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Natural Gas Midstream December 12, 2012 Brent Breon VP Business Development

Natural Gas Midstream December 12, 2012 Brent Breon VP Business Development. Caiman Energy – Who Are We? . Caiman is a private equity based midstream development company focused on the Appalachian Basin Initial private equity funding of $50 million – February 2009

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Natural Gas Midstream December 12, 2012 Brent Breon VP Business Development

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  1. Natural Gas Midstream December 12, 2012Brent BreonVP Business Development

  2. Caiman Energy – Who Are We? • Caiman is a private equity based midstream development company focused on the Appalachian Basin • Initial private equity funding of $50 million – February 2009 • Increased equity funding to $380 million – July 2010 • Capitalized to $900 million - July 2011 • Built $750 million in Marcellus midstream infrastructure since October 2009 • $680 million in West Virginia (wet gas) • $70 million in Pennsylvania (dry gas) • Sold West Virginia assets to Williams for $2.5 billion – May 2012 • Continue central Pennsylvania operations • Transition services for Williams • Recapitalized with $800 million in private equity in July 2012 • Caiman Energy II • Focused on Utica Shale development

  3. Caiman Energy – Why are we here? • Develop midstream infrastructure for the Utica Shale • Needs are similar to Marcellus Shale • Capital intensive infrastructure preceding cash flows • Limits traditional sources of capital • Ideal for Private Equity • Leverage Marcellus experience

  4. US Natural Gas and Oil Production The development of techniques to produce oil and gas from shales has dramatically increased midstream infrastructure needs across the US. For every $1 spent on upstream activity, a subsequent $.15 to $.35 needs invested in midstream infrastructure

  5. US Natural Gas and Oil Production The Marcellus, Eagle Ford, Bakken, Permian, Cana-Woodford, and Utica Plays will impact conventional sources of natural gas and NGL production but will require significant infrastructure build out Cana-Woodford Eagle Ford Permian Marcellus Bakken Utica Source for map: EIA, 2004.

  6. Everything Midstream and More! • Caiman Energy can complement our midstream services with marketing and commodity transport relationships

  7. Midstream Natural Gas Services Source: Enterprise Products Partners

  8. Example Capital Spend: Ft. Beeler System • Annual Capital Investments • 2010 • $100 million • 2011 • $325 million • 2012 • $525 million • 2013 • $350 million • 2014 • $100 million • 5-year cumulative capex • $1.4 billion • Capex Distribution

  9. Midstream Natural Gas Services • Dry Natural Gas: • Meets interstate gas spec • Below 1100 Btu • Pipeline, compression, meter, and tap • Wet or Rich Natural Gas: • Does not meet interstate gas specs • Over 1100 Btu • Requires processing to remove heavy hydrocarbons • Pipeline, meter, separation, cryogenic processing, and fractionation • Creates the most value from production stream

  10. Midstream Natural Gas Services • Services Utilized by Midstream: • Land Acquisition • Right of Way Acquisition • Environmental Permitting • Pipeline Construction • Gathering • Condensate • Oil • Residue Gas • Plant and Facility Construction • Safety Trailing • Reclamation • Lodging and Catering • Etc.

  11. Gathering Pipeline Pipelines gather natural gas, oil, and condensate to Processing Plant Natural Gas Gathering Well Head Oil/Condensate

  12. Cryogenic Processing Cryogenic processing strips valuable NGLs from the gas stream Residue Gas Processing Rich Gas NGLs

  13. Fractionation Fractionation separates the respective NGLs into discrete purity hydrocarbons Ethane* • Volatile NGL • Market for ethane has strengthened as petrochemicals have increasingly switched to ethane as a feedstock Propane • Various sources of demand: • 25% - residential market • 30% - petrochemical demand • 35% - commercial/industrial/agricultural Fractionation NGLs Butanes • Iso vs. normal butane pricing and liquidity differences • Petrochem feedstock • Ethanol blend stock Pentanes+ • Blend stock of motor gasoline • Highest priced NGL * Ethane may be recovered or rejected by modern cryogenic processors.

  14. Economics of Rich Gas LEAN GAS NETBACK Net to Producer $3.00 NYMEX $3.25 DTI Appalachia $2.75/Mcf 1 Mcf Lean Gas (1000 Btu) 1.00 MMBtu $0.50 gathering fee RICH GAS NETBACK (residue, processed liquids & condensate) $3.25 DTI Appalachia 1.01 MMBtu $3.00 NYMEX $60/Bbl $6.10/Mcf 1 Mcf Rich Gas (1250 Btu) .054 Bbl NGL $80/Bbl $1.00 incremental fees $0.63 gathering fee .015 Bbl Condensate

  15. Thank You EVERYTHING MIDSTREAM Ohio Office: 3500 Massillon Road Suite 280 Uniontown, Ohio 44685 330.546.4609 Brent Breon VP – Business Development Dallas Office: 5949 Sherry Lane Suite 1300 Dallas, Texas 75225 214.580.3700 Scott Williams SVP - Commercial

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