Merchant Energy Partners &

The East Cheyenne Gas Storage Project

10901 West Toller Drive, Suite 200, Littleton, CO 80127

Wyoming Pipeline Authority

December 10, 2009

Merchant Energy Partners &The East Cheyenne Gas Storage Project

IntroductionMarket SummaryIntegrated CasePhase I CaseOtherQuestions

Merchant Energy Partners &The East Cheyenne Gas Storage Project

“Introduction”

MEP – The CompanyFormed in February of 2008, MEP (“MEP” or the “Company”) is in business to develop, own, construct, & operate energy storage facilities at strategic locations throughout the United States. MEP is an LLC owned by Quantum Energy Partners, Dr. Larry Bickle, & the Company’s management team. Quantum Energy Partners – “QEP” (www.quantumep.com) is a private equity firm that sponsors proven, successful energy entrepreneurs and their companies. QEP currently has more than $5 billion under management, with a commitment to become a major participant in the gas storage business.Larry W Bickle – Considered by many to be a true pioneer in the development and operations of high deliverability natural gas storage, Dr. Bickle has been involved with more than 10 storage projects over the last 25 years, 7 of which are either in or close to commercial operations. Management – Company management has been involved with natural gas storage development, construction and operations for more than 20 years.

Merchant Energy Partners &The East Cheyenne Gas Storage Project

“Market Summary”

MEP – Storage Value Drivers

Value DriversAccess to multiple pipelinesHigh turn storage versus low turn storageProximity to Liquid Trading HubsServices Offered

Storage LeasesPark TransactionsLoan TransactionsWheelingImbalance Management Transactions

MEP – ECGS Phase I - Market Analysis

Intrinsic Values (summer/winter spread)

MEP – ECGS Phase I - Market Analysis

East Cheyenne Project: “Integrated Facility”

MEP - East Cheyenne Gas Storage Project

The East Cheyenne Gas Storage, LLC (“East Cheyenne” or the “Project”) is a 18.9 bcf gasstorage project involving two depleted, but still operating, oil & gas fields in NE Colorado,the West Peetz and Lewis Creek fields.

The fields offer significant potential for enhanced oil recovery (“EOR”), as well as NGLrecovery. MEP intends to increase oil and NGL recovery with gas injections. Estimatedremaining oil reserves in place are approximately 18 million barrels. EOR is estimated tolead to the recovery of approximately 4.40 million barrels of oil and NGLs over 20 years.

East Cheyenne - Project Location

East Cheyenne Gas Storage

• 18.9 bcf of working gas capacity• 91 miles from the Cheyenne Hub• 3.5 miles from REX & Trailblazer• 12 miles of the KMIGT• Project area

1) storage fields ~ 2320 acres2) with buffer ~ 5,800 acres

• Privately held farmland withexcellent road and rail access

• Co-located with an FPL wind farm• More than 95% of the land &

minerals under contract • 650 fee acres under option for

plant and metering facilities• Strong local support

East Cheyenne Gas Storage LLC Services

Firm, preferred, interruptible gas storage & hub servicesBi-directional flow with dual pipelines to REX & Trailblazer Designed with firm 350 mmcfd withdrawal & 200 mmcfd injection 3 turns on annual physical capacityNo cycling requirements contemplatedNominal ratcheting requirements on injection & withdrawal

East Cheyenne-Integrated Case

East Cheyenne - Phase I Site Map

Pipeline Interconnects

Pipeline Diameter MAOP (PSIG) Distance (Miles)Rockies Express (REX) 42 1480 3.5 milesTrailblazer 36 1000 3.5 miles** KMIGT 20 TBD 12.00 miles

** Currently not being permitted, but could be connected based on customer demand.

East Cheyenne Project: “Phase I”

East Cheyenne - Phase I Overview

Phase I – OverviewPrimary objective is to construct an operational 8.3 BCF gas storage 1-2 turn facility in the West Peetz field. All plant facilities will be located on property owned by East Cheyenne Gas Storage.The D-Sand will provide 4 BCF of gas storage post 7-C. We will also initiate J-Sand (oil sand) EOR development in order to recover oil and NGLs and will ultimately bring on-line 4.3 BCF of gas storage capability in the J-Sand. Construction timeline: Estimated 9 months

Pre 7(c): 1. Re-plug or reclassify 23 previously abandoned wells in the West Peetz field2. Drill two horizontal wells, 5 EOR withdrawal wells in the J-Sand (oil sand) & two water disposal wells3. Investment in pipeline interconnection and metering and facilityPost-7(c): 1. Drill two horizontal well in the D-Sand (gas sand) post 7(c)2. A dehydration unit, 3 additional compressor units, and refrigeration plant and associated equipment3. Bullet tanks, crude storage, & load out facilities4. 3 phase separation and liquids lines5. Other misc equipment for process facilities

Pad gas injection into the D-Sand (gas sand) and gas injection into the J-SandExpect to contract with one or two counter-party for the Project’s initial capacity for a 24-32 month period.

East Cheyenne-Phase I Case

East Cheyenne Gas Storage Development Plan

Pre-Engineering/Feed started August 2008Permitting started November 2008Open season July 2009Detailed Engineering starting 3rd Quarter 2009FERC 7C application filed 4th Quarter 2009FERC authorization to construct by 2nd Quarter 2010Order Equipment Phase I 1st/2nd Quarter 2010Start construction Phase I 2nd Quarter 2010In service date Phase I 3rd Quarter 2010Integrated Case completed 3rd Quarter 2012

East Cheyenne Gas Storage Development Team

Parent Company Quantum NGS Holdings

Project Owner Merchant Energy Partners LLC

Project Company East Cheyenne Gas Storage LLC

Project Manager Merchant Energy Partners LLC

FERC 7C Legal Dewey & LeBoeuff LLP

FERC 7C Permitting CH2M Hill

Engineering ENGobal

Land Manager/Leasing Agent Veritas Land Management

East Cheyenne - Phase I Milestones

Key Milestones

Air Permit: May/June 2010

FERC 7C: May/June 2010

REX Interconnect: May/June 2010

Commercial Operation Date: 3rd Quarter 2010

East Cheyenne Gas Storage LLC

Thanks for your time today!

If you have any further questions please contact:

William HarnischMerchant Energy Partners LLC10901 West Toller Drive, Suite 200Littleton, CO 80127Office: 720-351-4000