hiland partners, lp (hlnd) hiland holdings gp, lp...

Hiland Partners, LP (HLND)Hiland Holdings GP, LP (HPGP)

2006 RBC Master Limited Partnership ConferenceFour Seasons Hotel at Las Colinas, Dallas, TXNovember 16 & 17, 2006

Randy MoederChief Executive Officer, President and Director

2

Risks and Forward-Looking StatementsInvestment in the common units of Hiland Partners, LP and Hiland Holdings GP, LP (collectively “Hiland” or the “Partnership”) involves risks associated with the Partnership’s business, the Partnership’s structure and the tax characteristics of the common units. These risks can significantly impact the market value of Hiland’s common units.

The statements made by representatives of Hiland during the course of this presentation that are not historical facts are forward-looking statements. Although Hiland believes that the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect Hiland’s business prospects and performance, causing actual results to differ from those discussed during this presentation. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in Hiland’s various filings with the Securities & Exchange Commission (“SEC”).

Any forward-looking statements made are subject to all of the risks and uncertainties, many of which are beyond management’s control, involved in gathering, compressing, dehydrating, treating, processing and marketing natural gas, fractionating NGLs and providing air compression and water injection services for oil and gas secondary recovery operations. These risks include the risks described in the Preliminary Prospectus. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Hiland’s actual results and plans could differ materially from those expressed in any forward-looking statements.

The Partnership undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information or future events.

3

An Overview of Hiland

Hiland Holdings GP, LP

(Nasdaq: HPGP)

Hiland Partners, LP

(Nasdaq: HLND)

2.0% G.P.Interest

57% L.P.Interest 41% L.P.

Interest

Ownership Structure

All Assets & Operations

Public Unitholders

Strong operational and financial attributes

– Modern, strategically located assets

– Proven track record of executing growth strategy

Over $248 million of acquisitions / internal growth projects announced / closed in the last twelve months

– Visible inventory of growth prospects

– Strong distribution coverage

– Financial flexibility to fund growth

– Broad range of midstream services

– Experienced management team

Management’s interests are aligned with unitholdersHPGP Market Capitalization: $525 million

HLND Market Capitalization: $450 million

4

Business Strategy

Engage in construction and expansion opportunities

– Unique relationship with Continental Resources, Inc.

– Construct and expand systems to meet growing demand

Pursue complementary acquisitions

– Target opportunities that offer operational efficiencies and increased utilization

Increase volumes on existing assets

Reduce exposure to commodity price risk

Grow distributions to unitholders

5

Background & Continental Resources, Inc. Relationship

Hiland’s predecessor formed in 1990 to support privately-held Continental Resources, Inc.’s (“CRI”) E&P activities

CRI is a large E&P company with an active drilling program– Mid-Continent and Rocky Mountain regions – Specializes in horizontal drilling and large exploration activities – Focuses on areas without existing gathering infrastructure

HLND, HPGP and CRI are separate entities with Harold Hamm as thecontrolling equity holder of both

CRI contributed 31% of HLND’s total natural gas revenue for the nine months ended September 30, 2006

Hiland’s relationship with CRI has enabled it to significantly expand its asset base– Bakken Acquisition– Badlands Expansion

6

Midstream Natural Gas Industry

TransmissionLines

End Users

TransmissionLines

Wellhead

Gathering, Dehydrationand Compression

Processing, Treating and Fractionation

NGL ProductsTransportation

MarketableNGL

Products

Hiland Partners’

Midstream Focus

7

HLND Distribution Growth Since IPO

Hiland Partners has increased its cash distribution every quarter since its IPO

__________________1. Represents the MQD of $0.45 ($1.80 annualized). A pro rata portion of the MQD ($0.225) was paid for the first quarter of 2005.

An

nual

ized

Qu

arte

rly

Dis

trib

uti

on

$1.80 $1.85$2.05

$2.50 $2.60 $2.70 $2.80

$0.00

$0.40

$0.80

$1.20

$1.60

$2.00

$2.40

$2.80

$3.20

05Q1 05Q2 05Q3 05Q4 06Q1 06Q2 06Q3

56% growthQ3 '06 vs. Q1 '05

(1)

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Strong Price Performance Since IPO• Consistent track record of organic and acquisition-oriented growth and

increased distributions

75

100

125

150

175

200

225

250

2/10/05 5/11/05 8/9/05 11/4/05 2/6/06 5/5/06 8/3/06 10/31/06

Hiland Partners, LP Hiland Holdings GP, LP S&P 500

+116.4%

+29.7%

+15.1%

Inde

xed

Pri

ce P

erfo

rman

ce (

%)

2/10/05: HLND prices IPO at $22.50 per unit with MQD of $1.80 per unit.

