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| Discussion Materials January 8, 2009 |
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| Strategic Alternatives Summary Description Highlights ConsiderationsMaintain current status without anyRecovery/compliance dependent onCovenant problem requires pursuing a changes to operations, organizational sharp increase in near term commodity strategic solution. Status Quo structure or capital structure. prices.Likely no access to capital markets.Small market cap exacerbates risk.Restructure current credit agreement toPreserves asset base and future upside.Potential for bank group defections. Renegotiate Credit provide temporary covenant relief.Minimizes investor dilution.Size of covenant problem. AgreementLikely onerous terms. Use Asset SalePartially monetize existing assets andProvides proceeds relatively near termHighest quality assets would need to be sold. Proceeds to use net proceeds to repay debt. to repay bank debt.Limited universe of buyers. Partially RepayNegative impact on revolver availability. Existing DebtRemaining entity too small to remain public. Issue Convertible toDelever through the issuance ofStrengthens balance sheet.Significant execution risk. Partially Repay convertible security. Proceeds used toPreserves independence.Equity dilution. Existing Debt repay bank debt.Unitholder approval needed. Issue Sub. Debt toIssue deeply subordinated bridge loanProvides unitholders ability to retainRequires consent of existing lenders. P artially Repay and use proceeds to repay bank debt. upside without immediate dilution.May change nature of lending relationships. Existing DebtPreserves independence.Dilution if refinanced with new equity.Apply net proceeds from commonStrengthens balance sheet.Significant execution risk and dilution to Issue New Equity to equity issuance to existing debt inPreserves independence. existing unitholders. Partially Repay order to comply with debt covenants.Permanently impairs the value of HPGP’s Existing Debt sub units and IDRs.Unitholder approval needed.Combine with peer to extract synergiesPreserves equity holder participation inLoss of control. Merger and potentially alleviate credit future recovery.Limited universe of partners. concerns.Diversification.Cease to be publicly traded entity.Avoids downside risk to unitholdersReputational risk if not perceived correctly. associated with other alternatives.Litigation risk if not valued fairly. Restructure / Provides immediate liquidity to equityAdditional equity investments needed. Go Private holders.May be easier to grow as private company. Project Double Barrel 2 |
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| Alternatives Summary — HLND Implied Common Unit Price $ 0.00 $ 6.00 $ 12.00 $ 18.00 $ 24.00 $ 30.00 $ 36.00 Strip Case Comparable Transaction Multiples $ 3.46 $ 12.32 7.0x — 9.0x 2009E EBITDA multiple ($41.4 MM) Public Company Valuation 1 NM $ 7.89 5.4x — 8.0x 2009E EBITDA multiple ($41.4 MM) Convertible Security Issuance $ 8.42 $ 17.13 7.5% — 17.5% 2013E exit yield and 20.0% — 30.0% discount rate (13.3x — 5.7x 2013E cash flow exit multiple) Subordinated Debt Issuance $ 7.92 $ 17.25 7.5% — 17.5% 2013E exit yield and 20.0% — 30.0% discount rate (13.3x — 5.7x 2013E cash flow exit multiple) Common Equity Issuance $ 7.52 $ 16.52 7.5% — 17.5% 2013 exit yield and 20.0% — 30.0% discount rate (13.3x — 5.7x 2013E cash flow exit multiple) Implied TEV / 2009E EBITDA Multiple ( $41.4 MM) 6.2x 7.6x 8.9x 10.3x 11.6x 13.0x 14.3x