The Choice is Yours

© Copyright 2010. Alvarez & Marsal Holdings, LLC. All Rights Reserved.

L E A D E R S H I P P R O B L E M S O L V I N G V A L U E C R E A T I O N

The Choice is YoursAlvarez & Marsal Taxand, LLC

Acquisitions & Dispositions, Tax Planning, Choice of Entity


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Contents

I. Introduction

II. Choice of Entity – Tax Considerations

III. Master Limited Partnership (MLP)

IV. Basic Structuring

V. Elections Under Section 338

VI. Common Due Diligence Tax Issues

VII. Recent Deals in the Marketplace


Contact Details

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NOTE: Alvarez & Marsal employs CPAs but is not a licensed CPA firm.

Layne J. Albert, a Managing Director with Alvarez & Marsal Taxand, LLC, advises clients on the federal income tax ramifications of complex business transactions. He also advises clients on tax department design and operations, including creating a tax department or managing a tax department through adversity, assistance with accounting for income taxes and Sarbanes-Oxley compliance. Mr. Albert has significant experience with IRS and state tax controversies, as well as state income and franchise tax issues.

With more than 17 years of experience, Mr. Albert has significant experience in identifying, understanding and managing federal and state tax issues related to complex business transactions, including mergers, acquisitions, dispositions, financings, recapitalizations, reorganizations and bankruptcy. Mr. Albert has advised Boards of Directors, and has worked closely with CEOs, CFOs, private equity investors, IRS staff and investment bankers. He brings experience in the manufacturing, energy and service industries.

Prior to joining A&M, Mr. Albert was Vice President of Tax at Dynegy. Previously, he was Vice President of Tax at Encompass Services. Mr. Albert also served as Tax Counsel for Tenneco. Additionally, he has served in the public sector roles with Ernst & Young and Chamberlain, Hrdlicka, White, Williams & Martin.

Mr. Albert earned a bachelor's degree in business administration, with a concentration in accounting, at the University of Texas at Austin. He received a juris doctor from South Texas College of Law and a master of laws degree (LL.M.) in taxation from the University of Houston. He is a Certified Public Accountant (CPA) in Texas.

700 Louisiana StreetSuite 900Houston, TX 77002

Direct: (713) 221-3910Mobile: (713) 302-6506E-mail: [email protected]

Layne J. Albert Appendix I. Managing Director Biographies

Layne J. Albert

Managing Director


Christopher Howe

Chris Howe is a Senior Director with Alvarez & Marsal Taxand , LLC in New York. Mr. Howe has significant experience on transactional and general corporate tax matters in both the bankruptcy and non-bankruptcy setting. He brings experience in private equity, corporate tax and accounting, tax planning and tax controversy matters. His experience also includes advising financial and strategic investors on tax aspects associated with mergers and acquisitions and other transactional related matters including leveraged buyouts, reorganizations, spin-offs, cross-border financing, and cash repatriation.

Prior to joining Alvarez & Marsal, Mr. Howe was a Senior Manager with the Transaction Advisory Services practice of Ernst & Young. He is also a alumni of Deloitte & Touché and Arthur Andersen.

Mr. Howe holds both a Master’s of Science in Taxation and a Bachelor’s of Science in Business Administration from Northeastern University. He is a Certified Public Accountant (CPA) in the state of Massachusetts, and is a member of the American Institute of Certified Public Accountants (AICPA).

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Contact Details

125 Park Avenue, 25th FloorNew York, NY 10017

Direct: (212) 763-9607E-mail: [email protected]

A&M Professional Biographies

Christopher HoweSenior Director

Transaction Tax

NOTE: Alvarez & Marsal employs CPA’s but is not a licensed CPA Firm


Choice of Entity – Tax Considerations



Three most common legal entities that are encountered in USprivate equity buyout transactions:

“C” corporation A traditional statutory (state law) corporation where no election has been made to

treat as an “S” corporation “S” corporation

A traditional statutory (state law) corporation that, subject to certain requirements and restrictions, makes a special tax election or “S” election LLC/partnership

A joint venture of two or more parties entered into for profit



The “C” corporation tax considerations:

The C corporation is a separate taxpaying entity Corporate income is usually subject to two levels of income

tax (i.e., “double taxation”) Entity level income tax Shareholder level tax (dividend distributions)

Losses and other tax attributes are retained at the corporate level and do not flow through to shareholders

The treatment of these attributes to the corporation may be subject to limitation upon a purchase or “change in ownership”



The “S” corporation tax considerations:

