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<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>As filed with the Securities and Exchange Commission on June&nbsp;21, 2011  </B></FONT></P>

<P ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><B> Registration No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=5><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>  </B></FONT><FONT SIZE=2><B>Washington, D.C. 20549  </B></FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=5><B>FORM&nbsp;S-1<BR>  </B></FONT><FONT SIZE=2><B>REGISTRATION STATEMENT<BR>
UNDER<BR>
THE SECURITIES ACT OF&nbsp;1933  </B></FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=5><B>PetroLogistics&nbsp;LP<BR>  </B></FONT><FONT SIZE=2>(Exact name of registrant as specified in its charter) </FONT></P>

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<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Delaware</B></FONT><FONT SIZE=2><BR>
(State or other jurisdiction<BR>
of incorporation or organization)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> 2890</B></FONT><FONT SIZE=2><BR>
(Primary Standard Industrial<BR>
Classification Code Number)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> 45-2532754</B></FONT><FONT SIZE=2><BR>
(I.R.S. Employer<BR>
Identification Number)</FONT></TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>909 Fannin Street, Suite&nbsp;2630<BR>
Houston, TX 77010<BR>
(713)&nbsp;255-5990<BR>  </B></FONT><FONT SIZE=2>(Address, including zip code, and telephone number, including<BR>
area code, of registrant's principal executive offices) </FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>National Corporate Research,&nbsp;Ltd.<BR>
615 South DuPont Highway<BR>
Dover, DE 19901<BR>
(800)&nbsp;483-1140<BR>  </B></FONT><FONT SIZE=2>(Name, address, including zip code, and telephone number, including<BR>
area code, of agent for service) </FONT></P>

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<TD COLSPAN=3 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Copies to:</B></FONT></TD>
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<TD ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2><B> Mike Rosenwasser<BR>
James J. Fox<BR>
Vinson&nbsp;&amp; Elkins&nbsp;L.L.P.<BR>
666 Fifth Avenue, 26th&nbsp;Floor<BR>
New York, NY 10103<BR>
(212)&nbsp;237-0000</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2><B>G. Michael O'Leary<BR>
Andrews Kurth&nbsp;LLP<BR>
600 Travis, Suite&nbsp;4200<BR>
Houston, Texas 77002<BR>
(713)&nbsp;220-4200</B></FONT></TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>Approximate date of commencement of proposed sale to the public:</B></FONT><FONT SIZE=2><BR>
As soon as practicable after this Registration Statement becomes effective. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule&nbsp;415 under the Securities Act of 1933, check the
following box.&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is filed to register additional securities for an offering pursuant to Rule&nbsp;462(b) under the Securities Act, please check the following box and
list the Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule&nbsp;12b-2 of the Exchange Act. </FONT></P>
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<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Large&nbsp;accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Non-accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#253;</FONT><BR></FONT> <FONT SIZE=1>(Do not check if a<BR>
smaller reporting company)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Smaller&nbsp;reporting&nbsp;company&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>CALCULATION OF REGISTRATION FEE  </B></FONT></P>

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<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:5pt;text-indent:-5pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Title of each class of securities<BR>
to be registered</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Proposed maximum<BR>
aggregate offering<BR>
price<SUP>(1)</SUP><SUP>(2)</SUP></B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>Amount of<BR>
registration fee</B></FONT><BR></TH>
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<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:4pt;text-indent:-4pt;"><FONT SIZE=1><B> </B></FONT><FONT SIZE=2>Common units representing limited partner interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$600,000,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$69,660</FONT></TD>
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<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;"><p style="font-family:times;margin-left:5pt;text-indent:-5pt;"> &nbsp;</TD>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Includes
common units issuable upon exercise of the underwriters' option to purchase additional common units.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Estimated
solely for the purpose of calculating the registration fee pursuant to Rule&nbsp;457(o) of the Securities Act of 1933. </FONT></DD></DL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall
file&nbsp;a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section&nbsp;8(a) of the Securities Act of 1933 or
until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section&nbsp;8(a), may determine.</B></FONT></P>

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 </I></FONT><FONT COLOR="#FE4110" SIZE=3><I>PROSPECTUS (Subject to Completion)<BR>  </I></FONT><FONT COLOR="#FF4019" SIZE=2><I>dated June&nbsp;21, 2011</I></FONT></P>

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</FONT><FONT COLOR="#FE4110" SIZE=2>The information in this prospectus is not complete and may be changed. We may not sell these securities, and these securities
may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting
offers to buy these securities in any state where the offer or sale is not permitted.</FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=3><I>Common Units<BR>
Representing Limited Partner Interests  </I></FONT></P>

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<IMG SRC="g114531.jpg" ALT="LOGO" WIDTH="424" HEIGHT="55">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=4><I>PetroLogistics&nbsp;LP  </I></FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=1><B><I>This is the initial public offering of our common units representing limited partner interests. Prior to this offering, there has been no public market for our
common units. We currently anticipate that the initial public offering price for our common units will be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per unit. We intend to apply to list the common
units on the New York Stock Exchange under the symbol "PDH."  </I></B></FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=1><B><I> We have granted the underwriters an option to purchase up to an
additional&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units from us at the initial public offering price, less
underwriting discounts and commissions,
within 30&nbsp;days from the date of this prospectus.  </I></B></FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I>Investing in our common units involves risks. Please see "Risk Factors" beginning on page&nbsp;17. These risks include
the following:  </I></B></FONT></P>

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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1><I>We may not have sufficient available cash to pay any quarterly distribution on our
common units.   </I></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1><I>The amount of our quarterly cash distributions, if any, will vary significantly both
quarterly and annually and will be directly dependent on the performance of our business. Unlike most publicly traded partnerships, we will not have a minimum quarterly distribution or employ
structures intended to consistently maintain or increase distributions over time.   </I></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1><I>The propylene business is, and propylene prices are, cyclical and highly volatile
and have experienced substantial downturns in the past. Cycles in demand and pricing could potentially expose us to significant fluctuations in our operating and financial results, and expose you to
substantial volatility in our quarterly cash distributions and material reductions in the trading price of our common units.   </I></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1><I>Our operations are dependent on third-party suppliers, including Enterprise, which
owns the propane pipeline that provides propane to our facility. A deterioration in the financial condition of a third-party supplier, a mechanical problem with one of their facilities or the
inability of a third-party supplier to perform in accordance with its contractual obligations could have a material adverse effect on our results of operations, financial condition and our ability to
make cash distributions.   </I></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1><I>We currently derive substantially all of our sales from three customers, and the
loss of any of these customers without replacement on comparable terms would affect our results of operations and cash available for distribution to our unitholders.   </I></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1><I>Our general partner, which is owned by funds controlled by Lindsay Goldberg and York
Capital, has fiduciary duties to Lindsay Goldberg and York Capital, and the interests of Lindsay Goldberg and York Capital may differ significantly from, or conflict with, the interests of our public
common unitholders.   </I></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1><I>Our unitholders have limited voting rights and are not entitled to elect our general
partner or our general partner's directors.   </I></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1><I>You will experience immediate and substantial dilution in the net tangible book
value of your common units.   </I></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1><I>We have a limited operating history upon which to rely in evaluating our ability to
pay quarterly cash distributions or our ability to be successful in implementing our business strategy.   </I></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1><I>Our tax treatment depends on our status as a partnership for U.S. federal income tax
purposes, as well as our not being subject to a material amount of entity-level taxation by individual states. If the IRS were to treat us as a corporation for federal income tax purposes or we were
to become subject to material additional amounts of entity-level taxation for state tax purposes, then our cash available for distribution to you could be substantially reduced.  </I></FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1><I>You will be required to pay taxes on your share of our income even if you do not
receive any cash distributions from us.  </I></FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>

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<BR>  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><I>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Per Common Unit  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>

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</FONT> <FONT SIZE=2><I>

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<BR>  </I></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=1><I>


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  </I></FONT></P>

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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="96pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="96pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH NOWRAP  ALIGN="CENTER" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:58pt;"><FONT SIZE=1><B><I>Per&nbsp;Common&nbsp;Unit

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 </I></B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH NOWRAP  ALIGN="CENTER" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:18pt;"><FONT SIZE=1><B><I>Total

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 </I></B></FONT></DIV></TH>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:4pt;text-indent:-4pt;"><FONT SIZE=1><B><I> </I></B></FONT><FONT SIZE=1><I>Initial Public Offering Price </I></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><I>$</I></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><I>$</I></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:4pt;text-indent:-4pt;"><FONT SIZE=1><I> </I></FONT><FONT SIZE=1><I>Underwriting Discounts and Commissions </I></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><I>$</I></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><I>$</I></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:4pt;text-indent:-4pt;"><FONT SIZE=1><I> </I></FONT><FONT SIZE=1><I>Proceeds Before Expenses to Us </I></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><I>$</I></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=1><I>$</I></FONT></TD>
</TR>
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 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=1><B><I>The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.</I></B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=1><I>The underwriters expect to deliver the common units to purchasers on or
about&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011.  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>

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<BR>  </I></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><I>Joint Book-Running Managers  </I></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=4><I>


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  </I></FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="17%" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="17%" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="23%" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="34%" style="font-family:times;"></TD>
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<TD COLSPAN=7 style="font-family:times;"><FONT SIZE=5><I>Morgan Stanley</I></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD COLSPAN=5 style="font-family:times;"><FONT SIZE=5><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Citi</I></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=5><I>UBS Investment Bank</I></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=7 ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=5><I>Wells Fargo Securities<BR> </I></FONT></TD>
</TR>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><I>Co-Managers  </I></FONT></P>
 <DIV style="padding:0pt;position:relative;width:62%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=4><I>


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  </I></FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="133pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="188pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
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<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=3><I> SOCIETE GENERALE</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=3>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=3>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=3>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=3><I>Stifel Nicolaus Weisel</I></FONT></TD>
</TR>
</TABLE></DIV>
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011  </I></FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>
<A NAME="BG42901A_main_toc"></A> </FONT> <FONT SIZE=2><B> TABLE OF CONTENTS  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A NAME="BG42901_TOC"></A> </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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 </FONT></P>
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="23pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#ca42901_prospectus_summary"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>PROSPECTUS SUMMARY</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ca42901_prospectus_summary"><FONT SIZE=2>1</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#cc42901_organizational_structure"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Organizational Structure</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#cc42901_organizational_structure"><FONT SIZE=2>8</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ce42901_the_offering"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>The Offering</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ce42901_the_offering"><FONT SIZE=2>10</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#cg42901_summary_historical_and_pro_for__sum02739"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Summary Historical and Pro Forma Consolidated Financial
Information</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#cg42901_summary_historical_and_pro_for__sum02739"><FONT SIZE=2>14</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#da42901_risk_factors"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>RISK FACTORS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#da42901_risk_factors"><FONT SIZE=2><BR>
17</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#da42901_risks_related_to_our_business"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Risks Related to Our Business</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#da42901_risks_related_to_our_business"><FONT SIZE=2>17</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dc42901_risks_related_to_an_investment_in_us"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Risks Related to an Investment in Us</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dc42901_risks_related_to_an_investment_in_us"><FONT SIZE=2>29</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dc42901_tax_risks"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Tax Risks</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dc42901_tax_risks"><FONT SIZE=2>35</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#de42901_cautionary_note_regarding_forward-looking_statements"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#de42901_cautionary_note_regarding_forward-looking_statements"><FONT SIZE=2><BR>
39</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#de42901_the_transactions_and_our_structure_and_organization"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>THE TRANSACTIONS AND OUR STRUCTURE AND
ORGANIZATION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#de42901_the_transactions_and_our_structure_and_organization"><FONT SIZE=2><BR>
41</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#de42901_the_transactions"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>The Transactions</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#de42901_the_transactions"><FONT SIZE=2>41</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#de42901_management"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Management</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#de42901_management"><FONT SIZE=2>41</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#de42901_conflicts_of_interest_and_fiduciary_duties"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Conflicts of Interest and Fiduciary Duties</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#de42901_conflicts_of_interest_and_fiduciary_duties"><FONT SIZE=2>42</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#de42901_use_of_proceeds"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>USE OF PROCEEDS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#de42901_use_of_proceeds"><FONT SIZE=2><BR>
43</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#dg42901_capitalization"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>CAPITALIZATION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dg42901_capitalization"><FONT SIZE=2><BR>
44</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#dg42901_dilution"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DILUTION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dg42901_dilution"><FONT SIZE=2><BR>
45</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#di42901_our_cash_distribution_policy_a__our02636"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>OUR CASH DISTRIBUTION POLICY AND RESTRICTIONS ON
DISTRIBUTIONS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#di42901_our_cash_distribution_policy_a__our02636"><FONT SIZE=2><BR>
47</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#di42901_general"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#di42901_general"><FONT SIZE=2>47</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#di42901_forecasted_available_cash"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Forecasted Available Cash</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#di42901_forecasted_available_cash"><FONT SIZE=2>48</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#di42901_assumptions_and_considerations"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Assumptions and Considerations</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#di42901_assumptions_and_considerations"><FONT SIZE=2>50</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#dk42901_how_we_make_cash_distributions"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>HOW WE MAKE CASH DISTRIBUTIONS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dk42901_how_we_make_cash_distributions"><FONT SIZE=2><BR>
54</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dk42901_general"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dk42901_general"><FONT SIZE=2>54</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dk42901_common_units_eligible_for_distribution"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common Units Eligible for Distribution</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dk42901_common_units_eligible_for_distribution"><FONT SIZE=2>54</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dk42901_method_of_distributions"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Method of Distributions</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dk42901_method_of_distributions"><FONT SIZE=2>54</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dk42901_general_partner_interest_1"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General Partner Interest</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dk42901_general_partner_interest_1"><FONT SIZE=2>54</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dk42901_adjustments_to_capital_account__adj02985"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjustments to Capital Accounts upon Issuance of Additional Common
Units</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dk42901_adjustments_to_capital_account__adj02985"><FONT SIZE=2>54</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#dk42901_selected_historical_and_pro_fo__sel02733"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL
INFORMATION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dk42901_selected_historical_and_pro_fo__sel02733"><FONT SIZE=2><BR>
55</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#dm42901_management_s_discussion_and_an__man03466"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dm42901_management_s_discussion_and_an__man03466"><FONT SIZE=2><BR>
58</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dm42901_overview"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Overview</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dm42901_overview"><FONT SIZE=2>58</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dm42901_factors_affecting_the___dm402233"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Factors Affecting the Comparability of Future Results</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dm42901_factors_affecting_the___dm402233"><FONT SIZE=2>58</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dm42901_factors_affecting_results"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Factors Affecting Results</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dm42901_factors_affecting_results"><FONT SIZE=2>60</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dm42901_how_we_evaluate_our_performance"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>How We Evaluate Our Performance</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dm42901_how_we_evaluate_our_performance"><FONT SIZE=2>61</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dm42901_results_of_operations"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Results of Operations</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dm42901_results_of_operations"><FONT SIZE=2>61</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dm42901_critical_accounting_policies"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Critical Accounting Policies</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dm42901_critical_accounting_policies"><FONT SIZE=2>65</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#do42901_liquidity_and_capital_resources"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Liquidity and Capital Resources</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#do42901_liquidity_and_capital_resources"><FONT SIZE=2>67</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#do42901_cash_flows"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash Flows</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#do42901_cash_flows"><FONT SIZE=2>70</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#do42901_contractual_obligations"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Contractual Obligations</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#do42901_contractual_obligations"><FONT SIZE=2>70</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#do42901_off-balance_sheet_arrangements"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Off-Balance Sheet Arrangements</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#do42901_off-balance_sheet_arrangements"><FONT SIZE=2>71</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#do42901_quantitative_and_quali__do402477"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Quantitative and Qualitative Disclosures about Market Risk</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#do42901_quantitative_and_quali__do402477"><FONT SIZE=2>71</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#dq42901_industry_overview"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>INDUSTRY OVERVIEW</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dq42901_industry_overview"><FONT SIZE=2><BR>
72</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dq42901_propylene_industry_overview"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Propylene Industry Overview</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dq42901_propylene_industry_overview"><FONT SIZE=2>72</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ds42901_propane_market_overview"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Propane Market Overview</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ds42901_propane_market_overview"><FONT SIZE=2>80</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#du42901_business"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>BUSINESS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#du42901_business"><FONT SIZE=2><BR>
85</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#du42901_our_business"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our Business</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#du42901_our_business"><FONT SIZE=2>85</FONT></A></TD>
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<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#du42901_our_products_and_customers"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our Products and Customers</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#du42901_our_products_and_customers"><FONT SIZE=2>85</FONT></A></TD>
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<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#du42901_our_competitive_strengths"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our Competitive Strengths</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#du42901_our_competitive_strengths"><FONT SIZE=2>86</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#du42901_our_business_strategy_1"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our Business Strategy</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#du42901_our_business_strategy_1"><FONT SIZE=2>89</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#du42901_our_history"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our History</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#du42901_our_history"><FONT SIZE=2>90</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#du42901_our_sponsors"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our Sponsors</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#du42901_our_sponsors"><FONT SIZE=2>90</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#du42901_our_facility"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our Facility</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#du42901_our_facility"><FONT SIZE=2>91</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dw42901_our_pdh_technology"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our PDH Technology</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dw42901_our_pdh_technology"><FONT SIZE=2>92</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dw42901_feedstock_supply"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Feedstock Supply</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dw42901_feedstock_supply"><FONT SIZE=2>93</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dw42901_competition"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Competition</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dw42901_competition"><FONT SIZE=2>94</FONT></A></TD>
</TR>
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<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dw42901_environmental_matters"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Environmental Matters</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dw42901_environmental_matters"><FONT SIZE=2>94</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dw42901_safety,_health_and_security_matters"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Safety, Health and Security Matters</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dw42901_safety,_health_and_security_matters"><FONT SIZE=2>98</FONT></A></TD>
</TR>
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<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dw42901_employees"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Employees</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dw42901_employees"><FONT SIZE=2>98</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dw42901_properties"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Properties</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dw42901_properties"><FONT SIZE=2>98</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dw42901_legal_proceedings"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Legal Proceedings</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dw42901_legal_proceedings"><FONT SIZE=2>98</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#dy42901_management"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>MANAGEMENT</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dy42901_management"><FONT SIZE=2><BR>
99</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dy42901_our_management"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our Management</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dy42901_our_management"><FONT SIZE=2>99</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dy42901_board_committees"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Board Committees</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dy42901_board_committees"><FONT SIZE=2>99</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dy42901_executive_officers_and_directors"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Executive Officers and Directors</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dy42901_executive_officers_and_directors"><FONT SIZE=2>100</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dy42901_compensation_discussion_and_analysis"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Compensation Discussion and Analysis</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dy42901_compensation_discussion_and_analysis"><FONT SIZE=2>103</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dy42901_employment_agreements"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Employment Agreements</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dy42901_employment_agreements"><FONT SIZE=2>108</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dy42901_severance_and_change_in_control_arrangements"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Severance and Change in Control Agreements</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dy42901_severance_and_change_in_control_arrangements"><FONT SIZE=2>108</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dy42901_tax_considerations"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Tax Considerations</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dy42901_tax_considerations"><FONT SIZE=2>108</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#dy42901_executive_compensation"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Executive Compensation</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#dy42901_executive_compensation"><FONT SIZE=2>108</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ea42901_summary_compensation"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Summary Compensation</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ea42901_summary_compensation"><FONT SIZE=2>109</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ea42901_director_compensation"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Director Compensation</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ea42901_director_compensation"><FONT SIZE=2>113</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ea42901_compensation_practices__ea402320"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Compensation Practices as they Relate to Risk Management</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ea42901_compensation_practices__ea402320"><FONT SIZE=2>113</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#ec42901_security_ownership_of_certain___sec02525"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ec42901_security_ownership_of_certain___sec02525"><FONT SIZE=2><BR>
114</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#ec42901_certain_relationships_and_related_party_transactions"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ec42901_certain_relationships_and_related_party_transactions"><FONT SIZE=2><BR>
116</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ec42901_distributions_and_payments_to___dis02808"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distributions and Payments to Our General Partner and its
Affiliates</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ec42901_distributions_and_payments_to___dis02808"><FONT SIZE=2>116</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ec42901_agreements_with_affiliates_of_our_general_partner"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Agreements with Affiliates of Our General Partner</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ec42901_agreements_with_affiliates_of_our_general_partner"><FONT SIZE=2>117</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#ee42901_conflicts_of_interest_and_fiduciary_duties"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>CONFLICTS OF INTEREST AND FIDUCIARY DUTIES</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ee42901_conflicts_of_interest_and_fiduciary_duties"><FONT SIZE=2><BR>
119</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#Con_of_Int"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Conflicts of Interest</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#Con_of_Int"><FONT SIZE=2>119</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ee42901_fiduciary_duties"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiduciary Duties</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ee42901_fiduciary_duties"><FONT SIZE=2>124</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ee42901_related_party_transactions"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Related Party Transactions</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ee42901_related_party_transactions"><FONT SIZE=2>126</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#eg42901_description_of_our_common_units"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DESCRIPTION OF OUR COMMON UNITS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eg42901_description_of_our_common_units"><FONT SIZE=2><BR>
127</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eg42901_our_common_units"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our Common Units</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eg42901_our_common_units"><FONT SIZE=2>127</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eg42901_transfer_agent_and_registrar"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transfer Agent and Registrar</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eg42901_transfer_agent_and_registrar"><FONT SIZE=2>127</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eg42901_transfer_of_common_units"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transfer of Common Units</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eg42901_transfer_of_common_units"><FONT SIZE=2>127</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eg42901_listing"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Listing</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eg42901_listing"><FONT SIZE=2>128</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_the_partnership_agreement"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>THE PARTNERSHIP AGREEMENT</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_the_partnership_agreement"><FONT SIZE=2><BR>
129</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_organization_and_duration"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Organization and Duration</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_organization_and_duration"><FONT SIZE=2>129</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_purpose"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Purpose</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_purpose"><FONT SIZE=2>129</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_capital_contributions"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Capital Contributions</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_capital_contributions"><FONT SIZE=2>129</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_voting_rights"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Voting Rights</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_voting_rights"><FONT SIZE=2>129</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_applicable_law;_forum,_venue_and_jurisdiction"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Applicable Law; Forum, Venue and Jurisdiction</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_applicable_law;_forum,_venue_and_jurisdiction"><FONT SIZE=2>131</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_limited_liability"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Limited Liability</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_limited_liability"><FONT SIZE=2>131</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_issuance_of_additional_partnership_interests"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Issuance of Additional Partnership Interests</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_issuance_of_additional_partnership_interests"><FONT SIZE=2>132</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_amendment_of_our_partnership_agreement"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amendment of Our Partnership Agreement</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_amendment_of_our_partnership_agreement"><FONT SIZE=2>133</FONT></A></TD>
</TR>
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<!-- ZEQ.=2,SEQ=5,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=903330,FOLIO='ii',FILE='DISK131:[11ZBV1.11ZBV42901]BG42901A.;14',USER='TDIMIZI',CD='20-JUN-2011;19:22' -->
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<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_merger,_sale_or_other_disposition_of_assets"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Merger, Sale or Other Disposition of Assets</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_merger,_sale_or_other_disposition_of_assets"><FONT SIZE=2>135</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_termination_and_dissolution"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Termination and Dissolution</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_termination_and_dissolution"><FONT SIZE=2>135</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_liquidation_and_distribution_of_proceeds"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Liquidation and Distribution of Proceeds</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_liquidation_and_distribution_of_proceeds"><FONT SIZE=2>136</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_withdrawal_or_removal_of_our_general_partner"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Withdrawal or Removal of Our General Partner</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_withdrawal_or_removal_of_our_general_partner"><FONT SIZE=2>136</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_transfer_of_general_partner_interest"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transfer of General Partner Interest</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_transfer_of_general_partner_interest"><FONT SIZE=2>137</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ei42901_transfer_of_ownership___ei402313"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transfer of Ownership Interests in Our General Partner</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ei42901_transfer_of_ownership___ei402313"><FONT SIZE=2>137</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ek42901_change_of_management_provisions"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Change of Management Provisions</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ek42901_change_of_management_provisions"><FONT SIZE=2>138</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ek42901_call_right"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Call Right</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ek42901_call_right"><FONT SIZE=2>138</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ek42901_non-citizen_assignees;_redemption"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-Citizen Assignees; Redemption</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ek42901_non-citizen_assignees;_redemption"><FONT SIZE=2>138</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ek42901_meetings;_voting"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Meetings; Voting</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ek42901_meetings;_voting"><FONT SIZE=2>139</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ek42901_status_as_limited_partner_or_assignee"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Status as Limited Partner or Assignee</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ek42901_status_as_limited_partner_or_assignee"><FONT SIZE=2>139</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ek42901_indemnification"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Indemnification</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ek42901_indemnification"><FONT SIZE=2>139</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ek42901_reimbursement_of_expenses"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Reimbursement of Expenses</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ek42901_reimbursement_of_expenses"><FONT SIZE=2>140</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ek42901_books_and_reports"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Books and Reports</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ek42901_books_and_reports"><FONT SIZE=2>140</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ek42901_right_to_inspect_our_books_and_records"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Right to Inspect Our Books and Records</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ek42901_right_to_inspect_our_books_and_records"><FONT SIZE=2>140</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#ek42901_registration_rights"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Registration Rights</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ek42901_registration_rights"><FONT SIZE=2>141</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#ek42901_common_units_eligible_for_future_sale"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>COMMON UNITS ELIGIBLE FOR FUTURE SALE</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#ek42901_common_units_eligible_for_future_sale"><FONT SIZE=2><BR>
142</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#em42901_material_u.s._federal_income_tax_consequences"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#em42901_material_u.s._federal_income_tax_consequences"><FONT SIZE=2><BR>
144</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#em42901_taxation_of_the_partnership"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Taxation of the Partnership</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#em42901_taxation_of_the_partnership"><FONT SIZE=2>144</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#em42901_tax_consequences_of_unit_ownership"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Tax Consequences of Unit Ownership</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#em42901_tax_consequences_of_unit_ownership"><FONT SIZE=2>146</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eo42901_tax_treatment_of_operations"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Tax Treatment of Operations</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eo42901_tax_treatment_of_operations"><FONT SIZE=2>151</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eo42901_disposition_of_units"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Disposition of Units</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eo42901_disposition_of_units"><FONT SIZE=2>152</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eo42901_uniformity_of_units"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Uniformity of Units</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eo42901_uniformity_of_units"><FONT SIZE=2>154</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eo42901_tax-exempt_organizations_and_other_investors"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Tax-Exempt Organizations and Other Investors</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eo42901_tax-exempt_organizations_and_other_investors"><FONT SIZE=2>154</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eo42901_administrative_matters"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Administrative Matters</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eo42901_administrative_matters"><FONT SIZE=2>155</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eo42901_state,_local_and_other_tax_considerations"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>State, Local and Other Tax Considerations</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eo42901_state,_local_and_other_tax_considerations"><FONT SIZE=2>158</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#eq42901_investment_in_petrolog__eq402430"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>INVESTMENT IN PETROLOGISTICS&nbsp;LP BY EMPLOYEE BENEFIT
PLANS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eq42901_investment_in_petrolog__eq402430"><FONT SIZE=2><BR>
159</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#eq42901_underwriters"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>UNDERWRITERS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eq42901_underwriters"><FONT SIZE=2><BR>
160</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eq42901_directed_unit_program"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Directed Unit Program</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eq42901_directed_unit_program"><FONT SIZE=2>162</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eq42901_pricing_of_the_offering"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pricing of the Offering</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eq42901_pricing_of_the_offering"><FONT SIZE=2>163</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eq42901_european_economic_area"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>European Economic Area</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eq42901_european_economic_area"><FONT SIZE=2>163</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eq42901_united_kingdom"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>United Kingdom</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eq42901_united_kingdom"><FONT SIZE=2>163</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eq42901_switzerland"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Switzerland</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eq42901_switzerland"><FONT SIZE=2>164</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eq42901_hong_kong"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hong Kong</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eq42901_hong_kong"><FONT SIZE=2>164</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eq42901_singapore"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Singapore</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eq42901_singapore"><FONT SIZE=2>164</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><A HREF="#eq42901_japan"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Japan</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#eq42901_japan"><FONT SIZE=2>165</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#es42901_legal_matters"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>LEGAL MATTERS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#es42901_legal_matters"><FONT SIZE=2><BR>
166</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#es42901_experts"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EXPERTS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#es42901_experts"><FONT SIZE=2><BR>
166</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#es42901_where_you_can_find_more_information"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>WHERE YOU CAN FIND MORE INFORMATION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#es42901_where_you_can_find_more_information"><FONT SIZE=2><BR>
166</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#fa42901_index_to_financial_statements"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>INDEX TO FINANCIAL STATEMENTS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#fa42901_index_to_financial_statements"><FONT SIZE=2><BR>
F-1</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#gk42901_appendix_a"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>APPENDIX A&nbsp;&nbsp;&nbsp;&nbsp;FIRST AMENDED AND RESTATED PARTNERSHIP
AGREEMENT</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#gk42901_appendix_a"><FONT SIZE=2><BR>
A-1</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><A HREF="#gm42901_appendix_b"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>APPENDIX B&nbsp;&nbsp;&nbsp;&nbsp;GLOSSARY OF SELECTED TERMS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><A HREF="#gm42901_appendix_b"><FONT SIZE=2><BR>
B-1</FONT></A></TD>
</TR>
</TABLE></DIV>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with additional or different
information. If </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>iii</FONT></P>

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<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=6,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=827047,FOLIO='iii',FILE='DISK131:[11ZBV1.11ZBV42901]BG42901A.;14',USER='TDIMIZI',CD='20-JUN-2011;19:22' -->
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>anyone
provides you with additional, different or inconsistent information you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any
jurisdiction where an offer or sale is not permitted. You should assume the information appearing in this prospectus is accurate as of the date on the front cover page of this prospectus only. Our
business, financial condition, results of operations and prospects may have changed since that date. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
investors outside the United States: We have not, and the underwriters have not, done anything that would permit this offering, or possession or distribution of this prospectus, in
any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about,
and observe any restrictions relating to, the offering of the common units and the distribution of this prospectus outside of the United States. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="bg42901_industry_and_market_data"> </A>
<BR></FONT><FONT SIZE=2><B>  Industry and Market Data    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The data included in this prospectus regarding the propylene industry, including trends in the market and our position and the position
of our competitors within the propylene production industry, is based on a variety of sources, including information provided by Chemical Data,&nbsp;L.P. ("Chemical Data") independent industry
publications, government publications and other published independent sources, information obtained from customers, distributors, suppliers, trade and business organizations and publicly available
information (including the reports and other information our competitors file with the Securities and Exchange Commission, which we did not participate in preparing and as to which we make no
representation), as well as our good faith estimates, which have been derived from management's knowledge and experience in the areas in which our business operates. Estimates of market size and
relative positions in a market are difficult to develop and inherently uncertain. Accordingly, investors should not place undue weight on the industry and market share data presented in this
prospectus. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>iv</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ca42901_prospectus_summary"> </A>
<A NAME="toc_ca42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  PROSPECTUS SUMMARY    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>This summary highlights selected information contained elsewhere in this prospectus. You should carefully read
the entire prospectus, including "Risk Factors" and the historical and unaudited pro forma consolidated financial statements and related notes included elsewhere in this prospectus, before making an
investment decision. Unless otherwise indicated, the information in this prospectus assumes (1)&nbsp;an initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit (the mid-point
of the price range set forth on the cover page of this prospectus) and (2)&nbsp;that the underwriters do not exercise their option to purchase additional common units. References in this prospectus
to "PetroLogistics&nbsp;LP," "we, "our," "us," our "predecessor" or similar terms when used in a historical context refer to PL Propylene&nbsp;LLC ("PL Propylene"), which will be contributed to us
in connection with the closing of this offering. When used in the present tense or prospectively, those terms refer to PetroLogistics&nbsp;LP and its subsidiary unless the
context otherwise requires or where otherwise indicated. References to our "general partner" refer to PetroLogistics&nbsp;GP&nbsp;LLC. References in this prospectus to our "sponsors" refer to
Lindsay Goldberg&nbsp;LLC ("Lindsay Goldberg") and York Capital Management ("York Capital"), which, after the completion of this offering will collectively own our general partner and
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our common units. You should also see the "Glossary of Selected Terms" contained in Appendix&nbsp;B for definitions of some of the terms we use to describe our business and
industry and other terms used in this prospectus.</I></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ca42901_petrologistics_lp"> </A>
<A NAME="toc_ca42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  PETROLOGISTICS&nbsp;LP    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ca42901_our_business"> </A>
<A NAME="toc_ca42901_3"> </A></FONT> <FONT SIZE=2><B>  Our Business    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We own and operate the world's largest propane dehydrogenation ("PDH") facility that processes propane into propylene. Propylene is one
of the basic building blocks for petrochemicals that is utilized in the production of a variety of end uses including paints, coatings, building materials, clothing, automotive parts, packaging and a
range of other consumer and industrial products. We are the only independent, dedicated "on-purpose" propylene producer in North America. We are strategically located in the vicinity of
the Houston Ship Channel and within 50 miles of approximately one-half of all U.S. propylene consumption, and we have access to the leading global fractionation and storage hub for propane
located at Mt. Belvieu, Texas. The Houston Ship Channel represents the heaviest concentration of petrochemical and refining complexes in the world and provides us with unparalleled access and
connectivity to both customers and feedstock suppliers. Our newly-constructed facility has an annual nameplate production capacity of approximately 1.2&nbsp;billion pounds of propylene. We commenced
operations in October 2010 and first achieved daily production rates at or above nameplate capacity in April 2011. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current
energy commodity price dynamics are extremely favorable for our profitability. In particular, the emergence of shale gas in North America has led to a decrease in natural gas
prices, while continued robust demand for oil worldwide has resulted in high oil prices. Our profitability is enhanced by the high oil/low gas price environment in three ways. First, a significant
portion of propylene production comes from ethylene manufacturing facilities ("crackers") using feedstocks derived from oil, or "heavy feeds," such as naphtha. The high oil price has caused such
facilities to be less competitive than crackers using "light feeds" such as ethane, which produce little propylene. As a result, numerous heavy feed crackers in the U.S. have been shut down or
reconfigured to use lighter feeds, thereby reducing the supply of propylene. Second, the emergence of shale gas production has increased the supply of natural gas liquids such as ethane and propane
that are extracted from natural gas; thus increasing the U.S. supply of propane, our sole feedstock. Third, while not perfectly correlated, the price of propylene is highly related to the price of
crude oil, and the price of propane is related to the spread between the prices of crude oil and natural gas. Accordingly, a high oil/low gas price
environment leads to a wider propane-to-propylene spread and a higher gross margin for us. Chemical Data and other industry experts do not expect these dynamics to change in
the near future. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>1</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
facility was developed and built on the site of a former olefins production site and related infrastructure that we acquired from ExxonMobil Oil Corporation ("ExxonMobil") in March
2008. This site was ideally suited for the development of a PDH facility based on its existing location, infrastructure, utilities, permits, logistics and certain operating units which we were able to
integrate into our new facility. By leveraging these existing assets, we were able to save significant amounts of time and money versus those associated with the development of a green-field PDH
facility. Our PDH facility uses a CATOFIN&reg; dehydrogenation technology pursuant to a fully-paid license from CB&amp;I Lummus. CATOFIN technology has been in use for over
60&nbsp;years and is reliable and commercially proven. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propane
is our sole feedstock. Propane is a commodity produced by extraction and separation from natural gas production streams and as a by-product of refineries. We believe
that, given our location, we have access to an abundant supply of propane from multiple sources. Our propane is currently supplied by Enterprise Products Operating&nbsp;LLC (together with its
affiliates, "Enterprise") under a multi-year contract at market-based rates. Enterprise delivers the propane directly to our facility site through its propane pipeline system, which
gathers propane from various natural gas processing and fractionation facilities and refineries located in the region and from its interconnection with the leading global fractionation and storage hub
for propane at Mt. Belvieu, Texas where additional suppliers store and transport propane. We believe that ongoing substantial additions to the U.S. natural gas reserves from the development of shale
gas will continue to provide an abundant and growing supply of propane for the foreseeable future. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
currently have multi-year contracts for the sale of our propylene with The Dow Chemical Company ("Dow"), Total Petrochemicals USA,&nbsp;Inc. ("Total") and INEOS Olefins
and Polymers USA ("INEOS") that expire between 2013 and 2014. These contracts provide for minimum and maximum offtake volumes, with the minimum customer-contracted volumes representing 73% of facility
nameplate capacity and the maximum reflecting 97% of facility nameplate capacity. Each of our customer contracts contain pricing terms based upon market rates. We also intend to opportunistically
supply other propylene consumers on a spot basis when permitted by both operational and market conditions. Our pipeline system and interconnections provide us direct and indirect access to our
contracted customers and spot buyers of propylene. Although we anticipate approximately 96% of our sales at full operating rates will be derived from propylene sales, we will also produce commercial
amounts of hydrogen as well as a mixed stream of butane and butylenes ("C4 mix stream") and heavier hydrocarbons ("C5+ stream"). </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are currently pursuing engineering studies to significantly expand our capacity, and we intend to opportunistically pursue capacity expansion and other growth opportunities. In
addition, we intend to evaluate and pursue acquisition and development opportunities where we believe we can enhance our operating platform. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ca42901_our_competitive_strengths"> </A>
<A NAME="toc_ca42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Our Competitive Strengths    <BR>    </B></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Pure-play propane-to-propylene
production.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;As propane is our sole feedstock and propylene is our primary product, our profitability is primarily determined by the
difference between the cost of the propane we purchase and the price of the propylene we sell (the "propane-to-propylene spread"). The wider the price differential between
propane and propylene, the larger our gross margin. This spread has widened in recent years, and as the sole PDH propylene producer in North America, we believe we are uniquely positioned to benefit
from current positive trends in the propane-to-propylene spread. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>The
following table shows the impact of a change in the propane-to-propylene spread on our Adjusted EBITDA based on the assumptions described herein relative to our forecasted
pricing for the twelve months ending September&nbsp;30, 2012. </FONT></P>

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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="53pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="53pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="53pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="53pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="53pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="53pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="67pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Illustrative Sensitivity to Propane-to-Propylene Spread<SUP>(1)(2)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Pro Forma<BR>
Twelve<BR>
Months<BR>
Ended<BR>
March&nbsp;31,<BR>
2011<SUP>(2)(3)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Forecasted<BR>
Twelve<BR>
Months<BR>
Ending<BR>
September&nbsp;30,<BR>
2012<SUP>(2)(4)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=20 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(dollars in millions unless otherwise indicated)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Propane-to-Propylene Spread&nbsp;(&cent;/lb)<SUP>(5)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>15.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>25.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>35.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>45.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>55.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>30.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>33.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted EBITDA</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>52.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>172.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>293.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>414.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>535.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>226.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>276.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Available Cash</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>23.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>142.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>262.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>381.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>501.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>195.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>245.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>The
price sensitivity analysis in this table is based on the assumptions described in our forecast of Adjusted EBITDA for the twelve months ending
September&nbsp;30, 2012. This includes 1.2&nbsp;billion pounds of propylene sold and 344.9&nbsp;million gallons of propane utilized. It also assumes $30.4&nbsp;million of
by-product sales, $45.2&nbsp;million of fuel and utilities expense, $13.9&nbsp;million of insurance and property taxes, $30.2&nbsp;million of direct operating expense and other and
$11.0&nbsp;million of general and administrative expense. All other customer discounts and upcharge/delivery fees are per our September&nbsp;30, 2012 forecast. There can be no assurance that we
will achieve our Adjusted EBITDA forecast for the twelve months ending September&nbsp;30, 2012 or any of the specified levels of Adjusted EBITDA indicated above, or that the various
propane-to-propylene spreads will achieve any of the levels specified above.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>See
"Our Cash Distribution Policy and Restrictions on Distribution&#151;Forecasted Available Cash" for a reconciliation of our Adjusted EBITDA
forecast to our net income forecast for the twelve months ending September&nbsp;30, 2012 and a discussion of the assumptions underlying our forecast.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Reflects
financial results as if the plant had been fully operational during the period. Assumes realized market pricing levels during the twelve months
ended March&nbsp;31, 2011 for propylene, propane, C4 mix/C5+ streams and natural gas and that all other expenses, production rates, performance ratios, customer discounts, upcharge/delivery fees and
conversion factors are consistent with the forecast for the twelve months ending September&nbsp;30, 2012.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(4)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>PGP
Contract Benchmark and Propane pricing forecast provided per Chemical Data as of May&nbsp;29, 2011. See "Our Cash Distribution Policy and Restrictions
on Distribution&#151;Forecasted Available Cash" for a discussion of the assumptions underlying our forecast.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(5)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Propane-to-propylene
spread calculated as (PGP Contract Benchmark Price (&cent;/lb)-1.2 * (Propane Price
(&cent;/gl) / 4.2)). This calculation assumes that it takes approximately 1.2 pounds of propane to make 1.0 pound of propylene and that there are approximately 4.2&nbsp;pounds in a gallon of
propane.  </FONT> <FONT SIZE=2>
<BR><BR></FONT>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Strategically-Located Operations.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Our Houston Ship Channel
location places us within the heaviest concentration of petrochemical and refining complexes in the world. Our PDH facility is located within 50 miles of approximately one-half of all U.S.
propylene consumption, and our pipeline system enables us to access our contracted customers (Dow, Total and INEOS) and spot buyers of propylene. In addition, we have access to the Mt. Belvieu global
fractionation and storage hub, the world's largest and most reliable source for propane, to source our propane feedstock.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Cost Advantaged Facility Driven by a Proven
Technology.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Our PDH facility is the largest in the world. Our facility utilizes the CATOFIN PDH technology pursuant to a
fully-paid license from CB&amp;I Lummus, which we believe has the best combination of capital cost, product yield and reliability. We have also enhanced the design with our own innovations
that have resulted in energy efficiencies over the basic CATOFIN system.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Our PDH Facility's Characteristics are Difficult to
Replicate.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;In addition to its advantageous location, the ExxonMobil facility we acquired had existing air permits, pipelines, utilities,
selected processing units and other infrastructure in place which we utilized or reconfigured for our PDH process. A developer of a green-field PDH project would face significant impediments with
respect to </FONT></DD></DL>
</DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>3</FONT></P>

