Investor Presentation    August 2012
Forward Looking StatementsThis presentation contains forward-looking statements and projections, made in reliance on the s...
Key Investment Considerations                                             First Reserve and Crestwood Management own 100%...
Strong GP/LP Alignment of Interest    Public and                           Crestwood Holdings LLC     Class C   Unit holde...
Established Field Services Platform                                                                       100,000+ acres; ...
Evolving Growth Strategy   M&A strategy focused exclusively on high-growth midstream assets at the wellhead faces    near...
Disciplined Approach to M&A Competitive landscape and abundant access to capital continues to support “blow-out”  asset v...
Investing in the Value Chain Enhance Crestwood’s customer service offerings with integrated solutions from  wellhead to e...
Positioning for Greenfield Growth                       $200+ billion in potential midstream infrastructure required to s...
Recent Acquisition - Marcellus Shale                                                                       Crestwood Mids...
Marcellus Transaction Merits Very reasonable purchase price of ~11X 2012E EBITDA Acquired early phase gathering and comp...
Marcellus Development Update       400,000                     Antero CMM Volumes                        System volumes a...
Marcellus Operations Update                   Opened Charleston, West Virginia                    (Commercial office) and...
Pending Acquisition – Barnett Rich Located in southwestern rich gas portion of  the Barnett Shale $90MM pending acquisit...
Barnett Rich Transaction Merits   ~5%-8% accretive transaction to CMLP in 2H 2012 and 2013      Ensures solid coverage o...
Barnett Rich Development Plan   Devon is one of the largest Barnett Shale    producers by production volume     2Q 2012 ...
Barnett Rich Integration Plan   System Integration Strategy: Combine the    Cowtown and Devon gathering systems to    ena...
Granite Wash Development Update Acquired the Indian Creek gathering system  and processing plant in Roberts County,  Texa...
Granite Wash Development Update Current Le Norman Phase 1 drilling  plan calls for 13 wells over next 18  months    37 t...
Barnett Shale 2Q Update Total Barnett Shale 2Q 2012 gathering volumes  were 401 MMcf/d vs 450 MMcf/d in 2Q 2011 and  447 ...
Barnett Quicksilver Update Quicksilver currently accounts for ~35% of total CMLP/CMM gathering volumes and  ~40% of total...
Fayetteville Shale 2Q Update    Gathering volumes 78 MMcf/d vs 81 MMcf/d in 2Q     2011 and 83 MMcf/d in 1Q 2012         ...
Other Gathering Systems 2Q Update                                     Haynesville – Crestwood continues to               ...
Key Financial Metrics as of 2Q 2012                                                                          Six Months En...
Revised 2012 Financial Guidance              $160                                                                         ...
Factors Effecting Revised 2012 Guidance Lower than expected 2Q 2012 gathering volumes on the  Alliance, Lake Arlington, S...
Growth Drivers to Improved 2013 Performance                    Based on Current Crestwood 5-Year Plan Forecast            ...
Current Crestwood 5-Year Plan Supports Solid   Distribution Growth from Base Business                                     ...
Key Investment Considerations Experienced management team and strong general partner Solid field services operating plat...
Non-GAAP Financial MeasuresThe following slides of this presentation provide reconciliations of the non-GAAP financial mea...
Non-GAAP Reconciliations                                                                                                  ...
Non-GAAP Reconciliation: 2012 ForecastReconciliation of Net Income to Adjusted EBITDA(in millions) Net income             ...
