PennTex Midstream Partners, LP
PennTex Midstream Partners, LP (Form: SC 13E3, Received: 06/07/2017 17:33:42)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE 13E-3

Rule 13e-3 Transaction Statement under Section 13(e)

of the Securities Exchange Act of 1934

 

 

PennTex Midstream Partners, LP

(Name of the Issuer)

 

 

PennTex Midstream GP, LLC

PennTex Midstream Partners, LP

(Name of Person Filing Statement)

Common Units Representing Limited Partner Interests

(Title of Class of Securities)

709311104

(CUSIP Number of Class of Securities)

Todd Carpenter

PennTex Midstream GP, LLC

8111 Westchester Drive, Suite 600

Dallas, Texas 75225

(832) 456-4000

(Name, address and telephone number of person authorized to receive notices and communications on behalf of the persons filing statement)

 

 

With copies to:

 

Ryan J. Maierson

Debbie P. Yee

Latham & Watkins LLP

811 Main Street, Suite 3700

Houston, Texas 77002

(713) 546-5400

 

Joshua Davidson

Andrew J. Ericksen

Baker Botts L.L.P.

910 Louisiana Street

Houston, Texas 77002

(713) 229-1234

This statement is filed in connection with (check the appropriate box):

 

 

a. 

  The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934.
 

b. 

  The filing of a registration statement under the Securities Act of 1933.
 

c. 

  A tender offer.
 

d. 

  None of the above.

Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: ☐

Check the following box if the filing is a final amendment reporting the results of the transaction: ☐

 

 

Calculation of Filing Fee

 

Transaction valuation*   Amount of filing fee**
   

$280,253,200

  $32,481.35

 

* Estimated for purposes of calculating the amount of the filing fee only. The amount assumes the purchase of all outstanding common units representing limited partner interests (the “Common Units”) of PennTex Midstream Partners, LP (“PennTex”) not owned by Energy Transfer Partners, L.P. at a purchase price of $20.00 per Common Unit, net to the seller in cash. On May 1, 2017, 20,714,256 Common Units were outstanding, of which 6,701,596 are owned by Energy Transfer Partners, L.P. Accordingly, this calculation assumes the purchase of 14,012,660 Common Units.
** The amount of the filing fee is calculated in accordance with Rule 0-11 of the Securities Exchange Act of 1934, as amended, and Fee Rate Advisory # 1 for Fiscal Year 2017 issued by the Securities and Exchange Commission, by multiplying the transaction valuation by 0.0001159.

 

Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

Amount Previously Paid:    $32,481.35
Form or Registration No.:    Schedule TO (File No. 005-88873)
Filing Party:    Energy Transfer Partners, L.P.
Date Filed:    May 18, 2017

Neither the Securities and Exchange Commission nor any state securities commission has: approved or disapproved of the transaction contemplated herein; passed upon the merits or fairness of such transaction; or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

 

 

 


INTRODUCTION

This Transaction Statement on Schedule 13E-3 (this “ Schedule  13E-3 ”) relates to the offer by Energy Transfer Partners, L.P., a Delaware limited partnership (“ ETP ”), to purchase all outstanding common units representing limited partner interests (the “ Common Units ”), of PennTex Midstream Partners, LP, a Delaware limited partnership (the “ Partnership ,” “ we ” or “ us ”), not owned by ETP, upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 18, 2017 (as amended to date, the “ Offer to Purchase ”) and in the related letter of transmittal (which, together with any amendments or supplements thereto, collectively constitute the “ Offer ”). This Schedule 13E-3 is being filed by PennTex Midstream GP, LLC, the general partner of the Partnership (the “ General Partner ”), and the Partnership, which is the issuer of the Common Units.

In response to the Offer, the Partnership filed a Solicitation/Recommendation Statement on Schedule 14D-9 on June 2, 2017 (the “ Schedule  14D-9 ”). The information contained in the Schedule 14D-9 and the Offer to Purchase, including all schedules, annexes and exhibits thereto, copies of which are attached as exhibits hereto, is expressly incorporated by reference to the extent such information is required in response to the items of this Schedule 13E-3, and is supplemented by the information specifically provided herein. The responses to each item in this Schedule 13E-3 are qualified in their entirety by the information contained in the Schedule 14D-9 and the Offer to Purchase. All information contained or incorporated by reference in this Schedule 13E-3 concerning the General Partner, the Partnership and ETP has been provided by such person and not by any other person.

SPECIAL FACTORS

Purposes, Alternatives, Reasons and Effects

 

  (a) Purposes. The information set forth in the Schedule 14D-9 under “ Item 7. Purpose of the Transaction and Plans or Proposals ” and the information in the Offer to Purchase under “ Summary Term Sheet ,” “ Introduction ,” “ Special Factors—Background of the Offer ” and “ Special Factors—Purposes, Reasons and Plans for PennTex After the Exercise of the Limited Call Right ” is incorporated herein by reference.

 

  (b) Alternatives. The information set forth in the Schedule 14D-9 under “ Item 4. The Solicitation or Recommendation—Background of the Offer ” and “ Item 4. The Solicitation or Recommendation—Reasons for the Determination and Recommendation of the Conflicts Committee, ” and the information set forth in the Offer to Purchase under “ Special Factors—Background of the Offer ” and “ Special Factors—Purpose of and Reasons for the Offer; After the Offer and the Exercise of the Limited Call Right; Consideration of Alternatives ” is incorporated herein by reference.

 

  (c) Reasons. The information set forth in the Schedule 14D-9 under “ Item 4. The Solicitation or Recommendation— Reasons for the Determination and Recommendation of the Conflicts Committee, ” “ Item 4. The Solicitation or Recommendation—Opinion of Evercore Group L.L.C.—Financial Advisor to the Conflicts Committee, ” “ Item 4. The Solicitation or Recommendation—Management Forecast ” and “ Annex A—Opinion of Evercore Group L.L.C., dated June 1, 2017, ” and the information set forth in the Offer to Purchase under “ Special Factors—Background of the Offer ” and “ Special Factors—Purpose of and Reasons for the Offer; After the Offer and the Exercise of the Limited Call right; Consideration of Alternatives ” is incorporated herein by reference.

Projections of non-GAAP Adjusted EBITDA and Distributable cash flow set forth in “ Item 4. The Solicitation or Recommendation—Management Forecast ” of the Schedule 14D-9 have been made based upon prior results and as a result of the assumptions set forth therein, and thus have not been prepared on the basis of full projected financial statements. Accordingly, the Partnership is unable to provide line item disclosure without unreasonable effort because the projections were not prepared on a line-item basis.

 

  (d) Effects. The information set forth in the Schedule 14D-9 under “ Item 8. Additional Information—Limited Call Right ” and the information set forth in the Offer to Purchase under “ Summary Term Sheet ,” “ Introduction ,” “ Special Factors—Purposes, Reasons and Plans for PennTex After the Exercise of the Limited Call Right ,” “ The Tender Offer—Possible Effects of the Offer on the Market for PennTex Common Units; Stock Exchange Listing(s); Registration under the Exchange Act; Margin Regulations ,” “ The Tender Offer—Appraisal Rights ; “ Going-Private Rules ,” and “ Certain Legal Matters; Regulatory Approvals ” is incorporated herein by reference.

Fairness of the Transaction

 

  (a) Fairness. The information set forth in the Schedule 14D-9 under “ Item 4. The Solicitation or Recommendation ” is incorporated herein by reference.

 

  (b) Factors Considered in Determining Fairness. The information set forth in the Schedule 14D-9 under “ Item 4. The Solicitation or Recommendation—Reasons for the Determination and Recommendation of the Conflicts Committee, ” “ Item 4. The Solicitation or Recommendation—Opinion of Evercore Group L.L.C.—Financial Advisor to the Conflicts Committee, ” “ Item 4. The Solicitation or Recommendation—Management Forecast ” and “ Annex A—Opinion of Evercore Group L.L.C., dated June 1, 2017 ” and the information set forth in Exhibit (c)(3) attached hereto is incorporated herein by reference.

Projections of non-GAAP Adjusted EBITDA and Distributable cash flow set forth in “ Item 4. The Solicitation or Recommendation—Management Forecast ” of the Schedule 14D-9 have been made based upon prior results and as a result of the assumptions set forth therein, and thus have not been prepared on the basis of full projected financial statements. Accordingly, the Partnership is unable to provide line item disclosure without unreasonable effort because the projections were not prepared on a line-item basis.

 

  (c) Approval of Security Holders. The information set forth in the Schedule 14D-9 under “ Item 2. Identity and Background of Filing Person—Tender Offer ” and the information set forth in the Offer to Purchase under “ Summary Term Sheet—What are the most significant conditions to the offer ?,” “ Introduction ,” and “ The Tender Offer—Conditions to the Offer ” is incorporated herein by reference.

 

  (d) Unaffiliated Representative. An unaffiliated representative was not retained for the purpose of representing unaffiliated security holders in negotiating the terms of the offer, or preparing a report concerning the fairness of the transaction.

 

  (e) Approval of Directors. The information set forth in the Schedule 14D-9 under “ Item 4. The Solicitation or Recommendation—Recommendation, ” “ Item 4. The Solicitation or Recommendation—Reasons for the Determination and Recommendation of the Conflicts Committee ” and “ Item 4. The Solicitation or Recommendation—Background of the Offer ” is incorporated herein by reference .

 

  (f) Other Offers.  Not applicable .

Reports, Opinions, Appraisals and Negotiations

 

  (a)-(b) Reports, Opinion or Appraisal; Preparer and Summary of the Report.  The information set forth in the Schedule 14D-9 under “ Item 4. The Solicitation or Recommendation—Background of the Offer, ” “ Item 4. The Solicitation or Recommendation—Opinion of Evercore Group L.L.C.—Financial Advisor to the Conflicts Committee, ” “ Item 5. Persons/Assets, Retained, Employed, Compensated or Used ” and “ Annex A—Opinion of Evercore Group L.L.C., dated June 1, 2017 ” and the information set forth in Exhibits (c)(2) and (c)(3) attached hereto is incorporated herein by reference.

 

  (c) Availability of Documents.  Copies of the report, opinion or appraisal referenced in Item 9 of this Schedule 13E-3 will be made available for inspection and copying at the Partnership’s principal executive offices located at 8111 Westchester Drive, Suite 600, Dallas Texas 75225 during regular business hours by any unitholder or unitholder representative who has been so designated in writing.

 

Item 1. Summary Term Sheet

Regulation M-A Item 1001

The information set forth in the Offer to Purchase under “ Summary Term Sheet ” is incorporated herein by reference.

 

Item 2. Subject Company Information

Regulation M-A Item 1002

(a)

Name and Address. The information set forth in the Schedule 14D-9 under “ Item  1. Subject Company Information—Name and Address ” is incorporated herein by reference.

(b)

Securities. The information set forth in the Schedule 14D-9 under “ Item  1. Subject Company Information—Securities ” is incorporated herein by reference.

(c)

Trading Market and Price. The information set forth in the Offer to Purchase under “ The Tender Offer—Price Range of PennTex Common Units; Distributions on PennTex Common Units ” is incorporated herein by reference.

(d)

Dividends. The information set forth in the Offer to Purchase under “ The Tender Offer—Price Range of PennTex Common Units; Distributions on PennTex Common Units ” is incorporated herein by reference. Other than as set forth in the First Amended and Restated Agreement of Limited Partnership of PennTex Midstream Partners, LP dated as of June 9, 2015, there are no restrictions on the Partnership’s current or future ability to pay distributions with respect to the Common Units.

(e)

Prior Public Offerings. On June 9, 2015, the Partnership completed its initial public offering of 11,250,000 Common Units at a price of $20.00 per Common Unit, and the Partnership subsequently issued and sold 644,462 Common Units pursuant to the partial exercise of the underwriters’ over-allotment option. The Partnership received net proceeds from the offering (including pursuant to the over-allotment option) of approximately $223 million.

 

1


(f)

Prior Stock Purchases. None.

 

Item 3. Identity and Background of the Filing Person

Regulation M-A Item 1003

(a)

Name and Address. The Partnership is the subject company and the General Partner is the general partner of the Partnership. The information set forth in the Schedule 14D-9 under “ Item  1. Subject Company Information ” is incorporated herein by reference.

(b)

Business and Background of Entities. The information set forth in the Offer to Purchase under “ The Tender Offer—Certain Information Concerning PennTex ” is incorporated herein by reference.

(c)

Business and Background of Natural Persons. The information set forth in the Offer to Purchase under “ The Tender Offer—Certain Information Concerning PennTex ” is incorporated herein by reference. During the past five years, none of the directors and executive officers of the General Partner or the Partnership have been (1) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (2) party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities laws.

 

Name

   Citizenship   

Position with the General

Partner

  

Position with the Offeror

Kelcy L. Warren    USA    Chief Executive Officer    Chief Executive Officer and Chairman of the Board of Directors
Matthew S. Ramsey    USA    Chairman, President & Chief Operating Officer    Director, President and Chief Operating Officer
Thomas E. Long    USA    Chief Financial Officer and Director    Chief Financial Officer
A. Troy Sturrock    USA    Senior Vice President, Controller & Principal Accounting Officer    Senior Vice President, Controller and Principal Accounting Officer
Marshall S. (Mackie)
McCrea, III
   USA    Director    Director and ETE Group Chief Operating Officer and Chief Commercial Officer
Thomas P. Mason    USA    Director    None
Robert W. Jordan    USA    Director    None
Richard S. Walker    USA    Director    None
David C. Lawler    USA    Director    None

Kelcy L. Warren is the Chief Executive Officer of the General Partner, having served in that capacity since November 2016. Mr. Warren is the Chief Executive Officer and Chairman of the board of directors of ETP’s general

 

2


partner and has served in that capacity since August 2007. Mr. Warren also serves as the Chairman of the board of directors of Energy Transfer Equity, L.P.’s (“ ETE ”) general partner and has served in that capacity since August 2007. Prior to that, Mr. Warren had served as the Co-Chief Executive Officer and Co-Chairman of the board of directors of ETP’s general partner since January 2004. Prior to January 2004, Mr. Warren served as President of the general partner of ET Company I, Ltd., having served in that capacity since 1996. From 1996 to 2000, he also served as a director of Crosstex Energy, Inc. From 1993 to 1996, he served as President, Chief Operating Officer and as a director of Cornerstone Natural Gas, Inc. Mr. Warren has more than 25 years of business experience in the energy industry.