7/26/05: HLND announces distribution increase to $1.85 per unit (annualized).

9/12/05: HLND announces Bakken acquisition ($95 million).

11/10/05: HLND announces Badlands expansion ($40 million).

3/30/06: HLND announces acquisition of Enogex gathering assets ($93 million).





8/23/06: HLND announces planned expansion projects ($15 million).


9/19/06: HPGP prices IPO at $18.50 per unit with MQD of $0.74.

10/24/06: HPGP announces initial distribution increase to $0.81 per unit (annualized).

Asset Overview

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Hiland Cash Flow Growth Supported by High Quality Asset Base

Enid Pipeline

Driscoll

Stovall

Enid, OKCorporate Headquarters

Matli Gathering SystemKinta Gathering System

Badlands Gathering System

Cedar Hills Compression Facility

Bakken Gathering System

Eagle Chief Gathering System

Worland Gathering System

Hiland Partners is a growth-oriented midstream MLP– 1,800 miles of pipelines

– 13 gathering systems

– 5 processing plants

– 3 treating facilities

– 3 fractionation facilities

– 2 air compression facilities

– Water injection plant

Nine months ended September 30, 2006:– 64.8 MMBtu/d of natural gas sales

– 72.7 MMBtu/d of natural gas gathered

– 3,256 Bbls/d of NGL sales

HLND EBITDA for the LTM ended 9/30/06 of ~ $40.5 million(1)

1. EBITDA is defined as net income (loss) plus interest expense, provision for income taxes and depreciation, amortization and accretion expense..

11

Execution of Business Strategy

Acquired in Sept. 2005 for $95 million from an affiliate of Hiland’s G.P.

Expansion of gathering and compression infrastructure to improve efficiency

– Expected to be completed in 4Q 2006

Expansion of NGL fractionation facilities

– Increased volumes from Bakken and Badlands Plants


Major Gas Suppliers:– Enerplus– CRI– Burlington

Operating Highlights– 302 miles of pipelines

– 207 wells connected– 25,000 Mcf/d processing

plant capacity– Fractionation facility

– 34.8% of total segment margin for the nine months ended September 30, 2006

Bakken Gathering System

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Announced significant expansion of system in Nov. 2005

– $40 million capex in 2006; $9.5 million in 2007

– Constructing a 40 MMcf/d nitrogen rejection plant

– Expanding gathering infrastructure

– 15 year agreement with CRI

– 50% / 50% POP (with fees)

$3 million project to expand into South Dakota

– Completed on October 10, 2006

Major Gas Suppliers:– CRI– Luff– Burlington

Operating Highlights– 141 miles of pipeline

– 105 wells connected

– 5,000 Mcf/d processing plant capacity

– Treating facility

– Fractionation facility


Badlands Gathering System

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Badlands Air Compression and Water Injection Facilities

CRI secondary recovery operations

8 compression units

29,300 of horsepower in aggregate

Compress air to 4,000 psig

Inject water at 2,000 psig

Fixed-fee “take-or-pay” type contracts

8.0% of total segment margin for the nine months ended September 30, 2006

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Natural gas supplied under long-term POI contracts

Residue gas sold to intrastate markets

Major Gas Suppliers:– CRI– KCS

Operating Highlights– 151 miles of pipeline




– Fractionation facility


Worland Gathering System

15


Matli Gathering System

Announced construction of a new natural gas plant

– 25 MMcf/d of capacity

– Additional capacity for increased system volumes

– $2.8 million capex

– Expected to be operational 4Q 2006

Major Gas Suppliers:– CRI– Range



– Currently, 10,000 Mcf/d processing plant capacity



16


Eagle Chief Gathering System

Announced expansion of pipeline and compression facilities in Aug. 2006

– Increase system capacity to ~35,500 Mcf/d

– Expected to be completed by 4Q 2006

Major Gas Suppliers:– Chesapeake– CRI





17

Execution of Business StrategyKinta Gathering System

Acquired for $93 million effective May 1, 2006

Fixed fee contracts

Installation of four amine-treating facilities

– Removes excess CO2 from gas


Additional compression facilities to increase capacity by 11,000 Mcf/d


Major Gas Suppliers:– BP America– Chesapeake– Chevron

Operating Highlights– Five gathering systems

– 572 miles of pipeline


– Gathering approximately 137,000 Mcf/d (avg. May – September 2006)


