Crosstex Energy, L.P.



Crosstex Energy, L.P. was formed in July 2002 in connection with its initial public offering, which was completed in December 2002.  It is primarily engaged in the midstream energy business focused on the gathering, transmission, treating, processing and marketing of natural gas.

Crosstex connects the wells of natural gas producers in its market areas to its gathering systems, treats natural gas to remove impurities to ensure that it meets pipeline quality specifications, processes natural gas for the removal of natural gas liquids or NGLs, transports natural gas, and ultimately provide an aggregated supply of natural gas to a variety of markets.  In addition, Crosstex purchases natural gas from natural gas producers and other supply points and sells it to utilities, industrial consumers, other marketers and pipelines, thereby generating gross margins based on the difference between the purchase and resale prices.  Crosstex also purchases natural gas from producers not connected to its gathering systems for resale and sell natural gas on behalf of producers for a fee.

 Major assets include:

Ø             Over 2,500 miles of natural gas gathering and transmission pipelines.  Its gathering systems consist of a network of pipelines that collect natural gas from points near producing wells and transport it to larger pipelines for further transmission. The transmission pipelines primarily receive natural gas from Crosstex’s gathering systems and from third-party gathering and transmission systems and deliver natural gas to industrial end-users, utilities and other pipelines.

Ø              Three natural gas processing plants connected to its gathering systems, with a total NGL production capacity of 289,00 gallons a day  Crosstex’s processing plants remove NGLs from a natural gas stream and fractionate, or separate, the NGLs into separate NGL products, including ethane, propane, mixed butanes and natural gasoline.

Ø             61 natural gas treating plants, located largely in the Texas Gulf Coast area, which remove impurities from natural gas prior to delivering the gas into pipelines to ensure that it meets pipeline quality specifications.

Crosstex has two industry segments, Midstream and Treating, with a geographic focus along the Texas Gulf Coast.

The Midstream division focuses on the gathering, processing, transmission and marketing of natural gas, as well as providing certain producer services and contributed 785 of Crosstex’s gross profit in 2003.  Crosstex’s primary Midstream assets are several gathering and transmission systems and three natural gas processing plant located primarily along the Texas Gulf Coast and south-central Mississippi, which in the aggregate consist of approximately 2,500 miles of gathering and transmission pipelines.  These include the Gulf Coast, Vanderbilt, and Corpus Christi pipeline systems in South Texas; the Gregory processing plant and gathering system north of Corpus Christi, the Arkoma Gathering System in southeastern Oklahoma; the Mississippi pipeline system, located in 15 counties in south Mississippi; the Alabama pipeline system , located in West Alabama; and the Conroe gas plant and gathering system in Montgomery County, Texas.  Crosstex also has a 12.4% interest in the Seminole gas processing plant in Gaines County, Texas.

Crosstex also owns several small gathering systems totaling approximately 135miles, including its Manziel system in Wood County, Texas, San Augustine system in San Augustine County, Texas, Freestone Rusk system in Freestone County, Texas, and the Jack Starr and North Edna systems in Jackson County, Texas. Crosstex Energy owns a 28% interest in five gathering systems in east Texas, totaling 64 miles, .and  five industrial bypass systems each of which supplies natural gas directly from a pipeline to a dedicated customer. Crosstex owns various smaller gathering and transmission systems located in Texas, Louisiana, and New Mexico.

During 2003, throughput on Crosstex’s pipelines was 626,000MMBtu/d, and its plants processed 132,000 MMBtu/d of natural gas.

The Treating division focuses on the removal of carbon dioxide and hydrogen sulfide from natural gas to meet pipeline quality specifications. As of December 31, 2003, Crosstex owned 61 treating plants, 41 of which it operated, 11 of which were operated by producers, and 9 of which were held in inventory. In addition to its treating plants, the treating division includes three gathering systems with an aggregate of 43 miles of gathering pipeline located in Val Verde, Crockett, Dewitt and Live Oak counties, Texas that are connected to approximately 73 producing wells. These gathering systems are connected to three of Crosstex’s treating plants.  Crosstex’s plants treated 90,000 MMBtu/d of natural gas in 2003.

Crosstex’s business strategy is to increase distributable cash flow per unit by:

Ø    Making accretive acquisitions of assets that are essential to the production, transportation, and marketing of natural gas, with a focus on assets that offer the opportunity for operational efficiencies and the potential for increased utilization and expansion, and that will add to existing core areas;

Ø    Improving the profitability of the assets it owns by increasing their utilization through aggressive marketing efforts while controlling costs; and

Ø    Maintaining the financial flexibility to take advantage of construction and expansion opportunities, leveraging its structure and existing customer relationships by constructing new facilities and expanding existing systems to meet increased demand for Crosstex's services

Crosstex Energy trades on the NASDAQ under the symbol XTEX.  For additional information, contact Chief Financial Officer Bill Davis at 214-953-9500 [email protected]; or visit the company web site at

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*As of June 30, 2003 and December 31, 2002



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