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ADVISORY RESEARCH | 2

MLP investment vehicle flows & equity issuance breakdown

Period: 1/1/2011 to 4/30/2017 Data Source: Bloomberg, U.S. Capital, UBS Global Energy Group

-5

0

5

10

15

20

25

30

2017201620152014201320122011

$ R

aise

d ($

in B

illion

s)Fund Flows vs. Equity Issuance

Fund Flows Equity Raised

ADVISORY RESEARCH | 3

The MLP investment vehicle market has shifted from closed-end funds to ETNs, ETFs and open-end funds

Period: 1/1/2011 to 4/30/2017 Data Source: Bloomberg Note: Closed End Fund market value uses common net assets.

ADVISORY RESEARCH | 4

A growing number of energy infrastructure companies are organizing as corporations

Period: 1/1/2011 to 4/30/2017 Data Source: FactSet Research Systems

$0

$200

$400

$600

$800

$1,000

$1,200

2011 2012 2013 2014 2015 2016 2017

Mar

ket C

ap ($

in b

illio

ns)

Total MLP Mkt Cap Total C-Corp Mkt Cap

ADVISORY RESEARCH | 5

MLP investment vehicle flow has favored active management vs. passive management

Period: 1/1/2011 to 4/30/2017 Data Source: Bloomberg

36%

64%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 thru April 2017

MLP Active vs. Passive Flows

Passive Active

ADVISORY RESEARCH | 6

Generally, MLP active management has been beneficial

Period ending 3/31/2017 Data Source: eVestment, Morningstar Energy Limited Partnership Category

Over a 5-year period ended 3/31/2017: • The Alerian MLP Index ranks in the 66th percentile versus MLP Open-

End Funds.

• The Alerian MLP Index ranks in the 86th percentile versus asset manager MLP Separately Managed strategies.

1

Introduction – Revisiting MLP Simplifications

Last year our colleagues discussed the “simplification” trend, highlighting the following points: Simplification transactions are not new, and tend to happen in difficult markets GP/LP structure is not going away immediately, and it actually works well when growth is

strong and cost of equity is cheap Recent IPOs had GP/LP structures, and one GP just went public

The MLP universe is becoming more diverse as simplification transactions evolve—from IDR buy-ins to c-corp roll-ups to c-corp tracker securities

We echo last year’s comments but think an update is warranted given the bevy of large-cap

announcements since May 2016 (over 20% of the AMZ) Plains All American MPLX Williams ONEOK Tesoro?

What worked? What didn’t? What’s next?

2

Key Themes in Many Simplifications

Impairs an MLP’s cost of capital and “ability to pay”, particularly on a relative basis

IDRs or promoted economic incentives are unsustainable as companies grow and mature

High GP Burden 1

GP impairs ability to grow -> reduces valuation for MLP -> further reducing ability to grow (it’s circular)

Larger and larger projects required to grow, while the funding itself exacerbates the promote issue

Rating agencies and creditors like the increased scale, improved cost of capital, stronger credit metrics, enhanced growth prospects, and greater liquidity / access to capital

Allows MLP to re-set distributions if appropriate

GP Public Security Trading Wide v. Public LP Leverage Issues

3

Simplification is a “self-controlled” option

Wide yield spreads and valuation anomalies can be conducive to structuring a potentially accretive simplification transaction

Underlying MLP Valuations Challenged

2

4

3

Comparison of Recent Simplifications

Date 08/10/14 08/10/14 05/06/15 11/03/15 05/31/16 07/11/16 01/03/17 01/09/17 02/01/17

Transaction StructureAcquisition of public LP

Acquisition of public LP

Acquisition of public LP

Acquisition of public LP

Acquisition of public LP

IDR Buy-in IDR Buy-in IDR Buy-inAcquisition of public LP

Equity to be Issued $24.7bn $4.8bn $4.1bn $6.7bn $0.3bn $6.6bn NA $11.4bn $9.3bn

New Shareholders PF Ownership 32% 6% 73% 65% 23% 35% NA 72% 54%

GP Yield Prior to Announcement 4.76% 4.76% 8.06% 6.25% 6.10% 9.55% NA 2.48% 4.46%