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Project Summary Time Line

10/1/06 11/1/06 12/1/06 1/1/07 2/1/07 3/1/07 4/1/07 5/1/07

Kinta CompressorProject

NE Wildlife Treating Facility

(Kinta)

Eagle Chief Expansion Project

Bakken Compression

Project

Matli Processing

Plant

Badlands Gathering Expansion

Bakken Rail Spur

(Fully Operational)

Badlands Processing Plant

Bakken Frac Train Expansion

Dow Treating Facility (Kinta)

Harthshorne Treating Facility

(Kinta)

Panther Mountain Treating Facility

(Kinta)

November 16, 2006

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Midstream Segment Contract Mix

Eagle Chief

Matli

Worland

Badlands - 100.0% Fixed Fee

- 59.8% POP- 36.8% POI- 3.4% Fixed Fee

- 95.7% POI- 4.3% Fixed Fee

Total Inlet Volumes (MMBtu/d)(1) Total System Margin(1)

Bakken

For 2006, 50% of HLND’s gross margin is either hedged or subject to fixed-fee arrangements

For 2007 and 2008, 75% of HLND’s gross margin is either hedged or subject to fixed-fee arrangements

Fixed-Fee65.8% (2)

Percent of Index8.4%

Percent ofProceeds25.8%

- 100% POP

Kinta- 100.0%POP

- 100% Fixed Fee

__________________1. Represents data for the nine months ended September 30, 2006.2. Includes both fixed-fee purchase arrangements and fixed-fee gathering arrangements.

Financial Overview

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HLND Operational and Financial Highlights

Natural Gas Sales (MMBtu/d)

31,148

41,457 44,063 47,096

64,796

0

20,000

40,000

60,000

80,000

2002 2003 2004 2005 9/30/06

CAGR=20%

NGL Sales (Bbls/d)

1,232 1,1771,437

1,965

3,256

0

1,000

2,000

3,000

4,000

2002 2003 2004 2005 9/30/06

CAGR=28%

__________________Note: Historical 2002-2004 data reflects the combined results of Hiland’s predecessor and Hiland Partners, LLC.1. EBITDA is defined as a net income (loss) plus interest expense, provision for income taxes and depreciation, amortization and accretion expense.

CAGR=64%

Revenues

$40,952

$86,580

$112,631

$166,601 $163,415

0

50,000

100,000

150,000

200,000

2002 2003 2004 2005 389909 monthsended

9/30/2006

CAGR=60%

EBITDA (1)

$5,383

$10,446

$17,402

$23,875

$30,879

0

10,000

20,000

30,000

40,000

2002 2003 2004 2005 389909 monthsended

9/30/2006

22

Strong Balance Sheet

• HLND has $65.9 million of available capacity under its existing $200 million credit facility

September 30, 2006

Book Value Capitalization Ratio(unaudited - $’s in 000’s)

Capitalization:

Total debt $134,064 43.9%

Total partners’ capital 171,248 56.1%

Total capitalization $305,312 100.0%

23

Comparable MLPs

• HLND has demonstrated strong distribution growth in the past andhas significant potential to grow in the future relative to peers

Relative Market Capitalization (1)

0

2,000

4,000

6,000

8,000

10,000

12,000

EPD ETP VLI MMP BPL XTEX NRGY ARLP PVR APL HLND

Equ

ity

Ma

rket

Cap

($

mill

ions

)

MLP Distribution Growth – LTM (2)

50%

37%

23% 21%

12% 11%7% 7% 7% 7% 5%

0%

10%

20%

30%

40%

50%

60%

ETP HLND PVR ARLP XTEX MMP VLI EPD BPL NRGY APL

% I

ncre

ase

in D

istr

ibut

ion

__________________1. Market capitalization based on closing unit prices as of November 6, 2006.2. LTM as of 9/30/06.

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