Matthew S. Ramsey is a director and the Chairman, President & Chief Operating Officer of the General Partner, having served in that capacity since November 2016. He has served as a director of the general partner of ETE since July 2012 and as a director of ETP’s general partner since November 2015. Mr. Ramsey has served as President and Chief Operating Officer of ETP’s general partner since November 2015. Mr. Ramsey is also the chairman of the board of directors of the general partner of Sunoco LP (“SUN”) and has served in that capacity since April 2015. Mr. Ramsey previously served as President of RPM Exploration, Ltd., a private oil and gas exploration partnership generating and drilling 3-D seismic prospects on the Gulf Coast of Texas. Mr. Ramsey is currently a director of RSP Permian, Inc. (NYSE: RSPP), where he serves as chairman of the compensation committee and as a member of the audit committee.

Thomas E. Long is a director and the Chief Financial Officer of the General Partner, having served in that capacity since November 2016. He has served as the Group Chief Financial Officer of ETE’s general partner since February 2016 and as the Chief Financial Officer of ETP’s general partner since April 2015. Since May 2016, Mr. Long has served as a director of the general partner of SUN. Mr. Long previously served as Executive Vice President and Chief Financial Officer of Regency GP LLC from November 2010 to April 2015. From May 2008 to November 2010, Mr. Long served as Vice President and Chief Financial Officer of Matrix Service Company. Prior to joining Matrix, he served as Vice President and Chief Financial Officer of DCP Midstream Partners, LP, a publicly traded natural gas and natural gas liquids midstream business company. From 1998 to 2005, Mr. Long served in several executive positions with subsidiaries of Duke Energy Corp., one of the nation’s largest electric power companies.

A. Troy Sturrock has served as a Senior Vice President of the General Partner since November 2016 and as the Controller and Principal Accounting Officer of the General Partner since January 2017. He is the Senior Vice President, Controller and Principal Accounting Officer of ETP’s general partner and has served as the Principal Accounting Officer since February 2016. Mr. Sturrock previously served as Vice President and Controller of Regency GP LLC from February 2008, and in November 2010 was appointed as the Principal Accounting Officer. From June 2006 to February 2008, Mr. Sturrock served as the Assistant Controller and Director of Financial Reporting and tax for Regency GP LLC. From January 2004 to June 2006, Mr. Sturrock was associated with the Public Company Accounting Oversight Board, where he was an inspection specialist in the division of registration and inspections. Mr. Sturrock served in various roles at PricewaterhouseCoopers LLP from 1995 to 2004, most recently as a Senior Manager in the audit practice specializing in the transportation and energy industries. Mr. Sturrock is a Certified Public Accountant.

Marshall S. (Mackie) McCrea, III has served as a director of the General Partner since November 2016. Mr. McCrea has served as a director of ETP’s general partner since December 2009. He is the Group Chief Operating Officer and Chief Commercial Officer of ETE’s general partner and has served in that capacity since November 2015. Prior to that, he was the President and Chief Operating Officer of ETP’s general partner and served in that capacity from June 2008 to November 2015. Prior to that, he served as President – Midstream of ETP’s general partner from March 2007 to June 2008. Previously he served as the Senior Vice President – Commercial Development for ETP and its predecessors since January 2004. Mr. McCrea also currently serves as a director of the general partner of ETE and as the chairman of the board of directors of the general partner of Sunoco Logistics Partners L.P. (“SXL”).

Thomas P. Mason has served as a director of the General Partner since November 2016. He has served as Executive Vice President and General Counsel of the general partner of ETE since December 2015. Mr. Mason served as Senior Vice President, General Counsel and Secretary of ETP’s general partner from April 2012 to December 2015. Mr. Mason previously served as Vice President, General Counsel and Secretary of ETP’s general partner from June 2008 until April 2012 and as General Counsel and Secretary of ETP’s general partner from February 2007. Prior to

 

3


joining ETP, he was a partner in the Houston office of Vinson & Elkins. Mr. Mason has specialized in securities offerings and mergers and acquisitions for more than 25 years. Mr. Mason also serves on the board of directors of the general partner of SXL.

Robert W. Jordan has served as a director of the General Partner since June 2015. Ambassador Jordan has served as the Diplomat in Residence and Adjunct Professor of Political Science in the John G. Tower Center for Political Studies at Southern Methodist University since September 2005. Ambassador Jordan served as U.S. Ambassador to Saudi Arabia from 2001 until 2003. Prior to and following his diplomatic service, Ambassador Jordan was a partner in the international law firm Baker Botts L.L.P. for many years and headed the firm’s Middle East practice based in Dubai between 2010 and 2014. Ambassador Jordan received an A.B. in Political Science from Duke University in 1967 and an M.A.in Government and Politics from the University of Maryland in 1971. He received a J.D. from the University of Oklahoma in 1974.

Richard S. Walker has served as a director and Chairman of the Audit Committee of the General Partner since July 2015. Mr. Walker serves as the Managing Partner in the Houston office of DHR International, a leading global executive search firm. Prior to entering the executive search industry in 2005, Mr. Walker was a Managing Director with JPMorgan directing investment banking relationships with a variety of energy industry clients in the exploration and production, midstream and power sectors. Mr. Walker worked with JPMorgan and its predecessors from 1994 to 2005. From 1981 to 1994, Mr. Walker worked in the energy banking sector with predecessors of JPMorgan and Bank of America. From 2007 until its going private transaction in October 2012, Mr. Walker served as a director and member of the audit and compensation committees of Venoco, Inc., a publicly-traded E&P company based in Denver, and served as chairman of its audit committee from November 2012 until August 2015. Mr. Walker served as an advisory director of ASCENDE, a privately held employee benefits consulting firm, from 2014 until its sale in January 2016. Mr. Walker currently serves on the board of directors of Strake Jesuit College Preparatory in Houston. Mr. Walker holds a BBA from Loyola University, New Orleans and a MBA from Bowling Green State University. Mr. Walker is a Certified Public Accountant in the State of Texas.

David C. Lawler has served as a director of the General Partner since November 2015. Mr. Lawler currently serves as Chief Executive Officer of BP’s US Lower 48 Onshore business. Prior to joining BP in September 2014, Mr. Lawler was the Executive Vice President and Chief Operating Officer of SandRidge Energy, Inc., an independent oil and gas producer based in Oklahoma City. Before joining SandRidge in 2011, Mr. Lawler was the CEO and President of Post Rock Energy Corporation, another independent oil and gas company in Oklahoma. He began his career as a Production Engineer at Conoco before moving to Burlington Resources, and spent 10 years at Shell Exploration and Production Company in roles of increasing responsibility, including Business Planning for the Americas and Engineering and Operations Manager for the US Gulf Coast business unit. He holds a Bachelor of Science in Petroleum Engineering from the Colorado School of Mines and an MBA from Tulane University.

 

Item 4. Terms of the Transaction

Regulation M-A Item 1004(a) and (c) through (f)

(a)

(1)  Material Terms (Tender Offers).

(a)(1)(i) The information set forth in the Offer to Purchase under “ Summary Term Sheet—How many PennTex common units are you offering to purchase? ” and “ Introduction ” is incorporated herein by reference.

(a)(1)(ii) The information set forth in the Offer to Purchase under “ Summary Term Sheet—What will I receive in exchange for the PennTex common units that I tender into the offer? ” is incorporated herein by reference.

(a)(1)(iii) The information set forth in the Offer to Purchase under “ Summary Term Sheet—How long do I have to tender my PennTex common units in the offer? ” and “ The Tender Offer—Terms of the Offer ” is incorporated herein by reference.

 

4


(a)(1)(iv) The information set forth in the Offer to Purchase under “ Summary Term Sheet—Can the offer be extended, and under what circumstances? ” and “ The Tender Offer—Terms of the Offer ” is incorporated herein by reference.

(a)(1)(v) The information set forth in the Offer to Purchase under “ Summary Term Sheet—Can the offer be extended, and under what circumstances? ” and “ The Tender Offer—Terms of the Offer ” is incorporated herein by reference.

(a)(1)(vi) The information set forth in the Offer to Purchase under “ Summary Term Sheet—Can I withdraw PennTex common units that I previously tendered in the offer? Until what time may I withdraw previously tendered PennTex common units? ” and “ The Tender Offer—Withdrawal Rights ” is incorporated herein by reference.

(a)(1)(vii) The information set forth in the Offer to Purchase under “ Summary Term Sheet—How do I participate in the offer? ” and “ The Tender Offer—Procedures for Accepting the Offer and Tendering PennTex Common Units ” is incorporated herein by reference.

(a)(1)(viii) The information set forth in the Offer to Purchase under “ Summary Term Sheet—How do I participate in the offer? ”, “ The Tender Offer—Terms of the Offer ,” “ The Tender Offer—Acceptance for Payment and Payment for PennTex Common Units ,” “ The Tender Offer—Procedures for Accepting the Offer and Tendering PennTex Common Units ” and “ The Tender Offer—Conditions to the Offer ” is incorporated herein by reference.

(a)(1)(ix) Not applicable.

(a)(1)(x) Not applicable.

(a)(1)(xi) Not applicable.

(a)(1)(xii) The information set forth in the Offer to Purchase under “ The Tender Offer—Material U.S. Federal Income Tax Consequences ” is incorporated herein by reference.

(a)

(2)  Mergers or Similar Transactions.

(a)(2)(i)-(a)(2)(vii) Not applicable.

(c)

Different Terms. The information set forth in the Schedule 14D-9 under “ Item 3. Past Contacts, Transactions, Negotiations and Agreements ” and “ Item 8. Additional Information—Limited Call Right ” and the information set forth in the Offer to Purchase under “ Summary Term Sheet, ” “ Special Factors—Section  2— Purpose of and Reasons for the Offer; Plans for PennTex After the Offer and the Exercise of the Limited Call Right; Consideration of Alternatives, ” “ Special Factors— Section  4— The Position of ETP Regarding the Fairness of the Offer and the Exercise of the Limited Call Right, ” “ Special Factors—Section  7—Certain Effects of the Offer and the Exercise of the Limited Call Right, ” “ Special Factors—Section  8—Purposes, Reasons and Plans for PennTex After the Exercise of the Limited Call Right, ” “ The Tender Offer—Section  8—Appraisal Rights; Going-Private Rules ” is incorporated herein by reference.

(d)

Appraisal Rights. The information set forth in the Offer to Purchase under “ Summary Term Sheet ”, “ The Tender Offer—Section  8—Appraisal Rights; ‘Going-Private’ Rules ” is incorporated herein by reference.

(e)

Provisions for Unaffiliated Security Holders. Neither the General Partner nor the Partnership has made any arrangements in connection with the Offer to provide holders of Common Units access to their corporate files or to obtain counsel or appraisal services at their expense.

(f)

Eligibility for Listing or Trading. Not applicable.

 

5


Item 5. Past Contacts, Transactions, Negotiations and Agreements

Regulation M-A Item 1005(a) through (c) and (e)

(a)

Transactions. The information set forth in the Schedule 14D-9 under “ Item  3. Past Contacts, Transactions, Negotiations and Agreements ” and the information set forth in the Offer to Purchase under “ Special Factors—Background of the Offer ,” “ Special Factors—Transactions and Arrangements Concerning the PennTex Common Units ,” “ Special Factors—Interests of Certain Persons in the Offer and the Exercise of the Limited Call Right ,” and “ Special Factors—Certain Relationships Between ETP and PennTex ” is incorporated herein by reference.

(b)-(c)  Significant Corporate Events; Negotiations or Contacts. The information set forth in the Schedule 14D-9 under “ Item 3. Past Contacts, Transactions, Negotiations and Agreements, ” “ Item  4. The Solicitation or Recommendation—Background of the Offer ” and “ Item  7. Purposes of the Transaction and Plans or Proposals, ” and the information set forth in the Offer to Purchase under “ Special Factors—Background of the Offer ,” “ Special Factors—Transactions and Arrangements Concerning the PennTex Common Units ,” “ Special Factors—Interests of Certain Persons in the Offer and the Exercise of the Limited Call Right ,” and “ Special Factors—Certain Relationships Between ETP and PennTex ” is incorporated herein by reference.

(e)

Agreements Involving the Subject Company’s Securities. The information set forth in the Schedule 14D-9 under “ Item  3. Past Contacts, Transactions, Negotiations and Agreements ” and the information set forth in the Offer to Purchase under “ Special Factors—Transactions and Arrangements Concerning the PennTex Common Units ” and “ Schedule B—Ownership of PennTex Common Units by ETP and Certain Related Persons ” is incorporated herein by reference.

 

Item 6. Purposes of the Transaction and Plans or Proposals

Regulation M-A Item 1006(b) and (c)(1) through (8)

(b)

Use of Securities. The information set forth in the Offer to Purchase under “ Summary Term Sheet, ” “ Introduction, ” “ Special Factors—Purpose of and Reasons for the Offer; After the Offer and the Exercise of the Limited Call Right; Consideration of Alternatives ” and “ The Tender Offer—Possible Effects of the Offer on the Market for PennTex Common Units; Stock Exchange Listing(s); Registration under the Exchange Act; Margin Regulations ” is incorporated herein by reference.

(c)

Plans.

(c)(1) The information set forth in the Schedule 14D-9 under “ Item  7. Purposes of the Transaction and Plans or Proposals ” and the information set forth in the Offer to Purchase under “ Introduction ” and “ Special Factors—Purposes, Reasons and Plans for PennTex After the Exercise of the Limited Call Right ” is incorporated herein by reference.

(c)(2) The information set forth in the Schedule 14D-9 under “ Item  7. Purpose of the Transaction and Plans or Proposals ” and the information set forth in the Offer to Purchase under “ Introduction ” and “ Special Factors—Purposes, Reasons and Plans for PennTex After the Exercise of the Limited Call Right ” is incorporated herein by reference.

(c)(3) The information set forth in the Schedule 14D-9 under “ Item  7. Purpose of the Transaction and Plans or Proposals ” and the information set forth in the Offer to Purchase under “ Introduction ” and “ Special Factors—Purposes, Reasons and Plans for PennTex After the Exercise of the Limited Call Right ” is incorporated herein by reference.

