dcp midstream … a consistent success stor...
TRANSCRIPT
DCP Midstream … A Consistent Success Story
September 22, 2008
Tom O’ConnorCEO, DCP Midstream
Rose RobesonCFO, DCP Midstream
DCP Midstream…A Consistent Success Story | September 22, 20082
Safe Harbor Statement
Some of the statements in this document concerning future company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and you should refer to the additional information contained in Spectra Energy’s Form 10-K and other filings made with the SEC concerning factors that could cause those results to be different than contemplated in today's discussion.Reg G DisclosureIn addition, today’s discussion includes certain non-GAAP financial measures as defined under SEC Regulation G. A reconciliation of
those measures to the most directly comparable GAAP measures is available at the end of this packet and on our website.
DCP Midstream…A Consistent Success Story | September 22, 20083
Contents
•
Midstream Fundamentals and Market Environment
•
DCP Midstream –
A Consistent Success Story
•
Strategic Advantages and Differentiators
•
DCP Midstream Partners –
The MLP Growth Vehicle
•
Financial Update and Disclosures
DCP Midstream…A Consistent Success Story | September 22, 20084
The Midstream Energy Value Chain
Chemicals, Fuels & Blend Stocks
Marketing
Storage
Transportation
Fractionation
Marketing
Storage
Transportation
E&P
Gathering/ProcessingNGLs Residue Gas
Utilities, Industrial & Residential
DCP Midstream…A Consistent Success Story | September 22, 20085
Operates Across Much of the Midstream Value Chain
Wellhead Raw gasgathering andCompression
Gas ProcessingPlants
Mixed ProductPipelines
Fractionation/Facilities
NGLRefined Prod
Pipelines
TransportationLines / Rail
Truck/MarineBarges/Tankers
Retailers / End Users/
Retail StationsTerminal/ Storage Facilities
Residue Gas
Inter/Intrastate Transportation Lines / Storage Gas
End Users
NGL’s
Midstream Assets and Product Flow
The midstream collection of assets and services are the link between the wellhead and gas and NGL end use
NGL’sRaw Gas
DCP Midstream…A Consistent Success Story | September 22, 20086
Gathering and Processing -
a “Must Run Industry”
Source: Merrill Lynch Estimate
WellheadWellhead Pipeline QualityPipeline Quality
75%
7%6%
4%6%
2%
93%
3% 3%1%
MethaneEthanePropane
MethaneEthanePropaneHeavier NGLsCarbon Dioxide & NitrogenHydrogen Sulfide
Heavier NGLsCarbon Dioxide & NitrogenHydrogen Sulfide
Raw Gas Produced at the Wellhead is Not Pipeline Quality
Midstream service providers remove impurities,maximize value through NGL extraction and sell
gas and NGLs in marketable condition
DCP Midstream…A Consistent Success Story | September 22, 20087
A Typical NGL Barrel
40%
28% 10%7%Ethane
Propane
Normal Butane
IsoButane
Natural Gasoline
15%
Ethane
Propane
Normal Butane
IsoButane
Nat Gasoline
Ethylene
Propylene
Crude C4’s
Fuel Oil
Petrochemical productsand plastics
Refinery feeds and blend stocks
Commercial andResidential Fuels
NGLs Feedstocks/End Products Primary Uses
C2
C3
NC4
IC4
C5
DCP Midstream…A Consistent Success Story | September 22, 20088
How We Make Money -
Processing ContractsProcessing contracts take many forms
E&P Supply Customer Midstream Processor
ContractMarketing
NGL Market Gas Market
&
Fee Based Percent of Proceeds Keep Whole
DescriptionFixed fee for
gathering and processing
Retain a percentage of both residue gas and
NGLs produced and return remainder to producer
Pay producer in residue gas for Btu’s received
and keep all NGLs produced
Commodity Exposure