LP Yield Prior to Announcement 6.92% 7.74% 10.25% 10.82% 11.00% 10.45% 5.83% 8.65% 7.32%

Spread (bps) 216 298 219 457 490 90 NA 617 286

1-day Premium / (Discount) 12.0% 15.4% 16.9% 18.4% 6.0% 6.0% NA NA 22.4%

20-day Premium / (Discount) 9.6% 11.2% 19.3% 15.5% 15.5% 0.1% NA NA (3.4%)

PF Credit Rating BBB- / Baa3 BBB- / Baa3 NA NA B+ / B2 BBB / Baa3 BBB- / Baa3 Ba2 / BB Ba1 / BB+

Forward Year MLP Dist. Coverage 0.95x 1.01x 1.03x 1.10x 1.15x 0.87x 1.14x 0.99x 1.10x

GP / IDR Dist. Take 46.0% 28.1% 10.4% 30.4% 19.6% 31.3% 23.0% 31.2% 32.2%

LTM Debt / LTM EBITDA 4.58x 4.17x 4.50x 4.80x 4.20x 4.60x 3.36x 4.30x 4.30x

Cash Flow Accretion?

Immediate Dividend Raise?

Dividend Guidance Period 2020 2020 NA 2018 2018 Q3 2016 NASeveral

Years2021

Investment Grade?

Removal of IDRs?

Lower Cost of Capital?

Simplified Organization?

PF Scale $140bn $140bn $8bn $15bn $15bn $30bn $22bn $29bn $31bn

KMP El Paso

Since MLPA 2016 Source: Citi Investment Banking

4

Historical Performance of Corporate Simplifications

Simplification transactions, in general, have been well-received by the market (as seen in the table below) Time is on your side—the “first movers” group all have outperformed the index on a total

return basis by a wide margin as the benefits of simplification have had time to play out The Kinder-led “roll-up” wave group has had mixed results with timing and broader market

factors playing a significant role in performance to date The most recent deals are still in the early stages of execution, but as a whole have seen

slight outperformance relative to the index Post-announcement performance (relative to AMZ)

Date T+1 T+5 T+30 T+90 T+180 To dateFirst-moversMWE 09/05/07 2.4% 3.5% (4.3%) 5.5% 14.0% 89.7%MMP 03/03/09 (8.7%) (6.8%) (11.2%) (11.6%) (14.3%) 447.7%BPL 06/11/10 0.3% 0.9% 1.7% 1.0% 0.7% 26.3%EPD 09/07/10 (0.9%) (1.3%) 1.0% (2.1%) (3.9%) 56.1%GEL 12/28/10 1.5% (0.4%) 2.3% 1.3% 6.3% 49.7%The Kinder-led "roll-up" waveKMI 08/10/14 5.3% 9.3% (2.0%) 5.8% 23.1% (16.8%)CEQP 05/06/15 0.7% (3.6%) (9.4%) (19.4%) (22.0%) (19.3%)TRGP 11/03/15 1.4% 0.3% (10.6%) (30.4%) (5.8%) 4.8%SEMG 05/31/16 0.2% 1.4% (2.7%) (3.3%) 11.7% (2.2%)Since 2016 MLPAPAA 07/11/16 7.6% 6.2% 9.1% 19.6% 20.0% 5.5%MPLX 01/03/17 0.2% (0.0%) 2.0% 1.6% 0.2% 0.2%WPZ 01/09/17 1.5% 5.0% 3.0% 7.5% 7.9% 7.9%OKE 02/01/17 2.4% 1.1% 4.8% 1.9% 1.0% 1.0%

5

Who’s Next?