 

6


(c)(4) The information set forth in the Offer to Purchase under “ Special Factors—Purposes, Reasons and Plans for PennTex After the Exercise of the Limited Call Right ” is incorporated herein by reference.

(c)(5) The information set forth in the Offer to Purchase under “ Special Factors—Purposes, Reasons and Plans for PennTex After the Exercise of the Limited Call Right ” is incorporated herein by reference.

(c)(6) The information set forth in the Offer to Purchase under “ Introduction ” and “ The Tender Offer—Possible Effects of the Offer on the Market for PennTex Common Units; Stock Exchange Listing(s); Registration under the Exchange Act; Margin Regulations ” is incorporated herein by reference.

(c)(7) The information set forth in the Offer to Purchase under “ Introduction ” and “ The Tender Offer—Possible Effects of the Offer on the Market for PennTex Common Units; Stock Exchange Listing(s); Registration under the Exchange Act; Margin Regulations ” is incorporated herein by reference.

(c)(8) The information set forth in the Offer to Purchase under “ Special Factors—Purposes, Reasons and Plans for PennTex After the Exercise of the Limited Call Right ” and “ The Tender Offer—Possible Effects of the Offer on the Market for PennTex Common Units; Stock Exchange Listing(s); Registration under the Exchange Act; Margin Regulations ” is incorporated herein by reference.

 

Item 7. Purposes, Alternatives, Reasons and Effects

Regulation M-A Item 1013

(a)

Purposes. The information set forth in the Schedule 14D-9 under “ Item  7. Purpose of the Transaction and Plans or Proposals ” and the information in the Offer to Purchase under “ Summary Term Sheet ,” “ Introduction ,” “ Special Factors—Background of the Offer ” and “ Special Factors—Purposes, Reasons and Plans for PennTex After the Exercise of the Limited Call Right ” is incorporated herein by reference.

(b)

Alternatives. The information set forth in the Schedule 14D-9 under “ Item  4. The Solicitation or Recommendation—Background of the Offer ” and “ Item  4. The Solicitation or Recommendation—Reasons for the Determination and Recommendation of the Conflicts Committee, ” and the information set forth in the Offer to Purchase under “ Special Factors—Background of the Offer ” and “ Special Factors—Purpose of and Reasons for the Offer; After the Offer and the Exercise of the Limited Call Right; Consideration of Alternatives ” is incorporated herein by reference.

(c)

Reasons. The information set forth in the Schedule 14D-9 under “ Item  4. The Solicitation or Recommendation— Reasons for the Determination and Recommendation of the Conflicts Committee, ” “ Item  4. The Solicitation or Recommendation—Opinion of Evercore Group L.L.C.—Financial Advisor to the Conflicts Committee, ” “ Item  4. The Solicitation or Recommendation—Management Forecast ” and “ Annex A—Opinion of Evercore Group L.L.C., dated June  1, 2017, ” and the information set forth in the Offer to Purchase under “ Special Factors—Background of the Offer ” and “ Special Factors—Purpose of and Reasons for the Offer; After the Offer and the Exercise of the Limited Call right; Consideration of Alternatives ” is incorporated herein by reference.

Projections of non-GAAP Adjusted EBITDA and Distributable cash flow set forth in “ Item 4. The Solicitation or Recommendation—Management Forecast ” of the Schedule 14D-9 have been made based upon prior results and as a result of the assumptions set forth therein, and thus have not been prepared on the basis of full projected financial statements. Accordingly, the Partnership is unable to provide line item disclosure without unreasonable effort because the projections were not prepared on a line-item basis.

(d)

Effects. The information set forth in the Schedule 14D-9 under “ Item  8. Additional Information—Limited Call Right ” and the information set forth in the Offer to Purchase under “ Summary Term Sheet ,” “ Introduction ,” “ Special Factors—Purposes, Reasons and Plans for PennTex After the Exercise of the Limited Call Right ,” “ The Tender

 

7


Offer—Possible Effects of the Offer on the Market for PennTex Common Units; Stock Exchange Listing(s); Registration under the Exchange Act; Margin Regulations ,” “ The Tender Offer—Appraisal Rights ; “ Going-Private Rules ,” and “ Certain Legal Matters; Regulatory Approvals ” is incorporated herein by reference.

 

Item 8. Fairness of the Transaction

Regulation M-A Item 1014

(a)

Fairness. The information set forth in the Schedule 14D-9 under “ Item  4. The Solicitation or Recommendation ” is incorporated herein by reference.

(b)

Factors Considered in Determining Fairness. The information set forth in the Schedule 14D-9 under “ Item  4. The Solicitation or Recommendation—Reasons for the Determination and Recommendation of the Conflicts Committee, ” “ Item  4. The Solicitation or Recommendation—Opinion of Evercore Group L.L.C.—Financial Advisor to the Conflicts Committee, ” “ Item  4. The Solicitation or Recommendation—Management Forecast ” and “ Annex A—Opinion of Evercore Group L.L.C., dated June  1, 2017 ” and the information set forth in Exhibit (c)(3) attached hereto is incorporated herein by reference.

Projections of non-GAAP Adjusted EBITDA and Distributable cash flow set forth in “ Item 4. The Solicitation or Recommendation—Management Forecast ” of the Schedule 14D-9 have been made based upon prior results and as a result of the assumptions set forth therein, and thus have not been prepared on the basis of full projected financial statements. Accordingly, the Partnership is unable to provide line item disclosure without unreasonable effort because the projections were not prepared on a line-item basis.

(c)

Approval of Security Holders. The information set forth in the Schedule 14D-9 under “ Item  2. Identity and Background of Filing Person—Tender Offer ” and the information set forth in the Offer to Purchase under “ Summary Term Sheet—What are the most significant conditions to the offer ?,” “ Introduction ,” and “ The Tender Offer—Conditions to the Offer ” is incorporated herein by reference.

(d)

Unaffiliated Representative. An unaffiliated representative was not retained for the purpose of representing unaffiliated security holders in negotiating the terms of the offer, or preparing a report concerning the fairness of the transaction.

(e)

Approval of Directors. The information set forth in the Schedule 14D-9 under “ Item  4. The Solicitation or Recommendation—Recommendation, ” “ Item  4. The Solicitation or Recommendation—Reasons for the Determination and Recommendation of the Conflicts Committee ” and “ Item  4. The Solicitation or Recommendation—Background of the Offer ” is incorporated herein by reference.

(f)

Other Offers. Not applicable.

 

Item 9. Reports, Opinions, Appraisals and Negotiations

Regulation M-A Item 1015

(a)-(b)

Reports, Opinion or Appraisal; Preparer and Summary of the Report. The information set forth in the Schedule 14D-9 under “ Item  4. The Solicitation or Recommendation—Background of the Offer, ” “ Item  4. The Solicitation or Recommendation—Opinion of Evercore Group L.L.C.—Financial Advisor to the Conflicts Committee, ” “ Item  5. Persons/Assets, Retained, Employed, Compensated or Used ” and “ Annex A—Opinion of Evercore Group L.L.C., dated June  1, 2017 ” and the information set forth in Exhibits (c)(2) and (c)(3) attached hereto is incorporated herein by reference.

 

8


(c)

Availability of Documents. Copies of the report, opinion or appraisal referenced in this Item 9 will be made available for inspection and copying at the Partnership’s principal executive offices located at 8111 Westchester Drive, Suite 600, Dallas Texas 75225 during regular business hours by any unitholder or unitholder representative who has been so designated in writing.

 

Item 10. Source and Amounts of Funds or Other Consideration

Regulation M-A Item 1007

(a)

Source of Funds. The information set forth in the Offer to Purchase under “ Summary Term Sheet—Do you have the financial resources to pay for all of the PennTex common units that you are offering to purchase? ” and “ The Tender Offer—Source and Amount of Funds ” is incorporated herein by reference.

(b)

Conditions. The information set forth in the Offer to Purchase under “ Summary Term Sheet—What are the most significant conditions to the offer? ” and “ The Tender Offer—Conditions to the Offer ” is incorporated herein by reference.

(c)

Expenses. The information set forth in the Schedule 14D-9 under “ Item  5. Persons/Assets, Retained, Employed, Compensated or Used ” and the information set forth in the Offer to Purchase under “ The Tender Offer—Section  15—Fees and Expenses ” is incorporated herein by reference.

The following table presents the estimated fees and expenses incurred or to be incurred by the Partnership in connection with the offer:

 

Description

   Amount to be Paid  

Financial advisor fees

   $ 1,750,000  

Legal fees and expenses

   $ 225,000  

Miscellaneous expenses

   $ 25,000  

Total

   $ 2,000,000  

(d)

Borrowed Funds. The information set forth in the Offer to Purchase under “ Summary Term Sheet ” and “ The Tender Offer—Source and Amount of Funds ” is incorporated herein by reference.

 

Item 11. Interest in Securities of the Subject Company

Regulation M-A Item 1008

(a) - (b)  Ownership of Securities; Securities Transactions. The information set forth in the Schedule 14D-9 under “ Item  3. Past Contacts, Transactions, Negotiations and Agreements ” and “ Item  6. Interest in Securities of the Subject Company, ” and the information set forth in the Offer to Purchase under “ Special Factors—Transactions and Arrangements Concerning the PennTex Common Units ” and “ Schedule B—Ownership of PennTex Common Units by ETP and Certain Related Persons ” and in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2016 under “ Part III. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Unit Holder Matters ” is incorporated herein by reference.

 

Item 12. The Solicitation or Recommendation

Regulation M-A Item 1012(d) and (e)

(d)

Intent to Tender or Vote in a Going-Private Transaction. The information set forth in the Schedule 14D-9 under “ Item  4. The Solicitation or Recommendation—Intent to Tender ” and the information set forth in the Offer to Purchase under “ Introduction, ” “ Special Factors—Transactions and Arrangements Concerning the PennTex Common Units ” and “ The Tender Offer—Certain Information Concerning ETP ” is incorporated herein by reference.

 

9


(e)

Recommendations of Others. The information set forth in the Schedule 14D-9 under “ Item  4. The Solicitation or Recommendation—Recommendation ” and “ Item  4. The Solicitation or Recommendation—Reasons for the Determination and Recommendation of the Conflicts Committee, ” and the information set forth in the Offer to Purchase under “ The Tender Offer—Certain Information Concerning ETP ” is incorporated herein by reference.

 

Item 13. Financial Statements Consideration

Regulation M-A Item 1010(a) through (b)

(a)

Financial Information. The audited consolidated financial statements of the Partnership as of and for the fiscal years ended December 31, 2016 and December 31, 2015, and the notes thereto, are incorporated herein by reference to “ Part  II—Item  8—Financial Statements and Supplementary Data ” of the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on February 3, 2017. The unaudited consolidated financial statements of the Partnership as of and for the quarters ended March 31, 2017 and March 31, 2016, and the notes thereto, are incorporated herein by reference to “ Part  I—Item  8—Financial Information ” of the Partnership’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017, filed with the SEC on May 5, 2017. The information set forth in the Offer to Purchase under “ The Tender Offer—Section  9—Certain Information Concerning PennTex ” is incorporated herein by reference.

(b)

Pro Forma Information. Pro forma financial information is not material to the Offer.

 

Item 14. Persons/Assets Retained, Employed, Compensated or Used

Regulation M-A Item 1009

(a)

Solicitations or Recommendations.  The information set forth in the Schedule 14D-9 under “ Item  5. Persons/Assets, Retained, Employed, Compensated or Used ” is incorporated herein by reference. Reference is further made to the information set forth in the Offer to Purchase under “ The Tender Offer—Fees and Expenses ” with respect to the persons employed or retained by ETP.

(b)

Employees and Corporate Assets.  The information set forth in the Schedule 14D-9 under “ Item  5. Persons/Assets, Retained, Employed, Compensated or Used ” is incorporated herein by reference.

 

Item 15. Additional Information

Regulation M-A Item 1011(b) and (c)

(b)

Golden Parachute Payments.  None.

(c)

Other Material Information. The information set forth in the Schedule 14D-9 under “ Item  8. Additional Information ” and the information set forth in the Offer to Purchase, including all annexes thereto, is incorporated herein by reference.

 

10


Item 16. Exhibits

Regulation M-A Items 1016(a) through (d), (f) and (g)

The following exhibits are filed herewith:

 

Exhibit
No.

 

Description

(a)(1)(A)   Offer to Purchase, dated May 18, 2017 (incorporated by reference to Exhibit (a)(1)(i) to the Schedule TO).
(a)(1)(B)   Amendment No. 1 to Offer to Purchase, dated June 2, 2017 (incorporated by reference to Exhibit (a)(1)(i)(a) to the Schedule TO).
(a)(1)(C)   Form of Letter of Transmittal (incorporated by reference to Exhibit (a)(1)(ii) to the Schedule TO).
(a)(1)(D)   Form of Notice of Guaranteed Delivery (incorporated by reference to Exhibit (a)(1)(iii) to the Schedule TO).
(a)(1)(E)   Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(1)(iv) to the Schedule TO).
(a)(1)(F)   Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees (incorporated by reference to Exhibit (a)(1)(v) to the Schedule TO).
(a)(1)(G)   Form of Summary Advertisement to be published in The Wall Street Journal (incorporated by reference to Exhibit (a)(1)(vi) to the Schedule TO).
(a)(1)(H)   Press Release of ETP, dated May 18, 2017 (incorporated by reference to Exhibit (a)(1)(vii) to the Schedule TO).
(a)(1)(I)   Press Release of the Partnership, dated May 19, 2017 (incorporated by reference to Exhibit (a)(1)(A) to the Schedule 14D-9).
(a)(1)(J)   Press Release of the Partnership, dated June 1, 2017 (incorporated by reference to Exhibit (a)(1)(B) to the Schedule 14D-9).
(a)(2)(A)   Solicitation/Recommendation Statement on Schedule 14D-9 (incorporated by reference to the Schedule 14D-9 filed by the Partnership with the SEC on June 2, 2017).
(b)(1)   Second Amended and Restated Credit Agreement dated as of October 27, 2011 among Energy Transfer Partners, L.P., Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an LC Issuer, the other lenders party thereto and Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBS Securities Inc., as Joint Lead Arrangers and Joint Book Managers (incorporated by reference to Exhibit (b)(1) to the Schedule TO).
(b)(2)   First Amendment, dated as of November 19, 2013, to Second Amended and Restated Credit Agreement, dated October 27, 2011 among Energy Transfer Partners, L.P., Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and an LC Issuer, the other lenders party thereto and Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBS Securities Inc., as Joint Lead Arrangers and Joint Book Managers (incorporated by reference to Exhibit (b)(2) to the Schedule TO).
(c)(1)   Opinion of Evercore Group L.L.C., dated June 1, 2017 (incorporated by reference to Annex A to the Schedule 14D-9).
(c)(2)   Presentation to Conflicts Committee by Evercore Group L.L.C., dated May 28, 2017.