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Crestwood Investor Presentation

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Crestwood Investor Presentation

  1. 1. Investor Presentation August 2012
  2. 2. Forward Looking StatementsThis presentation contains forward-looking statements and projections, made in reliance on the safe harbor provisions of thePrivate Securities Litigation Reform Act of 1995, regarding future events, occurrences, circumstances, activities, performance,outcomes and results of Crestwood Midstream Partners LP (“Crestwood” or “CMLP”). Although these statements reflect thecurrent views, assumptions and expectations of Crestwood’s management, the matters addressed herein are subject tonumerous risks and uncertainties, which could cause actual activities, performance, outcomes and results to differ materiallyfrom those indicated. However, a variety of factors could cause actual results to materially differ from Crestwood’s currentexpectations in financial condition, results of operations and cash flows including, without limitation, changes in generaleconomic conditions; fluctuations in natural gas prices; the extent and success of drilling efforts, as well as the extent and qualityof natural gas volumes produced within proximity of our assets; failure or delays by our customers in achieving expectedproduction in their natural gas projects; competitive conditions in our industry; actions or inactions taken or non-performance bythird parties, including suppliers, contractors, operators, processors, transporters and customers; our ability to consummateacquisitions, successfully integrate acquired businesses, and realize any cost savings and other synergies from any acquisition;fluctuations in the value of certain of our assets and liabilities; changes in the availability and cost of capital; operating hazards,natural disasters, weather-related delays, casualty losses and other matters beyond our control; timely receipt of necessarygovernment approvals and permits, our ability to control the costs of construction, including costs of materials, labor and rights-of-way and other factors that may impact our ability to complete projects within budget and on schedule; the effects of existingand future laws and governmental regulations, including environmental and climate change requirements; the effects of existingand future litigation; and risks related to our substantial indebtedness; and other factors disclosed in Crestwood’s filings with theSecurities and Exchange Commission. The forward-looking statements included in this presentation are made only as of thedate of this presentation, and we undertake no obligation to update any of these forward-looking statements to reflect newinformation, future events or circumstances except to the extent required by applicable law. 2
  3. 3. Key Investment Considerations  First Reserve and Crestwood Management own 100% of the General Partner and 41% of the outstanding LP units Strong GP/LP  Raised ~$1.7 billion and invested ~$1.6 billion over past 18 Alignment months to create Crestwood’s operating platform Of Interest  Distribution growth of 19% since the acquisition of Quicksilver Gas Services (1)  6 acquisitions in leading unconventional plays (Marcellus, Granite Wash, Barnett, Avalon, Fayetteville, Haynesville) Established  Long term contracts with top-tier shale producers (Antero, BHP Field Services Billiton, BP, Chesapeake, Devon, Exxon Mobil, Quicksilver) Platform  95% fixed-fee portfolio – stable cash flows  Field services acquisitions established CMLP’s initial platform  Now focused on bolt-on acquisitions with operating synergies Evolving  Will evaluate value chain acquisitions to diversify cash flowsGrowth Strategy  Building experienced business development team to generate greenfield infrastructure investment opportunities that offer better return potential than acquisitions at current valuations(1) 4th quarter 2010 through 2nd quarter 2012 3