Implied TEV / 2010E EBITDA Multiple ( $48.0 MM) 5.4x 6.5x 7.7x 8.9x 10.0x 11.2x 12.4x HLND Closing Price Comparable Transaction Multiples @1/6/09 $ 18.12 $ 31.17 7.0x — 9.0x 2009E EBITDA multiple ($61.0 MM) ($ 11.03) Public Company Valuation 1 $ 7.68 $ 24.65 5.4x — 8.0x 2009E EBITDA multiple ($61.0 MM) Convertible Security Issuance $ 10.84 $ 21.69 7.5% — 17.5% 2013E exit yield and 20.0% — 30.0% discount rate (13.3x — 5.7x 2013E cash flow exit multiple) Subordinated Debt Issuance $ 9.05 $ 20.48 7.5% — 17.5% 2013E exit yield and 20.0% — 30.0% discount rate (13.3x — 5.7x 2013E cash flow exit multiple) Common Equity Issuance $ 9.45 $ 20.36 7.5% — 17.5% 2013E exit yield and 20.0% — 30.0% discount rate (13.3x — 5.7x 2013E cash flow exit multiple) Implied TEV / 2009E EBITDA Multiple ( $61.0 MM) 4.2x 5.1x 6.1x 7.0x 7.9x 8.8x 9.7x Implied TEV / 2010E EBITDA Multiple ( $72.2 MM) 3.6x 4.3x 5.1x 5.9x 6.7x 7.4x 8.2x 1 Range excludes the high and low values Project Double Barrel 3 |
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| Alternatives Summary — HPGP Implied Common Unit Price $ 0.00 $ 1.25 $ 2.50 $ 3.75 $ 5.00 $ 6.25 $ 7.50 HPGP Closing Price Public Company Valuation 1 @1/6/09 $ 2.89 $ 3.04 6.2x — 11.8x 2009E GP cash flow multiple ($0.6 MM) ($ 4.65) Convertible Security Issuance $ 2.14 $ 4.26 7.5% — 17.5% 2013E exit yield and 20.0% — 30.0% discount rate (13.3x — 5.7x 2013E cash flow exit multiple) Subordinated Debt Issuance $ 1.92 $ 4.25 7.5% — 17.5% 2013E exit yield and 20.0% — 30.0% discount rate (13.3x — 5.7x 2013E cash flow exit multiple) Common Equity Issuance $ 1.35 $ 3.48 7.5% — 17.5% 2013E exit yield and 20.0% — 30.0% discount rate (13.3x — 5.7x 2013E cash flow exit multiple) Public Company Valuation 1 $ 4.43 $ 5.99 6.2x — 11.8x 2009E GP cash flow multiple ($6.0 MM) Convertible Security Issuance $ 3.41 $ 6.54 7.5% — 17.5% 2013E exit yield and 20.0% — 30.0% discount rate (13.3x — 5.7x 2013E cash flow exit multiple) Subordinated Debt Issuance $ 2.50 $ 5.93 7.5% — 17.5% 2013E exit yield and 20.0% — 30.0% discount rate (13.3x — 5.7x 2013E cash flow exit multiple) Common Equity Issuance 7.5% — 17.5% 2013E exit yield and 20.0% — 30.0% discount rate $ 2.59 $ 5.75 (13.3x — 5.7x 2013E cash flow exit multiple) 1 Range excludes the high and low values Project Double Barrel 4 |
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| Subordinated Debt Issuance — Strip Case Commentary HLND repays existing bank debt by issuing $120 million of subordinated debt at December 31, 2008. Subordinated debt allows for:10% cash interest5% PIK 12/31/2011 maturity MQD paid to common and subordinated unitholders through Q4 2011. Once the subordinated debt has reached maturity, distributions in 2012-2013 are based on 1.2x distribution coverage ratio Equity issuance of 9.7 million common units at $14.40 per unit used to retire $139.3 million of subordinated debt at 12/31/2011. Issuance price based on 12.5% yield on the LQA distributionGP contributes to maintain its 2% interest1/3 of current outstanding subordinated units convert to common units at 3/31/09 and 2/3 of current outstanding subordinated units convert at 3/31/10 per the 12-quarter MQD test. HLND is below 4.0x senior debt but would need covenant relief. Commodity Prices (as of 12/31/08) 1 NYMEX Natural Gas $ 5.79 $ 5.78 $ 6.08 $ 6.68 $ 6.08 $ 7.10 $ 7.26 $ 7.20 $ 7.13 NYMEX Crude Oil $ 48.77 $ 53.51 $ 56.53 $ 58.97 $ 54.44 $ 63.88 $ 68.79 $ 71.14 $ 72.79 Conway Basket Average $ 0.649 $ 0.657 $ 0.681 $ 0.710 $ 0.674 $ 0.738 $ 0.989 $ 