High GP Burden (>=20% 2017E GP take)

Valuation Less than Ideal (“yield”

>6.5%)

High Leverage (>3.5x 2017 FYE/NTM

EBITDA)

Low Coverage (<1.1x 2017 FYE)

GP Wide to MLP (>=2.5%)

Others

…each situation is unique, and just because they “should,” doesn’t mean they “would”

6

Conclusion – Revisiting MLP Simplifications

We do think IDRs serve an important purpose in the early stages of an MLP—they incentivize growth for both the LP and GP—but eventually (if the MLP has been successful in growing its distribution and hopefully generated some return for its investors along the way), simple math dictates that it does become a burden on cost of capital Tend to work best, and longest, in a “sponsored” MLP situation

In an increasingly competitive and “lower for longer” environment, we believe corporate structure and cost of capital will play major roles in determining “winners” and “losers”

To the extent capital markets remain tight, cost and availability of cheap capital will become

even more important

The most successful transactions, we believe, will be those that: are decisive and permanent—a one-time approach are transformative are transparent provide for ample cushion in coverage and leverage position the pro forma company to compete for competitive capital, M&A, and projects

For institutional use only, not for redistribution ©2017 Tortoise.

MLP Market Trends Perspective from Fund Managers

June 2, 2017

2

TMLP index vs crude production

Source: Bloomberg, Company Filings as of 3/31/2017. TMLP = Tortoise Midstream MLP Index

600

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16

TMLP

T In

dex

Leve

l

U.S

. Cru

de P

rodu

ctio

n (k

b/d)

US Crude Production MLP

3

Seasonal period of declines for U.S. crude inventories

Source: Energy Information Administration as of 5/26/2017.

(12,000)

(10,000)

(8,000)

(6,000)

(4,000)

(2,000)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Cha

nge

in C

rude

Oil

Inve

ntor

ies

(kbb

ls)

US Weekly Crude Oil Inventory Change

5 Year Range 2017 Stock Change

4

(60.0%)

(50.0%)

(40.0%)

(30.0%)

(20.0%)

(10.0%)

0.0%

10.0%

20.0%

30.0%

2014 2015 2016

Y/Y

% C

hang

e

PAA EEP SXL WTI Crude Price U.S. Crude Production

Pipeline Volumes Resilient

Source: Bloomberg, Company Filings, EIA As of 12/31/16

% change of crude volumes transported vs. price and production

Crude volumes transported by top midstream service providers grew during the most recent downturn despite falling crude oil prices and declining domestic production

5

(80%)

(60%)

(40%)

(20%)

0%

20%

40%

Tota

l Ret

urn

(%)

Midstream E&P S&P

Midstream: Growth through the cycle

Source: Bloomberg, Company Filings as of 4/30/2017. Midstream = Tortoise Midstream MLP Index (TMLPMID) / E&P = Tortoise North American Oil & Gas Producers Index (TNEP) *Total return 6/30/14 – 5/30/17

EBITDA Growth (y/y)

Price volatility of the midstream sector is not indicative of the underlying cash flows which have grown steadily through the downturn, in our view.

(60%)

(40%)

(20%)

0%

20%

40%

60%

80%

2014 2015 2016 2017E CAGR

EBIT

DA G

row

th (

% y

/y)

Midstream E&P

Total return*

6

Important disclosures

Tortoise MLP Index®, a float-adjusted, capitalization-weighted index of energy master limited partnerships (MLPs). To be eligible for inclusion in the Tortoise MLP Index®, a company must be publicly traded, organized as a limited partnership or a limited liability company, and be classified as an “energy MLP” by the National Association of Publicly Traded Partnerships (NAPTP). The Tortoise North American Oil & Gas Producers IndexSM is a float-adjusted, capitalization-weighted index of North American energy companies primarily engaged in the production of crude oil, condensate, natural gas or natural gas liquids (NGLs). The index includes exploration and production companies structured as corporations, limited liability companies and master limited partnerships but excludes United States royalty trusts. The Tortoise MLP Index® and Tortoise North American Oil & Gas Producers IndexSM (the “Indices”) are the exclusive property of Tortoise Index Solutions, LLC, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Indices. The Indices are not sponsored by S&P Dow Jones Indices or its affiliates or its third party licensors (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices will not be liable for any errors or omission in calculating the Indices. “Calculated by S&P Dow Jones Indices” and its related stylized mark(s) are service marks of S&P Dow Jones Indices and have been licensed for use by Tortoise Index Solutions, LLC and its affiliates. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”), and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”).