  4. 4. Strong GP/LP Alignment of Interest Public and Crestwood Holdings LLC Class C Unit holders First Reserve and Management Continued Equity Support from Our General Partner 58% LP 42% LP/GP  First Reserve and Management have 65% invested $600MM+ in equity capital to Interest support CMLP growth Phase I: M&A Drop-Downs Crestwood Midstream  Continued equity support from First Partners LP 35% CMM Reserve for early stage, high-growth Interest acquisitions (NYSE: CMLP) Marcellus Shale  CMM, our Marcellus Shale joint venture, Enterprise Value: $2.1 Bn provides model Phase II: Greenfield Development  New greenfield development team aggressively chasing opportunities  Projects financed outside CMLP withBarnett Fayetteville Granite Haynesville Avalon equity capital from First Reserve and Shale Shale Wash Shale Shale other private investorsBarnett  Drop-Down to CMLP once in-service Shale Rich Dry and generating cash flow 4
  5. 5. Established Field Services Platform 100,000+ acres; Marcellus 15 year contracts; Shale 13,000+ acres; 10-20% developed growing rich-gas play Fayetteville Granite Wash Shale 127,000+ acres; Avalon 20 year contracts; Shale Barnett 7-year minimum Shale Haynesville volume contract Shale 55,000 acres; emerging liquids-rich area 140,000+ acres; 10-20 year 20,000 acres; Key Operating Statistics (1) contracts; 55% 5-10 year contracts; developed Miles of Pipeline 830 HBP phase Processing Plants 5 Compression HP (000’s) 226 Gathering Volume (MMcf/d) 945 Processing Volume (MMcf/d) 235(1) As of 8/15/12 Pro Forma for the pending Devon Acquisition 5
  6. 6. Evolving Growth Strategy M&A strategy focused exclusively on high-growth midstream assets at the wellhead faces near-term challenges  Competitive landscape and abundant access to capital continues to support “blow- out” asset valuations  More competitive economics across the value chain and from bolt-on transactions where built-in synergies provide competitive advantage Producer demand for required infrastructure creating significant greenfield opportunity  Drilling activity focused on unconventional crude oil and rich gas plays -- significant demand for infrastructure to transport associated natural gas and NGLs  $200+ billion in potential midstream infrastructure required to support the anticipated upstream development of unconventional assets over the next 2-3 decades Talented managers currently in the market  Primarily the result of the Kinder Morgan / El Paso transaction Abundance of private capital currently targeting midstream infrastructure  The opportunity for investment created by the scale of the expected future infrastructure build-out has captured the attention of the financial community  Significant private capital seeking qualified teams to provide creative financing solutions 6
  7. 7. Disciplined Approach to M&A Competitive landscape and abundant access to capital continues to support “blow-out” asset valuations  Sellers of assets continue to utilize large auction processes to drive increased competition resulting in higher valuations (10x – 11x EBITDA now on the cheap side!) Volatility in natural gas, NGL and even crude oil prices exploits near-term challenges in midstream M&A strategy at the wellhead  While long-term growth prospects and economics remain intact, producers are rationally allocating capital today to the highest return plays M&A will always be a key component of CMLP’s growth strategy; however, current market conditions require a disciplined approach to evaluating new opportunitiesM&A strategy shifting away from… Wellhead gathering where growth prospects are solely dependent on producer activityM&A strategy shifting towards… Bolt-on acquisitions around existing assets where synergies drive meaningful accretion Diversification throughout the value chain and across commodities 7
  8. 8. Investing in the Value Chain Enhance Crestwood’s customer service offerings with integrated solutions from wellhead to end market Diversify Crestwoods operating platform functionally throughout the value chain Improve Crestwood’s long-term cash flow growth profile Broaden Crestwood’s opportunity set Intrastate Intrastate & Gas Gathering CO2 & Interstate Gas Storage Interstate Pipelines Treating Pipelines Pipelines Residue Gas Ethane Propane NGL Gas Gathering Gas Mixed NGL NGL Iso-Butane Storage & NGLRich Gas Pipelines Processing Pipelines Fractionation Butane Pipelines Nat Gasoline Where We Are Where We Are Going Barges & Trucks, Barges Crude Oil Crude Oil Refined & Crude Oil Storage Storage Refining Products Pipelines Pipelines 8
