Crestwood Equity Announces Second Quarter 2014 Financial and Operating Results

  Crestwood Equity Announces Second Quarter 2014 Financial and Operating
  Results

Business Wire

HOUSTON -- August 6, 2014

Crestwood Equity Partners LP (NYSE: CEQP) (“Crestwood Equity” or “CEQP”)
reported today its financial results for the three months ended June 30, 2014.

Crestwood Equity owns the general partner interest of Crestwood Midstream
Partners LP (NYSE: CMLP) (“Crestwood Midstream” or “CMLP”). Crestwood
Midstream owns the majority of the assets of the consolidated results herein.
Crestwood Equity directly owns an NGL supply and logistics business and the
Tres Palacios natural gas storage facility. Crestwood Midstream today issued a
separate news release reporting stand-alone results for its operations.

“Results for Crestwood Equity’s stand-alone operations in the second quarter
2014 were below the first quarter due to a combination of factors, including a
lower seasonal quarterly contribution from our NGL supply and logistics
business, and an operating loss at our Tres Palacios gas storage facility in
Texas,” stated Robert G. Phillips, Chairman, President and Chief Executive
Officer of Crestwood’s general partner. “Additionally, CMLP’s decision to
delay its increase in quarterly distributions as it improves its coverage
ratio had an impact on CEQP’s coverage ratio,” commented Phillips.

Second Quarter 2014 Financial Highlights ^(1) (2)

  *Crestwood Equity reported adjusted earnings before interest, taxes,
    depreciation, amortization and accretion (“Adjusted EBITDA”) for the
    second quarter 2014 of $117.7 million, compared with Adjusted EBITDA of
    $116.6 million in the first quarter 2014.

       *Assets owned by CMLP contributed Adjusted EBITDA of $109.7 million
         for the second quarter 2014, compared to $98.9 million in the first
         quarter 2014.
       *Assets owned by CEQP contributed Adjusted EBITDA of $8.0 million for
         the second quarter 2014, compared to $17.7 million in the first
         quarter. The $9.7 million decrease was primarily attributable to
         lower seasonal volumes and margin contribution of $6.3 million from
         our NGL supply and logistics business and a $3.6 million lower
         contribution from our Tres Palacios asset which was the result of the
         expiration of historical firm gas storage contracts on March 31,
         2014.

  *Crestwood Equity reported a net loss of $4.8 million for the second
    quarter 2014, which included a $6.5 million non-cash accrual related to an
    earn-out premium associated with the acquisition of the Marcellus
    gathering system from Antero Resources (“Antero”) in 2012.
  *Crestwood Equity reported distributable cash flow attributable to its
    operations of $13.4 million for the second quarter 2014, compared to $19.7
    million in the first quarter 2014. The decrease was primarily due to lower
    Adjusted EBITDA, partially offset by lower maintenance capital spending
    attributable to CEQP assets.

“Following normal seasonal patterns, demand for LPG products was greatly
reduced in the second quarter 2014 as compared to the record winter of
2013/14, which resulted in a quarterly decrease in Crestwood Equity’s NGL
volumes sold, processed and transported from the first quarter 2014. As a
result of the lower seasonal demand and growing supply in the second quarter,
prices for propane and butane (which are our primary sales, storage and
transportation LPG products) declined in the quarter and resulted in lower
seasonal spreads. These factors along with temporary infrastructure
disruptions of some NGL supply volumes in the Marcellus/Utica region affected
our second quarter 2014 marketing and trucking results. We expect normal
seasonal demand and our growing NGL supply position in the Marcellus/Utica
region to increase in the third and fourth quarters as new supply dedicated to
Crestwood Equity under long-term contracts with customers is made available
for marketing and transportation,” stated Phillips.

“At Tres Palacios, demand for Gulf Coast storage service continues to be at
record lows primarily due to continued weakening of gas price volatility and
seasonal spreads caused largely by the ongoing regional oversupply of natural
gas relative to demand. We do expect to see improvement in storage
fundamentals and demand for storage services at Tres Palacios as regional gas
demand grows along with a ramp up in LNG exports and Mexico natural gas demand
over the next few years. Additionally, despite CMLP’s quarter-to-quarter
improvement in Adjusted EBITDA and distributable cash flow and achieving
record natural gas and crude oil volumes, CMLP held its cash distributions
flat in the second quarter 2014 to improve its coverage ratio. CMLP’s coverage
ratio improved from 0.83 times in the first quarter 2014 to 0.96 times in the
second quarter, moving it substantially closer to its coverage goal above 1.0
times. We believe that CMLP’s continued improvement will lead to the
resumption of quarterly increases of its distributions which will quickly
improve CEQP’s distribution coverage ratio and enable the resumption of
quarterly distributions at CEQP,” commented Phillips.