Generally, not subject to entity level income tax Entity level income, gain or loss flows through to the shareholders Shareholders report S corporation income, gain, or loss in their personal

income tax returns and adjust their tax basis in their stock accordingly No second level of income tax on distributions of previously taxed earnings



The “S” corporation tax considerations (continued):

Eligibility requirements Domestic corporation Maximum number of shareholders is 100 Eligible shareholders are limited to US citizen or resident individuals, certain estates,

certain trusts and ESOPs One class of stock

Private Equity (PE) consideration PE funds and corporations are not eligible shareholders. Thus, it is likely a

corporation’s S election will terminate in most transactions. As a result, a historic S corporation will operate as a C corporation after a PE transaction



The LLC or Partnership tax considerations:

Generally, not subject to entity level income tax Entity level income, gain or loss flows through to the member/partner and is

taxed on member/partner tax return PE considerations

Significant flexibility on the rights of equity interests and the types of equity holders. However, LLCs may be complex when compared to C corporations

Management incentive benefits and complexities in the use of profits interests vs. traditional corporate stock options

Single-member LLCs are generally disregarded for US federal income tax purposes


Master Limited Partnership - (MLP)


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Master Limited Partnership (MLP)

What is MLP?

A publicly traded limited partnership- Unique investment that combines tax benefits of limited

partnership with liquidity of common stock

Qualification for MLP status

Companies that receive 90% or more income from interest, dividends, real estate rents, gain from sale or disposition of real property, income and gain from commodities or commodity futures, and income and gain from mineral or natural resource activities


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Nature of MLPs

Rather than buying shares, investors buy units of partnership commonly known as unit holders

Tend to operate in stable, slow-growing parts of energy industry Typically grow by acquiring or constructing new pipelines and other

facilities General and Limited Partners

- General partner paid on a sliding scale, receiving greater share of each dollar distributed as limited partner’s cash distribution rise. Its take can reach as high as 50%, thus riskier

- General partner’s sliding scale gives extra incentive to increase limited partner distribution, which has higher yield and is less risky


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Benefits and Drawbacks

Tax avoidance - Owners of partnership only taxed at individual level Entity

level income Attractive yield

- Falls in 5%-7% range for limited and 3%-4% range for general partnership

- Cash distributions exceed partnership’s taxable income Tax complexity

- Larger unit holders may require investor to file tax returns in various states in which the partnership operates

May owe taxes on partnership income if units are held in tax-free account like an IRA


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Recent environment

Several general partners going public New generation of E&P MLPs aiming to create cash flows by

investing in oil and gas fields companies going public Tax laws that restricted MLP by mutual funds rolling back MLPs paying significantly higher prices to acquire assets


Basic Structuring


Basic Structuring - Straight Stock Purchase Example

Capital

Seller

TargetAcquisition

Newco

Cash

Buyer

LendersDebt

100% of stock of Target

Target



Target (T) is a C-CoSeller = individual owners of T100% of stock is purchased for cash

Tax consequences to Buyer

Newco takes cost basis in T stock Book step-up in T net assets (purchase accounting) No tax step-up in T assets

Tax consequences to Seller No tax gain to T Seller receives cash and reports a capital gain equal to the

difference between the proceeds and tax basis in the shares (20% federal and state individual capital gain tax rate)



Other issues

T’s legal identity is preserved and business will operate as subsidiary of acquiring company

Generally all liabilities of T (whether disclosed, undisclosed, or contingent) will remain with T

Target’s tax attributes such as NOLs and tax credits will remain with T subject to certain limitations (Sec. 382)


Basic Structuring - Stock Acquisition General Consequences

Carryover of target’s historical tax basis in assets Target is a “C” Corporation

Typically the preferred exit for sellers (because of one level of tax at capital gains rates)

Target’s tax attributes (e.g., NOLs) carry over post-close, subject to change-in-control limitations Target is an “S” Corporation

May not result in significantly lower taxes to seller than asset sale (or 338(h)(10) transaction)

Because an S Corporation is a flow-through entity, there are no tax attributes to carryover.– Prior C corporation attributes (e.g., NOLs) carry over post-close,

subject to change-in-control limitations Target is a “C” Corporation Sub. Of Tax Consolidated Group

Could be preferred exit for seller, if seller’s tax basis in target stock exceeds target’s tax basis in its assets, or seller has expiring capital losses

Target’s tax attributes (e.g., NOLs) may carry over post-close (depends on seller’s NOL position), subject to change-in-control limitations


