DCP Midstream … A Consistent Success Stor...

DCP Midstream … A Consistent Success Story

September 22, 2008

Tom O’ConnorCEO, DCP Midstream

Rose RobesonCFO, DCP Midstream

DCP Midstream…A Consistent Success Story | September 22, 20082

Safe Harbor Statement

Some of the statements in this document concerning future company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and you should refer to the additional information contained in Spectra Energy’s Form 10-K and other filings made with the SEC concerning factors that could cause those results to be different than contemplated in today's discussion.Reg G DisclosureIn addition, today’s discussion includes certain non-GAAP financial measures as defined under SEC Regulation G. A reconciliation of

those measures to the most directly comparable GAAP measures is available at the end of this packet and on our website.


Contents

•

Midstream Fundamentals and Market Environment

•

DCP Midstream –

A Consistent Success Story

•

Strategic Advantages and Differentiators

•

DCP Midstream Partners –

The MLP Growth Vehicle

•

Financial Update and Disclosures


The Midstream Energy Value Chain

Chemicals, Fuels & Blend Stocks

Marketing

Storage

Transportation

Fractionation

Marketing

Storage

Transportation

E&P

Gathering/ProcessingNGLs Residue Gas

Utilities, Industrial & Residential


Operates Across Much of the Midstream Value Chain

Wellhead Raw gasgathering andCompression

Gas ProcessingPlants

Mixed ProductPipelines

Fractionation/Facilities

NGLRefined Prod

Pipelines

TransportationLines / Rail

Truck/MarineBarges/Tankers

Retailers / End Users/

Retail StationsTerminal/ Storage Facilities

Residue Gas

Inter/Intrastate Transportation Lines / Storage Gas

End Users

NGL’s

Midstream Assets and Product Flow

The midstream collection of assets and services are the link between the wellhead and gas and NGL end use

NGL’sRaw Gas


Gathering and Processing -

a “Must Run Industry”

Source: Merrill Lynch Estimate

WellheadWellhead Pipeline QualityPipeline Quality

75%

7%6%

4%6%

2%

93%

3% 3%1%

MethaneEthanePropane

MethaneEthanePropaneHeavier NGLsCarbon Dioxide & NitrogenHydrogen Sulfide

Heavier NGLsCarbon Dioxide & NitrogenHydrogen Sulfide

Raw Gas Produced at the Wellhead is Not Pipeline Quality

Midstream service providers remove impurities,maximize value through NGL extraction and sell

gas and NGLs in marketable condition


A Typical NGL Barrel

40%

28% 10%7%Ethane

Propane

Normal Butane

IsoButane

Natural Gasoline

15%

Ethane

Propane

Normal Butane

IsoButane

Nat Gasoline

Ethylene

Propylene

Crude C4’s

Fuel Oil

Petrochemical productsand plastics

Refinery feeds and blend stocks

Commercial andResidential Fuels

NGLs Feedstocks/End Products Primary Uses

C2

C3

NC4

IC4

C5


How We Make Money -

Processing ContractsProcessing contracts take many forms

E&P Supply Customer Midstream Processor

ContractMarketing

NGL Market Gas Market

&

Fee Based Percent of Proceeds Keep Whole

DescriptionFixed fee for

gathering and processing

Retain a percentage of both residue gas and

NGLs produced and return remainder to producer

Pay producer in residue gas for Btu’s received

and keep all NGLs produced

Commodity Exposure

No exposure to NGLs or natural gas

Long NGLs and Long natural gas

Long NGLs and Short natural gas

2008B DCP Midstream Gross Margin Contribution (1)(1) The remaining 12% is “other” which includes condensate sales, NGL trading and marketing, gas marketing and other activity

8% 70% 10%


Our Customers and What They Value

Top 5 Gas Customers• Constellation• Tenaska• BP Energy• Oneok• ConocoPhillips

Supply Customers~2500

Supply Customers~2500

Market Customers~100

Market Customers~100

Top 10 Producers Top 5 NGL Customers• Chevron Phillips Chemical• ConocoPhillips• Formosa• Equistar Chemicals• Enterprise Products

