mn_20100525_i07

WEST TEXAS MIDSTREAM FOR SALE14 Miles Of Pipeline & Gas PlantSOUTH PERMIAN Plant Capacity: 5.0 MMCFD Resource Developmental Potential. MIDSTREAMDEAL COULD INCLUDE ACREAGE

G 4353PP

ARKANSAS PRODUCTION/LEASE48-Wells. 25,861-Gross Ac. 18,802 Net Ac.FAYETTEVILLE SHALE. RESOURCE PLAY.Shallower Pay Zone Via Regional-Trend and Faulting.High Organic Content/Thermal Maturity.OPERATED & NonOperated WINet Production: ~1.5 MMCFD HORIZONTALNet Cash Flow: ~$100,000/MnTotal Proved Reserves: 9,207 MMCFTotal PV10 Value: $8,528,000Infrastructure Includes Pipeline in Place.Drill & Completion Per Well: $~1.9MAGENT WANTS OFFERS JUNE 11

PP 4709HZ

FEATURED LISTINGS

All Standard Disclaimers & Seller Rights Apply.

KMP & Copano Energy initiate South Texas joint ventureEagle Ford Gathering will be a 50-50 JV, contracted through 2024

Kinder Morgan Energy Partners and Copano Energy LLC formed a JV to provideTexas midstream services.

The new company is called Eagle Ford Gathering LLC servicing producers inthe South Texas gas shale play. Each operator will provide a 50% investment and 50%participation in the JV. They said they have also extended their existing straddle pro-

cessing agreement and transportation agree-ment through the end of 2024. The compa-nies previously announced a letter of intentfor the joint venture on Nov. 13, 2009.

This project builds on the longstandingpartnerships between Copano and Kinder Morgan to capitalize on the strong and growingdemand in South Texas, Copano Energys president CEO Bruce Northcutt said. This newjoint venture will provide producers in the western Eagle Ford Shale a new, fully integratedmidstream alternative for their gathering, transportation, processing and fractionation needs,including access to multiple residue gas markets.

Enterprise & Duncan expandEagle Ford operations as well

Enterprise Products Partners LPcontinues to work on two gas pipeline proj-ects in the Eagle Ford Shale that it expects toprovide more than 200 MMCFPD ofincremental transportation capacity.The final segment of pipeline thatcompletes the White Kitchen lateral will becompleted in mid-July. The 62-mile lineruns through the heart of the Eagle FordShale in LaSalle and Webb counties andconnects two existing Enterprise 20-inch

lines that lie at the northern and southernedges of the play. Construction is also near-ing completion on the first segment of theeast-west Eagle Ford Shale mainline project,which will connect its South Texas pipelineto the White Kitchen lateral by 2H10.

CEO Michael A. Creel said. Theseexpansions will not only give us the flexi-bility to accommodate more volumes, butshould also position us to capture additionalvalue from the various physical qualities ofthe gas particularly the high NGL contentthat is characteristic of Eagle Ford Shaleproduction.

Hess expanding Tioga gas plant from 100 to 250 MMCFD$350 million expansion project will begin in March 2011

Hess Corp. plans to expand its northwestern North Dakota midstream operations by increas-ing production at its Tioga gas plant in North Dakota to keep up with Bakken formation produc-tion, underlining a broader push for US natural gas that drove ExxonMobil's $30 billion takeover

of US gas player XTO Energy. The project will increase Tioga plant capacity from100 MMCFD to 250 MMCFD. The existing plant was built in 1954, and Hess intendsto begin construction on the expansion project in March 2011 and wrap up in late

2012. Hess also plans to add five rigs to itsBakken fleet in the next 12 months, where thecompany has five working rigs deployed.

Greg Hill, president of WorldwideExploration for Hess says We have four dual lateral wells that weve completed to-date andwhile its still early days, results are coming in as expected on those wells. So, the well costsfor those dual laterals were averaging $10 million to $11 million each. The EUR is about onemillion barrels per well and the 30-day average IP for those dual laterals is around the 1,000barrels per day, so thats 450 to 500 barrels per lateral.

May 25, 2010 Volume 03, No. 07

MIDSTREAMNEWSServing the marketplace with research, insight and transaction opportunities

Hess Corp. also plans to add ve morerigs to its Bakken eet in the next year.

Capacity at Shoups facility in Nueces Co.,TX will increase to 77,000 BOPD.

Copano & KMP amended their existingprocessing and transport agreementthrough 2024.

KMP Continues On Page 2

HESS Continues On Page 11

ENTERPRISE Continues On Page 12

CenterPoint Energy expanding in HaynesvilleCenterPoint Energy Field Services, Inc., a natural gas gathering and treating sub-

sidiary of CenterPoint Energy, Inc., announced two new long-term agreements with EncanaCorp. and Shell to acquire existing facilities and expand them to gather and treat up to 580

MMCFPD of natural gas for the two companies Haynesville Shale production innorthwest Louisiana. The system, to be known as the Olympia Gathering System,will interconnect with CEFS's Magnolia Gathering System, being built to support

Encana and Shell in De Soto and Red RiverParishes. CEFSs total gathering and treat-ment capacity for DeSoto and Red RiverParishes will reach 1.2 BCFPD when allexpansions are in service by mid-2011.

Under the terms of these new agreements, Encana and Shell each can elect that CEFSexpand its facilities up to an additional 520 MMCFPD. The agreements also include vol-ume commitments.

Gathering and treatment services from the acquired facilities started immediately as did newconstruction to reach 580 MMCFPD, featuring more than 180 miles of pipelines, nearly 8,000 horse-power of compression and over 680 MMCFPD of treatment capacity. CEFSs cost estimates for theOlympia Gathering System, including the purchase of existing facilities, will be between $400 mil-lion and $425 million. Depending on expansion elections by Shell and Encana, Centerpoint couldinvest as much as $175 to $200 million for additional facilities.

Total gathering and treating for DeSotaand Red River parishes will reach 1.2 BCFPDwhen expansions are in service by mid-2011.

CenterPoint Continues On Page 17

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MIDSTREAMNEWS Thursday, June 17, 2010Welcome to PLSMidstreamNews,a regular report on

market information, including news and analysison gas gathering, marketing, pipelines, mergers,acquisitions, capital and corporate performance.The report also includes interviews with leadingmidstream and downstream executives.

In addition to the news, this report also containslistings for sale including midstream and down-stream projects and midstream infrastructurecontent. Anonymous listings are coded alpha-numerically. Clients interested in accessing onlylisted package information can call (or email) PLSand provide the listing codes.

Besides the MidstreamNews, PLS covers the en-ergy finance sector in the CapitalMarkets reportand MarketAlerts.

Additional products details can be obtained byvisit our website at www.plsx.com.

MIDSTREAMNEWS

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Cheniere adding liquefaction to Sabine Pass LNG terminalExpected fee for bi-directional services is $1.40-$1.75 per MMBtu

The U.S. Gulf Coast region is outfitting for the LNG export business. Cheniere EnergyPartners is moving ahead with its project to add liquefaction services at the Sabine Pass LNGreceiving terminal in Cameron Parish, La., which will transform the terminal into a bi-directional

facility capable of liquefying and exporting gas in addition to the import and re-gasification of foreign-sourced LNG.

Cheniere expects to take advantage of the existingSabinePass terminal infra-structure to keep customer prices down. Preliminary estimates project the expected fee for bi-direc-tional services in the range of $1.40 to $1.75 per MMBtu. The new liquefaction service will providecustomers with an option to source gas supply from the domestic pipeline grid at prices indexed toHenry Hub.

The company expects exports could com-mence as early as 2015, and plans to make arequest to the FERC to begin the NEPA pre-fil-ing process by the end of June.

We believe current market fundamentals have created an opportunity for the U.S. to offer nat-ural gas to global markets at competitive prices. The U.S. is experiencing an increase in natural gasproduction, primarily driven by unconventional gas plays, while natural gas demand in the U.S.continues to lag behind market projections. Due to the depth of the markets in South Louisiana,with an abundance of supply and existing pipeline infrastructure, we can provide an additional out-let for U.S. natural gas production while offering a low cost source of supply for global buyers seek-ing alternatives to oil-indexed contracts, CEO Charif Souki said. The ability to buy or sell natural

gas in one of the world's most liquid natural gasmarkets provides industry players with a verypowerful tool to manage their portfolios. Wehave begun pursuing contractual arrangements

related to the project and have received favorable preliminary indications of market interest fromboth potential natural gas buyers interested in capacity and U.S. natural gas producers interested incommitting supply to the project. Furthermore, we believe the opening of new markets for U.S. nat-ural gas would reduce price volatility, increase stability in markets, and support continued energyinvestments in the U.S.

Currently, the Sabine Pass site can accommodate up to 4 LNG trains with gas processingcapacity of about 2.0 Bcf/d. The capacity of each liquefaction train would be about 3.5 million tonsper year. The initial project would include two trains with liquefaction capacity of about 1.0 Bcf/d.Additional expansion will be considered based upon customer interest. Cheniere plans to use itsexisting infrastructure (including five storage tanks and two berths at the Sabine Pass terminal, andits 94-mile Creole Trail Pipeline which can be reconfigured as a bi-directional system).

The 853-acre Sabine Pass site is well situated for providing export services due to its largeacreage position, proximity to unconventional gas plays in Louisiana and Texas, and its intercon-nections with multiple interstate and intrastate pipeline systems.

