DUG East

November 3, 2010
Caiman Energy: The Foundation

• Skilled Management Team with Significant Shale Experience

• Over $2.5 Billion in New Infrastructure Investment in Barnett and Haynesville
• Crosstex and Regency
• Partners have 90+ years of Midstream Experience

• Solid Organization- Execution Culture Being Developed

• Attracting Top Talent
• Engineering/Operations
• Flat Structure Enables Effective Decision Making

• Well Funded by Investor Group Led by EnCap and Flatrock

• $400 MM Equity Commitment Secured
• Additional Capital Available as Opportunities Develop
• Private Equity Model Provides Financial and Operational Flexibility

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Caiman Energy: Producer Focused
• Independent Midstream Provider
• Not affiliated with an E&P, Interstate or Utility Company
• Fully Producer Focused: Our Only Customers!
• No Internal Competition for Focus or Capital

• Focused on Marcellus Infrastructure Needs Only

• Not Active in Other Plays: Marcellus Focused
• No Legacy Assets to Optimize
• Deals/Infrastructure Structured to Meet Producer Needs

• Full Suite of Classic Midstream Services

• Wellhead/Lateral Gathering, Dehydration, Measurement
• Compression Services
• Condensate Gathering
• Processing/Fractionation

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First Stop: Marcellus Rich Area

 Producers/Capital
Allocators shifting to
liquids-rich plays
 Rich Acreage of
Marcellus is 3,000 –
5,000 sq. miles
 Size of Barnett
Core
 Larger than
Woodford and
Eagle Ford
 $ Billions in Midstream
investments required

Issues:
 Take Away Capacity
 Processing Capacity
 NGL Infrastructure

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Opportunity: Marshall County, WV

• What we “Found”
• Apparent Sufficiency of Infrastructure
• Appalachian Pipelines Constrained
• Processing, But…
• Not Easily Accessible
• Legacy Assets Capacity Constrained
• Commercial Terms Not Producer-Oriented

• Reality: Dramatic Infrastructure

Investment Required
• Rich Area=Capital Intensive
• Take Away Capacity
• Processing/Fractionation Capacity

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Texas Eastern Transmission (TET)

• Critical for Rich Area Development

• TET: A Different Model for Appalachia

• Built as a “Long Line” Transmission Line
• Not a “Traditional” Appalachian Aggregator

• Record of Regional Expansions

• Vibrant Market Area
• Northeast US: Growth
• Regional Market: Static, Declining

• Caiman has (2) 300,000 Dth/day taps

• Taps in C2+ Waiver Zone

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Tennessee Gas: TET Analogy

• Early Marcellus Development

Proximate to Pipeline

• 2010: Volumes Increase 4x

• Caiman View: TET Analogy to

Tennessee Gas Pipeline for
SWPA/NWV
• Timing
• Access

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Caiman – Rich Gas System

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Caiman History

Feb. 2010 May 2010 Oct. 2010

May 2009
Caiman reaches 85,000 Began Cryo Plant Caiman reaches 150,000
Initial Survey of
dedicated acres Construction dedicated acres
Marcellus

2009 2011
Feb. 2009 Nov. 2009 Mar. 2010 Jul. 2010 Dec. 2010
EEIF commits $50 Caiman signs first First well connect to $400MM equity Cryo Plant
MM to Caiman agreement Fort Beeler System commitment secured operational
Energy (AB/Chief)

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Caiman Project Milestones

• $300 +MM for Infrastructure in Marshall and Wetzel Counties

• Over 150,000 Acres in Marshall and Wetzel Counties Dedicated to the Project
• 600 Dth/d Tap on Texas Eastern Transmission
• Rapidly Expanding High-Pressure Gathering System
• Constructed 30+ miles of pipe and related infrastructure
• 50+ miles of additional high capacity pipe under contract/construction

• Condensate Pipeline System Constructed/Expanding

• 120,000 Mcf/d Cryogenic Processing Facility Being Completed
• In Service: December 2010
• 200,000 Mcf/d Expansion Underway: Target 4Q 2011

• 12,500 BBl/d Fractionation Complex On-Track for Summer 2011

• NGL Pipeline to Fractionation Complex Scheduled for Summer 2011

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TAFT

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PICTURES

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PICTURES

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PICTURES

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NGL/Ethane Issues and Options