1.023 $ 1.047 Mt. Belvieu Basket Average $ 0.676 $ 0.695 $ 0.720 $ 0.747 $ 0.710 $ 0.778 $ 1.052 $ 1.088 $ 1.113 CIG Differential ($ 1.694) ($ 1.996) ($ 2.169) ($ 1.789) ($ 1.912) ($ 2.257) ($ 2.348) ($ 2.328) ($2.307) PEPL Differential ($ 1.400) ($ 1.239) ($ 1.109) ($ 1.114) ($ 1.216) ($ 0.958) ($ 1.220) ($ 1.209)($ 1.198) Centerpoint Differential ($ 1.288) ($ 1.016) ($ 1.010) ($ 1.003) ($ 1.079) ($ 0.922) ($ 1.134) ($ 1.124) ($ 1.114) OGT Differential ($ 1.400) ($ 1.239) ($ 1.109) ($ 1.114) ($ 1.216) ($ 0.958) ($ 1.111) ($ 1.102) ($ 1.091) Financial Results 2 Base EBITDA $ 9.2 $ 10.0 $ 10.8 $ 11.5 $ 41.4 $ 46.9 $ 62.0 $ 63.9 $ 64.9 Growth EBITDA 0.0 0.0 0.0 0.0 0.0 1.1 3.6 3.6 3.6 EBITDA $ 9.2 $ 10.0 $ 10.8 $ 11.5 $ 41.4 $ 48.0 $ 65.5 $ 67.5 $ 68.5 Maintenance Capital Expenditures (1.6) (2.2) (2.0) (1.7) (7.6) (8.5) (8.5) (8.5) (8.5) Interest Expense 3 (1.7) (1.8) (1.8) (1.7) (6.9) (6.4) (6.9) (7.6) (8.8) Capital Lease Payments (0.1) (0.1) (0.1) (0.1) (0.4) (0.4) (0.4) (0.4) (0.4) Subordinated Debt Cash Interest ( $ 3.0) ($ 3.0) ($ 3.1) ($ 3.1) ( $ 12.2) ($ 12.8) ($ 13.5) $0.0 $ 0.0 Remaining Common Distributable Cash Flow $ 2.7 $ 2.9 $ 3.8 $ 4.9 $ 14.3 $ 19.8 $ 36.2 $ 50.9 $ 50.8 Distribution Coverage 0.6x 0.7x 0.9x 1.1x 0.8x 1.2x 1.7x 1.2x 1.2x Cash to be Distributed/Pay Debt $ 4.3 $ 4.3 $ 4.3 $ 4.3 $ 17.2 $ 17.2 $ 21.6 $ 42.4 $ 42.3 Average Common Units Outstanding 6.3 7.3 7.3 7.3 7.0 8.8 11.8 19.0 19.0 Average Subordinated Units Outstanding 3.1 2.0 2.0 2.0 2.3 0.5 0.0 0.0 0.0 Total Distributions Paid Total Distributions to Common $ 2.8 $ 3.3 $ 3.3 $ 3.3 $ 12.7 $ 15.9 $ 21.2 $ 41.1 $ 41.0 Total Distributions to Subordinated 1.4 0.9 0.9 0.9 4.1 0.9 0.0 0.0 0.0 Total Distributions to GP/IDRs 0.1 0.1 0.1 0.1 0.3 0.3 0.4 1.4 1.4 Total Distributions Paid $ 4.3 $ 4.3 $ 4.3 $ 4.3 $ 17.2 $ 17.2 $ 21.6 $ 42.4 $ 42.3 Expansion Capital Expenditures $ 6.9 $ 3.9 $ 3.9 $ 3.9 $ 18.5 $ 21.5 $ 21.5 $ 21.5 $ 21.5 Equity Issuance $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 0.0 $ 139.3 $ 0.0 $ 0.0 Subordinated Debt Balance $ 121.5 $ 123.0 $ 124.6 $ 126.1 $ 126.1 $ 132.5 $ 0.0 $ 0.0 $ 0.0 Credit Metrics Senior Debt Balance $ 147.1 $ 152.4 $ 156.8 $ 160.1 $ 160.1 $ 178.9 $ 182.9 $ 196.0 $ 209.0 Senior Debt/LTM EBITDA 2.44x 3.04x 3.70x 3.87x 3.87x 3.73x 2.79x 2.90x 3.05x Covenant 4.00x 4.00x 4.00x 4.00x 4.00x 4.00x 4.00x 4.00x 4.00x Leverage Cushion / (Excess Leverage) $ 93. 6 $ 48.4 $ 12.7 $ 5.5 $ 5.5 $ 13.0 $ 79.2 $ 73.9 $ 65.1 LTM EBITDA/LTM Interest Expense 4.48x 3.32x 2.54x 2.16x 2.16x 2.49x 3.21x 8.83x 7.77x Covenant 3.00x 3.00x 3.00x 3.00x 3.00x 3.00x 3.00x 3.00x 3.00x Coverage Cushion / (Coverage Shortage) $ 19.9 $ 4.8 ($ 7.7) ($ 16.0) ( $ 16.0) ( $ 9.8) $ 4.4 $ 44.5 $ 42.1 Total Debt Balance $ 268.6 $ 275.5 $ 281.4 $ 286.2 $ 286.2 $ 311.5 $ 182.9 $ 196.0 $ 209.0 Total Debt/LTM EBITDA 4.46x 5.49x 6.64x 6.92x 6.92x 6.49x 2.79x 2.90x 3.05x 1 Based on commodity prices from Wachovia’s commodities group as of December 31, 2008 2 Based on HLND’s management guidance 3 Interest expense based on LIBOR from Wachovia Economics through 2010 and assumed to be 1.75% for 2011, 2.00% for 2012 and 2.25% for 2013 Project Double Barrel 5 |
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| Subordinated Debt Cash Flow Subordinated Debt Cash Flows ($ in millions, except per unit amounts) 12/31/08 1Q 2009 2Q 2009 3Q 2009 4Q 2009 2010 2011 Retirement Subordinated Debt Investment ($ 120.0) Cash Interest 1 $ 3.0 $ 3.0 $ 3.1 $ 3.1 $ 12.8 $ 13.5 PIK Interest 2 $ 1.5 $ 1.5 $ 1.5 $ 1.6 $ 6.4 $ 6.8 Principal Balance $ 139.3 1 Calculated based on annual 10% simple interest 2 Calculated based on annual 5% simple interest Project Double Barrel 6 |
