Outline of Presentation Management Team Why Ryckman Creek? Reservoir Facilities Location Market Aspects Financial 1
Senior Management Team John Hopper Jeffrey Foutch Luke Saban Mike Seward Chuck Sawyer Darrell Poteet Don Wash Co-founder and former President/CEO of Falcon Gas Storage Company Founder/Co-founder of 4 start-up energy companies, including Peregrine, since 1980 Over 33 years experience in the energy industry, including energy-focused legal practice Co-founder and CCO of Falcon Gas Storage Company and Peregrine Led start-up of 3 other companies engaged in energy, including Peregrine Over 32 years experience in energy industry, with emphasis on gas trading & marketing Former Senior Vice-President and Chief Financial Officer, Falcon Gas Storage Company Financial leadership for 2 operating divisions of JohnsManville, a Berkshire Hathaway Co. 24+ years finance/management experience, including Price Waterhouse and AlliedSignal Former Vice-President, NorTex Operations, Falcon Gas Storage Company Instrumental in developing paradigm for simultaneous gas storage and EOR/NGL operations 30+ Years O&G/gas storage industry experience with Arco, Unocal/Chevron, and others Former consultant to Falcon Gas Storage Company - gas storage and midstream projects Former Exploration Business Leader/Business Development Manager, Western Gas Resources Over 30 years experience in upstream, midstream and downstream energy operations Former Director, Midstream and Pipeline Projects, URS Corporation (Houston) Engineering positions with Enron, Panhandle Eastern (Duke), Tennessee Gas Pipeline (El Paso) 31+ years experience in energy project construction, engineering, management & operations Former Director of Marketing, Falcon Gas Storage Company Led Southwest Marketing and Business Development office for Mirant Americas Over 30 years experience in energy marketing, producer services and business development 2
Historical Project Experience Peregrine Team Successfully Developed 2 HDMC Storage Projects in North Texas Project CAPEX totaled $340 million - 8% over original budget (including incremental scope changes) Actual capacity and operating capabilities exceeded original design scope by more than 30% Included 80+ miles of high pressure pipelines with 750,000 Mcfg/d combined throughput capacity Both Storage Projects substantially completed and placed in service six months ahead of schedule Demonstrated Ability to Produce Oil & NGLs Concurrently with Storage Operations Gas Cycling (storage injection/withdrawal) mobilizes dead (immobile) crude oil in certain reservoirs Gas Cycling also enriches injected pipeline gas through mass transfer NGLs extracted Constructed 2 cryogenic processing/ngl extraction plants at NorTex (140,000 Mcfg/d total capacity) Achieved Maximum Production of ~4,000 b/d Total Liquid Hydrocarbons at NorTex (Oil + NGLs) NorTex Cumulative Production : 588,298 Bls Oil (48 months) and 1,164,915 Bls NGLs (18 months) Original Project Finance and Working Capital Debt Facility Paid in Full Prior to Term Multi-Bank $280 Million construction and term loan facility + $55 million working capital facility Project debt represented approximately 75% of total NorTex capital structure Converted project debt to term loan on-time and in compliance with all debt covenants Entire debt facility fully liquidated in 2010 in connection with Falcon s sale of NorTex Assets Awarded 2007 Project Finance Deal of the Year - North American Oil and Gas 3 3
Gas Storage Facility Northwest Texas Original Facility with Retrofitted Compression New Compression (~12,000 hp) And Gas Handling (450 MMscfd) New 70 MMCFD Cryogenic Gas Processing (NGL Extraction) Plant and Header System We Developed this 12+ Bcf Working Gas HDMC Facility in Northwest Texas 4
Gas Storage Facility Barnett Shale Pipeline Meter Station (1 of 4) Original Facility (with retrofitted compression) 16,570 HP New Compression New Header System & Gas Handling New 70 MMCFD NGL Gas Plant (Cryogenic) We Also Developed this 25-35 Bcf Working Gas HDMC Facility in North Texas 5
