(Note: This is not this week’s frac spread).

Frac spread margins fell throughout the month of February as both natural gas feedstock prices and natural gas liquids (NGLs) prices dropped during the course of the month. Only two heavier NGLs – butane and C5+ – posted margin gains over the course of the four weeks.

The largest gains were both posted at Conway with the butane margin up 10% and the C5+ margin up 8%. By comparison, butane and C5+ were tied for the largest margin gain at Mont Belvieu at 4%.

Conway iso-butane had the largest decrease in margin at either hub with a 20% drop for the month. The largest drop in margin at Mont Belvieu was for propane, which fell 8%.

The most profitable NGL to make at both hubs for the month of February was C5+ at US$1.29 per gallon (/gal) at Conway and $1.27/gal at Mont Belvieu. This was followed, in order, by iso-butane at $1.09/gal at Conway and $1.17/gal at Mont Belvieu; butane at $1.01/gal at Conway and $1.04/gal at Mont Belvieu; propane at 82¢/gal at Conway and 80¢/gal at Mont Belvieu; and ethane at 30¢/gal and 41¢/gal at Mont Belvieu. – Frank Nieto

Current Frac Spread (Cents/Gal)

Date: February 2010

Conway

Change from

Mont

start of month

Belvieu

start of month

Ethane

61.00

72.83

Shrink

30.90

32.02

Margin

30.10

-3.69%

40.81

-3.49%

Propane

124.30

123.97

Shrink

42.69

44.24

Margin

81.61

-6.34%

79.73

-8.36%

Normal Butane

148.85

154.00

Shrink

48.32

50.09

Margin

100.53

9.90%

103.91

4.02%

Iso-Butane

155.50

165.37

Shrink

46.41

48.11

Margin

109.09

-19.85%

117.26

-2.37%

Pentane+

181.00

180.43

Shrink

51.68

53.56

Margin

129.32

7.90%

126.87

3.36%

NGL $/Bbl

49.04

-4.87%

50.71

-4.00%

Shrink

17.02

17.64

Margin

32.02

-1.55%

33.06

-2.04%

Gas ($/mmBtu)

4.66

-10.56%

4.83

-7.47%

Gross Bbl Margin (in cents/gal)

73.46

-1.98%

77.30

-2.51%

NGL Value in $/mmBtu

Ethane

3.36

-7.29%

4.01

-5.28%

Propane

4.32

-7.83%

4.30

-8.05%

Normal Butane

1.61

2.30%

1.66

-0.02%

Iso-Butane

0.97

-17.29%

1.03

-3.91%

Pentane+

2.33

1.90%

2.33

-0.11%

Total Barrel Value in $/mmbtu

12.58

-5.65%

13.33

-4.61%

Margin

7.92

-2.50%

8.50

-2.91%

Price, Shrink of 42-gal NGL barrel based on following: Ethane, 36.5%; Propane, 31.8%; Normal Butane, 11.2%; Isobutane, 6.2%; Pentane+, 14.3%, Fuel, frac, transport costs not included. Conway gas based on NGPL Midcontinent zone, Mont Belvieu based on Houston Ship Channel.

Shrink is defined as Btus that are removed from natural gas through the gathering and processing operation.