Robert G. Phillips
President
Midstream M&A Overview
Arthur Andersen Energy Symposium
November 28, 2000
Cautionary Statement Regarding
Forward-looking Statements
This presentation includes forward-looking statements and projections, made
in reliance on the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The companies have made every reasonable effort to
ensure that the information and assumptions on which these statements and
projections are based are current, reasonable, and complete. However, a
variety of factors could cause actual results to differ materially from the
projections, anticipated results or other expectations expressed in this
presentation, including, without limitation, oil and gas prices; general
economic and weather conditions in geographic regions or markets served
by El Paso Energy and Coastal and their affiliates, or where operations of the
companies and their affiliates are located; inability to realize anticipated
synergies and cost savings on a timely basis; difficulty in integration of
operations; and competition. While the companies make these statements
and projections in good faith, neither company nor its management can
guarantee that the anticipated future results will be achieved. Reference
should be made to the companies’ (and their affiliates’) Securities and
Exchange Commission filings for additional important factors that may affect
actual results.
Industry Fundamentals
Strong Industry Fundamentals
Growth Driven by New Natural Gas Demand
Natural Gas Demand

35
30

Tcf/y
25
20
15

10
5
0
1998
2005
2015
Electricity generation
All other uses
Source: National Petroleum Council

Demand for natural
gas to increase to
31 Tcf by 2015
250,000 MW
announced generation
projects
2.3 percent annual
demand growth
(1.5 percent power
demand only)
Creates summer
season peak demand
Strong Industry Fundamentals
Growth Driven by Supply Buildup
Natural Gas Supply

25

Bcf/d
20
An unprecedented level
of growth to reach 30 Tcf

15
US gas production
declines at 24% per year
Need 10-25 Bcf/d each
year new supply
Capital expenditure
requirements per year:
$30 billion—E&P
 $10 billion—Midstream
 $3 billion—Gas
transmission
Focus on GOM, Rockies,
South Texas, WCSB, and
frontier areas

10
5
Strong demand pressure from
power under any scenario
0
1998 2000 2002 2004 2006 2008 2010
Source: CERA

Strong Industry Fundamentals
Strong Prices Promote Growth in Midstream

Natural
Gas Prices
0.60
0.50
0.40
0.30
0.20
0.10
0.00

5.00
4.00
3.00
2.00
$/MMBtu

1.00
0.00
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
$/Gallon
Crude and
NGL Prices
Crude Oil
Ethane
Natural Gas
Propane

Supplies will remain
tight through winter
2000/2001
Supply response will
appear by mid-2001
Technology and
infrastructure key to
Deepwater GOM and
frontier areas
High growth potential in
gathering, processing,
treating, storage for
gas, crude and natural
gas liquids
Midstream Segment
Old vs. New Midstream

Old Midstream Services— gathering and
processing in the field for delivery to
transmission systems

New Midstream Services— gas gathering,
compression, EFM and Internet based
scheduling, treating, processing, fractionation,
gas and gas liquids transportation, storage,
offshore platforms, production handling,
FPSO’s and wholesale marketing of natural
gas, crude oil, natural gas liquids and refined
products
Midstream Segment Overview
Major component of the natural gas
value chain
 Midstream currently enjoying record
profitability/free cash flow driven by high
commodity prices and consolidation
 Largely fee based businesses except for
processing
 Significant M&A activity in past few
years

Competitive Landscape
Natural gas and NGL segment
consolidating
 Tremendous economies of scale
 Strategic growth via acquisition and
organic infrastructure opportunities
 MLPs used as new financing tool

New Midstream “Majors”
Duke Energy Field Services
 El Paso Field Services
 Williams Field Services
 Kinder Morgan Energy Partners
 Enterprise Products Partners LP