No exposure to NGLs or natural gas
Long NGLs and Long natural gas
Long NGLs and Short natural gas
2008B DCP Midstream Gross Margin Contribution (1)(1) The remaining 12% is “other” which includes condensate sales, NGL trading and marketing, gas marketing and other activity
8% 70% 10%
DCP Midstream…A Consistent Success Story | September 22, 20089
Our Customers and What They Value
Top 5 Gas Customers• Constellation• Tenaska• BP Energy• Oneok• ConocoPhillips
Supply Customers~2500
Supply Customers~2500
Market Customers~100
Market Customers~100
Top 10 Producers Top 5 NGL Customers• Chevron Phillips Chemical• ConocoPhillips• Formosa• Equistar Chemicals• Enterprise Products
Competitive Contracts and Prices Flow and Supply ReliabilityTimely Fixes of Operational ProblemsTimely Well ConnectsProduct Purity
Who Are They…
What They Value…
• Anadarko• ConocoPhillips• Devon• Chesapeake• Noble Energy
• ExxonMobil• COG• Samson• Chevron• Oxy USA
DCP Midstream…A Consistent Success Story | September 22, 200810
Midstream Market Environment
OpportunitiesOpportunitiesContinued strength in natural gas pricesSustained high oil pricesShale technology improvements
ChallengesChallengesFocused competition
Shifting contract mixCost pressures and resource challenges
ImpactImpactRobust drilling around footprintElevated NGL prices and frac spreadsInfrastructure required to gather, process and transport
ImpactImpactMLP model intensifies localized competitionMargin pressuresRising costs for projects and competition for talent
Price strength expands opportunity while increasing competitive pressure
DCP Midstream…A Consistent Success Story | September 22, 200811
•
Midstream Fundamentals and Market Environment
•
DCP Midstream –
A Consistent Success Story
•
Strategic Advantages and Differentiators
•
DCP Midstream Partners –
The MLP Growth Vehicle
•
Financial Update and Disclosures
DCP Midstream…A Consistent Success Story | September 22, 200812
Corporate Structure
69.9% Common LP Interest
Key Competitor RankCompany 2007 Net Income
DCP Midstream $1,074MM
Energy Transfer (ETP) $676MM
Enterprise Products (EPD) $534MM
Oneok (OKE) $305MM
Enbridge Energy (EEP) $249MM
28.8% LP Interest1.3% GP Interest
50%50%
ConocoPhillipsConocoPhillipsConocoPhillipsSpectra EnergySpectra EnergySpectra Energy
PublicPublicUnitholdersUnitholders
MLP
DCP Midstream has Strong Sponsor
Support and a MLP Growth Vehicle69.9%
DCP Midstream…A Consistent Success Story | September 22, 200813
$0$10$20$30$40$50$60$70$80
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Cru
de O
il Pr
ice
$0
$2
$4
$6
$8
$10
Nat
ural
Gas
Pric
e
DCP Historical Timeline Growing to Size and Scale
Major acquisitions ahead of price increase yield strong earnings growth
Key Acquisitions Timeline
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
LEC Winnie/Pt
ArthurOneok - SOKDynegy - RR
TEPPCO GPConoco-COK
GPM – Phillips JVTexaco-
DiscoveryCOP - SENM
MobilTransok N La
Associated Natural Gas
UP FuelsCanrock – AlbertaKoch – S. Texas
MCN-Mobile BayGSRI
DCPP IPOTEPPCO Sale
50/50
Momentum Anadarko-Lindsay
$0$200$400$600$800
$1,000$1,200$1,400
2002 2003 2004 2005 2006 2007
EBIT
(1
($MM)
Crude Oil
Natural Gas
(1)
(1) Excludes one-time gain on sale of TEPPCO of $1.1B
DCP Midstream…A Consistent Success Story | September 22, 200814
(1) Includes DCP Midstream Partners
June 2008 YTD VolumesTotal Throughput 7.3 TBtu/dGathered & Processed 6.0 TBtu/dNatural Gas Liquids 378 MBbl/d52 Plants, 10 Fractionators59,000 Miles of Pipeline
DCP Midstream Stats(1)