Second Quarter 2014 Operating Results and Outlook

Gathering and processing segment EBITDA totaled $51.0 million in the second
quarter 2014, compared with $48.2 million in the first quarter 2014, excluding
the impact of the non-cash accrual for the Antero earn-out. Gathering volumes
increased 7% to 1,213 million cubic feet per day (“MMcf/d”) in the second
quarter 2014 compared to first quarter. The increase in gathering volumes was
largely due to increased production in the Marcellus Shale and in the dry gas
areas in the Barnett Shale. All of the assets included in the gathering and
processing segment are owned by CMLP.

Storage and transportation segment reported consolidated EBITDA of $34.9
million during the second quarter 2014, compared with $38.0 million in the
first quarter 2014. Segment EBITDA attributable to assets owned by CMLP
totaled $37.8 million during the second quarter, compared with $36.8 million
during the first quarter 2014 primarily attributable to higher storage and
transportation volumes and margins from CMLP’s northeast natural gas storage
and pipeline assets.

CEQP’s Tres Palacios storage and transportation asset contributed a loss of
$2.3 million to consolidated segment EBITDA during the second quarter. The
loss was attributable to a combination of factors including the expiration of
11 billion cubic feet (“Bcf”) of long-term firm storage contracts on March 31,
2014, and a slight reduction in hub services during the quarter each due to a
lack of demand for Gulf Coast storage services prompted by continued weakening
of storage fundamentals in 2014. Mitigating that loss to a certain extent,
CEQP sold approximately 4 Bcf of new firm storage services contracts during
the second quarter 2014 with terms of one to two years at current market rates
which were substantially below the rates paid by customers under the expired
contracts. CEQP continues to evaluate a wide range of near-term and long-term
development options for the Tres Palacios facility and expects to receive a
decision on our capacity abandonment application from the Federal Energy
Regulatory Commission in the second half of 2014.

NGL and crude services segment reported consolidated EBITDA, excluding
non-cash fair value adjustments on commodity inventory-based derivative
contracts, of $46.7 million during the second quarter 2014, a 4% increase from
$45.0 million in the first quarter 2014. Assets owned by CMLP contributed
$34.7 million during the second quarter, a 32% increase from the $26.3 million
contributed during the first quarter 2014. The increase was primarily
attributable to improved performance from the Bakken assets including
increased crude, gas and water gathering volumes on the Arrow system and
increased crude oil rail loading volumes at the COLT Hub.

CEQP’s NGL and crude services assets contributed $12.0 million in the second
quarter compared to $18.7 million in the first quarter 2014. The $6.7 million
decrease in contribution from CEQP’s NGL supply and logistics business was due
primarily to a seasonal decrease in volumes sold, processed and transported,
offset by slightly higher per unit margins in some areas of the business. CEQP
expects demand for LPG products to increase in the third and fourth quarters
based upon normal seasonal weather patterns. In the Marcellus and Utica Shale
plays, we continue to enter into long-term supply agreements with producers,
processors and fractionators for NGL volumes which are expected to grow
substantially in the years ahead as critical infrastructure is built.

Corporate expenses include general and administrative expenses not allocated
to the operating segments above. Corporate expenses attributable to CMLP and
CEQP totaled $21.3 million and $2.7 million, respectively, during the second
quarter 2014, compared with $24.1 million and $3.7 million, respectively,
during the first quarter 2014. Second quarter 2014 results included $6.2
million of non-cash compensation expense and $2.2 million of significant
transaction-related expenses, compared to $5.4 million and $6.5 million,
respectively, during the first quarter 2014.

2014 Guidance

The information provided below relates to operating assets owned directly by
CEQP. CMLP today issued a separate news release containing an updated 2014
business outlook for its operating assets.

CEQP issued original 2014 guidance including stand-alone Adjusted EBITDA in a
range of $55 million to $60 million and distributable cash flow in a range of
$85 million to $95 million inclusive of distributions received from CMLP.
During the first half of 2014, CEQP’s Adjusted EBITDA from its operating
assets totaled $25.7 million, including a $17.7 million contribution in the
first quarter and a seasonally lower $8.0 million contribution in the second
quarter. During the first half of 2014, CMLP did not increase its quarterly
distributions due to its goal to improve its distributable cash flow coverage
ratio to above 1.0 times before resuming quarterly distribution increases. As
noted above, CMLP significantly improved its coverage ratio to 0.96 times in
the second quarter.

