The 28 th Annual Fuel Oil/Energy Buyers’ Conference

1. The 28th Annual Fuel Oil/Energy Buyers’ Conference Bid Preparation: Suppliers’ Considerations Steven J. Levy October 2008

2. Clean fuels Motor fuels Our Products and Services End Users Resellers Materials Handling Home Heating Fuels Motor Fuels Natural Gas Fuel Oils Coal Bulk Break Bulk Risk Management Lumber Liquid

3. Sprague Energy • Sprague has been focused on the needs of energy consumers and wholesalers for over 130 years. Our vast network of facilities and global expertise have made us a leader in the procurement, handling and delivery of fuel, unique products and management programs and services. • Corporate headquarters in Portsmouth, New Hampshire • Employs 400 people • Annually distributes/handles more than: • 2.5 billion gallons of petroleum products • 170 billion cubic feet of natural gas • 3 million tons of bulk materials • Owns and operates 20 major oil terminals • Throughputs and exchanges at over 50 additional facilities

4. Sprague’s Commitment to Our Customers • Focused on “Doing More” to make our customers successful Premium product designed to help maintain and boost heating systems Premium product designed to help maintain and preserve diesel engine systems year round Fuel source derived from vegetable oils and/or animal fats (Sprague’s source is soybean oil). Domestic, environmentally sound and sustainable. BioDiesel/BioHeat Specialty price protection program designed to allow customers to match real demand to financial instruments. The BTU Options program is designed to leverage the cost gaps between natural gas and oil to lower total cost of energy. Daily natural gas and oil commentaries help customers make informed energy decisions with the two MarketWatch reports. Sprague Real-Time is a web-based tool to allow certified customers access to their information on a real time basis.

7. Contract Term • Months versus years • Product specification • Availability • Storage • Finances

8. Product specifications • ASTM vs. OEM vs. Individualized • Obtain consistent product quality • Meets/exceeds OEM specifications or…… • Meets operability standards • Meets federal, state and local regulations • Quality Control Program to ensure product integrity • Ability to supply with commercially available fungible product or special boutique product requiring special refining, purchasing agreement, storage and delivery practices and guidelines • If so: will product be readily available to obtain, store and deliver to meet demand requirement? • Special injection blending ( lubricity, pour point depressant, biodiesel) • Potential non-conforming product/ warranty issues

9. Supply and Distribution • Product Availability • Special Handling • Ratable versus non-ratable product • weather, economics, equipment availability • Strategically located alternative supply sources • Back-up terminal network supply system • Minimum inventory storage level • Modern delivery equipment and back-up delivery system

10. Supply and Distribution • Spot Market or Specific Contract Supply • Ability to purchase product at multiple terminals • Fungible versus boutique (segregated) • Own or leased storage • Common Carrier or own delivery transports • Segregated or fungible transports • Number of transports required • Product replenishment timing • Potential Union issues • Quality Control Program Requirement

11. Product Costs • Costs: product, transportation to storage, leased storage, inventory cost, cost of money (inventory, hedging, receivable), hedging costs risks, product loss ( distribution and temperature), lab testing, transportation to customer, additives, and ……….. • Special transport (barge or truck) delivery requirements (times of delivery, special training, equipment restraints (meter/pump), union challenges, product testing, etc.) • Ratability • Delivery risks (safe or hazardous conditions) • Demand based upon cost of other commodities, increased load capacity due to weather (too hot, hurricane, snow storm) • Cost to inventory product which may never be used and options to dispose of product

12. Product Costs • Product Lab Testing • Specific requirements/cost/elements and test methods • Inventory hedging • Risk and cost of financial instruments to hedge volatile price swings • Penalties • On time delivery • Off specification • Other benefits to supplying product versus historical customer issues: deliveries, payment, etc.

13. Pricing (acquiring vs. selling) History • Posting mechanism • Firm fixed price • Bulk purchase • Variable • Pricing mechanism familiarity - readily identifiable • Buy versus posting • Reliability of posting in marketplace • History of posting • NYMEX correlation/applicability • Hedging of product and costs associated with financial instruments

14. Financial Considerations • Fund availability to support agreement • Supply and deliver product • Special terms and conditions • Supply payment terms vs. invoiced financial terms • Customer ability to stay within payment terms • Resolution process for potential issue • Margin to support agreement • Product supply costs vs. customer payment terms • Incremental contract benefits • Product acquisition • Terminal • Transports

16. Contact Information Steven J. Levy Sprague Energy 4 New King Street White Plains, NY 10604 Phone: 914.328.6770 Toll Free: 877.723.3425 slevy@spragueenergy.com www.spragueenergy.com