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| Subordinated Debt Issuance — HLND Unit DCF Analysis HLND Common Unit DCF — Strip Case PV Annual Projections 12/31/2008 2009 2010 2011 2012 2013 Distribution Per Common Unit $1.80 $1.80 $1.80 $2.16 $2.16 Assumed Yield 12.5% Implied Future Unit Price $17.24 Discounted Cash Flow 1 $10.75 $1.44 $1.15 $0.92 $0.88 $6.36 1 Based on a 25.0% discount rate Common Unit DCF Sensitivity — Strip Case 2009E TEV/EBITDA Sensitivity — Strip Case 2013 Exit 2013 Exit Yield 7.5% 10.0% 12.5% 15.0% 17.5% Yield 7.5% 10.0% 12.5% 15.0% 17.5% Rate 20.0% $17.25 $14.36 $12.63 $11.47 $10.65 Rate 20.0% 9.9x 9.2x 8.8x 8.6x 8.4x 22.5% $15.81 $13.20 $11.64 $10.60 $9.85 22.5% 9.5x 9.0x 8.6x 8.4x 8.2x Discount 25.0% $14.52 $12.17 $10.75 $9.81 $9.14 Discount 25.0% 9.3x 8.7x 8.4x 8.2x 8.0x 27.5% $13.37 $11.24 $9.96 $9.11 $8.50 27.5% 9.0x 8.5x 8.2x 8.0x 7.9x 30.0% $12.35 $10.41 $9.25 $8.48 $7.92 30.0% 8.8x 8.3x 8.1x 7.9x 7.8x HLND Common Unit DCF — Upside Case PV Annual Projections 12/31/2008 2009 2010 2011 2012 2013 Distribution Per Common Unit $1.80 $1.80 $1.80 $2.72 $2.67 Assumed Yield 12.5% Implied Future Unit Price $21.36 Discounted Cash Flow 1 $12.50 $1.44 $1.15 $0.92 $1.11 $7.87 1 Based on a 25.0% discount rate Common Unit DCF Sensitivity — Upside Case 2009E TEV/EBITDA Sensitivity — Upside Case 2013 Exit 2013 Exit Yield 7.5% 10.0% 12.5% 15.0% 17.5% Yield 7.5% 10.0% 12.5% 15.0% 17.5% 20.0% $20.48 $16.90 $14.76 $13.33 $12.31 Rate 20.0% 7.2x 6.7x 6.3x 6.1x 5.9x Rate 22.5% $18.73 $15.50 $13.56 $12.27 $11.35 22.5% 6.9x 6.4x 6.1x 5.9x 5.8x Discount 25.0% $17.17 $14.25 $12.50 $11.33 $10.50 Discount 25.0% 6.7x 6.2x 6.0x 5.8x 5.7x 27.5% $15.77 $13.13 $11.55 $10.49 $9.74 27.5% 6.5x 6.1x 5.8x 5.7x 5.6x 30.0% $14.53 $12.13 $10.69 $9.73 $9.05 30.0% 6.3x 5.9x 5.7x 5.6x 5.4x Project Double Barrel 7 |
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| Subordinated Debt Issuance — HPGP Unit DCF Analysis Draft HPGP Common Unit DCF — Strip Case PV Annual Projections 12/31/2008 2009 2010 2011 2012 2013 Distribution Per Common Unit $0.41 $0.41 $0.41 $0.54 $0.54 Assumed Yield 12.5% Implied Future Unit Price $4.33 Discounted Cash Flow 1 $2.62 $0.33 $0.26 $0.21 $0.22 $1.60 1 Based on a 25.0% discount rate Common Unit DCF Sensitivity — Strip Case 2009E TEV/GP CF Sensitivity — Strip Case 2013 Exit 2013 Exit Yield 7.5% 10.0% 12.5% 15.0% 17.5% Yield 7.5% 10.0% 12.5% 15.0% 17.5% Rate 20.0% $4.25 $3.52 $3.09 $2.80 $2.59 Rate 20.0% 9.2x 7.7x 6.7x 6.1x 5.7x 22.5% $3.89 $3.24 $2.84 $2.58 $2.39 22.5% 8.5x 7.0x 6.2x 5.6x 5.2x Discount 25.0% $3.57 $2.98 $2.62 $2.39 $2.22 Discount 25.0% 7.8x 6.5x 5.7x 5.2x 4.8x 27.5% $3.29 $2.75 $2.43 $2.21 $2.06 27.5% 7.1x 6.0x 5.3x 4.8x 4.5x 30.0% $3.03 $2.54 $2.25 $2.06 $1.92 30.0% 6.6x 5.5x 4.9x 4.5x 4.2x HPGP Common Unit DCF — Upside Case PV Annual Projections 12/31/2008 2009 2010 2011 2012 2013 Distribution Per Common Unit $0.41 $0.41 $0.41 $0.84 $0.81 Assumed Yield 12.5% Implied Future Unit Price $6.46 Discounted Cash Flow 1 $3.53 $0.33 $0.26 $0.21 $0.35 $2.38 1 Based on a 25.0% discount rate Common Unit DCF Sensitivity — Upside Case 2009E TEV/GP CF Sensitivity — Upside Case 2013 Exit 2013 Exit Yield 7.5% 10.0% 12.5% 15.0% 17.5% Yield 7.5% 10.0% 12.5% 15.0% 17.5% Rate 20.0% $5.93 $4.84 $4.20 $3.76 $3.45 Rate 20.0% 12.8x 10.5x 9.1x 8.2x 7.5x 22.5% $5.41 $4.43 $3.84 $3.45 $3.18 22.5% 11.7x 9.6x 8.4x 7.5x 6.9x Discount 25.0% $4.94 $4.06 $3.53 $3.18 $2.93 Discount 25.0% 10.7x 8.8x 7.7x 6.9x 6.4x 27.5% $4.53 $3.73 $3.25 $2.93 $2.70 27.5% 9.8x 8.1x 7.1x 6.4x 5.9x 30.0% $4.16 $3.44 $3.00 $2.71 $2.50 30.0% 9.0x 7.5x 6.5x 5.9x 5.5x Project Double Barrel 8 |