Strategic Assets with Scale and Scope
Competitive Advantages
Assets• Largest G&P asset base
• Located in most major gas basins
Scope & Business Model
• Broad G&P services model supported by highly integrated downstream (gas and NGL) operations
Capital Structure• Strong balance sheet and internal cash
generation
• MLP access to capital markets
Customer Relationships
• Diverse Contract Portfolio
• Extensive / diversified customer base
DENVER
TULSA
MIDLAND
HOUSTON
DCP MidstreamDCP Midstream Plant
DCP Midstream Partners Plant
DCP Midstream Pipelines
DCP Midstream Partners Pipelines
Gas Storage
Major Offices
Oil & Gas Basins
DCP has the scale to be efficient andgeographic diversity to compete for growth(1) Includes DCP Midstream Partners
DCP Midstream…A Consistent Success Story | September 22, 200815
Gulf Coast RegionAssets are well positioned with emerging supply areas, including the
Barnett Shale, Haynesville Shale
SouthTexas
Barnett Shale Area Haynesville Shale Area
Stats (1)
June 2008 YTD VolumesTotal Throughput 3.7 TBtu/dGathered & Processed 2.5 TBtu/dNatural Gas Liquids 119 MBbl/d17 Plants, 8 Fractionators11,500 Miles of Pipeline
(1) Includes DCP Midstream Partners
DCP Midstream…A Consistent Success Story | September 22, 200816
Mid-Continent Region
Stats (1)
June 2008 YTD VolumesTotal Throughput 1.9 TBtu/dGathered & Processed 1.9 TBtu/dNatural Gas Liquids 120 MBbl/d11 Plants27,500 Miles of Pipeline
Volume growth in the Mid-Continent region is primarily due to activity in the Panhandle with emerging Woodford Shale upside
Woodford Shale Area
(1) Includes DCP Midstream Partners
DCP Midstream…A Consistent Success Story | September 22, 200817
Permian Basin Region
SE New Mexico
Ozona/Sonora
Triad
Goldsmith/Fullerton
StatsJune 2008 YTD VolumesTotal Throughput 1.3 TBtu/dGathered & Processed 1.2 TBtu/dNatural Gas Liquids 119 MBpd16 Plants, 2 Fractionators17,000 Miles of Pipeline
Wolfberry drilling activity in the Permian Basin has resulted in strong year on year volume growth
Woodford/Barnett Shale Area(Delaware Basin)
WolfberryDevelopment
DCP Midstream…A Consistent Success Story | September 22, 200818
Rocky Mountain Region
Stats (1)
June 2008 YTD VolumesTotal Throughput 0.4 TBtu/dGathered & Processed 0.4 TBtu/dNatural Gas Liquids 20 MBbl/d8 Plants3,000 Miles of Pipeline
(1) Includes DCP Midstream Partners
Strong drilling activity drives expansions to serve customers growing needs in Weld County and the Collbran Valley
Niobrara Shale Area
DCP Midstream…A Consistent Success Story | September 22, 200819
•
Midstream Fundamentals and Market Environment
•
DCP Midstream –
A Consistent Success Story
•
Strategic Advantages and Differentiators
•
DCP Midstream Partners –
The MLP Growth Vehicle
•
Financial Update and Disclosures
DCP Midstream…A Consistent Success Story | September 22, 200820
Strategy
From our current foundation of reliable, efficient and safe operations, we will accelerate shareholder value by:
Preserving and growing the business within our footprintPartnering with our customers to enter new basins Optimizing strategic levers to maximize dividends and position for industry growth and consolidation
Our aspiration is to lead the midstream industry with a reputation for customer service, superior returns and cash generation for our owners, and sustainable growth
DCP Midstream…A Consistent Success Story | September 22, 200821
Go-Forward Strategic Initiatives
Preserve Margins Accelerate Value and Growth
Operating Efficiency
I. Customer Focused Operations