 

11


(c)(3)   Presentation to Conflicts Committee by Evercore Group L.L.C., dated June 1, 2017 (incorporated by reference to Exhibit (c)(2) to the Schedule TO).
(d)   Contribution Agreement, dated October 24, 2016 by and among Energy Transfer Partners, L.P. and NGP X US Holdings, LP, PennTex Midstream Partners, LLC, MRD Midstream LLC, WHR Midstream LLC and certain individual investors and managers named therein. (incorporated by reference to Exhibit (d) to the Schedule TO).
(e)   The information contained under the headings “Business—Our Relationship with Energy Transfer,” “Certain Relationships and Related Party Transactions, and Director Independence,” “Executive Compensation—Compensation of Directors” and “Security Ownership of Certain Beneficial Owners and Management and Related Unit Holder Matters” in the Partnership’s Annual Report on Form 10-K filed on February 3, 2017 (incorporated by reference to Exhibit (e)(1) to Schedule 14D-9).
(f)   None.
(g)   None.
(h)   None.

 

12


SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.

 

   

PENNTEX MIDSTREAM GP, LLC

 

Date: June 7, 2017    

/s/ Kelcy L. Warren

    Name:   Kelcy L. Warren
    Title:   Chief Executive Officer
   

 

PENNTEX MIDSTREAM PARTNERS, LP

 

By:   PennTex Midstream GP, LLC,

         its general partner

Date: June 7, 2017    

/s/ Kelcy L. Warren

    Name:   Kelcy L. Warren
    Title:   Chief Executive Officer

 

13

SLIDE 0

The Conflicts Committee of the Board of Directors of PennTex Midstream GP, LLC Discussion Materials May 28, 2017 Preliminary Draft – Work in Progress Exhibit (c)(2)


SLIDE 1

These materials have been prepared by Evercore Group L.L.C. (“Evercore”) for the Conflicts Committee (the “Conflicts Committee”) of the Board of Directors of PennTex Midstream GP, LLC, the general partner of PennTex Midstream Partners, LP (the “Partnership”), to whom such materials are directly addressed and delivered and may not be used or relied upon for any purpose other than as specifically contemplated by a written agreement with Evercore. These materials are based on information provided by or on behalf of the Partnership and/or other potential transaction participants, from public sources or otherwise reviewed by Evercore. Evercore assumes no responsibility for independent investigation or verification of such information and has relied on such information being complete and accurate in all material respects. To the extent such information includes estimates and forecasts of future financial performance prepared by or reviewed with the management of the Partnership and/or other potential transaction participants or obtained from public sources, Evercore has assumed that such estimates and forecasts have been reasonably prepared on bases reflecting the best currently available estimates and judgments of such management (or, with respect to estimates and forecasts obtained from public sources, represent reasonable estimates). No representation or warranty, express or implied, is made as to the accuracy or completeness of such information and nothing contained herein is, or shall be relied upon as, a representation, whether as to the past, the present or the future. These materials were designed for use by specific persons familiar with the business and affairs of the Partnership. These materials are not intended to provide the sole basis for evaluating, and should not be considered a recommendation with respect to, any transaction or other matter. These materials have been developed by and are proprietary to Evercore and were prepared exclusively for the benefit and internal use of Conflict Committee. These materials were compiled on a confidential basis for use of the Conflicts Committee in evaluating the potential transaction described herein and not with a view to public disclosure or filing thereof under state or federal securities laws, and may not be reproduced, disseminated, quoted or referred to, in whole or in part, without the prior written consent of Evercore. These materials do not constitute an offer or solicitation to sell or purchase any securities and are not a commitment by Evercore (or any affiliate) to provide or arrange any financing for any transaction or to purchase any security in connection therewith. Evercore assumes no obligation to update or otherwise revise these materials. These materials may not reflect information known to other professionals in other business areas of Evercore and its affiliates. Evercore and its affiliates do not provide legal, accounting or tax advice. Accordingly, any statements contained herein as to tax matters were neither written nor intended by Evercore or its affiliates to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on such taxpayer. Each person should seek legal, accounting and tax advice based on his, her or its particular circumstances from independent advisors regarding the impact of the transactions or matters described herein. 1


SLIDE 2

Table of Contents Section Executive Summary PennTex Situation Analysis Preliminary PennTex Valuation Analysis Appendix Weighed Average Cost of Capital Tax Impact to Unitholders Additional Valuation Analysis – No Tax I II III


SLIDE 3

Executive Summary


SLIDE 4

Executive Summary Evercore Group L.L.C. (“Evercore”) is pleased to provide the materials herein to the Conflicts Committee of the Board of Directors (the “Conflicts Committee”) of PennTex Midstream GP, LLC (“PennTex GP”), the general partner of PennTex Midstream Partners, LP (“PTXP”, “PennTex” or the “Partnership”) regarding Energy Transfer Partners, L.P.’s (“ETP”) tender offer to purchase all of the outstanding Partnership common units that ETP does not already own (the “Public Offer”) As part of the Public Offer, ETP has proposed to acquire each publicly-owned common unit of PTXP for $20.00 per unit in cash (the “Offer Price”) The Offer Price represents a 20.1% premium to PTXP’s closing unit price of $16.65 as of May 18, 2017 The Offer Price represents a 21.4% premium to PTXP’s 20-day volume weighted-average unit price of $16.48 as of May 18, 2017 As of the date of the Public Offer, ETP owned approximately 65.6% of the equity interests in PTXP, including a non-economic general partner interest and limited partner interests consisting of 6,701,596 common units and 20,000,000 subordinated units (ETP’s affiliates also owned 43,722 common units) ETP’s 6,701,596 common units represent 32.4% of the total common units outstanding The Offer Price for units purchased pursuant to the Public Offer will be reduced by any future distributions received after May 18, 2017 The Public Offer is conditioned upon, among other things, sufficient PennTex common units validly tendered and not properly withdrawn such that, following the closing of the tender offer, ETP and its affiliates1 own at least 16,571,405 PennTex common units, representing greater than 80% of the outstanding PennTex common units2 (the “Minimum Tender Condition”) ETP can waive the Minimum Tender Condition, provided that not less than a majority of the PennTex common units held by unitholders that are not affiliates of ETP must be validly tendered and not properly withdrawn on or prior to the expiration date (the “Majority-of-the-Minority Tender Condition”) (i.e., at least 6,984,470 common units are tendered) The Public Offer is not conditioned upon financing or the approval of the Conflicts Committee Introduction 2 Source: PTXP SEC filings Affiliates include directors and officers of ETP’s general partner and the directors and officers of the PennTex GP, which collectively own 43,722 PennTex common units, excluding any common units owned by ETP and its affiliates that members of the board of directors of ETP’s general partner may be deemed to beneficially own Subordinated units will not be included in calculation of whether the 80% Minimum Tender Condition has been met


SLIDE 5

Executive Summary Summary Public Offer Terms 3 Description of Public Offer ETP is offering to purchase all of the outstanding common units representing limited partner interests in PTXP that ETP does not currently own Offer Price $20.00 per common unit in cash Conditions to the Offer Requires that more than 9,826,087 units are tendered such that ETP and its affiliates would own at least 80% of the outstanding PTXP common units (“Minimum Tender Condition”) ETP may waive the Minimum Tender Condition should a majority-of-the-minority common unitholder (not including affiliates of ETP) validly tender their units, or 6,984,740 unaffiliated common unitholders Other customary closing conditions Limited Call Right If ETP and its affiliates own more than 80% of the outstanding PennTex common units as a result of the Public Offer, ETP committed to exercising its limited call right provided for in the First Amended and Restated Agreement of Limited Partnership of PennTex (the “PennTex Partnership Agreement”) and repurchase the remaining units for a price equal to the greater of: The Offer Price ($20.00 per unit) The average of the daily closing price on the Nasdaq for the 20 trading days immediately prior to the date that is three business days prior to the date that notice of the exercise of the limited call right is delivered Other Considerations No financing conditions Units tendered pursuant to the Public Offer will not receive any future distributions (or the Offer Price will be reduced by any distributions received)


SLIDE 6

13,968,938 Common Units 34.3% LP Interest 100.0% Membership Interest Energy Transfer Partners, L.P. (NYSE: ETP) (BBB-/Baa3) Source: Public filings Note: Market data as of May 26, 2017 PennTex Midstream GP, LLC (“PennTex GP”) PennTex Midstream Partners, LP (NASDAQ: PTXP) Market Capitalization: $810.2 million Enterprise Value: $958.5 million Operating Subsidiaries Public Unitholders Non-economic GP Interest 100.0% of IDRs 6,701,596 Common Units 20,000,000 Subordinated Units 65.6% LP Interest 100% Membership Interest Summary PennTex Organizational Structure 4 Executive Summary ETP Affiliates 43,722 Common Units 0.1% LP Interest


SLIDE 7

Offer Price Analysis at Various Prices Price per PTXP Unit $20.00 $20.25 $20.50 $20.75 $21.00 $21.25 $21.50 Premium to: Price May 18, 2017 Closing Price $16.65 20.1% 21.6% 23.1% 24.6% 26.1% 27.6% 29.1% 5-Day VWAP as of May 18, 2017 16.63 20.3% 21.8% 23.3% 24.8% 26.3% 27.8% 29.3% 20-Day VWAP as of May 18, 2017 16.48 21.4% 22.9% 24.4% 25.9% 27.4% 29.0% 30.5% 52-Week High as of May 18, 2017 18.00 11.1% 12.5% 13.9% 15.3% 16.7% 18.1% 19.4% Implied PTXP Equity Value $814.3 $824.5 $834.6 $844.8 $855.0 $865.2 $875.4 Plus: Debt as of March 31, 2017 152.8 152.8 152.8 152.8 152.8 152.8 152.8 Less: Cash as of March 31, 2017 (4.5) (4.5) (4.5) (4.5) (4.5) (4.5) (4.5) Implied Enterprise Value $962.6 $972.8 $983.0 $993.1 $1,003.3 $1,013.5 $1,023.7 Total Consideration to Public Unitholders 1 $280.3 $283.8 $287.3 $290.8 $294.3 $297.8 $301.3 Implied Enterprise Value / PTXP EBITDA: EBITDA 2 2017E EBITDA $83.0 11.6x 11.7x 11.8x 12.0x 12.1x 12.2x 12.3x 2018E EBITDA 83.9 11.5 11.6 11.7 11.8 12.0 12.1 12.2 2019E EBITDA 83.8 11.5 11.6 11.7 11.8 12.0 12.1 12.2 Executive Summary Analysis at Various Prices($ in millions, except per unit amounts) 5 Source: PTXP management, SEC filings, Bloomberg Includes units owned by ETP affiliates EBITDA estimates per PennTex Financial Projections


SLIDE 8

Executive Summary Historical PennTex Unit Price Versus Offer Price PennTex Unit Price – Last Twelve Months Prior to Announcement of Public Offer 6 Source: FactSet Represents consideration for the GP interest and LP units only (does not include proportional net debt at PTXP) 10/25/16: ETP announces acquisition of the PennTex GP and approximately 26.3 million PTXP units (65% LP interest) for approximately $640 million1 Offer Price: $20.00


SLIDE 9

Executive Summary Distribution Growth Rates and Implications on Current Yield 7 Source: FactSet, Partnership press releases Note: Market data as of May 26, 2017. Excludes Southcross Energy Partners, L.P. since it is not currently making distributions Unaffected yield as of May 18, 2017, the closing price on the last trading day prior to the announcement of the Public Offer Illustrative Pricing


SLIDE 10

PennTex Situation Analysis


SLIDE 11

PennTex Situation Analysis PennTex Asset Map Source: PTXP Investor Presentations; Public Filings 8 Aethon BP Linn Nadel & Gussman Range WildHorse Other PTXP Natural Gas Gathering Pipeline PTXP Residue Gas Transportation Pipeline PTXP NGL Transportation Pipeline PTXP Mt. Olive Processing Plant PTXP Lincoln Parish Processing Plant Range Resources Corporation Dedicated Acreage Range Resources Corporation AMI Legend Asset Information Miles of Natural Gas Pipelines ~35 miles Miles of Residue Gas Pipelines ~15 miles Miles of NGL Pipelines ~40 miles Processing Plants 2 plants Total Processing Capacity 400 MMcfd


SLIDE 12

PennTex Situation Analysis Summary Market Data Market Capitalization Consolidated Balance Sheet and Credit Data Unit Price and Distribution Information General Partner Incentive Distribution Rights Source: Public filings, FactSet, IBES Consensus estimates ($ in millions, except per unit amounts) 9


SLIDE 13

PennTex Situation Analysis Wall Street Research Summary Price Targets Analyst Recommendations (Pre-Tender Offer Announcement) Distribution Per Unit Estimates EBITDA Estimates Source: Wall Street research; IBES; FactSet; Bloomberg ($ in millions, except per unit amounts) 10


SLIDE 14

Historical PennTex Trading Performance PennTex Situation Analysis Source: FactSet, Partnership filings Note: Market data as of May 26, 2017 Trading volume of 8,887,033 trades on PTXP’s first trading day of June 4, 2015 and trading volume of 8,475,123 trades on May 19, 2017 (first trading day following ETP’s unsolicited tender offer) not fully captured in chart 7/23/15: Declares initial quarterly distribution of $0.275 per unit ($1.10 per unit annualized) 6/4/15: PTXP commences trading (PTXP prices its initial public offering at $20.00 per unit on 6/3/15) 11 5/18/17: ETP announces unsolicited tender offer after market close to acquire all of the outstanding common units owned by the public for $20.00 per unit in cash 9/14/15: Announces completion of the 200 MMcfd capacity Mt. Olive Gas Processing Plant 7/21/16: Announces 3.5% quarterly distribution increase to $0.2846 per unit ($1.14 per unit annualized) 10/25/16: PTXP announces 3.7% quarterly distribution increase to $0.2950 per unit ($1.18 per unit annualized) and ETP announces $640.0 million acquisition of (i) the PennTex GP and PTXP’s IDRs, (ii) 6,301,596 PTXP common units and (iii) 20,000,000 PTXP subordinated units 5/16/16: Range Resources Corporation announces merger with Memorial Resource Development Corp. in an all-stock transaction valued at $4.4 billion