Based upon CEQP’s operating performance in the first half of 2014 and current
operating assumptions for the second half of 2014, CEQP is revising its range
of full year Adjusted EBITDA contribution of its operating assets to $50
million to $55 million, largely attributable to the expectation of a minimal
contribution from Tres Palacios during the remainder of 2014, offset by a
seasonal improvement in CEQP’s NGL supply and logistics business.
Notwithstanding the modest decrease in revised 2014 Adjusted EBITDA guidance,
CEQP depends on CMLP distributions for approximately 30-35% of its expected
distributable cash flow. Due to CMLP’s current objective of coverage ratio
improvement before resuming quarterly distribution increases, CEQP has
determined that it is prudent to revise its full year 2014 distributable cash
flow to a range of $65 million to $70 million. Given CMLP’s positive second
quarter performance resulting in an improved coverage ratio, an increase in
CMLP distributions in the second half of 2014 would have a positive impact on
CEQP’s coverage ratio, and would lead the way to an ultimate resumption of
distribution increases at CEQP, which benefits from the 50/50 incentive
distribution structure from CMLP’s underlying business which is clearly on a
path to improvement.

Liquidity and Capital Spending

At June 30, 2014, debt outstanding was primarily composed of $1,461 million of
fixed-rate senior notes issued primarily by Crestwood Midstream, approximately
$412 million outstanding under Crestwood Midstream’s revolving credit facility
and $404 million outstanding under Crestwood Equity’s revolving credit
facility.

Organic growth capital expenditures and joint venture contributions for the
six months ended June 30, 2014, totaled approximately $194.1 million, of which
$191.0 million was attributable to CMLP. The majority of capital spending was
related to construction of pipeline laterals and compression equipment in the
Marcellus Shale, expansion of the COLT Hub and Arrow gathering system in the
Bakken Shale, and capital contributions to Jackalope Gas Gathering for
construction of the Bucking Horse processing facility in the PRB Niobrara.

Conference Call

Management will host a conference call for investors and analysts of Crestwood
Equity and Crestwood Midstream today at 9:00 a.m. Eastern Time (8:00 a.m.
Central Time) which will be broadcast live over the Internet. Investors may
participate in the call either by phone or audio webcast.

By Phone: Dial 719-457-2689 at least 10 minutes before the call and ask for
the Crestwood Earnings Call. A replay will be available until August 20, 2014
by dialing 888-203-1112 and using the access code 7830581#.

By Webcast: Connect to the webcast via the “Presentations” page in the
Investor Relations section of Crestwood’s website at www.crestwoodlp.com.
Please log in at least 10 minutes in advance to register and download any
necessary software. A replay will be available shortly after the call for 90
days.

Non-GAAP Financial Measures

Adjusted EBITDA and distributable cash flow are non-GAAP financial measures.
The accompanying schedules of this news release provide reconciliations of
these non-GAAP financial measures to their most directly comparable financial
measures calculated and presented in accordance with GAAP. Our non-GAAP
financial measures should not be considered as alternatives to GAAP measures
such as net income or operating income or any other GAAP measure of liquidity
or financial performance.

Forward-Looking Statements

The statements in this news release regarding future events, occurrences,
circumstances, activities, performance, outcomes and results are
forward-looking statements. Although these statements reflect the current
views, assumptions and expectations of Crestwood’s management, the matters
addressed herein are subject to numerous risks and uncertainties which could
cause actual activities, performance, outcomes and results to differ
materially from those indicated. Such forward-looking statements include, but
are not limited to, statements about the future financial and operating
results, objectives, expectations and intentions and other statements that are
not historical facts. Factors that could result in such differences or
otherwise materially affect Crestwood’s financial condition, results of
operations and cash flows include, without limitation, the possibility that
expected synergies will not be realized, or will not be realized within the
expected timeframe; fluctuations in crude oil, natural gas and NGL prices; the
extent and success of drilling efforts, as well as the extent and quality of
natural gas and crude oil volumes produced within proximity of Crestwood
assets; failure or delays by customers in achieving expected production in
their oil and gas projects; competitive conditions in the industry and their
impact on our ability to connect supplies to Crestwood gathering, processing
and transportation assets or systems; actions or inactions taken or
non-performance by third parties, including suppliers, contractors, operators,
processors, transporters and customers; the ability of Crestwood to consummate
acquisitions, successfully integrate the acquired businesses, realize any cost
savings and other synergies from any acquisition; changes in the availability
and cost of capital; operating hazards, natural disasters, weather-related
delays, casualty losses and other matters beyond Crestwood’s control; timely
receipt of necessary government approvals and permits, the ability of
Crestwood to control the costs of construction, including costs of materials,
labor and right-of-way and other factors that may impact Crestwood’s ability
to complete projects within budget and on schedule; the effects of existing
and future laws and governmental regulations, including environmental and
climate change requirements; the effects of existing and future litigation;
and risks related to the substantial indebtedness, of either company, as well
as other factors disclosed in Crestwood Equity’s and Crestwood Midstream’s
filings with the U.S. Securities and Exchange Commission. You should read
filings made by Crestwood with the U.S. Securities and Exchange Commission,
including Annual Reports on Form 10-K and the most recent Quarterly Reports
and Current Reports for a more extensive list of factors that could affect
results. Readers are cautioned not to place undue reliance on forward-looking
statements, which reflect management’s view only as of the date made.
Crestwood does not assume any obligation to update these forward-looking
statements.

