Rating Agency Presentation

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Wyoming Pipeline Authority Meeting August 26th
2003 Michael Walsh President Chief Operating
Officer Jerry Morris VP Bus. Dev. Strategic
Planning Donny King Project Manager Bus. Dev.
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Michael Walsh President and Chief Operating
Officer
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Organizational Overview
Organizational Overview
Southern Star is wholly owned by AIG Highstar
AIG Highstar
Southern Star
Central Pipeline
Western Frontier Pipeline Company, LLC
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AIG Highstar Fund Summary

• AIG Highstar Portfolio (March 2003)
• Eight investments average size 42MM 84
  energy, 16 transportation
• Energy natural gas storage, interstate natural
  gas pipeline, power generation, waste-to-energy
• Transportation logistics, asset management, and
  construction materials

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AIG Highstar Capital, L.P. (AIG Highstar) Fund
Summary

• Private equity fund formed to make structured
  equity investments in infrastructure projects and
  operating companies
• 406 million in capital commitments (approx. 330
  million committed as of March 2003)
• Limited partners include multi-national
  corporations, financial services companies, and
  industry-focused funds

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AIG Highstar Fund Summary

• Sponsored by AIG and managed by AIG Global
  Investment Corp. (AIGGIC)
• AIG is one of the worlds leading U.S.-based
  international insurance and financial services
  organization
• AIG Global Investment Group, AIGGICs parent, has
  329 billion in assets, including over 53
  billion of external client assets, under
  management.

Source AIG Global Investment Corp. and its
affiliates. AIGGIG is a holding company whose
subsidiaries and investment affiliates provide
asset management services (the "AIGGIG
Companies"). The assets under management for
AIGGIG refers to assets advised or sub-advised by
AIGGIG Companies. Assets sub-advised to third
party managers are not included in this report,
but will be available upon request.
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Jerry Morris VP Bus. Dev. Strategic Planning
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Organizational Overview
Organizational Overview
Southern Star is wholly owned by AIG Highstar
AIG Highstar
Southern Star
Central Pipeline
Western Frontier Pipeline Company, LLC
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Operational Overview
Operational Overview
Overview
Southern Star Central Pipeline Map

• Southern Star Central Pipeline is a
  FERC-regulated interstate natural gas pipeline
  company providing transportation and storage
  services in seven states in the central U.S.,
  including major metropolitan areas in Kansas and
  Missouri
• Transportation capacity of approximately 2.3
  Bcf/day
• On-system working gas storage capacity of 43 Bcf
• Assets
• 6,076 miles of mainline, branch, and storage
  pipelines
• 41 compressor stations 223,916 HP
• 8 on-system storage fields
• 31 Pipeline Interconnects
• Headquartered in Owensboro, Kentucky
• 457 total employee complement
• 15 Operating Districts
• 330 field employees

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Organizational Overview
Organizational Overview
Southern Star is wholly owned by AIG Highstar
AIG Highstar
Southern Star
Central Pipeline
Western Frontier Pipeline Company, LLC
2
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S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E

• Western Frontier History
• Filed with FERC October 2001
• Design 540,000 Dth/day
  
• Cheyenne Hub to Mid-Continent
• 400 Mile 30 Pipeline
• Financial Distress of Previous Parent Forced
  Project to be Shelved
• FERC Filing Withdrawn in June 2002
• AIG Highstar Acquired Southern Star Central
  Western Frontier in November 2002
• Financial Capabilities now Stronger than Ever
• Open Season Announced August 18th 2003

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99 Years of Continuous Quality Service
S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E

• Reasons For Suspending the Project
• Recession
• Cautious Capital Markets
• Enron debacle
• Williams Communications demise
• Williams overall financial woes
• Current Status
• Western Frontier is Back
• Financially Capable of Implementing Project with
  Market Support

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Challenges
99 Years of Continuous Quality Service
S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E

• Drilling Timing - Environmental Constraints
• Issuance of Drilling Permits originally a 75
  day process currently taking 175 days
• Producers Subscribing to Capacity in todays
  market for 10 year terms
• State Commissions
• Lack of Risk Management Services
• FERC Certification Process

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Opportunities
99 Years of Continuous Quality Service
S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E

• Wyoming Pipeline Authority (WPA)
• Production Aggregator
• Risk Management
• State of Wyoming
• 700-750 MMcfd Royalty Gas Potential
• State Lands (2 Section in Every Range)
• 50 of all Federal Royalty
• Severance Tax In-Kind (Legislative Action
  Required)
• AdValorem Tax In-Kind (State Constitutional
  Amendment Required)
• Competitive Pipeline Alternative in the Rockies
• Gas Price Volatility Nation Wide
• Declining Supply Deliverability in the
  Mid-continent Canada
• Tremendous Production Growth Potential in the
  Rockies
• Substantial Work Already Completed on Western
  Frontier

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99 Years of Continuous Quality Service
S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E
Dont Let This be the Quote of the Future!
Energy Information Administration Natural Gas
Monthly October 2000 Quote for Rocky Mountain
Region





Expanding coal-bed methane production has
outpaced the development of long-haul capacity to
carry the gas to end-use markets. Capacity
constraint problems exiting the production areas
have resulted in the region having the lowest
average natural gas spot prices in the nation.