SLIDE 15

PennTex Situation Analysis Source: FactSet, Bloomberg Short interest per FactSet as of May 15, 2017 12 Equity Ownership Summary and Summary of Units to Achieve Minimum Tender Requirement Equity Ownership Minimum Tender Condition Approximately 73.3% of unaffiliated common units Approximately 23.5% of unaffiliated common units


SLIDE 16

PennTex Situation Analysis PTXP primary operating assets include natural gas gathering pipelines, two natural gas processing plants, a residue gas transportation pipeline and an NGL transportation pipeline PennTex Asset Overview Summary Natural Gas Gathering Pipeline 35-mile rich natural gas gathering system 30.3 miles of 12” pipeline, 1.4 miles of 20” pipeline and 3.1 miles of 24” pipeline Provides access to both of PTXP’s natural gas processing plants as well as ETP’s Minden natural gas processing plant (the “Minden Plant”) Capacity of at least 400 MMcfd to PTXP’s processing plants and 50 MMcfd to the Minden Plant Lincoln Parish Plant 200 MMcfd design-capacity cryogenic natural gas processing plant located near Arcadia, Louisiana On-site NGL storage and truck loading facilities PennTex Residue Gas Pipeline 15-mile, 24” residue natural gas header with at least 400 MMcfd of capacity Provides market access for residue natural gas from the Lincoln Parish Plant and the Mt. Olive Plant for delivery to third-party pipelines Allows customers to access the Perryville Hub and other markets in the Gulf Coast region Mt. Olive Plant 200 MMcfd design-capacity cryogenic natural gas processing plant near Ruston, Louisiana On-site liquids handling facilities for inlet gas PennTex NGL Pipeline 40-mile NGL pipeline, consisting of 27 miles of 10” pipeline and 13 miles of 8” pipeline Total capacity of over 36,000 Bblsd Connects processing plants to a delivery point to DCP’s Black Lake pipeline in Ada, Louisiana, providing a Mont Belvieu-based market for PennTex’s customers 13 PTXP Assets Source: PTXP public flilings


SLIDE 17

PennTex Situation Analysis Summary of PennTex’s Contracts with Range Resources Corporation (“RRC”) 14 Contract Maturity Commitments Fees / Rates AMI and Exclusivity Agreement 9/30/30 Exclusive right to build midstream infrastructure / provide midstream services for RRC on its operated acreage in northern Louisiana (other than production subject to existing third-party commitments) Not applicable Natural Gas Processing 9/30/30 Contains MVCs that are measured on a cumulative basis and based on specified daily minimum volume thresholds Daily minimum volume thresholds: - 7/1/16 - 6/30/26: 460 BBtud - From 7/1/26 - 5/31/30: 345 BBtud - From 6/1/30 - 9/30/30: 115 BBtud During the first five years of the agreement, RRC may increase the MVC in increments of 57.5 BBtud up to an aggregate additional 230 BBtud, subject to available capacity Volumes delivered up to the then-applicable daily MVC threshold are considered firm reserved gas and charged a fixed fee of $0.435 per BBtud for the first 345 BBtud of firm reserved volumes and $0.35 per BBtud for any firm reserved volumes in excess thereof (with CPI escalator) Fixed fee of $0.35 per MMBtu for interruptible volumes processed (in excess of MVC threshold) through 9/30/30 (with CPI escalator) Rich Natural Gas Gathering 5/31/30 Includes a firm capacity reservation payment and a usage fee component that is subject to a minimum volume commitment The deficiency fee calculation is based on RRC's then applicable daily minimum volume commitment under the processing agreement (usage fee only) Gathering volumes delivered to ETP facilities are not subject to a deficiency fee or MVC but will be applied against the volume delivery requirements for purposes of the MVC Current - 11/30/19: Firm capacity reservation payment of $0.03 per MMBtu is payable for a daily capacity of 460 BBtud (fees in excess subject to interruptible rates), and usage fee component of $0.02 per MMBtu is payable for volumes delivered into the gathering system 12/1/19 - 5/31/30: No firm capacity reservation payment, and the usage fee component will increase to $0.05 per MMBtu Rich natural gas delivered to facilities operated by ETP generate a usage fee of $0.22 per MMBtu Residue Gas Transportation 5/31/30 Plant tailgate dedication pursuant to which all of RRC's residue gas delivered from PennTex's processing plants is transported on the residue gas pipeline Usage fee of $0.04 per MMBtu for all volumes. In additional, through 12/31/25, RRC pays an additional fee of $360,000 per month for priority firm service for the first 100 BBtud of residue gas delivered to PennTex for transportation by Range Resources NGL Transportation 9/30/30 Plant tailgate dedication pursuant to which all of RRC's NGLs delivered from PennTex's processing plants is transported on the PennTex NGL Pipeline Usage fee of $1.68 per barrel for all volumes. The rate is subject to the terms of tariff, which is filed with FERC Source: SEC filings, PTXP management


SLIDE 18

PennTex Situation Analysis There is a subset of the Range Acreage currently dedicated to ETP for natural gas processing (the “ETP Processing Dedication”) that will become available to PTXP in February 2020 Based on discussions with ETP management, the current volumes associated with such acreage is approximately 200 BBtud and the majority of Range’s 2017E development plan is focused on the ETP Processing Dedication In February 2020, a portion of this volume would likely be allocated (via allocation by Range to PTXP) to the currently underutilized MVC (460 BBtud) with the excess volumes potentially nominated to PTXP to process the volumes via a newly-constructed natural gas processing plant or via a PTXP arrangement with a third-party (RRC’s current processing volumes are approximately 100 BBtud less than 460 BBtud MVC commitment) These volumes could represent revenue potential to PTXP in 2020E and beyond, but the economics are unclear: Nomination Uncertainty: Range nomination could trigger a nine month period during which PTXP would need to build or get access to a natural gas processing plant to service the volumes Depending on size of plant, economic returns are difficult to quantify (we have been informed by ETP that a smaller, 50 MMcfd plant would likely only achieve single digit returns) Volume Uncertainty: Since the event is in February 2020, Range has not indicated or given guidance on where volumes will be (thus no indication of nominations) Decline rates are high on these wells Capacity Uncertainty: While PTXP has ample takeaway alternatives for residue gas, NGL takeaway capacity is constrained Availability of capacity on Black Lake Pipeline uncertain Trucking too expensive Alternative to construct a pipeline (cost uncertain, terms/rates uncertain) Potential for excess capacity via Energy Transfer on Black Lake Pipeline, but uncertain given 2020 timeframe Acreage Dedication to ETP Expiring in 2020E 15 Source: ETP management Range North Louisiana Asset Map PTXP Pipeline PTXP Processing Plant ETP Processing Dedication Range Acreage Range AMI Legend


SLIDE 19

PennTex Situation Analysis Question: “If we were to add a third plant, do we need to increase the residue gas and NGL takeaway, or are the new lines big enough to handle?” -Kristina Kazarian, Analyst Deutsche Bank Answer: “That's a little bit of a complicated answer, but it really kind of depends on where the gas is sourced. If it's on the west side of the field, I think, there, we'd need to make some additional residue and natural gas access points created. On the – further on the east, I think there may be other alternatives. So, I think the simple answer is, yes, some. The NGL side, I think, we have enough capacity in our existing system, but we do question whether there's ample capacity out of the entire region. So, there are – the answer is, I think, yes, but it's a little bit too early, I think, to describe how we think that's going to look going forward.” -Thomas F. Karam, CEO PTXP North Louisiana NGL Takeaway Alternatives Source: Call Transcripts, Public Filings 16 The primary NGL takeaway option out of North Louisiana is the Black Lake Pipeline, owned by DCP Midstream, LP (“DCP”) Capacity of 80 MBblsd 2016A throughput of 55 MBblsd (69% utilization) DCP is the largest active shipper on the Black Lake Pipeline, accounting for approximately 66% of total throughput in 2016A The Black Lake Pipeline transports NGLs to Mont Belvieu, Texas from the following sources in northwestern Louisiana and southeastern Texas: Third-party processing plants Sand Hills Pipeline Third-party storage facility NGL Takeaway Pipeline Map PTXP Q3 2015 Earnings Call Takeaway Discussion DCP Midstream Enterprise Products Marathon Energy Transfer Partners Other NGL Pipelines Legend


SLIDE 20

PennTex Situation Analysis Range is Fort Worth, Texas-based independent producer focused on the Marcellus Shale and Lower Cotton Valley formation of North Louisiana Year-end 2016 proved reserves of 12.1 Tcfe, estimated resource potential of approximately 100.0 Tcfe Approximately 515,000 net acres in Southwest Marcellus (PA) and 95,000 acres in NE Marcellus (PA) 4,700 identified locations in the Marcellus and 2,800 locations in the Upper Devonian1 Expect to run an average of four rigs throughout 2017 Approximately 220,000 net acres in North Louisiana Total proved reserves of 1.3 Tcfe as of December 31, 2016 Plan to operate an average of four rigs in 2017, and currently operating five rigs (34% of 2017E capital plan) Expect to target four of the stacked over-pressured pay zones in the Lower Cotton Valley termed the Upper Red, Lower Red, Lower Deep Pink and Upper Deep Pink Successfully reduced well costs in Terryville to $7.4 million from $8.7 million at acquisition date Range Resources Corporation Overview 17 Source: Company filings and press releases Assumes 8,000 foot laterals For flat pricing natural gas case, oil price assumed to be $50.00 / Bbl for 2017, $60.00 / Bbl for 2018 then $65.00 / Bbl to life with no escalation Range North Louisiana Asset Map PTXP Pipeline PTXP Processing Plant Range Acreage Range AMI North Louisiana Well Economics


SLIDE 21

PennTex Situation Analysis Range Public Guidance 18 Source: DrillingInfo, Public filings, Investor presentations Shut-in production 2017E Capital Expenditures Historical and Forecasted Production (MMcfed) and Well Counts (Gross) Total Capital Expenditures Budget: $1.15 Billion “…brought on line 27 wells in the first quarter. The locations for this group of wells were chosen by the previous operator and 18 of the wells had already been drilled prior to Range acquiring the assets last September. Completing this large backlog of wells, many of which had been waiting on completion for almost a year…Going forward, the Company is planning a more balanced pace of drilling and completion activity to minimize the impact on offset production and continue driving operational efficiencies. Since taking over operations, Range has also revised production methods in accordance with Range’s safety and facilities protocol, which reduces 2017 production rates by approximately 30 MMcfe per day. This facility change results in a production profile that has a flatter decline and does not change expected ultimate recovery. The Company expects to bring to sales 29 additional wells during the remainder of the year.” – Range Resources Press Release, April 24, 2017 1 Q2 – Q4 2017E: 29 Additional Wells


SLIDE 22

PennTex Situation Analysis Source: Company filings, FactSet 19 Market Capitalization and Valuation Share Price Performance (Last Two Years) Range Summary Market Data($ in millions, except per share amounts) As of 05/26/17 Share Price $24.20 Fully Diluted Shares Outstanding (millions) 247.6 Total Equity Value $5,992 Plus: Total Debt 3,772 Less: Cash (1) Total Enterprise Value $9,763 Estimates and Implied Metrics I/B/E/S Data Metric Price / Cash Flow 2017E $4.05 6.0x 2018E 5.22 4.6 EV / EBITDAX 2017E $1,206 8.1x 2018E 1,498 6.5 EV / Proved Reserves ($/Mcfe) 12,072 Bcfe $0.81 EV / Production ($/Mcfed) Current 1,932 MMcfed $5,054 2017E 2,065 MMcfed 4,729 2018E 2,511 MMcfed 3,888 Credit Metrics Net Debt / 2017E EBITDAX $1,206 3.1x Net Debt / 2018E EBITDAX 1,498 2.5 Net Debt / Proved Reserves ($/Mcfe) 12,072 Bcfe $0.31 Net Debt / PD Reserves ($/Mcfe) 6,770 Bcfe 0.56 Credit Ratings (Senior Unsecured) Moody's B1 S&P BB+


SLIDE 23

PennTex Situation Analysis WildHorse is a small-cap E&P focused in the Eagle Ford Shale and North Louisiana Year-end 2016 proved reserves of 1,052.4 Bcfe Approximately 358,000 net acres in the East Texas Eagle Ford Shale 2,651 net drilling locations Currently running five rigs Approximately 104,000 net acres in North Louisiana 648 net locations with 11 operated horizontal wells drilled to date Currently operating one rig and plan to add a second in 2Q17 Wholly-owned midstream subsidiary currently constructing a gathering system with total capacity of approximately 250 MMcfd with expansion capability for horizontal Cotton Valley development program WildHorse Resource Development Corporation Overview 20 Source: Company filings and press releases Note: Pro forma for $625 million Eagle Ford acquisition announced May 11, 2017 WildHorse North Louisiana Asset Map PTXP Pipeline PTXP Processing Plant WildHorse Pipeline WildHorse Producing Well RRC Acreage WildHorse Acreage Summary In May 2017, announced $625.0 million Eagle Ford acquisition from Anadarko and KKR, $425.0 million convertible preferred offering and $200.0 million increase in borrowing base (to $650.0 million) In April 2017, announced upsizing of borrowing base from $362.5 million to $450.0 million In February 2017, announced a pending acquisition of 10,535 net acres in Burleson County from multiple sellers for $15.6 million In February 2017, issued $350.0 million 6.825% Senior Unsecured Notes due 2025 In December 2016, the Company closed its initial public offering of 27,500,000 shares of common stock at $15.00 per share In December 2016, closed acquisition of ~158,000 net acres from Clayton Williams in Eagle Ford Recent Events


SLIDE 24

PennTex Situation Analysis Source: Company filings, FactSet 21 Market Capitalization and Valuation Share Price Performance Since IPO WildHorse Summary Market Data($ in millions, except per share amounts)