Cheniere is a Houston-based company primarily engaged in LNG-related businesses, andowns and operates the Sabine Pass LNG receiving terminal with a 90.6%-ownership interest.

On June 10, Cheniere let a contract to Bechtel Oil, Gas & Chemicals for design and con-struction of the Sabine Pass liquefaction facilities. Bechtel also designed and built the Sabine Passreceiving terminal.

Bechtel, who built the receiving terminal,also won the liquefaction contract.

Project will allow Cameron Parishfacility to export as well as import LNG.

A note from PLS analystsWhat comes around goes around. That is true for LNG. Eyeing chronic gas oversupply from rising shale production,

several commentators suggest that the U.S. follow the Kitimat model in Canada byconverting domestic gas to LNG for export.

Cheniere Energy Partners wants to capitalize on that very idea byadding liquefaction capability to its Sabine Pass LNG receiving terminal insouthwest Louisiana, creating a bi-directional facility that could export LNGglobally by 2015.

Expansion remains the word in midstream. Enterprise Products Partnerswill build a 140-mile pipeline connecting the oil-rich segment of the Eagle Ford Shale in Karnes and GonzalesCounties, Tex., with the Houston refinery complex. The project will be operational in 2012.

But tough times continue downstream. Low gasoline demand prompted independentrefiner Tesoro to follow the Majors lead by reducing 2010 capex 17% with more cuts possible.

EOG Resources Inc. buys out Galveston LNG Inc.EOG Resources Inc. is buying all the shares of Galveston LNG Inc., which is a

backer of B.C.s large Kitimat LNG project. The price terms of the deal havent been dis-closed, but the Galveston acquisition includes a 24.5% stake in the 300-mile Pacific Trail

Pipelines line that runs from Summit Lake, B.C. to the project site. EOG was oneof the first companies to explore for gas in the Horn River play. Apache Corp.,which holds the Kitimat LNG plant majority interest, is partnered with EOG and

others on the Kitimat project, which is expected to handle 700 MCFD with constructioncosts of about $2.9 billion.

Alfred Sorensen and the Galveston LNG employees deserve credit for taking a greatidea and advancing it to the point where it now has the potential to attract new markets forWestern Canadian natural gas supply not only in the Asia-Pacific region but globally,CEO Mark G. Papa said.

The Kitimat terminal will link to the pipeline system that serves Western Canadas gasproducing regions via the proposed Pacific Trail Pipelines, which in and of itself is a bil-lion-dollar project. Pacific Trail Pipelines is a partnership between Galveston LNG Inc.,Apache and Pacific Northern Gas Ltd, the proposal for which has received environmentalassessment approvals from both the federal and provincial governments.

Tuesday, May 25, 2010 MIDSTREAMNEWS3

PLS Fax: (713) 658-1922

Midstream A&D

Enterprise Products Partners complete purchase of M2 assetsEnterprise Products Partners completed purchase of State Line and Fairplay gas

gathering and treating systems from subsidiaries M2 Midstream LLC. Assets acquiredin the $1.2 billion transaction, located in northwest Louisiana and East Texas, gather gas

from the Haynesville/Bossier Shale play, in addition to the Cotton Valley andTaylor Sand formations. The addition of M2s assets will complement the exten-sion of Enterprises Acadian pipeline system now underway to provide shippers

with takeaway capacity from the growing Haynesville Shale and flexible optionsto reach most attractive markets, plus access to nine interstate pipeline systems.

M2s gathering and treating assets will extend the partnerships integratedvalue chain through future interconnects of these gathering facilities to Enterprises TexasIntrastate gas pipeline system, with supporting deliveries of NGL into the Panola Pipelineand to the partnerships fractionation, storage and distribution complex at Mont Belvieu,TX. The transaction is supported by long-term acreage dedication agreements totaling~210,000 acres plus volumetric commitments from shippers.

El Paso Corp. closes two dealsEl Paso Corp. and Global

Infrastructure Partners (GIP) have closedon the project financing for the RubyPipeline project. The seven year, $1.5 bil-lion debt facility is supported by a group ofdomestic and international banks.

The closing of the Ruby Financingproject represents the deliv-ery of the most significantcomponent of our 2010

financing plan, CEO Doug Foshee of ElPaso said. With the sale of our Mexicanpipeline assets and the recent drop down toEl Paso Pipeline Partners, L.P., we haveeffectively addressed our funding require-ments for 2010.

El Pasos $3 billion Ruby Pipeline proj-ect was approved by the FERC previouslythis year, with construction commencing thisspring pending BLM rights-of-way permis-sion. The pipeline is expected to bea 675-mile, 42-inch interstate gaspipeline with initial design capacityof up to 1.5 BCFD. GIP is investing up to$700 million in the project, and will buy ahalf interest once closing conditions are met.The pipeline will run from an existing supplyhub in Opal, WY to interconnections nearMalin, OR for distribution to markets inCalifornia, Nevada, and Pacific Northwest.

In addition-El Paso closed on previously announced

sale of its interest in the Mexican pipelineand compression assets to Sempra unitSempra Pipelines & Storage for $300 mil-lion. Sale included El Pasos 50% interest ina JV with Pemex, which owns variouspipeline assets in northern Mexico close tothe Texas border as well as a 100% ownedpipeline originating at the Arizona border.

The 675-mile, 42-inch Ruby Pipeline willcarry up to 1.5 BCFD from Wyoming toOregon for West Coast distribution.

Mineral &Royalty

acquisition

432-684-8200www.anthemoil.com

Marathon selling Minnesota marketing franchisesDivestiture includes 74,000 b/d St. Paul Park renery

Marathon Oil Corp. plans to sell its downstream assets in the state of Minnesota for$800 million to ACON Investments LLC, NTR Partners LLC, and TPG Capital LP.

These assets include the 74,000 BPD day St. Paul Park refinery and asso-ciated terminal, 166 SuperAmerica convenience stores, and the SuperMomsBakery, SuperAmerica Franchising LLC, interests in pipeline assets in

Minnesota, and associated inventories. The refinery has 27,100 BPD catalytic crackingcapacity and 18,500 b/d semi-regenerativereforming capacity.

Marathon may receive additional con-tingent payments over several years. Letterof intent stipulates the investment groupwill have a period of exclusivity to work towards negotiation of solid agreements, andMarathon anticipates closing in Q3 or Q4. Marathon might receive additional contingentpayments over a number of years. This divestiture is part of Marathons continuing effortsto ensure asset portfolio stability as a leading integrated refiner. Marathons advisor onthe deal is Morgan Stanley.

Marathon expects to continue to be one of the largest suppliers of finished products inthe Midwest and Southeast through its remaining refining, distribution and marketing sys-tem. This transaction would not affect Marathons brand marketing operations inMinnesota. The company plans to continue to provide reliable refined product supply tothese operations in accordance to agreements with its Marathon brand customers.

The divestitures are part of the Marathonsportfolio stability program, as energymarkets recover.

www.plsx.com

MDU sub plans to expand Williston Basin pipeline capacityMDU Resources Group subsidiary Williston Basin Interstate Pipeline Co. plans to expand

its Bakken pipeline capacity by ~33% in northwestern North Dakota. The proposed expansion addsup to 30 MMCFD to existing volumes from the Bakken play for delivery to Northern BorderPipeline. Facilities will be added to an existing compressor station, and Williston Basin Interstate

Pipeline expects the expansion to enter service in November 2011.The existing Williston Basin Interstate Pipeline extends throughout the Bakken

production area in western North Dakota and eastern Montana, which was completedin 2008, and transports roughly 90 MMCFD of gas from 11 Bakken receipt points. Furthermore,WBI is working with gas producers and processors to add receipt points to the system throughoutthe Bakken region. An open season for the Bakken Expansion Project will run through June 2.

Last month Oneok Partners LP announced plans for construction of the 100 MMCFDGarden Creek gas processing plant in eastern McKenzie County, N.D., and related expan-sions for completion in Q4 2011. Oneoks gas gathering and processing segment will invest$200 million to $205 million in 2010-2011 for new well connections, expansion andupgrades to existing midstream gathering infrastructure in the Bakken.

MIDSTREAMNEWS Tuesday, May 25, 2010 4

Enterprise Products & Anadarko enter NGL dealEnterprise Products Partners LP announced its Enterprise Products Operating

LLC subsidiary entered a six year agreement to provide Anadarko Energy Services Co.with NGL fractionation services. Within the contract, Enterprise will make up to 62,000 bar-rels per day of firm NGL fractionation capacity available at the partnerships fractionation

complex in Mont Belvieu, Texas starting in September.This is our single-largest fractionation agreement in the history of the partnership and

we are very pleased to expand our relationship with one of the country's top independentproducers," said Enterprise CCO A.J. Jim Teague. This agreement serves as yet another exampleof the strategic importance of our Mont Belvieu hub and NGL pipeline infrastructure in providingproducers in prolific basins in the western UnitedStates with vital, value-added midstream serv-ices and enhancing the options available to themthrough our integrated value chain.

Enterprise will have added long-term sup-ply of over 100,000 BPD this year with this contract. To accommodate demand, the company pre-viously announced construction of a new fractionator, expected in Q1 of next year, will increasethe Enterprises NGL fractionation capacity at Mont Belvieu from 230,000 BPD to 305,000 BPD.