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<UL>
<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>permitting,
availability of real estate and cost considerations. In addition, we estimate that such a project would likely take at least four years to complete.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Dedicated "On-Purpose" Propylene
Production.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We are the only independent, dedicated on-purpose propylene production facility in North America. Unlike
refineries and ethylene crackers for which propylene is a secondary product, propylene is our primary product. Since propylene is our primary product and propane our only feedstock, our output will
never vary as a function of competiveness of alternative feedstock slates or decisions concerning production of other products such as ethylene or gasoline. We believe these factors represent key
advantages to our customers.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Contracts with Large, Prominent Customer Base.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Nearly all
of our nameplate capacity has been contracted to Dow, Total and INEOS under contracts whose maximum volumes constitute 97% of our nameplate capacity and whose minimum volumes represent 73%. The
primary Dow, Total and INEOS plants we supply produce acrylic acid, polypropylene and acrylonitrile, respectively. Each primary plant is the largest of its kind in the world. We value this diversity
of end use in the markets served by our customers. There also currently exists a spot market for propylene into which we sell our additional output.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Favorable Industry Conditions.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;The factors contributing to
the current robust environment for propylene production are not expected to change in the near term. The current high crude oil price and low natural gas price environment in North America is a
significant contributor to this favorable environment because of its negative impact on the amount of propylene production from other sources, in particular ethylene crackers that use naphtha and
heavy liquids. These factors have resulted in a reduction in the supply of propylene and a widening of the propane-to-propylene spread.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Experienced Management Team.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We employ a
highly-experienced and dedicated senior management team, with an average of over 20&nbsp;years of experience in the relevant disciplines of petrochemical engineering, marketing, management and
finance. See "Management&#151;Executive Officers and Directors." </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ca42901_our_business_strategy_1"> </A>
<A NAME="toc_ca42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Our Business Strategy    <BR>    </B></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Distribute All of the Available Cash We Generate Each
Quarter.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;The board of directors of our general partner will adopt a policy under which we will distribute all of the available cash we
generate each quarter, as described in "Our Cash Distribution Policy and Restrictions on Distributions." Unlike many publicly traded partnerships that have general partners with economic interests and
incentive distribution rights that entitle the general partner to receive disproportionate percentages of cash distributions as distributions increase, our general partner will have a
non-economic interest and no incentive distribution rights, and accordingly, our common unitholders will receive 100% of our cash distributions.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Focus on Operational Excellence, Reliable Production, Safety and
Training.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Operational excellence, reliability and safety are our core values. One of the key factors driving our selection of the
CATOFIN technology was its reputation for excellence and its reliability. We also assembled our management team with an intentional focus on the complement of skills and experience necessary to
deliver consistent and efficient operational results. We believe these factors, together with our strong culture of safety, should lead to dependable performance for our customers as well as safe
working conditions.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Continual Optimization of Facility.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Our management team
intends to optimize and improve the operating performance of our facility by identifying low cost methods to increase propylene output beyond initial nameplate capacity and undertaking initiatives
aimed at improving propylene yield and energy efficiency and enhancing the value of the by-products output of our facility. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>4</FONT></P>

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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Pursue Capacity Expansion and Other Growth
Opportunities.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We intend to opportunistically pursue capacity expansion and other growth opportunities. We are currently pursuing
engineering studies to significantly expand our capacity. In addition, we intend to evaluate and pursue acquisition and development opportunities where we believe we can enhance our operating
platform.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Actively Manage Customer Portfolio.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We believe that our
current customer portfolio represents an attractive composition of customers that serve diverse end-use markets and that are prominent industry members. We also have
well-established relationships with other consumers of propylene developed through active cultivation and regular interaction. We plan to build on our existing relationships and continue
to advance those relationships through spot sales in the short term and additional contracts in the long term if we are successful in expanding the facility's capacity. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ca42901_industry_overview"> </A>
<A NAME="toc_ca42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  Industry Overview    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propylene Supply and Demand  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propylene is an important building block in the production of complex petrochemical derivatives such as polypropylene, acrylonitrile
and acrylic acid. These derivatives are ultimately processed further to make many different consumer and industrial products such as clothing, automotive components, detergents, safety glass,
packaging materials, paints and nylon. In addition to its utility within the chemicals market, propylene also plays a significant role in the fuels market. When alkylated in a refinery, propylene is
routinely used as a gasoline blendstock. Propylene demand has historically tracked GDP growth, and experienced the first worldwide contraction in history during the recession in 2008. Following the
resumption of growth in late 2009 and 2010, Chemical Data forecasts that U.S. demand will grow at a compound annual growth rate of approximately 1.8% between 2010 and 2015. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
are three sources of propylene production in North America: crude oil refineries, ethylene manufacturing facilities and, to a much smaller extent, on-purpose facilities
such as ours. Crude oil refineries produce propylene as a by-product of gasoline production. Ethylene crackers produce propylene as a co-product of ethylene production.
Ethylene can be produced from many different feedstocks, including ethane, propane, butane, naphtha or gas oil. Although some ethylene facilities have feed flexibility, there are two general
categories of crackers: those that use feedstocks derived from crude oil (such as naphtha), referred to as "heavy feed crackers", and those that use ethane as a feedstock, referred to as "ethane
crackers." Heavy feed crackers produce propylene as a co-product in significant quantities, whereas ethane crackers produce very little propylene. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within
North America, increased natural gas production from shale gas discoveries has led to an abundance of natural gas liquids such as ethane and propane. Further, there has been a
fundamental decoupling of natural gas and oil prices as gas prices have fallen dramatically while global economic and geopolitical factors have propelled oil prices to the $100 per barrel range. In
the current high oil price/low natural gas price environment, heavy feed crackers generally have a cost disadvantage relative to ethane crackers. Numerous heavy feed crackers have been either
permanently shut down or reconfigured to enable them to produce ethylene using ethane as a feedstock. As a result, propylene production from ethylene manufacturing facilities has declined dramatically
from 15.5&nbsp;billion pounds in 2007 to 12.1&nbsp;billion pounds in 2010. Chemical Data estimates that 2&nbsp;billion pounds of this reduction represents propylene supply permanently removed
from the market. Furthermore, refinery production of propylene in recent years has declined from 19.2&nbsp;billion pounds in 2007 to 18.0&nbsp;billion pounds in 2010
along with the general softness in gasoline demand and the increased use of ethanol. The result of these reductions has been a tight supply of propylene in the North American market at a time when
demand is improving with the resumption of economic growth. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chemical
Data estimates that U.S. propylene supply will grow modestly through 2014, increasing at a compound annual growth rate of approximately 1.5% from year-end 2010. This
is primarily due to the belief that co-product supply of propylene from ethylene crackers is not likely to rebound in the near term </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>5</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>with
the expected continuation of the high oil price/low natural gas price environment. Furthermore, refinery operations are expected to remain hindered by modest gasoline demand growth. These
conditions suggest that the current very tight supply/demand dynamic affecting the propylene market is expected to persist for the foreseeable future. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propylene and Propane Pricing Dynamics  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As propane is our sole feedstock, and propylene is the primary product sold by our facility, our profitability is primarily determined
by the difference in price between propane and propylene, the "propane-to-propylene spread." Like other commodities, the pricing for propylene and propane reflect supply and
demand dynamics and are intricately related to the price movements of crude oil, natural gas and petrochemicals. The current dynamics affecting the price of these commodities, together with the tight
supply/demand environment for propylene discussed above, have led to the recent increase in the propane-to-propylene spread as illustrated in the graphic below: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ca42901_historical_propane-to-propylene_spread"> </A>
<A NAME="toc_ca42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  Historical Propane-to-Propylene Spread    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g674084.jpg" ALT="GRAPHIC" WIDTH="603" HEIGHT="295">
  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=1><I>Source U.S. Energy Information Administration ("EIA") and Chemical Data.</I></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For reasons more fully developed in the section of this prospectus entitled "Industry Overview," propylene generally prices at a premium to crude
oil and propane trades at a discount to crude oil. Over the last decade, propylene has priced in a range of approximately 1.3 to 1.4 times the price of crude, except in the recession in 2008 and 2009
when it traded tighter. The recent short supply of propylene due to the factors described above has pushed this premium higher. Propane has historically traded at a discount to crude oil, and has
declined over the last decade from approximately 80% of the price of crude in 2000 to approximately 61% in 2010 as the supply of propane from the shale gas developments has increased and the price of
natural gas relative to the price of crude oil has declined. These factors, combined with the higher crude price, have led to the recent increase in the propane-to-propylene
spread as illustrated in the above graphic. Because the propane-to-propylene spread is the primary driver of our gross margin, these trends are highly favorable to our
profitability. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
more information about the propylene industry, see "Industry Overview." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>6</FONT></P>

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<BR></FONT><FONT SIZE=2><B>  Our Relationship with Lindsay Goldberg and York Capital    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are majority owned by Lindsay Goldberg and York Capital. Although the project development for our facility occurred over several
years beginning in 2003, our predecessor was legally formed in 2007 to acquire the site of a former olefins production facility from ExxonMobil and to develop this site into a PDH facility with the
support of our sponsors. After the closing of this offering, Lindsay Goldberg will indirectly own&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our general partner and directly own&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our common
units, York
Capital will indirectly own&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our general partner and directly own&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our common units and certain of our employees and affiliates will collectively
own
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lindsay
Goldberg is a private equity investment firm with approximately $10&nbsp;billion of capital under management that focuses on partnering with entrepreneurial management teams
and closely held and family-owned businesses. Lindsay Goldberg has a team of 25 investment professionals who have invested over $5.6&nbsp;billion of equity capital in 27 portfolio companies. Lindsay
Goldberg typically invests in companies in North America and Western Europe in the manufacturing, energy, financial and business services industries. Lindsay Goldberg has a much longer time horizon
for investments than
most other private equity investment firms because of an investment structure that permits ownership for up to 20&nbsp;years. In addition to its long-term focus, Lindsay Goldberg also
identifies transformative follow-on investments and acquisitions in connection with its portfolio companies as those opportunities arise. Lindsay Goldberg has had a close relationship with
our management since 2000. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;York
Capital is an event-driven global investment firm with approximately $17&nbsp;billion of capital under management. The firm focuses on a variety of strategies, including private
equity investing. Established in 1991, York Capital has a team of over 150 individuals, including approximately 50 investment professionals and has offices in New York, Washington DC, London and Hong
Kong. York Capital's investment professionals possess multi-disciplinary knowledge and relationships, spanning industry sectors, geographies, business cycles and public and private equity and debt
markets. Over the past 19&nbsp;years, York Capital has focused on looking beyond market cycles, trends and other temporary factors to identify companies around the world with long-term
value potential. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lindsay
Goldberg and York Capital have been instrumental in our management team's effort to implement the optimal operating and financial platform for the development of the PDH
facility. Collectively, they will continue to own a majority of our common units upon completion of this offering and, therefore, will have a continuing incentive to support and promote the successful
implementation of our business strategy. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>7</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="cc42901_organizational_structure"> </A>
<A NAME="toc_cc42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Organizational Structure    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following chart provides a simplified overview of our organizational structure after giving effect to this offering and the related
transactions<SUP>(1)</SUP>: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g626674.jpg" ALT="GRAPHIC" WIDTH="633" HEIGHT="762">
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<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Assumes
the underwriters do not exercise their option to purchase additional common units, and as a result, such common units will instead be issued to our
sponsors and their affiliates, our executive officers and certain of our employees upon the expiration of such option. If and to the extent the underwriters exercise their option to purchase
additional common units, the units purchased pursuant to such exercise will be issued to the public and the remainder, if any, will be issued to our sponsors </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>8</FONT></P>

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<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>and
certain of our employees and affiliates. Accordingly, the exercise of the underwriters' option will not affect the total number of units outstanding. If the underwriters' option is exercised in
full, then our sponsors and their affiliates, our executive officers and certain of our employees would own an aggregate&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the common units and the public would
own&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of
the common units. </FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=1><A
NAME="cc42901_principal_executive_offices_and_internet_address"> </A>
<A NAME="toc_cc42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Principal Executive Offices and Internet Address    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal executive offices are located at 2 Houston Center, 909 Fannin Street, Suite&nbsp;2630, Houston, TX 77010 and our
telephone number is (713)&nbsp;255-5990. Upon completion of this offering, our website will be located at
www.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and will be activated following the closing of this
offering. We will make our periodic reports and other information filed with or furnished to the SEC, available free of charge, through our website, as soon as reasonably practicable after those
reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into this prospectus and does not
constitute a part of this prospectus. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="cc42901_risk_factors"> </A>
<A NAME="toc_cc42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Risk Factors    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An investment in our common units involves risks associated with our business, our partnership structure and the tax characteristics of
our common units. These risks are described under "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements." You
should carefully consider these risk factors together with all other information included in this prospectus. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>9</FONT></P>

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<A NAME="toc_ce42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  The Offering    <BR>    </B></FONT></P>
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<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Issuer</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>PetroLogistics&nbsp;LP, a Delaware limited partnership.</FONT></TD>
</TR>
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<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common Units Offered to<BR>
the Public</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units.</FONT></TD>
</TR>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Option to Purchase Additional Common Units from Us</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>If the underwriters exercise their option to purchase additional common units in full, we will issue a total
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units to the public.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units Outstanding After<BR>
this Offering</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units. If
the underwriters do not exercise their option to purchase additional common units, we will issue&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units to our sponsors and their affiliates, our
executive officers and certain of our employees upon the option's expiration. If and to the extent the underwriters exercise their option to purchase additional common units, the number of common units purchased by the underwriters pursuant to such
exercise will be issued to the public and the remainder, if any, will be issued to our sponsors and their affiliates, our executive officers and certain of our employees. Accordingly, the exercise of the underwriters' option will not affect the total
number of common units outstanding.</FONT></TD>
</TR>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>In addition, our general partner will own a non-economic general partner interest in us which will not entitle it
to receive distributions.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Use of Proceeds</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>We estimate that the net proceeds to us in this offering, after deducting underwriting discounts and commissions
and the estimated expenses of this offering, will be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million (based on an assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit, the mid-point of the price range set forth on the cover page of this prospectus). Of the total net proceeds we receive, we will use (a)&nbsp;approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million to make a distribution to our sponsors to reimburse them for certain construction capital expenditures and (b)&nbsp;approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million to make a distribution to our sponsors and their affiliates, our executive officers and certain of our employees.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>If the underwriters exercise their option to purchase additional common units in full, the additional net
proceeds would be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million (based upon the mid-point of the price range set forth on the cover page of this prospectus). We will use the net proceeds from any
exercise of such option to pay a distribution to our sponsors and their affiliates, our executive officers and certain of our employees. See "Use of Proceeds."</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash Distributions</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Within 45&nbsp;days after the end of each quarter, beginning with the quarter ending December&nbsp;31, 2011, we expect to make
cash distributions to unitholders of record on the applicable record date.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>The board of directors of our general partner will adopt a policy pursuant to which we will distribute all of the
available cash we generate each quarter. Available cash for each quarter will be determined by the board of directors of our general partner following the end of such quarter. We expect that available cash for each quarter will generally equal our
cash flow from operations for the quarter, less cash needed for maintenance capital expenditures, debt service and other contractual obligations and reserves for future operating or capital needs that the board of directors of our general partner
deems necessary or appropriate. We do not intend to maintain excess distribution coverage for the purpose of maintaining stability or growth in our quarterly distribution or to otherwise reserve cash for distributions, and we do not intend to incur
debt to pay quarterly distributions. We expect to finance substantially all of our growth externally, either by debt issuances or additional issuances of equity.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Because our policy will be to distribute all the available cash we generate each quarter, without reserving cash
for future distributions or borrowing to pay distributions during periods of low cash flow from operations, our unitholders will have direct exposure to fluctuations in the amount of cash generated by our business. We expect that the amount of our
quarterly distributions, if any, will vary based on our operating cash flow during such quarter. As a result, our quarterly cash distributions, if any, will not be stable and will vary from quarter to quarter as a direct result of variations in our
operating performance and cash flows caused by fluctuations in the prices of propane and propylene. Such variations in the amount of our quarterly distributions may be significant. Unlike most publicly traded partnerships, we will not have a minimum
quarterly distribution or employ structures intended to consistently maintain or increase distributions over time. The board of directors of our general partner may change our distribution policy at any time. Our partnership agreement does not
require us to pay cash distributions on a quarterly or other basis.</FONT></TD>
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<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Based upon our forecast for the twelve months ending September&nbsp;30, 2012, assuming the board of directors of our general
partner declares distributions in accordance with our cash distribution policy, we expect that our aggregate distributions for the twelve months ending September&nbsp;30, 2012 will be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit. See "Our Cash Distribution Policy and Restrictions on
Distributions&#151;Forecasted Available Cash." Unanticipated events may occur which could materially adversely affect the actual results we achieve during the forecast period. Consequently, our actual results of operations, cash flows, need for
reserves and financial condition during the forecast period may vary from the forecast, and such variations may be material. Prospective investors are cautioned not to place undue reliance on our forecast and should make their own independent
assessment of our future results of operations, cash flows and financial condition. In addition, the board of directors of our general partner may be required to or elect to eliminate our distributions at any time during periods of reduced prices or
demand for our propylene, among other reasons. Please see "Risk Factors."</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>We have a limited operating history upon which to rely in evaluating whether we will have sufficient cash to
allow us to pay distributions on our common units. Our PDH facility did not generate sales until the commencement of commercial operations in October 2010, and we did not achieve daily production rates at nameplate capacity until April 2011.
Accordingly, we would not have paid distributions to our common unitholders for periods prior to April 2011.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Incentive Distribution Rights</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>None.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Subordination Period</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>None.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Issuance of Additional Units</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our partnership agreement authorizes us to issue an unlimited number of additional units, including units with
rights to distributions or in liquidation that are senior to our common units, and rights to buy units for the consideration and on the terms and conditions determined by the board of directors of our general partner without the approval of our
unitholders. See "Common Units Eligible for Future Sale" and "The Partnership Agreement&#151;Issuance of Additional Partnership Interests."</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Limited Voting Rights</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our general partner manages and operates us. Unlike the holders of common stock in a corporation, you will have only limited
voting rights on matters affecting our business. You will have no right to elect our general partner or our general partner's directors on an annual or other continuing basis. Our general partner may be removed by a vote of the holders of at least
66<SUP>2</SUP>/<SMALL>3</SMALL>% of the outstanding common units, including any common units owned by our general partner and its affiliates (including our sponsors). Upon the completion of this offering our sponsors will own an aggregate of
approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our outstanding common units (approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% if the underwriters exercise their option to purchase additional common units in full).
This will give our sponsors the ability to prevent removal of our general partner. See "The Partnership Agreement&#151;Voting Rights."</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Call Right</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>If at any time our general partner and its affiliates (including our sponsors) own more than 80% of the common
units, our general partner will have the right, but not the obligation, to purchase all, but not less than all, of the common units held by public unitholders at a price not less than their then-current market price, as calculated pursuant to the
terms of our Partnership Agreement. See "The Partnership Agreement&#151;Call Right."</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Estimated Ratio of Taxable Income to Distributions</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>We estimate that if you own the common units you purchase in this offering through the record date for
distributions for the twelve months ending&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2014, you will be allocated, on a cumulative basis, an amount of U.S. federal taxable
income for that period that will be&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% or less of the cash distributed to you with respect to that period. For example, if you receive an annual distribution of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit, we estimate that your average allocable U.S. federal taxable income per year will be no more than
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit. See "Material U.S. Federal Income Tax Consequences&#151;Tax Consequences of Unit Ownership&#151;Ratio of Taxable Income to Distributions."</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Material U.S. Federal Income Tax Consequences</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>For a discussion of material U.S. federal income tax consequences that may be relevant to prospective unitholders,
 see "Material U.S. Federal Income Tax Consequences."</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Exchange Listing</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>We intend to apply for listing on the New York Stock Exchange ("NYSE") under the symbol "PDH."</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Risk Factors</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>See "Risk Factors" beginning on page&nbsp;16 of this prospectus for a discussion of factors that you should
carefully consider before deciding to invest in our common units.</FONT></TD>
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on market conditions at the time of pricing of this offering and other considerations, we may sell fewer or more common units than the number set forth on the cover page of
this prospectus. </FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="cg42901_summary_historical_and_pro_for__sum02739"> </A>
<A NAME="toc_cg42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Summary Historical and Pro Forma Consolidated Financial Information    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The summary financial information presented below under the caption Statement of Operations Data for the three months ended
March&nbsp;31, 2011 and 2010, and for the years ended December&nbsp;31, 2010, 2009 and 2008, and the summary financial information presented below under the caption Balance Sheet Data as of
March&nbsp;31, 2011 and 2010, and December&nbsp;31, 2010, 2009 and 2008, have been derived from the audited and unaudited financial statements of our predecessor, PL Propylene, included elsewhere
in this prospectus. Our predecessor's financial statements as of and for the years ended December&nbsp;31, 2010, 2009 and 2008 have been audited by Ernst&nbsp;&amp; Young&nbsp;LLP, independent
registered public accounting firm. Our predecessor's financial statements as of and for the three months ended March&nbsp;31, 2011 and 2010 are unaudited. Our predecessor was formed in January 2007
and acquired the site where our PDH facility is located in March 2008. Our PDH facility did not
generate sales until the commencement of commercial operations in October 2010, and we did not achieve daily production rates at nameplate capacity until April 2011. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
summary unaudited pro forma consolidated financial information presented below under the caption Statement of Operations Data for the three months ended March&nbsp;31, 2011 and for
the year ended December&nbsp;31, 2010 and the summary unaudited pro forma consolidated financial information presented below under the caption Balance Sheet Data as of March&nbsp;31, 2011 have
been derived from our unaudited pro forma consolidated financial statements included elsewhere in this prospectus. The unaudited pro forma consolidated statements of operations data for the three
months ended March&nbsp;31, 2011 and the year ended December&nbsp;31, 2010 were prepared based on the assumption that we were in existence as a separate entity throughout these periods and that
the transactions described below occurred on January&nbsp;1, 2011 and January&nbsp;1, 2010, respectively: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the entry by us into a new $350.0&nbsp;million term loan facility and a $120.0&nbsp;million revolving credit facility,
the related drawing of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million from the new term loan facility and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million under the new
revolving credit facility, and the use of proceeds of such
drawings to refinance our existing credit facility and to distribute $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million as a reimbursement of construction capital to our sponsors;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the issuance by us to our sponsors and their affiliates, our executive officers and certain of our employees of
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the issuance by us to the public of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units and the distribution of an aggregate
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of the proceeds from such offering to our sponsors and their affiliates, our executive officers and certain of our employees. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
unaudited pro forma consolidated balance sheet as of March&nbsp;31, 2011, was prepared based on the assumption that the Transactions (as defined on page&nbsp;38) occurred
March&nbsp;31, 2011. The unaudited pro forma consolidated financial data is not comparable to our historical financial data. A more complete explanation of the pro forma data can be found in our
unaudited pro forma consolidated financial statements and accompanying notes included elsewhere in this prospectus. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
historical data presented below has been derived from financial statements that have been prepared using accounting principles generally accepted in the United States, or GAAP, and
the pro forma data presented below has been derived from the "Unaudited Pro Forma Consolidated Financial Statements" included elsewhere in this prospectus. This data should be read in conjunction
with, and is qualified in its entirety by reference to, the financial statements and related notes and "Management's </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>14</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=21,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=744813,FOLIO='14',FILE='DISK131:[11ZBV1.11ZBV42901]CG42901A.;13',USER='JLAWRENA',CD='20-JUN-2011;16:52' -->
<A NAME="page_cg42901_1_15"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Discussion
and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. </FONT></P>
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<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Historical </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Unaudited&nbsp;Pro<BR>
Forma&nbsp;Consolidated </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three&nbsp;Months<BR>
Ended<BR>
March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years&nbsp;Ended<BR>
December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three<BR>
Months<BR>
Ended<BR>
March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year&nbsp;Ended<BR>
December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=20 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(dollars in millions, except per unit data<BR>
and as otherwise indicated)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Statement of Operations Data:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>105.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>30.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>105.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>30.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>91.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>41.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>91.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>41.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>31.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>31.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Management fee</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(17.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(34.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(17.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(34.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other income</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest income (expense), net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(5.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(5.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(12.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss before income taxes</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(22.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(39.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(22.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(46.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(22.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(39.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(22.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(46.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma net income (loss) per common unit, basic and diluted</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma number of common units, basic and diluted in millions</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Balance Sheet Data:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash (including restricted cash balances)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>45.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>30.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>71.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Working capital<SUP>(1)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>21.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>16.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>61.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>24.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>675.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>579.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>668.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>484.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>214.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>676.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total debt (including current portion)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>182.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>117.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>189.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>94.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>380.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Member's equity</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>464.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>434.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>456.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>365.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>202.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>267.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Financial and Other Data:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash flows provided by (used in) operating activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(53.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash flows used in investing activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(95.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(157.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(281.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(170.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash flows provided by (used in) financing activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(5.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>93.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>210.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>249.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>203.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted EBITDA<SUP>(2)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(12.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(12.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Capital expenditures</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>80.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>187.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>291.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>130.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Key Operating Data:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Production volume (thousand pounds unless otherwise noted):</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Propylene</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>144,208</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>76,522</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hydrogen (thousand standard cubic feet MSCF)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>295,425</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>C4 mix/C5+ streams</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,484</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>247</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
 <!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" -->
<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" >


