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Midstream

Areas of Operation

Overview

EROC has a strong geographic footprint in active drilling areas of Texas and Louisiana. These regions are prolific and long-lived natural gas basins that are experiencing significant drilling activity.

The company's midstream activities are located in three distinct natural gas producing regions: (1) the Texas Panhandle; (2) East Texas and North Louisiana; and (3) South Texas. Production in these regions is from wells in the Anadarko Basin, the East Texas Basin and South Texas Basin, respectively. Together, these systems represent approximately 5,000 miles of natural gas pipelines with 2,900 well connections and 600 MMcf/d of throughput capacity.

	Texas Panhandle	East Texas / North Louisiana	South Texas
Gathering and transporting	X	X	X
Dehydrating and treating	X	X	X
Processing	X	X
Product marketing	X	X	X

Texas Panhandle

Natural gas gathering and processing within the company's Texas Panhandle operations consist of operations in the East Panhandle System and West Panhandle System (collectively, "Texas Panhandle Systems") covering 10 counties in Texas and one county in Oklahoma. Through these systems, EROC offers producers a complete set of midstream wellhead-to-market services. Collectively, the Texas Panhandle Systems include 3,500 miles of gathering pipeline with a throughput capacity of over 200 MMcf/d.

In 2006, EROC constructed a 10-mile pipeline from the West Panhandle to the East Panhandle, and refurbished and restarted a 20 MMcf/d processing plant to provide additional capacity to the East Panhandle System and increased operational flexibility.

• East Panhandle: EROC's East Panhandle System gathers and processes natural gas produced in the Morrow and Granite Wash plays of the Anadarko Basin in an area that is experiencing significant drilling activity.
  
  In this area, we operate four major gas processing facilities with a combined inlet capacity of over 100 MMcf/d. These include our recently upgraded and expanded Arrington plant as well as our Canadian and Roberts County facilities. We recently began gas processing operations at our new Red Deer facility, which is already operating near capacity.
  
  We deliver inlet gas to our facilities via approximately 900 miles of gathering lines which we operate.
• West Panhandle: EROC's West Panhandle System also gathers and processes natural gas produced from the Anadarko Basin. Our major facilities in this area include the Stinnett, Cargay, Gray County and Lefors plants. The combined inlet capacity of these facilities is approximately 100 MMcf/d. We also operate approximately 2,600 miles of gathering lines and associated compression equipment.

East Texas / North Louisiana

EROC's East Texas and North Louisiana systems offer producers natural gas gathering, treating, processing and transportation, as well as NGL transportation. One of our major facilities is the Brookeland plant and associated gathering system. We currently provide 100 MMcf/d of inlet gas capacity and operate approximately 350 miles of gathering lines to service the plant. This area has been a very active one in the last two years, as several operators have been exploring and developing the Austin Chalk play.

Recently we have expanded our operations southward into Tyler County to be prepared to service customers who are expanding the Austin Chalk play. To date, we have constructed approximately 20 miles of gathering lines, which allow us to gather gas and deliver it into our Brookeland and Indian Springs systems.

In this area, we also own approximately 25 percent of the Indian Springs plant, which is operated by Enterprise, and we have the ability to deliver gas from our Tyler County system to it. This arrangement provides additional capacity and operating flexibility.

In North Louisiana, we operate a number of gathering systems that have a combined compression availability of approximately 10,000 horsepower and service over 200 miles of gathering lines.

South Texas

In South Texas, EROC operates under the name of its wholly-owned subsidiary "HESCO Gathering." The HESCO systems gather natural gas, recover NGLs and condensate, and sell natural gas purchased at the wellhead to third-party pipeline systems. In addition, HESCO provides producer services, utilizing third-party pipelines for the purchase and sale of wellhead natural gas into interstate or intrastate pipelines. There are a number of active plays in the region, and gas is produced primarily from various Frio and Vicksburg formations.

In this region, we do not operate any natural gas processing plants, but do operate a number of skid-mounted Joule-Thompson recovery units with a combined capacity of approximately 110 MMcf/d. We also own and operate approximately 8,100 horsepower of compression capacity and 170 miles of gathering lines.