Basic Structuring - Straight Asset Purchase

Capital

Seller

TargetAcquisition

Newco

Cash

Net assets

Liquidation$cash

Buyer

Lenders

Debt



Target (T) is a C-CoSeller = Target C-Co100% of assets from TPurchase price is all cash (can use other consideration such as

debt)

Tax consequences to Buyer

Book step-up in Target net assets to fair market value Tax step-up in Target net assets to fair market value

Tax consequences to Seller

T taxed on ordinary/capital gain income (40% federal and state tax rate)

Seller receives cash in liquidation and has capital gain (20% federal and state individual capital gain tax rate)



Step upTax basis

Net assets 50Step-up 200Annual tax amortization (15yr) 13.33Tax rate 40%Annual tax benefit 5.33NPV @ 10% 40.5

Value of basis step up



Other issues

May incur considerable expense with title transfers and state transfer taxes. Contract should specify who bears these costs.

If T is a C-Co, T’s shareholders will not be taxed on a straight asset acquisition unless T distributes the sale proceeds.

T’s NOLs and other tax attributes do not carry over to acquiring company. Attributes remain with T and can offset gain on sale. If T is liquidated, unused attributes are lost.

Acquiring company may “cherry pick” which T liabilities will be legally assumed. Undesired/ contingent liabilities can be left with seller.


Basic Structuring - Asset Acquisition

General Consequences Revalues target’s tax basis in assets to FMV Target is a “C” Corporation

Generally undesirable for sellers; potential for double-tax on exit (at corporate and shareholder levels)

Sellers may not be adverse if target has significant NOLs to shield corporate tax gains on asset sale Target is an “S” Corporation

Possible if legal conditions allow; sellers generally pay only one level of tax

If target (or predecessor) was a C corporation within past 10 years, some (or all) of the gains could be subject to built-in gains (“BIG”) taxes

Buyer might gross up seller for incremental taxes Target is a “C” Corporation Subsidiary Of Tax Consolidated Group

Possible if legal conditions allow; depends on, among other things, whether target has equal or higher tax basis in its assets than seller has in its target stock

Buyer might gross up seller for incremental taxes


Elections under Section 338


Elections Under Section 338 -Tax elections to treat a Stock purchase as an Asset acquisition Qualified stock purchase required

Unrelated corporate acquirer Purchase of 80% or more of vote and value Election made by the 15th day of 9th month beginning after the month in which

the acquisition occurs For §338(h)(10) both the buyer and seller must sign; best to include in the stock

purchase agreement


T stock

Cash and/or other consideration

Actual sale of T stock ignored for tax purposes only

Assets

Deemed taxablesale of assets

ACQUIRERCorporation

orS corp S/H

TARGET(New Co)

TARGET(Old Co)

Deemedliquidation

Elections Under Section 338 - Tax elections to treat a Stock purchase as an Asset acquisition


Elections under §338(h)(10) treated as a sale of assets by the Target while it is an S corporation owned by its shareholders or a C corporation owned by its corporate parent to a new corporation (“New Target”) followed by a deemed liquidation of the target.

Gain on asset sale is included in the final S corporation return or in the selling group’s consolidated return and gain on stock sale is ignored.



New Target assets get basis step-up equal to full fair market value.

Generally one level of seller tax but there can be exceptions in certain cases.

Note §338(h)(10) works in reverse in case of losses (FMV of Target’s assets is less than tax basis then tax basis may be stepped down).



Elections Under Section 338 - Stock Acquisitions Treated As Asset Acquisitions

Section 338(h)(10) (Election to Treat Stock Purchase as Taxable Asset Purchase) - General Requirements: Corporate purchaser unrelated to seller(s) Seller must be:

(a) an 80% corporate subsidiary of an affiliated group of companies or (b) an S corporation

Qualified Stock Purchase (“QSP”): Purchase of 80% or more of voting power and value of target’s stock (excludes certain preferred stock)

Joint election by purchaser and seller must be filed by the 15th day of 9th month following the month in which the acquisition occurs.

Section 338(h)(10) Consequences For Buyer

Tax basis step-up in target’s assets Increase in after-tax cash flow

For Seller May be additional taxes (federal + state) – “gross-ups” Complications in rolling shareholders


Common Due Diligence Tax Issues


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Common Due Diligence Tax Issues – Federal

Historical Exposure

In a stock acquisition, any pre-closing tax exposures will remain with the acquired entity. Moreover, where a corporation is acquired from a consolidated group, it remains severally liable under Treas. Reg. §1.1502-6 for the entire group’s federal income tax during the period in which it was a member of the group.