Enterprise's Mont Belvieu NGL fractionation complex is the largest of its kind in NorthAmerica with a comprehensive network of pipelines, which provides access to the largestconcentration of refineries and petrochemical plants in the world. The storage facilitiesinclude 34 multi-product underground storage caverns with more than 100 million barrelsof NGL, petrochemical and refined products capacity.

Midstream Projects

Penn Virginia enters East Texas/Mid-Con reservoir services dealPenn Virginia Corp. announced it has entered a one-year agreement with a private

service contractor to provide hydraulic fracturing services in its East Texas and Mid-Continent regions. The agreement commences in Q3 2010.

Corpus Christi-based C&J Energy Services Inc. will provide high-pressurehydraulic fracturing services for one year, primarily in relation to the Lower Bossier(Haynesville) Shale and Cotton Valley horizontal plays in the East Texas region, as

well as, the Granite Wash horizontal play in the Mid-Continent region of the United States.These hydraulic fracturing services have

recently been in short supply, leading to delays inPenn Virginias reservoir completion assign-ments. C&J performed many of Penn VirginiasLower Bossier Shale reservoir stimulations.

We are pleased to announce this fracturing agreement with C&J, who will provide a high-quality fleet of equipment and services to Penn Virginia. As discussed in our first quarter 2010update, production in the first quarter was affected by equipment-related delays in well comple-tions in East Texas and the Granite Wash play and such effects are expected to continue into thesecond quarter, CEO A. James Dearlove said. With the signing of this agreement, we will havereliable access to the equipment and services we need to complete the backlog of wells drilled,together with wells to be drilled in the second half of 2010 and through the first half of 2011.

C&J aims to shore up demand for hydraulicfracturing reservoir treatment services in theHaynesville, CV, & Granite Wash horizontal plays.

Contract includes 62,000 b/d rm NGLfractionation capacity at Mont Belvieu, Tx,starting around Christmas.

E.ON AG says gas sectorfacing challenges

E.ON AGs CEO Johannes Teyssenwarned that that the companys gas businesswill continue to face challenges in the years

to come due to persistentbroader economic problemsand energy prices remaining

below pre-crisis levels. This is particularlytrue in the industrial segment and the gaswholesale business, which is under consid-erable pressure not only from the recession-related drop in demand but also from a sup-ply surplus on the spot market, Teyssensaid in the companys 1Q10 report.

E.ON AG recently forecast flat-to-slightly-higher full-year earnings amideconomic uncertainty in response to its7.3% drop in net profit (including animpairment charge on recently divested U.S.power and gas operations). However, follow-ing a strong operations-based performancein 1Q10, the German utility said its 2010forecast was looking increasingly conser-vative. Citing strong performances for itsretail business--particularly in the U.K.--andimproved results at E.ON Energy Trading,E.ON saw a 20% increase in 1Q10 adjustedEBIT to 3.7 billion euros, compared with3.1 billion euros a year earlier. More volatileearnings are expected in 2010, with growthin the U.K. retail business expected to decel-erate during the rest of 2010.

Global gas prices projected to remain lowthrough 2010.

For more insight and analysis on energy finance look foryour email MarketAlertSubscribe by calling Susan Coburn at(713) 650-1212

Capital

MarketAnalysis


www.plsx.comPLS Fax: (713) 658-1922

Hegh LNG & KBR enter into long-term FPSO dealHegh LNG and Kellogg Brown & Root executed an agreement for the long-term

FPSO cooperation, by which KBR will be Hegh LNGs enduring topside engineeringpartner for Heghs FPSO projects.

The first phase of the cooperation will involve KBRs performance ofstudies and front-end engineering and design as instructed by Hegh. Thescope of the second phase to be undertaken by KBR will include execution of

topsides, detailed engineering and procure-ment services, project management servicesand construction management, and integra-tion and commissioning supervision as maybe required for each specific project.

This agreement with KBR further strengthens our LNG FPSO capabilities. InJanuary we teamed up with Prosafe Production, now we also have the worlds leading LNG

Engineering and Construction Company, with more than 50% of theworlds LNG Liquefaction trains and outstanding FPSO project experi-ence to its credit as part of our team, Hegh CEO Sveinung J. Sthle

said. We now have the competence, experience and track record in all the key elementswhich ultimately goes into an LNG FPSO, from early design stage through execution,implementation and finally operations. This put us in a unique position as the preferredservice provider for this new market segment.

Hegh joined with Prosafe Production inJan., the team will conduct front-end/designwith KBR for in the global FPSO market.

TransCanada & XOM hold Alaska Pipeline open seasonThe Alaska Pipeline Project commenced the first gas pipeline open season to develop

Alaskas North Slope resources last month. Separate but coordinated open seasons will beconducted simultaneously in Alaska and Canada.

The pipeline is a joint effort between TransCanada Corp. and ExxonMobilunder the purview of the Alaska Gasline Inducement Act.

The open season offering will be assessed by potential shippers from April 30through July 30. The project has provided information to potential shippers in Alaska andCanada on its anticipated engineering design, commercial terms, estimated projects costsand timelines. Shippers will assess this information and determine their interest in makinglong-term, contractual commitments to reserve capacity on the pipeline.

Two options will be provided in the Alaska Pipeline Project open season. The firstoption is a pipeline from Alaska's North Slope, through Alaska, the Yukon Territory andBritish Columbia, to Alberta, Canada a distance of about 1,700 miles (2,737 kilometers)where the gas can be delivered on existingpipeline systems serving major NorthAmerican markets.

The second option would transport nat-ural gas from the North Slope to Valdez,Alaska a distance of approximately 800 miles (1,287 km) where it would be convertedto liquefied natural gas in a facility to be built by others and then delivered by ship to NorthAmerican and international markets. Both options would provide opportunities for Alaskacommunities to acquire natural gas from a minimum of five delivery points on the pipeline.

The Alberta option would additionally provide the opportunity forlocal natural gas deliveries in Canada.

A gas treatment plant and Point Thomson natural gas transmis-sion pipeline are components of both options. The GTP would be built next to the NorthSlope's Prudhoe Bay facilities to treat the gas so it can be shipped on the pipeline. A ~58mile pipeline would connect the natural gas supplies of the Point Thomson field to the plantand pipeline. Only one of the two project options will advance and it is anticipated that theresults of the open season will determine the preferred option.

TransCanada expects full subscription through bids this summer as it negotiates withshippers for its proposed Alaska gas pipeline.

The project faces several challenges, primarily low gas prices and a competing projectproposal from BP PLC and ConocoPhillips. BP and ConocoPhillips have plans to moveto open season later this year.

The TransCanada/ExxonMobil proposalis in healthy competition with a similarBP/ConocoPhillips proposal.

Call PLS at (713) 650-1212 to place your listing, or visit www.plsx.com

Haynesvilles KinderHawkField Services JV deal closes

The $875 million JV deal betweenKinder Morgan Energy Partners andPetrohawk Energy has closed, marking thearrival of KinderHawk Field Services in the

Haynesville play.KMP paid cash a 50%

stake in HKs gathering and treatment busi-ness in the Haynesville Shale, creating thelargest gathering and midstream business inthe northwest Louisiana Haynesville region.The resulting KinderHawk Field Servicesunit has an enterprise value of $1.75 billion,according to PetroHawk.

The deal comprises some 170miles of pipeline currently in serviceand is expected to increase to about 375 milesof pipeline with a projected throughput ofabout 800 MMCFPD by the end of this year.The system's amine treating plants includedin the transaction have a projected capacity of2,635 gallons per minute by the end of thisyear. The joint venture received a life of leasededication to transport and treat all ofPetrohawk's operated Haynesville andBossier Shale production in Louisiana atagreed rates, as well as minimum volumecommitments from Petrohawk for the firstfive years. The new company will be staffedby personnel from both companies and willconcentrate on providing firm service tothird-party shippers. Ultimately the JVexpects to have about 2.0 BCFPD mainlinethroughput capacity. Petrohawk will use theincome to increase liquidity.

Freeport LNG Developmentsale closes

Zachry Hastings InfrastructurePartners LP closed on its purchase ofFreeport LNG Development LP. The fundowns now a 30% stake in the Freeport opera-tion, having bought the stake from CheniereEnergy Inc., as well as an additional 25%from a separate seller.

Financial terms werent disclosed.Zachry, part of a San Antonio-based group ofcompanies, is a JV between Zachry AmericanInfrastructure and Hastings FundsManagement Inc. The firm builds infra-structure to include that of power plants andLNG terminals. Its management is whollyowned by Westpac Banking Corp. subHastings Funds Ltd. of Australia.

Cheniere is a Houston-based companyprimarily engaged in LNG related operations,owning the Sabine Pass LNG receiving ter-minal and Louisianas Creole Trail pipeline.

Midstream Closings


www.plsx.com Call PLS To Place Your Listing: (713) 650-1212

PricingWTI crude troughed at $69.38; BHI rig count o by two

Gas prices increased across market spots in the continental United States with fewexceptions for the week ended May 12. The Henry Hub gas spot price went up ~2% sinceMay 12 from $4.18 per MMBTU to $4.28 per MMBTU.

At the NYMEX, the price of the June 2010 futures contract fell about 3%, from$4.284/MMBTU to $4.158/MMBTU.

The West Texas Intermediate crude spot dropped about 8% from $75.65/barrel to$69.91/barrel. On May 11, the WTI price settled at $69.38 per barrel, its lowest price sinceSeptember 2009. Working gas in storage increased to 2,165 BCF as of Friday, May 14, fol-lowing an implied net injection of 76 BCF.