About Crestwood Midstream Partners LP

Houston, Texas, based Crestwood Midstream (NYSE: CMLP) is a master limited
partnership that owns and operates midstream businesses in multiple
unconventional shale resource plays across the United States. Crestwood
Midstream is engaged in the gathering, processing, treating, compression,
storage and transportation of natural gas; storage, transportation and
terminalling of NGLs; and gathering, storage, terminalling and marketing of
crude oil.

About Crestwood Equity Partners LP

Houston, Texas, based Crestwood Equity (NYSE: CEQP) is a master limited
partnership that owns the general partner interest, the incentive distribution
rights and an approximate 4% limited partner interest of Crestwood Midstream.
In addition, Crestwood Equity’s operations include a natural gas storage
business in Texas and an NGL supply and logistics business that serves
customers in the United States and Canada.

^(1) Given the accounting treatment of Crestwood Holdings’ acquisition of
Crestwood Equity’s general partner in June 2013, Crestwood Equity has, where
appropriate, compared second quarter 2014 financial and operating results to
first quarter 2014 results for purposes of providing more meaningful
disclosure to investors.

^(2) Adjusted EBITDA and distributable cash flow are non-GAAP measures. Please
refer to the financial tables accompanying this release for reconciliation to
GAAP.

CRESTWOOD EQUITY PARTNERS LP (FORMERLY INERGY, L.P.)
Consolidated Statements of Operations (in millions, except unit and per unit
data)
(unaudited)

                      Three Months Ended     Six Months Ended       Three
                                                                 Months
                      June 30,               June 30,               Ended
                                                                    March 31,
                      2014       2013(a)    2014       2013(a)    2014
Revenues:
Gathering and         $ 82.7      $ 46.5     $ 161.3     $ 93.3     $  78.6
processing
Storage and           47.8        6.3        98.8        6.3        51.0
transportation
NGL and crude         795.1       41.5       1,636.2     41.5       841.1
services
Related party         0.7        24.6      1.6        50.2      0.9      
                      926.3       118.9      1,897.9     191.3      971.6
Costs of
product/services
sold (excluding
depreciation,
amortization and
accretion as shown
below):
Gathering and         7.8         6.2        15.5        12.9       7.7
processing
Storage and           7.2         0.6        14.0        0.6        6.8
transportation
NGL and crude         722.8       37.4       1,483.3     37.4       760.5
services
Related party         9.8        7.8       20.8       14.6      11.0     
                      747.6       52.0       1,533.6     65.5       786.0
Expenses:
Operations and        48.7        15.3       92.8        28.3       44.1
maintenance
General and           24.1        15.8       52.0        23.6       27.9
administrative
Depreciation,
amortization and      71.2       28.0      137.5      50.4      66.3     
accretion
                      144.0       59.1       282.3       102.3      138.3
Other operating income
(expense):
Gain on long-lived    1.2         —          1.7         —          0.5
assets
Loss on contingent    (6.5    )   —         (8.6    )   —         (2.1     )
consideration
Operating income      29.4        7.8        75.1        23.5       45.7
Loss from
unconsolidated        (1.5    )   —          (1.6    )   —          (0.1     )
affiliates, net
Interest and debt     (32.6   )   (12.0  )   (64.3   )   (23.4  )   (31.7    )
expense, net
Other income          0.1        —         0.2        —         0.1      
Income (loss)         (4.6    )   (4.2   )   9.4         0.1        14.0
before income taxes
Provision for         0.2        0.3       1.0        0.7       0.8      
income taxes
Net income (loss)     (4.8    )   (4.5   )   8.4         (0.6   )   13.2
Net loss
attributable to       0.4        6.1       6.8        7.3       6.4      
non-controlling
partners
Net income (loss)
attributable to       $ (4.4  )   $ 1.6     $ 15.2     $ 6.7     $  19.6  
Crestwood Equity
Partners LP
                                                                             