Competitive Contracts and Prices Flow and Supply ReliabilityTimely Fixes of Operational ProblemsTimely Well ConnectsProduct Purity

Who Are They…

What They Value…

• Anadarko• ConocoPhillips• Devon• Chesapeake• Noble Energy

• ExxonMobil• COG• Samson• Chevron• Oxy USA


Midstream Market Environment

OpportunitiesOpportunitiesContinued strength in natural gas pricesSustained high oil pricesShale technology improvements

ChallengesChallengesFocused competition

Shifting contract mixCost pressures and resource challenges

ImpactImpactRobust drilling around footprintElevated NGL prices and frac spreadsInfrastructure required to gather, process and transport

ImpactImpactMLP model intensifies localized competitionMargin pressuresRising costs for projects and competition for talent

Price strength expands opportunity while increasing competitive pressure


•


•

DCP Midstream –


•


•



•



Corporate Structure

69.9% Common LP Interest

Key Competitor RankCompany 2007 Net Income

DCP Midstream $1,074MM

Energy Transfer (ETP) $676MM

Enterprise Products (EPD) $534MM

Oneok (OKE) $305MM

Enbridge Energy (EEP) $249MM

28.8% LP Interest1.3% GP Interest

50%50%

ConocoPhillipsConocoPhillipsConocoPhillipsSpectra EnergySpectra EnergySpectra Energy

PublicPublicUnitholdersUnitholders

MLP

DCP Midstream has Strong Sponsor

Support and a MLP Growth Vehicle69.9%


$0$10$20$30$40$50$60$70$80

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Cru

de O

il Pr

ice

$0

$2

$4

$6

$8

$10

Nat

ural

Gas

Pric

e

DCP Historical Timeline Growing to Size and Scale

Major acquisitions ahead of price increase yield strong earnings growth

Key Acquisitions Timeline

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

LEC Winnie/Pt

ArthurOneok - SOKDynegy - RR

TEPPCO GPConoco-COK

GPM – Phillips JVTexaco-

DiscoveryCOP - SENM

MobilTransok N La

Associated Natural Gas

UP FuelsCanrock – AlbertaKoch – S. Texas

MCN-Mobile BayGSRI

DCPP IPOTEPPCO Sale

50/50

Momentum Anadarko-Lindsay

$0$200$400$600$800

$1,000$1,200$1,400

2002 2003 2004 2005 2006 2007

EBIT

(1

($MM)

Crude Oil

Natural Gas

(1)

(1) Excludes one-time gain on sale of TEPPCO of $1.1B


(1) Includes DCP Midstream Partners

June 2008 YTD VolumesTotal Throughput 7.3 TBtu/dGathered & Processed 6.0 TBtu/dNatural Gas Liquids 378 MBbl/d52 Plants, 10 Fractionators59,000 Miles of Pipeline

DCP Midstream Stats(1)

Strategic Assets with Scale and Scope

Competitive Advantages

Assets• Largest G&P asset base

• Located in most major gas basins

Scope & Business Model

• Broad G&P services model supported by highly integrated downstream (gas and NGL) operations

Capital Structure• Strong balance sheet and internal cash

generation

• MLP access to capital markets

Customer Relationships

• Diverse Contract Portfolio

• Extensive / diversified customer base

DENVER

TULSA

MIDLAND

HOUSTON

DCP MidstreamDCP Midstream Plant

DCP Midstream Partners Plant

DCP Midstream Pipelines

DCP Midstream Partners Pipelines

Gas Storage

Major Offices

Oil & Gas Basins

DCP has the scale to be efficient andgeographic diversity to compete for growth(1) Includes DCP Midstream Partners


Gulf Coast RegionAssets are well positioned with emerging supply areas, including the

Barnett Shale, Haynesville Shale

SouthTexas

Barnett Shale Area Haynesville Shale Area

Stats (1)