<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Working
capital is defined as current assets, including cash, less current liabilities, excluding bank debt.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Adjusted
EBITDA is defined as net income (loss) plus interest expense and amortization of deferred financing costs, income tax expense, depreciation,
amortization and accretion and equity-based compensation expense. </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>15</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=22,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=899511,FOLIO='15',FILE='DISK131:[11ZBV1.11ZBV42901]CG42901A.;13',USER='JLAWRENA',CD='20-JUN-2011;16:52' -->
<A NAME="page_cg42901_1_16"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<P style="font-family:times;text-align:justify"></FONT></P>
 </DIV>
 <UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors and commercial
banks, to assess: </FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the financial performance of our assets without regard to financing methods,
capital structure, income taxes or significant non-cash expenses;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our operating performance and return on invested capital compared to those of other
publicly traded limited partnerships, without regard to financing methods and capital structure;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our ability to generate cash sufficient to make distributions to our unitholders;
and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our ability to incur and service debt and to fund capital expenditures.
<BR><BR></FONT></DD></DL>
</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><BR></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Adjusted
EBITDA should not be considered an alternative to net income, operating income, net cash flows from operating activities or any other
measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA may have material limitations as a performance measure because it excludes some, but not all, items
that affect net income from operations. In addition, Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define this term differently. The
following table presents a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, net income, on a historical basis and pro forma basis, as applicable, for each of
the periods indicated: </FONT></DD></DL>
 <DIV style="padding:0pt;position:relative;width:67%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"120%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="120%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="9pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="34pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="28pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="34pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="28pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="28pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="49pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="64pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Historical </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Unaudited Pro Forma<BR>
Consolidated </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three Months<BR>
Ended<BR>
March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year Ended<BR>
December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three<BR>
Months<BR>
Ended<BR>
March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year Ended<BR>
December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=20 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(dollars in millions)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Reconciliation of net loss to Adjusted EBITDA:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(22.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(39.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(22.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(46.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Plus:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>12.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation, amortization and accretion</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity-based compensation expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>29.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>14.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>29.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>14.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted EBITDA</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(12.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(12.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="da42901_risk_factors"> </A>
<A NAME="toc_da42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  RISK FACTORS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>You should carefully consider each of the following risks and all of the information set forth in this
prospectus before deciding to invest in our common units. If any of the following risks and uncertainties develops into an actual event, our business, financial condition, cash flows and results of
operations could be materially adversely affected. In that case, we might not be able to pay distributions on our common units, the trading price of our common units could decline materially, and you
could lose all or part of your investment. Although many of our business risks are comparable to those faced by a corporation engaged in a similar business, limited partner interests are inherently
different from the capital stock of a corporation and involve additional risks described below.</I></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="da42901_risks_related_to_our_business"> </A>
<A NAME="toc_da42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Risks Related to Our Business    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We may not have sufficient available cash to pay any quarterly distribution on our common units.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may not have sufficient available cash each quarter to enable us to pay any distributions to our common unitholders. Our PDH
facility did not generate sales until the commencement of commercial operations in October 2010, and we did not achieve daily production rates at nameplate capacity until April 2011. Accordingly, we
would not have paid distributions to our common unitholders for periods prior to April 2011. The amount of cash we will be able to distribute on our common units principally depends on the amount of
cash we generate from our operations, which is primarily dependent upon the operating margins we generate. Our operating margins, and thus, the cash we generate from operations have been volatile, and
we expect that they will fluctuate from quarter to quarter based on, among other things: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the amount of propylene we are able to produce from our PDH facility, which could be adversely affected by, among other
things, accidents, equipment failure or bad weather conditions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the price at which we are able to sell propylene, which is affected by the supply of and demand for propylene; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the level of our operating costs, including the cost of propane, our sole feedstock, as well as the price of natural gas,
electricity and other costs;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our ability to produce propylene products that meet our customers' specifications;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>non-payment or other non-performance by our customers and suppliers; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>overall economic and local market conditions. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, the actual amount of cash we will have available for distribution will depend on other factors, some of which are beyond our control, including: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the level of capital expenditures we make;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our debt service requirements;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>fluctuations in our working capital needs;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our ability to borrow funds and access capital markets;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>planned and unplanned maintenance at our facility, which will reduce our cash flows in the quarter in which it occurs; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>restrictions on distributions and on our ability to make working capital borrowings for distributions contained in debt
agreements; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the amount of cash reserves established by our general partner. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
partnership agreement will not require us to pay a minimum quarterly distribution. The amount of distributions that we pay, if any, and the decision to pay any distribution at all,
will be determined by the </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>17</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>board
of directors of our general partner. Our quarterly distributions, if any, will be subject to significant fluctuations based on the above factors. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
a description of additional restrictions and factors that may affect our ability to pay distributions, see "Our Cash Distribution Policy and Restrictions on Distributions." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> The amount of our quarterly cash distributions, if any, will vary significantly both quarterly and annually and will be directly dependent on the performance of our
business. Unlike most publicly traded partnerships, we will not have a minimum quarterly distribution or employ structures intended to consistently maintain or increase distributions over time.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investors who are looking for an investment that will pay predictable quarterly distributions should not invest in our common units. We
expect our business performance will be more cyclical and volatile, and our cash flows will be less stable, than the business performance and cash flows of most publicly traded partnerships. As a
result, our quarterly cash distributions will be cyclical and volatile and are expected to vary quarterly and annually. Unlike most publicly traded partnerships, we will not have a minimum quarterly
distribution or employ structures intended to consistently maintain or increase distributions over time. The amount of our quarterly cash distributions will be directly dependent on the performance of
our business, which will be volatile as a result of fluctuations in propane and propylene prices and the demand for propylene products. Because our quarterly distributions will be subject to
significant fluctuations directly related to the cash we generate after payment of our fixed and variable expenses, future quarterly distributions paid to our unitholders will vary significantly from
quarter to quarter and may be zero. Given the cyclical and volatile nature of our business, we expect that our unitholders will have direct exposure to fluctuations in the price of propylene and the
cost of propane. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> The amount of cash we have available for distribution to unitholders depends primarily on our cash flow and not solely on profitability.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should be aware that the amount of cash we have available for distribution depends primarily upon our cash flow, including cash
flow sources and uses such as from changes in financial reserves, changes in working capital and capital expenditures, and not solely on profitability, which will be affected by non-cash
items. As a result, we may make cash distributions during periods when we report losses and may not make cash distributions during periods when we report net income. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> For the twelve months ended March&nbsp;31, 2011, on a pro forma basis, we would not have generated sufficient available cash to have paid the per unit quarterly
distribution that we project that we will be able to pay for the twelve months ending September&nbsp;30, 2012.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We project that we will be able to pay a distribution of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per unit for the twelve months ending September&nbsp;30,
2012. In order to pay this projected distribution, we must generate approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of available cash in the twelve months ending September&nbsp;30, 2012. We have a
limited operating history upon which to rely in evaluating whether we will have sufficient cash to allow us to pay distributions on our common units. Our PDH facility did not generate sales until the
commencement of commercial operations in October 2010, and we did not achieve daily production rates at nameplate capacity until April 2011. Accordingly, we would not have be paid distributions to our
common unitholders for periods prior to April 2011. For a description of the price assumptions upon which we have based our projected per unit distribution for the twelve months ending
September&nbsp;30, 2012, see "Our Cash Distribution Policy and Restrictions on Distributions&#151;Assumptions and Considerations." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>18</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> The board of directors of our general partner may modify or revoke our cash distribution policy at any time at its discretion. Our partnership agreement does not require us
to pay any distributions at all.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The board of directors of our general partner will adopt a cash distribution policy pursuant to which we will distribute all of the
available cash we generate each quarter to unitholders of record on a pro rata basis. However, the board may change such policy at any time at its discretion and could elect not to pay distributions
for one or more quarters. Our partnership agreement does not require us to pay any distributions at all. Accordingly, investors are cautioned not to place undue reliance on the permanence of such a
policy in making an investment decision. Any
modification or revocation of our cash distribution policy could substantially reduce or eliminate the amounts of distributions to our unitholders. The amount of distributions we make, if any, and the
decision to make any distribution at all will be determined by the board of directors of our general partner, whose interests may differ from those of our common unitholders. Our general partner has
limited fiduciary and contractual duties, which may permit it to favor its own interests or the interests of Propylene Holdings to the detriment of our common unitholders. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> None of the proceeds of this offering will be available to fund our operations or to pay distributions.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will pay the net proceeds from this offering, including all proceeds from the exercise of the underwriters'
over-allotment option, if any, after deducting underwriting discounts and commissions, to our sponsors and their affiliates, our executive officers and certain of our employees.
Consequently, none of the proceeds from this offering will be available to fund our operations or to pay distributions to the public unitholders. See "Use of Proceeds." </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> The assumptions underlying the forecast of available cash that we include in "Our Cash Distribution Policy and Restrictions on Distributions&#151;Forecasted Available
Cash" are inherently uncertain and are subject to significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those
forecasted.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our forecast of available cash set forth in "Our Cash Distribution Policy and Restrictions on Distributions&#151;Forecasted
Available Cash" includes our forecast of our results of operations and available cash for the twelve months ending September&nbsp;30, 2012. The forecast has been prepared by our management team.
Neither our independent registered public accounting firm nor any other independent accountants have examined, compiled or performed any procedures with respect to the forecast, nor have any of them
expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for the forecast. The assumptions underlying the forecast are
inherently uncertain and are subject to significant business, economic, regulatory and competitive risks and uncertainties, including those discussed in this section, that could cause actual results
to differ materially from those forecasted. If the forecasted results are not achieved, we would not be able to pay the forecasted annual distribution, in which event the market price of the common
units may decline materially. Our actual results may differ materially from the forecasted results presented in this prospectus. Investors should review the forecast of our results of operations for
the twelve months ending September&nbsp;30, 2012 together with the other information included elsewhere in this prospectus, including "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> The propylene business is, and propylene prices are, cyclical and highly volatile and have experienced substantial downturns in the past. Cycles in demand and pricing could
potentially expose us to significant fluctuations in our operating and financial results, and expose you to substantial volatility in our quarterly cash distributions and material reductions in the
trading price of our common units.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to fluctuations in propylene demand and supply in the petrochemical industry. These fluctuations historically have had
and could in the future have significant effects on prices and, in turn, significant effects on our financial condition, cash flows and results of operations, which could result in </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>19</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>significant
volatility or material adverse effects in the price of our common units or our ability to make quarterly cash distributions on our common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propylene
is a commodity, and its price can be cyclical and highly volatile. The price of propylene depends on a number of factors, including the price of crude oil and other
commodities, general economic conditions, cyclical trends in end-user markets and supply and demand imbalances. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Demand
for propylene is dependent on demand for petrochemicals by the global construction, automotive and housing industries. Propylene supply is affected by available capacity and
operating rates, raw material costs, government policies and global trade. For example, an increase in the OPEC production quota may cause crude oil prices to decline and, therefore, potentially
increase the supply of propylene and reduce propylene prices. A decrease in propylene prices would have a material adverse effect on our business, cash flow and ability to make distributions. If
propylene prices fall below a certain level, we may not generate sufficient sales to operate profitably or cover our costs and our ability to make distributions will be materially adversely affected. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our results of operations, financial condition and ability to make cash distributions may be adversely affected by the supply and price levels of propane.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The sole feedstock used in our production is propane. The price of propane can be cyclical and volatile. The cost of propane represents
a substantial portion of our cost of sales. If propane costs increase, the market price of propylene may not rise correspondingly or at all. Timing differences between propane prices, which may change
daily, and the market price of propylene, which is set monthly, may have a negative effect on our cash flow. Based on our current output, we obtain all of the propane we need from Enterprise through
its propane pipeline system, which is connected to the natural gas liquids and refined products storage hub at Mt. Belvieu. The
price that we pay Enterprise for propane fluctuates based on market prices. Propane prices could significantly increase in the future. Should Enterprise fail to perform in accordance with our existing
agreement, we would need to purchase propane from third parties on the open market, which could negatively impact our results of operations to the extent third-party propane is unavailable or
available only at higher prices. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Significant price volatility or interruptions in supply of other raw materials, such as natural gas, electricity and nitrogen, may result in increased costs that we may be
unable to pass on to our customers, which could reduce our profitability.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The raw materials we consume, such as natural gas, electricity and nitrogen, are generally commodity products that are readily
available at market prices. We frequently enter into supply agreements with particular suppliers, but disruptions of existing supply arrangements could substantially impact our profitability. If
certain of our suppliers are unable to meet their obligations under present supply agreements, we may be forced to pay higher prices to obtain the necessary materials from other sources. In addition,
if any of the raw materials that we use become unavailable within the geographic area from which they are now sourced, then we may not be able to obtain suitable or cost effective substitutes. Any
interruption in the supply of raw materials will increase our costs or decrease our sales, which will reduce our cash flow. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
supply agreements typically provide for market-based pricing and provide us no protection against price volatility. If the cost of any of our raw materials rises, the market price of
propylene may not rise correspondingly or at all. Timing differences between raw material prices, which may change daily, and the market price of propylene, which is set monthly, may have a negative
effect on our cash flow. Any cost increase could have a material adverse effect on our business, results of operations, financial condition and liquidity. </FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our operations are dependent on third-party suppliers, including Enterprise, which owns the propane pipeline that provides propane to our facility. A deterioration in the
financial condition of a third-party supplier, a mechanical problem with one of their facilities or the inability of a third-party supplier to perform in accordance with its contractual obligations
could have a material adverse effect on our results of operations, financial condition and our ability to make cash distributions.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations depend in large part on the performance of third-party suppliers, including Enterprise for the supply of propane, a
subsidiary of Kinder Morgan Energy Partners,&nbsp;L.P. ("Kinder Morgan") for the supply of natural gas and Praxair,&nbsp;Inc. ("Praxair") for the supply of nitrogen. Should Enterprise, Kinder
Morgan, Praxair or any of our other third-party suppliers
fail to perform in accordance with existing contractual arrangements, our operation could be forced to halt. Alternative sources of supply could be difficult to obtain. Any shutdown of our operations,
even for a limited period, could have a material adverse effect on our results of operations, financial condition and ability to make cash distributions. In particular, our operations could be
adversely affected if there were a deterioration in Enterprise's financial condition such that the operation of the propane delivery system connected to our facility was disrupted. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our facility faces operating hazards and interruptions, including unplanned maintenance or downtime. We could face potentially significant costs to the extent these hazards
or interruptions cause a material decline in production.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations, located at a single location, are subject to significant operating hazards and interruptions. Any significant
curtailing of production at our PDH facility or individual units within our facility could result in materially lower levels of sales and cash flow for the duration of any shutdown and materially
adversely impact our ability to make cash distributions. Operations at our PDH facility could be curtailed or partially or completely shut down, temporarily or permanently, as the result of a number
of circumstances, most of which are not within our control. For example, our facility experienced significant unplanned downtime as a result of a mechanical problem in one of our compressors. Other
scenarios that could result in a shut down of our facility include: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>unplanned maintenance or catastrophic events such as a major accident or fire, damage by severe weather, flooding or other
natural disaster;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>labor difficulties that result in a work stoppage or slowdown;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>environmental proceedings or other litigation that compel the cessation of all or a portion of the operations at our PDH
facility;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>increasingly stringent environmental regulations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a disruption in the supply of propane to our PDH facility; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a governmental ban or other limitation on the use of propylene products, either generally or specifically those processed
at our facility. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
magnitude of the effect on us of any shutdown will depend on the length of the shutdown and the extent of the facility operations affected by the shutdown. Our facility requires a
planned maintenance turnaround every three years, which generally lasts up to three to four weeks and may have a material impact on our cash flows and ability to make cash distributions in the quarter
or quarters in which it occurs. During planned maintenance turnaround times, if we elect to undertake extraordinary maintenance (for example, replacements of the defective distillation trays in our
splitter tower), our downtime may be substantially longer. In addition to the triennial maintenance projects, a more significant maintenance project will be undertaken approximately every nine years.
We anticipate each of these projects to take approximately four to six weeks. A major accident, fire, flood or other event could damage our facility or the environment and the surrounding community or
result in injuries or loss of life. Planned and unplanned maintenance could reduce our net income, cash flow and ability to make cash distributions </FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>during
the period of time that any of our units is not operating. Any unplanned future downtime could have a material adverse effect on our ability to make cash distributions to our unitholders. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We are not fully insured against all risks incident to our business, and if an accident or event occurs that is not fully insured it could adversely affect our business.  </I></B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A major accident, fire, flood or other event could damage our facility or the environment and the surrounding community or result in
injuries or loss of life. If we experience significant property damage, business interruption, environmental claims or other liabilities, our business could be materially adversely affected to the
extent the damages or claims exceed the amount of valid and collectible insurance available to us. We are currently insured under property, business interruption, general liability (including sudden
and accidental pollution liability), business automobile, workers compensation and excess liability insurance policies. The property and business interruption insurance policies have a
$1.0&nbsp;billion limit with a $1.0&nbsp;million deductible for physical damage and a 60-day waiting period before losses resulting from business interruptions are recoverable. The
policies also contain exclusions and conditions that could have a materially adverse impact on our ability to receive indemnification thereunder, as well as customary sub-limits for
particular types of losses. For example, the current property policy contains specific sub-limits of $400.0&nbsp;million for damage caused by flooding and $100.0&nbsp;million for
damage caused by named windstorms, with deductibles of $1.0&nbsp;million and $5.0&nbsp;million per occurrence,
respectively. We are fully exposed to all losses in excess of the applicable limits and sub-limits and for losses due to business interruptions of fewer than 60&nbsp;days. The occurrence
of any operating risk not covered by our insurance could have a material adverse effect on our business, financial condition, results of operations and ability to pay distributions to our unitholders.
Our general liability insurance policy, which includes sudden and accidental pollution coverage expires on March&nbsp;1, 2012, and our property and business interruption insurance policies expire on
May&nbsp;1, 2012. Market factors, including but not limited to catastrophic perils that impact our industry, significant changes in the investment returns of insurance companies, insurance company
solvency trends and industry loss ratios and loss trends, can negatively impact the future cost and availability of insurance. There can be no assurance that we will be able to buy and maintain
insurance in the future with adequate limits, reasonable pricing terms and conditions. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We face competition from other propylene producers.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management estimates over 30 different companies produce propylene in North America. We consider companies with net long positions in
PGP and CGP to be our direct competitors, including Enterprise, Chevron Phillips, Lyondell Basell, ExxonMobil Chemical, Shell Chemical, Flint Hills and the Williams Companies. Most of our competitors
have significantly greater financial and other resources than us and are engaged on a national or international basis in many segments of the petroleum products and petrochemicals business, including
refining, transportation and marketing, on a scale substantially larger than ours. In addition, we may face competition from captive propylene production facilities operated by consumers of propylene.
For example, Dow recently announced a plan to build its own on-purpose propane dehydrogenation propylene facility for start-up in 2015. Dow also announced that it is
considering building a second propylene facility with a possible start-up date in 2018. As a result of these factors, we may be unable to expand our relationships with existing customers
or to obtain new customers on a profitable basis, or at all, which would have a material adverse effect on our business, results of operations and financial condition and our ability to pay cash
distributions. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We depend on certain third-party pipelines to supply us with feedstock and to distribute propylene to our customers. If these pipelines become unavailable to us, our
business could be adversely affected.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to obtain propane and other inputs necessary for the production of propylene is dependent upon the availability of
third-party pipeline systems interconnected to our PDH facility. In addition, we depend on third-party pipeline systems to transport propylene to our customers. Because we do not own </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>22</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>these
pipelines, their continuing operation is not within our control. These pipelines may become unavailable for a number of reasons, including testing, maintenance, capacity constraints, accidents,
government regulation or other events. If third-party pipelines become partially or completely unavailable, our ability to operate could be restricted and our transportation costs could increase,
thereby reducing our profitability. A prolonged or permanent interruption in the availability of third-party pipelines could have a material adverse effect on our business, financial condition,
results of operations and ability to pay distributions. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increases to the price of natural gas, which may increase the price
of propane as well as the supply of our primary product, propylene, from competitors.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hydraulic fracturing is a process used by oil and natural gas exploration and production operators in the completion of certain oil and
natural gas wells whereby water, sand and chemicals are injected under pressure into subsurface formations to stimulate natural gas production. Recently, hydraulic fracturing has come under increased
scrutiny from federal and state officials for its potential impact on health and the environment. Adoption of legislation or any implementation of regulations placing restrictions on hydraulic
fracturing activities could make it more difficult to perform hydraulic fracturing, resulting in a reduction in the supply of natural gas. The resulting increase in the price of natural gas could
narrow the propane-to-propylene spread in two ways, each adversely affecting our gross margins. First, a significant increase in natural gas prices could cause ethylene
producers to determine that the use of naphtha as a feedstock is more economical than natural gas based feedstocks such as ethane. Because the use of naphtha as a feedstock in the ethylene production
process results in significantly more propylene as co-product than ethane, the result would be an increase in propylene production by ethylene plants. The increased supply of propylene
would in turn exert downward pressure on the price of propylene, adversely affecting the price we obtain for the propylene we produce, both in the spot market and pursuant to our customer contracts,
which are market-based. Second, an increase in the price of natural gas may be accompanied by an increase in the price of propane, which is derived from natural gas, thereby further narrowing the
propane-to-propylene spread and reducing our gross margins. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We currently derive substantially all of our sales from three customers, and the loss of any of these customers without replacement on comparable terms would affect our
results of operations and cash available for distribution to our unitholders.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have derived, and believe that we will continue to derive, substantially all of our sales from a limited number of customers that
purchase all of the propylene we produce. For the three months ended March&nbsp;31, 2011, Dow, Total and INEOS accounted for 44%, 36% and 19% of our total sales, respectively. When our current
contracts with these customers expire, our customers may decide not to extend the contracts or may decide to purchase fewer pounds of propylene at lower prices during renegotiations. If our customers
decide not to renew these contracts, or decide to purchase fewer pounds of propylene or at lower prices, and we are unable to find replacement counterparties on terms as favorable as our current
contracts, our business, results of operations, financial condition and our ability to pay cash distributions to our unitholders may be materially adversely affected. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We are subject to many environmental and safety regulations that may result in unanticipated costs or liabilities, which could reduce our profitability.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to extensive federal, state and local laws, regulations, rules and ordinances relating to pollution, protection of the
environment and human health, and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials. Actual or alleged violations of
environmental laws or permit requirements could result in restrictions or </FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>prohibitions
on facility operations, substantial civil or criminal sanctions, as well as, under some environmental laws, the assessment of strict liability and/or joint and several liability. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Continually
increasing concerns regarding the safety of chemicals in commerce and their potential impact on the environment constitute a growing trend. Governmental, regulatory and
societal demands for continuously increasing levels of product safety and environmental protection could result in continued pressure for more stringent regulatory control with respect to the chemical
industry. In addition, these concerns could influence public perceptions, the viability of certain products, our reputation, the cost to comply with regulations and the ability to attract and retain
employees. Moreover, changes in environmental regulations could inhibit or interrupt our operations, or require us to modify our facilities or operations. Accordingly, environmental or regulatory
matters may cause us to incur significant unanticipated losses, costs or liabilities, which could reduce our profitability. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
could incur significant expenditures in order to comply with existing or future environmental or safety laws. Capital expenditures and costs relating to environmental or safety
matters will be subject to evolving regulatory requirements and will depend on the timing of the promulgation and enforcement of specific standards which impose requirements on our operations. Capital
expenditures and costs beyond those currently anticipated may therefore be required under existing or future environmental or safety laws. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore,
we may be liable for the costs of investigating and cleaning up environmental contamination on or from our properties or at off-site locations where we disposed
of or arranged for the disposal or treatment of hazardous materials or from disposal activities that pre-dated our purchase of business. We may, therefore, incur additional costs and
expenditures beyond those currently anticipated to address all such known and unknown situations under existing and future environmental laws. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Climate change laws and regulations could have a material adverse effect on our results of operations, financial condition and ability to pay cash distributions.  </I></B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December&nbsp;15, 2009, the U.S. EPA published its findings that emissions of carbon dioxide and other "greenhouse gases" present
an endangerment to public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth's atmosphere and other climatic changes, and EPA
has begun to regulate greenhouse gas emissions pursuant to the federal Clean Air Act ("CAA"). In addition, it is possible federal legislation could be adopted in the future to restrict greenhouse gas
emissions. Many states and regions have adopted greenhouse gas initiatives. The cost of compliance with any new regulations could be significant. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We are subject to strict laws and regulations regarding employee and process safety, as well as the prevention of accidental releases, and failure to comply with these laws
and regulations could have a material adverse effect on our results of operations, financial condition and ability to pay cash distributions.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our facility is subject to the requirements of the federal Occupational Safety and Health Act ("OSHA"), and comparable state statutes
that regulate the protection of the health and safety of workers. OSHA requires that we maintain information about hazardous materials used or produced in our operations and that we provide this
information to employees, state and local governmental authorities and local residents. In addition, the Chemical Accident Prevention Provisions adopted by the EPA under the Clean Air Act require the
development of a Risk Management Plan to prevent the accidental release of hazardous substances that could harm public health or the environment. Failure to comply with these requirements, including
general industry standards, record keeping requirements and monitoring and control of potential exposure to regulated substances, could have a material adverse effect on our results of operations,
financial condition and ability to pay cash distributions if we are subjected to significant fines or compliance costs. </FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Instability and volatility in the global capital and credit markets could negatively impact our business, financial condition, results of operations and cash flows.  </I></B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The global capital and credit markets have experienced extreme volatility and disruption over the past two years. Our results of
operations, financial condition and ability to pay cash distributions could be negatively impacted by difficult conditions and extreme volatility in the capital, credit and commodities markets and in
the global economy. These factors, combined with
declining business and consumer confidence and increased unemployment, precipitated an economic recession in the U.S. and globally during 2009 and 2010. The difficult conditions in these markets and
the overall economy affect us in a number of ways. For example: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Although we believe we will have sufficient liquidity under our new revolving credit facility to run our business, under
extreme market conditions there can be no assurance that such funds would be available or sufficient, and in such a case, we may not be able to successfully obtain additional financing on favorable
terms, or at all.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Market volatility could exert downward pressure on the price of our common units, which may make it more difficult for us
to raise additional capital and thereby limit our ability to grow.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Market conditions could result in our significant customers experiencing financial difficulties. We are exposed to the
credit risk of our customers, and their failure to meet their financial obligations when due because of bankruptcy, lack of liquidity, operational failure or other reasons could result in decreased
sales and earnings for us. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We depend on key personnel for the success of our business.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We depend on the services of the executive officers of our general partner and other key personnel. The loss of the services of any
member of our executive officer team or key employee could have an adverse effect on our business and reduce our ability to make distributions to our unitholders. We may not be able to locate or
employ on acceptable terms qualified replacements for senior management or other key employees if their services were no longer available. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Certain members of our executive management team on whom we rely to manage important aspects of our business face conflicts regarding the allocation of their time.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will rely on the executive officers and employees of our general partner to manage our operations and activities. Pursuant to a
services agreement between our general partner and PL Midstream&nbsp;LLC ("PL Midstream"), an entity controlled by Lindsay Goldberg, certain executive officers and employees of our general partner
will perform services for the olefins business of PL Midstream in addition to us. These shared executive officers and employees include our chief
financial officer and much of our accounting department. Because the shared officers and employees allocate time among us and PL Midstream, they may face conflicts regarding the allocation of their
time, which may adversely affect our business, results of operations and financial condition. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> A shortage of skilled labor, together with rising labor costs, could adversely affect our results of operations and cash available for distribution to our unitholders.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The efficient production of propylene using modern techniques and equipment requires skilled employees. Our PDH facility relies on
technology that requires special expertise to operate efficiently and effectively. To the extent that the services of our key technical personnel become unavailable to us for any reason, we would be
required to hire other personnel. We may not be able to locate or employ such qualified personnel on acceptable terms or at all. We face competition for these professionals from our competitors, our
customers and other companies operating in our industry. If we are unable to find </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>25</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>qualified
employees, or if the cost to find qualified employees increases materially, our results of operations and cash available for distribution to our unitholders could be adversely affected. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Restrictions in the agreements governing our indebtedness, including our new credit facilities, will contain significant limitations on our business operations, including
our ability to pay distributions and other payments.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to enter into a new term loan facility and revolving credit facility in the third quarter of 2011. We anticipate that as of
December&nbsp;31, 2010, on a pro forma basis after giving effect to this offering and the use of the estimated proceeds hereof and the establishment of our new credit facility, we would have had
$350.0&nbsp;million of term loan debt outstanding and borrowing capacity of approximately $120.0&nbsp;million under the revolving credit facility. We and our subsidiary may be able to incur
significant additional indebtedness in the future. If we successfully enter into these new credit facilities, our ability to pay distributions to holders of our common units and our ability to borrow
under these new credit facilities to fund distributions (if we elected to do so) will be subject to covenant restrictions under the agreement governing them. We expect that our ability to make
distributions to our common unitholders will depend, in part, on our ability to satisfy applicable covenants as well as the absence of a default or event of default under the facilities. If we were
unable to comply with any such covenant restrictions in any quarter, our ability to pay distributions to unitholders would be curtailed. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, we will be subject to covenants contained in our new credit facilities and any agreement governing other future indebtedness. These covenants will, subject to significant
exceptions, limit our
ability and the ability of our operating subsidiary to, among other things: incur, assume or permit to exist additional indebtedness, guarantees and other contingent obligations, incur liens, make
negative pledges, pay dividends or other distributions, make payments to our subsidiary, make certain loans and investments, consolidate, merge or sell all or substantially all of our assets. Any
failure to comply with these covenants could result in a default under our new credit facilities. Upon a default, unless waived, the lenders under our new credit facilities would have all remedies
available to a secured lender and could elect to terminate their commitments, cease making further loans, cause their loans to become due and payable in full, institute foreclosure proceedings against
our or our subsidiary's assets and force us and our subsidiary into bankruptcy or liquidation. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Any increase in market interest rates would make our debt service obligations more burdensome, and in turn reduce our cash available for distributions to our unitholders.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrowings under our new credit facilities will bear interest at variable rates. If market interest rates increase, such
variable-rate debt will create higher debt service requirements, which could adversely affect our cash flow and ability to pay cash distributions. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
ability to make scheduled debt payments, to refinance our obligations with respect to our indebtedness and to fund capital and non-capital expenditures necessary to
maintain the condition of our operating assets, properties and systems software, as well as to provide capacity for the growth of our business, depends on our financial and operating performance,
which, in turn, is subject to prevailing economic conditions and financial, business, competitive, legal and other factors. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing distributions, reducing or delaying our
business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital or bankruptcy protection. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Increases in interest rates could adversely impact our unit price and our ability to issue additional equity to make acquisitions, incur debt or for other purposes.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot predict how interest rates will react to changing market conditions. Interest rates on our new credit facilities, future
credit facilities and debt offerings could be higher than current levels, causing </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>26</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>our
financing costs to increase accordingly. Additionally, as with other yield-oriented securities, we expect that our unit price will be impacted by the level of our quarterly cash distributions and
implied distribution yield. The distribution yield is often used by investors to compare and rank related yield-oriented securities for investment decision-making purposes. Therefore, changes in
interest rates may affect the yield requirements of investors who invest in our common units, and a rising interest rate environment could have a material adverse impact on our unit price and our
ability to issue additional equity to fund our operations or to make acquisitions or to incur debt as well as increasing our interest costs. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We are a holding company and depend upon our subsidiary for our cash flow.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a holding company. All of our operations are conducted and all of our assets are owned by PL Propylene, our wholly-owned
subsidiary and our sole direct or indirect subsidiary. Consequently, our cash flow and our ability to meet our obligations or to pay cash distributions in the future will depend upon the cash flow of
our subsidiary and the payment of funds by our subsidiary to us in the form of dividends or otherwise. The ability of our subsidiary to make any payments to us will depend on its earnings, the terms
of its indebtedness, including the terms of any credit facilities, and legal restrictions. In particular, future credit facilities incurred at our subsidiary may impose significant limitations on the
ability of our subsidiary to pay distributions to us and consequently our ability to pay distributions to our unitholders. See also "&#151;We may not have sufficient available cash to pay any
quarterly distribution on our common units." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We have a limited operating history upon which to rely in evaluating our ability to pay quarterly cash distributions or our ability to be successful in implementing our
business strategy.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are dependent on our PDH facility as our sole source of propylene and by-products to generate sales, and we are,
therefore, dependent on the continued operation of this PDH facility to generate our sales. Our PDH facility did not generate sales until the commencement of commercial operations in October 2010, and
we did not achieve daily production rates at nameplate capacity until April 2011. As a newly constructed complex processing facility and the
largest of only four CATOFIN processing facilities that produce propylene, the operating performance of our facility over the short-term and long-term is not yet proven. We
have already encountered and will continue to encounter risks and difficulties frequently experienced by companies whose performance is dependent upon newly constructed world-scale processing or
manufacturing facilities, such as the risks described in this prospectus. Because of our limited operating history and performance record, it is difficult for you to evaluate our business and results
of operations to date and to assess our future prospects. Further, our historical financial statements do not present a complete twelve month period of operations, and therefore do not provide a
meaningful basis for you to evaluate our operations or our ability to achieve our business strategy. We may be less successful than a seasoned company in achieving a consistent operating level at our
facility capable of generating cash flows from our operations sufficient to regularly pay a quarterly cash distribution or to pay any quarterly cash distribution. We may also be less successful in
implementing our business strategy than a seasoned company with a longer operating history. Finally, we may be less equipped to identify and address operating risks and hazards in the conduct of our
business than those companies whose major facilities have longer operating histories. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We will incur increased costs as a result of being a publicly traded partnership.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a publicly traded partnership, we will incur significant legal, accounting and other expenses that we did not incur prior to this
offering. In addition, the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010, as well as rules implemented by the SEC and the NYSE, require, or will require, publicly traded
entities to adopt various corporate governance practices that will further increase our costs. Before we are able to pay distributions to our unitholders, we must first pay our expenses, including the
costs of being a public company and other operating expenses. As a result, the amount of cash we have available for distribution to our unitholders will be affected by our expenses, including the
costs associated with being a </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>27</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>publicly
traded partnership. We estimate that we will incur approximately $3.5&nbsp;million of estimated incremental costs per year, some of which will be direct charges associated with being a
publicly traded partnership and some of which will be allocated to us by our general partner and its affiliates; however, it is possible that our actual incremental costs of being a publicly traded
partnership will be higher than we currently estimate. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior
to this offering, we have not filed reports with the SEC. Following this offering, we will become subject to the public reporting requirements of the Securities Exchange Act of
1934, as amended, or the Exchange Act. We expect these requirements will increase our legal and financial compliance costs and make compliance activities more time-consuming and costly.
For example, as a result of becoming a publicly traded partnership, we are required to have at least three independent directors and adopt policies regarding internal controls and disclosure controls
and procedures, including the preparation of reports on internal control over financial reporting. In addition, we will incur additional costs associated with our publicly traded company reporting
requirements. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> As a publicly traded partnership we qualify for, and will rely on, certain exemptions from the New York Stock Exchange's corporate governance requirements.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a publicly traded partnership, we qualify for, and will rely on, certain exemptions from the NYSE's corporate governance
requirements, including: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the requirement that a majority of the board of directors of our general partner consist of independent directors; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the requirement that the board of directors of our general partner have a nominating/corporate governance committee that
is composed entirely of independent directors; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the requirement that the board of directors of our general partner have a compensation committee that is composed entirely
of independent directors. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a result of these exemptions, our general partner's board of directors will not be comprised of a majority of independent directors, our general partner's compensation committee may
not be comprised entirely of independent directors and our general partner's board of directors does not currently intend to establish a nominating/corporate governance committee. Accordingly,
unitholders will not have the same protections afforded to equityholders of companies that are subject to all of the corporate governance requirements of the NYSE. See "Management." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We will be exposed to risks relating to evaluations of controls required by Section&nbsp;404 of the Sarbanes-Oxley Act.  </I></B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are in the process of evaluating our internal controls systems to allow management to report on, and our independent auditors to
audit, our internal controls over financial reporting. We will be performing the system and process evaluation and testing (and any necessary remediation) required to comply with the management
certification and auditor attestation requirements of Section&nbsp;404 of the Sarbanes-Oxley Act, and under current rules will be required to comply with Section&nbsp;404 in our annual report for
the year ended December&nbsp;31, 2012. Furthermore, upon
completion of this process, we may identify control deficiencies of varying degrees of severity under applicable SEC and Public Company Accounting Oversight Board, or PCAOB, rules and regulations that
remain unremediated. Although we produce our financial statements in accordance with GAAP, our internal accounting controls may not currently meet all standards applicable to companies with publicly
traded securities. As a publicly traded partnership, we will be required to report, among other things, control deficiencies that constitute a "material weakness" or changes in internal controls that,
or that are reasonably likely to, materially affect internal controls over financial reporting. A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over
financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>28</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we fail to implement the requirements of Section&nbsp;404 in a timely manner, we might be subject to sanctions or investigation by regulatory authorities
such as the SEC. If we do not implement improvements to our disclosure controls and procedures or to our internal controls in a timely manner, our independent registered public accounting firm may not
be able to certify as to the effectiveness of our internal controls over financial reporting pursuant to an audit of our internal controls over financial reporting. This may subject us to adverse
regulatory consequences or a loss of confidence in the reliability of our financial statements. We could also suffer a loss of confidence in the reliability of our financial statements if our
independent registered public accounting firm reports a material weakness in our internal controls, if we do not develop and maintain effective controls and procedures or if we are otherwise unable to
deliver timely and reliable financial information. Any loss of confidence in the reliability of our financial statements or other negative reaction to our failure to develop timely or adequate
disclosure controls and procedures or internal controls could result in a decline in the price of our common units. In addition, if we fail to remedy any material weakness, our financial statements
may be inaccurate, we may face restricted access to the capital markets and the price of our common units may be adversely affected. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> If licensed technology were no longer available, our business may be adversely affected.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have licensed, and may in the future license, a combination of patent, trade secret and other intellectual property rights of third
parties for use in our business. In particular, the CATOFIN dehydrogenation technology licensed to us by CB&amp;I Lummus. The license, which is fully paid, grants us perpetual rights to use the CATOFIN
dehydrogenation technology on specified terms and conditions and is integral to the operations of our PDH facility. If this, or any other license agreements on which our operations rely were to be
terminated, licenses to alternative technology may not be available, or may only be available on terms that are not commercially reasonable or acceptable. In addition, any substitution of new
technology for currently-licensed technology may require substantial changes to manufacturing processes or equipment and may have a material adverse effect on our results of operations, financial
condition and ability to make cash distributions. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<BR></FONT><FONT SIZE=2><B>  Risks Related to an Investment in Us    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> The board of directors of our general partner will adopt a policy to distribute all of the available cash we generate each quarter, which could limit our ability to grow and
make acquisitions.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The board of directors of our general partner will adopt a policy to distribute all of the available cash we generate each quarter to
our unitholders, beginning with the quarter ending December&nbsp;31, 2011. As a result, our general partner will rely primarily upon external financing sources, including commercial bank borrowings
and the issuance of debt and equity securities, to fund our acquisitions and expansion capital expenditures. As such, to the extent we are unable to finance growth externally, our cash distribution
policy will significantly impair our ability to grow. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, because the board of directors of our general partner will adopt a policy to distribute all of the available cash we generate each quarter, our growth may not be as robust
as that of businesses that reinvest their available cash to expand ongoing operations. To the extent we issue additional units in connection with any acquisitions or expansion capital expenditures,
the payment of distributions on those additional units will decrease the amount we distribute on each outstanding unit. There are no limitations in our partnership agreement on our ability to issue
additional units, including units ranking senior to the common units. The incurrence of additional commercial borrowings or other debt to finance our growth strategy would result in increased interest
expense, which, in turn, would reduce the available cash that we have to distribute to our unitholders. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>29</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our general partner, which is owned by funds controlled by Lindsay Goldberg and York Capital, has fiduciary duties to Lindsay Goldberg and York Capital, and the interests of
Lindsay Goldberg and York Capital may differ significantly from, or conflict with, the interests of our public common unitholders.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our general partner is responsible for managing us. Although our general partner has fiduciary duties to manage us in a manner that is
in our best interests, the fiduciary duties are specifically limited by the express terms of our partnership agreement, and the directors and officers of our general partner also have fiduciary duties
to manage our general partner in a manner beneficial to its owners, Lindsay Goldberg and York Capital, and the interest of Lindsay Goldberg and York Capital may differ from, or conflict with, the
interests of our common unitholders. In resolving these conflicts, our general partner may favor its own interests or the interests of Lindsay Goldberg and York Capital over our interests and those of
our common unitholders. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
potential conflicts of interest include, among others, the following: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Neither our partnership agreement nor any other agreement will require the owners of our general partner to pursue a
business strategy that favors us. The affiliates of our general partner have fiduciary duties to make decisions in their own best interests and in the best interest of their owners, which may be
contrary to our interests. In addition, our general partner is allowed to take into account the interests of parties other than us or our unitholders, such as its owners, in resolving conflicts of
interest, which has the effect of limiting its fiduciary duty to our unitholders.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our general partner has limited its liability and reduced its fiduciary duties under our partnership agreement and has
also restricted the remedies available to our unitholders for actions that, without those limitations and reductions, might constitute breaches of fiduciary duty. As a result of purchasing common
units, unitholders consent to some actions and conflicts of interest that might otherwise constitute a breach of fiduciary or other duties under applicable state law.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>The board of directors of our general partner will determine the amount and timing of asset purchases and sales, capital
expenditures, borrowings, repayment of indebtedness and issuances of additional partnership interests, each of which can affect the amount of cash that is available for distribution to our common
unitholders.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any
services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf. There is no limitation on the amounts our general partner can cause us to pay it
or its affiliates.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our general partner may exercise its rights to call and purchase all of our common units if at any time it and its
affiliates own more than 80% of the common units.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our general partner will control the enforcement of obligations owed to us by it and its affiliates. In addition, our
general partner will decide whether to retain separate counsel or others to perform services for us.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our general partner determines which costs incurred by it and its affiliates are reimbursable by us. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See
"Conflicts of Interest and Fiduciary Duties." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our partnership agreement limits the liability and reduces the fiduciary duties of our general partner and restricts the remedies available to us and our common unitholders
for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our partnership agreement limits the liability and reduces the fiduciary duties of our general partner, while also restricting the
remedies available to our common unitholders for actions that, without these limitations and reductions, might constitute breaches of fiduciary duty. Delaware partnership law permits such contractual
reductions of fiduciary duty. By purchasing common units, common unitholders consent </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>30</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>to
some actions that might otherwise constitute a breach of fiduciary or other duties applicable under state law. Our partnership agreement contains provisions that reduce the standards to which our
general partner would otherwise be held by state fiduciary duty law. For example: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our partnership agreement permits our general partner to make a number of decisions in its individual capacity, as opposed
to its capacity as general partner. This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any
interest of, or factors affecting, our common unitholders. Decisions made by our general partner in its individual capacity will be made by our sponsors, as the owners of our general partner, and not
by the board of directors of our general partner. Examples include the exercise of the general partner's call right, its voting rights with respect to any common units it may own, its registration
rights and its determination whether or not to consent to any merger or consolidation or amendment to our partnership agreement.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our partnership agreement provides that our general partner will not have any liability to us or our unitholders for
decisions made in its capacity as general partner so long as it acted in good faith, meaning it believed that the decisions were in our best interests.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our partnership agreement provides that our general partner and the officers and directors of our general partner will not
be liable for monetary damages to us for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our
general partner or those persons acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that such person's conduct was criminal. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our partnership agreement generally provides that affiliate transactions and resolutions of conflicts of interest not
approved by the conflicts committee of the board of directors of our general partner and not involving a vote of unitholders must be on terms no less favorable to us than those generally provided to
or available from unrelated third parties or be "fair and reasonable." In determining whether a transaction or resolution is "fair and reasonable," our general partner may consider the totality of the
relationship between the parties involved, including other transactions that may be particularly advantageous or beneficial to us. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By
purchasing a common unit, a unitholder will become bound by the provisions of our partnership agreement, including the provisions described above. See "Description of Our Common
Units&#151;Transfer of Common Units." </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our sponsors have the power to appoint and remove our general partner's directors.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the consummation of this offering, our sponsors will have the power to elect all of the members of the board of directors of our
general partner. Our general partner has control over all decisions related to our operations. See "Management&#151;Our Management." Our public unitholders do not have an ability to influence
any operating decisions and will not be able to prevent us from entering into any transactions. Furthermore, the goals and objectives of our sponsors, as the owner of our general partner, may not be
consistent with those of our public unitholders. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Common units are subject to our general partner's call right.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will have the right,
which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the common units held by public unitholders at a price not less than their
then-current market price, as calculated pursuant to the terms of our partnership agreement. As a result, you may be required to sell your common units at an undesirable time or price and
may not receive any return on your investment. You may also incur a tax liability upon a sale of your common units. Our general partner is not obligated to obtain a fairness opinion regarding the
value of the </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>31</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>common
units to be repurchased by it upon exercise of the call right. There is no restriction in our partnership agreement that prevents our general partner from issuing additional common units and
then exercising its call right. Our general partner may use its own discretion, free of fiduciary duty restrictions, in determining whether to exercise this right. See "The Partnership
Agreement&#151;Call Right." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our unitholders have limited voting rights and are not entitled to elect our general partner or our general partner's directors.  </I></B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unlike the holders of common stock in a corporation, our unitholders have only limited voting rights on matters affecting our business
and, therefore, limited ability to influence management's decisions regarding our business. Unitholders will have no right to elect our general partner or our general partner's board of directors on
an annual or other continuing basis. The board of directors of our general partner, including the independent directors, will be chosen entirely by our sponsors as the owner of the general partner and
not by our common unitholders. Unlike publicly traded corporations, we will not hold annual meetings of our unitholders to elect directors or conduct other matters routinely conducted at annual
meetings of stockholders. Furthermore, even if our unitholders are dissatisfied with the performance of our general partner, they will have no practical ability to remove our general partner. As a
result of these limitations, the price at which the common units will trade could be diminished. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our public unitholders will not have sufficient voting power to remove our general partner without our sponsors' consent.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following the closing of this offering, our sponsors will own approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our common units (approximately
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% if the underwriters exercise their option to purchase
additional common units in full), which means holders of common units purchased in this offering will not be able to remove the general partner, under any circumstances, unless our sponsors sell some
of the common units that they own or we sell additional units to the public. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units (other than our general partner and its affiliates and permitted
transferees).  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our partnership agreement restricts unitholders' voting rights by providing that any units held by a person that owns 20% or more of
any class of units then outstanding, other than our general partner, its affiliates, their transferees and persons who acquired such units with the prior approval of the board of directors of our
general partner, may not vote on any matter. Our partnership agreement also contains provisions limiting the ability of common unitholders to call meetings or to acquire information about our
operations, as well as other provisions limiting the ability of our common unitholders to influence the manner or direction of management. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Cost reimbursements due to our general partner and its affiliates will reduce cash available for distribution to you.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to making any distribution on our outstanding units, we will reimburse our general partner for all expenses it incurs on our
behalf including, without limitation, salary, bonus, incentive compensation and other amounts paid to its employees and executive officers who perform services for us. The payment of these amounts,
including allocated overhead, to our general partner and its affiliates could adversely affect our ability to make distributions to you. See "Our Cash Distribution Policy and Restrictions on
Distributions," "Certain Relationships and Related Party Transactions" and "Conflicts of Interest and Fiduciary Duties&#151;Conflicts of Interest." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Limited partners may not have limited liability if a court finds that unitholder action constitutes control of our business.  </I></B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A general partner of a partnership generally has unlimited liability for the obligations of the partnership, except for those
contractual obligations of the partnership that are expressly made without </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>32</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>recourse
to the general partner. Our partnership is organized under Delaware law and our subsidiary conducts business in Texas. Limited partners could be liable for our obligations as if such limited
partners were general partners if a court or government agency determined that: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>we were conducting business in a state but had not complied with that particular state's partnership statute; or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>limited partners' right to act with other unitholders to remove or replace our general partner, to approve some amendments
to our partnership agreement or to take other actions under our partnership agreement constituted "control" of our business. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See
"The Partnership Agreement&#151;Limited Liability" for a discussion of the implications of the limitations of liability on a limited partner. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Unitholders may have liability to repay distributions.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event that: (1)&nbsp;we make distributions to our unitholders when our nonrecourse liabilities exceed the sum of
(a)&nbsp;the fair market value of our assets not subject to recourse liability and (b)&nbsp;the excess of the fair market value of our assets subject to recourse liability over such liability, or
a distribution causes such a result, and (2)&nbsp;a unitholder knows at the time of the distribution of such circumstances, such unitholder will be liable for a period of three years from the time
of the impermissible distribution to repay the distribution under Section&nbsp;17-607 of the Delaware Act. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Likewise,
upon the winding up of the partnership, in the event that (1)&nbsp;we do not distribute assets in the following order: (a)&nbsp;to creditors in satisfaction of their
liabilities; (b)&nbsp;to partners and former partners in satisfaction of liabilities for distributions owed under our partnership agreement; (c)&nbsp;to partners for the return of their
contribution; and finally (d)&nbsp;to the partners in the proportions in which the partners share in distributions and (2)&nbsp;a unitholder knows at the time of such circumstances, then such
unitholder will be liable for a period of three years from the impermissible distribution to repay the distribution under Section&nbsp;17-807 of the Delaware Act. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
purchaser of common units who becomes a limited partner is liable for the obligations of the transferring limited partner to make contributions to us that are known by the purchaser at
the time it became a limited partner and for unknown obligations if the liabilities could be determined from our partnership agreement. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our general partner's interest in us and the control of our general partner may be transferred to a third party without unitholder consent.  </I></B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our general partner may transfer its general partner interest in us to a third party in a merger or in a sale of all or substantially
all of its assets without the consent of the unitholders. Furthermore, there is no restriction in our partnership agreement on the ability of our sponsors to transfer their equity interests in our
general partner to a third party. The new equity owner of our general partner would then be in a position to replace the board of directors and the officers of our general partner with its own choices
and to influence the decisions taken by the board of directors and officers of our general partner. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> There is no existing market for our common units, and we do not know if one will develop to provide you with adequate liquidity. If our unit price fluctuates after this
offering, you could lose a significant part of your investment.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to this offering, there has not been a public market for our common units. If an active trading market does not develop, you may
have difficulty selling any of our common units that you buy. The initial public offering price for the common units will be determined by negotiations between us and the underwriters and may not be
indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell our common units at prices equal to or greater than the price </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>33</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>paid
by you in this offering. The market price of our common units may be influenced by many factors including: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the level of our distributions and our earnings or those of other companies in our industry or other publicly traded
partnerships;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the failure of securities analysts to cover our common units after this offering or changes in financial estimates by
analysts;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>announcements by us or our competitors of significant contracts or acquisitions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>variations in quarterly results of operations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>loss of a large customer or supplier;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>market prices of propylene;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>market prices of propane;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>general economic conditions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>terrorist acts;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>changes in the applicable environmental regulations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>changes in accounting standards, policies, guidance, interpretations or principles;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>future sales of our common units; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>investor perceptions of us and the industries in which our products are used. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a result of these factors, investors in our common units may not be able to resell their common units at or above the initial offering price. In addition, the stock market in general
has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies like us. These broad market and industry factors may
materially reduce the market price of our common units, regardless of our operating performance. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> You will incur immediate and substantial dilution in net tangible book value per common unit.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The initial public offering price of our common units is substantially higher than the pro forma net tangible book value of our
outstanding units. As a result, if you purchase common units in this offering, you will incur immediate and substantial dilution in the amount of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit. This dilution
results primarily because the assets contributed by Propylene Holdings are recorded at their historical costs, and not their fair value, in accordance with GAAP. See "Dilution." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We may issue additional common units and other equity interests without your approval, which would dilute your existing ownership interests.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our partnership agreement, we are authorized to issue an unlimited number of additional interests without a vote of the
unitholders. The issuance by us of additional common units or other equity interests of equal or senior rank will have the following effects: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the proportionate ownership interest of unitholders immediately prior to the issuance will decrease; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the amount of cash distributions on each unit will decrease;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the ratio of our taxable income to distributions may increase;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the relative voting strength of each previously outstanding unit will be diminished; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the market price of the common units may decline. </FONT></DD></DL>
</UL>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, our partnership agreement does not prohibit the issuance of equity interests by our subsidiary, which may effectively rank senior to the common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Units eligible for future sale may cause the price of our common units to decline.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of substantial amounts of our common units in the public market, or the perception that these sales may occur, could cause the
market price of our common units to decline. This could also impair our ability to raise additional capital through the sale of our equity interests. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
will be&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units outstanding following this offering.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units are being sold to the public in this
offering (&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units
if the underwriters exercise their option to purchase additional common units in full) and an aggregate&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units will be owned by our sponsors and their affiliates, our
executive
officers and certain of our employees following this offering (&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units if the underwriters exercise their option to purchase additional common units in full).
The
common units sold in this offering will be freely transferable without restriction or further registration under the Securities Act of 1933, or the Securities Act, by persons other than "affiliates,"
as that term is defined in Rule&nbsp;144 under the Securities Act. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, under our partnership agreement, affiliates of our general partner have the right to cause us to register their units under the Securities Act and applicable state
securities laws. In connection with this offering, we will enter into a registration rights agreement with our sponsors pursuant to which we may be required to register the sale of the common units
they hold under the Securities Act and applicable state securities laws. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with this offering, we, our sponsors, our general partner and our general partner's directors and executive officers will enter into lock-up agreements,
pursuant to which they will agree, subject to certain exceptions, not to sell or transfer, directly or indirectly, any of our common units until 180&nbsp;days from the date of this prospectus,
subject to extension in certain circumstances. Following termination of these lockup agreements, all units held by our sponsors, members of our executive management team, our general partner and their
affiliates will be freely tradable under Rule&nbsp;144, subject to the volume and other limitations of Rule&nbsp;144. See "Common Units Eligible for Future Sale." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dc42901_tax_risks"> </A>
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<BR></FONT><FONT SIZE=2><B>  Tax Risks    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to reading the following risk factors, you should read "Material U.S. Federal Income Tax Consequences" for a more complete
discussion of the expected material federal income tax consequences of owning and disposing of common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our tax treatment depends on our status as a partnership for U.S. federal income tax purposes, as well as our not being subject to a material amount of entity-level taxation
by individual states. If the IRS were to treat us as a corporation for federal income tax purposes or we were to become subject to material additional amounts of entity-level taxation for state tax
purposes, then our cash available for distribution to you could be substantially reduced.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The anticipated after-tax economic benefit of an investment in our common units depends largely on our being treated as a
partnership for U.S. federal income tax purposes. We have not requested, and do not plan to request, a ruling from the Internal Revenue Service (the "IRS"), on this or any other tax matter affecting
us. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Despite
the fact that we are organized as a limited partnership under Delaware law, it is possible in certain circumstances for a partnership such as ours to be treated as a corporation
for federal income tax purposes. Although we do not believe, based upon our current operations, that we will be so treated, a change in our business (or a change in current law) could cause us to be
treated as a corporation for federal income tax purposes or otherwise subject us to taxation as an entity. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income at the corporate tax rate, which is currently a maximum of 35%
and would likely pay </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>35</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>state
income tax at varying rates. Distributions to you would generally be taxed again as corporate distributions, and no income, gains, losses, deductions or credits would flow through to you.
Because a tax would be imposed upon us as a corporation, our cash available for distribution to you would be substantially reduced. Therefore, treatment of us as a corporation would result in a
material reduction in the anticipated cash flow and after-tax return to the unitholders, likely causing a substantial reduction in the value of our common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
Texas, we will be subject to an entity-level tax on any portion of our income that is generated in Texas in the prior year. Imposition of any such additional taxes on us or an
increase in the existing tax rates would reduce the cash available for distribution to our unitholders. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> The tax treatment of publicly traded partnerships or an investment in our units could be subject to potential legislative, judicial or administrative changes and differing
interpretations, possibly on a retroactive basis.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units may
be modified by administrative, legislative or judicial interpretation at any time. For example, members of Congress have recently considered substantive changes to the existing federal income tax laws
that affect publicly traded partnerships. Any modification to the U.S. federal income tax laws and interpretations thereof may be applied retroactively and could make it more difficult or impossible
to meet the exception for certain publicly traded partnerships to be treated as partnerships for U.S. federal income tax purposes. Although the considered legislation would not appear to have affected
our treatment as a partnership, we are unable to predict whether any of these changes, or other proposals will be reintroduced or will ultimately be enacted. Any such changes could negatively impact
the value of an investment in our common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> You will be required to pay taxes on your share of our income even if you do not receive any cash distributions from us.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because our unitholders will be treated as partners to whom we will allocate taxable income that could be different in amount than the
cash we distribute, you will be required to pay any federal income taxes and, in some cases, state and local income taxes on your share of our taxable income whether or not you receive cash
distributions from us. You may not receive cash distributions from us equal to your share of our taxable income or even equal to the actual tax liability that results from that income. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> The sale or exchange of 50% or more of our capital and profits interests during any twelve-month period will result in the termination of our partnership for federal income
tax purposes.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will be considered to have terminated our partnership for federal income tax purposes if there is a sale or exchange of 50% or more
of the total interests in our capital and profits within a twelve-month period. Our termination would, among other things, result in the closing of our taxable year for all unitholders and could
result in a deferral of depreciation deductions allowable in computing our taxable income. In the case of a unitholder reporting on a taxable year other than a fiscal year ending December&nbsp;31,
the closing of our taxable year may also result in more than twelve months of our taxable income or loss being includable in his taxable income for the year of termination. Our termination currently
would not affect our classification as a partnership for federal income tax purposes, but instead, we would be treated as a new partnership for federal income tax purposes. If treated as a new
partnership, we must make new tax elections and could be subject to penalties if we are unable to determine that a termination occurred. See "Material U.S. Federal Income Tax
Consequences&#151;Disposition of Common Units&#151;Constructive Termination" for a discussion of the consequences of our termination for federal income tax purposes. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>36</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Tax gain or loss on the disposition of our common units could be more or less than expected.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you sell your common units, you will recognize a gain or loss equal to the difference between the amount realized and your tax basis
in those common units. Because distributions in excess of your allocable share of our net taxable income decrease your tax basis in your common units, the amount, if any, of such prior excess
distributions with respect to the units you sell will, in effect, become taxable income to you if you sell such units at a price greater than your tax basis in those units, even if the price you
receive is less than your original cost. Furthermore, a substantial portion of the amount realized, whether or not representing gain, may be taxed as ordinary income due to potential recapture items,
including depreciation recapture. In addition, because the amount realized includes a unitholder's share of our nonrecourse liabilities, if you sell your units, you may incur a tax liability in excess
of the amount of cash you receive from the sale. See "Material U.S. Federal Income Tax Consequences&#151;Disposition of Common Units&#151;Recognition of Gain or Loss" for a further
discussion of the foregoing. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Tax-exempt entities and non-U.S. persons face unique tax issues from owning common units that may result in adverse tax consequences to them.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment in common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts
("IRAs"), and non-U.S. persons raises issues unique to them. For example, virtually all of our income allocated to organizations that are exempt from federal income tax, including IRAs and
other retirement plans, will be unrelated business taxable income and will be taxable to them. Distributions to non-U.S. persons will be reduced by withholding taxes at the highest
applicable effective tax rate, and non-U.S. persons will be required to file&nbsp;U.S. federal tax returns and pay tax on their share of our taxable income. If you are a
tax-exempt entity or a non-U.S. person, you should consult your tax advisor before investing in our common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted and the cost of any IRS contest will reduce our cash
available for distribution to you.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The IRS may adopt positions that differ from the positions we take. It may be necessary to resort to administrative or court
proceedings to sustain some or all of the positions we take. A court may not agree with some or all of the positions we take. Any contest with the IRS may materially and adversely impact the market
for our common units and the price at which they trade. Our costs of any contest with the IRS will be borne indirectly by our unitholders and our general partner because the costs will reduce our cash
available for distribution. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We will treat each purchaser of our common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment,
which could adversely affect the value of the common units.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because we cannot match transferors and transferees of common units, we will adopt depreciation and amortization positions that may not
conform to all aspects of existing Treasury Regulations. A successful IRS challenge to those positions could adversely affect the amount of tax benefits available to you. It also could affect the
timing of these tax benefits or the amount of gain from your sale of common units and could have a negative impact on the value of our common units or result in audit adjustments to your tax returns.
See "Material U.S. Federal Income Tax Consequences&#151;Tax Consequences of Unit Ownership&#151;Section&nbsp;754 Election" for a further discussion of the effect of the depreciation
and amortization positions we adopt. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>37</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We will prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first
day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and
deduction among our unitholders.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We generally prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each month
based upon the ownership of our common units on the first day of each month, instead of on the basis of the date a particular common unit is transferred. Nonetheless, we allocate certain deductions
for depreciation of capital additions based upon the date the underlying property is placed in service. The use of this proration method may not be permitted under existing Treasury Regulations, and
although the U.S. Treasury Department issued proposed Treasury Regulations allowing a similar monthly simplifying convention, such regulations are not final and do not specifically authorize the use
of the proration method we have adopted. Accordingly, our counsel is unable to opine as to the validity of this method. If the IRS were to successfully challenge our proration method, we may be
required to change the allocation of items of income, gain, loss and deduction among our unitholders. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> A unitholder whose common units are loaned to a "short seller" to cover a short sale of common units may be considered as having disposed of those common units. If so, he
would no longer be treated for tax purposes as a partner with respect to those common units during the period of the loan and may recognize gain or loss from the disposition.  </I></B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because there is no tax concept of loaning a partnership interest, a unitholder whose common units are loaned to a "short seller" to
cover a short sale of common units may be considered as having disposed of the loaned units. In that case, he may no longer be treated for tax purposes as a partner with respect to those common units
during the period of the loan to the short seller and the unitholder may recognize gain or loss from such disposition. Moreover, during the period of the loan to the short seller, any of our income,
gain, loss or deduction with respect to those common units may not be reportable by the unitholder and any cash distributions received by the unitholder as to those common units could be fully taxable
as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller should modify any applicable brokerage account
agreements to prohibit their brokers from borrowing their common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Unitholders may be subject to state and local taxes and return filing requirements in jurisdictions where they do not live as a result of investing in our common units.  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to federal income taxes, unitholders may become subject to other taxes, including state, local and non-U.S.
taxes, unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by jurisdictions in which we conduct business or own property in the future, even if they do not live
in any of those jurisdictions. We currently conduct business only in Texas, which does not impose a personal income tax but does impose a tax on corporations and other entities. We may own property or
conduct business in other states or non-U.S. countries in the future. Unitholders may be required to file state and local income tax returns and pay state and local income taxes in some or
all of those various jurisdictions. Further, unitholders may be subject to penalties for failure to comply with those requirements. It is the unitholder's responsibility to file all U.S. federal,
state, local and non-U.S. tax returns. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>38</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
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<BR></FONT><FONT SIZE=2><B>  CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus contains forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future
events or conditions or that include the words "will," "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and
that do not relate to historical matters identify forward-looking statements. Our forward-looking statements include statements about our business strategy, our industry, our future profitability, our
expected capital expenditures (including environmental expenditures) and the impact of such expenditures on our performance, the costs of operating as a public company and our capital expenditure
projects. All statements herein about our forecast of available cash and our forecasted results for the twelve months ending September&nbsp;30, 2012
constitute forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, including the factors described under "Risk Factors," that may cause our
actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. Such risks and uncertainties include, among
other things: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our ability to make cash distributions on the common units;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the volatile nature of our business and the variable nature of our distributions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the ability of our general partner to modify or revoke our distribution policy at any time;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our ability to forecast our future financial condition or results of operations and our future sales and expenses; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the cyclical nature of our business;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>intense competition from other propylene producers;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our reliance on propane that we purchase from Enterprise;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the supply and price levels of propane and propylene;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the risk of a material decline in production at our propane dehydrogenation facility;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>potential operating hazards from accidents, fire, severe weather, floods or other natural disasters; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the risk associated with governmental policies affecting the petrochemical industry;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>capital expenditures and potential liabilities arising from environmental laws and regulations; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our potential inability to obtain or renew permits;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>existing and proposed environmental laws and regulations, including those relating to climate change, alternative energy
or fuel sources, and on the end-use and application of propylene;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>new regulations concerning the transportation of hazardous chemicals, risks of terrorism and the security of propane
processing facilities;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our lack of asset diversification;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our dependence on significant customers;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our ability to comply with employee safety laws and regulations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>potential disruptions in the global or U.S. capital and credit markets;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our potential inability to successfully implement our business strategies, including the completion of significant capital
expenditure projects;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>additional risks, compliance costs and liabilities from expansions or acquisitions; </FONT></DD></DL>
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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our reliance on certain members of our senior management team;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the potential development of integrated propylene facilities by our current customers, displacing us as suppliers; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the potential shortage of skilled labor or loss of key personnel;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our ability to continue to license the technology used in our operations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our ability to secure appropriate and adequate debt facilities at a reasonable cost of capital; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>restrictions in our debt agreements;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the dependence on our subsidiary for cash to meet our debt obligations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our limited operating history;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>potential increases in costs and distraction of management resulting from the requirements of being a publicly traded
partnership;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>exemptions we will rely on in connection with NYSE corporate governance requirements;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>risks relating to evaluations of internal controls required by Section&nbsp;404 of the Sarbanes-Oxley Act; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>risks relating to our relationships with our sponsors;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>control of our general partner by our sponsors;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>limitations on the fiduciary duties owed by our general partner which are included in the partnership agreement; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>changes in our treatment as a partnership for U.S. income or state tax purposes. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs, forward-looking statements involve known and
unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements
expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events,
changed circumstances or otherwise, unless required by law. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>40</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_de42901_1_41"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="de42901_the_transactions_and_our_structure_and_organization"> </A>
<A NAME="toc_de42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  THE TRANSACTIONS AND OUR STRUCTURE AND ORGANIZATION    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="de42901_the_transactions"> </A>
<A NAME="toc_de42901_3"> </A></FONT> <FONT SIZE=2><B>  The Transactions    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following transactions will take place in connection with, or prior to, this offering. We refer to these transactions collectively
as the "Transactions": </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Prior to the closing of this offering, PL Propylene expects to enter into a new $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million term loan
facility and a $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million revolving credit facility;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Prior to the closing of this offering, PL Propylene will draw $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million from under its revolving
credit facility to fund its working capital needs, draw $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million under the new term loan facility and use (1)
&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million to refinance and cancel its
existing credit facility, (2)&nbsp;approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million to reimburse our sponsors for certain construction capital expenditures and (3)&nbsp;approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million to pay associated financing costs;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our general partner and Propylene Holdings will enter into an amended and restated agreement of limited partnership, the
form of which is attached hereto as Appendix&nbsp;A;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Propylene Holdings will contribute PL Propylene to us in exchange for (1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units,
(2)&nbsp;the right to receive the net proceeds from this offering (after deducting underwriting discounts and commissions and the expenses of this offering) and (3)&nbsp;the right to receive
additional common units, a cash distribution or both, based upon whether or not the underwriters exercise their option to purchase additional common units in full or in part; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Propylene Holdings will distribute
all&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units, its right to
receive the net proceeds from this
offering (after deducting underwriting discounts and commissions and the expenses of this offering) and its right to receive additional common units, a cash distribution or both, based upon whether or
not the underwriters exercise their option to purchase additional common units in full or in part to our sponsors and their affiliates, our executive officers and certain of our employees; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>We will offer and sell&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units in this offering and pay related underwriting discounts and
commissions and offering expenses;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>We will distribute the $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of net proceeds from this offering (after deducting underwriting
discounts and commissions and the expenses of this offering) of which (1)&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million will be distributed to our sponsors to reimburse them for certain construction
capital
expenditures and (2)&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million will be a distribution to our sponsors and their affiliates, our executive officers and certain of our employees; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>To the extent the underwriters exercise their option to purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional common units, we will issue
such units to the public and distribute the net proceeds to our sponsors and their affiliates, our executive officers and certain of our employees; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>To the extent the underwriters do not exercise their option to purchase additional common units, we will issue those
common units to our sponsors and their affiliates, our executive officers and certain of our employees. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="de42901_management"> </A>
<A NAME="toc_de42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Management    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The board of directors and executive officers of our general partner will manage our operations and activities. In order to carry out
our operations, our general partner will employ approximately 90 employees. Following this offering, our general partner will be owned by our sponsors. Our general partner will not receive any
management fee or other compensation in connection with the management of our business but will be entitled to be reimbursed for all direct and indirect expenses it incurs or payments it makes on our
behalf (including salary, bonus, incentive compensation and other amounts paid to its </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>41</FONT></P>