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Audit Exams

Inquire as to whether or not entities have been audited by the IRS and whether or not there have been any waivers or extensions of any statutes of limitations with respect to federal income taxes.


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Hedging

If a transaction is timely identified as a hedge for tax purposes, the character of income and deduction recognized on each element of the hedge would be ordinary. If not, any loss on the hedge may be characterized as a capital loss that may not be used to offset ordinary income.

Generally, a hedging transaction must be identified for tax purposes in a taxpayer's books and records on the date on which the taxpayer enters into the transaction in order for any loss on the transaction to be treated as ordinary. The taxpayer’s identification must also identify the items or aggregate risk being hedged within 35 days of entering the hedging transaction.


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Hedging

The absence of an identification that satisfies the requirements can cause any loss on the transaction to be treated as capital. For any transaction that is clearly a hedging transaction, however, the regulations provide that any gain is ordinary whether or not identification has been made.

While Treasury Regulations may grant taxpayers relief for an “inadvertent” failure to properly identify hedging transactions, it is not clear whether such relief would be available. As a result, any losses on the hedges could be treated as capital, while any gains would be ordinary for U.S. federal income tax purposes. Capital losses can only offset capital gains of a U.S. corporation and can generally be carried back 3 years and forward 5 years.


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Common Due Diligence Tax Issues - Federal

Net operating loss limitations – “Section 382”

After an ownership change, pre-change tax loss attributes are subject to annual “Section 382 limitation”

Limitation:- Generally = FMV of T stock x long-term tax exempt rate- Downward adjustments to FMV of T stock may be required

i. Redemptions and corporate contractions (LBO applicability)

ii.Certain capital contributions

iii.Certain non-business assets

iv.Certain controlled group members- Unused limitation is cumulative- Potential increase for certain built-in gains


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Net operating loss limitations – “Section 382”

Built in Gains and Built in Losses- Upon ownership change, T determines whether a net

unrealized built-in gain (NUBIG) or net unrealized built-in loss (NUBIL) exists in its assets

i. NUBIG (NUBIL) = FMV of assets minus aggregate tax basis

If NUBIG - Built-in gains (BIGs) recognized during next 60 months increase the limitation

If NUBIL - Built-in losses (BILs) including depreciation/amortization recognized during next 60 months are subject to limitation

Rules are complex and create inherent difficulty in identifying/computing/tracking BIGs and BILs


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Tax Contingency Reserves

Standards Codification (ASC) 740, Income Taxes, (ASC 740), establishes the financial accounting and reporting standards for capturing the income tax effects from an enterprise’s current and historic activities.

FASB Interpretation No. 48 (“FIN 48”) is FASB’s formal interpretation of ASC 740 and requires an enterprise to evaluate its income tax positions based on tax laws and regulations for financial reporting purposes.

In December 2008, FASB extended the deferral of the application of FIN 48 for non-public enterprises until years beginning after December 15, 2008 (that is, until 2009 for calendar-year companies).

.


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Tax Contingency Reserves

Upon adoption, corporations will recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.


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Transaction Expenses

Transaction expenses - $20 million in tax deductible items that will be realized on the date of the closing related to:

Stock option deductions - $12 million Restricted stock grants - $2 million Deferred financing cost on existing debt - $1 million Investment banking fees, advisor fees, etc. - $5 million

Seller advises that the tax benefit of these deductions should be considered in the bid price.




What is the value of these deductions? When can the deductions be used? Items to consider:

These amounts will generally be considered expenses incurred on the date of closing (pre-ownership change period).

The amounts will first be utilized against pre-close stub period taxable income (seller’s period and seller’s benefit).

Remaining amount may be carried back to the previous two tax years for refunds, and/or

Remaining amount could create an NOL carryforward or add to an existing NOL carryforward which could be limited going forward.




As such, these amounts need to be considered in the cash tax model to determine timing of actual benefit (and NPV). In the example, these amounts are added to the existing NOL but must first be reduced by 2005 pre-closing taxable income.