June 2008 YTD VolumesTotal Throughput 3.7 TBtu/dGathered & Processed 2.5 TBtu/dNatural Gas Liquids 119 MBbl/d17 Plants, 8 Fractionators11,500 Miles of Pipeline



Mid-Continent Region

Stats (1)

June 2008 YTD VolumesTotal Throughput 1.9 TBtu/dGathered & Processed 1.9 TBtu/dNatural Gas Liquids 120 MBbl/d11 Plants27,500 Miles of Pipeline

Volume growth in the Mid-Continent region is primarily due to activity in the Panhandle with emerging Woodford Shale upside

Woodford Shale Area



Permian Basin Region

SE New Mexico

Ozona/Sonora

Triad

Goldsmith/Fullerton

StatsJune 2008 YTD VolumesTotal Throughput 1.3 TBtu/dGathered & Processed 1.2 TBtu/dNatural Gas Liquids 119 MBpd16 Plants, 2 Fractionators17,000 Miles of Pipeline

Wolfberry drilling activity in the Permian Basin has resulted in strong year on year volume growth

Woodford/Barnett Shale Area(Delaware Basin)

WolfberryDevelopment


Rocky Mountain Region

Stats (1)

June 2008 YTD VolumesTotal Throughput 0.4 TBtu/dGathered & Processed 0.4 TBtu/dNatural Gas Liquids 20 MBbl/d8 Plants3,000 Miles of Pipeline


Strong drilling activity drives expansions to serve customers growing needs in Weld County and the Collbran Valley

Niobrara Shale Area


•


•

DCP Midstream –


•


•



•



Strategy

From our current foundation of reliable, efficient and safe operations, we will accelerate shareholder value by:

Preserving and growing the business within our footprintPartnering with our customers to enter new basins Optimizing strategic levers to maximize dividends and position for industry growth and consolidation

Our aspiration is to lead the midstream industry with a reputation for customer service, superior returns and cash generation for our owners, and sustainable growth


Go-Forward Strategic Initiatives

Preserve Margins Accelerate Value and Growth

Operating Efficiency

I. Customer Focused Operations

Mechanical IntegrityBtu EfficiencySafety / Environmental Leadership

Customer Responsive Growth

III. Growth within the Footprint

Accelerate Bolt-On ProjectsAccelerated Well Connects and Volume Growth

IV. Growing the Enterprise and Accelerating Value

Enhance Competitive ProfilePosition the Enterprise for Expansion

II. Cost Control

Targeted Cost ImprovementInvest in Service Quality


97.00%

98.00%

99.00%

Janu

aryFeb

ruary

March

April

MayJu

ne July

Augus

tSep

tembe

rOcto

ber

Novem

ber

Decem

ber

Run

tim

e %

Customer Focused Operations

•

2008 target of 98.5%, lost profit <2.5% EBIT•

Initiatives:– Predictive-based maintenance– Critical spare parts inventory– Expand supersystem footprint

Reliable and Efficient Operations are the Foundation of Value Creation and Customer Relations

Operating strategies support safety and emissions objectives

Mechanical Reliability

2007

2008target

Btu Efficiency Improvement

$51$62

$76

$23 $25$19$30

$33

$0

$20

$40

$60

$80

2005 2006 2007 2008

($ in

mill

ions

)

Btu Efficiency Margin Cumulative Annual Pipeline Integrity Spending

B

•

2008 run time target of 98.5%•

Initiatives:– Predictive-based maintenance– Critical spare parts inventory– Expand supersystem footprint

•

2008 Btu efficiency target of 95.5% •

Initiatives:– Value driven leak repair– Horsepower optimization– Btu recovery and recycle


Accelerating growth opportunities support $1B for new projects (2009 – 2011)