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| Go Private Assumptions General Assumptions4.0 million of HLND and 8.4 million units of HPGP are purchased for total consideration of $91.3 million.$13.24 per HLND unit (20% premium to 1/6/09 close)$4.65 per HPGP unit (0% premium to 1/6/09 close)11.3x 2009E EBITDA based on strip case7.7x 2009E EBITDA based on upside caseTransaction close on 12/31/08.$1.0 million in savings from elimination of public company costs.Free cash flow used to repay revolver.Dividends allowed with leverage below 4.0x debt/EBITDAAcquisition financed with revolver and cash from equity investor(s).Target leverage at close of 4.0x 2009E EBITDAExisting revolver remains in placeRequires $87.3 million in additional equity to comply with debt covenants.Total cash outlay of $178.6 million.Interest expense based on current pricing grid. Purchase Price Analysis ($ in millions, except per unit amounts) HLND HPGP Current Units Units % of Total $ Value (MM) Units % of Total % Mkt Value Harold Hamm 0 0.0% $0.0 13,244,675 61.3% $61.6 HPGP Ownership 5,381,471 57.6% 59.4 0 0.0% 0.0 Purchased Units Other Insiders 58,748 0.6% $0.6 203,808 0.9% $0.9 Total Insiders 5,440,219 58.2% 60.0 13,448,483 62.2% 62.5 Institutional Ownership 2,529,290 27.1% 27.9 6,016,139 27.8% 28.0 Public Ownership 1,372,826 14.7% 15.1 2,142,878 9.9% 10.0 Total Purchased 3,960,864 42.4% $43.7 8,362,825 38.7% $38.9 Total Outstanding 9,342,335 100.0% $103.0 21,607,500 100.0% $100.5 Current Unit Price $11.03 $4.65 Current Market Value of Purchased Units $43.7 $38.9 Implied Market Capitalization $103.0 $100.5 Current Unit Price $11.03 $4.65 % Premium 20.0% 0.0% Purchase Price per Unit $13.24 $4.65 Minority Stake Purchase Price $52.4 $38.9 Implied Equity Value $123.7 $100.5 Net Debt Outstanding 254.1 0.7 Enterprise Value $377.8 $101.2 2009E EBITDA (Base) $42.4 2009E EBITDA (Upside) $62.0 Implied Multiple of 2009E EBITDA (Strip) 8.9x Implied Multiple of 2009E EBITDA (Upside) 6.1x Total Purchase Price $91.3 Total Implied Equity Value $224.1 Total Net Debt 254.8 Total Enterprise Value $478.9 Implied Multiple of 2009E EBITDA (Strip) 11.3x Implied Multiple of 2009E EBITDA (Upside) 7.7x 1 Assumes savings of $450K for K-1/Tax Prep Fees, $300K of lower Board Fees and $250K of savings for Other Public Company costs (D&O, non-deal roadshow travel, conferences, etc.). Project Double Barrel 9 |
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| Returns Analysis Draft Internal Rate of Return — Strip Case Cash On Cash Returns — Strip Case 30.0% 1.4x 26.1% 1.2x 1.2x 1.1x 25.0% 22.7% 20.3% 1.0x 1.0x 20.0% 0.8x 16.0% 15.4% 0.8x 0.7x 15.0% 14.7% Internal Rate of Return Cash on Cash 0.6x 0.5x 10.0% 7.6% 0.3x 6.2% 0.4x 0.2x 5.0% 3.5% 0.2x 0.1x 0.0% 0.0x 2011 2012 2013 2011 2012 2013 7.0x EBITDA Exit Multiple 9.0x EBITDA Exit Multiple 11.0x EBITDA Exit Multiple 7.0x EBITDA Exit Multiple 9.0x EBITDA Exit Multiple 11.0x EBITDA Exit Multiple Internal Rate of Return — Upside Case Cash On Cash Returns — Upside Case 1.9x 2.0x 1.8x 50.0% 44.0% 1.8x 45.0% 1.5x 38.2% 1.6x 40.0% 1.4x 33.1% 32.8% 1.4x 1.3x 35.0% 30.7% 30.0% 1.2x 1.0x 27.2% 25.0% 21.3% 1.0x 0.9x 19.5% 20.2% Cash on Cash 0.8x Internal Rate of Return 20.0% 0.8x 0.5x 15.0% 0.6x 10.0% 0.4x 5.0% 0.2x 0.0% 0.0x 2011 2012 2013 2011 2012 2013 7.0x EBITDA Exit Multiple 9.0x EBITDA Exit Multiple 11.0x EBITDA Exit Multiple 7.0x EBITDA Exit Multiple 9.0x EBITDA Exit Multiple 11.0x EBITDA Exit Multiple Note: IRR and Cash on Cash Returns assumes 20% and 0% premium to HLND and HPGP unit price, respectively Cash on Cash Returns calculated as all equity receipts over equity investments Project Double Barrel 10 |