  9. 9. Positioning for Greenfield Growth  $200+ billion in potential midstream infrastructure required to support the anticipated upstream development of unconventional assets over the Significant next 2-3 decadesGreenfield Growth  Currently evaluating $1.0+ billion in greenfield opportunities in Opportunities developing plays (Utica, Marcellus, Niobrara and Avalon / Permian)  Heath Deneke, former VP Project Development and Engineering at El Paso, joins CMLP as SVP and Chief Commercial Officer bringing Building a significant technical and commercial expertise to lead the World-Class development efforts Team  Development team will leverage the CMLP platform, including industry relationships and existing asset footprint, to aggressively pursue new opportunities  Abundant pool of private capital (private equity, infrastructure funds, asset managers and sovereign wealth) chasing the midstream infrastructure opportunity Financing the  Continued support from First Reserve, coupled with increasing appetiteGrowth Strategy from new private capital sources, provides ability to pursue and finance early stage greenfield build-out at the general partner level  Strategy to build significant backlog of future growth at CMLP through the drop-down strategy 9
  10. 10. Recent Acquisition - Marcellus Shale  Crestwood Midstream Marcellus (CMM) acquired Antero Resources’ Marcellus Shale gathering systems on March 26, 2012  Purchase price: ~$377MM  CMM Ownership: Crestwood Holdings 65% - CMLP 35% with quarterly distributions  Growth Capital: $200MM revolver at CMM level to fund growth capital needs  Operations: CMLP assumed operations from Antero in June 2012  Long Term Strategy: CMM is an appropriate ownership vehicle during the development Rich Gas Area Dry Gas Area phase of the Marcellus assets  Provides visible CMLP growth through planned drop downs from CMM LegendArea of Dedication (AOD) Planned Pipeline (2013 – 2016)Planned MWE Sherwood Plant Existing and Planned ThirdPipeline in Service at YE 2012 Party Pipeline 10
  11. 11. Marcellus Transaction Merits Very reasonable purchase price of ~11X 2012E EBITDA Acquired early phase gathering and compression assets with significant long term growth potential based on producer plans, minimum volume commitments, current drilling economics and downstream infrastructure build-out  Assets located in core fairway of the Marcellus Shale with rich gas exposure  High BTU value provides processing upgrade which enhances drilling economics 127,000 acre Area of Dedication (AOD) de-risked through substantial production history and future development potential  63 wells producing ~ 200 MMcf/d at acquisition close  Over 800 Antero well locations and 300+ third party well locations in AOD 20 year 100% fixed fee contract structure with annual escalator 7 year Minimum Throughput Volume Guarantee by Antero ensures minimum quarterly cash flow to CMM and distributions to CMLP 7 year ROFO on Antero gathering systems on additional rich gas acreage located due west in Doddridge County, WV 11
  12. 12. Marcellus Development Update 400,000 Antero CMM Volumes  System volumes averaged 257 350,000 MMcf/d for 2Q 2012 with 11 new 300,000 wells and one new production area 250,000 connectedMcfd 200,000 150,000  Antero currently running 9 rigs on the 100,000 Antero acreage & AOD 50,000 0  ~286 MMcf/d currently flowing through CMM systems (1) Minimum Annual Volume  ~ 40 additional wells expected to be connected in 2H 2012 Antero CMM Wells 1st 90 Days 10,000  Expected FYE exit rate 380 MMcf/d (average 300 MMcf/d for 2012) 8,000  AOD well IP’s running ~ 20% better Mcfd 6,000 than acquisition forecast 4,000  Markwest Sherwood plant on track for 3Q 2012 in-service date 2,000 30 60 90 (1) As of 8/15/12 Acquisition Type Curve 12
  13. 13. Marcellus Operations Update  Opened Charleston, West Virginia (Commercial office) and Clarksburg WV (Operations office) in 2Q 2012  Fully staffed Marcellus team  Completing first new compression station installation in 4Q 2012  Currently building first full scale gathering system extension project  Target in-service Nov 2012  CMM building new Greenbrier compression station  Target in-service 2Q 2013  Revised CMM 2H 2012 capex of $20MM ($50MM original est.) due to increased pad drilling versus HBP drilling 13