Subordinated
unitholders'          $ (0.1  )   $ 0.1     $ 0.4      $ 0.6     $  0.5   
interest in net
income
Common unitholders'
interest in net       $ (4.3  )   $ 1.5     $ 14.8     $ 6.1     $  19.1  
income
                                                                             
Net income (loss)
per limited partner
unit:
Basic                 $ (0.02 )   $ 0.03    $ 0.08     $ 0.14    $  0.11  
Diluted               $ (0.02 )   $ 0.03    $ 0.08     $ 0.14    $  0.11  
                                                                             
Weighted-average
limited partners’
units outstanding
(in thousands):
Basic                 182,116     52,459     182,001     43,829     181,885
Dilutive units        4,388      4,388     4,388      4,388     4,388    
Diluted               186,504    56,847    186,389    48,217    186,273  
                                                                             

^(a) Financial data presented for the three and six months ended June 30, 2013
reflects the operations of Legacy Crestwood GP for the entire period, and the
operations of Legacy Inergy from June 19, 2013 to June 30, 2013. This
presentation is required under U.S. Generally Accepted Accounting Principles
(“GAAP”). We have also compared second quarter 2014 results to first quarter
2014 for purposes of providing more meaningful disclosure to investors.

CRESTWOOD EQUITY PARTNERS LP (FORMERLY INERGY, L.P.)
Selected Balance Sheet Data
(in millions)

                                            June 30, 2014  December 31, 2013
                                             (unaudited)
                                                             
Cash and cash equivalents                    $  18.2         $     5.2
                                                             
Outstanding debt:
                                                             
Crestwood Equity Partners LP ^(a)
Revolving credit facility                    $  403.5        $     381.0
Senior notes                                 11.4            11.4
Other                                        2.9            2.8
Subtotal                                     $  417.8        $     395.2
                                                             
Crestwood Midstream Partners LP ^(b)
Revolving credit facility                    $  412.3        $     414.9
Senior notes                                 1,450.0         1,450.0
Other                                        8.9            5.9
Subtotal                                     $  1,871.2      $     1,870.8
                                                             
Total debt                                   $  2,289.0     $     2,266.0
                                                             
Total partners' capital                      $  5,637.1     $     5,508.6
                                                             
Crestwood Equity Partners LP partners'
capital
                                                             
Limited partner units outstanding            186.4           185.3
                                                             

^(a) Crestwood Midstream and its subsidiaries do not provide credit support or
guarantee any amounts outstanding under CEQP’s credit facility or senior
notes.

^(b) CEQP and its subsidiaries do not provide credit support or guarantee any
amounts outstanding under the credit facility or senior notes of Crestwood
Midstream.

CRESTWOOD EQUITY PARTNERS LP (FORMERLY INERGY, L.P.)
Reconciliation of Non-GAAP Financial Measures
(in millions)
(unaudited)

                                                                     Three
                    Three Months Ended      Six Months Ended      Months
                     June 30,                 June 30,               Ended
                                                                     March 31,
                     2014         2013       2014       2013       2014
EBITDA
Net income (loss)    $  (4.8   )   $ (4.5 )   $ 8.4       $ (0.6 )   $ 13.2
Interest and debt    32.6          12.0       64.3        23.4       31.7
expense, net
Provision for        0.2           0.3        1.0         0.7        0.8
income taxes
Depreciation,
amortization and     71.2         28.0      137.5      50.4      66.3    
accretion
EBITDA ^(a)          $  99.2       $ 35.8     $ 211.2     $ 73.9     $ 112.0
Significant items
impacting EBITDA:
Non-cash equity
compensation         6.2           1.4        11.6        2.0        5.4
expense
Gain on long-lived   (1.2      )   —          (1.7    )   —          (0.5    )
assets
Loss on contingent   6.5           —          8.6         —          2.1
consideration
Loss from
unconsolidated       1.5           —          1.6         —          0.1
affiliates, net
Adjusted EBITDA
from                 0.4           —          2.1         —          1.7
unconsolidated
affiliates
Change in fair
value of commodity
inventory-related    2.9           1.6        (7.8    )   1.6        (10.7   )
derivative
contracts
Significant
transaction          2.2          9.0       8.7        9.7       6.5     
related costs and
other items
Adjusted EBITDA      $  117.7      $ 47.8     $ 234.3     $ 87.2     $ 116.6
^(a)
                                                                             