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| Returns Sensitivity Analysis 5-Year Equity IRR — Strip Case Unit Price % Premium Purchase Market TEV / 2009E 2013 Trailing EBITDA Exit Multiple HLND HPGP HLND HPGP Price Cap TEV EBITDA 7.0x 8.0x 9.0x 10.0x 11.0x 12.0x $13.24 $4.65 20.0% 0.0% $91.3 $224.1 $478.9 11.3x 7.6% 11.4% 14.7% 17.7% 20.3% 22.7% to Unit $14.34 $5.12 30.0% 10.0% $99.6 $244.5 $499.3 11.8x 5.9% 9.7% 13.0% 15.9% 18.5% 20.9% $15.44 $5.58 40.0% 20.0% $107.8 $264.8 $519.6 12.3x 4.4% 8.2% 11.4% 14.3% 16.9% 19.2% Premium Price $16.55 $6.05 50.0% 30.0% $116.1 $285.2 $540.0 12.7x 2.9% 6.7% 9.9% 12.8% 15.4% 17.7% $17.65 $6.51 60.0% 40.0% $124.3 $305.5 $560.3 13.2x 1.6% 5.3% 8.6% 11.4% 14.0% 16.3% $18.75 $6.98 70.0% 50.0% $132.6 $325.9 $580.7 13.7x 0.4% 4.1% 7.3% 10.1% 12.6% 14.9% 5-Year Equity IRR — Upside Case Unit Price % Premium Purchase Market TEV / 2009E 2013 Trailing EBITDA Exit Multiple HLND HPGP HLND HPGP Price Cap TEV EBITDA 7.0x 8.0x 9.0x 10.0x 11.0x 12.0x $13.24 $4.65 20.0% 0.0% $91.3 $224.1 $478.9 7.7x 20.2% 23.9% 27.2% 30.1% 32.8% 35.2% to Unit $14.34 $5.12 30.0% 10.0% $99.6 $244.5 $499.3 8.1x 17.7% 21.5% 24.8% 27.7% 30.3% 32.7% $15.44 $5.58 40.0% 20.0% $107.8 $264.8 $519.6 8.4x 15.6% 19.3% 22.6% 25.5% 28.1% 30.4% Premium Price $16.55 $6.05 50.0% 30.0% $116.1 $285.2 $540.0 8.7x 13.6% 17.3% 20.6% 23.4% 26.0% 28.4% $17.65 $6.51 60.0% 40.0% $124.3 $305.5 $560.3 9.0x 11.7% 15.5% 18.7% 21.6% 24.1% 26.5% $18.75 $6.98 70.0% 50.0% $132.6 $325.9 $580.7 9.4x 10.0% 13.8% 17.0% 19.8% 22.4% 24.7% Project Double Barrel 11 |
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| Go Private Scenarios Considerations Post-Buyout Ownership Harold Hamm Cash Outlay Scenario Harold Hamm Swank & Kayne Buyout 1 Cash Infusion 2 Total Harold Hamm buys out 100% of 100.0% 0.0% $91.3 $87.3 $178.6 public / No outside partners Swank and Kayne roll over their 85.6% 14.4% 3 58.8 74.8 133.6 holdings Swank and Kayne increase their 80.0% 20.0% 46.0 69.8 115.8 holdings to 20% Swank and Kayne increase their 70.0% 30.0% 23.3 61.1 84.4 holdings to 30% Note: Analysis reflects Swank’s and Kayne Anderson’s HLND and HPGP unit holdings as of September 30, 2008, per FactSet 1 Reflects a 20% premium paid for HLND units and a 0% premium paid for HPGP units 2 Based on Harold Hamm’s post-buyout ownership percentage 3 Reflects Swank’s and Kayne Anderson’s HLND and HPGP unit holdings as of September 30, 2008 (per FactSet) at the contemplated buyout prices, shown as a percentage of the total combined equity value of HLND and HPGP Highlights of Partnering Considerations of Partnering · Provides opportunity for selected• Likely requires board representation investors to participate in recovery• Will require exit mechanism for outside · Decreases amount of capital needed to be investors (i.e. put or IPO) provided by Harold Hamm• May complicate buyout process · May improve investor acceptance of offer Project Double Barrel 12 |
