October 2006
Business Update
Forward Looking Statements
Under the Private Securities Litigation Reform Act of 1995
This presentation contains forward looking information which is subject to risks and
uncertainties, including, but not limited to, changes in laws and regulations
impacting the gathering and processing industry, the level of creditworthiness of the
Partnership’s counterparties, the Partnership’s ability to access the debt and equity
markets, the Partnership’s use of derivative financial instruments to hedge
commodity and interest rate risks, the amount of collateral required to be posted
from time to time in the Partnership’s transactions, changes in commodity prices,
interest rates, demand for the Partnership’s services, weather and other natural
phenomena, industry changes including the impact of consolidations and changes in
competition, the Partnership’s ability to obtain required approvals for construction or
modernization of the Partnership’s facilities and the timing of production from such
facilities, and the effect of accounting pronouncements issued periodically by
accounting standard setting boards.
Regulation G
This document may include certain non-GAAP financial measures as defined under
SEC Regulation G. In such an event, a reconciliation of those measures to the most
directly comparable GAAP measures is included in this presentation.
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Agenda
Business Highlights
GSR Acquisition from DEFS
Additional $250 Million Contribution from
DEFS
Base Business Update
3
DCP Midstream Highlights
Successful IPO launched
December 2005
Strong earnings and unit price
performance
Announced agreement with
sponsor to expand gathering and
transportation services in 1Q 2006
Announced NGL pipeline organic
growth project in 1Q 2006
Increased quarterly distribution by
9% in 2Q 2006
Announced GSR contribution from
DEFS in 4Q 2006
Announced DEFS’ intention to
contribute an additional $250
million of assets to DCP (targeted
for 2Q 2007)
___________________________
1.
DPM Peer Index includes WPZ, TLP, XTEX, RGNC, HLND, HEP, TCLP, MMLP, MWE and APL.
2.
Midstream Peer Index includes BPL, EEP, EPD, KMP, OKS, PPX, PAA, SXL, TCLP, TPP, VLI, MMP, XTEX, MWE,
MMLP, APL, HEP, HLND, TLP, CPNO, WPZ, RGNC, ETP and BWP.
Total Returns: DPM versus Comparable MLP Indices
Prepared by Lehman Brothers
4
GSR Transaction Overview
DEFS to contribute Gas Supply Resources (GSR)
wholesale propane logistics business to DCP
Transaction valued at approximately $77 million for
base business including new Midland terminal,
subject to standard closing adjustments
DEFS to receive combination of cash and partnership
units
DCP to finance transaction with existing credit facility
GSR 2007 estimated EBITDA: $8.5 million (including
G&A expense)
DEFS to continue to operate post-closing
5
GSR: Key Investment Highlights
Excellent business
Acquisition of a growing franchise, not just assets
Largest propane wholesaler in N.E.
Opportunity to extend into upper Midwest & other areas
Well suited for MLP ownership
Fee-like earnings, qualifying income (but seasonal variability)
Base load sales to market
Organic and acquisition growth opportunities
Minimal maintenance capital
Supports DCP Midstream objectives
Increase cash distributions
Acquire business with growth opportunities
Benefit from strong sponsorship
Diversify asset/earnings portfolio
6
GSR Wholesale Propane Logistics
Largest wholesale propane
supplier in the Northeast
Purchases propane and
sells to retail distributors
Annually Markets
25+ MBbl/d
Integrated and strategically
located business
Six owned rail terminals
New Midland, PA pipeline
terminal: Projected 4Q
2006 start-up
Leased marine terminal
475,000 barrels storage
Marketing at several open
access pipeline terminals
7
GSR Growth Opportunities
Midland, PA pipeline terminal under construction
Market reception has exceeded expectations
Projected 4Q 2006 startup
Receives propane off Buckeye pipeline
Terminals have excess capacity and expansion
potential, providing opportunities to increase volumes
at minimal cost
Actively seeking new rail terminals through
acquisition and/or construction
8
Supply Diversity = Competitive Advantage
Sources:
Pipelines (10%)
TEPPCO
Buckeye
Rail (70%)
Canada (various)
Midwest
Waterbourne (20%)
Shell
Other international LPG
Greater seasonal volume flexibility allows GSR to
become retail customers’ preferred provider
(1)
(1) Propane suppliers typically require customers to draw some fraction of their winter requirements during
the summer months. Due to GSR’s flexibility of supply sources in the winter, the winter deliverability is
higher than the competition.
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Favorable Contracts
Propane purchase and sale
index-based prices are
generally matched, allowing
DCP to lock in margins and
create fee-like earnings
Diverse customer base
Supplier agreements allow
DCP to minimize working
capital needs
Long term contracts
Propane supply with Aux
Sable (2008 and 2016) and
Shell (2008)
Term rail agreements
Top 3 customers (~30%)
Suburban Propane
Amerigas Partners
Valley National Gas
Top 3 suppliers (~70%)
Aux Sable
Shell
Provident Energy
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GSR Financial Overview
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$8.5
EBITDA
1.2
Depreciation and Amortization
4.3
Interest Expense
Add:
$3.0
Net Income
(1)
(2)
(1)
Note 2007 economics assume capital spending of $2.3 million to relocate the York terminal
to access a different railroad line. These expenditures result in future operating cost
savings.
(2)
DCP and DEFS negotiated a $2 million increase to the Omnibus Agreement to cover G&A.
Public company costs and insurance are estimated at an additional $0.3 million.