Distributable Cash
Flow
Adjusted EBITDA      $  117.7      $ 47.8     $ 234.3     $ 87.2     $ 116.6
^(a)
Cash interest        (31.2     )   (11.8  )   (61.6   )   (22.2  )   (30.4   )
expense ^(b)
Maintenance
capital              (5.5      )   (2.1   )   (11.9   )   (3.0   )   (6.4    )
expenditures ^(c)
Provision for        (0.2      )   (0.3   )   (1.0    )   (0.7   )   (0.8    )
income taxes
Deficiency payment   3.8           —          4.9         —          1.1
Public Crestwood
Midstream LP
unitholders          (71.2     )   (24.9  )   (131.6  )   (47.7  )   (60.4   )
interest in CMLP
distributable cash
flow ^(d)
Distributable cash
flow attributable    $  13.4       $ 8.7      $ 33.1      $ 13.6     $ 19.7
to CEQP ^(e)
                                                                             

^(a) EBITDA is defined as income before income taxes, plus net interest and
debt expense, and depreciation, amortization and accretion expense. In
addition, Adjusted EBITDA considers the adjusted earnings impact of our
unconsolidated affiliates by adjusting our equity earnings or losses from our
unconsolidated affiliates for our proportionate share of their depreciation
and interest, the impact of certain significant items, such as non-cash equity
compensation expenses, gains and impairments of long-lived assets and
goodwill, third party costs incurred related to potential and completed
acquisitions, loss on contingent consideration, and other transactions
identified in a specific reporting period. EBITDA and Adjusted EBITDA are not
measures calculated in accordance with accounting principles generally
accepted in the United States of America (GAAP), as they do not include
deductions for items such as depreciation, amortization and accretion,
interest and income taxes, which are necessary to maintain our business.
EBITDA and Adjusted EBITDA should not be considered an alternative to net
income, operating cash flow or any other measure of financial performance
presented in accordance with GAAP. EBITDA and Adjusted EBITDA calculations may
vary among entities, so our computation may not be comparable to measures used
by other companies.

^(b) Cash interest expense less amortization of deferred financing costs plus
bond premium amortization plus or minus fair value adjustment of interest rate
swaps.

^(c) Maintenance capital expenditures are defined as those capital
expenditures which do not increase operating capacity or revenues from
existing levels.

^(d) Crestwood Midstream distributable cash flow less incentive distributions
paid to the general partner and the public LP ownership interest in Crestwood
Midstream.

^(e) Distributable cash flow is defined as Adjusted EBITDA, less cash interest
expense, maintenance capital expenditures, income taxes, deficiency payments
(primarily related to deferred revenue), and public Crestwood Midstream LP
unitholders interest in CMLP distributable cash flow. Distributable cash flow
should not be considered an alternative to cash flows from operating
activities or any other measure of financial performance calculated in
accordance with generally accepted accounting principles as those items are
used to measure operating performance, liquidity, or the ability to service
debt obligations. We believe that distributable cash flow provides additional
information for evaluating our ability to declare and pay distributions to
unitholders. Distributable cash flow, as we define it, may not be comparable
to distributable cash flow or similarly titled measures used by other
corporations and partnerships.

CRESTWOOD EQUITY PARTNERS LP (FORMERLY INERGY, L.P.)
Reconciliation of Non-GAAP Financial Measures
(in millions)
(unaudited)

                                                                     Three
                    Three Months Ended      Six Months Ended      Months
                     June 30,                 June 30,               Ended
                                                                     March 31,
                     2014         2013       2014       2013       2014
EBITDA
Net cash provided
by operating         $  39.2       $ 23.3     $ 111.5     $ 57.4     $ 72.3
activities
Net changes in
operating assets     41.1          1.9        53.1        (4.3   )   12.0
and liabilities
Amortization of
debt-related
deferred costs,      (2.0      )   (1.1   )   (3.9    )   (2.1   )   (1.9    )
discounts and
premiums
Interest and debt    32.6          12.0       64.3        23.4       31.7
expense, net
Market adjustment
on interest rate     0.6           0.9        1.2         0.9        0.6
swap
Non-cash equity
compensation         (6.2      )   (1.4   )   (11.6   )   (2.0   )   (5.4    )
expense
Gain on long-lived   1.2           —          1.7         —          0.5
assets
Loss on contingent   (6.5      )   —          (8.6    )   —          (2.1    )
consideration
Loss from
unconsolidated       (1.5      )   —          (1.6    )   —          (0.1    )
affiliates, net
Deferred income      0.3           —          4.1         —          3.8
taxes
Provision for        0.2           0.3        1.0         0.7        0.8
income taxes
Other non-cash       0.2          (0.1   )   —          (0.1   )   (0.2    )
income (expense)
EBITDA ^(a)          $  99.2       $ 35.8     $ 211.2     $ 73.9     $ 112.0
Non-cash equity
compensation         6.2           1.4        11.6        2.0        5.4
expense
Gain on long-lived   (1.2      )   —          (1.7    )   —          (0.5    )
assets
Loss on contingent   6.5           —          8.6         —          2.1
consideration
Loss from
unconsolidated       1.5           —          1.6         —          0.1
affiliates, net
Adjusted EBITDA
from                 0.4           —          2.1         —          1.7
unconsolidated
affiliates
Change in fair
value of commodity
inventory-related    2.9           1.6        (7.8    )   1.6        (10.7   )
derivative
contracts
Significant
transaction          2.2          9.0       8.7        9.7       6.5     
related costs and
other items
Adjusted EBITDA      $  117.7      $ 47.8     $ 234.3     $ 87.2     $ 116.6
^(a)
                                                                             