Midstream M&A Analysis
U.S. Midstream M&A Volume
$ Billions
3.5
2.2
3.3
16.1
0.55
17
13.1
5.7
1997
1998
1999
Corporate Deals
Source: Chase Securities Inc. and J.S. Herold
Asset Deals
2000
Precedent Transactions
Midstream
Announced
Date
Buyers
09/25/00
Enterprise Products Partners, L.P.
Acadian Gas, LLC.
08/03/00
The Williams Companies, Inc.
01/30/00
Sellers
Transaction
Value
($MM)
Transaction
Value/
EBITDA
$ 226.0
8.5x
Transcanada Pipelines, Ltd.
540.0
N/A
El Paso Field Services
PG & E Corp./GTT
840.0
8.4
12/17/99
Duke Energy Field Services
Phillips Petroleum Co./GPM
6,000.0
10.0
07/08/99
Kinder Morgan, Inc.
KN Energy, In.
598.9
13.0
04/20/99
Enterprise Products Partners, L.P.
Royal Dutch Shell, Inc.
421.6
N/A
11/22/98
Duke Energy Field Services
Union Pacific Resources Corp.
1,350.0
8.2
08/10/98
El Paso Field Services
Leviathan Gas Pipeline Partners
420.0
N/A
11/24/97
The Williams Companies, Inc.
MAPCO, Inc.
3,517.0
10.9
10/20/97
Kinder Morgan, Inc.
Santa Fe Pacific Pipelines Partners
$1,421.4
11.3
Source: J.S. Herold
Multiple Summary
Mean = 9.6
High = 13.0
Median = 10.0
Low = 8.2
Midstream Transaction Multiples
4Q 1996 to Present ($ Millions)
(LTM EBITDA Multiple)
25
20
15
Kinder Morgan–Santa Fe
Kinder Morgan–KN


10

ENT–Acadian
Williams–MAPCO
 Duke–UPR

Duke–Phillips


El Paso–PGE/GTT
5
0
10/97
11/97
11/98
7/99
12/99
1/00
Announcement Date
Source: John S. Herold, Inc.
9/00
Midstream M&A Case Studies
Duke/GPM
Transaction Profile
Announced
Date
Buyers
12/17/99 Duke Energy Field Services
Sellers
GPM
Deal
Level
JV
Transaction Transaction
Value
Value/
($MM)
EBITDA
$6,000
10.0x
Rationale
Creates the largest midstream company in the industry. Joint venture
takes advantage of economies of scale in Permian, Anadarko and
Mid-Continent areas. Planned IPO last summer was withdrawn.
Duke Energy Field Services has 57,000 miles of pipeline, interests in
83 processing plants with 7.9 Bcf/d capacity producing 415,000 Bbls/d of
natural gas liquids. Assumed GP interest in TEPPCO Partners LP in
March 2000.
Williams/TransCanada
Transaction Profile
Announced
Date
08/3/00
Buyers
The Williams Companies
Sellers
Deal
Level
Transaction Transaction
Value
Value/
($MM)
EBITDA
Transcanada Pipeline, Ltd Acquisition
$540
Rationale
To increase gas processing and NGL presence in the rapidly
growing Western Canadian market. Leverage off previous Mapco
acquisition. The purchased assets included approximately 6 bcf/d of
gas processing capacity, 225,000 bbl/d of NGL production capacity,
more than 5 MMbbl of NGL storage capacity, and an NGL pipeline
system. Expected to IPO a MLP entity in the near future.
NA
Kinder Morgan/KN Energy
Transaction Profile
Announced
Date
Buyers
07/08/99 KN Energy, Inc.
Sellers
Kinder Morgan, Inc.
Deal
Level
Transaction Transaction
Value
Value/
($MM)
EBITDA
Acquisition
$599
13.0x
Rationale
Combination creates large natural gas pipeline and refined products
pipeline entity in Midwest and Western US. Unique corporate structure
allows Kinder Morgan to transfer desirable assets into Kinder Morgan
Energy Partners, its MLP. The combined entity operates over 30,000
miles of natural gas and products pipelines, gathering, processing and
treating facilities for gas, NGL’s and refined products and numerous bulk
terminal facilities.
Enterprise/Shell
Transaction Profile
Announced
Date
Buyers
Sellers
Deal
Level
Transaction Transaction
Value
Value/
($MM)
EBITDA
07/01/00 Enterprise Products Partners L.P.
Shell / Acadian
Acquisition
$200.0
8.5x
04/20/99 Enterprise Products Partners L.P.
Shell / Tejas
Acquisition
421.6
NA
Rationale
To form a fully integrated Gulf Coast natural gas and NGL business.
Through the Tejas acquisition, EPD expanded its significant NGL
business including fractionation and storage at Mont Belvieu with
interests in 11 gas processing plants (3.1 Bcf/d), 4 NGL fractionation
facilities (131 MBbl/d), four NGL storage facilities (8.8 MM Bbls), and
2,100 miles of NGL pipelines. In the Acadian acquisition, EPD increased
its gas gathering and transportation activities in Louisiana.
El Paso Field Services
EPFS/GTT/CFS
Transaction Profile
Announced
Date
Buyers
Sellers
Deal
Level
Transaction Transaction
Value
Value/
($MM)
EBITDA
01/31/00 El Paso Field Services
PG&E / GTT
Acquisition
01/15/00 El Paso Field Services
Coastal/CFS
Merger
$840
8.4x
Rationale
El Paso acquired GTT to expand gathering and processing
presence in South Texas and Gulf Coast and bolster NGL
fractionation and liquids pipeline operations. The purchased assets
include 8,500 miles of pipeline with throughput capacity of 2.8 Bcf/d,
9 gas processing plants with capacity of 1.5 Bcf/d yielding 90,000
Bbls/d NGL production and gas storage with capacity of 7.2 Bcf/d.
After the Coastal merger, Coastal Field Services will be integrated
into EPFS creating the 2nd largest midstream company in the
industry.
Combined Midstream Assets
Geographic Diversity and Commercial Balance
Rocky
Mountain
Mid-Continent
San Juan
Gathering Plants
El Paso
Coastal
GTT
Offshore
Storage
E. TX / N. LA
Black Warrior
Permian
Gulf of Mexico
Size and Scope of Combination
2nd Largest Midstream Player in U.S.
EPFS
GTT
Pipeline volumes (Bcf/d)
4.1
2.8
1.0
7.9
Processing volumes (Bcf/d)
1.1
1.5
1.5
4.1
NGL production (MBbls/d)
63
90
55
208
11,000
9,000
4,000
24,000
11
9
15
35
Miles of pipeline
Processing plants
Coastal
Total
Drivers for Growth