<HR NOSHADE>
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<A NAME="page_de42901_1_42"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>employees
and executive officers who perform services for us). Upon the closing of this offering, our general partner will own a non-economic general partner interest and therefore will
not be entitled to receive cash distributions. However, it may acquire common units in the future and, if it does so, will be entitled to receive pro rata distributions therefrom. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unlike
shareholders in a corporation, our common unitholders are not entitled to elect our general partner or the board of directors of our general partner. See
"Management&#151;Our Management." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="de42901_conflicts_of_interest_and_fiduciary_duties"> </A>
<A NAME="toc_de42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Conflicts of Interest and Fiduciary Duties    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PetroLogistics&nbsp;GP&nbsp;LLC, our general partner, has legal duties to manage us in a manner that is in our best interests.
These legal duties are commonly referred to as "fiduciary duties." Because our general partner is owned by our sponsors, the officers and directors of our general partner also have fiduciary duties to
manage the business of our general partner in a manner beneficial to our sponsors. As a result of these relationships, conflicts of interest may arise in the future between us and our unitholders, on
the one hand, and our general partner and its affiliates, on the other hand. For a more detailed description of the conflicts of interest and fiduciary duties of our general partner, see "Risk
Factors&#151;Risks Related to an Investment in Us" and "Conflicts of Interest and Fiduciary Duties." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
partnership agreement limits the liability and reduces the fiduciary duties of our general partner and its directors and officers to our unitholders. Our partnership agreement also
restricts the remedies
available to unitholders for actions that might otherwise constitute breaches of our general partner's fiduciary duties. By purchasing a common unit, you are consenting to various limitations on
fiduciary duties contemplated in our partnership agreement and conflicts of interest that might otherwise be considered a breach of fiduciary or other duties under applicable law. See "Conflicts of
Interest and Fiduciary Duties&#151;Fiduciary Duties" for a description of the fiduciary duties imposed on our general partner by Delaware law, the material modifications of these duties
contained in our partnership agreement and certain legal rights and remedies available to unitholders. In addition, our general partner will have the right to call, under specified circumstances, all
of the outstanding common units without considering whether this is in the interest of our common unitholders. For a description of such call right, see "The Partnership Agreement&#151;Call
Right." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
a description of our other relationships with our affiliates, see "Certain Relationships and Related Party Transactions." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>42</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_de42901_1_43"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="de42901_use_of_proceeds"> </A>
<A NAME="toc_de42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  USE OF PROCEEDS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to receive approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of net proceeds from the sale of common units by us in this
offering, after deducting underwriting discounts and commissions and the estimated expenses of this offering, based on an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common
unit (the
mid-point of the price range set forth on the cover page of the prospectus). We intend to use the net proceeds of this offering to make a $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million distribution to
our sponsors and their affiliates, our executive officers and certain of our employees, of which $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million will be distributed to our sponsors to reimburse them for certain
construction capital expenditures and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, which will be distributed as a distribution. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the underwriters exercise their option to purchase up to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional common units in full, the additional net proceeds to us would be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million (and the total net proceeds to us from this offering would be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million),
 in each case assuming an initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit (the mid-point of the price range set forth on the cover page of the prospectus). We will use the net proceeds from any exercise of such option to pay a
distribution to our sponsors and certain of our employees and affiliates. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
$1.00 increase (or decrease) in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit would increase (decrease) the net proceeds to us from this offering by
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, assuming the number of
common units offered by us, as set forth on the cover page of this prospectus, remains the same and assuming the underwriters do not exercise their option to purchase additional common units, and
after deducting underwriting discounts and commissions. The actual initial public offering price is subject to market conditions and negotiations between us and the underwriters. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depending
on market conditions at the time of the pricing of this offering and other considerations, we may sell fewer or more common units than the number set forth on the cover page of
this prospectus. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>43</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dg42901_capitalization"> </A>
<A NAME="toc_dg42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  CAPITALIZATION    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our cash and cash equivalents, restricted cash and capitalization as of March&nbsp;31, 2011
on: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>an actual basis; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a pro forma basis to reflect the issuance of common units in this offering, the Transactions and the application of the
net proceeds from this offering as described under "Use of Proceeds." </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
table assumes (1)&nbsp;an initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per unit (the mid-point of the price range set forth on the cover page of the prospectus),
and (2)&nbsp;no exercise by the underwriters of their option to purchase additional common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
should read this table in conjunction with "Use of Proceeds," "Selected Historical and Pro Forma Consolidated Financial Information," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and the financial statements and related notes included elsewhere in this prospectus. </FONT></P>
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<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="10pt" style="font-family:times;"></TD>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="56pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of March&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Actual </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Pro Forma<BR>
Consolidated </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,904</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Existing term loan<SUP>(1)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>150,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Existing revolving credit facility<SUP>(1)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>32,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>New term loan facility<SUP>(1)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>New revolving credit facility<SUP>(2)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Member's/Partners' capital:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>PL Propylene</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>464,340</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>PetroLogistics&nbsp;LP:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity held by public:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common units: none issued and outstanding actual; issued and outstanding pro forma</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity held by our sponsors and their affiliates, our executive officers and certain of our employees:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common units: none issued and outstanding actual; issued and outstanding pro forma</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General partner interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total partners' capital</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>464,340</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total capitalization</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>646,840</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>We
expect to enter into a new term loan facility prior to the closing of this offering, the proceeds of which will be used, in part, to refinance and cancel
our existing term loan facility and revolving credit facility. We will enter into new credit facilities prior to the closing of this offering. The new credit facilities will include a
$350.0&nbsp;million term loan facility, which we expect will be fully drawn at closing, and a $120.0&nbsp;million revolving credit facility, $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of which we expect
will
be drawn at closing.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>We
expect to have approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of available capacity under our new revolving credit facility at the closing of this
offering. </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>44</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=51,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=134180,FOLIO='44',FILE='DISK131:[11ZBV1.11ZBV42901]DG42901A.;10',USER='AGUERRE',CD='19-JUN-2011;13:09' -->
<A NAME="page_dg42901_1_45"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dg42901_dilution"> </A>
<A NAME="toc_dg42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  DILUTION    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchasers of common units offered by this prospectus will suffer immediate and substantial dilution in net tangible book value per
unit. Our unaudited pro forma consolidated net tangible book value as of March&nbsp;31, 2011, excluding the net proceeds of this offering, was approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or
approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per unit. Unaudited pro forma consolidated net tangible book value per unit gives effect to the pro forma adjustments described in the notes to our unaudited pro
forma
consolidated financial statements included elsewhere in this prospectus (other than the issuance of common units in this offering and the receipt of the net proceeds from this offering as described
under "Use of Proceeds") and represents the amount of unaudited pro forma consolidated tangible assets less unaudited pro forma consolidated total liabilities (excluding the net proceeds of this
offering), divided by the pro forma number of units outstanding (excluding the units issued in this offering). </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dilution
in net tangible book value per unit represents the difference between the amount per unit paid by purchasers of our common units in this offering and the unaudited pro forma
consolidated net tangible book value per unit immediately after this offering. After giving effect to the sale
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units in this offering at an assumed initial public offering
price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit (the mid-point of the price range set forth on the cover page of the prospectus), and after deducting the estimated underwriting discounts and
commissions and estimated offering expenses payable by us, our unaudited pro forma consolidated net tangible book value as of March&nbsp;31, 2011 would have been approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per unit. This represents an immediate increase in net tangible book value of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per unit to our existing unitholders and an
immediate pro forma dilution of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per unit to purchasers of common units in this offering. The following table illustrates this dilution on a per unit basis: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
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<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Assumed initial public offering price per common unit</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unaudited pro forma consolidated net tangible book value per unit before this offering<SUP>(1)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase in net tangible book value per unit attributable to purchasers in this offering and use of proceeds</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less: Unaudited pro forma consolidated net tangible book value per unit after this offering<SUP>(2)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Immediate dilution in net tangible book value per common unit to purchasers in this offering</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Determined
by dividing the net tangible book value of our assets less total liabilities by the number of units outstanding prior to this offering.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Determined
by dividing our unaudited pro forma consolidated net tangible book value, after giving effect to the application of the net proceeds of this
offering, by the total number of units to be outstanding after this offering. </FONT></DD></DL>
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
$1.00 increase (decrease) in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit (the mid-point of the price range set forth on the cover page of
the prospectus) would increase (decrease) our unaudited pro forma consolidated net tangible book value by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, the unaudited pro forma consolidated net tangible book
value
per unit by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and the dilution per common unit to new investors by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, assuming the number of common units
offered by us, as set forth on the cover page of this
prospectus, remains the same and the underwriters do not exercise their option to purchase additional common units, and after deducting the underwriting discounts and commissions and estimated
offering expenses payable by us. Depending on market conditions at the time of pricing
of this offering and other considerations, we may sell fewer or more common units than the number set forth on the cover page of this prospectus. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>45</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth the total value contributed by our general partner and its affiliates in respect of the units held by them and the total amount of consideration
contributed to us by the purchasers of common units in this offering upon the completion of the Transactions. </FONT></P>
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<TD WIDTH="37pt" style="font-family:times;"></TD>
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<TD WIDTH="39pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=4 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Units Acquired </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total Consideration </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
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<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Percent </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Amount </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Percent </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General Partner and its affiliates</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>New investors</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the value of the assets contributed as recorded at historical cost in accordance with GAAP, as adjusted for distributions and other capital account
adjustments.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the net proceeds of this offering after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. </FONT></DD></DL>
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
$1.00 increase (decrease) in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit would increase (decrease) total consideration paid by new investors and total
consideration paid by all unitholders by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, assuming the number of common units offered by us, as set forth on the cover page of this prospectus, remains the same,
and
after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the underwriters exercise their option to
purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units in full, then
the pro forma increase per unit attributable to new investors would be $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
the net tangible book value per unit after this offering would be $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and the dilution per unit to new investors would be
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. In addition, new investors would purchase
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units, or approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of units outstanding, and the total consideration contributed to us by new investors would
increase to $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million,
or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the total consideration contributed (based on an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit, the mid-point
of the price range set forth
on the cover page of the prospectus). </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>46</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di42901_our_cash_distribution_policy_a__our02636"> </A>
<A NAME="toc_di42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  OUR CASH DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>You should read the following discussion of our cash distribution policy and restrictions on distributions in
conjunction with the specific assumptions upon which our cash distribution policy is based. See "&#151;Assumptions and Considerations" below. For additional information regarding our historical
and our pro forma operating results, you should refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations," our predecessor's audited historical financial
statements, our predecessor's unaudited historical financial statements and our unaudited pro forma consolidated financial statements included elsewhere in this prospectus. In addition, you should
read "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" for information regarding statements that do not relate strictly to historical or current facts and certain risks
inherent in our business.</I></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="di42901_general"> </A>
<A NAME="toc_di42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  General    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our Cash Distribution Policy  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The board of directors of our general partner will adopt a policy pursuant to which we will distribute all of the available cash we
generate each quarter, beginning with the quarter ending December&nbsp;31, 2011. Available cash for each quarter will be determined by the board of directors of our general partner following the end
of such quarter. We expect that available cash for each quarter will generally equal our cash flow from operations for the quarter, less cash needed for maintenance capital expenditures, debt service
and other contractual obligations and reserves for future operating or capital needs that the board of directors of our general partner deems necessary or appropriate. We do not intend to maintain
excess distribution coverage for the purpose of maintaining stability or growth in our quarterly distribution or otherwise to reserve cash for distributions, nor do we intend to incur debt to pay
quarterly distributions. We expect to finance substantially all of our growth externally, either by debt issuances or additional issuances of equity. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because
our policy will be to distribute all available cash we generate each quarter, without reserving cash for future distributions or borrowing to pay distributions during periods of
low cash flow from operations, our unitholders will have direct exposure to fluctuations in the amount of cash generated by our business. We expect that the amount of our quarterly distributions, if
any, will vary based on our operating cash flow during each quarter. Our quarterly cash distributions, if any, will not be stable and will vary from quarter to quarter and year to year as a direct
result of variations in our operating performance and cash flow caused by fluctuations in the price of propane and propylene, working capital and capital expenditures. Such variations may be
significant. The board of directors of our general partner may change the foregoing distribution policy at any time. Our partnership agreement does not require us to pay cash distributions on a
quarterly or other basis. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
PDH facility did not generate sales until the commencement of commercial operations in October 2010, and we did not achieve daily production rates at nameplate capacity until April
2011. Accordingly, we would not have paid distributions to our common unitholders for periods prior to April 2011. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Limitations on Cash Distributions; Our Ability to Change Our Cash Distribution Policy  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no guarantee that unitholders will receive quarterly cash distributions from us. Our distribution policy may be changed at any
time and is subject to certain restrictions, including: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our unitholders have no contractual or other legal right to receive cash distributions from us on a quarterly or other
basis. The board of directors of our general partner will adopt a policy at or prior to the closing of this offering pursuant to which we will distribute to our unitholders each quarter all of the
available cash we generate each quarter, as determined quarterly by the board of directors of our general partner, but it may change this policy at any time. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>47</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our business performance is expected to be more cyclical and volatile, and our cash flows are expected to be less stable,
than the business performance and cash flows of most publicly traded partnerships. As a result, our quarterly cash distributions will be cyclical and volatile and are expected to vary quarterly and
annually.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Unlike most publicly traded partnerships, we will not have a minimum quarterly distribution or employ structures intended
to consistently maintain or increase quarterly distributions over time. Furthermore, none of our limited partner interests, including those held by our sponsors and their affiliates, our executive
officers and certain of our employees, will be subordinate in right of distribution payment to the common units sold in this offering.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Under Section&nbsp;17-607 of the Delaware&nbsp;LP Act, we may not make a distribution to our limited
partners if the distribution would cause our liabilities to exceed the fair value of our assets.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>We expect that our distribution policy will be subject to restrictions on distributions under our new credit facilities.
Our ability to make distributions to common unitholders will depend, in part, on our fixed charge coverage ratio, and the absence of a default or event of default under the facilities. See
"Management's Discussion and Analysis of Financial Condition and Results of Operations&#151;Liquidity and Capital Resources&#151;New Credit Facilities." Should we be unable to satisfy
these restrictions under our new credit facilities, our ability to make cash distributions to unitholders would be curtailed.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>We may lack sufficient cash to make distributions to our unitholders due to a number of factors that would adversely
affect us, including but not limited to decreases in sales or increases in operating expenses, principal and interest payments on debt, working capital requirements, capital expenditures, disruptions
in the operations of our PDH facility or anticipated cash needs. See "Risk Factors" for information regarding these factors. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have a limited operating history upon which to rely in evaluating whether we will have sufficient cash to allow us to pay distributions on our common units. While we believe, based on
our financial forecast and related assumptions, that we should have sufficient cash to enable us to pay the forecasted aggregate distribution on all of our common units for the twelve months ending
September&nbsp;30, 2012, we may be unable to pay the forecasted distribution or any amount on our common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
intend to pay our distributions on or about the 15th&nbsp;day of each February, May, August and November to holders of record on or about the first day of each such month. We expect
our first distribution will include available cash for the period from the closing of the offering through December&nbsp;31, 2011. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the section that follows, we present "PetroLogistics&nbsp;LP Estimated Available Cash for the Twelve Months Ending September&nbsp;30, 2012," that contains our unaudited forecast
of available cash for the twelve months ending September&nbsp;30, 2012. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="di42901_forecasted_available_cash"> </A>
<A NAME="toc_di42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Forecasted Available Cash    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not as a matter of course make or intend to make projections as to future sales, earnings, or other results. However, our
management has prepared the prospective financial information set forth below in the table entitled "PetroLogistics&nbsp;LP Estimated Available Cash for the Twelve Months Ending September&nbsp;30,
2012" to supplement the historical and unaudited pro forma consolidated financials included elsewhere in this prospectus. The table presents our expectations regarding our ability to generate
$245.2&nbsp;million of available cash for the twelve months ending September&nbsp;30, 2012. The accompanying prospective financial information was not prepared with a view toward complying with
the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of our management, was prepared on a reasonable
basis, reflects the best currently available estimates and judgments, and presents, to the best of management's knowledge and belief, the expected course of action and our expected future financial
performance. However, this </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>48</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_di42901_1_49"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>information
is not fact and should not be relied upon as being indicative of future results, and readers of this prospectus are cautioned not to place undue reliance on the prospective financial
information. Neither our independent registered public accounting firm, nor any other registered public accounting firm, has compiled, examined, or performed any procedures with respect to the
prospective financial information contained in this section, nor have any of them expressed any opinion or any other form of assurance on such information or its achievability and each assumes no
responsibility for, and disclaims any association with, the prospective financial information. See "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the twelve months ending September&nbsp;30, 2012, we estimate that we will generate $245.2&nbsp;million of available cash. In "&#151;Assumptions and Considerations"
below, we discuss the major assumptions underlying this estimate. The available cash discussed in the forecast should not be viewed as management's projection of the actual available cash that we will
generate during the twelve months ending September&nbsp;30, 2012. We can give you no assurance that our assumptions will be realized or that we will generate any available cash, in which event we
will not be able to pay quarterly cash distributions on our common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When
considering our ability to generate available cash and how we calculate forecasted available cash, investors should keep in mind all of the risk factors and other cautionary
statements under the headings "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements," which describe factors that could cause our results of operations and available cash to vary
significantly from our estimates. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
assumptions and estimates underlying the prospective financial information are inherently uncertain. Although such assumptions and estimates are considered, as of the date of this
prospectus, to be reasonable by our management team, such assumptions and estimates are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could
cause actual results to differ materially from those contained in the prospective financial information. Accordingly, there can be no assurance that the prospective results are indicative of our
future performance or that actual results will not differ materially from those presented in the prospective financial information. Inclusion of the prospective financial information in this
prospectus should not be regarded as a representation by any person that the results contained in the prospective financial information will be achieved. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
do not undertake any obligation to release publicly the results of any future revisions we may make to the financial forecast or to update this financial forecast to reflect events or
circumstances after the date of this prospectus. In light of the above, the statement that we believe that we will have sufficient available cash to allow us to pay the forecasted quarterly
distributions on all of our outstanding common units for the twelve months ending September&nbsp;30, 2012, should not be regarded as a representation by us or the underwriters or any other person
that we will make such distributions. Therefore, you are cautioned not to place undue reliance on this information. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table shows how we calculate estimated available cash for the twelve months ending September&nbsp;30, 2012. The assumptions that we believe are relevant to particular
line items in the table below are explained in the corresponding footnotes and in "&#151;Assumptions and Considerations." </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither
our independent registered public accounting firm, nor any other independent registered public accounting firm, has compiled, examined or performed any procedures with respect to
the forecasted financial information contained herein, nor has it expressed any opinion or given any other form of assurance on such information or its achievability, and it assumes no responsibility
for such forecasted financial information. Our independent registered public accounting firm's reports included elsewhere in this prospectus relate to our audited historical financial information.
These reports do not extend to the tables and the related forecasted information contained in this section and should not be read to do so. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>49</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_di42901_1_50"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="di42901_petrologistics_lp_estimated_av__pet03257"> </A>
<A NAME="toc_di42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  PetroLogistics&nbsp;LP<BR>  Estimated Available Cash for the<BR>  Twelve Months Ending September&nbsp;30, 2012    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table illustrates the amount of cash that we estimate that we will generate for the twelve months ending
September&nbsp;30, 2012 that would be available for distribution to our unitholders. All of the amounts for the twelve months ending September&nbsp;30, 2012 in the table below are estimates. </FONT></P>
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<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="105pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Twelve Months Ending<BR>
September&nbsp;30, 2012 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Total Sales</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>900.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of Sales:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Propane</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>523.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fuel and utilities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>45.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation, amortization and accretion</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>32.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Insurance and property taxes</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>13.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Direct operating expenses and other</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>30.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total production cost</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>645.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Change in inventory</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Cost of Sales</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>645.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>11.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense and other financing costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest income</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Net Income</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>220.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjustments to reconcile net income to Adjusted EBITDA:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Add:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense and other financing costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>20.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation, amortization and accretion</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>32.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Adjusted EBITDA</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>276.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjustments to reconcile Adjusted EBITDA to available cash:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Subtract:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Debt service costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash income tax</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Maintenance capital expenditures (includes environmental, health and safety expenditures)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Available cash</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>245.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>New Credit Facilities:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest coverage ratio</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Leverage ratio</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<A NAME="toc_di42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Assumptions and Considerations    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> General  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based upon the specific assumptions outlined below with respect to the twelve months ending September&nbsp;30, 2012, we expect to
generate Adjusted EBITDA and available cash in an amount sufficient to allow us to pay $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit on all of our outstanding units for the twelve months ending
September&nbsp;30, 2012. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>50</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While
we believe that these assumptions are reasonable in light of our management's current expectations concerning future events, the estimates underlying these assumptions are
inherently uncertain and are subject to significant business, economic, regulatory, environmental and competitive risks and uncertainties that could cause actual results to differ materially from
those we anticipate. If our assumptions are not correct, the amount of actual cash available to pay distributions could be substantially less than the amount we currently estimate and could,
therefore, be insufficient to allow us to pay the forecasted aggregate cash distributions for the twelve months ending September&nbsp;30, 2012, or any amount, on all of our outstanding common units,
in which event the market price of our common units may decline substantially. When reading this section, you should keep in mind the risk factors and other cautionary statements under the headings
"Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements." Any of the risks discussed in this prospectus could cause our actual results to vary significantly from our estimates. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
accompanying financial forecast and summary of significant forecast assumptions of PetroLogistics&nbsp;LP present the forecasted results of operations of PetroLogistics&nbsp;LP
for the twelve months ending September&nbsp;30, 2012, assuming that the Transactions (as defined on page&nbsp;41 of this prospectus) had occurred at the beginning of such period. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Capacity Utilization Rates  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the twelve months ending September&nbsp;30, 2012, we estimate our facility will operate at an average capacity utilization rate
of 98.0% on an annual basis after making an allowance for downtime associated with maintenance on the facility. There is no planned maintenance for the forecast period. Our newly constructed facility
has an annual nameplate capacity of approximately 1.2&nbsp;billion pounds of propylene. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Sales  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propylene.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have secured contracts with Dow, Total and INEOS for the purchase of an aggregate minimum offtake volume of 73% and
maximum offtake
volume of 97% of our nameplate propylene capacity. We forecast that we will sell 1.2&nbsp;billion pounds of propylene at an average price of $0.72 per pound during the forecast period. We have
assumed sales to our customers of the maximum offtake volumes at contractual discounts to the forecasted benchmark price. The forecasted benchmark price was determined by management based on price
projection data received from Chemical Data. In addition, we have assumed any excess volume produced will be sold in the spot market to other customers at a slight discount to the Chemical Data
forecasted benchmark price. Based on these assumptions, we forecast our net sales for the twelve months ending September&nbsp;30, 2012, will be approximately $869.8&nbsp;million. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holding
all other variables constant, we expect that a 10% change in the price per pound of propylene would change our forecasted available cash by approximately $90.1&nbsp;million for
the twelve months ending September&nbsp;30, 2012. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hydrogen.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have executed a ten-year contract with Praxair in which Praxair has committed to buy a minimum of 93% of the hydrogen we
produce. We forecast that we will sell approximately 9.1&nbsp;million standard cubic feet ("MSCF"), of hydrogen to Praxair at an average price of $2.01 per MSCF for net sales of $18.2&nbsp;million
during the forecast period. The estimated amount of hydrogen we will produce during the forecast period was determined by management based upon the amount of propylene we expect to produce. The
estimated price per MSCF of hydrogen sold during the
forecast period was determined by management based on price projections data received from Chemical Data. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C4 Mix/C5+ Streams.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We estimate that we will sell approximately 32.9&nbsp;million pounds of C4 mix/C5+ streams at an average price of
$0.37 per
pound for net sales of $12.2&nbsp;million during the forecast period. We estimate net sales based on a forecast of future C4 mix/C5+ streams prices multiplied by the number of pounds we estimate we
will produce and sell during the forecast period. The estimated amount of C4 mix/C5+ streams we will produce during the forecast period was determined by management based upon the amount of propylene
we expect to produce. The estimated price per pound of C4 mix/C5+ </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>51</FONT></P>