Mechanical IntegrityBtu EfficiencySafety / Environmental Leadership
Customer Responsive Growth
III. Growth within the Footprint
Accelerate Bolt-On ProjectsAccelerated Well Connects and Volume Growth
IV. Growing the Enterprise and Accelerating Value
Enhance Competitive ProfilePosition the Enterprise for Expansion
II. Cost Control
Targeted Cost ImprovementInvest in Service Quality
DCP Midstream…A Consistent Success Story | September 22, 200822
97.00%
98.00%
99.00%
Janu
aryFeb
ruary
March
April
MayJu
ne July
Augus
tSep
tembe
rOcto
ber
Novem
ber
Decem
ber
Run
tim
e %
Customer Focused Operations
•
2008 target of 98.5%, lost profit <2.5% EBIT•
Initiatives:– Predictive-based maintenance– Critical spare parts inventory– Expand supersystem footprint
Reliable and Efficient Operations are the Foundation of Value Creation and Customer Relations
Operating strategies support safety and emissions objectives
Mechanical Reliability
2007
2008target
Btu Efficiency Improvement
$51$62
$76
$23 $25$19$30
$33
$0
$20
$40
$60
$80
2005 2006 2007 2008
($ in
mill
ions
)
Btu Efficiency Margin Cumulative Annual Pipeline Integrity Spending
B
•
2008 run time target of 98.5%•
Initiatives:– Predictive-based maintenance– Critical spare parts inventory– Expand supersystem footprint
•
2008 Btu efficiency target of 95.5% •
Initiatives:– Value driven leak repair– Horsepower optimization– Btu recovery and recycle
DCP Midstream…A Consistent Success Story | September 22, 200823
Accelerating growth opportunities support $1B for new projects (2009 – 2011)
Expansion Within the Footprint –
Bolt-on Projects
Drilling activity throughout footprint supports expansion
Strategy to preserve/ expand volumes
Typically bolt-on
EBIT ROCE 15%+ typical
Cimarron River E. Texas Optimization
Transco Spindown
Bluff Springs/Black Diamond
Spindletop Storage
Weld System Expansion
CV Expansion Cimarron Plant
Zapata County Expansion
Panola County, Texas
E. Avalon Build
DCP Midstream…A Consistent Success Story | September 22, 200824
Non-Conventional
Opportunities -
Shale Plays
Gammon Bakken Excello/Mulky
New Albany
Antrim
Floyd andConasauga
Fayetteville
Haynesville
Caney andWoodford
WoodfordBarnett
Niobrara
Barnett andWoodford
Palo Duro
Lewis and Mancos
Cane Creek
Green River
DCP Asset Shale Opportunity
Tolar Asset Barnett Shale
Southern Oklahoma Woodford Shale
Permian Basin Barnett & Woodford Shale (Delaware Basin)
East Texas & North Louisiana
Haynesville Shale
Weld County Niobrara Shale
Infrastructure is needed to support new developing resource areas
Marcellus/DevonianAppalachia
(NY, PA, WV)
DCP Midstream is advantaged in several shale plays
DCP Midstream…A Consistent Success Story | September 22, 200825
Organic Expansion –
Barnett ShaleExpansion of the Tolar – Barnett Shale asset acquired from Momentum in
2007 proceeds as planned ($80MM, In Service 2008–2009)
Barnett shale development continues to expand to non-core areas
Black Diamond first of three planned process trains in service 8/2008 (40MMcf/d)
Second train (40MMcf/d) expected in service 1Q 2009
Fee based services
Black Diamond Plant
DCP Midstream…A Consistent Success Story | September 22, 200826
Current Asset ProfileVolumes up 18% since 2005
Well connects up 100% since 2006
Favorable life of lease contracts
All seven plants at capacity
All compression running
Planned expansions to add system capacity in support of continued DJ Basin volume growth ($250 - $300MM, In Service 2009)
Organic Expansion –
Weld County, CO
Plants to be expanded
DCP Midstream…A Consistent Success Story | September 22, 200827