Expansion Within the Footprint –

Bolt-on Projects

Drilling activity throughout footprint supports expansion

Strategy to preserve/ expand volumes

Typically bolt-on

EBIT ROCE 15%+ typical

Cimarron River E. Texas Optimization

Transco Spindown

Bluff Springs/Black Diamond

Spindletop Storage

Weld System Expansion

CV Expansion Cimarron Plant

Zapata County Expansion

Panola County, Texas

E. Avalon Build


Non-Conventional

Opportunities -

Shale Plays

Gammon Bakken Excello/Mulky

New Albany

Antrim

Floyd andConasauga

Fayetteville

Haynesville

Caney andWoodford

WoodfordBarnett

Niobrara

Barnett andWoodford

Palo Duro

Lewis and Mancos

Cane Creek

Green River

DCP Asset Shale Opportunity

Tolar Asset Barnett Shale

Southern Oklahoma Woodford Shale

Permian Basin Barnett & Woodford Shale (Delaware Basin)

East Texas & North Louisiana

Haynesville Shale

Weld County Niobrara Shale

Infrastructure is needed to support new developing resource areas

Marcellus/DevonianAppalachia

(NY, PA, WV)

DCP Midstream is advantaged in several shale plays


Organic Expansion –

Barnett ShaleExpansion of the Tolar – Barnett Shale asset acquired from Momentum in

2007 proceeds as planned ($80MM, In Service 2008–2009)

Barnett shale development continues to expand to non-core areas

Black Diamond first of three planned process trains in service 8/2008 (40MMcf/d)

Second train (40MMcf/d) expected in service 1Q 2009

Fee based services

Black Diamond Plant


Current Asset ProfileVolumes up 18% since 2005

Well connects up 100% since 2006

Favorable life of lease contracts

All seven plants at capacity

All compression running

Planned expansions to add system capacity in support of continued DJ Basin volume growth ($250 - $300MM, In Service 2009)

Organic Expansion –

Weld County, CO

Plants to be expanded


Step-Out Expansion: Haynesville Connector

Step-Out Expansion: Panola County, Texas Project

Construct 30 miles of 20” pipeline ($56MM, In Service 2009)

Project to be owned 75% by DCP Midstream and 25% by DCP Midstream Partners

Designed capacity of 175mmcf/d for processing at the JV’s E. Texas complex

Extend the reach of the JV gathering footprint in southern Panola County

Access volumes in the rapidly growing Minden Field


Construct 20 Miles of 24” pipeline, compression and liquids handling facilities ($150MM, In Service 2009)

DCP Partners is the operator and 70% owner

• Plains Exploration –

25%• Delta Petroleum –

5%

System through-put grows to 600mmcf/d over multi-year period

Acreage dedications include Delta Petroleum and Plains Exploration and Production

DCP Partners Organic Expansion Collbran Valley


Step-Out Expansion: Haynesville Connector

New Basin Expansion: Antrim Shale –

Michigan

DCP Partners Strategic Acquisition of Gas Assets in Michigan ($145MM, 10/2008 closing)

Modern Facilities with franchise position

5 Treating facilities and associated gathering systemOwnership in 3 residue pipelines

Future step out growth opportunities

Fee based and steady production

Predictable wells with long life reserves

Antrim Shale


Construct ~150 Miles of pipeline to serve the developing Haynesville Shale (In Service 2009-2010)

DCP Partners Step-Out Expansion: Haynesville Connector


Appalachia’s Devonian Shale (Marcellus and Huron) hold vast natural gas reserves estimated at >225 Tcf

These resources are in close proximity to NE markets

Extensive midstream infrastructure is needed to handle pressures and volumes from new horizontal wells

Marcellus Shale Devonian Shale Chattanooga, Huron, New Albany ShaleCoal Bed Methane

New Basin Expansion -

Appalachia

Evaluating opportunities to participate in developing resource areas


•


•

DCP Midstream –


•


•



•



DCP Partners Strategic to DCP Midstream

Value CreationSignificant value creation through increased distributions to unit holders and achievement of 50% incentive distribution rightsDistributions have increased every quarter since inception

2-Yr CAGR of 26%

Background Sponsored MLP Completed IPO in December 2005Midstream owns 30.1% of Partners, including 1.3% GP interest Objective is to facilitate DCP Midstream growth