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<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>streams
sold during the forecast period was determined by management based on price projections data received from Chemical Data. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
on these assumptions, we estimate that our total net sales for the twelve months ending September&nbsp;30, 2012, will be approximately $900.2&nbsp;million. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Cost of Sales  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales includes cost of propane, fuel and utility expenses, depreciation, amortization and accretion expense, insurance and
property taxes, direct operating expenses, other expenses and changes in inventory. Our feedstock and raw material expenses consist of inputs into the propylene production process which are driven by
commodity prices and volumes. Approximately 81% of our forecasted cost of sales is related to the purchase of propane. We estimate that our cost of sales for the twelve months ending
September&nbsp;30, 2012, will be approximately $645.4&nbsp;million, or approximately 72% of sales. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propane.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We intend to purchase 100% of our required propane feedstock volumes through a multi-year supply contract with Enterprise.
This
volumetric supply contract will be priced at a published high-low monthly average price plus a contractual upcharge and delivery fee. We assume that our product yield will be a ratio of
approximately 1.2 pounds of propane to 1.0 pound of propylene and that we will purchase a total of 344.9&nbsp;million gallons (or 1.45&nbsp;billion pounds) of propane during the forecast period.
We estimate that our total propane expense for the twelve months ending September&nbsp;30, 2012, will be approximately $523.8&nbsp;million and that our realized propane cost for
the twelve months ending September&nbsp;30, 2012, will be approximately $1.52 per gallon. The estimated amount of propane we will utilize during the forecast period was determined by management
based upon the amount of propylene we expect to produce and the yield we forecast for our PDH facility. The estimated price per gallon of propane we will pay during the forecast period was determined
by management based on price projections data received from Chemical Data. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holding
all other variables constant, we estimate that a 10% change per gallon in the price of propane would change our forecasted available cash by $51.4&nbsp;million for the twelve
months ending September&nbsp;30, 2012. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fuel/Utilities.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We intend to purchase our natural gas fuel pursuant to a three-year contract with Kinder Morgan. We use natural gas to
run our generator, propane heater and other related systems. We estimate that our total natural gas usage expense, based upon the amount of propylene we expect to produce, for the twelve months ending
September&nbsp;30, 2012 will be approximately $41.1&nbsp;million and that our average natural gas cost for the twelve months ending September&nbsp;30, 2012 will be approximately $4.28 per MMBtu.
The estimated price per MMBtu of natural gas we will pay during the forecast period was determined by management based on price projections data received from Chemical Data. We also incur variable
electricity, nitrogen and water usage expenses necessary to operate our dehydrogenation facility on a day-to-day basis. Based on management's usage expectations, we estimate
that our electricity, nitrogen and water expense will be approximately $4.1&nbsp;million. We estimate that our total fuel and utilities expense for the twelve months ending September&nbsp;30,
2012, will be approximately $45.2&nbsp;million. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation, Amortization and Accretion.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We estimate that depreciation, amortization and accretion for the twelve months ending
September&nbsp;30,
2012 will be approximately $32.3&nbsp;million. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insurance and Property Taxes.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A significant fixed component of our cost of sales expense item is the cost of insurance and property
taxes, which we
expect to be $13.9&nbsp;million for the twelve months ending September&nbsp;30, 2012. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Direct Operating Expenses and Other.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Direct operating expenses include all direct and indirect labor at the facility, materials,
supplies, and other
expenses associated with the operation and maintenance of the facility. We estimate that our direct operating and other expenses for the twelve months ending September&nbsp;30, 2012, will be
approximately $30.2&nbsp;million. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>52</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> General and Administrative Expense  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expense includes salary and benefits costs for executive management, accounting and information technology
personnel, legal, audit, tax and other professional service costs and charges for equity-based compensation expense. We estimate that our general and administrative expense, excluding equity-based
compensation expense, will be approximately $11.0&nbsp;million for the twelve months ending September&nbsp;30, 2012. This includes $3.5&nbsp;million of expected incremental general and
administrative expenses that we expect to incur as a public company. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Debt Service  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debt service is defined as cash interest expense and debt amortization payments. As part of the Transactions, we expect to incur
$350.0&nbsp;million of term debt at an assumed average interest rate of 5.0% and an annual amortization rate of 1.0%, and we expect to enter into a $120.0 working capital facility, and will pay
associated interest expense for the twelve months ending September&nbsp;30, 2012. We have assumed average working capital borrowings of $30.0&nbsp;million from the revolving facility during the
forecast period. The estimate excludes the amortization of $1.5&nbsp;million of deferred financing and original issue discount costs related to our term loan facility and revolving credit facility.
We have assumed that the average interest rate on the revolver will be 4.35%. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Interest Income  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our estimate of interest income is based on a 0.5% return on our projected average cash balances during the twelve months ending
September&nbsp;30, 2012. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Income Taxes  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We estimate that we will pay no federal income tax during the forecast period. We believe the only income tax to which our operations
will be subject is the Texas Margin Tax incurred on gross margins, which is estimated to be 1.0% of gross margins for the twelve months ending September&nbsp;30, 2012. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Regulatory, Industry and Economic Factors  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our forecast for the twelve months ending September&nbsp;30, 2012, is based on the following assumptions related to regulatory,
industry and economic factors: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>no material nonperformance or credit-related defaults by suppliers, customers or vendors;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>no new regulation or interpretation of existing regulations that, in either case, would be materially adverse to our
business;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>no material accidents, weather-related incidents, floods, unplanned turnarounds or other downtime or similar unanticipated
events that would reduce our capacity utilization below 98%;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>no material adverse change in the markets in which we operate resulting from reduced demand for propylene or significant
changes in the market prices and supply levels of propane;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>no material decreases in the prices we receive for our propylene;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>no material changes to market or overall economic conditions; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>an annual inflation rate of 3.0%. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Actual
conditions may differ materially from those anticipated in this section as a result of a number of factors, including, but not limited to, those set forth under "Risk Factors" and
"Cautionary Note Regarding Forward-Looking Statements." </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Compliance with Debt Covenants  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to make distributions could be affected if we do not remain in compliance with the covenants that will be included in our
new credit facilities. We have assumed we will be in compliance with such covenants. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>53</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk42901_how_we_make_cash_distributions"> </A>
<A NAME="toc_dk42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  HOW WE MAKE CASH DISTRIBUTIONS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dk42901_general"> </A>
<A NAME="toc_dk42901_2"> </A></FONT> <FONT SIZE=2><B>  General    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within 45&nbsp;days after the end of each quarter, beginning with the quarter ending December&nbsp;31, 2011, we expect to make
distributions, as determined by the board of directors of our general partner, to unitholders of record on the applicable record date. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dk42901_common_units_eligible_for_distribution"> </A>
<A NAME="toc_dk42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Common Units Eligible for Distribution    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the closing of this offering, we will
have&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units outstanding. Each common unit will be allocated a portion
of our income, gain, loss, deduction and credit on a pro-rata basis, and each common unit will be entitled to receive distributions (including upon liquidation) in the same manner as each
other unit. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dk42901_method_of_distributions"> </A>
<A NAME="toc_dk42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Method of Distributions    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The board of directors of our general partner will adopt a policy at or prior to the closing of this offering (which policy may be
changed at any time), pursuant to which we will make distributions pursuant to our general partner's determination of the amount of available cash for the applicable quarter, which we will then
distribute to our unitholders, pro rata; provided, however, that our partnership agreement allows us to issue an unlimited number of additional equity interests of equal or senior rank. Our
partnership agreement permits us to borrow to make distributions, but we are neither required, nor do we intend to borrow to pay quarterly distributions. Accordingly, there is no guarantee that we
will pay any distribution on the units in any quarter. We do not have a legal obligation to pay distributions, and the amount of distributions paid under our policy and the decision to make any
distribution will be determined by the board of directors of our general partner. See "Management's Discussion and Analysis of Financial Condition and Results of Operations&#151;Liquidity and
Capital Resources&#151;New Credit Facilities" for a discussion of provisions to be included in our new credit facilities that restrict our ability to make distributions. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dk42901_general_partner_interest_1"> </A>
<A NAME="toc_dk42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  General Partner Interest    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the closing of this offering, our general partner will own a non-economic general partner interest and therefore will
not be entitled to receive cash distributions. However, it may acquire common units and other equity interests in the future and would be entitled to receive pro rata distributions therefrom. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dk42901_adjustments_to_capital_account__adj02985"> </A>
<A NAME="toc_dk42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  Adjustments to Capital Accounts upon Issuance of Additional Common Units    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will make adjustments to capital accounts upon the issuance of additional common units. In doing so, we will generally allocate any
unrealized and, for tax purposes, unrecognized gain or loss resulting from the adjustments to our unitholders prior to such issuance on a pro rata basis so that after such issuance the capital account
balances attributable to all common units are equal. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>54</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=61,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=525820,FOLIO='54',FILE='DISK131:[11ZBV1.11ZBV42901]DK42901A.;12',USER='AGUERRE',CD='19-JUN-2011;13:10' -->
<A NAME="page_dk42901_1_55"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dk42901_selected_historical_and_pro_fo__sel02733"> </A>
<A NAME="toc_dk42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selected financial information presented below under the caption Statement of Operations Data for the three months ended
March&nbsp;31, 2011 and 2010, and for the years ended December&nbsp;31, 2010, 2009 and 2008, and the selected financial information presented below under the caption Balance Sheet Data as of
March&nbsp;31, 2011 and 2010, and December&nbsp;31, 2010, 2009 and 2008, have been derived from the audited and unaudited financial statements of our predecessor, PL Propylene, included elsewhere
in this prospectus. Our predecessor's financial statements as of and for the years ended December&nbsp;31, 2010, 2009 and 2008 have been audited by Ernst&nbsp;&amp; Young&nbsp;LLP, independent
registered public accounting firm. Our predecessor's financial statements as of and for the
three months ended March&nbsp;31, 2011 and 2010 are unaudited. Our predecessor was formed in January 2007 and acquired the site where our PDH facility is located in March 2008. Our PDH facility did
not generate sales until the commencement of commercial operations in October 2010, and we did not achieve daily production rates at nameplate capacity until April 2011. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
selected unaudited pro forma consolidated financial information presented below under the caption Statement of Operations Data for the three months ended March&nbsp;31, 2011 and
for the year ended December&nbsp;31, 2010 and the selected unaudited pro forma consolidated financial information presented below under the caption Balance Sheet Data as of March&nbsp;31, 2011
have been derived from our unaudited pro forma consolidated financial statements included elsewhere in this prospectus. The unaudited pro forma consolidated statements of operations data for the three
months ended March&nbsp;31, 2011 and the year ended December&nbsp;31, 2010 were prepared based on the assumption that we were in existence as a separate entity throughout these periods and that
the transactions described below occurred on January&nbsp;1, 2011 and January&nbsp;1, 2010, respectively: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the entry by us into a new $350.0&nbsp;million term loan facility and a $120.0&nbsp;million revolving credit facility,
the related drawing of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million from the new term loan facility and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million under the new
revolving credit facility, and the use of proceeds of such
drawings to refinance our existing credit facility and to distribute $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million as a reimbursement of construction capital to our sponsors;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the issuance by us to our sponsors and their affiliates, our executive officers and certain of our employees of
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the issuance by us to the public
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units and the distribution of an aggregate
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of the proceeds from such offering to our sponsors and their affiliates, our executive officers and certain of our employees. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
unaudited pro forma consolidated balance sheet as of March&nbsp;31, 2011, was prepared based on the assumption that the Transactions (as defined on page&nbsp;38) occurred
March&nbsp;31, 2011. The unaudited pro forma consolidated financial data is not comparable to our historical financial data. A more complete explanation of the pro forma data can be found in our
unaudited pro forma consolidated financial statements and accompanying notes included elsewhere in this prospectus. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
historical data presented below has been derived from financial statements that have been prepared using accounting principles generally accepted in the United States, or GAAP, and
the pro forma data presented below has been derived from the "Unaudited Pro Forma Consolidated Financial Statements" included elsewhere in this prospectus. This data should be read in conjunction
with, and is qualified in its entirety by reference to, the financial statements and related notes and "Management's </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>55</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_dk42901_1_56"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Discussion
and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:57%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=1>


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<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="37pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="36pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="49pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Historical </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Unaudited Pro Forma<BR>
Consolidated </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three Months<BR>
Ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three<BR>
Months<BR>
Ended<BR>
March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year Ended<BR>
December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=20 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(dollars in millions, except per unit data<BR>
and as otherwise indicated)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Statement of Operations Data:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Sales</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>105.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>30.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>105.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>30.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Cost of sales</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>91.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>41.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>91.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>41.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>General and administrative expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>31.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>22.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>4.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>4.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>31.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>22.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Management fee</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>0.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Operating loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(17.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(1.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(34.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(4.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(4.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(17.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(34.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Other income</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>0.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>0.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Interest income (expense), net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(4.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(0.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(5.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(0.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>0.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(5.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(12.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net loss before income taxes</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(22.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(2.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(39.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(4.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(4.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(22.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(46.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Income tax expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(0.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(0.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(22.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(2.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(39.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(4.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(4.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(22.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(46.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Pro forma net income (loss) per common unit, basic and diluted</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Pro forma number of common units, basic and diluted in millions</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:10pt;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Balance Sheet Data:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Cash (including restricted cash balances)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>45.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>6.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>30.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>71.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>5.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Working capital<SUP>(1)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>22.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>21.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>16.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>9.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>61.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>24.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Total assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>675.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>579.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>668.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>484.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>214.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>676.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Total debt (including current portion)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>182.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>117.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>189.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>94.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>380.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Member's equity</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>464.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>434.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>456.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>365.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>202.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>267.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:10pt;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Financial and Other Data:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Cash flows provided by (used in) operating activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>9.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(53.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(1.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Cash flows used in investing activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(3.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(95.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(157.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(281.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(170.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Cash flows provided by (used in) financing activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(5.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>93.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>210.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>249.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>203.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Adjusted EBITDA<SUP>(2)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>19.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(1.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(12.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(3.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(2.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>20.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(12.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Capital expenditures</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>3.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>80.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>187.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>291.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>130.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:10pt;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Key Operating Data:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Production volume (thousand pounds unless otherwise noted):</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Propylene</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>144,208</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>76,522</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Hydrogen (thousand standard cubic feet MSCF)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>295,425</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>C4 mix/C5+ streams</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,484</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>247</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
 <!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" -->
<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" >


<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Working
capital is defined as current assets, including cash, less current liabilities, excluding bank debt.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Adjusted
EBITDA is defined as net income (loss) plus interest expense and amortization of deferred financing costs, income tax expense, depreciation,
amortization and accretion and equity-based compensation expense. <BR></FONT>
<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>Adjusted
EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors and commercial banks, to
assess: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>the financial performance of our assets without regard to financing methods, capital structure, income taxes or significant
non-cash expenses;  </FONT> <FONT SIZE=1>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>our operating performance and return on invested capital compared to those of other publicly traded limited partnerships,
without regard to financing methods and capital structure; </FONT></DD></DL>
</UL>
</DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>56</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=63,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=46192,FOLIO='56',FILE='DISK131:[11ZBV1.11ZBV42901]DK42901A.;12',USER='AGUERRE',CD='19-JUN-2011;13:10' -->
<A NAME="page_dk42901_1_57"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<P style="font-family:times;text-align:justify"></FONT></P>

<UL>
<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>our ability to generate cash sufficient to make distributions to our unitholders; and </FONT> <FONT SIZE=1>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>our ability to incur and service debt and to fund capital expenditures. </FONT></DD></DL>
</UL>
</UL>
 </DIV>
 <UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>Adjusted
EBITDA should not be considered an alternative to net income, operating income, net cash flows from operating activities or any other measure of financial performance or liquidity presented
in accordance with GAAP. Adjusted EBITDA may have material limitations as a performance measure because it excludes some, but not all, items that affect net income from operations. In addition,
Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define this term differently. The following table presents a reconciliation of Adjusted
EBITDA to the most directly comparable GAAP financial measure, net income, on a historical basis and pro forma basis, as applicable, for each of the periods indicated: </FONT></P>

</UL>
 <DIV style="padding:0pt;position:relative;width:62%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=1>


<!-- COMMAND=ADD_TABLEWIDTH,"130%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="130%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="8pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="31pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="26pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="26pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="49pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="64pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Historical </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Unaudited Pro Forma<BR>
Consolidated </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three Months<BR>
Ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three<BR>
Months<BR>
Ended<BR>
March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year Ended<BR>
December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=20 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(dollars in millions)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Reconciliation of net loss to Adjusted EBITDA:</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(22.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(2.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(39.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(4.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(4.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(22.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(46.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Plus:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Interest expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>4.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>0.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>5.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>0.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>5.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>12.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Income tax expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>0.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>0.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Depreciation, amortization and accretion</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>7.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>0.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>7.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Equity-based compensation expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>29.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>14.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>29.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>14.5</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Adjusted EBITDA</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>19.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(1.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(12.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(3.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(2.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>20.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(12.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dm42901_management_s_discussion_and_an__man03466"> </A>
<A NAME="toc_dm42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  MANAGEMENT'S DISCUSSION AND ANALYSIS OF<BR>  FINANCIAL CONDITION AND RESULTS OF OPERATIONS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>You should read the following discussion and analysis of our financial condition, results of operations and
cash flows in conjunction with our financial statements and related notes included elsewhere in this prospectus. This discussion and analysis contains forward-looking statements that involve risks,
uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including, but not limited to,
those set forth under "Risk Factors," "Cautionary Note Regarding Forward-Looking Statements" and elsewhere in this prospectus.</I></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dm42901_overview"> </A>
<A NAME="toc_dm42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Overview    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We own and operate the world's largest "on-purpose" PDH facility, which uses propane as a feedstock to produce propylene.
Our facility is situated on the site of a former olefins production facility we acquired in March 2008. We believe our position as the only independent on-purpose propylene producer in the
U.S. gives us a competitive advantage in attracting and retaining customers. We commenced operations in October 2010 and first achieved daily production rates at or above nameplate capacity in April
2011. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have multi-year contracts with Dow, Total and INEOS, which expire between 2013 and 2014. These contracts provide for minimum and maximum offtake volumes, with the minimum
customer-contracted volumes representing approximately 73% of facility nameplate capacity and the maximum contracted volumes reflecting approximately 97% of facility nameplate capacity. We have
supplied and will continue to opportunistically supply other propylene consumers on a spot basis when permitted by both operational and market conditions. During the three months ended
March&nbsp;31, 2011, our three largest customers accounted for substantially all of our propylene sales. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to propylene, we also produce commercial quantities of hydrogen and C4 mix/C5+ streams. The sales of these products represented approximately 1% of total sales in the three
months ended March&nbsp;31, 2011, and do not represent a material part of our production. Accordingly, we have one operating segment. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dm42901_factors_affecting_the___dm402233"> </A>
<A NAME="toc_dm42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Factors Affecting the Comparability of Future Results    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our historical results of operations and cash flows are not indicative of results of operations and cash flows to be expected in the
future, principally for the following reasons: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><B><I>Our PDH facility did not generate sales until we commenced operations in October
2010.</I></B></FONT><FONT SIZE=2> We commenced operations in October 2010. Accordingly, our financial statements for the years ended December&nbsp;31, 2009 and 2008 and for the three months ended
March&nbsp;31, 2010 reflect neither sales nor cost of sales, and the financial statements for the year ended December&nbsp;31, 2010 and for the three months ended March&nbsp;31, 2011, reflect
limited operations prior to our first achieving daily production rates at or above nameplate capacity in April 2011.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><B><I>Our historical results of operations reflect equity-based compensation expense that may not be
indicative of future equity-based compensation expense.</I></B></FONT><FONT SIZE=2> Our historical results of operations reflect equity-based compensation expense for both our employees and certain
employees of affiliated entities, who are treated for accounting purposes as non-employees. Equity-based awards granted to non-employees are subject to periodic fair value
adjustments as the awards vest. The changes in fair value are recognized in our statement of operations during the period the related services are rendered, resulting in greater volatility of our
results of operations. Because certain members of our senior management have previously been treated as non-employees for accounting purposes, these fair value adjustments have
significantly affected our historical results of operations. The currently outstanding equity-based awards will be fully vested as of the completion of this offering, and no additional expense related
to these awards will be recorded thereafter. However, we intend to make equity-based compensation awards subsequent to this offering pursuant to our long-term incentive </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>58</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<UL>
<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>plan,
which will again require us to record equity-based compensation expense. See "Management&#151;Compensation Discussion and Analysis."  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><B><I>We will incur additional general and administrative expenses as a publicly traded
partnership.</I></B></FONT><FONT SIZE=2> We expect we will incur approximately $3.5&nbsp;million in additional general and administrative expenses as a publicly traded limited partnership that we have
not previously incurred, including costs associated with compliance under the Exchange Act, annual and quarterly reports to unitholders, tax return and Schedule&nbsp;K-1 preparation and
distribution, investor relations, registrar and transfer agent fees, audit fees, incremental director and officer liability insurance costs and directors' compensation. These incremental expenses
exclude the costs of this offering, as well as the costs associated with the initial implementation of our Sarbanes-Oxley Section&nbsp;404 internal control reviews and testing. Although our
financial statements following this offering will reflect the impact of these expenses, our unaudited pro forma consolidated financial statements do not reflect these expenses. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><B><I>Our historical results of operations reflect allocated administrative costs that may not be
indicative of future administrative costs.</I></B></FONT><FONT SIZE=2> Our financial statements included elsewhere in this prospectus include certain costs of a formerly affiliated company that were
incurred on our behalf. Historically, these costs, which are reflected in our general and administrative expense, have been billed to us pursuant to a services agreement entered into in 2008 (the
"former services agreement"). See "Certain Relationships and Related Party Transactions&#151;Former Services Agreement." Our financial statements therefore include certain expenses incurred
which may include, but are not necessarily limited to, executive management and employee salaries and benefits, travel and entertainment expenses, rent and other general and administrative expenses.
Such expenses were allocated to us based upon certain assumptions and estimates that were made in order to allocate a reasonable share of such expenses from the formerly affiliated company to us so
that our financial statements would reflect all the costs of conducting our business. The former services agreement will terminate in connection with this offering, and after the offering we will rely
on the directors, executive officers and employees of our general partner to manage our business and conduct our operations. The amounts charged or allocated to us under the former services agreement
are not necessarily indicative of the costs that we will incur after the consummation of this offering.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><B><I>We will periodically undertake major maintenance projects.</I></B></FONT><FONT SIZE=2> Safe and
reliable operations at our facility are critical to our performance and financial results. As such, we expect future periods of major maintenance. Since a substantial portion of our facility is newly
built, we do not expect to undergo a major maintenance project until late 2013 or 2014, at which time the most significant activity will be to replace the reactor catalyst, which is required
approximately every three years. We expect these catalyst change-out projects will typically last approximately three to four weeks and cost approximately $15&nbsp;million to
$20&nbsp;million per project. In addition to the triennial maintenance projects, more significant maintenance projects will be undertaken approximately every nine years which will include
change-out of the reactor catalyst and overhauls of selected pieces of equipment. We anticipate these projects to take approximately four to six weeks and cost approximately
$25&nbsp;million to $35&nbsp;million. Additionally, we may undertake capital projects in connection with major maintenance projects. If we elect to undertake such projects, these capital projects
will require additional time and expense. </FONT></DD></DL>
<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>In
addition to planned downtime for major maintenance projects, we may experience periods of unplanned downtime. For example, our facility experienced significant unplanned downtime as a result of a
mechanical problem in one of our compressors. We expect to be able to mitigate the financial and operational impact of unplanned downtime through a targeted program of routine maintenance and diligent
monitoring of our systems. Downtime, whether planned or unplanned, </FONT></P>

</UL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>59</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<UL>
<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>will
result in lost sales and margin, increased capital and maintenance expenditures and working capital changes. </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><B><I>We may enter into different financing arrangements.</I></B></FONT><FONT SIZE=2> Our current financing
arrangement may not be representative of the arrangements we will enter into in the future. We expect to enter into new credit arrangements in the third quarter of 2011, which will include a new term
loan facility that we will draw upon, in part, to refinance and cancel our existing facility, and a revolving credit facility which we will use for our working capital needs. For descriptions of our
current and expected future financing arrangements, see "&#151;Liquidity and Capital Resources." </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dm42901_factors_affecting_results"> </A>
<A NAME="toc_dm42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Factors Affecting Results    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe key factors that influence our business and impact our operating results are (1)&nbsp;the
propane-to-propylene spread, (2)&nbsp;our facility's capacity utilization and (3)&nbsp;our propane-to-propylene conversion factor. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propane-to-Propylene Spread  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The price spread between propane, our sole feedstock, and propylene, our primary product, largely determines our gross margin and is
the key driver of our profitability. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propylene
sales constitute substantially all of our sales. Propylene is a commodity, and its price can be cyclical and highly volatile. The price of propylene depends on a number of
factors, including general economic conditions, cyclical trends in end-user markets and supply and demand imbalances. Under our propylene sales contracts, Dow, Total and INEOS pay
market-based prices for propylene, and a significant decrease in propylene prices would have a material adverse effect on sales generated from these customers. In addition, a decrease in the price of
propylene would result in decreased sales from any sales of propylene on the spot market. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propane
is the sole feedstock in our production process, and the cost of propane represents a substantial portion of our cost of sales. Enterprise supplies 100% of our required propane
feedstock volume under a multi-year contract at market-based prices, which prices are subject to fluctuations in response to changes in supply, demand, market uncertainties and a variety
of additional factors beyond our control. See "&#151;Quantitative and Qualitative Disclosures about Market Risk." </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Capacity Utilization  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our facility has an annual design or "nameplate" production capacity of approximately 1.2&nbsp;billion pounds of propylene. Actual
annual production will vary based on a number of factors, including the amount of downtime for planned and unplanned maintenance on the facility. Actual production as a percentage of nameplate
production is referred to as our "capacity utilization" rate. Excluding planned major maintenance projects, we anticipate that our PDH facility will operate at an average capacity utilization rate of
approximately 98% on an annual basis. Any significant planned or unplanned downtime will affect not only production, and therefore sales, but also capital expenditures and direct operating expenses,
primarily maintenance expenses, and fuel and utilities, primarily natural gas usage. A 98% average capacity utilization rate equates to an average daily propylene production of approximately
3.3&nbsp;million pounds. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propane-to-Propylene Conversion Factor (Monomer Factor)  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An important contributor to profitability is our propane-to-propylene conversion factor, which is a ratio that
indicates how much propane is used to produce one pound of propylene. We expect to have an average monthly propane-to-propylene conversion factor of 1.0 pound of propylene for
each 1.2 pounds of propane used. This important statistic reflects our facility's operating efficiency. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>60</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dm42901_how_we_evaluate_our_performance"> </A>
<A NAME="toc_dm42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  How We Evaluate Our Performance    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to utilizing the key factors affecting our operating results described above to evaluate our performance, our management
uses certain additional financial and operational measures as well. These measures include Adjusted EBITDA and health, safety and environmental performance. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Adjusted EBITDA  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We view Adjusted EBITDA as an important indicator of cash flow generation. Adjusted EBITDA is principally affected by our sales
volumes, the propane-to-propylene spread, capacity utilization, propane-to-propylene conversion factors and, to a lesser extent, the prices of natural
gas and our by-products. Other than the cost of propane and natural gas, production-related expenses generally remain stable across broad ranges of throughput volumes, but can fluctuate
significantly depending on the planned and unplanned maintenance performed during a specific period. Our Adjusted EBITDA and available cash may not always correlate to each other. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Health, Safety and Environmental Performance  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We consider our ability to manage our facility and customer needs in a safe and reliable manner to be a critical factor in assessing
our performance. Accordingly, we have an extensive training program and set annual goals on achieving operating performance and safety measures that assure the reliable operation of our facility and a
safe working environment for our employees. Further, we closely monitor all environmental metrics to assure compliance with all regulatory requirements and that we operate in an environmentally
responsible manner. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dm42901_results_of_operations"> </A>
<A NAME="toc_dm42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  Results of Operations    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The period-to-period comparisons of our results of operations have been prepared using the historical periods
included in our financial statements. In order to effectively review and assess our historical financial information below, we have also included a description of the components of the various
financial statement line items. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Sales are comprised of propylene sales and by-product sales which include hydrogen and C4 mix/C5+ streams. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of Sales.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales represents the costs of propylene and by-products sold. These costs include the cost of propane,
fuel and
utilities used in the propylene production process, as well as direct operating expenses and insurance and property tax expenses associated with the facility. Direct operating expenses include all
direct and indirect labor at the facility, materials, supplies, and other expenses associated with the operation and maintenance of the facility. Depreciation, amortization and accretion expenses,
exclusive of amortization of deferred financing fees, are also included within cost of sales. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and Administrative Expense.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expense includes salary and benefits costs for executive
management, accounting and
information technology personnel, as well as legal, audit, tax and other professional service costs and charges for equity-based compensation expense. A portion of these costs were billed to us by a
formerly affiliated company pursuant to a services agreement. See "Certain Relationships and Related Party Transactions&#151;Former Services Agreement." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management Fee.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Management fee consists of the expense incurred through our management services agreement with Lindsay Goldberg.
This agreement
terminates upon the occurrence of various conditions including an initial public offering. As such, this agreement will terminate upon the closing of this offering. See "Certain Relationships and
Related Party Transactions&#151;Management Agreement with Lindsay Goldberg." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>61</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=68,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=379268,FOLIO='61',FILE='DISK131:[11ZBV1.11ZBV42901]DM42901A.;15',USER='LBURNET',CD='20-JUN-2011;10:36' -->
<A NAME="page_dm42901_1_62"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest Income (Expense), Net.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Interest expense includes expense incurred on outstanding debt balances under our existing
credit facility, the
amortization of deferred financing fees and loan commitment expenses. Loan commitment expense is comprised of the fees assessed on the unutilized portion of our credit facility. Interest income
results from earnings on available cash balances and is offset against interest expense. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Income.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Other income has historically been generated through the sale of certain equipment. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income Tax.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As an entity operating in the State of Texas, we are subject to the Texas Margin Tax. This tax represents a tax on
gross margin and is,
therefore, reported as income tax expense in the accompanying statements of operations. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Three Months Ended March&nbsp;31, 2011 Compared to Three Months Ended March&nbsp;31, 2010  </I></B></FONT></P>

</UL>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="75pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="75pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three Months Ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Increase/Decrease </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B><BR>
&nbsp;&nbsp;&nbsp;&nbsp;%</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Amounts in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>105,810</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>105,810</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>91,565</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>91,565</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,245</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,245</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>31,555</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,851</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>29,704</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,605</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Management fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(17,810</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,851</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(15,959</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest income (expense), net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,697</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(657</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,040</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>615</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss before income tax expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(22,482</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2,508</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(19,974</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(356</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(356</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(22,838</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2,508</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(20,330</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We commenced operations in October 2010 and first achieved daily production rates at or above nameplate capacity in April
2011. Accordingly,
there were no sales in the three months ended March&nbsp;31, 2010. Product output for the first quarter of 2011 totaled approximately 144.2&nbsp;million pounds of CGP, which represents an increase
in production of approximately 88% over the three months ended December&nbsp;31, 2010. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Cost of Sales.  </I></B></FONT></P>

</UL>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="75pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="75pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three Months Ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Increase/Decrease </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Amounts in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>%</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Propane</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>57,890</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>57,890</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fuel and utilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,790</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,790</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation, amortization and accretion</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,317</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,317</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Insurance and property taxes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,562</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,562</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Direct operating expenses and other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>11,944</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>11,944</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total production costs</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>88,503</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>88,503</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Change in inventory</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,062</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,062</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>91,565</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>91,565</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>62</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=69,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=180909,FOLIO='62',FILE='DISK131:[11ZBV1.11ZBV42901]DM42901A.;15',USER='LBURNET',CD='20-JUN-2011;10:36' -->
<A NAME="page_dm42901_1_63"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost
of sales was $91.6&nbsp;million, or approximately 87% of sales, for the three months ended March&nbsp;31, 2011. The primary component of cost of sales is the propane feedstock,
which represented approximately 65% of total production costs for the three months ended March&nbsp;31, 2011. There was no production in the three months ended March&nbsp;31, 2010, and
accordingly, there were no costs of sales during that period. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and Administrative Expense.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expense was $31.6&nbsp;million for the three months ended
March&nbsp;31, 2011,
compared to $1.9&nbsp;million for the three months ended March&nbsp;31, 2010, an increase of $29.7&nbsp;million. The increase is attributable to equity-based compensation expense of
$29.3&nbsp;million in the first quarter of 2011 resulting from equity-based awards granted in September 2010 to both our employees and certain employees of affiliated entities, who are treated for
accounting purposes as non-employees, compared to an insignificant amount in the first three months of 2010. In addition to the increase in equity-based compensation expense, there was a
$0.4&nbsp;million increase in other general and administrative expense, primarily in payroll and benefits. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management Fee.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We incurred management fees of $0.5&nbsp;million for the three months ended March&nbsp;31, 2011, compared to
zero for the three
months ended March&nbsp;31, 2010. The management fees incurred
relate to a management services agreement, pursuant to which we pay Lindsay Goldberg a total of $2.0&nbsp;million per year, beginning on January&nbsp;1, 2011. The agreement and related management
fees will be terminated at the closing of this offering. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest Income (Expense), Net.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Interest expense of $3.7&nbsp;million was incurred for the three months ended March&nbsp;31, 2011,
 on an average
daily debt balance of $189.1&nbsp;million. Interest expense of $2.2&nbsp;million was incurred on an average daily balance of $111.6&nbsp;million for the three months ended March&nbsp;31, 2010,
and was capitalized as part of construction costs. Interest expense for the three months ended March&nbsp;31, 2011 includes $0.8&nbsp;million of amortized deferred financing costs. Amortized
deferred financing costs for March&nbsp;31, 2010 totaled $0.8&nbsp;million, all of which was capitalized. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loan
commitment expense for the three months ended March&nbsp;31, 2011, was $0.2&nbsp;million, a decrease of $0.5&nbsp;million from the first quarter of 2010. The decrease was
largely due to the construction loan commitment being fully drawn upon in the first quarter of 2011. The only commitment expense we incurred in 2011 was on our existing revolving credit facility. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Income.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Other income resulted from the gain on sale of certain equipment. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income Tax Expense.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Income tax expense was $0.4&nbsp;million for the three months ended March&nbsp;31, 2011, compared to zero
for the three
months ended March&nbsp;31, 2010, resulting from income taxes incurred on gross margin with the State of Texas. As there were no gross margins in the first three months of 2010, no income taxes were
incurred. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Year Ended December&nbsp;31, 2010 Compared to Year Ended December&nbsp;31, 2009  </I></B></FONT></P>

</UL>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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</FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="63pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="63pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Increase/Decrease </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Amounts in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>%</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>30,351</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>30,351</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>41,836</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>41,836</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(11,485</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(11,485</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>22,884</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,264</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>18,620</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>437</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(34,369</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,264</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(30,105</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>706</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest income (expense), net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(5,418</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(224</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(5,194</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,319</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>52</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>52</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(39,735</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,488</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(35,247</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>785</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>63</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=6,SEQ=70,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=382113,FOLIO='63',FILE='DISK131:[11ZBV1.11ZBV42901]DM42901A.;15',USER='LBURNET',CD='20-JUN-2011;10:36' -->
<A NAME="page_dm42901_1_64"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The facility commenced operations in October 2010. Accordingly, financial statements for the year ended December&nbsp;31,
2009, reflect
neither sales nor cost of sales, and the financial statements for the year ended December&nbsp;31, 2010, reflect the operations of the facility from the date when we commenced commercial operations,
in October 2010, to December&nbsp;31, 2010. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the first few months of start-up, the facility's operations were periodically suspended in connection with routine start-up and other maintenance
activities. Accordingly, we were unable to fully absorb fixed overhead costs, and we reported a negative gross profit. Product output for the period from October 2010 to December&nbsp;31, 2010,
totaled approximately 76.5&nbsp;million pounds of CGP. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Cost of Sales.  </I></B></FONT></P>

</UL>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="63pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="63pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Increase/Decrease </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Amounts in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>%</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Propane</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>30,540</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>30,540</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fuel and utilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,747</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,747</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation, amortization and accretion</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,056</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,056</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Insurance and property taxes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,146</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,146</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Direct operating expenses and other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,661</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,661</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total production costs</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>52,150</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>52,150</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Change in inventory</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10,314</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10,314</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>41,836</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>41,836</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost
of sales was $41.8&nbsp;million, or approximately 138% of sales for the year ended December&nbsp;31, 2010. The commencement of operations in October 2010 was followed by several
months of routine start-up and other maintenance activities. Accordingly, we were unable to fully absorb fixed overhead costs, and we recorded a negative gross profit. The primary
component of cost of sales is the propane feedstock, which represented approximately 59% of total production costs for the year ended December&nbsp;31, 2010. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and Administrative Expense.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expense was $22.9&nbsp;million for the year ended December&nbsp;31,
 2010, compared
to $4.3&nbsp;million for the year ended December&nbsp;31, 2009, an increase of $18.6&nbsp;million. Equity-based compensation expense, as a component of general and administrative expense, was
$14.0&nbsp;million in 2010 resulting from equity-based awards granted in September 2010 to both employees and non-employees compared to zero for the year ended December&nbsp;31, 2009.
Also, as part of the transition of the facility from development stage, management added accounting and information systems support personnel and accounting, systems and tax consultants, resulting in
increases of $1.5&nbsp;million and $1.1&nbsp;million, respectively. Legal fees increased by $0.5&nbsp;million, and other expenses increased by $1.5&nbsp;million. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest Income (Expense), Net.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We entered into a five-year credit facility agreement in
June 2009, which included a $150&nbsp;million secured construction loan commitment and a $55&nbsp;million revolving credit facility. We did not draw upon the construction loan commitment until the
end of October 2009. The average construction loan balance from that point until December&nbsp;31, 2009, was $50.9&nbsp;million, resulting in interest expense of $0.9&nbsp;million for the year,
all of which was capitalized as part of construction costs. Interest expense in 2009 includes $0.8&nbsp;million of loan commitment fees on the unutilized portion of our credit facility. Interest
income of $0.6&nbsp;million was earned during 2009 on cash balances. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2010, the average construction loan balance was approximately $132&nbsp;million, resulting in interest of $10.5&nbsp;million for the year, of which $8.3&nbsp;million was
capitalized as part of construction costs. The increase in total interest of $9.1&nbsp;million on the construction loan from 2009 to 2010 was primarily the result of the higher level of borrowing
due to the capital spending on the facility construction. The interest </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>64</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=7,SEQ=71,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=1033874,FOLIO='64',FILE='DISK131:[11ZBV1.11ZBV42901]DM42901A.;15',USER='LBURNET',CD='20-JUN-2011;10:36' -->
<A NAME="page_dm42901_1_65"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>rate
remained unchanged at 8% during the periods ended December&nbsp;31, 2010 and December&nbsp;31, 2009. No interest income was earned in 2010. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
revolving loan commitment was not drawn upon until August 2010; accordingly, there was no interest expense on the revolving loan during 2009. The average revolving loan balance from
August 2010 to December&nbsp;31, 2010, was $14.6&nbsp;million, resulting in interest of $0.5&nbsp;million for the year ended December&nbsp;31, 2010. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loan
commitment expense increased $1.3&nbsp;million to $2.1&nbsp;million in 2010 due to the bank debt facility being in place for the full year. Also, during the year ended
December&nbsp;31, 2010, we recorded amortization of deferred financing costs of $3.1&nbsp;million, of which we capitalized $2.5&nbsp;million. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Income.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Other income resulted from the gain on sale of certain equipment. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Year Ended December&nbsp;31, 2009 Compared to Year Ended December&nbsp;31, 2008  </I></B></FONT></P>