(3)
Reconciliation of Non-GAAP Measure ($ in millions):
(3)
2007 Estimate
($ in millions)
O&M and G&A Expenses
14.0
$
EBITDA
8.5
$
$250 Million DEFS Contribution
DEFS committed to contribute an additional $250
million of assets
Timing: Targeted for 2Q 2007
Specific assets not yet identified
Transaction subject to approval by board of directors
for both DEFS and DCP as well as DCP conflicts
committee
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Base Business Update (YTD 2Q 2006)
Solid operating performance results in 9% distribution
increase for 2Q 2006
Net income at 6/30/06 = $14.2 million
Strong commodity prices drive increased processing
margins and marketing opportunities
Drilling activity remains strong
Increased volumes create expansion opportunities
Wilbreeze NGL pipeline on track for 4Q 2006 start-up
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Key Investment Highlights
Ability to capitalize on strong sponsorship
Assets with strong market positions
Stable cash flows from fee and
substantially hedged commodity
positions
Experienced management team with a
demonstrated track record of growing
midstream and MLP businesses
Low cost of capital to facilitate growth
Identified organic growth
Well Positioned to Execute Growth Strategies
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Appendix
58% Common
LP Interest
(10.4MM units)
40.0% Subordinated LP Interest
(7.1MM units)
2.0% GP Interest
NYSE: DPM
50%
50%
Duke Energy
ConocoPhillips
Public
Unitholders
Natural Gas Services
Strong Sponsorship
NGL Logistics
(1)
(1) Pre-GSR acquisition structure
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DEFS Highlights
One of the nation’s largest natural gas
gatherers
Largest NGL producer in U.S.
Major wholesale propane supplier to northeast
U.S.
Acquired and managed general partner of
TEPPCO (March 2000 – February 2005)
2005 EBITDA of $1.5 billion, excluding
TEPPCO gain on sale
DEFS’ Industry-Leading Midstream Business
DCP Midstream
56,000 miles of pipelines
52 plants; 11 fractionators
8 propane terminals
4 offices
(1)
(1) Pre-GSR acquisition by DCP Midstream
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Pursue strategic and accretive acquisitions
Consolidate with and expand existing infrastructure
Pursue new lines of business and geographic areas
Potential to acquire assets from Sponsors
Acquire:
Capitalize on organic expansion opportunities
Expand existing infrastructure
Develop projects in new areas
Build:
Maximize profitability of existing assets
Increase capacity utilization
Expand market access
Enhance operating efficiencies
Leverage ability to provide integrated services
Optimize:
Our Primary Business Objective: Increase our Cash Distribution per Unit
Business Strategies
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Enhanced growth
opportunities
Infrastructure to
support business
objectives
Operational
Commercial
Technical
Risk Management
Administrative
Talent / Infrastructure
Industry
relationships and
reputation
Access to deal flow
Potential to acquire
assets directly from
Sponsors
Joint-transaction
opportunities
Relationships
DCP Midstream Growth
+
=
DCP Midstream Benefits from its Sponsors
DEFS / Duke Energy / ConocoPhillips
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Platform of Integrated Businesses
Natural Gas Services
Minden and Ada natural gas
gathering and processing
systems
PELICO pipeline system
NGL Logistics
Seabreeze NGL pipeline
Black Lake NGL pipeline
DCP Midstream Operates in Two Business Segments
Natural Gas Services Segment
NGL Logistics Segment
(1)
(1) Pre-GSR acquisition structure
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Overview of Natural Gas Services Segment
Minden, Ada and PELICO
systems
One of North Louisiana’s
largest gathering and
processing systems
Interconnects with 7 inter- and
2 intrastate pipelines / critical
west-to-east conduit
160 MMcf/d of processing
capacity and 1,430 miles of
pipeline
Bundled “wellhead-to-market”
services
Multiple market outlets provide
premium netback economics,
market optionality and liquidity
Integrated Business with Strong Market Position
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Seabreeze is a 68-mile
intrastate pipeline system
located in Southeast TX
Sole NGL outlet for 2 large
third party gas plants and sole
market outlet for South DEAN
Pipeline
Black Lake (45% non-operating
interest) is a 317-mile interstate
pipeline system located in LA
and TX
Sole NGL pipeline serving 5
gas plants in LA and TX
Overview of NGL Logistics Segment
3rd Party Gas Plant
DEFS Gas Plant
DCP Midstream Minden Gas Plant
Access to Key Markets / Fee-Based Cash Flows
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New Wilbreeze Pipeline
37-mile pipeline to
connect to DEFS’
plant
$12 million capital
10-year product
dedication from
DEFS
DEFS’ avg. volume of
5,300 bpd
Est. completion date:
4Q 2006
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DCP Midstream Board of Directors
Former group VP, gathering & processing of DEFS, former director of TEPPCO’s GP
Michael J. Bradley, President
and CEO
Former Group VP and chief development officer of Duke Energy, former CEO of DEFS,
former chairman and director of TEPPCO’s GP
Jim W. Mogg, Chairman
Former president and CEO of GPM Gas Corporation
Michael J. Panatier
Former senior VP and CFO of Phillips Petroleum Company
Thomas C. Morris
Former chairman and CEO of Kerr McGee, former director of ConocoPhillips
Frank A. McPherson
Executive VP of planning, strategy and corporate affairs for ConocoPhillips, director of DEFS
John E. Lowe
Former senior VP and treasurer of Duke Energy, former senior VP and CFO of PanEnergy,
former director and chair of audit committee of TEPPCO’s GP
Paul Ferguson, Jr.
Chairman, president and CEO of DEFS
William H. Easter III
Director at CenterPoint Energy, Inc., former director of TEPPCO’s GP, former EVP of Texas
Eastern Corp., former chairman and CEO of Texas Eastern Gas Pipeline Company
Derrill Cody
Chairman of CenterPoint Energy, Inc., founder and chairman of Instrument Products, Inc.,
chairman of Healthcare Service Corporation, director of Eagle Global Logistics, Inc., former
director of PanEnergy and TEPPCO’s GP
Milton Carroll
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