^(a) EBITDA is defined as income before income taxes, plus net interest and
debt expense, and depreciation, amortization and accretion expense. In
addition, Adjusted EBITDA considers the adjusted earnings impact of our
unconsolidated affiliates by adjusting our equity earnings or losses from our
unconsolidated affiliates for our proportionate share of their depreciation
and interest, the impact of certain significant items, such as non-cash equity
compensation expenses, gains and impairments of long-lived assets and
goodwill, third party costs incurred related to potential and completed
acquisitions, gain or loss on contingent consideration, and other transactions
identified in a specific reporting period. EBITDA and Adjusted EBITDA are not
measures calculated in accordance with accounting principles generally
accepted in the United States of America (GAAP), as they do not include
deductions for items such as depreciation, amortization and accretion,
interest and income taxes, which are necessary to maintain our business.
EBITDA and Adjusted EBITDA should not be considered an alternative to net
income, operating cash flow or any other measure of financial performance
presented in accordance with GAAP. EBITDA and Adjusted EBITDA calculations may
vary among entities, so our computation may not be comparable to measures used
by other companies.

CRESTWOOD EQUITY PARTNERS LP (FORMERLY INERGY, L.P.)
Segment Data
(in millions)
(unaudited)

                                                                     Three
                  Three Months Ended      Six Months Ended June    Months
                  June 30,                 30,                       Ended
                                                                     March 31,
                  2014         2013       2014         2013        2014
Gathering and
Processing
Operating         $  83.4       $ 71.1     $ 162.9       $ 143.5     $ 79.5
revenues
Costs of
product/services  17.6          14.0       36.3          27.5        18.7
sold
Operations and
maintenance       14.7          12.6       28.1          25.6        13.4
expense
Gain on           0.5           —          1.0           —           0.5
long-lived assets
Loss on
contingent        (6.5      )   —          (8.6      )   —           (2.1    )
consideration
Earnings (loss)
from              (0.6      )   —         (0.3      )   —          0.3     
unconsolidated
affiliate
EBITDA            $  44.5       $ 44.5     $ 90.6        $ 90.4      $ 46.1
                                                                             
Storage and
Transportation
Operating         $  47.8       $ 6.3      $ 98.8        $ 6.3       $ 51.0
revenues
Costs of
product/services  7.2           0.6        14.0          0.6         6.8
sold
Operations and
maintenance       6.3           0.9        12.5          0.9         6.2
expense
Gain on           0.6          —         0.6          —          —       
long-lived assets
EBITDA            $  34.9       $ 4.8      $ 72.9        $ 4.8       $ 38.0
                                                                             
NGL and Crude
Services
Operating         $  795.1      $ 41.5     $ 1,636.2     $ 41.5      $ 841.1
revenues
Costs of
product/services  722.8         37.4       1,483.3       37.4        760.5
sold
Operations and
maintenance       27.7          1.8        52.2          1.8         24.5
expense
Gain on           0.1           —          0.1           —           —
long-lived assets
Loss from
unconsolidated    (0.9      )   —         (1.3      )   —          (0.4    )
affiliate
EBITDA            $  43.8       $ 2.3      $ 99.5        $ 2.3       $ 55.7
                                                                             
Total Segment     $  123.2      $ 51.6     $ 263.0       $ 97.5      $ 139.8
EBITDA
Corporate         (24.0     )   (15.8  )   (51.8     )   (23.6   )   (27.8   )
EBITDA            $  99.2      $ 35.8    $ 211.2      $ 73.9     $ 112.0 
                                                                             

CRESTWOOD EQUITY PARTNERS LP (FORMERLY INERGY, L.P.)
Operating Statistics
(unaudited)