Baker Hughes active rig count totaled 951 for the week ended May 14, reflecting adecrease of two rigs compared with the previous week ended May 7.

Regional Spot Prices for Natural Gas

Source: NGIs Daily Gas Price Index (http://www.intelligencepress.com)

Spot Prices Thu. Fri. Mon. Tue. Wed.($ per MMBtu) 13-May 14-May 17-May 18-May 19-MayHenry Hub 4.26 4.27 4.34 4.42 4.28New York 4.60 4.58 4.74 4.83 4.67Chicago 4.34 4.33 4.41 4.49 4.32Cal. Comp. Avg.* 4.18 4.18 4.27 4.33 4.20Futures ($/MMBtu)June Delivery 4.339 4.312 4.398 4.342 4.158July Delivery 4.440 4.409 4.489 4.436 4.246*Avg, of NGIs reported average for: Malin, PG&E citygate and Southern California Border.

Estimated Average Wellhead Price

Source: Energy Information Administration, Oce of Oil and Gas.

Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10

Price ($ per Mcf) 3.64 4.44 5.14 4.89 4.36 3.92

Price ($ per MMBtu) 3.54 4.31 5.00 4.75 4.24 3.81Note: Prices were converted from $ per Mcf to $ per MMBtu using an average heat content of 1,029 Btu per cubic foot as published in Table A4 of the Annual Energy Review 2008.

Current Natural Gas Stocks by Region

Source: Energy Information Administration: Form EIA-912, Weekly Underground Natural Gas Storage Report, and the Historical Weekly Storage Estimates Database. Row and column sums may not equal totals due to independent rounding.

Estimated Percent Current One-Week Implied Net Prior 5-Year DifferenceStocks Prior Stocks Change from (2005-2009) From 5 Year

All Volumes in Bcf 05/14/10 05/07/10 Last Week Average Average

East Region 992 958 34 872 13.8

West Region 359 344 15 278 29.1

Producing Region 814 787 27 707 15.1

Total Lower 48 2,165 2,089 76 1,857 16.6

Midstream Briefs Western Gas Partners LP is offering

4 million common units representinglimited partner interests, and granting

the underwriting banks a 30-dayoption to buy another 600,000more common units. Western

Gas plans to use the anticipated proceedsfor debt service under its $350 millionrevolving debt program. UBS, Citi andMorgan Stanley are the joint bookrunners.

NuStar Energy is opening a new 32-acre, $100 million corporate oce in SanAntonio. The company bought the tract ofland at a northside area of town known asThe Rim where the 300,000-square-footstandalone building will be erected. Thecompanys current oce is currently at theHeritage Oaks Oce Park, where it leasesan 84,000-square-foot building from R.L.Worth & Associates.

Magellan Midstream Partners LPsQ1 was up as revenue jumped. Thecompany forecast earnings per limitedpartner unit of $2.69 for 2010 and $0.64 forQ2. Increased revenue has well oset loweroperating margins. Magellanreported a prot of $64.5 million,$0.60 per unit, up from $41.2million or $0.30 cents per unit in 2008.Revenue soared 55% to $329.7 million onhigher fees and rates. Analysts had mostrecently forecast $281 million.

InterOil Corp. has initiated Front-EndEngineering and Design work with its jointventure partner, Mitsui & Co. Ltd. leading

to a contract for the design andconstruction of the proposedcondensate stripping facility. Civil

works investigation and eld datagathering in support of FEED areproceeding simultaneously.

Valero Energy Corp. is investigating thecause of a re that struck the companysrenery near downtown Memphis. Theincident occurred in the selectivehydrogenation unit. On Friday Valero ocialssaid a damage assessment isunderway. The U.S. Coast Guardresponded and veried that nochemicals were released into the waterways.Preliminary indications are that damage to theunit is minor, and no other units wereaected. Valero is not expecting anydisruption to the fuel supply from the renery.



Midstream ProjectsGenesis Energy enters Allegro midstream logistics contract

Genesis Energy LP has contracted Allegro Development Corp. for its Allegro 8platform to manage its crude gathering and refined products operations. The contract willprovide Genesis with improved visibility into crude purchases, physical logistics, refiner

services, storage and hedging activities along with the flexibility to scale withGenesis future growth.

The Allegro 8 logistics platform offers improvements in speed and accuracy inDOI and revenue distribution to royalty interest owners, as well as improvements in speedand accuracy in heavy liquids and storage assets with derivatives transactions trading.

Genesis Energy LP is a growth orientedpartnership focused on U.S. Gulf Coastmidstream segment. Its operations andassets include sulfur removal refinery, serv-ices, pipelines, storage tanks and terminals,trucks and barges, as well as expedition of DOI and revenue distributions, hedge manage-ment for midstream partnerships, and integration of Oracle Financials using its ERPConnect product line.

Genesis is a Houston-based diversified midstream energy MLP, divided into a PipelineTransportation Division, a Refinery Services Division, a Supply and Logistics Division,and an Industrial Gases Division.

CB&I takes $280 million contract for processing plantOccidental of Elk Hills Inc. awarded Houston-based CB&I a $280 million contract

for a gas processing plant at Central Californias Elk Hills oil and gas field. CB&I will pro-vide engineering, procurement and construction for the 200 MMCFD gas plant that will

provide fractionation, liquids storage and export pipelines.Further, CB&Is Lummus Technology sector will provide its NGL-

Max recovery technology. The project is scheduled for completion in Q1 orQ2 of 2012. CB&I designs, engineers andconstructs some of the worlds largestenergy infrastructure projects, providing thefull spectrum of EPC solutions and provenprocess technologies. The company is divided into CB&I Lummus to build upstream anddownstream oil & gas projects, LNG terminals and projects of the like; CB&I Steel PlateStructures builds storage and containment vessels for oil & gas, water & wastewater, min-ing, and nuclear industries; and Lummus Technology applies processing, catalyst and spe-cialty equipment technology.

The CB&I contract is worth $280 MM forfront-end design on the 200 MMCFD plant.

Genesis will apply Allegros crudegathering & rened products logisticsplatform.

TransCanada Keystone XL crude permit alteredTransCanadas permit to bury a crude line across western South Dakota has been

modified with regard to how it will deal with HAZMAT materials. The company had askedfor the permit to change.

The TransCanada Keystone XL pipeline would deliver up to 900,000BOEPD from tar sands near Hardisty, Alberta, to Gulf Coast terminals and refiner-ies in Texas. It would enter South Dakota from Montana in Harding County and

run through Butte, Perkins, Meade, Pennington, Haakon, Jones, Lyman and Tripp countiesbefore entering Nebraska. TransCanadaKeystone is already building anotherpipeline through eastern South Dakota todeliver Canadian crude oil to refineries inIllinois and Oklahoma.

The 313-mile South Dakota portion is estimated to cost $920 million and the companywants to begin construction next year. Much of Tuesday's discussion dealt with spills of haz-ardous materials and the discovery of dinosaur fossils during construction. Part of the route runsthrough an area where Tyrannosaurus Rex fossils worth millions of dollars have been found.

The PUC clarified the permit to require TransCanada to bear the cost of dealing withfossils uncovered during construction, including the cost of removing the fossils or chang-ing the route to avoid damaging them. But if landowners want extensive work to have fos-sils removed (perhaps so they can be sold), the landowners must pay that cost since theywill benefit, the PUC said.

TransCanadas Keystone XL pipeline willrun bitumen crude to the GOM from Canada.

Midstream Briefs A re struck one of Shells major crude

lines (the Trans Niger pipeline) in Nigeriassouthern delta, and Shell isinvestigating what caused the re.Eni SpA resumed daily production

of 12,000 BOPD in the Niger Delta. Two crude units at LyondellBasells

268,000 b/cd refinery in Houston will beout of service for four weeks subsequentto a May 17 fire. Both units run heavyheavy crude. The fire was confined to thecrude unit and extinguished in less thanan hour, with no injuries.

Enterprise Products and Anadarkoreceived the Distinguished AchievementAward presented by the OffshoreTechnology Conference for theirgroundbreaking Independence project inultra-deepwater Gulf of Mexico.

Williams Co. and Williams PartnersLP will host an Analyst Day to include in-depth presentations anddiscussions on the companysgas businesses. Some of thepresentation topics will include: Strategicoverviews of Williams and WilliamsPartners LP.

PAA Natural Gas Storage received thenecessary regulatory approvals and hasplaced cavern well #3 into service at itsPine Prairie storage facility. This 10 Bcfcavern increases the Partnerships workinggas storage capacity at Pine Prairie byapproximately 70% from 14 Bcf to 24 Bcf andincreases the Partnerships aggregate workingcapacity by 25% from 40 Bcf to ~50 Bcf.

Canadas National Energy Boardhas approved a new gas plant to serveincreased shale gas production from theHorn River Basin in B.C. Spectras EnergyCorp. Field Services subsidiary will buildthe 250MMCFD Fort Nelson North gasprocessing plant on about 200 acres 75kilometers northeast of Fort Nelson B.C.

Your Full Service

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Baker Hughes installs subsea boosting systems at PerdidoBaker Hughes has installed Centrilift XP electrical submersible pumping (ESP) sys-

tems designed to boost up to 125,000 b/d of fluid at Shells Perdido facility in the U.S.Gulf of Mexico. The 1600-horsepower ESP systems, designed to overcome the challenge

of lifting liquids 8,000 feet from the seafloor to the production platform, aredeployed in two vertical subsea boosting stations located on the seabed.