Step-Out Expansion: Haynesville Connector
Step-Out Expansion: Panola County, Texas Project
Construct 30 miles of 20” pipeline ($56MM, In Service 2009)
Project to be owned 75% by DCP Midstream and 25% by DCP Midstream Partners
Designed capacity of 175mmcf/d for processing at the JV’s E. Texas complex
Extend the reach of the JV gathering footprint in southern Panola County
Access volumes in the rapidly growing Minden Field
DCP Midstream…A Consistent Success Story | September 22, 200828
Construct 20 Miles of 24” pipeline, compression and liquids handling facilities ($150MM, In Service 2009)
DCP Partners is the operator and 70% owner
• Plains Exploration –
25%• Delta Petroleum –
5%
System through-put grows to 600mmcf/d over multi-year period
Acreage dedications include Delta Petroleum and Plains Exploration and Production
DCP Partners Organic Expansion Collbran Valley
DCP Midstream…A Consistent Success Story | September 22, 200829
Step-Out Expansion: Haynesville Connector
New Basin Expansion: Antrim Shale –
Michigan
DCP Partners Strategic Acquisition of Gas Assets in Michigan ($145MM, 10/2008 closing)
Modern Facilities with franchise position
5 Treating facilities and associated gathering systemOwnership in 3 residue pipelines
Future step out growth opportunities
Fee based and steady production
Predictable wells with long life reserves
Antrim Shale
DCP Midstream…A Consistent Success Story | September 22, 200830
Construct ~150 Miles of pipeline to serve the developing Haynesville Shale (In Service 2009-2010)
DCP Partners Step-Out Expansion: Haynesville Connector
DCP Midstream…A Consistent Success Story | September 22, 200831
Appalachia’s Devonian Shale (Marcellus and Huron) hold vast natural gas reserves estimated at >225 Tcf
These resources are in close proximity to NE markets
Extensive midstream infrastructure is needed to handle pressures and volumes from new horizontal wells
Marcellus Shale Devonian Shale Chattanooga, Huron, New Albany ShaleCoal Bed Methane
New Basin Expansion -
Appalachia
Evaluating opportunities to participate in developing resource areas
DCP Midstream…A Consistent Success Story | September 22, 200832
•
Midstream Fundamentals and Market Environment
•
DCP Midstream –
A Consistent Success Story
•
Strategic Advantages and Differentiators
•
DCP Midstream Partners –
The MLP Growth Vehicle
•
Financial Update and Disclosures
DCP Midstream…A Consistent Success Story | September 22, 200833
DCP Partners Strategic to DCP Midstream
Value CreationSignificant value creation through increased distributions to unit holders and achievement of 50% incentive distribution rightsDistributions have increased every quarter since inception
2-Yr CAGR of 26%
Background Sponsored MLP Completed IPO in December 2005Midstream owns 30.1% of Partners, including 1.3% GP interest Objective is to facilitate DCP Midstream growth
$0.35$0.38
$0.41$0.43
$0.47
$0.53$0.55
$0.57$0.59 $0.60
Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08
2-Yr CAGR of 26% Quarterly LP Distributions
A Growth and Ownership Vehicle with Access to Equity Markets
DCP Midstream…A Consistent Success Story | September 22, 200834
Strategic Transactions/Projects Provide Pivotal Growth Since IPO
(1) Excludes $11 million incurred on the Midland propane terminal prior to our acquisition.(2) We own a 70% interest in Collbran, a 40% equity interest in Discovery and a 25% equity interest in East Texas.(3) Estimated, net to Partners’ interest
DCP Partners Discipline Leads to Successful Execution