Total NOL available to carry forward to post-change year of $40 million [subject to Section 382 limitation], as follows:



Limitations on deductibility of interest

Common limitations Applicable high yield discount obligation (“AHYDO”) rules Corporate acquisition indebtedness rules Disqualified interest rules - “earnings stripping”



Limitations on deductibility of interest AHYDO Rules

Defers tax deductions for original issue discount (“OID”), including payment in kind (“PIK”) interest, until interest is actually paid in cash if the yield-to-maturity (“YTM”) of the debenture exceeds the applicable federal rate (“AFR”) + 5%

Permanently disallows OID deductions to the extent that the YTM exceeds the AFR + 6% Application

Borrower must be a C corporation. However, anti-abuse rules exist for non-corporate issuers

Maturity date must be greater than five years from date of issuance YTM must be greater than or equal to the applicable federal rate (“AFR”) + 5% Debt must also have “significant OID”, which exists whenever, at the end of any

accrual period after the fifth anniversary of issuance, the total yield accrued on the debt exceeds the total amount paid in cash by more than the issue price x YTM (i.e., the first year’s yield)




Corporate acquisition indebtedness rules Disallows interest deduction for the lesser of: Total acquisition interest greater than $5 million in such year, or Interest for such year on tainted acquisition debt

– Test is applied cumulatively to multiple acquisitions Application

Proceeds are used to acquire at least 2/3rds of a target company Debt is issued with equity kicker or conversion feature The debt is subordinated to trade creditors or unsecured debt D:E ratio is greater than 2:1 or interest is in excess of 1/3 of earnings




Limitation applies to excess interest expense on debt due to a related person if no tax is imposed with respect to such interest income.

In the case of interest paid or accrued to a partnership (or LLC) the determination is made at the partner level.

Foreign owners, tax exempt owners, pension funds, etc. Excess interest is interest expense in excess of adjusted taxable income. EBITDA

is generally used as a proxy for adjusted taxable income. Excess interest in a given year can be carried forward.

The rule does not apply if D:E does not exceed 1.5:1


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Common Due Diligence Tax Issues – State and Local

Income, Franchise Taxes – Nexus Issues Related to Inventory

Inventory held in a state, even if held by a third party, may result in a nexus with the state and create a filing obligation.

Energy companies that are transporting their product across state lines and storing it, even temporarily, in a state while in transit which may create an income/franchise, sales, and property tax filing obligation.- Pipelines

http://www.google.com/imgres?imgurl=http://www.nationalpost.com/related/links/144151.bin?size=404x272&imgrefurl=http://www.andrewhalcro.com/politics_and_the_pipeline&usg=__fVeULW1HiA72Ei2NAg4SdPCcG6w=&h=272&w=404&sz=14&hl=en&start=5&sig2=0Qzgms_5ZRBZV1vrCBtZUQ&um=1&itbs=1&tbnid=xU0agY3AvQTuCM:&tbnh=83&tbnw=124&prev=/images?q=natural+gas+pipeline&um=1&hl=en&sa=N&rls=com.microsoft:en-us&tbs=isch:1&ei=uV8JTLbRHtGG4QaU3c10


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Sales Tax - Exemption for Resale Energy Companies that produce their energy to sell to energy

providers may be entitled to an exemption from sales tax as sales for resale. - Energy companies should ensure they are diligently

collecting exemption certificates from all customers.

Specific exemptions per state Certain states do not impose sales tax on the sale of energy,

such as Massachusetts. - It is important to review the specific state law regarding the

taxability of energy.


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Use Tax – Manufacturing Equipment Exemptions

Many states have an exemption from sales/use tax for manufacturing equipment and replacement parts. - In some instances, the bulk of the equipment purchased by

an energy company that produces energy may be exempt from sales/use tax.

- This exemption is particularly useful for energy companies that produce energy.


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Property Tax – Abatement Agreement Opportunities Many municipalities are entitled to enter into agreements to

abate certain taxes, such as property, for a company in exchange for established payment schedules, promises to remain for a set period of time, and/or promises to hire and maintain employment of a certain number of municipal residents. - Energy companies may be able to leverage their production

of energy to the area and stable, high-tech job market to the municipalities.

Payroll Tax – Fringe Benefits As a general rule for all industries, auto allowances, in excess

of the amount used solely for work, must be included on an employee’s W-2.


Common Due Diligence Tax Issues – International

International Considerations Regional allocation of EBITDA and other cash flow items is necessary

to quantify taxes. Capital structure will have a significant impact on taxes

In the case of interest paid or accrued to a partnership (or LLC) the determination is made at the partner level.

In a US Holdco structure, US limitations on foreign tax credit utilization can result in double taxation.

Placement of debt in the regions generating significant cash flows will often reduce tax inefficiencies.– External debt– Internal debt pushdowns Beware of trapped losses that do not provide a current tax benefit.