                                                                     Three
                 Three Months Ended June   Six Months Ended June  Months
                  30,                        30,                     Ended
                                                                     March 31,
                  2014          2013        2014         2013      2014
Gathering and
Processing
(MMcf/d)
Marcellus         584.7          415.0       558.0         396.0     531.0
Barnett rich      174.8          203.9       174.6         207.5     174.3
Barnett dry       264.1          233.9       238.5         235.7     212.7
Fayetteville      102.2          84.6        107.5         83.7      112.8
PRB Niobrara -
Jackalope Gas     44.2           —           48.5          —         52.9
Gathering^(a)
Other             43.2          55.4       44.4         60.9     45.6    
Total gathering   1,213.2        992.8       1,171.5       983.8     1,129.3
volumes
Processing        190.9          217.3       190.1         220.7     189.4
volumes
Compression       470.5          284.4       459.3         277.1     448.0
volumes
                                                                             
Storage and
Transportation
Northeast
Storage
Storage
capacity, 100%    34.8           —           34.8          —         34.8
firm contracted
(Bcf)
Firm storage
services          474.0          —           480.1         —         486.2
(MMcf/d)
Interruptible
storage           23.1           —           45.0          —         66.9
services
(MMcf/d)
Northeast
Transportation
- firm            955.0          —           915.0         —         875.0
contracted
capacity
(MMcf/d)
% of
operational       100      %     —      %    100      %    —     %   100     %
capacity
contracted
Firm services     1,072.0        —           982.7         —         893.3
(MMcf/d)
Interruptible
services          237.7          —           311.7         —         385.6
(MMcf/d)
Gulf Coast
Storage - firm    7.5            —           12.2          —         16.8
contracted
capacity (Bcf)
% of
operational       20       %     —      %    32       %    —     %   42      %
capacity
contracted
                                                                             
NGL and Crude
Services
Arrow Midstream
Crude oil         55.8           —           50.0          —         44.1
(MBbls/d)
Natural gas       29.0           —           24.6          —         20.2
(MMcf/d)
Water (MBbls/d)   19.0           —           15.7          —         12.4
COLT Hub
Rail loading      111.6          —           104.8         —         98.1
(MBbls/d)
NGL Operations
Storage
capacity, 100%    1,500.0        —           1,500.0       —         1,500.0
contracted
(MBbls)
Supply &
Logistics         227.1          —           615.5         —         388.4
gallons sold
(millions)
West Coast
gallons sold or   167.1          —           320.9         —         153.8
processed
(millions)
NGL gallons
transported       241.1          —           621.0         —         379.9
(millions)
                                                                             

^(a) Represents 50% owned joint venture, operational data reported at 100%.

CRESTWOOD EQUITY PARTNERS LP (FORMERLY INERGY, L.P.)
Full Year 2014 Adjusted EBITDA and Distributable Cash Flow Guidance
Reconciliation to Net Income
(in millions)
(unaudited)
                                                             
Net income                                                     $115 - $140
Interest and debt expense, net                                 $135
Depreciation, amortization and accretion                       $240
Adjusted EBITDA                                                $490 - $515
                                                               
Cash interest expense ^ (a)                                    ($115)
Maintenance capital expenditures ^(b)                          ($25)
Public Crestwood Midstream LP unitholders interest in CMLP     ($285) - ($305)
distributable cash flow ^(c)
Distributable cash flow attributable to CEQP ^(d)              $65 - $70
                                                               

^(a) Cash interest expense less amortization of deferred financing costs plus
bond premium amortization plus or minus fair value adjustment of interest rate
swaps.

^(b) Maintenance capital expenditures are defined as those capital
expenditures which do not increase operating capacity or revenues from
existing levels.

^(c) Crestwood Midstream distributable cash flow less incentive distributions
paid to the general partner and the public LP ownership interest in Crestwood
Midstream.

^(d) Distributable cash flow is defined as Adjusted EBITDA, less cash interest
expense, maintenance capital expenditures, income taxes, deficiency payments
(primarily related to deferred revenue), and public Crestwood Midstream LP
unitholders interest in CMLP distributable cash flow. Distributable cash flow
should not be considered an alternative to cash flows from operating
activities or any other measure of financial performance calculated in
accordance with generally accepted accounting principles as those items are
used to measure operating performance, liquidity, or the ability to service
debt obligations. We believe that distributable cash flow provides additional
information for evaluating our ability to declare and pay distributions to
unitholders. Distributable cash flow, as we define it, may not be comparable
to distributable cash flow or similarly titled measures used by other
corporations and partnerships.

Contact:

Crestwood Equity Partners LP
Mark Stockard, 832-519-2207
Vice President, Investor Relations
mstockard@crestwoodlp.com
 
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