  14. 14. Pending Acquisition – Barnett Rich Located in southwestern rich gas portion of the Barnett Shale $90MM pending acquisition of Devon Energy’s Corvette Plant West Johnson County gathering and processing assets Devon Plant  HSR approval 8/13/2012  Expected to close by 9/1/2012 Acquiring 74 miles of gathering system and a 100 MMcf/d gas processing plant Cowtown Plant  Constructed in 2006-08  System capacity of 100 MMcf/d  Current volumes of ~95 MMcf/d  ~230 Devon wells connected Signed 20-year fixed fee contract with Devon  20,500 acreage dedication  Annual fee escalator Legend Processing Plants Devon Gathering System CMLP Cowtown Gathering System 14
  15. 15. Barnett Rich Transaction Merits ~5%-8% accretive transaction to CMLP in 2H 2012 and 2013  Ensures solid coverage of Class C unit conversion from PIK to cash pay in 2Q 2013 Acquisition of high quality rich gas midstream assets from Devon, a leading North American unconventional resource play developer  Should lead to additional acquisition and greenfield development opportunities with Devon Allows for the integration of the Devon gathering system with Crestwood’s Cowtown gathering system  Optimize excess processing capacity at CMLP’s Cowtown and Corvette plants  Reduced wellhead pressures on Devon system provides 3-5% volume uplift  Increased NGL recoveries at CMLP plants enhances Devon’s sales value and future development activity After integration, provides CMLP with an additional 100 MMcf/d 2008 vintage cryogenic processing plant to redeploy in new rich gas development areas  Offers competitive advantage to CMLP as new 100 MMcf/d plants cost $18-20MM and take over 1 year to manufacture 15
  16. 16. Barnett Rich Development Plan Devon is one of the largest Barnett Shale producers by production volume  2Q 2012 ~ 1.3 Bcf/d  10 rigs running at June 30, 2012 Devon’s current West Johnson County rich gas volumes are ~95 MMcf/d  30 Devon wells connected YTD  17 Devon wells remaining for 2012 2 2 2 4 4  CMLP inherits 6 well connect projects 3 w/ total capex of ~$1.5MM in 2H 2012  Expect 10-20 wells to be drilled on current acreage in 2013 3 16
  17. 17. Barnett Rich Integration Plan System Integration Strategy: Combine the Cowtown and Devon gathering systems to enable processing of Devon volumes at CMLP’s Cowtown and Corvette processing plants  Approximately $7MM capital cost to connect (includes new NGL and gas interconnects)  Avoids paying Quicksilver lateral fee on current Devon offload volumes Plant Optimization Strategy: Current CMLP plant capacity of 325 MMcf/d vs current Cowtown volumes of 140-150 MMcf/d  Current CMLP capacity utilization of ~40%  Excess capacity of 175 – 185 MMcf/d vs current Devon volumes of 95 MMcf/d  Improve capacity utilization to ~80%  Increase in plant and system compression efficiency  Lower operating costs per MCF than Devon plant on a standalone basis 17
  18. 18. Granite Wash Development Update Acquired the Indian Creek gathering system and processing plant in Roberts County, Texas from Frontier Gas Services in April 2011  32 miles mid/low pressure gathering system; 36 MMcf/d cryogenic processing plant  Long term fixed fee/POP contracts with acreage dedications from Chesapeake, Linn and Great Plains Le Norman Operating (FRC portfolio company) acquired Great Plains acreage To MAPL and formed JV with Noble in May 2012 Le Norman commenced Granite Wash development program on Great Plains acreage and will then move to Noble acreage Existing Frontier Pipeline Existing Frontier Liquids Line Indian Creek Dedication Area Chesapeake Low Pressure Line CDP Great Plains Acreage 1st Le Norman Granite Wash completion on Plains Low Pressure Line Producing Gas Well Indian Creek Plant Site Linn Low Pressure Line Permitted Gas Well Indian Creek North Station Great Plains acreage currently flowing ~ 4.5 Pitco Low Pressure Line MMcf/d + 1,000 Bpd of oil 18