SLIDE 25

PennTex Situation Analysis The PennTex financial projections, as provided by PennTex management (the “PennTex Financial Projections”) and utilized herein by Evercore, incorporate the following assumptions: Commodity prices as follows: General and Administrative expenses that include a management fee of approximately $4.0 million (paid in cash) to ETP pursuant to the services and secondment agreement between PTXP and ETP EBITDA, maintenance capital expenditures and growth capital expenditures through 2019E per PTXP management Assumes no additional third-party or related-party acquisitions or divestitures PTXP maintains its current $1.18 per unit annual distribution throughout forecast period Interest expense based on credit agreement and assumes an interest rate of LIBOR plus 200 basis points Growth capital expenditures funded with distributable cash flow surplus Excess cash after growth capital expenditures utilized to repay revolving credit facility Standalone PennTex Financial Projections – Assumptions Source: PTXP management 22


SLIDE 26

PennTex Situation Analysis Historical and Projected Operating Data Natural Gas Gathering Volumes (BBtud) Natural Gas Processing Volumes (BBtud) Natural Gas Transportation (BBtud) NGL Production (Bblsd) Source: PTXP management, Partnership SEC filings Note, PTXP’s MVC is for 460 BBtud, and is not reduced by volumes processed for other customers. The actual MVC volumes charged are therefore higher than the amount reflected in the chart by the volumes processed for other customers 23 Range Other Customers MVC Deficit1


SLIDE 27

PennTex Situation Analysis Summary PennTex Financial Projections Source: PTXP management ($ in millions, except per unit amounts) 24 For the Years Ending December 31, CAGR 2017E 2018E 2019E 2017E-2019E Processing Fees $52.8 $61.8 $61.8 Processing MVC Revenue (Deferred) 19.7 10.4 10.4 Total Processing Revenue $72.5 $72.1 $72.1 Gathering Usage Fees $3.3 $3.3 $3.3 Firm Gathering Fees 5.0 5.0 5.0 Gathering MVC Revenue 1.0 0.6 0.6 Total Gathering Revenue $9.3 $8.9 $8.9 Firm Residue Gas Transportation $2.5 $4.3 $4.3 Interruptible Residue Gas Transportation 5.1 4.7 4.7 Total Residue Gas Transportation Revenue $7.6 $9.1 $9.1 NGL Transportation Revenue 7.8 8.9 8.9 NGL Sales / Other 0.3 (0.3) 0.0 Total Revenue $97.5 $98.7 $99.0 0.7% Less: Operating and Maintenance Expense (8.5) (8.7) (8.9) Less: General and Administrative Expense (6.0) (6.1) (6.2) EBITDA $83.0 $83.9 $83.8 0.5% Less: Cash Interest Expense (5.0) (4.5) (3.8) Less: Maintenance Capital Expenditures (0.5) (0.5) (0.5) Management Case Check Distributable Cash Flow $77.5 $78.8 $79.5 1.3% Distributed Cash Flow: Common Units (Public) $16.5 $16.5 $16.5 Common Units (ETP) 7.9 7.9 7.9 Subordinated Units (ETP) 23.6 23.6 23.6 GP -- -- -- Management Case Check Distributed Cash Flow $48.0 $48.0 $48.0 % to GP -- -- -- GP IDRs $-- $-- $-- 0.0% Weighted Average LP Units Outstanding 40.7 40.7 40.7 DCF / LP Unit $1.72 $1.75 $1.76 1.0% Distribution / LP Unit 1.18 1.18 1.18 0.0% LP Coverage 1.46x 1.48x 1.49x Total Coverage 1.61 1.64 1.65 Management Case Check Distributable Cash Flow Surplus / (Shortfall) $29.4 $30.8 $31.5


SLIDE 28

PennTex Situation Analysis PennTex Financial Projections – Sources and Uses Source: PTXP management ($ in millions, except per unit amounts) 25 For the Years Ending December 31, 2017E 2018E 2019E Sources: Equity Issued to the Public $-- $-- $-- Equity Issued to the Sponsor -- -- -- GP Contribution -- -- -- Debt Issued / (Repaid) (27.4) (28.8) (29.5) Distributable Cash Flow Surplus / (Shortfall) 29.4 30.8 31.5 Other 4.0 -- -- Total Sources $6.0 $2.0 $2.0 Uses: Growth Capital Expenditures $2.0 $2.0 $2.0 Cash Utilized 4.0 -- -- Total Uses $6.0 $2.0 $2.0 Capital Structure: Cash $4.5 $4.5 $4.5 Total Debt 140.6 111.8 82.3 Net Debt $136.1 $107.3 $77.9 Credit Statistics: Debt / Adjusted EBITDA 1.7x 1.3x 1.0x Net Debt / Adjusted EBITDA 1.6 1.3 0.9


SLIDE 29

Preliminary PennTex Valuation Analysis


SLIDE 30

Preliminary PennTex Valuation Analysis Evercore analyzed the value of the PTXP common units utilizing the following methodologies: Valuation Methodologies Methodology Description Metrics/Assumptions Discounted Cash Flow Analysis Values PTXP common units based on the concept of the time value of money Utilizing the PennTex Financial Projections as previously reviewed herein, Evercore: Utilized varying weighted average cost of capital (“WACC”) discount rates and applied various perpetuity growth rates to derive after-tax valuation ranges for PTXP Calculated terminal values based on a range of multiples of EBITDA as well as assumed perpetuity growth rates Tax depreciation utilizes a 7-year MACRS depreciation schedule EBITDA exit multiple of 10.0x to 11.0x Perpetuity growth rate of 1.5% to 2.5% WACC of 9.5% to 10.5% based on the Capital Asset Pricing Model (“CAPM”) for PTXP Tax rate of 35.0% Discounted the projected cash flows to the assumed June 30, 2017 transaction date Discounted Distribution Analysis Valuation based on the present value of the future cash distributions to PTXP unitholders Projected distributions based on PennTex Financial Projections Terminal yield range of 6.5% to 7.5% applied to the projected distribution per unit Projected distributions assuming a 1.125x total distribution coverage ratio Terminal yield range of (i) 6.5% to 7.5% and (ii) 9.5% to 10.5% applied to the projected distribution per unit Cost of equity of 10.5% to 11.5% based on CAPM and cost of equity of 12.0% to 13.0% based on expected total return for similar MLPs Precedent M&A Transaction Analysis Values PTXP common units based on multiples of transaction value to EBITDA based on historical asset transactions involving natural gas gathering and processing assets and historical corporate transactions involving natural gas gathering and processing MLPs and corporations Enterprise value / EBITDA multiples applied to 2017E EBITDA For the analysis involving asset transactions, the resulting values are discounted at a 10.0% midpoint PTXP WACC discount rate to the assumed June 30, 2017 transaction date Peer Group Trading Analysis Values PTXP common units based on multiples of current market enterprise value to EBITDA for selected gathering and processing MLPs Enterprise value / EBITDA multiples applied to 2017E EBITDA, 2018E EBITDA and 2019E EBITDA Premiums Paid Analysis Values PTXP common units based on 1-Day, 5-Day and 30-Day premiums paid in historical transactions since 2011 of (i) MLP Buy-Ins and (ii) MLP Mergers Historical MLP Merger Premium range applied to relevant 1-Day, 5-Day and 30-Day PTXP unit prices Median 1-Day, 5-Day and 30-Day premiums paid applied to relevant PennTex unit prices 26


SLIDE 31

Summary Preliminary Valuation Analysis – PTXP Unit Preliminary PennTex Valuation Analysis 27 For Reference Purposes Only Offer Price $20.00 per Unit


SLIDE 32

Preliminary PennTex Valuation Analysis 28 Discounted Cash Flow Analysis – Assumptions Evercore utilized the following assumptions for analyzing PTXP’s discounted cash flows: Discounted the projected cash flows to the June 30, 2017 effective date EBITDA exit multiple of 10.0x to 11.0x Perpetuity growth rate of 1.5% to 2.5% WACC of 9.5% to 10.5% based on CAPM for selected gathering and processing MLP peers Tax depreciation forecast based on a full tax-basis step-up and a 7-year MACRS depreciation schedule For the terminal value, tax depreciation assumed to be equal to maintenance capital expenditures


SLIDE 33

Discounted Cash Flow Analysis – PennTex Financial Projections($ in millions, except per unit amounts) Summary Results EBITDA Exit Multiple Sensitivities Perpetuity Growth Rate Sensitivities Preliminary PennTex Valuation Analysis Source: PTXP management 29 For the Six Months Ending Terminal Value December 31, For the Years Ending December 31, EBITDA Perpetuity 2017E 2018E 2019E Exit Multiple Growth Rate EBITDA $42.3 $83.9 $83.8 $83.8 $83.8 Less: Tax Depreciation and Amortization (119.7) (205.5) (147.5) (0.5) EBIT ($77.4) ($121.6) ($63.6) $83.3 Less: Cash Taxes @ 35.0% -- -- -- (29.2) EBIAT ($77.4) ($121.6) ($63.6) $54.2 Plus: Tax Depreciation and Amortization 119.7 205.5 147.5 0.5 Less: Maintenance Capital Expenditures (0.3) (0.5) (0.5) (0.5) Less: Growth Capital Expenditures (1.0) (2.0) (2.0) -- Unlevered Free Cash Flow $41.1 $81.4 $81.3 $54.2 EBITDA Multiple / Perpetuity Growth Rate 10.5x 2.0% Terminal Value $880.2 $690.6 PV of Terminal Value @ 10.0% $693.6 - $544.2 Plus: PV of Unlevered Free Cash Flow @ 10.0% 181.3 Plus: PV of 0.5x 2019E NOL Tax Benefit @ 10.0% 36.2 Implied Enterprise Value $911.1 - $761.7 Less: Projected Debt as of June 30, 2017 (155.2) Plus: Projected Cash as of June 30, 2017 4.5 Implied Equity Value $760.4 - $610.9 Projected Units Outstanding as of June 30, 2017 40.7 Implied PTXP Unit Price $18.68 - $15.01 EBITDA Multiple Perpetuity Growth Rate $18.7 9.5x 10.0x 10.5x 11.0x 11.5x 9.0% $17.53 $18.39 $19.26 $20.13 $20.99 9.5% 17.25 18.11 18.96 19.82 20.67 10.0% 16.98 17.83 18.68 19.52 20.37 10.5% 16.73 17.56 18.40 19.24 20.07 11.0% 16.48 17.31 18.13 18.96 19.78 WACC $15.0 1.0% 1.5% 2.0% 2.5% 3.0% 9.0% $15.28 $16.30 $17.46 $18.80 $20.36 9.5% 14.25 15.14 16.15 17.30 18.63 10.0% 13.34 14.12 15.01 16.01 17.15 10.5% 12.52 13.21 13.99 14.87 15.87 11.0% 11.78 12.40 13.09 13.87 14.74 WACC


SLIDE 34

Discounted Distribution Analysis – PennTex Financial Projections Unaffected PTXP yield range over past three months of 6.8% to 7.5%, with an average of 7.1% as of May 18, 2017 Summary Results Preliminary PennTex Valuation Analysis 30 The analysis below sets forth PTXP’s projected annual distribution per unit assuming the PennTex Financial Projections, discounted at a cost of equity for PTXP ranging between 10.5% and 11.5% based on CAPM and 12.0% to 13.0% based on the total expected market return For the Six Months Ending December 31, For the Years Ending December 31, Terminal Value 2017E 2018E 2019E Low - High PTXP Standalone Distribution per LP Unit $0.59 $1.18 $1.18 $1.18 Terminal Yield 1 7.5% - 6.5% Terminal Value $15.73 - $18.15 Equity Cost of Capital Based on CAPM PV @ 10.0% of Value per PTXP Common Unit $15.02 - $16.93 PV @ 10.5% of Value per PTXP Common Unit 14.87 - 16.75 PV @ 11.0% of Value per PTXP Common Unit 14.72 - 16.58 PV @ 11.5% of Value per PTXP Common Unit 14.57 - 16.41 PV @ 12.0% of Value per PTXP Common Unit 14.42 - 16.24 Implied PTXP Common Unit Value Range - Based on CAPM $14.57 - $16.75 Equity Cost of Capital Based on Expected Market Return PV @ 11.5% of Value per PTXP Common Unit $14.57 - $16.41 PV @ 12.0% of Value per PTXP Common Unit 14.42 - 16.24 PV @ 12.5% of Value per PTXP Common Unit 14.27 - 16.08 PV @ 13.0% of Value per PTXP Common Unit 14.13 - 15.91 PV @ 13.5% of Value per PTXP Common Unit 13.99 - 15.75 Implied PTXP Common Unit Value Range - Based on Expected Market Return $14.13 - $16.24


SLIDE 35

Discounted Distribution Analysis – Reduced Coverage with PTXP Terminal Yield Unaffected PTXP yield range over past three months of 6.8% to 7.5%, with an average of 7.1% as of May 18, 2017 Summary Results Preliminary PennTex Valuation Analysis 31 The analysis below sets forth PTXP’s projected annual distribution per unit assuming a total distribution coverage ratio of 1.125x, discounted at a cost of equity for PTXP ranging between 10.5% and 11.5% based on CAPM and 12.0% to 13.0% based on the total expected market return For the Six Months Ending December 31, For the Years Ending December 31, Terminal Value 2017E 2018E 2019E Low - High PTXP Distribution per LP Unit (1.125x Coverage) $0.80 $1.61 $1.61 $1.61 Terminal Yield 1 7.5% - 6.5% Terminal Value $21.46 - $24.76 Equity Cost of Capital Based on CAPM PV @ 10.0% of Value per PTXP Common Unit $20.48 - $23.08 PV @ 10.5% of Value per PTXP Common Unit 20.27 - 22.84 PV @ 11.0% of Value per PTXP Common Unit 20.06 - 22.61 PV @ 11.5% of Value per PTXP Common Unit 19.86 - 22.37 PV @ 12.0% of Value per PTXP Common Unit 19.66 - 22.14 Implied PTXP Common Unit Value Range - Based on CAPM $19.86 - $22.84 Equity Cost of Capital Based on Expected Market Return PV @ 11.5% of Value per PTXP Common Unit $19.86 - $22.37 PV @ 12.0% of Value per PTXP Common Unit 19.66 - 22.14 PV @ 12.5% of Value per PTXP Common Unit 19.46 - 21.92 PV @ 13.0% of Value per PTXP Common Unit 19.27 - 21.70 PV @ 13.5% of Value per PTXP Common Unit 19.07 - 21.48 Implied PTXP Common Unit Value Range - Based on Expected Market Return $19.27 - $22.14