Perdido, which began producing in late 1Q10, is the world's deepest application offull-scale seabed separating and boosting systems, installed in five, 350-foot caissonsconnected directly to the platform's production risers. Each caisson is located near thespar production facility and is equipped with cylindrical-cyclonic gas separation systemsto separate natural gas entrained in the fluids before the fluids enter the ESP system. Theboosting systems handle production fromthree subsea satellite fields tied back to thePerdido spar (Great White, Silvertip andTobago).

Shell designed and is the operator ofPerdido with a 35% working interest. Its partners are Chevron (37.5%) and BP (27.5%).The spar is on Alaminos Canyon block 85. In 2007, Baker Hughes was awarded the con-

tract for 5 enhanced run life systems, engineering design and qualification andtesting services for Perdido. The remaining three ESP systems are scheduled forinstallation later this year.

Reliable ESP performance is critical to the overall success of Perdido in the Gulf ofMexico and BC-10 offshore Brazil, said Ernst den Hartigh, VP of technical support,Shell Deepwater. Richard Williams, president of Baker Hughes GOM operations, addedPerdido was an extremely complex project, requiring years of joint research and devel-opment with Shell to design reliable seabed boosting systems capable of handling the pro-duction challenges at ultra-deepwater fields.

Midstream Projects

NuStar buys Denham midstream assets for $44.1 millionNuStar Energy LP is buying Denham Capital's Asphalt Holdings Inc. for $44.1 mil-

lion. Denham is an energy/commodities-focused, privately held equity form, and the assetsinvolved comprise midstream operations related to receipt, storage and distribution of

asphalt and crude via marine vessels, barges, tank trucks and rail. NuStar isgaining three storage terminals in the deal including 24 tanks with a sumcapacity of about 1.8 MMBBL. Further, the terminals have rail and truck

loading docks and three sea docks.The facilities acquired are on 17 acres

on Blakely Island on the east bank of theMobile River, and 28.5 acres at the Port ofChicksaw. Acquiring the three storage terminals allows us to add to our already attractiveset of fee-based assets in the U.S. Through this acquisition, we expand our terminal pres-ence into a new market in the U.S. Gulf Coast and have the opportunity to expand into newasphalt markets as well, CEO Curt Anastasio said. This is the sixth investment success-fully exited by the Denham Energy Infrastructure Group in 2010, so far.

The San Antonio based NuStar is a publicly traded MLP with 8,417 miles of pipeline,89 storage facilities, and two asphalt refineries with a combined throughput capacity of104,000 b/d. It is one of the largest asphalt refiners and markets in the United States andthe second largest independent liquids terminal operator. Foreign operations include theNetherlands Antilles, Canada, Mexico, the Netherlands and Britain. Its combined systemhas 93 million barrels storage capacity, two asphalt refineries, and pipeline, terminals,products and crude infrastructure.

Denham has $4.3 billion of invested and committed capital, and typically targets invest-ments between $50 million and $250 million.

This is Denham Energys sixth successfuldivestment in 2010, so far.

Increase Deal Flow & Business Opportunities: For subscription details call (713) 650-1212 or visit www.plsx.com

Three more ESP systems are scheduledfor installation in 2010 at the AlaminosCanyon block 85 spar.

Networking! Industry Events.

For more events please visitwww.plsx.com/calendar

Haynesville Eagle Ford Unconventional PlatformWorkshopMay 26, 2010Hyatt Regency - Houston, TXwww.info.drillinginfo.com

Khurais Field DevelopmentMay 26, 2010Petroleum Club- Houston, TXwww.spegcs.org

Intro to Midstream OilMay 27, 2010Brookhaven College- FarmersBranch, TXenergy.pdi.org

ADAM Speaker MeetingJune 02, 2010Hollytree Country Club- Tyler, TXwww.adamhouston.com

5th Annual Oil & Gas ShaleDeveloperJune 03-04, 2010Hilton Americas- Houston, TXwww.shaledeveloper.platts.com



Midstream ProjectsEnterprise adding 140-mile crude line at Eagle Ford

Enterprise Products Partners LP is expanding its midstream operations in the Eagle Fordplay, and will build a 140-mile crude pipeline from Karnes County to Austin County. The linewill interconnect with Enterprise's existing crude system in Austin County and will be supported

by a long-term transportation agreement with a major Eagle Ford Shale producer.The company is also in discussions with several other producers regarding crude

transport services through additional pipeline connections along the way. The endmarket for this crude line system is Houston-area refiners and the major Cushing, Okla. stor-age hub via the Enterprise-operated Seaway pipeline. The new crude line will accommodategrowing Eagle Ford production; the project also includes trucking logistics, with two deliverypoints in Karnes County and a third to be builtin Gonzales County. The project is due forcompletion in the fourth quarter of 2011.

"Our existing crude oil system, which weacquired in the TEPPCO acquisition in 2009 enables us to quickly and cost efficiently expandthe system to serve producers in the Eagle Ford. This project provides Enterprise an opportu-nity to diversify our operations while taking advantage of the complementary nature amongour crude, gas and NGL businesses. Our ability to use the partnerships vast South Texas infra-structure network as a foundation to pursue incremental projects should enable the partnershipto earn attractive returns on capital by generating incremental cash flow while limiting ourcapital costs," CEO Michael A. Creel said.

The letter of intent on this deal also contains a gas portion which includes a seven-yeartransport and processing agreement, as Enterprise is developing significant additions to itsgathering, processing and storage system as well as its NGL transportation and fractionationnetwork that serves South Texas producers. Enterprise also recently announced initiatives toincrease NGL fractionation capacity at its Mont Belvieu, Shoup and Armstrong facilities (asdiscussed on pg. 1 in this edition of MidstreamNews).

Enterprise provides midstream energy services to producers and consumers of gas, NGL,crude, refined products and petrochemicals, with assets of 49,100 miles of onshore and offshorepipelines, ~190 million barrels of liquid storage capacity and 27 BCF gas storage capacity.

Karnes Co. to Austin Co. line will link EagleFord crude with Houston-area reneries.

Demands for downstreamchemicals to top $7 billion

Demand for chemicals used in domesticrefineries is expected to increase by 5% peryear to $7.1 billion by the year 2014.Although refined-product output likely willdecline throughout the same period, demandfor refinery chemicals will be supported byuse of new and higher value products thatenhance performance. In addition, refinerswill continue to subject their products tohigher levels of chemical treatment in orderto remove more impurities. That trend willalso support chemical demand in refineries.

Market gains will result primarily fromabove-average increases in the large mer-chant-hydrogen segment, due to rising useby refiners trying to supplement their cap-tive hydrogen production. According to anew study from the industry research firm,Freedonia Group, Inc., Merchant hydro-gen will remain the largest and fastestgrowing product in the U.S. refinery chem-ical market, with environmental regula-tions to reduce sulfur in fuels continuing topromote the use of hydrotreating.

Production increases inCanyon Express Hub pipelines

Production from the MississippiCanyon Block 217 No. 3 well beganthrough the Canyon Express pipeline at a

gross rate of 35 MMCFPDin March 2010. ATP Oil& Gas operates the

Canyon Express Hub with a 50% or greaterworking interest in the wells and associ-ated pipelines.

Production resumed from the No. 3and No. 4 wells at the ATP-operatedAconcagua field on Mississippi CanyonBlock 305. Production from the wells is at acombined rate of 30 MMCFPD, bringingproduction at ATPs Canyon Express Hub toaround 65 MMCFPD. ATP intends to spudan additional well at Mississippi CanyonBlock 305 during 2Q10.

U.S. renery feedstock up in 2010 due todemand for higher levels of chemicaltreatment/purication.

Ryckman Creek Gas Storage Project coming to WyomingPeregrine Midstream Partners LLC subsidiary Ryckman Creek Resources LLC,

has received approval to use the FERCs pre-filing review process with respect to itsRyckman Creek Gas Storage Project.

Ryckman Creek Gas Storage Project is a new interstate gas storage developmentnear the Opal Hub in Uinta County, Wy. The project involves converting existing par-tially depleted field known as the Ryckman Creek Nugget Unit into a gas storage

field. First phase working gas capacity is being designed for 25 BCF of high deliverability,multiple cycle gas storage. Phase oneincludes maximum injections exceeding200,000 MCFD and maximum withdrawalsof ~360,000 MCFD.

Ryckman Creek is ideally located nearthe Opal Hub where it can serve a large number of producers, shippers and markets,Peregrine Project Development Vice President Chuck Sawyer said. The project's naturalgas storage services will meet existing and anticipated demand for firm, peak day, load fol-lowing, balancing, and seasonal storage services to natural gas markets throughout theMidwest, Rocky Mountains and Western U.S. This will be the largest independently-ownedgas storage project serving the Opal Hub area.

Ryckman Creek Resources intends to file an application for certificates of publicconvenience and necessity in fall 2010 to construct, own and operate the project, and tocharge market-based rates for services it will offer.

Ryckman plans to conduct a non-binding Open Season to gauge prospective customerinterest in fall 2010. Construction on the project will start upon receipt of the certificate, antic-ipated in spring 2011, with an in-service date by April 2012. Parties submitting a proposal tothe planned Open Season will be expressing an interest in contracting for storage services tocommence in April 2012 or later. Rates, including fuel retention percentages, will be negoti-ated market-based rates and will be determined after the Open Seasons conclusion.