  19. 19. Granite Wash Development Update Current Le Norman Phase 1 drilling plan calls for 13 wells over next 18 months  37 total well locations on Phase 1 Phase 1 acreage over next 5 years Currently negotiating 5,000 acre Indian addition to original Great Plains Phase 2 Creek Plant acreage dedication  $3MM CMLP capital project to receive higher volumes from Le Norman Phase 1 delivery points Current Potential 37,000 acreage expansion (Phase 2) in the coming months based on 2H 2012 and 2013 drilling results Long term volume forecasts (Phase 1 and Phase 2) may exceed current Indian Creek plant capacity of 38 MMcf/d 19
  20. 20. Barnett Shale 2Q Update Total Barnett Shale 2Q 2012 gathering volumes were 401 MMcf/d vs 450 MMcf/d in 2Q 2011 and 447 MMcf/d in 1Q 2012 Alliance  Lower than expected volumes due to delayed new well completions, extended shut-in of Lake current volumes due to fracking operations, Arlington modest economic shut-ins and natural decline  12 new wells connected to Alliance system late 2Q 2012 added 50 MMcf/d IP rate Cowtown  Current 3Q 2012 volumes averaging ~ 430 MMcf/d (1) Total Barnett Shale 2Q 2012 processing volumes were 130 MMcf/d ~ flat over the last 3 quarters Barnett Shale Asset Overview  Current 3Q volumes averaging 143 MMcf/d including ~ 35 MMcf/d third party volumes (1)  420 miles of pipeline  850 MMcf/d gathering capacity  Quicksilver added 10 new wells in 1H 2012 with additional 8-10 wells expected in 2H 2012  325 MMcf/d processing capacity  Devon West Johnson County volumes will add  160,000 HP compression ~ 95 MMcf/d net of offloads after closing  950 wells connected (1) As of 8/15/12 20
  21. 21. Barnett Quicksilver Update Quicksilver currently accounts for ~35% of total CMLP/CMM gathering volumes and ~40% of total CMLP/CMM revenues (1) Quicksilver expects to scale back Barnett development plans in 2H 2012  15 wells connected 1H 2012; 8-10 wells to be connected in 2H 2012  24 drilled but uncompleted wells remaining at year-end 2012 Quicksilver is actively pursuing improvement in capital flexibility  Amended credit agreement provides $440MM of availability; lower interest coverage requirement through 2014  S&P revised its outlook of KWK’s credit rating (B-) to stable from negative in August 2012 reflecting improved assessment of liquidity  Quicksilver Production Partners - Barnett Shale MLP cleared by the SEC in 2Q – waiting on improved market conditions to proceed; analysts believe it is likely a 2013 event  Currently considering other Barnett related monetization strategies (i.e. development JV, asset sale or combination with MLP) Long term Quicksilver / Barnett Shale outlook  Barnett Rich Gas (Cowtown area) remains the best economic play in the Quicksilver portfolio with an estimated value at the wellhead of $6.02 Mcf (2)  Barnett Shale still holds 4 TCF (proved and potential) resource base; 55% developed per KWK forecast (2) (1) Based on preliminary Crestwood July 2012 gathering and revenue estimates and pro forma for the pending Devon acquisition (2) Per Quicksilver Resources July 2012 Investor Presentation 21
  22. 22. Fayetteville Shale 2Q Update Gathering volumes 78 MMcf/d vs 81 MMcf/d in 2Q 2011 and 83 MMcf/d in 1Q 2012  15 wells connected YTD; 13 additional wells expected in 2H 2012 Wilson Creek  6 new wells connected to Twin Groves system late 2Q 2012 added 12 – 17 MMcf/d IP rate  Current 3Q volumes averaging ~ 86 MMcf/d Twin Woolly Rose Bud with recent highs of 93 MMcf/d (1) Prairie Creek Groves Hollow  BHP has 1 rig running in CMLP AOD with 2 rigs running in overall Fayetteville Shale play On August 3, 2012 BHP announced a $2.84 billion impairment charge on carrying value of its Fayetteville Shale assets Fayetteville Shale Asset Overview  “The Fayetteville charge reflects the decline in  160 miles of pipeline US domestic gas prices and the company’s  510 MMcf/d gathering capacity decision to adjust its development plans to  165 MMcf/d treating capacity more liquids rich fields. We believe our dry gas assets are well positioned for the future  28,000 HP compression given their competitive position on the industry  150 wells connected cost curve” BHP CEO Marius Klopper (1) As of 8/15/12 22