SLIDE 36

Discounted Distribution Analysis – Reduced Coverage with Implied No Growth Terminal Yield Based on yield implied for a no distribution growth MLP assuming the gathering and processing peer group for PTXP Summary Results Preliminary PennTex Valuation Analysis 32 The analysis below sets forth PTXP’s projected annual distribution per unit assuming a total distribution coverage ratio of 1.125x, discounted at a cost of equity for PTXP ranging between 10.5% and 11.5% based on CAPM and 12.0% to 13.0% based on the total expected market return For the Six Months Ending December 31, For the Years Ending December 31, Terminal Value 2017E 2018E 2019E Low - High PTXP Distribution per LP Unit (1.125x Coverage) $0.80 $1.61 $1.61 $1.61 Terminal Yield 1 10.5% - 9.5% Terminal Value $15.33 - $16.94 Equity Cost of Capital Based on CAPM PV @ 10.0% of Value per PTXP Common Unit $15.65 - $16.92 PV @ 10.5% of Value per PTXP Common Unit 15.49 - 16.75 PV @ 11.0% of Value per PTXP Common Unit 15.34 - 16.58 PV @ 11.5% of Value per PTXP Common Unit 15.19 - 16.42 PV @ 12.0% of Value per PTXP Common Unit 15.04 - 16.26 Implied PTXP Common Unit Value Range - Based on CAPM $15.19 - $16.75 Equity Cost of Capital Based on Expected Market Return PV @ 11.5% of Value per PTXP Common Unit $15.19 - $16.42 PV @ 12.0% of Value per PTXP Common Unit 15.04 - 16.26 PV @ 12.5% of Value per PTXP Common Unit 14.89 - 16.10 PV @ 13.0% of Value per PTXP Common Unit 14.75 - 15.94 PV @ 13.5% of Value per PTXP Common Unit 14.61 - 15.78 Implied PTXP Common Unit Value Range - Based on Expected Market Return $14.75 - $16.26


SLIDE 37

Precedent M&A Transactions – Selected Asset Gathering and Processing Transactions($ in millions) Source: Public filings Preliminary PennTex Valuation Analysis 33 Date Transaction EBITDA Announced Acquiror / Target (Seller) Value Multiple 03/17 Enterprise Products Partners LP / Acquisition of midstream business and assets via a 363 bankruptcy sale (Azure Midstream Partners LP) $189.0 7.5x 01/17 DCP Midstream Partners, LP / Permian Basin, Midcontinent and DJ Basin gathering and processing assets and marketing and logistics assets (DCP Midstream, LLC) 3,851.0 8.0 11/16 Tesoro Logistics LP / Bakken gathering and processing assets (Whiting Oil and Gas Corporation, GBK Investments, LLC and WBI Midstream, LLC) 700.0 6.7 09/16 Rice Midstream Partners, LP / 30 miles of dry gas gathering assets and compression assets (Rice Midstream, Inc.) 600.0 13.3 07/16 Sanchez Production Partners LP / 50% interest in Carnero Gathering, LLC (Sanchez Energy Corp) 44.4 6.3 02/16 Summit Midstream Partners, LP / Summit Utica, Meadowlark Midstream, Tioga Midstream and 40.0% of Ohio Gathering (Summit Midstream Partners, LLC) 1,200.0 5.9 02/16 Western Gas Partners, LP / Springfield Pipeline LLC (Anadarko Petroleum Corporation) 750.0 5.8 12/15 I Squared Capital / San Juan Basin Gathering System (WPX Energy, Inc.) 309.0 14.3 12/15 EnLink Midstream Partners, LP / Tall Oak Midstream, LLC 1,550.0 13.0 11/15 Meritage Midstream Services IV, LLC / Rocky Mountain Infrastructure LLC (Bonanza Creek Energy, Inc.) 255.0 11.9 09/15 Sanchez Production Partners LP / Pipeline, Gathering and Compression Assets in Western Catarina (Sanchez Production Partners LP) 345.0 9.3 06/15 Enterprise Products Partners L.P. / 50.1% interest in Eagle Ford Shale Midstream business (Pioneer Natural Resources Company) 2,150.0 10.8 05/15 Southcross Energy Partners, LP / Remaining gathering, treating, compression and transportation assets (Southcross Holdings, LP) 78.0 5.8 04/15 Williams Partners L.P. / 21% equity interest in Utica East Ohio Midstream LLC (EV Energy Partners, L.P.) 575.0 15.1 03/15 Howard Midstream Energy Partners, LLC / Northeast Pennsylvania gathering assets (Southwestern Energy Company) 500.0 12.0 03/15 EQT Midstream Partners, LP / Northern West Virginia Marcellus Gathering System (EQT Corporation) 1,050.0 9.8 03/15 Western Gas Partners, LP / 50% interest in the Delaware Basin JV gathering system (Anadarko Petroleum Corporation) 176.0 8.8 02/15 Enlink Midstream Partners, LP / Coronado Midstream Holdings LLC 600.0 19.3 01/15 Marlin Midstream Partners / Legacy Gathering System (Azure Midstream Energy, LLC) 162.5 10.9 10/14 Western Gas Partners, LP / Nuevo Midstream LLC 1,500.0 16.5 10/14 American Midstream Partners, LP / Costar Midstream LLC (Energy Spectrum Partners and Costar Management) 470.0 10.5 06/14 Midcoast Energy Partners, L.P. / 12.6% interest in Midcoast Operating, L.P. (Enbridge Energy Partners, L.P.) 350.0 10.0 05/14 QEP Midstream Partners, LP / Green River Processing, LLC (QEP Resources, Inc.) 230.0 11.0 04/14 EQT Midstream Partners, LP / Jupiter Natural Gas Gathering System (EQT Corporation) 1,180.0 10.1 03/14 Summit Midstream Partners, LP / Red Rock Gathering Company, LLC (Summit Midstream Partners, LLC) 305.0 8.6 01/14 American Midstream Partners, LP / Eagle Ford Shale Natural Gas Midstream Assets (Penn Virginia Corporation) 100.0 12.5 2014 - YTD 2017 Mean 10.5x Median 10.3 2016 - YTD 2017 Only Mean 7.6x Median 6.7


SLIDE 38

Precedent M&A Transactions Analysis – Asset Transactions($ in millions, except per unit amounts) Source: PTXP management Precedent M&A Transactions – Asset Transactions Preliminary PennTex Valuation Analysis 34 2017E EBITDA $83.0 Relevant EBITDA Multiple 8.0x - 10.5x Implied Enterprise Value Range on December 31, 2017 $663.8 - $871.3 Implied Enterprise Value Range on June 30, 2017 @ 10.0% Discount Rate $633.0 - $830.7 Less: Present Value of Growth Capital Expenditures from June 30, 2017 to December 31, 2017 @ 10.0% Discount Rate (1.0) Implied Value $632.0 - $829.8 Relevant Enterprise Value $632.0 - $829.8 Less: Projected Debt as of June 30, 2017 (155.2) Plus: Projected Cash as of June 30, 2017 4.5 Implied Equity Value $481.2 - $679.0 Projected Units Outstanding as of June 30, 2017 40.7 Implied PTXP Unit Price $11.82 - $16.68


SLIDE 39

Precedent M&A Transactions – Selected Public MLP Gathering and Processing Transactions($ in millions) Source: Public filings Note: Selected precedent transactions excludes ETP’s approximately $640 million purchase of 100% of membership interests of the PennTex GP and an approximately 65.5% LP interest in PTXP that was announced on October 25, 2016. The transaction included the acquisition of 100% of the GP/IDR interest as well as control of PTXP via the GP. Since no allocation of value between the LP and GP interests was disclosed, EVR excluded the October 25, 2016 “first step” of the ETP / PTXP merger Enterprise value includes allocation of 51.6% interest in Midcoast Operating net debt Preliminary PennTex Valuation Analysis 35 Transaction Date Equity Enterprise Current Year Announced Acquiror(s) / Target Consideration Value Value EBITDA Multiple 01/26/17 Enbridge, Inc. / Midcoast Energy Partners, L.P. 1 Cash-for-Unit $369.1 $787.7 9.1x 07/13/15 MPLX LP / MarkWest Energy Partners, L.P. Unit-for-Unit 15,736.0 19,956.0 21.5 05/06/15 Crestwood Equity Partners LP / Crestwood Midstream Partners LP Unit-for-Unit 3,242.8 4,895.4 9.7 04/06/15 Tesoro Logistics LP / QEP Midstream Partners, LP Unit-for-Unit 393.7 483.6 14.5 01/26/15 Energy Transfer Partners, L.P. / Regency Energy Partners LP Unit-for-Unit 10,977.8 17,595.1 12.4 10/13/14 Targa Resource Partners LP / Atlas Pipeline Partners, L.P. Unit-for-Unit 4,065.4 5,908.8 12.2 10/10/13 Regency Energy Partners LP / PVR Partners, L.P. Unit-for-Unit 3,900.0 5,643.0 17.8 05/06/13 Inergy Midstream, L.P. / Crestwood Midstream Partners LP Unit-for-Unit 1,420.0 2,167.1 16.1 01/29/13 Kinder Morgan Energy Partners, L.P. / Copano Energy, L.L.C. Unit-for-Unit 3,260.9 4,640.5 13.1 Median 13.1x Mean 14.0


SLIDE 40

Source: PTXP management Precedent M&A Transactions – Public MLP Transactions 36 Precedent M&A Transactions Analysis – Public MLP Transactions($ in millions, except per unit amounts) Preliminary PennTex Valuation Analysis 2017E EBITDA $83.0 Relevant EBITDA Multiple 10.5x - 13.5x Implied Value $871.3 - $1,120.2 Relevant Enterprise Value $871.3 - $1,120.2 Less: Projected Debt as of June 30, 2017 (155.2) Plus: Projected Cash as of June 30, 2017 4.5 Implied Equity Value $720.6 - $969.5 Projected Units Outstanding as of June 30, 2017 40.7 Implied PTXP Unit Price $17.70 - $23.81


SLIDE 41

Source: Public filings and FactSet Note: PennTex EBITDA multiples based on IBES consensus data Selected Gathering and Processing MLP Peers Preliminary PennTex Valuation Analysis 37 Peer Group Trading Analysis ($ in millions, except per unit amounts) Price Equity Enterprise Enterprise Value / EBITDA Distribution Yield Distribution Total Partnership 5/26/17 Value Value 2017E 2018E 2019E Current 2017E 2018E 2019E Growth Return American Midstream Partners, LP $12.95 $679 $2,012 11.3x 9.1x 9.0x 12.7% 12.7% 13.3% 13.9% 1.8% 14.5% Crestwood Equity Partners LP 24.25 1,700 4,041 10.7 9.5 9.1 9.9% 9.9% 10.1% 10.8% 6.9% 16.8% DCP Midstream Partners, LP 35.66 5,126 10,189 10.0 9.0 8.3 8.7% 8.7% 8.7% 9.0% 2.5% 11.3% Enable Midstream Partners, LP 15.96 6,901 10,305 11.8 10.8 10.2 8.0% 8.0% 8.0% 8.2% 3.7% 11.7% EnLink Midstream Partners, LP 17.45 6,070 10,822 12.6 11.0 10.1 8.9% 8.9% 8.9% 9.2% 2.3% 11.3% Summit Midstream Partners, LP 23.25 1,716 2,986 9.7 8.5 7.6 9.9% 9.9% 10.2% 10.5% 4.4% 14.3% Tallgrass Energy Partners, LP 50.75 3,719 5,839 8.8 7.9 7.0 6.6% 7.2% 8.4% 9.1% 6.7% 13.3% Western Gas Partners, LP 55.61 9,327 12,360 11.7 9.8 8.5 6.3% 6.5% 7.0% 7.4% 5.5% 11.8% Mean 10.8x 9.4x 8.7x 8.9% 9.0% 9.3% 9.8% 4.2% 13.1% Median 11.0 9.3 8.8 8.8% 8.8% 8.8% 9.1% 4.1% 12.5% PennTex Midstream Partners, LP $19.90 $810 $959 12.2x 11.0x 9.9x 5.9% 5.9% 6.3% 7.6% 11.1% 17.0%


SLIDE 42

Peer Group Trading Analysis – PennTex Financial Projections ($ in millions, except per unit amounts) Source: PTXP management Peer Group Trading Analysis Preliminary PennTex Valuation Analysis 38


