Howard Energy Partners To Acquire 185 Miles of South Texas Pipeline From Meritage Midstream Services

March 15, 2012
Howard Energy Partners

SAN ANTONIO – March 15, 2012 – Howard Energy Partners (HEP) announced today that the company has entered into definitive agreements to acquire substantially all of Meritage Midstream Services’ natural gas gathering assets in South Texas. HEP will acquire the Eagle Ford Escondido Gathering System, which is partially owned by Laredo Energy, and the Cuervo Creek Gathering System. Both systems are primarily 12-inch to 16-inch high pressure natural gas pipelines. The transaction is expected to close in April, subject to regulatory approvals and customary closing conditions.

The acquisition will be funded primarily with equity investments in HEP by Crosstex Energy, L.P. (NASDAQ: XTEX), Quanta Services, Inc. (NYSE: PWR), GE Energy Financial Services, a division of General Electric (NYSE: GE), and Clear Springs Energy Company LLC. After closing of the acquisition and including initial investments, Crosstex and Quanta will have contributed an aggregate of $87.25 million each to HEP. These two companies, along with GE Energy Financial Services, upon the closing of the acquisition, will each own 30.6 percent of the outstanding units in HEP.

The two systems, located in Webb County, Texas, consist of a newly constructed rich natural gas gathering system with approximately 83 miles of pipeline, a 102-mile lean natural gas gathering system, two leased amine treating plants, and multiple intrastate pipeline outlets for regional processing and transportation. The systems are supported by multiple long-term fee based agreements with more than 180,000 dedicated acres and more than 200 billion cubic feet of total volume commitments. The lean and rich gas pipelines have a combined capacity of 400 million cubic feet of natural gas per day (MMcf/d), of which 80 percent of the firm capacity is under contract. HEP expects to expand the systems in the near term to meet increased demand for natural gas gathering from multiple geologic formations including the Escondido, Olmos, San Miguel, Austin Chalk and Eagle Ford Shale.

Following the closing of the acquisition, HEP will own and operate approximately 450 miles of natural gas gathering pipelines in Webb, Dimmit, Frio, Maverick and Zavala counties in Texas. These systems currently gather more than 175 MMcf/d and have the ability to quickly expand capacity as drilling continues to increase in HEP’s area of operation.

“The addition of these strategic assets enhances the value of our position in the prolific South Texas area so that we may continue to provide integrated midstream solutions to our customers,” said Brad Bynum, President of Howard Energy Partners. “Adding GE Energy Financial Services to our partnership complements our strengths and allows us the opportunity to accelerate our growth strategy and solidify our position as a total-solutions provider in and around the Eagle Ford Shale. We would like to thank our existing partners for their continued support as we grow this company.”

“We developed the Eagle Ford Escondido and Cuervo Creek systems through a key producer midstream partnership with Laredo IV from the ground up in just two years. We are very pleased to realize a strong return on a seamless operational transition for our producers,” said Meritage President and CEO, Steven B. Huckaby. “Howard Energy will bring additional resources to our producers, expanding opportunities to maximize the wellhead value of their natural gas. I’ve known Howard Energy’s CEO for a long time. Mike Howard and his team are excellent operators who will serve Eagle Ford customers well.”

About Howard Energy Partners
San Antonio-based HowardMidstream Energy Partners, LLC dba Howard Energy Partners is an independent, total-solutions energy services company, owning and operating approximately 280 miles of natural gas pipelines and related facilities in the Eagle Ford Shale. The company employs more than 800 people in South Texas, creating value for our customers by offering a full range of midstream services, in addition to project management, contract operations, fabrication and construction. For more information on Howard Energy Partners, visit www.howardenergypartners.com.

About MeritageMidstream Services, LLC
Headquartered in Golden, Colorado, Meritage Midstream provides oil and gas producers with a full complement of midstream services. Capabilities include the gathering, treating and handling of natural gas, crude oil and condensate. The company differentiates itself with a focus on excellence in customer service, integrated all-in solutions and the ability to respond quickly to rapidly developing resource plays. The company’s senior management team has a combined 140 years experience in natural gas gathering and processing. Meritage is backed by equity commitments from EnCap Flatrock Midstream and TPH Partners. Visit MeritageMidstream.com for more information.

About Laredo Energy
Formed in 2001, Laredo Energy is a privately held company engaged in the acquisition and development of natural gas and oil reserves in south Texas. The company has drilled more than 300 wells in Webb and Zapata counties, acquired several hundred more and owns non-operated interests in hundreds of others. The company continues to drill 20 to 30 wells per year. Laredo is supported by equity capital commitments from EnCap Investments L.P. and Avista Capital Partners. For more information, visit LaredoEnergy.com.

About the Crosstex Energy Companies
Crosstex Energy, L.P., a midstream natural gas company headquartered in Dallas, operates approximately 3,300 miles of pipeline, nine processing plants and three fractionators. The Partnership currently provides services for 3.2 billion cubic feet of natural gas per day, or approximately six percent of marketed U.S. daily production. Crosstex Energy, Inc. (NASDAQ: XTXI) (the Corporation) owns the two percent general partner interest, a 25 percent limited partner interest and the incentive distribution rights of Crosstex Energy, L.P. Additional information about the Crosstex companies can be found at www.crosstexenergy.com.

About Quanta Services
Quanta Services, Inc. (NYSE: PWR), is a leading specialized contracting services company, delivering infrastructure solutions for the electric power, natural gas and pipeline and telecommunication industries. The company’s comprehensive services include design, installation, repair and maintenance of network infrastructure nationwide. Additionally, Quanta licenses point-to-point fiber optic telecommunications infrastructure in select markets and offers related design, procurement, construction and maintenance services. With operations throughout North America and in select international markets, Quanta has the manpower, resources and expertise to complete projects that are local, regional, national or international in scope. Additional information about Quanta Services can be found at www.quantaservices.com

About GE Energy Financial Services
GE Energy Financial Services’ experts invest globally across the capital spectrum in essential, long-lived, and capital-intensive energy assets that meet the world’s energy needs. In addition to capital, GE Energy Financial Services offers the best of GE’s technical know-how, technology innovation, financial strength, and rigorous risk management. Based in Stamford, Connecticut, the GE business unit helps its customers and GE grow through new investments, strong partnerships, and optimization of its approximately $20 billion in assets. For more information, visit www.geenergyfinancialservices.com

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