$0.35$0.38

$0.41$0.43

$0.47

$0.53$0.55

$0.57$0.59 $0.60

Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08

2-Yr CAGR of 26% Quarterly LP Distributions

A Growth and Ownership Vehicle with Access to Equity Markets


Strategic Transactions/Projects Provide Pivotal Growth Since IPO

(1) Excludes $11 million incurred on the Midland propane terminal prior to our acquisition.(2) We own a 70% interest in Collbran, a 40% equity interest in Discovery and a 25% equity interest in East Texas.(3) Estimated, net to Partners’ interest

DCP Partners Discipline Leads to Successful Execution

3rd Party AcquisitionsNew geographic areas Expand existing footprint

Lindsay (Anadarko Gathering) (5/07)Ivan (Laser Extension) (4/07)Collbran & Douglas (Momentum) (8/07)Michigan Pipeline and Processing (10/08)

Transaction Value ($MM)$181

10177145

Dropdown TransactionsNew lines of businessNew assets in new geographic areas

Gas Supply Resources (11/06)East Texas & Discovery (7/07)

72271

Build New Assets Wilbreeze

NGL Pipeline (2006)Midland Propane Terminal (2007)Collbran gathering expansion (2009)East Texas gathering expansion (2009)

1215

105 14

Total Closed or Pending Transactions $1,002

(1)

(3)

(3)

(2) (2)

(2)

(2)

(2)


•


•

DCP Midstream –


•


•



•



DCP Midstream Strong Financial Performance

1

DCP Midstream’s Exceptional Asset Position

and Contract Portfolio Continue to Deliver Strong

Financial Results

(1) 2005 EBITDA and credit ratios exclude the gain from the TEPPCO GP sale of $1.1B

(2) Total debt includes DCP Midstream’s ownership % of Partners debt but excludes Lakehead debt

(3) Based on $83 crude oil and 60% NGL to crude relationship(4) EBITDA is based on the 2008 Budget. The Debt/EBITDA

ratio is from 6/30/08 debt and last trailing 12 months ending 6/30/08 EBITDA. The EBITDA/Interest ratio is from the last trailing 12 months ending 6/30/08 EBITDA and Interest Expense.

0%

5%

10%

15%

20%

25%

30%

35%

2004 2005 2006 2007 2008B (3)

RO

CE

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

WTI

- Cr

ude

ROCE WTI - Crude

$0

$500

$1,000

$1,500

$2,000

0.0

4.0

8.0

12.0

EBITDA $1,064 $1,454 $1,561 $1,555 $1,900

Debt (2) / EBITDA 2.1 1.1 1.2 1.6 1.4

EBITDA / Interest 6.6 9.4 10.8 9.1 10.6

2004 2005 (1) 2006 2007 2008 (4)


DCP Midstream Debt and Credit Facility Update

DCP MidstreamLong-Term Debt

BBB+/BBB+/Baa2MM % Notes Due

$800 7.875 2010

$250 6.875 2011

$200 5.375 2015

$300 8.125 2030

$300 6.450 2036

$450 6.750 2037

DCP Midstream Credit Facility• $450MM credit facility

• April 2012 maturity

• Financial covenant – 5x leverage ratio (Debt/EBITDA) with a step up to 5.5x for 3 quarters after an acquisition

• Leverage Ratio – 1.4x as of 6/30/08

364-Day Bank Loan• $300MM term loan used to partially

fund April 2008 special dividend

• April 2009 maturity

• Plan to take-out via the debt capital markets


DCP Midstream 2008 Financial Plan Summary

Long Gas Position Arises Due to Change in Contract Mix vs 2007 Crude Oil Sensitivity Reduced

Midstream Earnings ($MM) (1)

EBIT

$1,500EBITDA

$1,900Net Income

$1,300Dividends / Tax Distributions

$1,200 (2)

DCP Midstream CapEx

$ 620 (3)

(1)

Based on late October 2007 forward market curve for crude oil of $83 and 60% NGL to crude relationship

(2)

Spectra Energy receives 50% of dividends and tax distributions

(3)