3rd Party AcquisitionsNew geographic areas Expand existing footprint
Lindsay (Anadarko Gathering) (5/07)Ivan (Laser Extension) (4/07)Collbran & Douglas (Momentum) (8/07)Michigan Pipeline and Processing (10/08)
Transaction Value ($MM)$181
10177145
Dropdown TransactionsNew lines of businessNew assets in new geographic areas
Gas Supply Resources (11/06)East Texas & Discovery (7/07)
72271
Build New Assets Wilbreeze
NGL Pipeline (2006)Midland Propane Terminal (2007)Collbran gathering expansion (2009)East Texas gathering expansion (2009)
1215
105 14
Total Closed or Pending Transactions $1,002
(1)
(3)
(3)
(2) (2)
(2)
(2)
(2)
DCP Midstream…A Consistent Success Story | September 22, 200835
•
Midstream Fundamentals and Market Environment
•
DCP Midstream –
A Consistent Success Story
•
Strategic Advantages and Differentiators
•
DCP Midstream Partners –
The MLP Growth Vehicle
•
Financial Update and Disclosures
DCP Midstream…A Consistent Success Story | September 22, 200836
DCP Midstream Strong Financial Performance
1
DCP Midstream’s Exceptional Asset Position
and Contract Portfolio Continue to Deliver Strong
Financial Results
(1) 2005 EBITDA and credit ratios exclude the gain from the TEPPCO GP sale of $1.1B
(2) Total debt includes DCP Midstream’s ownership % of Partners debt but excludes Lakehead debt
(3) Based on $83 crude oil and 60% NGL to crude relationship(4) EBITDA is based on the 2008 Budget. The Debt/EBITDA
ratio is from 6/30/08 debt and last trailing 12 months ending 6/30/08 EBITDA. The EBITDA/Interest ratio is from the last trailing 12 months ending 6/30/08 EBITDA and Interest Expense.
0%
5%
10%
15%
20%
25%
30%
35%
2004 2005 2006 2007 2008B (3)
RO
CE
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
WTI
- Cr
ude
ROCE WTI - Crude
$0
$500
$1,000
$1,500
$2,000
0.0
4.0
8.0
12.0
EBITDA $1,064 $1,454 $1,561 $1,555 $1,900
Debt (2) / EBITDA 2.1 1.1 1.2 1.6 1.4
EBITDA / Interest 6.6 9.4 10.8 9.1 10.6
2004 2005 (1) 2006 2007 2008 (4)
DCP Midstream…A Consistent Success Story | September 22, 200837
DCP Midstream Debt and Credit Facility Update
DCP MidstreamLong-Term Debt
BBB+/BBB+/Baa2MM % Notes Due
$800 7.875 2010
$250 6.875 2011
$200 5.375 2015
$300 8.125 2030
$300 6.450 2036
$450 6.750 2037
DCP Midstream Credit Facility• $450MM credit facility
• April 2012 maturity
• Financial covenant – 5x leverage ratio (Debt/EBITDA) with a step up to 5.5x for 3 quarters after an acquisition
• Leverage Ratio – 1.4x as of 6/30/08
364-Day Bank Loan• $300MM term loan used to partially
fund April 2008 special dividend
• April 2009 maturity
• Plan to take-out via the debt capital markets
DCP Midstream…A Consistent Success Story | September 22, 200838
DCP Midstream 2008 Financial Plan Summary
Long Gas Position Arises Due to Change in Contract Mix vs 2007 Crude Oil Sensitivity Reduced
Midstream Earnings ($MM) (1)
EBIT
$1,500EBITDA
$1,900Net Income
$1,300Dividends / Tax Distributions
$1,200 (2)
DCP Midstream CapEx
$ 620 (3)
(1)
Based on late October 2007 forward market curve for crude oil of $83 and 60% NGL to crude relationship
(2)
Spectra Energy receives 50% of dividends and tax distributions
(3)
Excludes DCP Partners CapEx
and includes $160MM increase from 2008B for recently approved projects
2008 Commodity Forecast and Sensitivity12 Month
Forecast Sensitivity EBIT Impact
Crude (1)
$83
+/-$1.00 bbl =+/-$24MMSE Impact = +/- $12MM
Natural
$8 +/-$1.00MMBtu =+/-$40MMGas
SE Impact = +/- $20MM
DCP Midstream…A Consistent Success Story | September 22, 200839