Leading asset position in the fastest growing
producing areas:







San Juan Basin
Gulf of Mexico
South Texas
Rockies
Large E&P affiliate expands opportunity set
Significant integration savings and revenue
enhancements
Leverage MLP with asset transfers
EPN Corporate Structure
El Paso Energy Partners Relationship to El Paso Energy

El Paso Energy
Corporation

100%
General
Partner
30.3% (including General
Partner interest)
EPN
(Partnership)
Market Equity
$0.7 bn
Debt
0.5
Enterprise Value
$1.2 bn

El Paso Energy owns 30%
of the Partnership
EPN is El Paso Energy’s
primary vehicle for
acquiring and developing
midstream assets
GP interest incentivized to
grow distributions
Public LP
Unitholders
69.7%
Master Limited Partnerships
MLPs & Midstream “Majors”
Master Limited Partnerships
 Duke
- TEPPCO Partners
 El Paso Energy Partners
 Enterprise Product Partners
 Kinder Morgan Energy Partners
 Williams Energy Partners
MLP Performance Overview
October 31, 2000
YTD
Return
10/31/00
Unit Price
Current 10/31/00
Distribution Yield
El Paso Energy Partners
47.5%
$25.88
$2.20
8.5%
Enterprise Products Partners
51.1
$25.81
$2.10
8.1%
Kinder Morgan Energy Partners
22.4
$47.50
$3.40
7.2%
TEPPCO Partners
31.7
$23.44
$2.10
9.0%
S&P 500 Index
<1.8%>
Ideal MLP Assets

Predictable cash flow



No commodity price/volume exposure
Low maintenance capital requirements
Stable financial history
Focused on free cash flow generating
capability not earnings
 Immediately accretive to LP distributions
 Leveragability; minimize equity dilution

Key MLP Advantages
Corporate finance tool to monetize
assets
 Tax efficient structure
 Maintain operating control of key assets
 Provides off-balance sheet financing
 Free up corporate debt capacity
 Lower cost of capital—acquisition edge

Final Remarks
Forecasted commodity prices ensure
significant growth in midstream segment
 Capital returns count. MLPs provide
financial advantage
 In mature markets there is room for only
a handful of major players

Robert G. Phillips
President
Midstream M&A Overview
Arthur Andersen Energy Symposium
November 28, 2000