Excludes DCP Partners CapEx

and includes $160MM increase from 2008B for recently approved projects

2008 Commodity Forecast and Sensitivity12 Month

Forecast Sensitivity EBIT Impact

Crude (1)

$83

+/-$1.00 bbl =+/-$24MMSE Impact = +/- $12MM

Natural

$8 +/-$1.00MMBtu =+/-$40MMGas

SE Impact = +/- $20MM


Hypothetical Example: Commodity Price Change Effect on EBIT (100%)

Hypothetical average commodity prices for calendar year 2008:$100/bbl Crude Oil

55% NGL/Crude Price Correlation$9/MMBTU Natural Gas

Crude Price Change ImpactSensitivity to Hypothetical

Budgeted Hypothetical +/- $1.00/bbl Crude 12-mo. EBITPrice Price Change Price Change IMPACT$83 $100 $17 x $24 $408

Correlation Assumption Decrease Impact - @$100/bbl Crude PriceSensitivity to Hypothetical

Budgeted Hypothetical 1% Change in 12-mo. EBITCorrelation Correlation Change Correlation IMPACT

60% 55% (5) x $30 ($150)

Natural Gas Price Increase ImpactHypothetical

Budgeted Hypothetical Sensitivity to 12-mo. EBITPrice Price Change +/- $1.00 MMBTtu IMPACT$8 $9 $1 x $40 = $40

Total Hypothetical 12 mo. EBIT Impact to Change in Price and Correlation $298

Crude Oil Price/bbl

Crude Oil to NGL Price Correlation %

Crude Oil Price/bbl

=

=


Historical Cash Flow to Parents

$94$389

$650 $497 $292$527

$580

$801 $867

$320

$500

$1,345

$0

$500

$1,000

$1,500

$2,000

$2,500

2004 2005 2006 2007 Thru June2008

Tax Distribution Dividend Distribution Special Distribtution

$621

$2,314 (1)

$1,451 $1,364

$1,112

Total distributions to Spectra/Duke Energy since 2004, are in excess of $4B

(1) Includes distribution of $1.1B for sale of TEPPCO GP and $245MM cash for 50/50 JV Split


DCP Partners Hedging Policy Details and ObjectivesThe purpose of the DCP Partners commodity hedging program is to protect distributable cash flow and maintain minimum cash flow to service debt, production replacement and capital projects

DCP Partners has placed $75 million of DCP Partners has placed $75 million of Letters of Credit and has DCP Midstream Letters of Credit and has DCP Midstream parental guarantees issued to selected parental guarantees issued to selected counterparties to significantly reduce or counterparties to significantly reduce or eliminate margining requirementseliminate margining requirementsDCP Partners has hedged approximately DCP Partners has hedged approximately 75% of its 2008 commodity exposure and 75% of its 2008 commodity exposure and has additional hedges thru 2013 at has additional hedges thru 2013 at diminishing percentages diminishing percentages The DCP Partners Risk Management The DCP Partners Risk Management Policy allows hedging for up to seven years Policy allows hedging for up to seven years and up to 90% of Partnersand up to 90% of Partners’’ commodity commodity exposureexposure

Hedging Objective is to Protect Distributable Cash Flow


Exceptional Performance and Financial Strength

Competitive Position

• Leading industry position• Geographic diversity with

regional focus• Extensive expertise and service

offering in a “must run” industry• Reliable operations

Financial Strength

• Robust earnings, cash generation and financial standing−

10.6x EBITDA/Interest Expense Ratio as of June 30, 2008

−

1.4x Debt/EBITDA as of June 30, 2008

• Positioned to withstand industrycycles and cover fixed costsduring industry downturns

Strong Sponsorship

• Experienced and successfulmanagement

• Proven track record of capitalizingon industry trends

• Spectra Energy and ConocoPhillipsare strong, supportive parentcompanies

Management Committed to Maintaining DCP Midstream’s StrongFinancial Position and Investment Grade Rating

43DCP Midstream…A Consistent Success Story | September 22, 2008

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