</UL>
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<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Years Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Increase/Decrease </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Amounts in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>%</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,264</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,729</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(465</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,264</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,729</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>465</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest income (expense), net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(224</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>744</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(968</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(130</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>N/A</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,488</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,985</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(503</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>13</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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 <P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The facility commenced operations in October 2010. Accordingly, there were no sales in 2009 and 2008. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of Sales.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;There was no production in either 2009 or 2008. Accordingly, there were no cost of sales in 2009 or 2008.
</FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and Administrative Expense.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expense was $4.3&nbsp;million for the year ended December&nbsp;31,
2009, compared
to $4.7&nbsp;million for the year ended December&nbsp;31, 2008, a decrease of $0.4&nbsp;million. The higher general and administrative expense in 2008 was driven by $2.0&nbsp;million in
equity-based compensation expense resulting from an award of fully vested profits interests to certain key individuals in 2008. Excluding the equity-based compensation expense, general and
administrative expense increased $1.6&nbsp;million, primarily due to increased property taxes. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest Income (Expense), Net.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Interest income was $0.6&nbsp;million for the year ended December&nbsp;31, 2009, compared to
interest income of
$0.7&nbsp;million for the year ended December&nbsp;31, 2008. Interest income was generated from the cash held from initial capital contributions of the members for the construction of the PDH
facility. As the construction project was fully underway in 2009, cash balances decreased and reduced interest income. We did not enter into a bank credit facility until June 2009. Accordingly, there
was no loan commitment expense or interest expense in 2008. However, during the year ended December&nbsp;31, 2009, we recorded $0.8&nbsp;million in loan commitment expense on the unutilized
portion of our credit facility. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dm42901_critical_accounting_policies"> </A>
<A NAME="toc_dm42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  Critical Accounting Policies    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of our financial statements in accordance with GAAP requires that management make estimates and assumptions affecting
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the
reporting period. The following is a discussion of the accounting policies applied by us that are considered to involve a higher degree of judgment in their application. See Note&nbsp;2 (Summary of
Significant Accounting Policies) to our audited financial statements included elsewhere in this prospectus. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>65</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Impairment of Long-Lived Assets  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We account for impairment of long-lived assets in accordance with ASC 360, "Plant, Property and
Equipment&#151;Impairment or Disposal of Long-Lived Assets." Long-lived assets used in operations are assessed for possible impairment when events or changes in
circumstances indicate a potential significant deterioration in future cash flows projected to be generated by the assets. Individual assets are grouped for impairment purposes at the lowest level for
which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets&#151;generally at the facility level, as we produce one primary product. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
upon review, the sum of the projected undiscounted cash flows is less than the carrying value of the asset group, the carrying value is written down to estimated fair value. The fair
values of impaired assets are usually determined based on the present value of projected future cash flows using discount rates commensurate with the risks involved in the asset group, as quoted
market prices in active markets are generally not available. The expected future cash flows used for impairment reviews and related fair value calculations are based on projected production volumes,
sales volumes, prices, and costs, taking into consideration available internal and external information at the date of review. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Should
an impairment of assets arise, we may be required to record a charge to operations that could be material to the period reported. To date, we have not recorded any impairment
charges. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Equity-Based Compensation  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We recognize equity-based compensation expense related to the profits interests granted to employees based on the estimated fair value
of the awards on the grant date. The grant date fair value of the equity-based awards to employees is recognized on a straight-line basis over the requisite service period, which is the
vesting period of the respective awards. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
also account for profit interests granted to certain employees of affiliated entities, who are treated for accounting purposes as non-employees, based on the estimated
fair value of the awards. The measurement of equity-based compensation for awards granted to non-employees is subject to periodic adjustment as the awards vest, and the resulting change in
value, if any, is recognized in our statements of operations during the period the related services are rendered. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
engage an independent valuation specialist to assist us in determining the fair value of the awards as of the grant date for employees, and as of each reporting date for
non-employees. The fair value of our business was allocated to each of our classes of profits interests using the Option Pricing Method (OPM). The OPM is appropriate to use when the range
of possible future outcomes is so difficult to predict that forecasts would be highly speculative. In applying the OPM, we utilized the Black-Scholes option-pricing model. The Black-Scholes model
requires the use of highly subjective and complex assumptions that determine the fair value of equity-based awards, including the equity value of our business and the expected time to liquidity,
volatility, risk-free interest rate and dividend yield. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Given
the absence of a public trading market for our common units and in accordance with the American Institute of Certified Public Accountants Practice Guide, </FONT> <FONT SIZE=2><I>Valuation of Privately-Held-Company Equity Securities Issued as
Compensation</I></FONT><FONT SIZE=2>, we
exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the equity value of our business, including: publicly available forecasts of
future propylene and propane prices that are published by industry sources as of each valuation date; contemporaneous and retrospective valuations performed by an independent valuation specialist; the
status of our facility's construction and operations, including risks attendant thereto; the likelihood of our achieving a liquidity event given prevailing market conditions in the estimated
timeframe; the nature, history and strategy of our business; the illiquidity of equity-based awards involving private company securities; and current expectations about future macroeconomic
conditions. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>66</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
estimate the value of our business by considering a weighted combination of value indications under two valuation approaches, an income approach and a market approach. The income
approach estimates the present value of future estimated cash flows, based upon forecasted sales and costs, including consideration of forecasts of future propylene and propane prices that are
published by industry sources as of each valuation date. These future cash flows are discounted to their present values using a discount rate derived from an analysis of the cost of capital of
comparable publicly traded companies in our industry or similar lines of business as of each valuation date and are adjusted to reflect the risks inherent in our cash flows. The market approach
estimates the fair value of a company by applying market multiples of comparable publicly traded companies in our industry or similar lines of business, which are based on key metrics implied by the
enterprise values or acquisition values of our comparable publicly traded companies. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the latter part of 2010 and in the first quarter of 2011, our estimates of future results, and therefore, our estimates of the equity value of our business, have increased
substantially as a result of (1)&nbsp;the completion of the construction of our facility and (2)&nbsp;significantly higher expectations of future profitability based on increases in the forecasted
propane-to-propylene spread. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
a further discussion of our historical equity-based compensation, please see Notes&nbsp;2 and 9 in our audited financial statements included elsewhere in this prospectus. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="do42901_liquidity_and_capital_resources"> </A>
<A NAME="toc_do42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Liquidity and Capital Resources    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal sources of liquidity have historically been equity contributions from our sponsors and borrowings under our existing
credit facility. Our principal uses of
cash are expected to be operations, distributions, capital expenditures and funding our debt service obligations. We believe that our cash from operations will be adequate to satisfy commercial
commitments for the next twelve months and that the borrowings under our revolving credit facility will be adequate to fund our planned capital expenditures and working capital needs. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
ability to make payments on and to refinance our indebtedness, to make distributions, to fund planned capital expenditures and to satisfy our other capital and commercial commitments
will depend on our ability to generate cash flow in the future. This, to a certain extent, is subject to the prevailing propane-to-propylene spread, natural gas prices and
general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our business may not generate sufficient cash flow from operations, and future
borrowings may not be available to us under our new credit facilities in amounts sufficient to enable us to make quarterly distributions, finance necessary capital expenditures, service our
indebtedness or fund our other liquidity needs. We may seek to sell assets or issue debt securities or additional equity securities to fund our liquidity needs but may not be able to do so. We may
also need to refinance all or a portion of our indebtedness on or before maturity. We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Existing Credit Facility  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We entered into a five-year credit facility agreement in June 2009 that included a $150.0&nbsp;million construction loan
commitment and a $55.0&nbsp;million revolving credit facility. Interest for the facility is based upon LIBOR plus a margin or the bank's prime rate plus a margin, at our option. All of our
obligations under the credit facility are secured by all of our assets, subject to certain exceptions and exclusions. Principal and interests payment are due based on a ten-year
amortization schedule with a balloon payment due in 2014. Additional information about this credit facility may be found in our audited financial statements and accompanying notes included elsewhere
in this prospectus. We plan to refinance and cancel this credit facility with borrowings under the new term loan facility we expect to enter into in the third quarter of 2011. See Note&nbsp;8 to our
financial statements included elsewhere in this prospectus. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>67</FONT></P>

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<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> New Credit Facilities  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the closing of this offering, PL Propylene, as borrower, expects to enter into a new term loan facility of
$350.0&nbsp;million. PL Propylene also expects to enter into a revolving credit facility of $120.0&nbsp;million with Morgan Stanley Senior Funding,&nbsp;Inc. as lead arranger. Morgan Stanley
Senior Funding,&nbsp;Inc. (the "Agent") will act as the administrative agent and collateral agent for both the term loan facility and the revolving credit facility. PL Propylene has engaged a group
of financial institutions to use their commercially reasonable efforts to arrange the term loan facility. Also, PL Propylene has received a commitment letter from a group of financial institutions in
respect of the full amount of the revolving credit facility. It is a condition to the commitment of the lenders under the revolving credit facility commitment letter that a portion of the term loan
facility is successfully closed and funded. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
expect the term loan facility and the revolving credit facility will mature in 2018 and 2016, respectively. Proceeds of the new credit facilities will be used (1)&nbsp;to refinance
and cancel our existing credit facility, (2)&nbsp;to pay transaction costs associated with entering into the new credit facilities and (3)&nbsp;to make a distribution to our sponsors to reimburse
them for certain construction capital expenditures. In respect of the revolving credit facility, (1)&nbsp;on the closing date of the revolving loan facility, we may draw up to $60.0&nbsp;million
of revolving loans (a)&nbsp;to make a distribution to our sponsors to reimburse them for certain construction capital expenditures and (b)&nbsp;to pay transaction costs associated with entering
into the credit facilities and (2)&nbsp;on and after the closing date of the revolving loan facility, we may draw available amounts to fund our working capital needs and for other general
partnership purposes. Borrowings under our new credit facilities will each be subject to the satisfaction of customary conditions, including the absence of a default, and the accuracy, in all material
respects, of all representations and warranties. We will also have the right to add, subject to certain restrictions and conditions, incremental term loan and revolving credit facilities in an amount
not to exceed $200.0&nbsp;million. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest Rate and Fees.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We currently expect that borrowings under the term loan facility and revolving credit facility will bear
interest at a rate
per annum equal to either: (1)&nbsp;the "ABR," defined as the highest of (a)&nbsp;the rate of interest publicly announced by the Agent as its prime rate, (b)&nbsp;the federal funds effective
rate from time to time plus 0.50% per annum and (c)&nbsp;in respect of the term loan facility only, one-month LIBOR plus 1.00% per annum, </FONT> <FONT SIZE=2><I>plus</I></FONT><FONT SIZE=2> an applicable margin </FONT><FONT
SIZE=2><I>OR</I></FONT><FONT SIZE=2> (2)&nbsp;the higher of (a)&nbsp;at the election of PL Propylene, one,
two, three, six, or, if available to all relevant affected lenders, nine or twelve month (or shorter) LIBOR or (b)&nbsp;in respect of the term loan facility only, 1.25% per annum, </FONT> <FONT SIZE=2><I>plus</I></FONT><FONT SIZE=2> an applicable
margin. Additionally, we expect that the revolver will bear a commitment fee calculated at a rate per annum equal to 0.50% on the
average daily unused portion of the commitments under the revolving credit facility. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
applicable margins under the credit facilities are subject to step-ups and step-downs based on our leverage ratio and our credit rating, respectively. In
addition,
PL Propylene will pay an underwriter fee and an upfront fee as well as an annual management fee for our term loan facility and our revolving credit facility. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mandatory Prepayments.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We will be required to prepay outstanding amounts under our term loan facility with the net proceeds from
certain issuances of
debt (other than debt permitted to be incurred under the facility). We will also be required to prepay outstanding amounts under our term loan facility in an amount equal to the net proceeds from any
non-ordinary course asset sale, subject to certain thresholds, exemptions and reinvestment rights. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Voluntary Prepayments/Commitment Reductions.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We expect that we may, at any time, voluntarily prepay, in whole or in part, outstanding
amounts under
our new credit facilities without premium or penalty; provided, we may be subject to a 1.0% penalty for refinancing or repricing the term loan facility within one year after the closing of the new
term loan facility under certain circumstances. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>68</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization and Final Maturity.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We expect amortization of the new term loan facility in aggregate amounts of 1.0% per year of the
original principal
amount and that it will mature on the seventh anniversary of the closing date. We expect that the revolving credit facility will terminate on the fifth anniversary of the closing date. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restrictive Covenants and Other Matters.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We expect that our new credit facilities will contain covenants requiring us to maintain
certain financial
ratios such as leverage, interest coverage and current ratios. In addition, we expect that the term loan and revolving credit facilities will include negative covenants that will, subject to
significant exceptions, limit our ability and the ability of our sole subsidiary, PL Propylene, to, among other things: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>incur, assume or permit to exist additional indebtedness, guarantees and other contingent obligations; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>incur liens;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>make negative pledges;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>pay dividends or make other distributions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>make certain loans and investments;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>consolidate, merge or sell all or substantially all of our assets; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>enter into transactions with affiliates. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
credit facilities are expected to contain certain customary representations and warranties, affirmative covenants and events of default, including among other things, payment
defaults, breach of representations and warranties, covenant defaults, cross-defaults to material indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments, actual or
asserted failure of any guaranty or security document supporting the credit facilities to be in force and effect, and change of control. If an event of default occurs, the Agent would be entitled to
take various actions, including the acceleration of amounts due under the new credit facilities, termination of the commitments under the revolving credit facility and all remedial actions available
to a secured creditor. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Capital Spending  </I></B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2010, we incurred $187.5&nbsp;million of capital expenditures to complete the construction of our PDH facility which commenced
operations in October 2010. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Major
planned turnaround costs will be deferred and amortized over the period until the next turnaround. Capital expenditures are for discretionary projects. Our new term loan facility
may limit the amount we can spend on capital expenditures. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
future capital spending will be determined by the board of directors of our general partner. We currently plan to incur maintenance capital expenditures of $14.5&nbsp;million in
2011 and $6.0&nbsp;million per year for each of 2012 through 2014. We have not planned maintenance capital expenditures beyond 2014. Since a substantial portion of our facility is newly built, we do
not expect to undergo a major maintenance project until late 2013 or 2014, at which time the most significant activity will be to replace the reactor catalyst, which is required approximately every
three years. We expect these catalyst change-out projects will typically cost approximately $15&nbsp;million to $20&nbsp;million per project. In addition to the triennial maintenance
projects, a more significant maintenance project will be undertaken approximately every nine years, which will include change-out of the reactor catalyst and overhauls of selected pieces
of equipment. We anticipate these projects to cost approximately $25&nbsp;million to $35&nbsp;million. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
estimated capital expenditures and planned major maintenance costs are subject to change due to unforeseen circumstances and unanticipated increases in the cost, scope and completion
time. For </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>69</FONT></P>

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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>example,
we may experience increases in labor or equipment costs necessary to comply with government regulations or to complete projects that sustain or improve the profitability of our PDH facility.
Maintenance capital expenditures and planned turnaround expenses will be funded using cash flow from operations. Other capital expenditures (including growth capital expenditures), should we identify
opportunities for such expenditures, will be funded by issuances of debt or equity. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="do42901_cash_flows"> </A>
<A NAME="toc_do42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Cash Flows    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Operating Activities  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities for the year ended December&nbsp;31, 2010, was $53.2&nbsp;million. This negative cash flow
from operating activities was primarily attributable to increases in accounts receivable and inventory and a decrease in accounts payable combined with our loss from operations. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
cash flows used in operating activities for the year ended December&nbsp;31, 2009 and 2008, were zero and $1.0&nbsp;million, respectively, each due primarily to our net loss
offset by changes in components of working capital. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Investing Activities  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities for the years ended December&nbsp;31, 2010, 2009 and 2008, was $157.4&nbsp;million,
$281.2&nbsp;million and $170.0&nbsp;million, respectively. Net cash used in investing activities principally relates to capital expenditures in connection with construction of our facility. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Financing Activities  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities for the years ended December&nbsp;31, 2010, 2009 and 2008, was $210.7&nbsp;million,
$249.1&nbsp;million and $203.0&nbsp;million, respectively. Net cash provided by financing activities resulted from proceeds from member capital contributions and proceeds from debt borrowings. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="do42901_contractual_obligations"> </A>
<A NAME="toc_do42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Contractual Obligations    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our contractual obligations for the periods indicated as of December&nbsp;31, 2010: </FONT></P>
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<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="26pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="26pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="26pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="26pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=20 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Payments Due by Period </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2012 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2013 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2014 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2015 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>There-<BR>
after </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=20 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(in millions)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bank Debt<SUP>(1)</SUP></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>189.5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>189.5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Purchase Obligations<SUP>(2)</SUP></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10.3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3.5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asset Retirement Obligations<SUP>(3)</SUP></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>200.9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>191.3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4.6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Our
debt obligations as of December&nbsp;31, 2010, include (i)&nbsp;a $150&nbsp;million term loan and (ii)&nbsp;$39.5&nbsp;million of outstanding
debt drawn on our revolving credit facility. These amounts are reflected as being due in 2011 based on our anticipated repayment of these amounts pursuant to our entry into new credit facilities in
advance of this offering. These amounts exclude interest payments and loan commitment fees. See Note&nbsp;8 in our audited financial statements for discussion of interest rates and loan commitment
fees. We expect to enter into new credit facilities prior to the closing of this offering. Payments on borrowings under the new credit facility have not been included in the table above as they were
not contractual obligations as of December&nbsp;31, 2010. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>70</FONT></P>

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<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=77,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=786833,FOLIO='70',FILE='DISK131:[11ZBV1.11ZBV42901]DO42901A.;8',USER='NLUCCA',CD='20-JUN-2011;12:47' -->
<A NAME="page_do42901_1_71"> </A>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Represents
the aggregate minimum purchase commitments pursuant to a nitrogen supply contract and a propylene storage contract. We have contracts to purchase
propane and other raw materials used in the production of propylene. These contracts do not specify any minimum quantities to be purchased, and accordingly, this table does not reflect amounts that
may be payable under these contracts.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Represents
amounts to be incurred in connection with the retirement of the facility at the end of its life. The amount included herein reflects the amount
recorded in our December&nbsp;31, 2010, financial statements and does not include the effects of inflation. Our recorded asset retirement obligation will be accreted over time until it is equivalent
to the anticipated ultimate cash retirement cost. </FONT></DD></DL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="do42901_off-balance_sheet_arrangements"> </A>
<A NAME="toc_do42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Off-Balance Sheet Arrangements    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not have any "off-balance sheet arrangements" as such term is defined within the rules and regulations of the SEC. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="do42901_quantitative_and_quali__do402477"> </A>
<A NAME="toc_do42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Quantitative and Qualitative Disclosures about Market Risk    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse
changes in financial and commodity market prices and rates. We do not currently use derivative financial instruments to manage risks related to changes in prices of commodities (e.g.,&nbsp;propane)
or interest rates. Given that our business is currently based entirely in the U.S., we are not directly exposed to foreign currency exchange rate risk. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
do not engage in activities that expose us to speculative or non-operating risks, including derivative trading activities. In connection with our new term loan facility,
we expect to enter into certain interest rate protection agreements. Additionally, our management will continue to monitor whether financial derivatives become available which could effectively hedge
identified risks and management may in the future elect to use derivative financial instruments consistent with our overall business objectives to avoid unnecessary risk and to limit, to the extent
practical, risks associated with our operating activities. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>71</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dq42901_industry_overview"> </A>
<A NAME="toc_dq42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  INDUSTRY OVERVIEW    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dq42901_propylene_industry_overview"> </A>
<A NAME="toc_dq42901_2"> </A></FONT> <FONT SIZE=2><B>  Propylene Industry Overview    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propylene Overview  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propylene is a versatile basic hydrocarbon predominantly produced as a by-product of petroleum refining and as a
co-product of ethylene production. Propylene is an important building block in the production of complex petrochemicals such as polypropylene, acrylonitrile and acrylic acid. As such,
propylene is the foundation of many different consumer and industrial products such as plastics, clothing, automotive components, detergents, safety glass, packaging materials, paints and nylon. In
addition to its utility within the chemicals market, propylene also plays a significant role in the fuels market. When alkylated in a refinery, propylene is used as a major gasoline blendstock. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propylene
pricing reflects supply and demand dynamics that are intricately related to the price movements of crude oil, natural gas and petrochemicals. Within North America, recent shale
gas discoveries and the use of new extraction technologies have been one factor that has led to an abundance of natural gas and natural gas liquids ("NGLs") such as ethane and propane, significantly
impacting propylene production and pricing. In addition, there has been a fundamental decoupling of natural gas and oil prices in North America as gas prices have fallen dramatically while global
economic and geopolitical factors have propelled oil prices to the $100 per barrel range. Given this dynamic, North American ethylene producers have shifted to lighter natural gas liquids as their
primary feedstocks, which yield less propylene per pound of feed than heavy feedstocks such as naphtha. The result has been a tight supply of propylene in the North American market. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following diagram depicts the principal uses of propylene: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dq42901_propylene_supply_chain"> </A>
<A NAME="toc_dq42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Propylene Supply Chain    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g205464.jpg" ALT="GRAPHIC" WIDTH="504" HEIGHT="387">
  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propylene
is produced globally primarily in regions containing crude oil refineries or an abundant supply of hydrocarbon feedstocks. The export and import of propylene between regions is
relatively limited </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>72</FONT></P>

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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>due
to the expense associated with transport of highly pressurized or refrigerated liquids. When sold, propylene is divided into grades based on final composition of the saleable product. There are
three grades of propylene produced in the U.S.: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Polymer-Grade Propylene ("PGP"):</I></FONT><FONT SIZE=2>&nbsp;&nbsp;a mix of 99.5% propylene
and 0.5% propane and other hydrocarbons; this type of propylene is typically used as a raw material for polypropylene. Polypropylene is a thermoplastic polymer and is used in a variety of applications
including packaging, ropes, textiles, paper coatings, plastic parts and reusable containers;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Chemical-Grade Propylene ("CGP"):</I></FONT><FONT SIZE=2>&nbsp;&nbsp;a mix of 93.0% to 95.0%
propylene and 7.0% to 5.0% propane and other hydrocarbons; this type of propylene is used as a raw material for a wide variety of chemicals including propylene oxide, oxo alcohols, cumene,
acrylonitrile, acrylic acid and isopropanol;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Refinery-Grade Propylene ("RGP"):</I></FONT><FONT SIZE=2>&nbsp;&nbsp;a mix of approximately
60.0% propylene and 40.0% propane and other hydrocarbons; this type of propylene is utilized in both fuel and chemicals markets. RGP can be used directly in cumene, isopropanol and propylene oligomer
markets or purified into CGP or PGP. In the fuel market, RGP can be converted into propylene alkylate or dimersol/polygas and blended directly into motor gasoline, or RGP can be blended in propane. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table depicts historical market prices of PGP and CGP during the period from 2005 through 2011 and projected 2011 through 2015: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dq42901_historical_and_projected_propylene_pricing_levels"> </A>
<A NAME="toc_dq42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Historical and Projected Propylene Pricing Levels    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g226792.jpg" ALT="GRAPHIC" WIDTH="552" HEIGHT="309">
  </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=1>Source: Chemical Data</FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propylene Supply Sources  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are three sources of propylene production in North America: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Crude oil refineries produce RGP as a by-product of gasoline production. RGP is typically produced in the
fluid catalytic cracker unit ("FCC unit" or "cat cracker") associated with a refinery. U.S. refineries produced approximately 18&nbsp;billion pounds of propylene in 2010 (approximately 60% of total
U.S. propylene production); </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>73</FONT></P>

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<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Olefins facilities (ethylene crackers) produce PGP and CGP as co-products of ethylene production. These
facilities include both heavy feed crackers and light feed crackers. Ethylene crackers produced approximately 12&nbsp;billion pounds of propylene in 2010 (approximately 40% of total U.S.
production); and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>On-purpose propylene plants produce PGP and CGP as their primary products. Currently, on-purpose
plants produce propylene using three primary production techniques: metathesis (ethylene and butane-2 feedstocks), propane dehydrogenation (propane feedstock) and methanol to propylene
(methanol feedstock&#151;derived from natural gas, biomass or coal). Chemical Data estimates that on-purpose metathesis propylene plants produced 3% of U.S. propylene in 2010 and
that with the start-up of our facility, on-purpose facilities will account for approximately 7% of total U.S. propylene. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following chart show the change in propylene sources from 2006 to 2011. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dq42901_change_in_u.s._propylene_production_sources"> </A>
<A NAME="toc_dq42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Change in U.S. Propylene Production Sources    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g435278.jpg" ALT="GRAPHIC" WIDTH="595" HEIGHT="235">
  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>Source: Chemical Data</FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propylene Production via Oil Refineries  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propylene is produced as a by-product in oil refineries when they process crude oil with the primary goal of creating
gasoline. The first part of the refining process is to heat the crude oil to a very high temperature and feed it to a distillation column in which lighter distillates will rise as vapors and heavier
distillates liquefy, thus separating the fractions. The fractions are further processed in a variety of ways, but it is the fraction sent to the FCC unit that has the capability to produce substantial
amounts of propylene. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
FCC unit takes heavy gas oil as an input with the goal of producing gasoline and/or distillate fuel oil. The cat cracker "cracks" the bigger compounds in the heavy gas oil into
smaller compounds. When the "cracked" product leaves the reaction chamber, it is separated in a dedicated fractionator. The products leaving the fractionator include a mix of heavy gas oil, light gas
oil, gasoline and a gas stream. The gas stream is then further processed in a distillation tower to separate the gases into a propane/propylene mix, namely refinery grade propylene. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
refiner then has three primary options for the resulting refinery grade propylene: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Sell the combined stream to the merchant market for further processing (by "splitters") into propane and propylene. The
merchant fractionators will then sell this refinery-derived propylene into the market for use in petrochemical plants;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Process the propylene into propylene alkylate, a motor gasoline blendstock; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Burn the propane/propylene mix as fuel. Only in isolated areas or capital constrained plants does this make economic
sense. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>74</FONT></P>

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<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propylene Production via Ethylene Plants  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ethylene is the most common petrochemical in the world and Chemical Data estimates that over 50&nbsp;billion pounds are produced
annually in the U.S. Ethylene is a major building block for many common products. It is produced in an ethylene plant (also referred to as an olefins plant, ethylene cracker, steam cracker or a
cracker defined by the feed type, such as "naphtha cracker" or "ethane cracker"). </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ethylene
can be produced by a variety of chemical reactions involving many different feedstocks, including ethane, propane, butane, naphtha or gas oil. Many ethylene plants in the U.S.
are designed to shift between feedstocks as relative economics shift. Regardless of the feedstock, the basic process is the same: the feed is mixed with steam and heated to 750 to 950 degrees Celsius,
inducing numerous free radical reactions followed by immediate cooling to freeze the reactions. The resulting output streams are separated from each other by repeated compression and distillation. The
table below is illustrative of the relative production of propylene for the various feedstocks. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dq42901_illustrative_olefins_crack_yie__ill02874"> </A>
<A NAME="toc_dq42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  Illustrative Olefins Crack Yields: Pounds of Product per Pound of Feed    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="35pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="41pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Ethane </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Propane </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Naphtha </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Gas Oil </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Yield:</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Ethylene</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.78</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.42</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.37</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.23</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Propylene</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.03</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.17</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.18</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.15</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.19</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.41</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.45</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.62</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=1>Source: Chemical Data</FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
is portrayed in the above table, olefins plants that crack primarily ethane will result in almost no co-product propylene generation, whereas crackers that use heavier
feeds, referred to as heavy feed crackers, such as naphtha or gas oil will result in more co-product propylene generation. While not all ethylene plants are able to shift between feed
types, for the "flexible" crackers that are able to adjust, the choice of feedstock depends on a complex interaction of feedstock prices, as well as ethylene and co-product prices. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propylene Supply Dynamics  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. oil refineries and ethylene plants historically produced approximately equal relative amounts of propylene each year. Beginning in
2007, this relationship changed as two parallel events resulted in the permanent closure of various ethylene plants and the curtailment of refinery production, conditions that have led to an extremely
tight propylene market. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;First,
new U.S. supplies of natural gas from liquid rich shale deposits have brought an abundant supply of natural gas and natural gas liquids into the U.S. market. As a result, the
price of natural gas declined in a period of rising oil prices. This decoupling of the oil to gas price ratio has caused natural gas based feedstocks such as ethane to be favored versus crude oil
based feedstocks such as naphtha for ethylene production. Accordingly, steam crackers that crack only naphtha or heavy oil based liquids have generally become economically cost disadvantaged. As a
result, numerous heavy feed crackers have been permanently shut down or reconfigured to enable them to use lighter feedstocks. As a key supply source of propylene is from the steam cracking of heavy
liquids, propylene production by ethylene plants has been reduced and is expected to remain so in the future, leaving the propylene market to remain tight. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>75</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
illustration below shows historical crude oil and natural gas pricing for the period from 2000 to May&nbsp;31, 2011. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dq42901_historical_oil_and_natural_gas__his02008"> </A>
<A NAME="toc_dq42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  Historical Oil and Natural Gas Pricing: 2000 through 2011 YTD    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g837296.jpg" ALT="GRAPHIC" WIDTH="582" HEIGHT="288">
  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>Source: EIA</FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
second event influencing U.S. propylene production has been the reduced demand for gasoline caused by the economic recession and subsequent slow recovery as well as the increased use
of ethanol. A reduction in gasoline demand reduces refining operations, which in turn limits the by-product production of propylene. With reduced gasoline demand, refineries curtailed
production and reduced FCC unit output. The combination of closures and reconfigurations of heavy feed ethylene crackers and reduced output of FCC units at refineries reduced annual U.S. propylene
production by approximately 4&nbsp;billion pounds from 2007 through 2010 according to Chemical Data estimates. Of that total, Chemical Data estimates that approximately 2&nbsp;billion pounds of
supply from ethylene plants was permanently removed from the market, slightly offset by an increase in refinery capacity. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
illustrated below, propylene supply in the U.S. contracted sharply by 17.0% from 2007 through 2009 before rebounding 7.5% in 2010 according to Chemical Data estimates. Chemical Data
also estimates that U.S. propylene supply will grow modestly through 2014, increasing at a compound annual growth rate of approximately 1.5% from year-end 2010. This is primarily due to
the belief that co-product supply of propylene from heavy feed ethylene crackers is not likely to rebound in the near term. As mentioned earlier, overall production economics strongly
favor lighter feedstocks, hindering the supply of propylene from ethylene crackers. In 2015, Chemical Data assumes that a new PDH plant is added to U.S. capacity, contributing to an annual supply
growth rate that year of 3.4%. However, despite this growth, supply is expected to remain below levels achieved in 2007. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>76</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table depicts historical and projected propylene production in the U.S. for the period from 2005 through 2015. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dq42901_historical___projected_u.s._pr__his02493"> </A>
<A NAME="toc_dq42901_8"> </A>
<BR></FONT><FONT SIZE=2><B>  Historical&nbsp;&amp; Projected U.S. Propylene Supply (millions of pounds)    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g801877.jpg" ALT="GRAPHIC" WIDTH="654" HEIGHT="210">
  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>Source: Chemical Data</FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propylene Demand Summary  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propylene demand in the U.S. has historically tracked GDP growth and was driven by increases in consumer consumption of both durable
and non-durable plastics, nylon, insulation, furniture, carpets, appliances and adhesives, among other items. The recession that began in 2008 spurred the first worldwide contraction in
propylene demand in history, and U.S. demand fell by 11.4% from 2007 to 2008. In early 2009, U.S. propylene demand continued to experience a contraction as a wide range of industries were affected by
the global recession. Propylene demand growth resumed in the U.S. in late 2009 and 2010. Chemical Data forecasts that U.S. demand is expected to grow at a compound annual growth rate of approximately
1.8% between 2010 and 2015, with further growth somewhat constrained by the tight supply market. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>77</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following graph shows historical and projected propylene demand in the U.S. for the period from 2005 through 2015. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dq42901_historical___projected_u.s._pr__his02425"> </A>
<A NAME="toc_dq42901_9"> </A>
<BR></FONT><FONT SIZE=2><B>  Historical&nbsp;&amp; Projected U.S. Propylene Demand (millions of pounds)    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g68502.jpg" ALT="GRAPHIC" WIDTH="631" HEIGHT="295">
  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>Source: Chemical Data</FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propylene Demand by Product  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As one of the primary petrochemical building blocks, propylene demand is driven by four key products: polypropylene, propylene oxide,
acrylonitrile and acrylic acid. The following chart shows U.S. propylene demand by product in 2010. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dq42901_2010_u.s._propylene_demand_by_product"> </A>
<A NAME="toc_dq42901_10"> </A>
<BR></FONT><FONT SIZE=2><B>  2010 U.S. Propylene Demand by Product    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g20845.jpg" ALT="GRAPHIC" WIDTH="276" HEIGHT="202">
  </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=1>Source: Chemical Data</FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Polypropylene</I></FONT><FONT SIZE=2> (approximately 49% of propylene demand in 2010) is produced as a solid pellet that can be modified and molded into both hard
and flexible plastic materials for both durable use (transportation, building and construction, electrical, furniture, industrial machinery) and
non-durable use (packaging, consumer and industrial products). For example, a key use of polypropylene is in plastic component parts of automobiles. Chemical Data projects U.S.
polypropylene demand growth of approximately 1.6% per year from 2011 through 2015. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>78</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Propylene oxide</I></FONT><FONT SIZE=2> (approximately 13% of demand in 2010) is primarily used to produce foam and polyurethane products. It has historically
been produced by one of two methods: reacting propylene with ethyl-benzene and by reacting propylene with isobutene. Chemical Data projects U.S. propylene oxide demand growth of approximately 2.0% per
year from 2011 through 2015. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Acrylonitrile</I></FONT><FONT SIZE=2> (approximately 9% of propylene demand in 2010) is used to produce synthetic rubber compounds, automotive body parts, golf
club heads, clothing, carpet fibers, protective head gear, coatings and toys (LEGO&reg; bricks). Asian manufacturers also import acrylonitrile from U.S. producers for use in the creation of
nylon, among other items. Chemical Data projects U.S. acrylonitrile demand growth of approximately 2.9% per year from 2011 through 2015. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Acrylic acid</I></FONT><FONT SIZE=2> (approximately 6% of propylene demand in 2010) is used to produce super-absorbents (for diapers), coatings, adhesives, floor
polishes and paints. Chemical Data projects U.S. acrylic acid demand growth of approximately 3.0% per year from 2011 through 2015. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propylene's Relation to WTI Crude Oil  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The price of propylene has always been closely related to the price of crude oil. The chart below illustrates the price ratio between
propylene and WTI crude oil over historical periods and shows that propylene trades at a premium to crude oil on a per barrel basis. This is because propylene is a by-product of refinery
output and can be alkylated and used as a gasoline blendstock. Propylene's value outside of the chemicals market as a gasoline blendstock provides a floor for the price of propylene since gasoline
always trades at a premium to crude oil. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dq42901_propylene_price_as_a_multiple_of_crude_oil"> </A>
<A NAME="toc_dq42901_11"> </A>
<BR></FONT><FONT SIZE=2><B>  Propylene Price as a Multiple of Crude Oil    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g703274.jpg" ALT="GRAPHIC" WIDTH="583" HEIGHT="270">
  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>Source: EIA, Chemical Data</FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1><I>Note: Propylene price expressed as a multiple of WTI crude oil price on a dollar per barrel equivalent basis.</I></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As depicted in the above chart, with the exception of the recession in 2008 and 2009, the price of propylene relative to crude oil has been fairly
consistent over the past decade in a range between roughly 1.3 to 1.4 times the price of crude oil. Since the alkylation value of propylene establishes the floor for propylene pricing, the price of
propylene has never fallen below the price of crude oil for more than a very brief period. As described above, since 2010 the curtailed supply of propylene has resulted in a substantially higher price
of propylene relative to crude oil. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>79</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
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<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> North American Propylene Industry Structure  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management estimates that over 30 different companies produce propylene in North America. However, we do not consider most of these
producers as our direct competition when seeking contractual or spot customers. First, refineries that produce refinery grade propylene are not direct competitors. Refinery grade propylene is
generally sold to other companies, such as Enterprise and ExxonMobil, for further purification, or splitting, into PGP and CGP. Second, many producers, such as Dow, Formosa and INEOS, consume all of
the propylene they produce and purchase significant additional volumes of propylene from third parties. We consider companies with net long positions in polymer and chemical grade propylene to be our
direct competitors, including Enterprise, Chevron Phillips, Lyondell Basell, ExxonMobil Chemical, Shell Chemical, Flint Hills, and Williams Companies. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Most
of our competitors have significantly greater financial and other resources than us and are engaged on a national or international basis in many segments of the petroleum products
business including refining, transportation and marketing, on a scale substantially larger than ours. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Competition
in our industry is determined by price considerations, logistics and, to some extent, stability of supply. Our ability to compete effectively depends on our responsiveness to
customers' needs, our pipeline connectivity to customer facilities and our ability to provide reliable supply at competitive prices. We are the only independent dedicated on-purpose
propylene production facility in North America. We believe this is a significant advantage because it enables us to provide customers a more consistent, predictable supply offering than conventional
suppliers. However, it is possible that a competitor could construct an on-purpose propylene plant in future years and offer our customers similar capabilities. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> International Propylene Markets  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;International trade of propylene is limited due to the expense of transporting highly pressurized or refrigerated liquids. Most of the
propylene trade crossing international borders is in the form of derivative chemicals, usually polypropylene or acrylonitrile. Historically, the U.S. has been the incremental supplier to the world.
However, this trend is expected to move toward equilibrium in the near term due to two primary factors: (1)&nbsp;the shift to lighter feedstocks in the U.S. and the resulting reduction in propylene
supply and (2)&nbsp;the increase in Middle Eastern and Asian production facilities. Middle Eastern propylene production capacity, once nearly non-existent, is experiencing growth as the
region adds capacity through the construction of new crackers, refineries and on-purpose facilities. This incremental Middle Eastern production capacity is expected to be more than offset
by the growth in net propylene equivalent demand in Asia, despite that region's own capacity increases. As such, the North American propylene market is expected to be driven by its own domestic supply
and demand dynamics. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ds42901_propane_market_overview"> </A>
<A NAME="toc_ds42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Propane Market Overview    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propane Overview  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propane, our sole feedstock, is a hydrocarbon that exists as a gas at atmospheric pressure and temperature. It is derived from
petroleum products during oil and natural gas processing. U.S. propane production from gas processing plants comes in the form of natural gas liquids (a mix of ethane, propane and butane) and from
refineries in the form of liquefied petroleum gas. The two primary U.S. uses for propane are retail (primarily heating in rural areas and as a motor fuel) and as a chemical feedstock (primarily in
ethylene plants). The U.S. maintains an abundant supply of natural gas and reserves have increased in recent years to 2,552 trillion cube feet of potential natural gas resources according to the U.S.
Energy Information Administration. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>80</FONT></P>