Interest expense Deductible expenses resulting from change of control (e.g.,

options and debt “make whole” fees)


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Common Due Diligence Tax Issues - Compensation & Benefits

Section 280G

Section 280G generally provides that if certain payments in the nature of compensation paid to a “disqualified individual” equal or exceed three times the individual’s “base amount”(“parachute payments”), then all amounts paid in excess of one times the base amount are nondeductible to the employer (the “excess parachute payment”).

- The base amount is the average of the individual’s W-2 Box 1 compensation for the five years preceding the year in which the change in control occurs.

20% excise tax on the recipient of any “excess parachute payment,” which is in addition to normal withholding tax and income tax and is also non-deductible.


Recent Deals in the Marketplace


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1/2008: Continental Energy Corporation purchase of natural gas operations of PNM Resources ($620 million in cash)

4/2008: Hoosier Energy REC, Inc. purchase of Holland Energy LLC ($383 million)

1/2009: Natural Gas Partners Midstream & Resources LP purchase of 40% interests in MarkWest Liberty Midstream ($200 million in cash)

2/2009: Denbury Resources Inc. purchase of Hastings Complex (oil field) from Venoco Inc. ($201 million)

2/2009: Valero Renewable Fuels Company LLC purchase of 5 production facilities and a development site of Valero Energy Corporation ($477 million--$280 million in cash)

2/2009: GE Capital and Alinda Capital purchase of Regency Intrastate Gas ($653 million)

3/2009: NRG Energy Inc. purchase of Reliant Energy Retail Services LLC ($288 million)

3/2009: First Solar Inc. purchase of solar project development business from OptiSolar Inc. ($400 million in equity)

3/2009: Agstar Financial Services ACA purchase of VeraSun Energy Corporation ($319 million)


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4/2009: Spectra Energy Partners purchase of NOARK Pipeline System LP from Atlas ($300 million in cash)

4/2009: Atlas America Inc. purchase of Atlas Energy Resources LLC ($1,419 million)

5/2009: Talon Oil & Gas LLC purchase of 60% stake in Barnett Shale natural gas assets of Denbury Resources Inc. ($270 million)

5/2009: TC PipeLines purchase of North Baja Pipeline ($391 million) 6/2009: Cameron International purchase of NATCO Group ($728 million) 6/2009: HLND MergerCo LLC purchase of Hiland Partners LP ($304 million) 6/2009: Indigo Minerals LLC purchase of Chesapeake Energy ($218 million) 6/2009: Magellan Midstream Partners L.P. purchase of Longhorn Partners

Pipeline L.P. ($350 million) 6/2009: Enterprise Products LP purchase of TEPPCO Partners LP ($6 billion –

but may be too downstream) 6/2009: Encore Operating L.P. purchase of EXCO Resources Inc. ($375

million) 6/2009: TCW Energy & Infrastructure Group purchase of Pinon Gathering

Company LLC ($200 million in cash)


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6/2009: Abraxas Petroleum Corporation purchase of Abraxas Energy Partners LP ($202 million)

7/2009: Targa Resources Partners LP purchase of Downstream Business of Targa Resources Inc. ($530 million)

8/2009: Pride International purchase of Seahawk Drilling ($296 million) 8/2009: LS Power Group purchase of five peaking and three combined-cycle

generation assets from Dynegy Inc. ($1,498 million) 8/2009: Williams Companies Inc. purchase of Piceance Valley of Western

Colorado ($258 million) 8/2009: Kinder Morgan Energy Partners L.P. purchase of natural gas treating

business of Crosstex Energy L.P. ($266 million) 9/2009: Quanta Services purchase of Price Gregory Services ($350 million in

cash and equity) 9/2009: Apollo Management LP purchase of Parallel Petroleum Corporation

($483million) 9/2009: Global Infrastructure purchase of 50% stake in Chesapeake Midstream

($588 million) 9/2009: Sheridan Holding Company I LLC purchase of natural gas producing

assets from EXCO Resources Inc. ($540 million)


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10/2009: MEMC Electronic Materials Inc. purchase of SunEdison LLC ($289 million)

11/2009: Denbury Resources purchase of Encore Acquisition Co. ($4 billion – but not sure how much gas v. oil)

12/2009: Mariner Energy Inc. purchase of substantially all assets of Edge Petroleum Corporation ($215 million)

1/2010: Newfield Exploration Company purchase of 350,000 gross acres from TXCO Resources Inc. ($217 million)

2/2010: Western Gas Partners LP purchase of midstream assets from Anadarko ($254 million)

Documents

The Choice is Yours