AZURE CASE STUDY

Consolidation of Azure/TGGT/ETG (November 2013)

• Simultaneous close on TGGT and Tenaska/ETG allowed reduction from 175 to 140 employees
• OPEX reductions from $45 million to $26 million over 2013-2016 (Holly, Shelby, Legacy, ETG)
• G&A from combined $18.4 million to $9.7 million over 2013-2016 ($8.7 million/47% reduction)
• Automation
• Gas control consolidation to the field
• Centralized plant controls
• Technology & communications experts
• Asset utilization
• Shut down / put under utilized plants in standby mode and shifted gas to other central facilities

Marlin transaction (February 2015)

• From 18 to 10 FTE’s operating natural gas assets
• OPEX from $16.8 million to $7.2 million in 24 months post-merger
• G&A savings of $2.1 million annually from 2015-2016 (excluding non-recurring)

Capital Projects
Upon closing TGGT/ETG in late 2013 we immediately reduced the capital budget from $35 million (not including well connects) to less than $5 million annually. This was accomplished by using a rigorous economic justification methodology based upon broad technical/operational experience emphasizing the principle that every capital project needs solid “economic” justification.

Sustainable..? – YES

• We increase operating leverage and make the business “lean” under all operating conditions
• We train/develop our people to manage costs under a continuous improvement process

Repeatable...? – YES

• Acquisitions from upstream companies and larger midstream operators will have low hanging fruit
• Expertise of management team insures execution

Source of Advantage..? – YES

• Aggressive goal setting to optimize every deal
• Management/accountability processes
• Leveraging technology to automate operations and use database systems for management