  23. 23. Other Gathering Systems 2Q Update  Haynesville – Crestwood continues to Sabine System benefit from a firm transportation agreement with Wildcat Gathering which supports CMLP’s expected volumes through mid 2013. Producers on CMLP’s Sabine gathering system continue to 55 miles of pipeline implement restricted choke production 100 MMcf/d gathering capacity practices which curtails volumes but 74 MMcf/d treating capacity 100 wells connected enhances the long term reserve to production potential of dedicated wells. Las Animas  Avalon – Avalon Shale development has Systems been slow to develop on our Las Animas gathering systems. Further development of CMLP’s adjacent Poker Lake rich gas gathering and processing project has been delayed by Chesapeake’s Permian Basin asset sales process expected to be 47 miles of pipeline 50 MMcf/d gathering capacity completed before FYE 2012. 60 wells connected 23
  24. 24. Key Financial Metrics as of 2Q 2012 Six Months Ended June 30, 2012 2011 % IncreaseOperating Statistics: Gathering (Bcf) (1) 114.9 90.3 + 27% Processing (Bcf) 26.5 25.5 + 4% Revenues ($MMs) $101.9 $87.9 + 16% Adjusted EBITDA ($MMs) $56.9 $50.4 + 13% Distributions per Unit $1.00 $0.90 + 11%Leverage Metrics(2): Total Debt ($MMs) $550.5 $437.5 Debt to Capitalization 46% 48% Debt to Pro Forma LTM EBITDA 4.1x 4.3x Borrowing Capacity ($MMs) $165.5 $185.1(1) Includes 35% proportionate ownership of Crestwood Marcellus Midstream LLC gathering volumes.(2) As defined in CMLPs credit agreement. Debt includes capital lease obligations, $8.0 million deferred purchase of Tristate acquisition that will be paid Q4 2012, $90 million for the pending Devon Acquisition, offset by $116.9 million of equity proceeds received in Q3 2012. Latest twelve months EBITDA is pro forma for the Tristate Acquisition and the pending Devon Acquisition. 24
  25. 25. Revised 2012 Financial Guidance $160 $135 $140 $130 $120 $125 $125 $100$ Millions $80 $65 $60 $43 $55 $40 $38 $20 $- Original Revised Original Revised (1) (1) Net Income Net Income Adjusted EBITDA Adjusted EBITDA Low Range High Range (1) Original guidance provided in February 28, 2012 earnings release 25
  26. 26. Factors Effecting Revised 2012 Guidance Lower than expected 2Q 2012 gathering volumes on the Alliance, Lake Arlington, Sabine, Prairie Creek and Woolly Hollow dry gas systems Higher than expected DD&A and Interest expense Revised 2H 2012 producer drilling plans on dry gas systems based on lower than expected natural gas prices for the remainder of 2012 Offset by:  Increasing contribution from CMM in 3Q and 4Q 2012  Completion of pending Devon acquisition by 9/1/12  Recent new well production results and 2H 2012 development plans on the Indian Creek gathering system 26
  27. 27. Growth Drivers to Improved 2013 Performance Based on Current Crestwood 5-Year Plan Forecast Gathering Volumes MMcf/d Total Crestwood Volumes 21% Total Rich Gas Volumes 49% Marcellus Joint Venture 65%Rich Gas Systems (100% Owned) 26%Dry Gas Systems 10% 0 200 400 600 800 1,000 1,200 2012 2013 27
  28. 28. Current Crestwood 5-Year Plan Supports Solid Distribution Growth from Base Business Factors which could improve distribution growth and strengthen coverage  Improved natural gas prices leading to increased drilling on dry gas systems  Contributions from bolt-on or value chain acquisitions  Contributions from new greenfield infrastructure projects  Faster drop downs from2011 2012 2013 2014 2015 Crestwood Holdings related to CMM Annual Distributions Crestwood maintains its 10% historical distribution growth target 28
  29. 29. Key Investment Considerations Experienced management team and strong general partner Solid field services operating platform New strategy to emphasize bolt-on and value chain acquisitions Building competitive business development team to take advantage of historic midstream infrastructure opportunities Access to multiple sources of growth capital  Ample CMLP current liquidity to execute new acquisition and greenfield project strategies Focused on creating long term value through consistent distribution growth  Remain committed to 10% annual distribution growth target 29