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Donny King Project Manager Business Development
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(No Transcript)
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Rockies Production Growth
99 Years of Continuous Quality Service
S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E

• Production in Wyoming totals about 4.2 Bcfd now
  and if environmental and regulatory delays can be
  cleared, could grow to in excess of 6 Bcfd over
  the next 5 years
• Wyoming state budget is heavily dependent upon
  revenues received from mineral production
  produced from state federal lands. During the
  past 5 years, natural gas production has grown
  almost 50 in the state, with limited additions
  to the infrastructure to export growing
  production

Source WPA GD 7/9/03
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Major Natural Gas Producing Basins and Pipeline
Transportation Corridors to Market Areas
99 Years of Continuous Quality Service
S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E
Source Energy Information Administration,
GasTran Gas Transportation Information System
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10 annual decline
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5 annual decline
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99 Years of Continuous Quality Service
S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E

• Mid-Continent Production
• Richard Sharples, President of Anadarko Energy
  Services on the status of Mid-continent supplies
  
• The Mid-continent is so mature that it doesnt
  matter how much you drill, you wont increase
  production
• From Gas Daily Friday, February 16, 2001

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(No Transcript)
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• 540-1,000 MDth/day
  
• Cheyenne Hub to Mid-Continent
• 400 Mile P/L
• Targeted In-Service date 2006-2007
• Mid-continent Hub 6.8 Bcfd of interstate takeaway
  capacity

Insert map
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S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E

• 540,000 - 1,000,000 Dth/day
  
• Cheyenne Hub to Mid-Continent
• 400 Miles 30-36 P/L
• 30,000-60,000 HP
• 100 LF Rate Range to pipeline hub is 0.25-0.35
• Anticipated Fuel at 1 or Less
• Targeted In-Service 2006-2007 Timeframe
• Mid-continent Hub 6.8 Bcfd of interstate takeaway
  capacity

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99 Years of Continuous Quality Service
S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E

• Project Activities Completed
• Pipeline Route Established
• Aerial Photography
• Detailed Land Survey
• Biological and Archeological Study
• Over 26 of Right-of-Way Acquired
• Station Site Acquired
• Project Activities Underway
• Project Engineering Review and Estimate
  Refinement
• Non-binding Open Season August 18th- October 10th
• Western Frontier Website Available
  www.sscgp.com/westernfrontier

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• 540,000 Dth/day
• Echo Springs/Wamsutter to Cheyenne Hub
• 186 Miles 30 P/L
• 41,000 HP
• Greater Green River Takeaway Capacity
• Targeted In-Service Date of 2006-2007

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Conclusions
99 Years of Continuous Quality Service
S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E

• Gas Market will Remain Tight in Near Term
• Leaves Market Vulnerable to Price Volatility
• If Environmental Regulatory delays can be
  cleared Wyoming Production could Grow from the
  current 4.2 Bcfd to in excess of 6 Bcfd over the
  next 5 years
• New Infrastructure will be required to get this
  gas to Market
• New Infrastructure should help stabilize cash
  flow for funding producer drilling investments
  and the State of Wyoming budgeting activities.
• Western Frontier Project Situated to meet Market
  Needs Quickly Efficiently with Market Support

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99 Years of Continuous Quality Service
S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E

• Why Western Frontier?
• Mid-Continent Supply Basins Declining
• Anadarko 5 Annually
• Hugoton 7-10 Annually
• Supply Diversification Necessary
• Rockies Supply Prolific needs Additional Market
  Access
• Basin Diversification
• Cheyenne Hub
• Denver Julesburg (DJ) Basin
• Average Differential Between Rockies-Cheyenne Hub
  and Mid-Continent Inception to Present 0.80
• Dynamic Operating Hub - Additional Infrastructure
  Needed out of Cheyenne Hub
• Diverse Market Access Providing Liquidity
• Market Growth
• Oklahoma Intrastate Market
• Southwest Missouri

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99 Years of Continuous Quality Service
S O U T H E R N S T A R C E N
T R A L G A S P I P E L I N E

• Contact Information
• Jerry Morris [phone]
• Jerry.L.Morris_at_SSCGP.com
• Donny King [phone]
• Donny.W.King_at_SSCGP.com
• Dale Sanders [phone]
• Dale.T.Sanders_at_SSCGP.com