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<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propane Supply  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propane supplies in the U.S. are derived from natural gas plants (approximately 50% in 2010), refineries (approximately 39% in 2010)
and imports (approximately 11% in 2010). </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently,
the majority of propane in the U.S. is supplied by gas processing plants. When natural gas is produced, it is sometimes accompanied by NGLs such as ethane, propane and butane,
as well as heavier hydrocarbons such as condensate. These liquids can be separated from the natural gas by either cooling or absorption and fractionation in gas processing plants. The recent increase
in the supply of shale gas in North America has led to additional propane supply coming online with new NGL fractionation capacity. Chemical Data projects propane supply from U.S. gas processing
plants will increase at a compound annual growth rate of 2.6% from 2011 through 2015. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According
to Chemical Data, refinery produced propane is expected to grow at a relatively modest 1% compound annual growth rate over the same forecast period due to a reduced demand for
gasoline. Almost all refinery processing units generate some volumes of propane, some of which is consumed on site as fuel at the refineries. Chemical Data also projects propane imports, most of which
are from Canada, will decline slightly over the next four years as exporting countries seek higher prices in other markets. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Overall,
propane supply in the U.S. is projected by Chemical Data to grow at a compound annual growth rate of 1.4% from 2011 through 2015. The below chart shows historical and projected
propane supply in the U.S., broken out by source, for the period from 2005 through 2015: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ds42901_u.s._propane_supply_by__ds402314"> </A>
<A NAME="toc_ds42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  U.S. Propane Supply by Source (thousands of barrels per day)    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g222881.jpg" ALT="GRAPHIC" WIDTH="577" HEIGHT="196">
  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>Source: Chemical Data</FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propane Demand  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The two primary U.S. uses for propane are retail (primarily heating in rural areas and as a motor fuel) and as a chemical feedstock for
ethylene plants. Propane is also exported and, with the completion of our facility, used as a feedstock for PDH processing. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
use of propane as heating/motor fuel in the residential and commercial end-use sectors is currently the largest market for propane, totaling nearly 700&nbsp;thousand
barrels per day (bpd) during the last few years, and 60% of demand in 2010. Chemical Data expects that natural gas will increasingly replace propane in some rural areas, and therefore projects demand
for propane for heating and motor fuel use to decline at approximately 1.4% per year through 2015. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propane
consumption as an ethylene cracker feedstock is the second largest end use sector at approximately 30% of the total U.S. propane market in 2010. Ethylene cracker consumption is
forecasted by Chemical Data to remain fairly constant over the next several years, between 320 and 350&nbsp;thousand bpd from 2011 to 2015. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>81</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exports
are expected by Chemical Data to nearly double from 109&nbsp;thousand bpd in 2010 to 196&nbsp;thousand bpd in 2015. Chemical Data expects that the surplus in propane
production, primarily from gas processing plants and the shale gas developments, will encourage the development of export terminals. Overall, Chemical Data expects the U.S. to convert its current even
trade balance into a net export position of 100&nbsp;thousand bpd by year-end 2015. The below chart shows historical and projected propane demand in the U.S., broken out by use, for the
period from 2005 through 2015: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ds42901_u.s._propane_demand_by__ds402117"> </A>
<A NAME="toc_ds42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  U.S. Propane Demand by Use (thousands of barrels per day)    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g1033673.jpg" ALT="GRAPHIC" WIDTH="582" HEIGHT="199">
  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>Source: Chemical Data</FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Propane's Relation to WTI Crude Oil  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The price of propane has always been closely correlated to the price of crude oil. In general, propane trades at a discount to crude
oil when compared on a per barrel basis. Propane trades at a discount to crude oil in part because the marginal consumer of propane is the
flexible ethylene cracker. Flexible ethylene cracker operators constantly evaluate production costs of ethylene based on the price of each of their alternative feedstocks. Certain feedstock
alternatives, like naphtha and natural gasoline, are crude oil based and have alternate uses in the gasoline market. However, these crude oil derived feedstocks do not contain the more valuable
fractions of the crude barrel and they require significant further processing in order to be used as a gasoline blendstock. Thus, naphtha and natural gasoline trade at a discount to crude. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since
propane is an alternative ethylene cracker feedstock, flexible ethylene cracker operators continuously evaluate propane relative to the crude oil derived feedstock alternatives,
creating a constant price competition between the various feedstocks. This causes the price of propane to trade in a band below the price of crude on a per barrel basis. Further, since the majority of
propane is derived from natural gas production, its supply and price are partially a function of the rate of development of natural gas and the natural gas price. Natural gas supplies in the U.S. have
increased due to shale gas development and gas prices have declined as a result. The low natural gas price has led producers to concentrate their development efforts on regions rich in natural gas
liquids, such as propane, to capture additional profitability afforded by the sale of the liquids. This has led to (1)&nbsp;abundant supplies of both natural gas and propane, (2)&nbsp;a
historically low gas price relative to the price of crude oil and (3)&nbsp;a decrease in the price of propane relative to the price of crude. The diagram below illustrates the effects of these
dynamics on the historical price ratio between propane and WTI crude oil. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>82</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ds42901_propane_as_a_multiple_of_crude_oil"> </A>
<A NAME="toc_ds42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Propane as a Multiple of Crude Oil    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g887339.jpg" ALT="GRAPHIC" WIDTH="558" HEIGHT="282">
  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>Source: EIA and Chemical Data</FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1><I>Note: Propane price expressed as a multiple of WTI crude oil price on a dollar per barrel equivalent
basis</I></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> The Propane-to-Propylene Spread  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The propane-to-propylene spread is the primary driver for our profitability. The figure below illustrates the
relative price of propylene and propane to crude oil since the year 2000. Although the relationship between propane, crude oil and propylene is fairly consistent over time it is evident that the
positive trends identified above have led to a widening of this spread recently. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ds42901_propane_and_propylene_as_a_multiple_of_crude_oil"> </A>
<A NAME="toc_ds42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Propane and Propylene as a Multiple of Crude Oil    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g389097.jpg" ALT="GRAPHIC" WIDTH="562" HEIGHT="271">
  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>Source: EIA, Chemical Data</FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1><I>Note: Propane and propylene price expressed as a multiple of WTI crude oil price on a dollar per barrel equivalent
basis</I></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
summary, several factors are contributing to the currently favorable propane-to-propylene spread. First, the growth in production from the shale gas formations
with associated natural gas liquids (ethane, propane and butane), has led to increasingly abundant propane supplies in the U.S. This provides downward pressure on propane prices at a time when there
is upward pressure on propylene prices due to </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>83</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>the
tight propylene market. Second, the prices for both propane and propylene are correlated to the price of crude oil&#151;propane trades at a discount to crude and propylene at a premium. The
price of propane is also influenced by the price of natural gas from which it is derived. When the price of natural gas is low relative to the price of crude oil, as in the current environment, the
price of propane will be lower relative to crude oil as well. Third, because the prices of propane and propylene are correlated to the price of crude oil, the differential between their prices is
correlated to crude as well. Therefore a high absolute price of oil leads to a higher propane-to-propylene spread. Accordingly, the current high oil price, low natural gas
price environment is a significant contributor to the widening of the propane-to-propylene spread. Because the propane-to-propylene spread is the
primary driver of our gross margin, these trends are highly favorable to our profitability. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ds42901_historical_propane-to-propylene_spread"> </A>
<A NAME="toc_ds42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  Historical Propane-to-Propylene Spread    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g674084.jpg" ALT="GRAPHIC" WIDTH="603" HEIGHT="295">
  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=1>Source EIA and Chemical Data.</FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>84</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="du42901_business"> </A>
<A NAME="toc_du42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  BUSINESS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="du42901_our_business"> </A>
<A NAME="toc_du42901_2"> </A></FONT> <FONT SIZE=2><B>  Our Business    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We own and operate the world's largest PDH facility that processes propane into propylene. Propylene is one of the basic building
blocks for petrochemicals that is utilized in the production of a variety of end uses including paints, coatings, building materials, clothing, automotive parts, packaging and a range of other
consumer and industrial products. We are the only independent, dedicated "on-purpose" propylene producer in North America. We are strategically located in the vicinity of the Houston Ship
Channel and within 50 miles of approximately one-half of all U.S. propylene consumption, and we have direct access to the leading global fractionation and storage hub for propane located
at Mt. Belvieu, Texas. The Houston Ship Channel represents the heaviest concentration of petrochemical and refining complexes in the world and provides us with unparalleled access and connectivity to
both customers and feedstock suppliers. Our newly-constructed facility has an annual nameplate production capacity of approximately 1.2&nbsp;billion pounds of propylene. We commenced operations in
October 2010 and first achieved daily production rates at or above nameplate capacity in April 2011. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
facility was developed and built on the site of a former olefins production site and related infrastructure acquired from ExxonMobil in March 2008. This site was ideally suited for
the development of a PDH facility based on its existing location, infrastructure, utilities, permits, logistics and certain operating units which we were able to integrate into our new facility. By
leveraging these existing assets, we were able to save significant amounts of time and money versus those of a green-field PDH facility. Our PDH facility uses a CATOFIN dehydrogenation technology
pursuant to a fully-paid license from CB&amp;I Lummus. CATOFIN technology has been in use for over 60&nbsp;years and is reliable and commercially proven. Our plan of operation for the
remainder of the year ending December&nbsp;31, 2011 is to continue to utilize our PDH facility to process propane into propylene, and to sell such propylene pursuant to customer contracts or on the
spot market. For more information about our state-of-the-art PDH facility, see "&#151;Our Facility." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="du42901_our_products_and_customers"> </A>
<A NAME="toc_du42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Our Products and Customers    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We derive our sales from three different sources: propylene sales, hydrogen sales and C4 mix/C5+ streams sales. For more information
relating to the sales, assets, profits and losses of our business since inception, see the audited and unaudited financial statements and our unaudited pro forma consolidated financial statements
included elsewhere in this prospectus. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Contracted Propylene Sales  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are party to long-term propylene sales contracts with Dow, Total and INEOS, which use the propylene we supply in the
largest acrylic acid, polypropylene and acrylonitrile plants, respectively, in the world. Each of these customers has a significant net short position in propylene. Each contract details both minimum
offtake volumes and maximum offtake volumes as well as pricing terms. As is customary in the propylene industry, our customer contracts are based on market prices. Consistent with industry practice
for such contracts, our pricing terms with these customers reflect a specified discount to the monthly benchmark propylene price published by the Chemical Market Associates,&nbsp;Inc. ("CMAI"). </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
deliver propylene to these customers through our integrated pipeline system, which directly connects our facility to the Dow and Total plants and, through interconnected third-party
pipelines, connects our facility to the INEOS plant and to other potential propylene customers. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>85</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table illustrates certain information regarding our propylene contracts with Dow, Total and INEOS (in thousands of pounds): </FONT></P>
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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="58pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="32pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="23pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="49pt" style="font-family:times;"></TD>
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<TH NOWRAP  COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:33pt;"><FONT SIZE=1><B>Company

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Connections </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Max </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Min </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Term </B></FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dow</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Direct</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>690</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>510</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12/31/14</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Direct</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>300</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>220</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12/31/14</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>INEOS</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Shell</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>200</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>160</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12/31/13</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,190</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>890</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>% of our nameplate capacity</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>97</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>73</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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 <UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Spot-Market Propylene Sales  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through our integrated pipeline system, we are also able to access other consumers of propylene which we are able to supply on a spot
basis with our excess production capacity. We are located in a propylene market area that is net short of propylene and connected to major propylene consumers with the necessary logistics (feed and
offtake pipelines) already in place. We actively manage our contract and spot portfolio and have received a high degree of interest from other customers for both spot volumes, in the short term, and
longer term contracts. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have well-established relationships with other prominent consumers of propylene, which we have developed through active cultivation and regular interaction. We plan to
continue to advance those relationships through spot sales in the short term to enable us to optimize our contracted portfolio in the future. Since we commenced operations in October 2010, less than
1% of our sales have been in the spot market. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Hydrogen Gas Sales  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the PDH process, we produce commercial quantities of hydrogen. Hydrogen is primarily consumed in numerous refinery processes
including fuel desulphurization. As a result, we have entered into a ten-year contract with Praxair for the sale of our hydrogen production. Praxair has committed to buying a minimum of
93% of the hydrogen produced, which it supplies to local refineries along the upper Texas Gulf Coast. Although we anticipate the sale of 100% of our hydrogen volumes, any volumes we do not sell will
be consumed in our fuel system reducing our requirement to purchase natural gas. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
additional benefit of our hydrogen production is that it provides a natural hedge against rising fuel costs due to the strong and positive correlation between natural gas prices and
hydrogen prices. While an increase in natural gas prices would increase our operating costs (since we consume natural gas as a fuel), such increase would be partially offset by the higher prices we
would earn through our hydrogen sales. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> C4 Mix/C5+ Streams Sales  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also produce commercial quantities of C4 mix/C5+ streams. We sell the C4 mix stream to specialty chemical consumers and these
customers transport the purchased volumes from our facility by truck. The C5+ stream, which is heavy in aromatics, is transported by our pipeline to a Kinder Morgan terminal, and then sold to Texas
Aromatics for use in the chemical or gasoline markets. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="du42901_our_competitive_strengths"> </A>
<A NAME="toc_du42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Our Competitive Strengths    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe we are well positioned to execute on our business strategies based upon the following strengths: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Pure-play propane-to-propylene
production.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;As propane is our sole feedstock, and propylene is the primary product sold by our facility, our profitability is primarily
determined by the propane-to-propylene spread. The wider the price differential between propane and propylene, the </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>86</FONT></P>

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<UL>
<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>larger
our gross margin. As discussed above, this spread has widened in recent years due to the currently high price of oil relative to the price of natural gas, due in part to the robust global
demand for oil and the emergence of the natural gas shale plays in North America. As the sole PDH propylene manufacturer in North America, we believe we are uniquely positioned to benefit from current
positive trends in the propane-to-propylene spread. Given the recent completion of our facility, our expected near-term capital requirements are low. With
relatively low planned maintenance capital expenditures of approximately $6&nbsp;million per year in non-turnaround years, we expect to convert the enhanced profitability generated by
the current propane-to-propylene spread dynamics relatively effectively into distributable cash flow. </FONT></P>

</UL>
</UL>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table shows the impact of a change in the propane-to-propylene spread on our Adjusted EBITDA based on the
assumptions described herein relative to our forecasted pricing for the twelve months ending September&nbsp;30, 2012. </FONT></P>
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<TD WIDTH="53pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="53pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="53pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="53pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="53pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="53pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="67pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Illustrative Sensitivity to Propane-to-Propylene Spread<SUP>(1)(2)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Pro Forma<BR>
Twelve<BR>
Months<BR>
Ended<BR>
March&nbsp;31,<BR>
2011<SUP>(2)(3)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Forecasted<BR>
Twelve<BR>
Months<BR>
Ending<BR>
September&nbsp;30,<BR>
2012<SUP>(2)(4)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=20 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(dollars in millions unless otherwise indicated)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Propane-to-Propylene Spread&nbsp;(&cent;/lb)<SUP>(5)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>15.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>25.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>35.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>45.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>55.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>30.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>33.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted EBITDA</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>52.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>172.9</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>293.6</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>414.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>535.0</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>226.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>276.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Available Cash</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>23.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>142.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>262.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>381.7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>501.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>195.8</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>245.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<DL compact>
<DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>The
price sensitivity analysis in this table is based on the assumptions described in our forecast of Adjusted EBITDA for the twelve months ending
September&nbsp;30, 2012. This includes 1.2&nbsp;billion pounds of propylene sold and 344.9&nbsp;million gallons of propane utilized. It also assumes $30.4&nbsp;million of
by-product sales, $45.2&nbsp;million of fuel and utilities expense, $13.9&nbsp;million of insurance and property taxes, $30.2&nbsp;million of direct operating expense and other and
$11.0&nbsp;million of general and administrative expense. All other customer discounts and upcharge/delivery fees are per our September&nbsp;30, 2012 forecast. There can be no assurance that we
will achieve our Adjusted EBITDA forecast for the twelve months ending September&nbsp;30, 2012 or any of the specified levels of Adjusted EBITDA indicated above, or that the various
propane-to-propylene spreads will achieve any of the levels specified above.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>See
"Our Cash Distribution Policy and Restrictions on Distribution&#151;Forecasted Available Cash" for a reconciliation of our Adjusted EBITDA
forecast to our net income forecast for the twelve months ending September&nbsp;30, 2012 and a discussion of the assumptions underlying our forecast.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Reflects
financial results as if the plant had been fully operational during the period. Assumes realized market pricing levels during the twelve months
ended March&nbsp;31, 2011 for propylene, propane, C4 mix/C5+ streams and natural gas and that all other expenses, production rates, performance ratios, customer discounts, upcharge/delivery fees and
conversion factors are consistent with the forecast for the twelve months ending September&nbsp;30, 2012.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(4)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>PGP
Contract Benchmark and Propane pricing forecast provided per Chemical Data as of May&nbsp;29, 2011. See "Our Cash Distribution Policy and Restrictions
on Distribution&#151;Forecasted Available Cash" for a discussion of the assumptions underlying our forecast.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-9pt;'><FONT SIZE=1>(5)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=1>Propane-to-propylene
spread calculated as (PGP Contract Benchmark Price (&cent;/lb)&#151;1.2 * (Propane Price
(&cent;/gl) / 4.2)). This calculation assumes that it takes approximately 1.2 pounds of propane to make 1.0 pound of propylene and that there are approximately 4.2 pounds in a gallon of
propane. </FONT></DD></DL>
 </DIV>
 <UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Strategically-Located Operations.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Our Houston Ship Channel
location places us within the heaviest concentration of petrochemical and refining complexes in the world. In terms of access to both customers and feedstock supply, we believe there is no more
advantageous location for PDH propylene production anywhere in the world. The U.S. is the largest propylene consuming country and our PDH facility is located within 50 miles of approximately
one-half of all U.S. propylene consumption. The pipeline distribution system we use enables us to access not only our contracted customers (Dow, Total and INEOS) but also spot buyers of
propylene. We believe this access </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>87</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<UL>
<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>provides
us critical optionality when it is time to renew or optimize our contracted customer base. Our Houston Ship Channel location and logistics infrastructure also provide us access to the Mt.
Belvieu global fractionation and storage hub, the world's largest and most reliable source for propane, to source our propane feedstock.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Cost-Advantaged Facility Driven by a Proven
Technology.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Our PDH facility is the largest in the world. Our facility utilizes the CATOFIN PDH technology pursuant to a
fully-paid license from CB&amp;I Lummus, which we believe has the best combination of capital cost, product yield and reliability. We believe we were able to benefit from the best existing
CATOFIN PDH technology utilized by other facilities outside the U.S., and we also enhanced the design with our own innovations that have resulted in energy efficiencies over the basic CATOFIN system. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Our PDH Facility's Characteristics are Difficult to
Replicate.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;In addition to its advantageous location, the ExxonMobil facility we acquired had existing air permits, pipelines, utilities,
selected processing units and other infrastructure in place which we utilized or reconfigured for our PDH process. A developer of a green-field PDH project would face significant impediments with
respect to permitting, availability of real estate and cost considerations. Utilizing the ExxonMobil facility saved us significant amounts of time and money compared to those associated with the
development of a green-field project. We estimate that such a project would likely take at least four years to complete at a cost significantly higher than our project.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Dedicated "On-Purpose" Propylene
Production.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We are the only independent dedicated on-purpose propylene production facility in North America. We believe this
enables us to provide customers a more consistent, predictable propylene supply offering than conventional suppliers. Unlike refineries and ethylene crackers for which propylene is a secondary
product, propylene is our primary product. As a result, our goal is to produce a consistent output of propylene to meet customer requirements. Since propylene is our primary product and propane our
only feedstock, our output will never vary as a function of competiveness of alternative feedstock slates or decisions concerning production of other products such as ethylene or gasoline. We believe
these factors represent key advantages to our customers.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Contracts with Large, Prominent Customer Base.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Nearly all
of our nameplate capacity has been contracted to Dow, Total and INEOS under contracts whose maximum volumes constitute 97% of our nameplate capacity and whose minimum volumes represent 73%. The
primary Dow, Total and INEOS plants we supply produce acrylic acid, polypropylene and acrylonitrile, respectively. Each primary plant is the largest of its kind in the world. We value this derivative
diversification in our portfolio. Our contract terms range from 3.5 to 4.5&nbsp;years, which is consistent with industry norms. Further, each of these customers has a significant net short position.
There also currently exists a spot market for propylene into which we sell our additional output.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Favorable Industry Conditions.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;The current environment for
propylene production is extremely robust as end market demand continues to recover and production capacity remains constrained. We do not expect the factors leading to this dynamic to change in the
near term. The current high crude oil price and low natural gas price environment is a significant contributor to this favorable environment because of its negative impact on the economics of
propylene production from conventional sources. The proliferation of shale gas technology bringing additional natural gas and natural gas liquids to the market has greatly influenced the economics for
ethylene facility feedstocks as several steam crackers that crack only naphtha or heavy liquids (producing the co-product propylene) have become severely disadvantaged and reduced or
ceased production. Furthermore, the reduced demand for gasoline has curtailed production by refineries thereby </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>88</FONT></P>

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<UL>
<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>reducing
the supply of propylene from refineries, causing a widening of the propane-to-propylene spread. </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Experienced Management Team.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We employ a
highly-experienced and dedicated senior management team, with an average of over 20&nbsp;years of experience in the relevant disciplines of petrochemical engineering, marketing, management and
finance. Our current executive team identified the PDH project opportunity, developed the concept and executed the plan to bring our PDH facility into operation, and through their expertise and
innovation, we believe they have since enhanced the cost and operating efficiencies of our facility. Following the closing of this offering, our executive officers and employees will own an aggregate
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our common units. See "Management&#151;Executive Officers and Directors." </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="du42901_our_business_strategy_1"> </A>
<A NAME="toc_du42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Our Business Strategy    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our objective is to maximize our quarterly cash distributions to our unitholders by executing the following
strategies: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Distribute All of the Available Cash We Generate Each
Quarter.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Our strategy is to pay out all of the available cash we generate each quarter. The board of directors of our general partner
will adopt a policy under which we will distribute all of the available cash we generate each quarter, as described in "Our Cash Distribution Policy and Restrictions on Distributions." We do not
intend to maintain excess distribution coverage for the purpose of maintaining stability or growth in our quarterly distributions or otherwise to reserve cash for future distributions. Unlike many
publicly traded partnerships that have general partners with economic interests and incentive distribution rights that entitle the general partner to receive disproportionate percentages of cash
distributions as distributions increase (often up to 50%), our general partner will have a non-economic interest and no incentive distribution rights, and will, therefore, not be entitled
to receive cash distributions. Our common unitholders will receive 100% of our cash distributions.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Focus on Operational Excellence, Reliable Production, Safety, and
Training.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Operational excellence, reliability and safety are our core values. One of the key factors driving our selection of the
CATOFIN technology was its reputation for excellence and its reliability. We also assembled our key management team with an intentional focus on the complement of skills and experience necessary to
deliver consistent and efficient operational results. We believe these factors, together with our strong culture of safety, should lead to dependable performance for our customers as well as safe
working conditions.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Continual Optimization of Facility.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;The same team that
developed the important innovations leading to our effective operations is continually working to further optimize and improve the operating performance of our facility. One major focus is to identify
low cost methods to increase propylene output beyond initial nameplate capacity. We also have initiatives underway to optimize propylene yield, energy efficiency and fine tune feedstock composition to
enhance the value of the by-products output of our facility.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Pursue Capacity Expansion and Other Growth
Opportunities.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We intend to opportunistically pursue capacity expansion and other growth opportunities. We are currently pursuing
engineering studies to significantly expand our capacity. In addition, we intend to evaluate and pursue acquisition and development opportunities where we believe we can enhance our operating
platform. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2><I>Actively Manage Customer Portfolio.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We believe that our
current customer portfolio represents an attractive composition of customers that serve diverse end-use markets and that are prominent industry members. We also have
well-established relationships with other consumers of propylene developed through active cultivation and regular interaction. We plan to build on our existing </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>89</FONT></P>

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<UL>
<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>relationships
and continue to advance those relationships through spot sales in the short term and additional contracts in the long term if we are successful in expanding the facility's capacity. </FONT></P>

</UL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="du42901_our_history"> </A>
<A NAME="toc_du42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  Our History    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our senior management team has been affiliated with Lindsay Goldberg, our majority financial sponsor, since 2000 and has worked with
them on a variety of petrochemical and midstream investment projects. The concept for the PDH facility was developed in 2003 and the ExxonMobil Houston olefins plant was identified as the best
location and platform for the project in 2005. An agreement to acquire the olefins plant from ExxonMobil was signed in December 2006 at which time we commenced front end engineering design work for
the project. Our predecessor closed on the purchase of the ExxonMobil olefins plant in March 2008 and commenced demolition of certain facilities and construction of the new facility shortly
thereafter. Mechanical completion of the construction phase of the project was completed in July 2010 at which time facility commissioning
commenced. Initial production commenced in October 2010, and we first achieved daily production rates at or above nameplate capacity in April 2011. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are a Delaware limited partnership formed in June 2011. In connection with this offering, Propylene Holdings will contribute our predecessor to us in exchange
for&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
common units, the right to receive the net proceeds from this offering and the right to receive additional common units, a cash distribution, or both based upon whether or not the underwriters
exercise in whole or in part the option to purchase additional common units. Immediately thereafter, Propylene Holdings will distribute
all&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units, its right to receive net
proceeds of this offering and its right to receive to receive additional common units, a cash distribution or both, based upon whether or not the underwriters exercise in whole or in part their option
to purchase additional common units, to our sponsors and their affiliates, our executive officers and certain of our employees. Our general partner will own a non-economic general partner
interest and will not be entitled to receive distributions therefrom. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="du42901_our_sponsors"> </A>
<A NAME="toc_du42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  Our Sponsors    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lindsay Goldberg is a private equity investment firm with approximately $10&nbsp;billion of capital under management that focuses on
partnering with entrepreneurial management teams and closely held and family-owned businesses. Lindsay Goldberg has a team of 25 highly talented and experienced investment professionals who have
successfully invested over $5.6&nbsp;billion of equity capital in 27 portfolio companies. Lindsay Goldberg typically invests in companies in North America and Western Europe in the manufacturing,
energy, financial and business services industries. Lindsay Goldberg has a much longer time horizon than most other private equity investment firms because of an investment structure that permits
ownership for up to 20&nbsp;years. In addition to its long-term focus, Lindsay Goldberg also identifies transformative follow-on investments and acquisitions in connection
with its portfolio companies as those opportunities arise. Lindsay Goldberg has had a close relationship with our management since 2000. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;York
Capital is an event-driven global investment firm with approximately $17&nbsp;billion of capital under management. The firm focuses on a variety of strategies, including private
equity investing. Established in 1991, York Capital has a team of over 150 individuals, including approximately 50 investment professionals, and has offices in New York, Washington DC, London and Hong
Kong. York Capital's investment professionals possess multi-disciplinary knowledge and relationships, spanning industry sectors, geographies, business cycles and public and private equity and debt
markets. Over the past 19&nbsp;years, York has focused on looking beyond market cycles, trends and other temporary factors to identify companies around the world with long-term value
potential. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lindsay
Goldberg and York Capital have been instrumental in our management team's effort to implement the optimal operating and financial platform for the project. Collectively, they
will continue to own a majority of our common units upon completion of this offering and therefore will have a continuing incentive to support and promote the successful implementation of our business
plan. Following the </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>90</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>closing
of this offering, Lindsay Goldberg and York Capital will indirectly own 80% and 20% interests in our general partner
and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units, respectively.
 </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="du42901_our_facility"> </A>
<A NAME="toc_du42901_8"> </A>
<BR></FONT><FONT SIZE=2><B>  Our Facility    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our state-of-art PDH facility is a world-scale facility that is currently the largest of its kind in the world.
It is located on our 67-acre site in the vicinity of the Houston Ship Channel that was formerly the site of an ExxonMobil olefins plant. Our facility commenced operations in October 2010
and first achieved daily production rates at or above nameplate capacity in April 2011. Our newly-constructed facility has an annual nameplate production capacity of approximately 1.2&nbsp;billion
pounds of propylene. At times our facility has produced propylene at rates approximately 10% in excess of the nameplate capacity. We believe that our PDH facility has the capability to produce above
nameplate capacity on a sustained basis as our facility optimization proceeds. We believe the former ExxonMobil site was ideally suited for the development of our project based on its location,
infrastructure, utilities, permits, logistics, and certain operating units we were able to utilize in the new process. As part of our purchase of the site, we acquired all major environmental and
regulatory permits, and we were able to take advantage of these permits through amendments to reflect the specifications of the PDH process. Management estimates that utilization of the ExxonMobil
olefins plant cost significantly less time and money than would have been required for the development of a green-field PDH facility. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe our location in the vicinity of the Houston Ship Channel provides unparalleled access and connectivity to both our existing and prospective customers and our feedstock
suppliers. We are located within 50 miles of approximately one-half of all U.S. propylene consumption. We also have access through third parties to the leading global fractionation and
storage hub for propane, our feedstock, located at Mt. Belvieu, Texas, approximately 30 miles from our facility. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>91</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is an illustration of the extensive pipeline system connected to our facility which makes our location uniquely suited to the business of propylene
production, followed by a table indicating pipeline system ownership: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g450659.jpg" ALT="GRAPHIC" WIDTH="621" HEIGHT="364">
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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="152pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="25%" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="89pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Pipeline </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Ownership </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Pipeline </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Ownership </B></FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>Propane</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Enterprise</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Coker Gas (unutilized)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Lyondell</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>Propane (unutilized)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>ETP&#151;Regency Midstream</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>FCC Gas (unutilized)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Valero</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>PGP</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>PetroLogistics</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Hydrogen Delivery</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Praxair</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>CGP</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>PetroLogistics</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Nitrogen Delivery</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Praxair</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>C4 Mix Stream (inactive)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>PetroLogistics</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Natural Gas</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Kinder Morgan</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>C5+ Stream</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>PetroLogistics</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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 <P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dw42901_our_pdh_technology"> </A>
<A NAME="toc_dw42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Our PDH Technology    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propane dehydrogenation is a straightforward chemical process that involves refining propane by removing two atoms of hydrogen
(H<SUB>2</SUB>) from one molecule of propane (C<SUB>3</SUB>H<SUB>8</SUB>) to produce one molecule of propylene (C<SUB>3</SUB>H<SUB>6</SUB>). The technology that is used to remove hydrogen from
the propane feedstock in order to produce propylene is the CATOFIN process, licensed by CB&amp;I Lummus to us on a non-exclusive and perpetual basis. Our current license requires no further
payment to CB&amp;I Lummus to the extent we produce at our nameplate capacity. To the extent we increase our operational capacity, we are responsible for additional one-time payments to CB&amp;I
Lummus equal to $22.00 per metric ton of additional capacity above the current nameplate. We selected this technology because of its straightforward design, its record of high reliability and expected
low operating costs. Further, our team developed and implemented a variety of energy cost-saving processes which improved upon the typical CATOFIN design. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
CATOFIN process uses fixed-bed reactors to convert propane to propylene, recycling unconverted propane back to the reactors in order to optimize conversion, selectivity
and energy consumption. During the dehydrogenation process, propane feed and propane recycle are vaporized, heated and dehydrogenated across the catalyst under a vacuum. After the dehydrogenation
cycle, the catalyst is then regenerated with hot air. The hot air is then evacuated and the dehydrogenation sequence begins again. The reactor effluent is sent to the purification section where, using
compression, </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>92</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>refrigeration
and distillation steps, the various hydrocarbons are separated into fuel gas and our products: propylene, C4 mix/C5+ streams and hydrogen. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
CATOFIN propane dehydrogenation process is illustrated below: </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dw42901_process_flow_diagram"> </A>
<A NAME="toc_dw42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Process Flow Diagram    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g333652.jpg" ALT="GRAPHIC" WIDTH="625" HEIGHT="378">
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Thirty-one
CATOFIN (or CATADIENE as the process is known when producing butadiene) facilities have been licensed and built since 1944 to produce iso-butylene,
butadiene, or propylene. Our facility is the fourth CATOFIN unit to produce propylene. The first propylene unit came on-line almost 20&nbsp;years ago in Belgium. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
our facility relies on the typical CATOFIN process design, we also implemented a number of energy cost savings process innovations. For example, the facility produces
regeneration air using gas turbines instead of the typical compressor/heater configuration. Also, the hydrogen by-product is captured and purified by a pressure swing absorption unit then
sold and consumed in neighboring refineries. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have also designed and constructed the facility with the features necessary for high reliability. These include a state-of-the-art Honeywell
Experian distributive control system, redundant/independent electrical power supplies, auxiliary steam production, redundant pumps for critical operations, redundant compressors where practical,
redundant dryers, and even redundant fractionation towers for some operations. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dw42901_feedstock_supply"> </A>
<A NAME="toc_dw42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Feedstock Supply    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Propane is our sole feedstock. Propane is produced by extraction and separation from natural gas production streams via gas processing
facilities and fractionation. It is also produced as a by-product of refineries. Our propane is provided to us by Enterprise under a multi-year contract with market-based
pricing consistent with industry standards. Under the propane supply contract, we pay a market price based on the published high-low monthly average price for propane. The initial term of
the propane supply contract is for a period of five years (expiring in 2015). Thereafter, the contract is automatically renewed </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>93</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>for
successive three year terms unless cancelled by either party giving one year prior written notice of cancellation. Enterprise delivers the propane we purchase to our facility through a connection
to
Enterprise's propane pipeline system. The Enterprise propane pipeline system gathers propane from various natural gas processing and fractionation facilities and refineries located in the region and
is connected to the leading global fractionation and storage hub for propane at Mt. Belvieu, Texas, where additional suppliers store and transport propane as well. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that our supply strategy meets our expected feedstock requirements for the foreseeable future. However, if we choose not to or are unable to renew our Enterprise contract, we
believe that, given our location, alternative propane supplies will be readily available from other suppliers in order to meet our production requirements. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See
"Risk Factors&#151;Risks Related to our Business&#151;Our results of operations, financial condition and ability to make cash distributions may be adversely affected by
the supply and price levels of propane." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dw42901_competition"> </A>
<A NAME="toc_dw42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Competition    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management estimates over 30 different companies produce propylene in North America. We consider companies with net long positions in
PGP and CGP to be our direct competitors, including Enterprise, Chevron Phillips, Lyondell Basell, ExxonMobil Chemical, Shell Chemical, Flint Hills and the Williams Companies. Most of our competitors
have significantly greater financial and other resources than us and are engaged on a national or international basis in many segments of the petroleum products business including refining,
transportation and marketing, on a scale substantially larger than ours. In addition, we may face competition from captive propylene production facilities operated by consumers of propylene. For
example, Dow Chemical recently announced its plan to build its own on-purpose propane dehydrogenation propylene facility for start-up in 2015. Dow also announced that it is
considering building a second propylene facility with a possible start-up date in 2018. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Competition
in our industry is determined by price considerations, logistics and, to some extent, stability of supply. Our ability to compete effectively depends on our responsiveness to
customer needs, our pipeline connectivity to customer facilities and our ability to provide reliable supply at competitive prices. We are the only independent dedicated on-purpose
propylene production facility in North America. We believe this is a significant advantage because it enables us to provide customers a more consistent, predictable supply offering than conventional
suppliers. However, it is possible that a competitor could construct an on-purpose propylene facility in future years and offer our customers similar capabilities. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See
"Risk Factors&#151;Risks Related to our Business&#151;We face competition from propylene producers." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dw42901_environmental_matters"> </A>
<A NAME="toc_dw42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Environmental Matters    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The petrochemical business is subject to extensive and frequently changing federal, state and local laws and regulations relating to
the protection of human health, workplace safety and the environment. These laws, their underlying regulatory requirements and their enforcement impact our business in a number of respects by
imposing: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>The need to obtain, renew and comply with permits, licenses and authorizations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Regulatory controls such as monitoring and recordkeeping requirements;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Requirements to install enhanced or additional pollution controls;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Fines and penalties for failing to comply with requirements of applicable laws or permits; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Liability for the investigation and remediation of contaminated soil or groundwater at current and former facilities and
off-site waste disposal locations. </FONT></DD></DL>
</UL>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Environmental
laws and regulations change regularly and any changes that result in more stringent requirements could affect our operations and financial position adversely. While we
believe that we are in substantial compliance with currently applicable environmental laws and regulations and that continued compliance with existing requirements would not have a material adverse
impact on us or our business, there is no assurance that this trend will continue in the future. Failure to comply with environmental laws and regulations may result in the assessment of
administrative, civil and criminal fines and penalties and the imposition of injunctive relief. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
operations are subject to the requirements of the OSHA and comparable state statutes that regulate the protection of the health and safety of workers. In addition, the OSHA hazard
communication standard requires that we maintain information about hazardous materials used or produced in our operations and that we provide this information to employees, state and local government
authorities and local residents. Failure to comply with OSHA requirements, including general industry standards, record keeping requirements and monitoring of occupational exposure to regulated
substances could reduce our ability to make distributions to our unitholders if we are subjected to fines or significant compliance costs. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Federal Clean Air Act  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The federal Clean Air Act and its implementing regulations as well as the corresponding state laws and regulations that regulate
emissions of pollutants into the air affect our operations both directly and indirectly. We are required to comply with federal and state air permitting regulations or emissions control requirements
relating to specific air pollutants. Some or all of the standards promulgated pursuant to the federal Clean Air Act, or any future standards which may be promulgated, may require the installation of
controls or changes to our operations. If new controls or changes to operations are needed, then the costs could be material. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
federal Clean Air Act requires us, in certain situations, to obtain various construction and operating permits and to incur capital expenditures to install certain air pollution
control devices at our PDH facility. Some of the applicable programs are the various general and specific source standards under the National Emission Standard for Hazardous Air Pollutants, New Source
Performance Standards, and New Source Review. We may incur substantial capital expenditures to maintain compliance with these and other air emission regulations. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, the EPA adopted rules to require the development of a Risk Management Plan to prevent the accidental release of hazardous substances that could harm public health or the
environment. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some
facilities in Texas have obtained permits from the Texas Commission on Environmental Quality ("TCEQ") that are at risk from overfilling by the EPA. Specifically, on July&nbsp;15,
2010, the EPA formally disapproved the flexible permits program submitted by the TCEQ in 1994 for inclusion in its Clean Air
Act implementation plan. The EPA determined that Texas' flexible permit program did not meet several requirements under the federal Clean Air Act. Because we did not use flexible permits, our
facility's operations were not affected by EPA's actions. However, the EPA has also formally disapproved the TCEQ pollution control standard permit. This action could require companies to undergo
conventional permitting for pollution control equipment. Industry groups and others have brought suit against the EPA for these actions. The EPA has also objected to several Title V permits in Texas
and other states. Environmental groups have filed a notice of intent to sue the EPA, seeking to require the EPA to assume control of all pollution control permits from TCEQ. All of these developments
have created substantial uncertainty regarding existing and future permitting in Texas. The EPA's challenges to the Texas permitting system created uncertainties about the authority of TCEQ to issue
permits for air emissions which could have a material adverse effect on our operations. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>95</FONT></P>

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<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Climate Change  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, legislative and regulatory measures to address greenhouse gas emissions (including CO<SUB>2</SUB>, methane and nitrous
oxides) are in various phases of discussion or implementation. At the federal legislative level, Congress could adopt some form of federal mandatory greenhouse gas emission reduction laws, although
the specific requirements and timing of any such laws are uncertain at this time. In June 2009, the U.S. House of Representatives passed a bill that would create a nationwide
cap-and-trade program designed to regulate emissions of CO<SUB>2</SUB>, methane and other greenhouse gases. A similar bill was introduced in the U.S. Senate, but was not voted
upon. Congressional passage of such legislation does not appear likely at this time, though it could be adopted at a future date. It is also possible that Congress may pass alternative climate change
bills that do not mandate a nationwide cap-and-trade program and instead focus on promoting renewable energy and energy efficiency. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the absence of congressional legislation curbing greenhouse gas emissions, the EPA has begun to regulate GHG emissions pursuant to the CAA based on the April 2007 United States
Supreme Court ruling in Massachusetts, et al. v. EPA that the EPA has authority to regulate carbon dioxide emissions. The GHG regulations that EPA has issued following exercising the authority
affirmed by Massachusetts v. EPA include: (1)&nbsp;the December 2009 "endangerment finding" determining that air pollution from six GHGs endangers public health and welfare, and that mobile sources
cause or contribute to that air pollution; (2)&nbsp;the May 2010 "Tailpipe Rule," issued jointly with the National Highway Traffic Safety Administration setting GHG emission and fuel economy
standards for new light-duty vehicles; (3)&nbsp;the April 2010 "Timing Rule," concluding that stationary source regulation under Titles I and V of the CAA (involving Prevention of
Significant Deterioration regulations and operating permits, respectively) must regulate GHG emissions beginning when such emissions are subject to controls under the mobile source provisions of the
Act; (4)&nbsp;the June 2010 "Tailoring Rule," temporarily exempting small stationary sources from PSD and Title V requirements through regulations modifying
the Act's emissions thresholds; and (5)&nbsp;the December 2010 "SIP Call" rule, finding 13 State Implementation Plans ("SIPs") inadequate because they did not regulate GHGs from stationary sources,
and directing those States to correct the inadequacies or face federalization of their permitting programs. The first four rules have been challenged in consolidated litigation in the D.C. Circuit.
However, the Court refused to stay the rules while the challenge is pending. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to the above rules, the EPA has stated that it intends to propose standards for power plants in July 2011 and for refineries in December 2011 and will issue final standards
in May 2012 and November 2012, respectively. Finally, in December 2010, the EPA issued its plan to update pollution standards for fossil fuel power plants and petroleum refineries. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
EPA's endangerment finding, the Greenhouse Gas Tailoring Rule and certain other greenhouse gas emission rules have been challenged and will likely be subject to extensive litigation.
In addition, a number of Congressional bills to overturn the endangerment finding and bar the EPA from regulating greenhouse gas emissions, or at least to defer such action by the EPA under the
federal Clean Air Act, have been proposed in the past, although President Obama has announced his intention to veto any such bills if passed. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2007, the U.S. Supreme Court decided that carbon dioxide is an air pollutant which is subject to regulation under the federal Clean Air Act for the purposes of vehicle emissions.
Similar lawsuits have been filed seeking to require the EPA to regulate carbon dioxide emissions from stationary sources, such as petrochemical plants like our PDH facility. The implementation of EPA
regulations and/or the passage of federal or state climate change legislation will likely result in increased costs to (1)&nbsp;operate and maintain our facilities, (2)&nbsp;install new emission
controls on our facilities and (3)&nbsp;administer and manage any greenhouse gas emissions program. Increased costs associated with compliance with any future legislation or regulation of greenhouse
gas emissions, if it occurs, may have a material adverse effect on our results of operations, financial condition and ability to make cash distributions. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>96</FONT></P>