Hypothetical Example: Commodity Price Change Effect on EBIT (100%)
Hypothetical average commodity prices for calendar year 2008:$100/bbl Crude Oil
55% NGL/Crude Price Correlation$9/MMBTU Natural Gas
Crude Price Change ImpactSensitivity to Hypothetical
Budgeted Hypothetical +/- $1.00/bbl Crude 12-mo. EBITPrice Price Change Price Change IMPACT$83 $100 $17 x $24 $408
Correlation Assumption Decrease Impact - @$100/bbl Crude PriceSensitivity to Hypothetical
Budgeted Hypothetical 1% Change in 12-mo. EBITCorrelation Correlation Change Correlation IMPACT
60% 55% (5) x $30 ($150)
Natural Gas Price Increase ImpactHypothetical
Budgeted Hypothetical Sensitivity to 12-mo. EBITPrice Price Change +/- $1.00 MMBTtu IMPACT$8 $9 $1 x $40 = $40
Total Hypothetical 12 mo. EBIT Impact to Change in Price and Correlation $298
Crude Oil Price/bbl
Crude Oil to NGL Price Correlation %
Crude Oil Price/bbl
=
=
DCP Midstream…A Consistent Success Story | September 22, 200840
Historical Cash Flow to Parents
$94$389
$650 $497 $292$527
$580
$801 $867
$320
$500
$1,345
$0
$500
$1,000
$1,500
$2,000
$2,500
2004 2005 2006 2007 Thru June2008
Tax Distribution Dividend Distribution Special Distribtution
$621
$2,314 (1)
$1,451 $1,364
$1,112
Total distributions to Spectra/Duke Energy since 2004, are in excess of $4B
(1) Includes distribution of $1.1B for sale of TEPPCO GP and $245MM cash for 50/50 JV Split
DCP Midstream…A Consistent Success Story | September 22, 200841
DCP Partners Hedging Policy Details and ObjectivesThe purpose of the DCP Partners commodity hedging program is to protect distributable cash flow and maintain minimum cash flow to service debt, production replacement and capital projects
DCP Partners has placed $75 million of DCP Partners has placed $75 million of Letters of Credit and has DCP Midstream Letters of Credit and has DCP Midstream parental guarantees issued to selected parental guarantees issued to selected counterparties to significantly reduce or counterparties to significantly reduce or eliminate margining requirementseliminate margining requirementsDCP Partners has hedged approximately DCP Partners has hedged approximately 75% of its 2008 commodity exposure and 75% of its 2008 commodity exposure and has additional hedges thru 2013 at has additional hedges thru 2013 at diminishing percentages diminishing percentages The DCP Partners Risk Management The DCP Partners Risk Management Policy allows hedging for up to seven years Policy allows hedging for up to seven years and up to 90% of Partnersand up to 90% of Partners’’ commodity commodity exposureexposure
Hedging Objective is to Protect Distributable Cash Flow
DCP Midstream…A Consistent Success Story | September 22, 200842
Exceptional Performance and Financial Strength
Competitive Position
• Leading industry position• Geographic diversity with
regional focus• Extensive expertise and service
offering in a “must run” industry• Reliable operations
Financial Strength
• Robust earnings, cash generation and financial standing−
10.6x EBITDA/Interest Expense Ratio as of June 30, 2008
−
1.4x Debt/EBITDA as of June 30, 2008
• Positioned to withstand industrycycles and cover fixed costsduring industry downturns
Strong Sponsorship
• Experienced and successfulmanagement
• Proven track record of capitalizingon industry trends
• Spectra Energy and ConocoPhillipsare strong, supportive parentcompanies
Management Committed to Maintaining DCP Midstream’s StrongFinancial Position and Investment Grade Rating
43DCP Midstream…A Consistent Success Story | September 22, 2008