  30. 30. Non-GAAP Financial MeasuresThe following slides of this presentation provide reconciliations of the non-GAAP financial measures adjusted EBITDA andadjusted distributable cash flow to their most directly comparable financial measures calculated and presented inaccordance with generally accepted accounting principles in the United States of America ("GAAP"). Our non-GAAPfinancial measures should not be considered as alternatives to GAAP measures such as net income or operating income orany other GAAP measure of liquidity or financial performance.We define adjusted EBITDA as net income from continuing operations adjusted for interest expense, income taxes,depreciation, amortization and accretion expense and certain non-recurring expenses, including but not limited to items suchas transaction related expenses and gains/losses on the exchange of property, plant and equipment. Adjusted EBITDA iscommonly used as a supplemental financial measure by senior management and by external users of our financialstatements, such as investors, research analysts and rating agencies, to assess the financial performance of our assetswithout regard to financing methods, capital structures or historical cost basis. We define adjusted distributable cash flow asnet income from continuing operations adjusted for: (i) the addition of depreciation, amortization and accretion expense; (ii)the addition of income taxes; (iii) the addition of non-cash interest expense; (iv) the subtraction of maintenance capitalexpenditures and (v) certain non-recurring expenses, including but not limited to items such as transaction related expensesand gains/losses on the exchange of property, plant and equipment. The GAAP measure most directly comparable toadjusted distributable cash flow is net income from continuing operations. 30
  31. 31. Non-GAAP Reconciliations Six Months Ended Year Ended December 31, June 30, 2008 2009 2010 2011 2011 2012 ($ in thousands)Total revenues $ 76,084 $ 95,881 $ 113,590 $ 205,820 $ 87,915 $ 101,935Product purchases - - - (38,787) (12,528) (16,414)Operations and maintenance expense (19,395) (21,968) (25,702) (36,303) (15,592) (18,598)General and administrative expense (6,407) (9,676) (17,657) (24,153) (12,430) (13,674)Earnings from unconsolidated affiliate - - - - - 441Gain from exchange of property, plant and equipment - - - 1,106 - -Other income 11 1 - - - - EBITDA 50,293 64,238 70,231 107,683 47,365 53,690Add: Non-recurring expenses - - 6,318 2,279 3,037 1,778Less: Equity earnings from unconsolidated affiliates - - - - - (441)Add: Adjusted earnings from unconsolidated affiliates - - - - - 1,876 Adjusted EBITDA 50,293 64,238 76,549 109,962 50,402 56,903Less: Depreciation and accretion expense 13,131 20,829 22,359 33,812 14,386 21,484 Interest expense 8,437 8,519 13,550 27,617 12,825 15,843 Income tax provision (benefit) 253 399 (550) 1,251 551 578 Non-recurring items impacting net income - - 6,318 2,279 3,037 3,213 Net income from continuing operations $ 28,472 $ 34,491 $ 34,872 $ 45,003 $ 19,603 $ 15,785Net income from continuing operations $ 28,472 $ 34,491 $ 34,872 $ 45,003 $ 19,603 $ 15,785Depreciation and accretion expense 13,131 20,829 22,359 33,812 14,386 21,484Income tax provision (benefit) 253 399 (550) 1,251 551 578Amortization of deferred financing fees 6,096 3,836 4,961 3,473 1,610 2,325Non-cash equity compensation 1,017 1,705 5,522 916 565 994Maintenance capital expenditures (1,890) (10,000) (6,600) (1,409) (705) (1,593) Distributable cash flow 47,079 51,260 60,564 83,046 36,010 39,573Add: Non-recurring expenses - - 2,737 4,779 5,537 1,778Less: Equity earnings from unconsolidated affiliates - - - - - (441)Add: Adjusted DCF from unconsolidated affiliates - - - - - 1,750 Adjusted distributable cash flow $ 47,079 $ 51,260 $ 63,301 $ 87,825 $ 41,547 $ 42,660Distributions declared for respective period 33,736 39,428 52,423 70,453 31,621 45,787Distribution coverage 1.40x 1.30x 1.21x 1.25x 1.31x 0.93x 31
  32. 32. Non-GAAP Reconciliation: 2012 ForecastReconciliation of Net Income to Adjusted EBITDA(in millions) Net income $38 to $43 Add: Depreciation, amortization and accretion expense $45 Add: Interest expense $35 Add: Income tax provision $1 EBITDA $119 to $124 Add: Non-recurring expenses (1) $2 Deduct: Equity earnings from Crestwood Marcellus Midstream ("CMM") ($3) Add: 35% of CMMs Adjusted EBITDA $7 Adjusted EBITDA $125 to $130 (1) Includes approximately $2 million of non-recurring expenses primarily related to due diligence activities of a potential acquisition that is not expected to be completed. 32

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