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| Sources and Uses, Capitalization and Credit Metrics — Strip Case Sources and Uses ($ in Millions) Sources Uses New Equity (Cash to Delever) $87.3 Partial Repayment of Debt $87.3 New Equity (Cash to HLND & HPGP) 91.3 Purchase of Public Equity 91.3 Revolver 2.0 Fees and Expenses 2.0 Total Sources $180.6 Total Uses $180.6 Pro Forma Capitalization ($ in Millions) Pro Forma Cumulative Cumulative Capitalization PF 12/31/2009 PF 12/31/2010 $ % Leverage 1 Leverage 2 Revolver $169.5 35.1% Total Senior Secured Debt 169.5 35.1% 4.0x 3.5x Capital Leases 4.6 0.9% Total Debt 174.1 36.0% 4.1x 3.6x Equity 309.4 64.0% Total Capitalization $483.5 100.0% 11.4x 9.9x 1 Based on Pro Forma 12/31/09 Adjusted EBITDA of: $42.4 2 Based on Pro Forma 12/31/10 Adjusted EBITDA of: $49.0 Credit Metrics 1 ($ in Millions) Projected 2008 2009 2010 2011 2012 2013 Revenue $387.7 $309.9 $381.9 $418.3 $420.8 $421.6 % Growth n/a (20.1%) 23.2% 9.5% 0.6% 0.2% EBITDA $66.4 $42.4 $49.0 $66.5 $68.5 $69.5 % Margin 17.1% 13.7% 12.8% 15.9% 16.3% 16.5% Less: Working Capital Usage ($3.4) $0.7 $1.5 $0.2 $0.2 Less: Total Cash Interest Expense 7.1 6.3 8.9 11.0 11.9 Less: Maintenance Capital Expenditures 7.6 8.5 8.5 8.5 8.5 Less: Expansion Capital Expenditures 18.5 21.5 21.5 21.5 21.5 Free Cash Flow Before Debt Repayment $12.6 $12.0 $26.1 $27.3 $27.5 Less: Scheduled Debt Repayment 0.0 0.0 0.0 0.0 0.0 Excess Cash Flow Available for Debt Sweep, Incremental CapEx or Dividends $12.6 $12.0 $26.1 $27.3 $27.5 Revolver (Repayments)/Borrowings ($4.6) $26.3 $70.3 $7.7 $4.3 Equity (Infusion)/Dividend $8.0 $38.3 $96.3 $35.0 $31.8 Cash Balance (End of Year) $1.3 $1.3 $1.3 $1.3 $1.3 $1.3 Senior Secured Debt Balance (End of Year) $169.5 $165.0 $191.3 $261.6 $269.3 $273.5 Total Debt Balance (End of Year) $174.1 $169.5 $195.9 $266.2 $273.9 $278.1 Leverage Statistics Senior Secured Debt / EBITDA 2.6x 3.9x 3.9x 3.9x 3.9x 3.9x Total Debt / EBITDA 2.6x 4.0x 4.0x 4.0x 4.0x 4.0x EBITDA / Interest Expense 11.2x 6.0x 7.8x 7.5x 6.3x 5.9x 1 Assumes 12/31/08 close Project Double Barrel 13 |
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| Sources and Uses, Capitalization and Credit Metrics — Upside Case Sources and Uses ($ in Millions) Sources Uses New Equity (Cash to Delever) $87.3 Partial Repayment of Debt $87.3 New Equity (Cash to HLND & HPGP) 91.3 Purchase of Public Equity 91.3 Revolver 2.0 Fees and Expenses 2.0 Total Sources $180.6 Total Uses $180.6 Pro Forma Capitalization ($ in Millions) Pro Forma Cumulative Cumulative Capitalization PF 12/31/2009 PF 12/31/2010 $ % Leverage 1 Leverage 2 Revolver $169.5 35.1% Total Senior Secured Debt 169.5 35.1% 2.7x 2.3x Capital Leases 4.6 0.9% Total Debt 174.1 36.0% 2.8x 2.4x Equity 309.4 64.0% Total Capitalization $483.5 100.0% 7.8x 6.6x 1 Based on Pro Forma 12/31/09 Adjusted EBITDA of: $62.0 2 Based on Pro Forma 12/31/10 Adjusted EBITDA of: $73.2 Credit Metrics 1 ($ in Millions) Projected 2008 2009 2010 2011 2012 2013 Revenue $387.7 $421.2 $477.6 $517.0 $543.7 $543.0 % Growth n/a 8.6% 13.4% 8.3% 5.2% (0.1%) EBITDA $66.4 $62.0 $73.2 $78.1 $82.7 $81.7 % Margin 17.1% 14.7% 15.3% 15.1% 15.2% 15.0% Less: Working Capital Usage ($1.7) $1.1 $0.5 $0.5 $0.0 Less: Total Cash Interest Expense 8.3 8.9 11.4 12.9 14.0 Less: Maintenance Capital Expenditures 7.6 8.5 8.5 8.5 8.5 Less: Expansion Capital Expenditures 18.5 21.5 21.5 21.5 21.5 Free Cash Flow Before Debt Repayment $29.3 $33.2 $36.2 $39.4 $37.7 Less: Scheduled Debt Repayment 0.0 0.0 0.0 0.0 0.0 Excess Cash Flow Available for Debt Sweep, Incremental CapEx or Dividends $29.3 $33.2 $36.2 $39.4 $37.7 Revolver (Repayments)/Borrowings $73.7 $44.9 $19.6 $18.6 ($4.1) Equity (Infusion)/Dividend $103.0 $78.1 $55.7 $57.9 $33.6 Cash Balance (End of Year) $1.3 $1.3 $1.3 $1.3 $1.3 $1.3 Senior Secured Debt Balance (End of Year) $169.5 $243.3 $288.2 $307.7 $326.3 $322.2 Total Debt Balance (End of Year) $174.1 $247.8 $292.7 $312.3 $330.9 $326.8 Leverage Statistics Senior Secured Debt / EBITDA 2.6x 3.9x 3.9x 3.9x 3.9x 3.9x Total Debt / EBITDA 2.6x 4.0x 4.0x 4.0x 4.0x 4.0x EBITDA / Interest Expense 11.2x 7.5x 8.2x 6.8x 6.4x 5.8x 1 Assumes 12/31/08 close Project Double Barrel 14 |