Ryckman Creek Project 6
Ryckman Creek Gas Storage Location The Oil & Gas Fields in the Overthrust Trend were developed in the late 1970s thru the mid 1980s. Several of the Overthrust Fields are considered World Class Overthrust Area Uinta County 7
Canyon Creek Ryckman Creek Combining the Two Canyon Creek Compressor Station 4 Miles 16 HP Pipeline Ryckman Creek Field 8
Ryckman Creek Field Discovered in 1976 by Amoco (Now BP) BP/Amoco Drilled 36 Development Wells 7 Nitrogen/Hc Gas Injector/Production wells 27 producing wells (Oil, Gas and NGLs) 2 water disposal wells (Produced water) Reservoir Limits are Very Well Defined Verifiable Production History/Material Bal. Proven Gas Injection and Gas Cycling Capability for ~22 Years (1977 1999) 480 BCF gas cycled during operation Estimated Remaining Oil & Gas Reserves: ~41 Million Barrels of Crude Oil (plus NGLs) ~70 Bcf of Gas (Nitrogen-Hydrocarbon Mix) ~42 Bcf of Solution Gas (HcG In Crude Oil) Oil & NGLs Recovered thru Gas Cycling Fits Peregrine Management Expertise in HDMC Gas Storage & EOR Development 9
RCU #6-300 Core at Top of Nugget Stacked dune sets of cross bedded sandstone 15% Avg Porosity 50 md Avg Perm 10
Horizontal Lateral Location Objectives Stay in the gas cap. Gas is compressible and will help push noncompressible water Orient for maximum deliverability Procedure Orient wells NE-SW to intersect NW-SE orientation of dunes 1,500 lateral Based on modeling Open-hole completion Toe up laterals Accomplishment Wells will flow in excess of 70,000 Mcfd/well 11
Ryckman Creek Gas Storage Project Drilled 6 I/W wells 1,500 HZ Laterals Reconfigured compression for high pressure service Convert meters for bi-directional service Install 60,000 MMcfd NRU plant to ensure gas quality Connected field to compressor station with 16 HP pipeline Add 6,500 HP of new compression for NWPL New 16 line to Ruby interconnect. New electrical substation 12
Ryckman Creek Compressor Facility and PL Interconnects/Meter Stations Existing Kern River, Questar & Overthrust Interconnects/Meter Stations Area for Future ExpansionCompressor Expansion 138 Kv Electric Sub-Station Existing 22,000 HP Electric Drive Compression 3X Expansion Capability (Formerly the Canyon Creek Facility Purchased from Kinder Morgan) 13
Construction of Facilities 14
Construction of Facilities 15
Ryckman Creek Design Scope Project Operating Scope Phase I Phase II HDMC Working Gas Capacity ~35 BCF 50+ BCF Initial HC Pad Gas Requirement ~7.8 BCF TBD Maximum Injection Capacity (MMCFD) ~350 800+ Maximum Withdrawal Capacity (MMCFD) ~480 800+ Maximum Annual Inventory Cycles ~2 2½ - 3 Minimum # of Pipeline Interconnections 5 5 Number of Storage I/W Wells (Horizontal) 6 10-12 Compression 38,850 HP TBD Interconnects: Kern River, Ruby, Northwest, Overthrust, Questar 1.2 BCF TBD 16
Market Aspects 17
Why The Opal Hub? Three Times More Physical Gas Liquidity than the La. Henry Hub Multiple Gas Pipelines 9.5 Bcfd Northern Rockies Export Capacity Market Diversity CA, Desert SW, PacNW, Rockies/Midwest, REX Direct Access to Rockies Gas Supply Major Gas Processing Hub NO AVAILABLE GAS STORAGE DIRECTLY SERVING OPAL HUB 18
Ryckman Creek is Well Connected Opal Hub Ryckman Creek effectively will directly connect to ALL of the Pipelines at Opal*. The Opal Hub has 3 Bcfd of physical gas throughput more than three times that of the Henry Hub Ruby Overthust/REX/WIC CIG/Cheyenne Plains Questar Ryckman Cr. Compression Facilities Ryckman Creek Compressor Pipeline (~4 miles) Ryckman Creek Field *Note: REX and WIC have firm capacity on Overthrust Pipeline. As such, their shippers can nominate on Overthrust Pipeline for receipts and deliveries at Ryckman Creek. CIG (El Paso) has firm capacity on WIC and its shippers also can nominate receipts and deliveries on Overthrust Pipeline at Ryckman Creek. Ryckman Creek Will Become THE Gas Storage Hub for the Western Rockies 19