• Issue #1: Limited Marcellus Fractionation Capacity

• Alternatives:
• Construct New Fractionation Capacity
– New Marcellus Capacity Being Added (Caiman, MWE)
• Transport Y-Grade to Markets
– Pipeline Projects Are Proposed (Sarnia)

• Issue #2: No Local Ethane Market

• Alternatives
• Fractionate Y-Grade Where Ethane Market Exists
• Fractionate Locally, Sell C3+ Regionally, Transport Ethane to USGC
• Blend Ethane, Fractionate C3+ Locally, Sell C3+ Regionally

• Key Questions:
• Will Ethane Demand Keep Up with Supply?
• Will Mt. Belvieu (less T&F) > Gas Equivalence?

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Ethane Economics

• Supply Will Increase Much Faster Than Demand

• Added Fractionation Capacity, Rich Gas Focus Will Increase Supply

• Demand Increasing Much Slower Than Supply (Wells Fargo 10/5/10)

• Past, Present, Future Look at Ethane Economics
• 1995-2010 : Approx. 80% of the time, Blending would be Better Option

• October 22, 2010: 20% Premium to Blending (2011)

• Forward Curve: Frac Spread Below $2.00/Mmbtu ($0.15 or less/gal) in 2012-13

• OPIS study: “[O]ver the next five years, the difference between the Marcellus Shale gas
price and the Mt. Belvieu ethane price could average just 1-20cts/gal.”

2011 Blending Economics

$/gal $/MMBTU
Mt. Belvieu Ethane (1) $0.46 $6.93
Fractionation and Gulf Transport $0.22 $3.32
Realized Ethane Price $0.24 $3.62
Natural Gas (2) $4.34
Blending Advantage $0.72
1. Calendar 2011 swap pricing as of 10/22/10.
2. NYMEX CY 2011 as of 10/22/10 plus $0.20 per MMBTU Appalachia basis.

Source: Wells Fargo

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Blending Rich Gas on TET

• Rich Gas Area: 15% of Marcellus Area

• Really Lean Gas! 2-3% Ethane
• Most Marcellus Mileage in Lean Area
• Substantial Capacity to Blend Ethane

Recent Lean Gas Datapoints in SW PA

• CNX (October 2010 Investor Presentation)

• Greene County EURs range from 5.5
to 9.9 BCF
• EQT (9/29/10 press release)
• Reported an average 30-day IP rate of 22
Mmcf/d and a preliminary EUR of 18 Bcf in
Greene County.
• ATLS (10/13/10 press release)
• Completed a well in Westmoreland County that
reached a Company-record IP rate of 21
Mmcf/d.

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Caiman NGL Strategy

• Continued Expansion of
Processing Capacity
• Blend Ethane with Lean Gas
– Lean Gas Opportunities
– Ample Ethane Capacity in TET
– Gas Equivalency Pricing

• Complete Y-Grade/Fractionation
Projects
– Focus on C3+ Fractionation /Sell
Regionally
– Remain Flexible with Fractionation
Investments

• Active Dialogue with Proposed

NGL Pipelines
• Finalizing NGL Marketing Alliance

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Summary: Caiman Energy

• Caiman: Well Funded, Experienced Midstream Team

• Solely Focused on Producers

• Successful First Year Execution in Rich Gas Area

• TET Take Away Strategy
• High Pressure Gathering System Build out (80+) Miles by 2011
• Ft. Beeler Processing Plant (2010) and Expansion (2011)
• 320,000 Mcf/d Capacity
• NGL Infrastructure in Place for 2011
• 150,000 Dedicated Acres

• Ethane Blending Strategy with Flexibility: Provide Options

to Producers

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Caiman Energy Contacts

• Jack Lafield, President and CEO

• jack@caimanenergy.com
• 214-580-3704

• Rick Moncrief, EVP, Business Development

• rick@caimanenergy.com
• 214-580-3703

• Art Cantrell, VP, Business Development

• art@caimanenergy.com
• 724-754-9369

• Ryan Strawn, Business Development Manager

• ryan@caimanenergy.com
• 724-754-9370

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