

2,000

4,000

6,000

8,000

10,000

2009 2010 2011 2012 2013 2014E 2015E 2016E

El Paso OneOk

Northern Energy Transfer

Atmos Enterprise

NGPL Kinder Morgan

Residue Gas

-

200

400

600

800

1,000

2009 2010 2011 2012 2013 2014E 2015E 2016E

West Texas LPG Seminole

Chaparral Line EZ

West Texas LPG Lone Star

Sand Hills Permian NGL productionsource: Jefferies source: drillinginfo

NGL Production Growth Residue Gas Growth

MM

cf/

da

y

MB

PD

Focus Turns to G&P Companies

Midland Basin Legacy Infrastructure

• Aging pipeline systems

• High system fuel & loss

• Lower NGL recoveries

• New horizontal development is higher GOR

• Pressure is on to perform

LUCID

Asset

Coverage

High Growth Development Areas

LUCID Operations:

• Wolfcamp A Bench

• Wolfcamp B Bench

• Wolfcamp C Bench

• Wolfcamp D Bench

• Spraberry

• Cline Shale

• Clear Fork

• Strawn

• Canyon Sands

• Mississippian Lime

• Fussellman

Midland

Basin

Cline

Shale

Wolfcamp

Shale

Spraberry

Trend

Avalon Trend

Wolfcamp Shale

Abo Trend

Yeso Trend

Central Basin

Platform

Delaware

Basin

TEXAS

NEW MEXICO

Bone Springs Trend LUCID

Asset

Coverage

LUCID Development

• Over 450 miles of new

infrastructure

• 500 MMcf/day of new

pipeline capacities

• 4 new plants

• High pressure pipeline system

interconnecting all plants

• Contracted with large

independents and majors

Ahead of Development

LUCID Plant Execution

• Early mover in Cline with Silver 1 (20MMcf/day)

• Early mover in Wolfcamp with Munson (40MMcf/day)

• Rapid expansion with Silver 2 (60MMcf/day)

• Rapid expansion with Big Lake Plant (200MMcf/day)

Gas Processing Capacities

SILVER 1

MUNSON

SILVER 2

BIG LAKE

LUCID Plant Capacities vs Forecast

Gas Processing Expansions

-

100

200

300

400

500

600

700

800

2013 2014 2015 2016 2017 2018 2019 2020

Silver 1 Munson

Silver 2 Big Lake

Silver 3 Big Lake 2

Next Plant Gas Volumes

• Current capacities with Big Lake of

320 MMcf/day

• Additional expansion planned at

Silver for northern growth in 2015

• Big Lake Plant expansion supporting

Wolfcamp development in 2016

• Well inventory of over 10,000

locations on current contracted

acreage

• Additional growth projects active

MM

cf/

da

y

EOY

Midland Basin Gas Characteristics

Nitrogen Rejection Capability

SILVER NRU

• Recent development is high nitrogen

• Legacy production declining

• Cline Shale gas over 5% post

processing

• Wolfcamp gas over 4% post

processing

• LUCID provides flow assurance with

nitrogen treating

• Integrates with LUCID's existing

cryogenic plants

Resolving Crude Oil Constraints

Critical Growth Projects > 850,000 BPD New Capacity

Magellan

• Longhorn Expansions (Gulf Coast)

• BridgeTex ( Gulf Coast)

Plains Pipeline

• Cactus (Corpus Christi)

Sunoco Logistics

• Permian Express II

Enterprise/Enbridge

• Seaway Twin

CORPUS

HOUSTON

NEDERLAND

ST. JAMES MIDLAND

CUSHING

WICHITA FALLS

HOUMA PORT NECHES

Existing Infrastructure

Expansion Project

Crude Quality Considerations

Shift to Crude Oil Gathering

• Eastern Midland Basin crude oil is lighter than

historical production

• New projects specify strict API gravity

requirements

• Condensate blending is increasing the scrutiny

of markets and pipelines

• LUCID's system affords multi-market

accessibility

• Reduces producer's risk of curtailment

• Access to rail facility near-term enhances

competition for the producer contracted/ constructing

in development

Mindset of Service

CUSTOMER

ENGAGEMENT

SINGULAR

FOCUS

RISK ALIGNED

SERVICE FIRST

• Singular corporate focus in the Permian Basin

• Tasked with debottlenecking the Midland Basin

• Track record of execution – on time, every time

• Individual customer attention

• Creative solutions in contracting and execution

• Customers problems become LUCID problems

• In the field with pipe when customers need it

• Ahead of customer needs with plant capacity

• Private sponsorship provides capital risk tolerance

• LUCID is a service company first

• Transparency in communication – no surprises

• Value is created through trust from our customers

Counties in Operation

9

Customer Counterparties

25

Miles of Pipeline Operated

450

Cryogenic Plant Capacity (Mcf/day)

320,000

Acres Dedicated

>1,000,000

Success is a Result of Trust

VISION AT WORK

Lucid Energy Group

Michael J. Latchem

Managing Director & CEO

mlatchem@lucid-energy.com

www.lucid-energy.com