(Note: This is not this week’s Frac Spread)

The continued drop in natural gas feedstock prices helped natural gas liquids (NGL) frac spread margins at Mont Belvieu showed improvements and lessened the drop for Conway margins while improving several other margins.

Ethane margins were down at both hubs as the margin fell 22% at Conway and 6% at Mont Belvieu. This was the lone NGL frac spread margin to decrease at both hubs the week of March 17.

The most improved margin at both hubs was for butane, which rose 2% at Conway and 5% at Mont Belvieu. The second most improved margin at Mont Belvieu was for iso-butane, which improved by 4%. Pentanes-plus (C5+) was the second most improved margin at Conway at 2%.

The most profitable NGL to make at both hubs was C5+ at US$1.40 per gallon (/gal) at Mont Belvieu and $1.38/gal at Conway. This was followed, in order, by iso-butane at $1.09/gal at Mont Belvieu and $1.06/gal at Conway; butane at $1.04/gal at Mont Belvieu and 92¢/gal at Conway; propane at 75¢/gal at Mont Belvieu and 70¢/gal at Conway; and ethane at 30¢/gal at Mont Belvieu and 14¢/gal at Conway. – Frank Nieto

Current Frac Spread (Cents/Gal)

Date: March 25, 2010

Conway

Change from

Mont

last week

Belvieu

last week

Ethane

40.83

56.90

Shrink

26.52

27.32

Margin

14.31

-22.34%

29.58

-5.52%

Propane

106.83

112.28

Shrink

36.64

37.74

Margin

70.19

-0.26%

74.54

2.59%

Normal Butane

133.67

147.13

Shrink

41.48

42.72

Margin

92.19

2.33%

104.41

4.72%

Iso-Butane

145.83

149.75

Shrink

39.84

41.04

Margin

105.99

-1.89%

108.71

3.93%

Pentane+

182.50

186.13

Shrink

44.36

45.69

Margin

138.14

1.47%

140.44

2.64%

NGL $/Bbl

42.71

-2.69%

46.47

-0.45%

Shrink

14.61

15.05

Margin

28.09

-1.82%

31.42

1.80%

Gas ($/mmBtu)

4.00

-4.31%

4.12

-4.85%

Gross Bbl Margin (in cents/gal)

64.19

-1.79%

73.02

1.77%

NGL Value in $/mmBtu

Ethane

2.25

-11.51%

3.13

-5.20%

Propane

3.71

-1.68%

3.90

-0.04%

Normal Butane

1.44

0.17%

1.59

1.75%

Iso-Butane

0.91

-2.57%

0.93

1.37%

Pentane+

2.35

0.00%

2.40

0.69%

Total Barrel Value in $/mmbtu

10.66

-3.42%

11.95

-0.97%

Margin

6.66

-2.88%

7.83

1.21%

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.