An open season will occur in the fall,construction begins next year and in-serviceis expected by April 2012.

List with PLS. It Works!For details contact Ross Benoche at [email protected]

Reid Strand, [email protected] / www.plsx.com (713) 600-0155

The M&A Transactions Database is an invaluable tool for professionals engaged inupstream oil and gas transactions. Whether youare an industry executive, part of an E&P M&Ateam, an investment or commercial banker, privateor public equity investor, or consultant, the M&A Transactions Database will help you identify market values, partners, clients, buyers andother new opportunities.

The PLS database is highly competitive with otherleading databases in the marketplace.

Comprehensive deal coverage Our team of analysts scour the public domain tobring comprehensive deal coverage on asset, corporate, JV and acreage transactions in a conciseand comparable format. Standard comps andbenchmarks are established for $/BOE and $/Daily BOE, among others.

U.S. M&A DatabaseThe U.S. M&A database is designed for those activein the U.S. markets. The database includes analysison individual deals, regional analytics, deals in playas well as the original source documents.

Global M&A Database The Global M&A database is designed for those active in Canada and internationally. Great care istaken to present the data on a comparable basis.Included are individual deals, 1P, 2P and 3P analyses, deals in play, and more.

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El Paso subsidiary gets FERC approval for 300 Line ProjectEl Paso Corp. announced today its subsidiary Tennessee Gas Pipeline Co. received

FERC approval for its 300 Line Project in the Appalachias. This expansion, along with ourNortheast Upgrade project, represents approximately $1 billion of projects that will provide

much needed infrastructure related to the development of Marcellus Shale andAppalachian natural gas supplies, said Tennessee Gas COO Bryan Neskora.

The 300 Line Project is fully subscribed under a 15-year contract is sched-uled to be in service next November. It involves the looping of ~127 miles of 30-inch pipelinein Pennsylvania and New Jersey with another ~55,000 HP coming along with the installationof two new compressor stations and upgrades at seven existing compressor stations.

Midstream RegulationNorthernStar suspends Oregon LNG development

NorthernStar Natural Gas of Houston is suspending development of its BradwoodLanding LNG terminal near Astoria, Ore. The suspended project has a design capacity of1.3 BCFD into Northwest U.S. markets and a 36.3-mile pipeline. The project is one of threeLNG plants proposed for the state of Oregon.

NorthernStar President Paul Soanes said the delays are because of a tough invest-ment market warding off investors. Work on the Bradwood Landing project began sixyears ago on the site of the former Bradwood lumber mill with a natural deepwater

port on the Columbia River in Clatstop County. The U.S. Coast Guard last spring declaredthe river could be made suitable for LNG marine traffic, and the project previously receivedFERC approval in September 2008 after years of scientific and technical review.

Bradwood Landings withdrawal from the LNG terminal scene in Oregon leaves twosimilar projects facing the same ilk of publicopposition: Oregon LNG would build andoperate a terminal with berthing and threefull-containment, 160,000 cubic meter tankson the Skipanon Peninsula in Warrenton,Ore. With completion targeting early 2013, the terminal is designed to operate by toll.Subsidiary Oregon Pipeline plans a 120-mile pipeline connected to a hub in Molalla, Ore.

The second remaining project, Jordan Cove Energy Project, would install a terminal onan undeveloped site within the Oregon International Port of Coos Bay that would have 1.0BCFD normal sendout, and peak 1.2 BCFD. The Jordan Cove project also plans two 160,000cubic meter full-containment tanks and NGL recovery capability.

The Bradwood Landing LNG project hasrun into severe environmentalist ack, ashave other proposed LNG projects in Oregon.

NYMEX Natural Gas Futures Near - Month Contract SettlementPrice, WTX Intermediate Crude Oil Spot Price & Henry Hub Natural gas Spot Price

Note: The West Texas Intermediate (WIT) crude oil price, in dollars per barrel, is converted to $/MMBtu using a conversionfactor of 5.80 MMbtu per barrel. The dates marked by vertical lines are the NYMEX near-month contract settlement dates.

Source: Natural gas prices, NGIs Daily Gas Price Index (http://intelligencepress.com), WTI price, Reuters News Service(http://www.reuters.com)

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CapitalMarketsThe latest news articles online:

Deepwater accident likely to stymie futureinvestment

Majors make more money, but downstreamfeeble

A tale of two IPOs

High-yield debt, the latest fashion in energynance

Senate begins debate on nancial reform

Passive loss exception for working

Epic makes moves to improve liquidity

Higher oil price evident in independents results

Vanguard raises $71.5 million of equity

Hyperdynamics raises $10.6MM

Service companies continue to see revenueand earnings fall

Trico Marines woes continue

ExxonMobils energy outlook driven by eciency

Baker Hughes closes $7.3 B acquisition of BJ Services

Schlumberger acquires 3 companies

Chesapeake continues to wheel and deal

Denbury looks to sell or partner on Encoregas elds

ATP closes private oering of $1.5 billion insenior notes

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ENERGYFINANCE



Midstream RegulationYukon Pacic Co. denied Alaska LNG project extension

Federal regulators have denied a request by Yukon Pacific Co. for additional extensionsin the construction of an LNG project in south-central Alaska.

The FERC denial impels new questions about the option to liquefy North Slope pro-duction for shipment by sea via a proposal to build a major export pipeline. Federal regu-lators said regulatory and environmental standards have changed since the companyobtained permission to build in 1995, and those need to be addressed after extensions inthe past have been repeatedly granted.

This new FERC denial terminates the companys ability to build and run an export ter-minal for LNG near Valdez, Alaska. Yukon Pacifics statement following the denialexpressed surprise, and said the ruling would undermine the export project. The denial cameweeks into TransCanada/ExxonMobils open season for its proposed pipeline project. TheTransCanada/ExxonMobil collaboration is in competition with a similar project proposal byConocoPhillips and British Petroleum (the COP/BP project doesnt have an LNG option).As the COP/BP pipeline proposal and XOM/TRP proposals include Canadian production,the Yukon Pacific proposed a strictly trans-Alaska transport system to bring North Slopeproduction to Valdez and export markets. It is unknown whether CSX Corp., who has anownership stake in Yukon, will appeal the denial.

Enterprise & Duncan expand in Eagle Ford Enterprise and Duncan Energy Partners LP are working on expansions to their jointly-

owned Shoup and Armstrong gas processing and NGL fractionation facilities in SouthTexas. The upgrades are part of a more comprehensive plan to expand the partnerships mid-

stream infrastructure in South Texas to handle increasing gas production from thegrowing Eagle Ford Shale play.

At the Shoup facility, focus is onmodifying existing fractionation equipment,which would increase capacity to 77,000BOPD. Modifications to existing infrastruc-ture at the Armstrong plant are designed toincrease fractionation capacity to over 20,000 BPD. Improvements in processing capabilitiesexpected to be completed in Q410 will significantly increase NGL recoveries. Gas plant andfractionator upgrades will allow Armstrong to handle more of the condensate that comprisesmuch of the reserves in the Eagle Ford Shale.

Production from these plants is expected to increase significantly over the next sixmonths as quantity and quality of gas supplies increase.

NGL processing project will supportincreasing volumes of typically wet EagleFord shale production.

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SemGroup LP customers suedby producers

Former trading partners and corporatecustomers of SemGroup LP are being suedby producers who allege theyre owed mil-

lions after the defendants failed topay for their production.

The civil suit was filed at a districtcourt in May accusing Aron & Co., BP OilSupply, ConocoPhillips and Plains Marketingof not paying a SemCrude affiliate, chargingthose payments should have gone to the rightfulproducers, royalty owners and other interests.

The plaintiff list includes ChaparralEnergy, Arrow Oil and Gas, Mustang FuelCorp., DC Energy, and Kingery Drilling,among others. SemGroup and subsidiariesdeclared bankruptcy in July 2008.Netherlands-based Vitol Inc. bought a 100%stake in SemGroup Energy Partners GPLLC and 12.6 million subordinated units inSemGroup Energy Partners LP last fall.

Judge rules against NorthTexas landowners

Landowners in the North Texas regionare suing gas producers for 2008 withdrawalsof high-dollar leasing offers. At the 67th statecourt in Fort Worth, a judge ruled a landownerhad no legal standing to sue on antitrust andconspiracy claims under the Texas FreeEnterprise and Antitrust Act of 1983.

This sets precedent that applies to morethan 20 lawsuits filed by the Dallas-basedNorth Texas Lease Litigation Group onbehalf of property owners in southwest FortWorth and southeast Arlington. Landownercoalitions had negotiated highly desirable leaseagreements with gas producers but before resi-dents could sign, the offers were withdrawn asthe price crashed in October 2008.

Continued From Page 1

BLM gives nod for 400-mileproducts pipeline

The U.S. Bureau of LandManagements state office in Utah providedits final impact statement for UNEV PipelineLLCs proposed 400-mile products pipelinefrom Salt Lake-area refineries to CedarCity/Las Vegas-area terminals.

UNEV Pipeline LLC is 75% owned byDallas-based Holly Corp. and 25% owned bySinclair Oil Corp. of Salt Lake City. The proj-ect is designed as a 12-inch, 118,000 BPDcapacity pipeline, to carry 30,000 BPD initially.With its impact assessment, the BLM grants amajor new right-of-way for a pipeline with aland-use amendment of the Pony ExpressResource Management Plan, originally devel-oped for a proposed 140-mile electric powerline from Mona in Juab Co., Utah (near termi-nal station and substation in Salt Lake Co.)