Marketing Overview Pipeline Interconnects Kern River Pipeline 276 MMcfd Serves markets in Utah (Salt Lake City), Nevada (Las Vegas) and Southern California Top five shippers are LA Dept Water and Power, PacifiCorp, Southwest Gas, CA Dept of Water Resources, So Cal Gas Questar Pipeline 86 MMcfd Serves markets in Utah (Salt Lake City) Top five shippers are Questar Gas Company, PacifiCorp, XTO Energy, EOG Resources, CIG Resources Overthrust/(CIG, WIC, REX, Cheyenne Plains) 344 BCF/D Serves markets in the Rockies, Midwest and East Coast Top five shippers are EnCana Marketing, ConocoPhillips, Ultra Resources, Freepoint Commodities, BP Energy Ruby Pipeline 500 MMcfd Serves markets in California and Pacific Northwest Top five shippers are PG&E, Anadarko, Conoco/Phillips, Shell, BP Northwest Pipeline 45 MMcfd Serves Pacific Northwest Top five shippers are Puget Sound, NW Natural, Cascade Nat Gas, Intermountain, WPX Energy Mktg 20
Regional Pricing Dynamics Opal Market Dynamics Current basis spread narrowed REX & Ruby online Recessionary effect Future basis expected to widen Marcellus impact Gas-on-Gas competition Canadian Gas (GTN) and Ruby Impacting Malin Greater need for storage Underserved market Supply push dynamics Increased demand volatility due to renewables mandates Fuel switching from coal to natural gas for power generation 9.5 BCFD pipeline takeaway capacity in the area Physical Liquidity equal to Henry Hub Opal Hub Forward Natural Gas Prices ($/MMbtu) Forward curve spreads widening Spreads historically widen as they become prompt Forward intrinsic values have been robust current flattening will eventually abate 21
Services Tariff provides for the following types of services; Firm Storage Service FSS Firm Parking Service FPS Firm Loan Service FLP Firm Hourly Balancing Service FHBS Enhanced Interruptible Storage Service EISS Enhanced Interruptible Loan Service EILS Enhanced Interruptible Wheeling Service EIWS Interruptible Storage Service ISS Interruptible Parking Service IPS Interruptible Loan Service ILS Interruptible Wheeling Service IWS Interruptible Hourly Balancing Service IHBS 22
Timeline & Present Status July 2011- Received FERC 7(C) September 2011- Initiated Drilling I/W Wells October 2011- Initiated construction May 2012 Initiated injection of Pad Gas August 2012- Declared Commercial Operations October 2012 Open Season for Apr 13 (8 BCF) November 2012- Projected 20 BCF in Ground ~$230 MM capital successfully deployed over 12 months (groundbreaking to commercial operations) 23
Ryckman Creek Checks All the Boxes Experienced HDMC Gas Storage Development Team Well-Defined Reservoir Excellent History Match Proven History of Gas Cycling Existing Compressor Facility Room for Expansion Existing Pipeline Interconnects & Meter Stations Effective Direct Access to All Opal Hub Pipelines Successful Open Season 29 Bids for 53 Bcf WGC FERC 7(c) Acquired 2Q 2011 Injecting ~250 MMcf/d Finalizing Construction of NRU 24
Financing Ryckman Creek 1. Estimated Capital Cost ~ $270 MM a. Purchase field & native gas b. Permitting costs c. Existing facilities- compressor station, NRU d. Drilling wells, construction of surface facilities 2. Equity Participation a. Original Investors (~ $10MM) b. Private Equity - EQT Partners Infrastructure Fund ($95 MM) 3. Debt Participation a. Syndicate of 5 Banks (~ $160 MM) b. ING, RBC, SMBC,SEB, Natixis Won Project Finance-North American Oil & Gas Deal of the Year 2011 25
Open Season for Additional Capacity Currently in Progress: October 3, 2012 through November 2, 2012 Service beginning April 2013 8 BCF of Capacity 1-4 Turn Service 350 MMcfd Injection Capacity 480 MMcfd Withdrawal Capacity Information Package Available www.peregrinempllc.com 26
Contact Information Peregrine Midstream Partners LLC 3 Riverway, Suite 1110 Houston, Texas 77056 713-974-5600 www.peregrinempllc.com Jeffrey Foutch 713-974-5600 jhfoutch@peregrinempllc.com Chuck Sawyer 303-594-9338 csawyer@peregrinempllc.com Don Wash 713-750-9939 dwash@peregrinempllc.com 27