SLIDE 43

Preliminary PennTex Valuation Analysis Source: Partnership filings Note: Highlighted transactions are those that are MLP buy-ins Enterprise Products Partners L.P.’s acquisition of the GP interest, IDRs, common units and subordinated units in Oiltanking Partners L.P. held by Oiltanking Holding Americas, Inc. was announced on October 1, 2014, while Oiltanking Partners L.P.’s agreement to merge with a subsidiary of Enterprise Products Partners L.P. was announced on November 12, 2014. The premiums listed herein for this transaction are based on the unit price of Oiltanking Partners, L.P. as of September 30, 2014, which is the last date on which such unit price was unaffected by the announcement of either transaction ($ in millions) 39 Premiums Paid Analysis – MLP Buy-Ins and Mergers Transaction Premium Date Equity Enterprise Announced Acquiror(s) / Target Consideration Value Value 1-Day 5-Day 30-Day 2-Mar-17 VTTI Energy Partners GP LLC / VTTI Energy Partners LP Cash $917.3 $1,258.0 6.0% 4.8% 14.4% 1-Feb-17 ONEOK, Inc. / ONEOK Partners, L.P. Stock-for-Unit 9,278.3 17,115.6 25.8% 22.2% 23.1% 26-Jan-17 Enbridge Energy Co, Inc. / Midcoast Energy Partners, L.P. Cash 369.1 787.7 (8.6%) (1.8%) 10.3% 18-Nov-16 Sunoco Logistics Partners L.P. / Energy Transfer Partners, L.P. Unit-for-Unit 20,127.6 45,107.6 (0.2%) 1.6% 6.8% 24-Oct-16 American Midstream Partners, LP / JP Energy Partners LP Unit-for-Unit 295.3 452.1 14.5% 13.7% 10.5% 26-Sep-16 TransCanada Corporation / Columbia Pipeline Partners LP Cash 1,711.1 2,287.0 11.1% 15.0% 25.6% 1-Aug-16 Transocean Ltd. / Transocean Partners LLC Stock-for-Unit 862.8 1,605.0 15.0% 10.9% 1.0% 31-May-16 SemGroup Corporation / Rose Rock Midstream, L.P. Stock-for-Unit 884.0 1,647.3 0.0% 0.9% 52.4% 3-Nov-15 Targa Resources Corp. / Targa Resources Partners LP Stock-for-Unit 6,673.1 7,216.2 18.4% 23.1% 14.9% 26-Oct-15 Western Refining, Inc. / Northern Tier Energy LP Cash/Stock-for-Unit 2,513.6 2,746.4 14.0% 11.9% 12.7% 13-Jul-15 MPLX LP / MarkWest Energy Partners, L.P. Unit-for-Unit 15,736.0 19,956.0 31.6% 35.8% 29.8% 13-May-15 The Williams Companies, Inc. / Williams Partners L.P. Stock-for-Unit 34,237.6 54,142.3 17.9% 17.1% 13.5% 6-May-15 Crestwood Equity Partners LP / Crestwood Midstream Partners LP Unit-for-Unit 3,532.6 6,251.3 17.2% 17.4% 27.6% 26-Jan-15 Energy Transfer Partners, L.P. / Regency Energy Partners LP Unit-for-Unit 11,155.6 17,955.6 13.2% 16.4% 10.6% 27-Oct-14 Access Midstream Partners LP / Williams Partners L.P. Unit-for-Unit 25,925.8 37,006.8 7.0% 6.7% 7.0% 13-Oct-14 Targa Resource Partners LP / Atlas Pipeline Partners, L.P. Unit-for-Unit 4,065.4 5,908.8 15.0% 7.8% 3.0% 1-Oct-14 Enterprise Products Partners L.P. / Oiltanking Partners L.P. 1 Unit-for-Unit 5,823.0 6,051.0 5.6% 4.6% 6.8% 10-Aug-14 Kinder Morgan, Inc. / Kinder Morgan Energy Partners, L.P. Stock-for-Unit 36,689.1 58,551.1 12.0% 10.8% 10.7% 10-Aug-14 Kinder Morgan, Inc. / El Paso Pipeline Partners, L.P. Stock-for-Unit 5,288.5 10,021.5 15.4% 13.8% 7.3% 10-Oct-13 Regency Energy Partners LP / PVR Partners, L.P. Unit-for-Unit 3,899.3 5,664.3 25.6% 25.2% 23.7% 27-Aug-13 Plains All American Pipeline, L.P. / PAA Natural Gas Storage LP Unit-for-Unit 1,713.6 2,271.9 8.5% 8.7% 7.2% 7-May-13 Pioneer Natural Resources Company / Pioneer Southwest Energy Partners L.P. Stock-for-Unit 933.0 1,086.0 23.0% 27.5% 9.6% 6-May-13 Inergy Midstream, L.P. / Crestwood Midstream Partners LP Unit-for-Unit 1,614.7 2,402.0 4.6% 1.7% 8.1% 29-Jan-13 Kinder Morgan Energy Partners, L.P. / Copano Energy, L.L.C. Unit-for-Unit 3,777.5 4,724.3 21.8% 21.7% 36.7% 23-Feb-11 Enterprise Products Partners L.P. / Duncan Energy Partners L.P. Unit-for-Unit 2,405.0 3,302.8 27.9% 27.7% 27.4% Median 15.0% 13.8% 13.5% Mean 13.6% 14.0% 17.2% Max 27.9% 27.7% 52.4% Min (8.6%) (1.8%) 1.0% Median 14.5% 13.7% 10.7% Mean 13.7% 13.8% 16.0% Max 31.6% 35.8% 52.4% Min (8.6%) (1.8%) 1.0% MLP Buy-Ins All MLP Mergers


SLIDE 44

Preliminary PennTex Valuation Analysis MLP Buy-In Premiums Paid Analysis Premiums Paid Analysis – MLP Buy-Ins Premiums Paid Analysis – All Transactions 40 Source: FactSet 1-Day 5-Day 30-Day Relevant Unit Price $16.65 $16.43 $17.19 Historical MLP Merger Premium Range (8.6%) - 27.9% (1.8%) - 27.7% 1.0% - 52.4% Implied Transaction Price Range $15.22 - $21.29 $16.13 - $20.98 $17.36 - $26.19 Median Buy-In Premium 15.0% 13.8% 13.5% Median Implied Transaction Price $19.15 $18.69 $19.51 1-Day 5-Day 30-Day Relevant Unit Price $16.65 $16.43 $17.19 Historical MLP Merger Premium Range (8.6%) - 31.6% (1.8%) - 35.8% 1.0% - 52.4% Implied Transaction Price Range $15.22 - $21.91 $16.13 - $22.31 $17.36 - $26.19 Median MLP Merger Premium 14.5% 13.7% 10.7% Median Implied Transaction Price $19.06 $18.68 $19.03


SLIDE 45

Appendix


SLIDE 46

Weighed Average Cost of Capital


SLIDE 47

Weighted Average Cost of Capital Analysis PTXP WACC Analysis – Capital Asset Pricing Model Source: Bloomberg; FactSet Source: Predicted raw betas from FactSet; Adjusted Equity Beta calculated as: (0.67) × Raw Beta +(0.33) × 1.0 Unlevered Beta calculated as: Adjusted Equity Beta × (E/(E + D × (1-T)); Assumes corporate tax rate of 35.0% 20-year Treasury as of May 26, 2017 Source: Duff and Phelps supply-side market risk premium Decile: 8 (2.08%) with equity value range of $569.3 million to $1,030.4 million Equity Cost of Capital calculated as: Risk-free rate + (Levered Equity Beta × Market Risk Premium) + Small Company Risk Premium Weighted Average Cost of Capital – CAPM ($ in millions, except per unit amounts) 41 Unit Price Market Equity Total Debt and Total Debt / Adjusted Unlevered Partnership 5/26/17 Value Preferred Equity Total Capitalization Beta 1 Beta 2 American Midstream Partners, LP $12.95 $678.7 $1,332.4 66.3% 1.65 0.73 Equity Crestwood Equity Partners LP 24.25 1,699.7 2,147.4 55.8% 1.55 0.85 Cost of DCP Midstream Partners, LP 35.66 5,125.5 5,209.0 50.4% 1.48 0.89 Capital Enable Midstream Partners, LP 15.96 6,900.9 3,409.0 33.1% 1.46 1.11 EnLink Midstream Partners, LP 17.45 6,069.9 4,281.1 41.4% 1.45 0.99 Summit Midstream Partners, LP 23.25 1,715.6 1,264.9 42.4% 1.34 0.91 Tallgrass Energy Partners, LP 50.75 3,718.6 2,088.2 36.0% 1.09 0.80 Western Gas Partners, LP 55.61 9,326.6 3,092.3 24.9% 1.27 1.05 Mean 43.8% 1.41 0.92 Median 41.9% 1.46 0.90 PennTex Midstream Partners, LP $19.90 $810.2 $152.8 15.9% 0.77 0.68 Risk-free Rate 3 2.7% Unlevered Beta 0.90 Debt and Preferred / Total Capitalization 15.9% Adjusted Levered Equity Beta 1.01 Market Risk Premium 4 6.0% WACC Small Company Risk Premium 5 2.1% Equity Cost of Capital 6 10.8% Pre-Tax Cost of Debt 6.0% After-Tax Cost of Debt 3.9% WACC 9.7%


SLIDE 48

Weighted Average Cost of Capital Analysis PTXP WACC Analysis – Expected Market Return Source: Bloomberg; FactSet Based on IBES distribution estimates Weighted Average Cost of Capital – Expected Market Return ($ in millions, except per unit amounts) 42 Unit Price Market Equity Total Partnership 5/26/17 Value Current Yield Distribution Growth 1 Return American Midstream Partners, LP $12.95 $678.7 12.7% 1.8% 14.5% Peer Crestwood Equity Partners LP 24.25 1,699.7 9.9% 6.9% 16.8% Total DCP Midstream Partners, LP 35.66 5,125.5 8.7% 2.5% 11.3% Return Enable Midstream Partners, LP 15.96 6,900.9 8.0% 3.7% 11.7% EnLink Midstream Partners, LP 17.45 6,069.9 8.9% 2.3% 11.3% Summit Midstream Partners, LP 23.25 1,715.6 9.9% 4.4% 14.3% Tallgrass Energy Partners, LP 50.75 3,718.6 6.6% 6.7% 13.3% Western Gas Partners, LP 55.61 9,326.6 6.3% 5.5% 11.8% Mean 13.1% Median 12.5% PennTex Midstream Partners, LP $19.90 $810.2 5.9% 11.1% 17.0%


SLIDE 49

Tax Impact to Unitholders


SLIDE 50

Tax Impact to Unitholders Evercore analyzed the estimated unitholder tax basis data as provided by PTXP management and as calculated by PricewaterhouseCoopers Plc Utilized most recent schedule K-1s for PTXP unitholders Analysis as of January 1, 2017 Utilized PTXP unit price of $20.00 based on the Offer Price Tax Analysis Assumptions 43


SLIDE 51

Tax Impact to Unitholders Distribution of Total Gain / Loss: Equal to Consideration less Estimated Basis Distribution of Ordinary Gain / (Loss) Distribution of Capital Gain / (Loss): Equal to Total Gain / (Loss) less Ordinary Gain / (Loss) Distribution of Total Taxes1 Source: PTXP management tax data as of 1/1/2017 with 28 issuance groups (excluding ETP affiliated groups) assuming a PTXP unit price of $20.00 Distribution of total taxes assumes 20% capital gain tax rate and 39.6% ordinary gain tax rate 44


SLIDE 52

Additional Valuation Analysis – No Tax


SLIDE 53

Discounted Cash Flow Analysis – PennTex Financial Projections($ in millions, except per unit amounts) Summary Results EBITDA Exit Multiple Sensitivities Additional Valuation Analysis – No Tax Source: PTXP management Note: Perpetuity methodology excluded due to terminal value assumption of full tax basis forever and taxes never being paid by the unitholder 45 For the Six Months Ending Terminal Value December 31, For the Years Ending December 31, EBITDA 2017E 2018E 2019E Exit Multiple EBITDA $42.3 $83.9 $83.8 $83.8 Less: Tax Depreciation and Amortization (126.5) (217.1) (155.8) EBIT ($84.2) ($133.2) ($71.9) Less: Cash Taxes @ 0.0% -- -- -- EBIAT ($84.2) ($133.2) ($71.9) Plus: Tax Depreciation and Amortization 126.5 217.1 155.8 Less: Maintenance Capital Expenditures (0.3) (0.5) (0.5) Less: Growth Capital Expenditures (1.0) (2.0) (2.0) Unlevered Free Cash Flow $41.1 $81.4 $81.3 EBITDA Multiple / Perpetuity Growth Rate 10.5x Terminal Value $880.2 PV of Terminal Value @ 9.5% $701.5 Plus: PV of Unlevered Free Cash Flow @ 9.5% 182.3 Implied Enterprise Value $883.8 Less: Projected Debt as of June 30, 2017 (155.2) Plus: Projected Cash as of June 30, 2017 4.5 Implied Equity Value $733.1 Projected Units Outstanding as of June 30, 2017 40.7 Implied PTXP Unit Price $18.01 EBITDA Multiple $18.0 9.5x 10.0x 10.5x 11.0x 11.5x 8.5% $16.78 $17.62 $18.46 $19.29 $20.13 9.0% 16.57 17.40 18.23 19.06 19.89 9.5% 16.36 17.18 18.01 18.83 19.65 10.0% 16.16 16.97 17.79 18.60 19.41 10.5% 15.97 16.77 17.57 18.37 19.17 WACC


SLIDE 54

Additional Valuation Analysis – No Tax PTXP WACC Analysis – Theoretical Capital Asset Pricing Model Source: Bloomberg; FactSet Source: Predicted raw betas from FactSet; Adjusted Equity Beta calculated as: (0.67) × Raw Beta +(0.33) × 1.0 Unlevered Beta calculated as: Adjusted Equity Beta × (E/(E + D × (1-T)); Assumes corporate tax rate of 0.0% 20-year Treasury as of May 26, 2017 Source: Duff and Phelps supply-side market risk premium Decile: 8 (2.08%) with equity value range of $569.3 million to $1,030.4 million Equity Cost of Capital calculated as: Risk-free rate + (Levered Equity Beta × Market Risk Premium) + Small Company Risk Premium Weighted Average Cost of Capital – CAPM ($ in millions, except per unit amounts) 46 Unit Price Market Equity Total Debt and Total Debt / Adjusted Unlevered Partnership 5/26/17 Value Preferred Equity Total Capitalization Beta 1 Beta 2 American Midstream Partners, LP $12.95 $678.7 $1,332.4 66.3% 1.65 0.56 Equity Crestwood Equity Partners LP 24.25 1,699.7 2,147.4 55.8% 1.55 0.69 Cost of DCP Midstream Partners, LP 35.66 5,125.5 5,209.0 50.4% 1.48 0.74 Capital Enable Midstream Partners, LP 15.96 6,900.9 3,409.0 33.1% 1.46 0.98 EnLink Midstream Partners, LP 17.45 6,069.9 4,281.1 41.4% 1.45 0.85 Summit Midstream Partners, LP 23.25 1,715.6 1,264.9 42.4% 1.34 0.77 Tallgrass Energy Partners, LP 50.75 3,718.6 2,088.2 36.0% 1.09 0.70 Western Gas Partners, LP 55.61 9,326.6 3,092.3 24.9% 1.27 0.95 Mean 43.8% 1.41 0.78 Median 41.9% 1.46 0.75 PennTex Midstream Partners, LP $19.90 $810.2 $152.8 15.9% 0.77 0.64 Risk-free Rate 3 2.7% Unlevered Beta 0.75 Debt and Preferred / Total Capitalization 15.9% Adjusted Levered Equity Beta 0.90 Market Risk Premium 4 6.0% WACC Small Company Risk Premium 5 2.1% Equity Cost of Capital 6 10.1% Pre-Tax Cost of Debt 6.0% After-Tax Cost of Debt 6.0% WACC 9.4%