Midstream Regulation General Motors selling NGpowered vans

General Motors plans to sell naturalgas-powered versions of its full-sizedexpress & GMC Savana vans, to be madeavailable only to fleet vehicle operations.

Dallas Love Field and DFWInternational Airport have put incentivesin place to encourage taxi cab operators toswitch to cleaner-burning gas vehicles.Those moves have been challenged in courtby cab owners.

Oil billionaire T. Boone Pickens haspushed natural gas as a bridge-fuel toreduce American dependence on importedoil. He also is a financial backer of CleanEnergy Fuels Corp., which builds andruns compressed natural gas fueling sta-tions. Natural gas automobiles produce lessexhaust than gasoline or diesel-poweredvehicles. Thats important to North Texasand other metro areas which battle air pol-lution problems every summer.

Hess expanding Tioga gas plant to 250 MMCFDHill said the current base plan is to utilize dual laterals across most of their phase one acreage,

because the Middle Bakken and Three Forks are largely present across that phase one acreage.Now, the costs advantage of this approach is clear, he said. You get one less

vertical wellbore, you have fewer surface facility. So, we really believe that there isdual lateral approach combined with the application of lean manufacturing tech-

nique and pad drilling is going to result in superior returns for us on the Bakken, which is whywere going with that approach. Now, well say its early days. As we learn, as we need to, wellchange and modify as appropriate. But right now, were happy with dual lateral performance.Hess has awarded a number of long-term service contracts in the Bakken, drilling rig contractsfor five-year terms, and pumping services contracts for five.

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Continued From Page 1

Park Service recommends against Weavers Cove LNG projectThe U.S. National Park Service has dealt a major blow to the Weavers Cove Energy

LLC project proposal with a letter to the FERC, stating initial information shows the projectis out of step with federal Wild and Scenic Rivers Act. However, the FERC will make theultimate call regarding the fate of the Weavers Cove project.

A representative of Weaver's Cove Energy responded that the National Park Serviceseems to have offered its opinion without due and thorough data about the current design ofthe proposed LNG facilities.

Order Back Issues:Multiple options areavailable by calling(713) 650-1212

Spectra Energy preps for Fort Nelson expansion projectSpectra Energy Corp.s B.C. field services subsidiary will build the 250-MMCFD Fort

Nelson North gas processing plant on about 200 acres that is 75 miles northeast of Fort NelsonB.C. The new plant will expand the companys processing services to basin producers, addingthe capacity to the older 1 BCFD Fort Nelson Gas Plant, which OGJ gas processing data showhas been operating at less than 500 MMCFD.



Two Australian LNG engineering/design projects moving forwardLiquefied Natural Gas Ltd. announced a fixed-price cost to engineer its Fishermans

Landing LNG plant in Gladstone of $720 million, with subsequent trains to cost about $300million each. The trains will have a nameplate capacity of 1.85 million tons per year LNG.The companys proposed contractors are SK Engineering & Construction, and LaingORourke Australia Construction.

Also, Santos Ltd. let a contract to Fluor Australia for front-end design of upstreamfacilities at its planned CSM to LNG project in Queensland, worth [Australian]$50 mil-lion related to all CSG and associated water gathering and processing infrastructure forthe Fairview and Roma fields in the Surat-Bown basins. The project consists of a onetrain/3.6 million ton per year LNG plant, plus associated field infrastructure and pipelineto feed the Gladstone plant. Santos has 60%; Petronas has 40% and will by 2.0 milliontpy LNG from the Gladstone plant.

China Integrated Energy building biodiesel projectChina Integrated Energy Inc. has procured production equipment for its new 50,000-

ton biodiesel facility under construction in Tongchuan City in Chinas Shaanxi Province.The infrastructure will be used for producing high-quality second-generation

biodiesel. The project is being built at the companys 100,000-ton biodiesel productionfacility and will expand capacity to 150,000 MT. Installation of the biodiesel equipment atthe new facility will be completed by Q3, with production commencing in Q4, and be oper-ating at 60%-70% of capacity in Q1 2011. Capacity will be ramped up to 80%-90% in Q22011. For the full year next year, the plant will likely contribute more than $27 million and$9 million in revenue and net income.

The procurement of this advanced biodiesel production and processing equipment forour new 50,000 facility is a major milestone in our company's strategy to become a leadingproducer of alternative fuels sources," CEO Gao Xincheng said. This technology, which isproprietary to China Integrated Energy, will position us as leader in the market with high-quality, competitively priced second-generation biodiesel that can be made from a diversefeedstock. Our new biodiesel facility will significantly increase our production capacitywhile realizing greater yields and significant cost savings, which will generate higher incre-mental revenue and expand both gross and operating margins.

InternationalShell reviews downstream assets in Africa

Royal Dutch Shell PLC is reviewing its downstream businesses in 21 African countries,saying it hopes to sell them as going concerns. It has excluded from the review its fuels, lubri-cants, and refining operations in South Africa as well as its African exploration and production

and LNG interests and most of its trading activities in the continent.Under review are retail, commercial fuels, lubricants (excluding Egypt),

LPG, bitumen, aviation, and marine businesses in Morocco, Algeria, Tunisia,Egypt, Ivory Coast, Burkina Faso, Ghana, Togo Senegal, Mali, Guinear, Cape Verder,Kenya, Uganda, Tanzania, Botswana, Namibia, Madagascar, Mauritius, and La Reunion.

Shell last month said it would cut worldwide refining capacity by 15% and retail oper-ations by 35% and has announced plans to sell its downstream business in New Zealand.

Golar LNG Energy begins spot trading ventureBermudas Golar LNG Energys new trading unit is seeking to be a major player in

the LNG spot market by the end of summer. Platts reports the firm intends to establish 20to 25 traders around the world, hiring positions in London ASAP and, ultimately, a

Singapore office.Golars new subsidiary will manage and trade proprietary and third party

LNG cargoes on the back of increased LNG production and arbitrage opportuni-ties between Asian, U.S. and European market hubs.

At first, Golar was strictly involved with LNG shipping, but began to diversify in thelast year to the extend of signing a definitive LNG offtake agreement with AustraliasLiquefied Natural Gas. Golar has a fleet of seafaring vessels which may benefit its newtrading venture. Incidental to the new Golar venture, a number of LNG traders fromCitigroup have quit.

Coming Soon!International DealsSubscribe Today! Call (713) 650-1212or access www.plsx.com

International Briefs Enbridge intends to go ahead with

its proposed Northern Gateway pipelinedespite opposition from First Nations and

environmental groups wish toblock the project. The $5.4 billionpipeline would run from Alberta

to British Columbia. The 1,170-kmpipeline project would have the capacityto move 525,000 b/d of crude from theAthabasca oil sands to the proposedKitimat LNG terminal.

Abu Dhabis Dolphin Energyexpanded its gas pipeline system in theUAE after completing its 128-km, 48-inchTaweelah-Fujairah Pipeline. The projecthas another 116 km of pipelay scheduledfor completion by Q3 10.Belgian andFrench energy regulators approved a newinterconnection enabling bi-directionalflows of gas between the two countries.Frances CRE and Belgiums CREGapproved the link at the Belgian bordertown of Veurne.

Belgian and French energyregulators approved a newinterconnection enabling bi-directionalflows of gas between the two countries.Frances CRE and Belgiums CREGapproved the link at the Belgian bordertown of Veurne.

Iraqs South Oil Co. invitedinternational contractors to submit lettersof interest by May 5, related to anoffshore crude export facilityreconstruction project at the port atBasra. The project would raise the exportcapacity from Basra ports to more than4.0 million b/d in four years (up from thecurrent 1.8 million). The upgrade includesconstruction of a 10-km, 48-inch onshorepipeline; a 60-km, 48-inch offshorepipeline; and installation ofa valve station at the Khoral-Amaya oil terminals.

Japan Petroleum Exploration Co.unit Japan Canada Oil Sands Ltd.submitted a joint application to theAlberta Conservation Board to expand itsoil sands operations in the Hangingstonearea by up to 35,000 b/d of bitumen.



The IndustrysMultiple Listing ServiceA central access point for buyers and sellers24:7:365

Ross Benoche, Manager, [email protected] / (713) 600-0154

CNOOC Ltd. and its businesspartners signed a technical servicecontract with the Iraqi government to

develop the Missan oil fields, 350km southeast of Baghdad. Thecompanies plan to raise

production to 450,000 b/d from 100,000b/d in six years, to earn $2.30/bbl ofincremental output beyond 10% abovethe current rate reported the Oil & GasJournal. The 20-year contract provides forcost recovery.

Shengli Engineering & Consultingwas awarded a contract to provideengineering and design services for apipeline owned by Datang EnergyChemical Industry. The $4.38 millioncontract commits SLECC to routine surveyand soil investigation, as well aspreliminary and detailed engineering anddesign for one main trunk line and twolaterals. The 345-km, 4.0 Bcm/y line beginsin Fuxin city and terminates in Tielin andBenxi via Shenyang, which is the capital ofthe Liaoning province.

The state oil company of Azerbaijanplans to construct an oil & gas processingplant and petrochemical complex nearBaku, due to be complete about 2019. Thefacility will be 45-50 km south of Baku atSangachal, where the Caspians mainpipelines come ashore. The facility willinclude a 40 BCM gas plant, a 300,000 b/drefinery, and chemical/petrochemical/power plants.