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| Premiums Paid Analysis and Historical Trading of HLND and HPGP Premiums Paid Analysis (All Transactions) 1 U.S. Based Acquisitions January 2000 — Present One Day One Week Four Weeks Prior Prior Prior Mean 35.1% 36.2% 40.1% Median 26.5% 28.4% 29.6% 25th Percentile 14.3% 15.0% 15.7% 75th Percentile 43.3% 45.0% 47.2% HLND Unit Price $11.03 $4.41 $7.49 HLND Implied Price Per Unit at Median $13.96 $5.66 $9.71 HPGP Unit Price $4.65 $2.05 $2.93 HPGP Implied Price Per Unit at Median $5.88 $2.63 $3.80 1 U.S. transactions; Deal size between $50 Million and $250 Million Premiums Paid Analysis (Cash Transactions) 1 U.S. Based Acquisitions January 2000 — Present One Day One Week Four Weeks Prior Prior Prior Mean 38.5% 39.4% 42.4% Median 29.8% 30.0% 32.3% 25th Percentile 15.3% 16.5% 16.2% 75th Percentile 48.6% 49.6% 47.3% HLND Unit Price $11.03 $4.41 $7.49 HLND Implied Price Per Unit at Median $14.31 $5.73 $9.91 HPGP Unit Price $4.65 $2.05 $2.93 HPGP Implied Price Per Unit at Median $6.03 $2.66 $3.88 1 U.S. transactions; Deal size between $50 Million and $250 Million HLND 12-Month Units Traded Analysis (as of 1/7/09) 32.8% 24.1% 14.3% 13.2% 7.6% 5.7% 2.4% $0.00 — $10.00 $10.00 — $12.00 $12.00 — $17.00 $17.00 — $27.00 $27.00 — $37.00 $37.00 — $47.00 $47.00+ Unit Price Premium to 1/7/09 price (100.0%) — -9.3% (9.3%) — 8.8% 8.8% — 54.1% 54.1% — 144.8% 144.8% — 235.4% 235.4% — 326.1% 326.1% — 353.3% % Public Float 32.8% 13.2% 5.7% 14.3% 2.4% 24.1% 7.6% Cumulative % of Public Float 32.8% 46.0% 51.7% 65.9% 68.3% 92.4% 100.0% 10-Day VWAP 30-Day VWAP 60-Day VWAP 90-Day VWAP $7.43 $7.40 $11.46 $13.43 Source: CapIQ, Bloomberg HPGP 12-Month Units Traded Analysis (as of 1/7/09) 33.8% 15.5% 14.6% 14.3% 12.6% 9.2% $0.00 — $3.00 $3.00 — $5.00 $5.00 — $10.00 $10.00 — $16.00 $16.00 — $22.00 $22.00+ Unit Price Premium to 1/7/09 price (100.0%) — -35.5% (35.5%) — 7.5% 7.5% — 115.1% 115.1% — 244.1% 244.1% - 373.1% 373.1% — 512.8% % Public Float 14.3% 15.5% 9.2% 12.6% 14.6% 33.8% Cumulative % of Public Float 14.3% 29.8% 39.0% 51.6% 66.2% 100.0% 10-Day VWAP 30-Day VWAP 60-Day VWAP 90-Day VWAP $3.23 $3.15 $5.91 $8.14 Project Double Barrel 15 |
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| Timeline of Upcoming Events January 2009 February 2009 March 2009 S M T W R F S S M T W R F S S M T W R F S 1 2 3 4 5 6 7 1 2 3 4 5 6 7 8 9 10 8 9 10 11 12 13 14 8 9 10 11 12 13 14 11 12 13 14 15 16 17 15 16 17 18 19 20 21 15 16 17 18 19 20 21 18 19 20 21 22 23 24 22 23 24 25 26 27 28 22 23 24 25 26 27 28 25 26 27 28 29 30 31 29 30 31 Important Date Bank / Exchange Holiday Key Event Date Provide update to Board of Directors Week of January 12th Board approval for Q4 2008 distribution January 23 Announce Q4 2008 distribution / plan January 26 Q4 2008 earnings release / conference call February 19 / 20 Board of Directors meetings March 5 Year-end auditor rep. letter process begins Week of March 9 — Going concern — Unqualified opinion File 10-Ks March 16 Project Double Barrel 16 |