Statoil and EGL will divest theircombined stake of 15% in the TransAdriatic Pipeline project, to E.On Ruhrgas.

The pipeline remains open foradditional partners to join in,with EGL singling out companies

active in construction and gasdistribution. The projects aims to connectexisting and planned gas transport gridsin southeastern Europe with westernEurope systems via Italy, the Adriatic Sea,Albania and Greece.

Inpex Australia of Perth will delayits proposed Ichthys LNG project atDarwin, the Oil & Gas Journal reported,and a final investmentdecision is not expecteduntil q4 2011. As a result, production fromthe project wont come on-stream untilQ4 2016. The project will produce gasfrom the Browse basin of northwestWestern Australia and pipe it ~850 km toDarwin; it would be the worlds biggestFPSO with a 100,000 b/d condensatestripping capacity.

International BriefsZi unconventional gas supply forecast announced

According to the latest report from Ziff Energy, unconventional sources of naturalgas will account for more than half of Western Canadas supply by 2020, despite a cur-rent industry downturn.

The Calgary-based energy consultancy also said unconventional plays--shales, coalbed methane and other sources--will account for 53% of U.S. andCanadian natural gas supplies within 11 years, up from 30% in 2000. Shale gas

production is changing the mix of the North American gas supply, said Simon Mauger,Ziffs director of gas service

While the popularity of unconventionals will continue to increase, their productionwill only offset the decline in conventional gas according to Ziff Energys report.According to Ed Kallio, Ziffs director of gas consulting, The reason is cost. Producerscannot recover their full-cycle costs in the conventional plays in Western Canada becausethey are very much marginal plays. The plays that will see healthy levels of activity arethe more productive plays such as the Montney and the Horn River, Kallio added, Wedont see high enough prices for producers to recover all their costs in the higher-cost con-ventional plays.

In the next decade, natural gas supplyis expected to decline to 13 BCFPD fromthe present average of 15 BCFPD. Ziffanticipates the number of well completionsin 2020 to be about 5000--lower than 2004s figure of 16,000--but better qualitywells.Producers are systematically selecting the higher quality drilling targets and arelearning that a horizontal well, along with multi-stage fracking, produces more, said BillGwozd, Vice president of Gas Services at Ziff.

Also factored into the Ziff production forecast is the demand for natural gas in the oilsands of northern Alberta and the proposed Kitimat LNG terminal. According to Gwozd,the oil sands will use up 20% of the supply.

International

The booming shales in North Americacontinue to have strong impact onmidstream infrastructure and gas prices.

Shell seeking to sell most of its LPG retailing businessShell hopes to sell much of its LPG retail business as part of a strategy announced late

in the first quarter of 2010 to lower downstream exposure by reducing global refining capac-ity by 15% and retail operations by 35%. The company is currently in discussions with thirdparties as part of an ownership options review for most of the companys LPG businesses

and called sale of its business the preferred outcome of the review.Covered in the review are Shell Gas (LPG) units in France, Belgium, the

Netherlands, Luxembourg, Denmark, Finland, Sweden, Norway, Hungary, Poland,the UK, Malaysia, Pakistan, Sri Lanka, the Philippines, Singapore and Argentina. Alsounder discussion are Shell Gas (LPG) businesses working through Shell Oil ProductsAfrica in Morocco, Tunisia, South Africa and Botswana. Excluded from the review areShell Gas (LPG) units in Canada, Turkey, Brunei, Vietnam, Hong Kong and Macau. Thecompany sold its LPG business in India and confirmed it wants to sell its major sharehold-ing in an LPG operation in Pakistan.



STONEHENGE is a asset-backed midstream company thatoffers considerable engineering, operating and financial resources that can be applied to the midstream needs ofnatural gas producers.

Our mission is to support customers in the production of natural gasand natural gas liquids by: Maximizing the value received for the produced gas Responding quickly to new facility needs Maintaining industry-best online times Maintaining an inventory of processing equipment to accelerate project development

We have technical and financial backing from three proven companies: Energy Spectrum Capital, a leading private equity firm Kahuna Ventures, a full-service midstream engineering consulting firm Kahuna Operating, a midstream facility operator

www.StonehengeEnergy.com

Chuck Wilkinson, PresidentDirect: [email protected]

Richard Carl, Director, Business DevelopmentDirect: 720-889-9953 [email protected]

Mike Brinkmeyer, Director, New VenturesDirect: [email protected]

People Briefs Jerry C. Welch, senior VP of refining

at Marathon Oil Corp., will retire, to besucceeded by Rich Bedell, currently

division manager of thecompanys Garyville, La. refinery.Also, Mary Ellen Peters, senior

VP of Transportation and Logistics, willretire to be succeeded by George P.Shaffner whom is currently the divisionmanager of Marathons Detroit refinery.

Spectra Energy Partners LP CEOGreg J. Rizzo spoke at the 2010 MLPInvestor Conference May 13 inGreenwich, Conn., which is sponsored bythe National Association of PubliclyTraded Partnerships.

William D. Thomas was named CFOof treasurer of Mainland Resources Inc.Tom Sawyer was promoted tovice president of internationalbusiness at Greenes EnergyGroup. James E. Wade was appointedsenior vice president of Copano EnergyLLC and president of the companysTexas operating segment subsidiaries.

Williams Partners LPs SteveMalcolm spoke at the NationalAssociation of Publicly TradedPartnerships 2010 Annual MLP InvestorConference on May 13.

M INL NDRESOURCES, INC.

V V

Utilities uncertainty sinking investors search for safe harborOne would think an industry as solid as utilities would benefit from current market uncer-

tainty wrote Liam Denning in the Wall Street Journal before pointing out that power providersare facing their own perfect storm of uncertainties. At the beginning of the financial crisis,utilities looked like they would weather the storm in fine shape. According to Denning, utili-ties lost only 30% of their value compared with the S&P 500s 38% loss. Some companies dideven better than that Southern Co.'s stock lost a mere 5%.

Even as the economy recovers, changes in the capital stock and consumer habits meanpower demand isnt rebounding at the same rate. Investors looking to power utilities as anoption on economic recovery will find themselves doubting the link. Even the power util-ities themselves are being cautious, withDuke Energy voicing doubts on 2H10industrial-power demand after reportingdecent 1Q10 earnings.

Recent acquisitions also point to uncer-tainty. In 1Q10, Allegheny Energy was pur-chased by FirstEnergy for $8.5 billion, including assumed debt, to expand its unregulated gen-eration capabilities as leverage to an economic recovery. In contrast, PPL Corp. was looking tospend $7.6 billion in April for E.On's largely regulated U.S. assets, reducing PPL's leverage toany recovery. The natural-gas price collapse is also a good litmus test, since low gas prices meanlower electricity prices. One only has to look to futures prices for 2010 to 2013 in the regionalPJM electricity market in the eastern U.S. which dropped by between 8% and 13% since thestart of 2010, according to Morgan Stanley.

Regulated utilities should represent that long sought after stable, safe harbor forinvestors, since regulated utilities are tied less to power prices and usually carry a higherdividend yield. Since 1974, dividends have accounted for 69% of total returns from owningutility stocks, against 42% for the S&P 500. But uncertainty has seen fit to influence thatside of the market. President George W. Bushs tax cuts on dividends are set to expire at theend of 2010, potentially raising the top rate to almost 40% from the current 15%. While theexpected tax increase is anticipated, how far it will increase is unknown, causing investorsto reevaluate utility stocks as a safe harbor.

A lag in power demand as the economyrecovers has utilities and their investorscautious as the U.S. begins a bridging the21st century.



Riverstone & Mistral enter midstream infrastructure dealRiverstone/Carlyle Global Energy and Power Funds (under the management of

Riverstone Holdings LLC), have entered an agreement with Mistral Energy Inc. for build-ing midstream infrastructure in Western Canada.

As part of its agreement with Riverstone, which was effective March 1,Mistral will identify and pursue midstream energy investments in WesternCanada, spanning assets supporting the gas and NGL industries, although the

Mistral team in the past has also acquired, developed, and operated Canadian power assets.Mistral is led by a team of four princi-

pals Terry Killackey, Bob Pritchard, GordSalahor and David Schmunk. Mistrals man-agement group was the executive team ofTaylor NGL Limited Partnership from 2001until 2008 when Taylor was acquired by AltaGas Income Trust. We are eager to pursue anddevelop midstream energy opportunities with the Mistral team as we believe it has some ofthe strongest and deepest operational experience in Western Canada, said Riverstone co-founders Pierre Lapeyre and David Leuschen.

Riverstone Holdings, an energy and power-focused private equity firm founded in2000, has ~$17 billion under management across six investment funds, including theworld's largest renewable energy fund. Riverstone conducts buyout and growth capitalinvestments in the midstream, exploration and production, oilfield services, power andrenewable sectors of the energy industry.

Canada

Eurogas Corp. to buy Talisman Energys Ontario/Erie AssetsEurogas Corp., Toronto, plans to acquire Ontario oil and gas assets from an undis-

closed seller for $131 million. Closing is set for May 27. Eurogas described the assets which appear to be those of Talisman Energy Inc., as the largest accumulation of oil andgas assets in Ontario. Talisman separately announced agreements to sell $1.9 billion(Canadian) in

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