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<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Clean Water Act  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The federal Clean Water Act, or CWA, affects our operations by prohibiting discharges of pollutants into, or impacting, navigable
waters except in compliance with permits issued by federal and state governmental agencies. Regular monitoring, reporting requirements and performance standards are preconditions for the issuance and
renewal of permits. The federal government has delegated authority to Texas to manage the CWA permit and enforcement process. The
CWA and comparable state statutes provide for civil, criminal, and administrative penalties for the unauthorized discharge of pollutants into wetlands or other waters and impose liability on parties
responsible for those discharges for the cost of cleaning up any environmental damage or natural resource damages resulting from the release. Our business maintains waste water and storm water
discharge permits as required under the National Pollutant Discharge Elimination System program and the Texas Pollutant Discharge Elimination System program. Under the CWA, onshore facilities that
could reasonably be expected to cause substantial harm to the environment by discharging pollutants to navigable waters are required to maintain plans for spill prevention, preparedness and response.
We have implemented internal programs to oversee our compliance efforts and we believe that we are in substantial compliance with the CWA. In the future, changes to the CWA, state law, or state and
federal regulations could require us to make additional capital expenditures or incur additional costs in order to comply with new rules and could have a significant effect on our profitability. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Emergency Planning and Community Right-to-Know Act  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Emergency Planning and Community Right-to-Know Act, or EPCRA, requires facilities to report certain
chemical inventories to local emergency planning committees and response departments. We believe that we are in substantial compliance with our EPCRA reporting requirements. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Resource Conservation and Recovery Act (RCRA)  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations are subject to the RCRA requirements for the generation, management, and disposal of hazardous wastes. These
requirements entail certain costs. When feasible, materials that would be subject to RCRA are recycled instead of being disposed of. Though we believe that we are in substantial compliance with the
existing requirements of RCRA, we cannot assure you that compliance with existing and future RCRA requirements will not entail costs that are significant. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CERCLA and comparable state laws impose liability, without regard to fault or the legality of the original conduct, on certain classes
of persons who are considered to be responsible for the release of a hazardous substance into the environment. These persons include the owner or operator of the site where the release occurred and
companies that disposed or arranged for
the disposal of the hazardous substances. Under CERCLA, these persons may be subject to joint and several liability for the costs of cleaning up the hazardous substances that have been released into
the environment, for damages to natural resources and for the costs of certain health studies. CERCLA also authorizes the EPA, and in some instances third parties, to act in response to threats to the
public health or the environment and to seek to recover from the responsible persons the costs they incur. It is possible for neighboring landowners and other third parties to file claims for personal
injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment. In the course of our ordinary operations, we may generate substances that fall
within CERCLA's definition of a hazardous substance, and as a result, we may be jointly and severally liable under CERCLA for all or part of the costs required to clean up sites at which those
hazardous substances have been released into the environment. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>97</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
CERCLA, we could be required to remove or remediate previously disposed wastes, including wastes disposed of or released by prior owners or operators, to clean up contaminated
property, including groundwater contaminated by prior owners or operators. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dw42901_safety,_health_and_security_matters"> </A>
<A NAME="toc_dw42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  Safety, Health and Security Matters    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our extensive safety program includes, among other things, (1)&nbsp;employing two full-time safety professionals,
(2)&nbsp;implementing policies and procedures to protect employees and visitors at our facility (3)&nbsp;conducting routine safety tests on our facilities and (4)&nbsp;ensuring that each
employee undergoes the required safety, hazard and task training. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dw42901_employees"> </A>
<A NAME="toc_dw42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  Employees    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To carry out our operations, our general partner will employ approximately 90 employees. Our employees are not represented by a labor
union and are not covered by a collective bargaining agreement. We believe that we have good relations with our employees. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to performing services for us, certain of our employees and executive officers perform management and administrative services for the olefins business of PL Midstream, an
entity that is beneficially owned by Lindsay Goldberg, pursuant to a shared services agreement. PL Midstream will reimburse our general partner for its reasonable costs and expenses incurred in
connection with the provision of management and administrative services to it. See "Certain Relationships and Related Party Transactions&#151;PL Midstream Services Agreement." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dw42901_properties"> </A>
<A NAME="toc_dw42901_8"> </A>
<BR></FONT><FONT SIZE=2><B>  Properties    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We own one facility, our PDH facility, which is located in Houston, Texas. Our executive offices are located in Houston, Texas, where a
number of our senior executives work. We believe that our owned PDH facility, together with our leased executive office, are sufficient for our needs. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dw42901_legal_proceedings"> </A>
<A NAME="toc_dw42901_9"> </A>
<BR></FONT><FONT SIZE=2><B>  Legal Proceedings    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are, and will continue to be, subject to litigation from time to time in the ordinary course of our business. We are not party to
any pending legal proceedings that we believe will have a material adverse effect on our business, and there are no existing legal proceedings where we believe that the reasonably possible loss or
range of loss is material. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>98</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="dy42901_management"> </A>
<A NAME="toc_dy42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  MANAGEMENT    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dy42901_our_management"> </A>
<A NAME="toc_dy42901_2"> </A></FONT> <FONT SIZE=2><B>  Our Management    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our general partner manages our operations and activities subject to the terms and conditions specified in our partnership agreement.
Our general partner will be owned by our sponsors. The operations of our general partner in its capacity as general partner are managed by its board of directors. Actions by our general partner that
are made in its individual capacity will be made by our sponsors as the owners of our general partner and not by the board of directors of our general partner. Our general partner is not elected by
our unitholders and will not be subject to re-election on a regular basis in the future. The executive officers of our general partner will manage our day-to-day
activities consistent with the policies and procedures adopted by the board of directors of our general partner. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Limited
partners will not be entitled to elect the directors of our general partner or directly or indirectly participate in our management or operation. Our partnership agreement
contains various provisions which replace default fiduciary duties under applicable law with contractual corporate governance standards. See "The Partnership Agreement." Our general partner will be
liable, as a general partner, for all of our debts (to the extent not paid from our assets), except for indebtedness or other obligations that are made expressly non-recourse to it. Our
general partner therefore may cause us to incur indebtedness or other obligations that are non-recourse to it. It is expected that our new credit facilities will be
non-recourse to our general partner. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whenever
our general partner makes a determination or takes or declines to take an action in its individual, rather than representative, capacity, it is entitled to make such
determination or to take or decline to take such other action free of any fiduciary duty or obligation whatsoever to us, any limited partner or assignee, and it is not required to act in good faith or
pursuant to any other standard imposed by our partnership agreement or under Delaware law or any other law. Examples include the exercise of its call right, its voting rights and its determination
whether or not to consent to any merger or consolidation of the partnership. Actions by our general partner that are made in its individual capacity will be made by our sponsors, the owners of our
general partner, and not by its board of directors. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a publicly traded partnership, we qualify for, and intend to rely on, certain exemptions from the NYSE's corporate governance requirements, including the requirement that a majority
of the board of directors of our general partner consist of independent directors and the requirement that the board of directors of our general partner have a nominating/corporate governance
committee that is composed entirely of independent directors. While not required by NYSE rules, the board of directors of our general partner intends to have a compensation committee, however, our
compensation committee may not be composed entirely of independent directors. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a result of these exemptions, our general partner's board of directors will not be comprised of a majority of independent directors, our general partner's compensation committee may
not be comprised entirely of independent directors and our general partner's board of directors does not currently intend to establish a nominating/corporate governance committee. Accordingly,
unitholders will not have the same protections afforded to equityholders of companies that are subject to all of the corporate governance requirements of the NYSE. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<BR></FONT><FONT SIZE=2><B>  Board Committees    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As required by our partnership agreement, the board of directors of our general partner will maintain a conflicts committee, comprised
of independent directors that will determine if the resolution of a conflict of interest with our general partner or its affiliates is fair and reasonable to us. Any matters approved by the conflicts
committee will be conclusively deemed to be fair and reasonable to us, approved by all of our partners and not a breach by our general partner of any duties it may owe us or our unitholders. The
members of the conflicts committee may not be directors, officers or employees of our general partner or </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>99</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>any
person controlling our general partner, including Lindsay Goldberg and York Capital, and must meet the independence standards established by the NYSE and the Exchange Act to serve on an audit
committee of a board of directors, along with other requirements in our partnership agreement. Any matters approved by the conflicts committee in good faith will be conclusively deemed to be fair and
reasonable to us, approved by all of our partners and not a breach by our general partner of any duties it may owe us or our unitholders. In addition, as required by the Exchange Act and the listing
standards of the NYSE, the board of directors of our general partner will maintain an audit committee comprised of at least three independent directors. The audit committee may also serve as the
conflicts committee. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
board of directors of our general partner will have at least one independent director to serve on the audit committee prior to our units being listed for trading on the NYSE, at
least one additional independent directors to serve on the audit committee within 90&nbsp;days after listing of our units on the NYSE and a third independent director to serve on the audit committee
not later than one year following the listing of our units on the NYSE. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
committee will oversee, review, act on and report to our board of directors of our general partner on various auditing and accounting matters, including: the selection of our
independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the performance of our independent accountants and our accounting practices. In addition, the
audit committee will oversee our compliance programs relating to legal and regulatory requirements. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
completion of this offering, the compensation committee will operate pursuant to a written charter. This committee will establish salaries, incentives and other forms of
compensation for officers and other employees. The compensation committee will also administer our incentive compensation and benefit plans. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dy42901_executive_officers_and_directors"> </A>
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<BR></FONT><FONT SIZE=2><B>  Executive Officers and Directors    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are managed and operated by the board of directors and executive officers of our general partner. In this prospectus, we refer to
the executive officers of our general partner as "our executive officers." All of our executive officers below, with the exception of Ms.&nbsp;Spurlin and Mr.&nbsp;Jeans, will devote all of their
business time and effort to our business. Ms.&nbsp;Spurlin and Mr.&nbsp;Jeans will divide their working time between the management of PL Midstream and the management of us. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth the names, positions and ages (as of June&nbsp;20, 2011) of our executive officers and directors: </FONT></P>
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<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Age </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Position with Our General Partner </B></FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>David Lumpkins</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>56</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Executive Chairman and Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nathan Ticatch</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>45</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>President, Chief Executive Officer and Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sharon Spurlin</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>46</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Senior Vice President and Chief Financial Officer</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hank Jeans</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>58</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Senior Vice President&#151;Commercial</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>John Parkinson</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>49</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Vice President&#151;Operations</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Randy Miller</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>45</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Vice President&#151;Engineering</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Alan E. Goldberg</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>56</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Lance L. Hirt</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>44</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Zalmie Jacobs</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>45</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Robert D. Lindsay</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>56</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Andrew S. Weinberg</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>37</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Director</FONT></TD>
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 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>David Lumpkins,</B></FONT><FONT SIZE=2> co-founder of our predecessor, is responsible for formulating and executing our business strategy as well as
providing general executive oversight of our managerial and commercial activities. Mr.&nbsp;Lumpkins has had a key role since the initial conception in the development and execution of the plan to
develop the PDH facility now owned and operated by the Partnership. Mr.&nbsp;Lumpkins has </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>100</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>been
affiliated with Lindsay Goldberg since 2000, during which time he has worked on a number of investment opportunities in the petrochemical and energy mid-stream industries including
Lindsay Goldberg's investment in PL Midstream which he helped initiate and served as Chairman. Prior to his affiliation with Lindsay Goldberg, Mr.&nbsp;Lumpkins worked in the investment banking
industry for 17&nbsp;years principally for Morgan Stanley and Credit Suisse. In 1995, Mr.&nbsp;Lumpkins opened Morgan Stanley's Houston office and served as head of the firm's southwest region.
Mr.&nbsp;Lumpkins' extensive experience in the petrochemical, energy midsteam and finance industries adds significant value to the board of directors of our general partner. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Nathan Ticatch,</B></FONT><FONT SIZE=2> co-founder of our predecessor, is responsible for formulating and executing our business strategy and for
managing the operations and commercial activities of the Partnership. Mr.&nbsp;Ticatch is the originator of the PDH project idea and has had a key role in the development and execution of the plan
to develop the PDH facility now owned and operated by the Partnership. Mr.&nbsp;Ticatch has been affiliated with Lindsay Goldberg since 2000, during which time he has worked on a number of
investment opportunities in the petrochemical and energy mid-stream industries including Lindsay Goldberg's investment in PL Midstream which he helped initiate and most recently served as
Vice-Chairman. Prior to his affiliation with Lindsay Goldberg, Mr.&nbsp;Ticatch worked in the petrochemical and logistics industry for GATX Terminals and ICI Americas.
Mr.&nbsp;Ticatch's record of innovation in the petrochemical and logistics industries provides the critical capabilities that the board of directors of our general partner needs to manage our
business. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Sharon Spurlin</B></FONT><FONT SIZE=2> has served as Senior Vice President and Chief Financial Officer of our predecessor since 2009. Ms.&nbsp;Spurlin also
serves in that capacity for PL Midstream, another investment of Lindsay Goldberg related to the energy and petrochemical logistics sector. Ms.&nbsp;Spurlin is responsible for overseeing our
accounting and financial reporting functions, business banking relations, treasury, and information systems. From September 2002 to June 2009, Ms.&nbsp;Spurlin served as the Assistant Treasurer for
Plains All American Pipeline,&nbsp;L.P., where she also started up their Internal Audit group. Prior to joining Plains All American Pipeline,&nbsp;L.P., Ms.&nbsp;Spurlin held the roles of
Controller and Director of Financial Analysis for American Ref-Fuel Company and was an audit manager for a public accounting firm. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Hank Jeans</B></FONT><FONT SIZE=2> has served as the Senior Vice President&#151;Commercial for our predecessor since inception. He has also served in that
capacity for PL Midstream, another investment of Lindsay Goldberg related to the energy and petrochemical logistics sector. Mr.&nbsp;Jeans is responsible for managing our business development and
commercial activities. Prior to his affiliation with Lindsay Goldberg, Mr.&nbsp;Jeans worked in the crude oil, natural gas liquids and petrochemical industry for 30&nbsp;years, most recently at
Williams Olefins (from 1999 to 2004), where he was Director of NGL Feedstocks and Olefins. His responsibilities in that capacity included the acquisition of feedstocks and the marketing of ethylene,
propylene and other olefins co-products. Prior to his employment with Williams Olefins, Mr.&nbsp;Jeans spent 16&nbsp;years with Union Texas Petroleum Corporation where he held various
management positions. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>John Parkinson</B></FONT><FONT SIZE=2> has served as the Vice President&#151;Operations of our predecessor since 2010. In 2008 and 2009
Mr.&nbsp;Parkinson served as Operations Manager. Mr.&nbsp;Parkinson is the PDH facility site manager and is responsible for managing all the operations of our PDH facility. Mr.&nbsp;Parkinson
has worked in the petrochemical industry for over 26&nbsp;years holding various business and operating positions of increasing responsibility. Prior to joining our predecessor in June 2008,
Mr.&nbsp;Parkinson worked for 12&nbsp;years for Lyondell Chemical Company, where he held various roles in the business and manufacturing groups with the most recent assignments as the specialty
polymers business manager and plant manager at the Clinton, Iowa facility. Prior to Lyondell, Mr.&nbsp;Parkinson worked for Chevron Chemical Company for eight and a half years and Allied Signal for
four years in various manufacturing roles. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Randy Miller</B></FONT><FONT SIZE=2> has served as the Vice President&#151;Process Engineering of our predecessor since 2007. Mr.&nbsp;Miller has been
instrumental in the design and development of the PDH facility since the commencement of the front end engineering design work in 2007. Mr.&nbsp;Miller has worked in the </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>101</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>petrochemical
industry for over 20&nbsp;years. Prior to joining our predecessor, he served as a Senior Process Consultant at Barnes and Click&nbsp;Inc. from 1999 to 2006 where his last assignment
was to advise us with respect to the development of the PDH project concept. Prior to Barnes and Click he worked for Westlake Chemical Company from 1995 to 1999 and for Dow Chemical from 1988 to 1995.
He is a Registered Engineer in the State of Texas. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Alan E. Goldberg</B></FONT><FONT SIZE=2> was appointed as a director of our general partner in June 2011. Mr.&nbsp;Goldberg co-founded Lindsay
Goldberg in 2001. Previously, he served as Chairman and Chief Executive Officer of Morgan Stanley Private Equity from 1998 to 2001. Mr.&nbsp;Goldberg joined Morgan Stanley in 1978 and played an
integral role in founding its Private Equity business in 1984 and building the firm's highly successful global private equity business. Mr.&nbsp;Goldberg holds a J.D. from Yeshiva University, an
M.B.A. from the New York University Graduate School of Business, and a B.A. in philosophy and economics from New York University. Mr.&nbsp;Goldberg is a director of Brightstar Corp., FAPS
Holdings,&nbsp;Inc., Maine Beverage Company,&nbsp;LLC, PL Olefins&nbsp;LLC, Continental Energy Systems&nbsp;LLC, Intermex Holdings,&nbsp;Inc., The Brock Group,&nbsp;Inc.,
Rosetta&nbsp;LLC, PL Propylene&nbsp;LLC, RECON Holdings III&nbsp;Inc., Ambulatory Services of America,&nbsp;Inc., Crane&nbsp;&amp;&nbsp;Co.,&nbsp;Inc., Scandza AS, PSC,&nbsp;LLC, Panadero
Aggregates Holdings,&nbsp;LLC, Aviv REIT,&nbsp;Inc. and Pacific Architects and Engineers Incorporated. He also serves as a Trustee of Yeshiva University. Mr.&nbsp;Goldberg brings senior
leadership and global strategic expertise to the Board. His role at Lindsay Goldberg allows him to bring significant business development and merger and acquisition experience to the board of
directors of our general partner. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Lance L. Hirt</B></FONT><FONT SIZE=2> was appointed as a director of our general partner in June 2011. Mr.&nbsp;Hirt is a partner at Lindsay Goldberg. Prior to
joining Lindsay Goldberg in 2003, Mr.&nbsp;Hirt was a Managing Director at Morgan Stanley where he spent nine years in the mergers and acquisitions department advising a broad range of general
industrial clients. Mr.&nbsp;Hirt began his career practicing law at Sullivan&nbsp;&amp; Cromwell in New York and was subsequently a management consultant at Touche Ross&nbsp;&amp;&nbsp;Co.
Mr.&nbsp;Hirt received his M.B.A. and J.D. from Harvard University and graduated from Yeshiva College with a B.A. in economics. He currently serves as a Director of Brightstar Corp., PL
Olefins&nbsp;LLC, Brock Holdings,&nbsp;Inc., PL Propylene&nbsp;LLC, RECON Holdings III&nbsp;Inc., Scandza AS, PSC,&nbsp;LLC, Trygg Pharma Holding AS and Panadero Aggregates
Holdings,&nbsp;LLC. He also serves as a Trustee of Yeshiva University in New York City. Mr.&nbsp;Hirt brings extensive private equity experience and mergers and acquisition expertise to the board
of directors of our general partner. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Zalmie Jacobs</B></FONT><FONT SIZE=2> was appointed as a director of our general partner in June 2011. Mr.&nbsp;Jacobs joined York Capital in March 2008 and is
Co-Head of Private Equity at York Capital and a partner of the firm. Prior to joining York Capital, for eleven years Mr.&nbsp;Jacobs co-led an investment group at Leucadia
National Corporation. Previously, Mr.&nbsp;Jacobs worked as a Vice President at The Carlyle Group. Prior to that, he was a corporate attorney at Davis, Polk&nbsp;&amp; Wardwell. Mr.&nbsp;Jacobs
received a B.A. from Columbia College and a J.D. from Harvard Law School. Mr.&nbsp;Jacobs' knowledge of our business and extensive investment experience make him a valuable addition to the board of
directors of our general partner. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Robert D. Lindsay</B></FONT><FONT SIZE=2> was appointed as a director of our general partner in June 2011. Mr.&nbsp;Lindsay co-founded Lindsay
Goldberg in 2001. Previously, he was the managing general partner of Bessemer Holdings and, prior to joining Bessemer Holdings in 1991, he was a managing director at Morgan Stanley Private Equity,
where he played an integral role in founding the business in 1984. Mr.&nbsp;Lindsay holds a B.A. in English and American literature and language from Harvard College and an M.B.A. from Stanford
University. He is President and Chief Executive Officer of Bessemer Securities&nbsp;LLC as well as a director of The Bessemer Group, Incorporated and its subsidiary banks, including Bessemer Trust
Company, N.A. Mr.&nbsp;Lindsay serves as a director of Brightstar Corp., Pike Electric Corporation, FAPS Holdings,&nbsp;Inc., Maine Beverage Company,&nbsp;LLC, PL Olefins&nbsp;LLC, Continental
Energy Systems&nbsp;LLC, Intermex Holdings,&nbsp;Inc., The Brock Group,&nbsp;Inc., Bell Nursery Holdings,&nbsp;LLC, Rosetta&nbsp;LLC, PL Propylene&nbsp;LLC, Ambulatory Services of
America,&nbsp;Inc., Crane&nbsp;&amp;&nbsp;Co.,&nbsp;Inc., Scandza AS, PSC,&nbsp;LLC, Panadero Aggregates Holdings,&nbsp;LLC, Aviv REIT,&nbsp;Inc. and Pacific Architects and Engineers
Incorporated. He also serves as a </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>102</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>Trustee
of the Cold Spring Harbor Biological Laboratory and St.&nbsp;Paul's School in Concord, New Hampshire. Mr.&nbsp;Lindsay was selected to serve on the board of directors of our general
partner due to the perspective and experience he brings as one of our largest stockholders with Lindsay Goldberg, as well as his experience with the venture capital industry. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>Andrew S. Weinberg</B></FONT><FONT SIZE=2> was appointed as a director in June 2011. Mr.&nbsp;Weinberg is a partner at Lindsay Goldberg, which he joined in
2003. Previously, he was an associate at Goldman, Sachs&nbsp;&amp;&nbsp;Co. in the Principal Investment Area. Mr.&nbsp;Weinberg began his career at Morgan Stanley in the mergers and acquisitions
department in New York and in the leveraged finance group in London. Mr.&nbsp;Weinberg holds an M.B.A. from Stanford University, and an A.B. in Economics and History from Dartmouth College. He
currently serves as a Director of Brightstar Corp., PL Olefins&nbsp;LLC, The Brock Group,&nbsp;Inc., PL Propylene&nbsp;LLC, RECON Holdings III&nbsp;Inc., Scandza AS, PSC,&nbsp;LLC, and Trygg
Pharma Holding AS. Mr.&nbsp;Weinberg was selected to serve on the board of directors of our general partner due to his senior leadership, strategic and merger and acquisition expertise. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
directors of our general partner hold office until the earlier of their death, resignation or removal. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<A NAME="toc_dy42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Compensation Discussion and Analysis    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our general partner has the sole responsibility for conducting our business and for managing our operations and its board of directors
and officers make decisions on our behalf. In connection with the completion of this offering, the board of directors of our general partner will form&nbsp;a compensation committee that will
determine the future compensation of the directors and officers of our general partner, including the named executive officers. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically,
the board of managers of PL Manufacturing, the indirect owner of our predecessor, made all decisions regarding the compensation of our predecessor's executive officers.
Prior to the completion of this offering, certain of our executive officers, including Messrs.&nbsp;Lumpkins, Ticatch, and Jeans and Ms.&nbsp;Spurlin, have performed services for both PL Propylene
and PL Midstream, an entity controlled by Lindsey Goldberg, and the aggregate compensation paid to those executive officers has been in recognition of services provided to both entities. See "Certain
Relationships and Related Party Transactions&#151;Agreements with Affiliates of our General Partner" for a discussion of the arrangements between our predecessor and its affiliated entities
with respect to the shared services performed by our executive officers and the allocation of costs associated with such arrangements. The narratives and tables provided below describe the aggregate
compensation received by the named executive officers. Going forward, certain executive officers, including Ms.&nbsp;Spurlin and Mr.&nbsp;Jeans, will continue to perform services both for us and
for PL Midstream. See "Certain Relationships and Related Party Transactions&#151;Agreements with Affiliates of our General Partner" for information regarding the shared services arrangements
following the completion of this offering. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to discussing the aggregate compensation paid to the executive officers of our predecessor, this compensation discussion and analysis, or CD&amp;A, provides information about the
compensation objectives and policies for these individuals and is intended to place in perspective the information contained in the executive compensation tables that follow this discussion. This CD&amp;A
provides a
general description of the compensation program and specific information about its various components. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Throughout
this discussion, the following individuals are referred to as the "named executive officers" and are included in the Summary Compensation Table: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>David Lumpkins&#151;Executive Chairman  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Nathan Ticatch&#151;President and Chief Executive Officer  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Sharon Spurlin&#151;Senior Vice President and Chief Financial Officer  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Hank Jeans&#151;Senior Vice President&#151;Commercial </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>103</FONT></P>

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<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Randy Miller&#151;Vice President&#151;Process Engineering </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Bernard Sandner (deceased)&#151;former Project Manager and Vice President&#151;Manufacturing </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
historical compensation discussion that follows reflects the total compensation the named executive officers received for services provided, and the philosophy and policies that
drove the compensation decisions for these named executive officers, as implemented by the board of managers of PL Manufacturing. Current and forward-looking statements refer to the compensation
philosophy, policy and practices of our general partner and the procedures our general partner either has adopted or intends to adopt, though these practices are largely a continuation of the
compensation practices historically employed. Unless otherwise noted, within the remainder of this CD&amp;A, references to "we" and "our" refer to both the philosophy and policies historically
implemented, as well as the philosophy and policies to be implemented by our general partner upon completion of this offering. The philosophy and policies may change in the future. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Compensation Philosophy and Objectives  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our future success and the ability to create long-term value for our unitholders depends on our ability to attract, retain,
and motivate the executives necessary to manage our business. We employ a compensation philosophy that emphasizes pay for performance. We believe that compensation should: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Align the interests of the individual with those of our unitholders;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Pay for performance, whereby an individual's total compensation is heavily influenced by the partnership's and the
individual's performance; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Be competitive with compensation paid to persons having similar responsibilities and duties in other companies in the same
and closely related industries in order to help us attract and retain the most qualified individuals. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
not formally adopted as objectives in 2010 and prior years, the preceding objectives are consistent with the compensation arrangements we have utilized historically. In the
future, we also intend to ensure that a portion of the total compensation made available to the named executive officers is based on the total return received by our unitholders, thus assuring an
alignment of interests between employees and our unitholders. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Compensation Setting Process  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, the board of managers of PL Manufacturing determined the overall compensation philosophy and set the final compensation
of the named executive officers without the assistance of a compensation consultant. Following the formation of the compensation committee by the board of directors of our general partner, all
compensation decisions for the named executive officers will be determined by the compensation committee. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
compensation committee will seek to provide a total compensation package designed to drive performance and reward contributions in support of our business strategies and to attract,
motivate and retain high quality talent with the skills and competencies required by us. It is possible that the compensation committee will examine the compensation practices of our peer companies
and may also review compensation data from our industry generally to the extent the competition for executive talent is broader than a group of selected peer companies. In addition, the compensation
committee may review and, in certain cases, participate in, various relevant compensation surveys and consult with compensation consultants with respect to determining compensation for the named
executive officers. We expect that our Executive Chairman, Mr.&nbsp;Lumpkins, and our President and Chief Executive Officer, Mr.&nbsp;Ticatch, will provide periodic recommendations to the
compensation committee regarding the compensation of the other named executive officers. It is also possible that we may engage a compensation consultant prior to </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>104</FONT></P>

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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>the
completion of this offering to assist us in determining the compensation of our named executive officers that will become effective upon the completion of the offering. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Elements of Compensation  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion regarding the elements of compensation provided to the named executive officers reflects our historical
philosophy concerning the division of the elements of senior management employees' compensation packages, which our general partner, at this time, continues to employ. For the fiscal year ended
December&nbsp;31, 2010, the principal elements of compensation for the named executive officers were the following: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>base salary;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>discretionary bonus awards;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>long-term equity-based incentive awards; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>non-discriminatory welfare and retirement benefits. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
long-term equity-based incentive awards that we have historically granted to our employees have been in the form of profits interest awards. Historically, profits
interest awards have comprised a significant portion of the potential compensation for our named executive officers and other employees in order to incentivize and motivate our employees to grow
unitholder value. Profits interests are not the same security as the common units being issued in this offering, and the number of profits interests awarded does not correlate to the common units that
are being issued in this offering. In connection with this offering, our employees will receive distributions with respect to their outstanding profits interest awards and those awards will then be
cancelled in their entirety and will cease to be outstanding following the completion of this offering. The information provided with respect to these profits interest awards in the following
narratives and tables is provided in order to comply with the disclosure rules of the Securities and Exchange Commission regarding our historical compensation; however, these profits interest awards
will not comprise a portion of the compensation package for any of our employees following the completion of this offering. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Base Salary.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Base salary is the fixed annual compensation we pay to each named executive officer for performing specific job duties. It
represents
the minimum income a named executive officer may receive for a full year's performance. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically,
the board of managers of PL Manufacturing has established the annual base salary rate for each of the named executive officers at a level necessary to retain the
individual's services. While we believe it is important to provide our named executive officers with an appropriate amount of fixed compensation each year, the base salaries of our named executive
officers have been a small portion of their total compensation relative to the potential value that our named executive officers could realize with respect to the profits interest awards we granted in
2010 and prior years. The board of managers of PL Manufacturing reviews base salaries on an annual basis, in consultation with the Executive Chairman and the President and Chief Executive Officer, and
may adjust base salaries upon consideration of the factors discussed above. We did not increase the base salaries of the named executive officers during fiscal 2010, except that Mr.&nbsp;Ticatch's
annual rate of base salary was increased in April 2010 from $275,000 to $400,000 to reflect his growing responsibilities and contributions to our
business. Ms.&nbsp;Spurlin's base salary is set in her employment agreement, subject to annual review and adjustment at the discretion of the board of managers of PL Manufacturing. See
"&#151;Employment Agreements" below for additional information regarding Ms.&nbsp;Spurlin's employment agreement. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
2011, we have adopted base salary increases for certain of our named executive officers. Specifically, for 2011, (a)&nbsp;Ms.&nbsp;Spurlin's base salary was increased from
$250,000 to $260,000, (b)&nbsp;Mr.&nbsp;Jeans' base salary was increased from $225,000 to $240,000 and (c)&nbsp;Mr.&nbsp;Miller's base salary was increased from </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>105</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>$230,000
to $250,000. Contemporaneous with the consummation of this offering, we may adopt base salary adjustments as deemed necessary in order for us to maintain a competitive compensation program
following the effectiveness of this offering. In light of the elimination of our profits interest program in connection with the completion of this offering, going forward, we anticipate that base
salary determinations made by the compensation committee of the board of directors of our general partner will be based on a broader group of factors than those we have historically considered,
including the amounts considered necessary to attract and retain the highest quality executives, the responsibilities of the named executive officers, the officer's position and level of
responsibility, and the base salary amounts paid to executive officers in similar positions with similar responsibility at other companies in our industry. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Discretionary Bonus Awards.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Historically, annual bonuses have been discretionary. We review annual cash bonus awards for the named
executive officers
annually to determine award payments for the last completed fiscal year, as well as to establish award opportunities for the current fiscal year. However, Ms.&nbsp;Spurlin's employment agreement
provides that she is eligible for an annual target bonus of 30% of her base salary based on our performance and the company bonus policies then in effect. Bonuses are determined based both on
individual performance and our performance. We believe that an annual bonus program based on performance motivates management to achieve key short-term corporate objectives and aligns
executives' interests with our unitholders' interests. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
bonuses paid for 2010 were approved by the board of managers of PL Manufacturing following a year-end review of the individual performance of the executive officer in
question and our overall performance. For 2010, the company performance component was primarily based on efforts expended by our named executive officers towards the completion of construction and
successful start-up of our PDH facility. In addition to her annual bonus, Ms.&nbsp;Spurlin received a special sign-on bonus payment of $150,000 in June 2010 pursuant to the
terms of her employment agreement. See "&#151;Employment Agreements" below for additional information regarding Ms.&nbsp;Spurlin's employment agreement. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the future, we expect that the compensation committee of our general partner's board of directors will continue to rely on discretionary annual bonus awards to the named executive
officers, subject to any applicable employment agreement. Our general partner intends to use discretionary bonus awards for achieving financial and operational goals and for achieving individual
performance objectives. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historical Equity-Based Incentive Awards.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As discussed above, historically, our compensation structure has included long-term
equity-based incentive awards in the form of profits interests that allow key employees to share in the distributions received by the unitholders of PL Manufacturing once a certain level of proceeds
has been generated. Value with respect to these awards is only realized once certain investment return thresholds have been met. These profits interest awards have comprised a substantial portion of
the potential compensation that our named executive officers and other employees could realize in order to motivate such individuals to grow unitholder value. Award holders will receive distributions
with respect to these profit interest awards in connection with the completion of this offering, and these awards will cease to exist following the completion of the offering. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior
to 2010, (a)&nbsp;fully vested Class&nbsp;B profits interests were issued to Messrs.&nbsp;Lumpkins and Ticatch and (b)&nbsp;Class&nbsp;C profits interests were issued to
Ms.&nbsp;Spurlin in accordance with her employment agreement. In addition, in 2010, (i)&nbsp;Class&nbsp;C profits interests were issued to all members of the management team (other than
Ms.&nbsp;Spurlin), and (ii)&nbsp;Class&nbsp;D profits interests were issued to Messrs.&nbsp;Lumpkins and Ticatch. The Class&nbsp;C and Class&nbsp;D profits interests are subject to a
vesting schedule that requires continued service by the award recipient, and will vest in substantially equal annual installments over the four year period beginning on the later of March&nbsp;11,
2009, or the recipient's commencement of employment. The profits interests will become fully vested upon the earlier to occur of (1)&nbsp;a sale or other disposition of our assets, with respect to
any distribution of net proceeds received in connection with the sale, or (2)&nbsp;at the discretion of the board of managers of PL Manufacturing. If an award recipient's employment terminates for
any reason, all unvested profits interests will be forfeited unless otherwise determined by the board of </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>106</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>managers
of PL Manufacturing. If an award recipient's employment is terminated involuntarily for cause, all vested profits interests will also be forfeited. The Class&nbsp;C profits interests issued
with respect to Mr.&nbsp;Sandner were granted following Mr.&nbsp;Sandner's death to his estate in recognition of his prior services and were fully vested at the time of grant. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders
of profits interest awards are entitled to receive distributions when and as determined by the board of managers of PL Manufacturing. The ultimate amount received by each holder
will vary depending on the level of amounts distributed. We anticipate that the named executive officers will receive the following estimated amounts in respect of their Class&nbsp;B, Class&nbsp;C
and Class&nbsp;D profits interests, as applicable, in connection with the completion of this offering: (a)&nbsp;Mr.&nbsp;Ticatch&#151;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
(b)&nbsp;Ms.&nbsp;Spurlin&#151;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, (c)&nbsp;Mr.&nbsp;Lumpkins&#151;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, (d)
&nbsp;Mr.&nbsp;Jeans&#151;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
(e)&nbsp;Mr.&nbsp;Miller&#151;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, and (f)&nbsp;estate of Mr.&nbsp;Sandner&#151;$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. These amounts will be
paid to the named executive officers in a
combination of cash and our common units. Following the consummation of this offering, the profits interests will be cancelled and will cease to be outstanding. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
order to incentivize management members following the completion of this offering to continue to grow our business, our general partner intends to adopt a long-term
incentive plan for employees, consultants and directors of our general partner and its affiliates, who perform services for us. Each of the named executive officers will be eligible to participate in
this plan. The long-term incentive plan provides for the grant of unit awards, restricted units, phantom units, unit options, unit appreciation rights, distribution equivalent rights and
substitute awards. These awards are intended to align the interests of key employees (including the named executive officers) with those of our unitholders and to give those employees the opportunity
to share in our long-term performance. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employee Benefits.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In addition to the elements of compensation previously discussed, the named executive officers are eligible for the
same health,
welfare and other employee benefits as are available to our employees generally, which include medical and dental insurance, short and long-term disability insurance, life insurance, and a
401(k) profit sharing plan. The 401(k) plan permits all eligible employees, including the named executive officers, to make voluntary salary deferrals, subject to applicable tax limitations. The
401(k) plan also provides a dollar-for-dollar safe harbor matching contribution on the first 6% of eligible salary deferrals, which is 100% vested at all times. We will also
make discretionary profit sharing contributions to the 401(k) plan for employees who have completed a year of service and are employed on the last day of the plan year, and these contributions are
based upon age and a target rate and are typically paid in the first quarter of the following year. In addition, we have historically provided minimal perquisites to our named executive officers, as
approved on a case-by-case basis, and the annual costs of these personal benefits has been less than $10,000 per individual officer. We do not sponsor any defined benefit
pension plan or nonqualified deferred compensation arrangements at this time. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
general benefits offered to all employees (and thus to the named executive officers) are reviewed each year, and we anticipate that, in the future, any benefits offered only to named
executive officers will be reviewed by the compensation committee of our general partner in conjunction with its annual review of executive officer compensation. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation Mix.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Going forward, the compensation committee of our general partner's board of directors will determine the mix of
compensation, both
among short- and long-term compensation and cash and non-cash compensation, to establish structures that it believes are appropriate for each of the named executive officers.
We believe that the mix of base salary, bonus awards, awards under the long-term incentive plan and the other benefits that will be available to the named executive officers fit the
overall compensation objectives of our general partner and us. We believe this mix of compensation provides competitive compensation opportunities to align and drive employee performance in support of
our business strategies and to attract, motivate and retain high quality talent with the skills and competencies required by us. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>107</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_dy42901_1_108"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dy42901_employment_agreements"> </A>
<A NAME="toc_dy42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  Employment Agreements    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ms.&nbsp;Spurlin previously entered into an employment agreement with PL Manufacturing and certain related entities. The employment
agreement with Ms.&nbsp;Spurlin commenced on June&nbsp;9, 2009, and automatically extends for successive one year periods each June&nbsp;9, unless either party gives 30&nbsp;days' advance
notice prior to the end of the then current employment period. In addition to the provisions previously described above, the employment agreement with Ms.&nbsp;Spurlin provides for vacation and
other standard employee benefits and reimbursement for certain out-of-pocket expenses. Ms.&nbsp;Spurlin's employment agreement also provides for certain payments and benefits
to be made to her in the event her employment is terminated for specified reasons, including without cause or for good reason. The employment agreement also subjects Ms.&nbsp;Spurlin to certain
restrictive covenants, including non-solicitation and confidentiality covenants. These payments, benefits and covenants are described in greater detail below under "&#151;Executive
Compensation&#151;Potential Payments upon Termination and Change in Control." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
this time, the remainder of our named executive officers are "at will" and we expect them to remain "at will," although we have in the past entered into employment agreements with
other executive officers on a case-by-case basis. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dy42901_severance_and_change_in_control_arrangements"> </A>
<A NAME="toc_dy42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  Severance and Change in Control Arrangements    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than the employment agreement with Ms.&nbsp;Spurlin and the profits interest awards, we did not have any agreements in place
with our named executive officers providing for severance and/or change in control benefits during 2010 and prior years. However, upon the death of Mr.&nbsp;Sandner in July 2010, we agreed to
continue to pay Mr.&nbsp;Sandner's salary to his estate until the earlier to occur of an initial public offering and a sale of the company. See "&#151;Executive
Compensation&#151;Summary Compensation Table" and "Executive Compensation&#151;Potential Payments upon Termination and Change in Control" for additional information. To date, our general
partner has not adopted any other arrangements that would provide severance and/or change in control benefits to our named executive officers for periods
of time following the consummation of this offering. Our general partner may change this policy in the future. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dy42901_tax_considerations"> </A>
<A NAME="toc_dy42901_8"> </A>
<BR></FONT><FONT SIZE=2><B>  Tax Considerations    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With respect to the deduction limitations under Section&nbsp;162(m) of the Internal Revenue Code, we are a limited partnership and do
not meet the definition of a "corporation" under Section&nbsp;162(m). Therefore, we will not be subject to the $1&nbsp;million deduction limitation imposed by Section&nbsp;162(m). </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="dy42901_executive_compensation"> </A>
<A NAME="toc_dy42901_9"> </A>
<BR></FONT><FONT SIZE=2><B>  Executive Compensation    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables and narratives reflect historic compensation paid to our named executive officers for the fiscal year ended
December&nbsp;31, 2010. Certain column and other heading descriptions have been modified from the heading names prescribed by the applicable Securities and Exchange Commission rules in order to more
accurately describe the compensation arrangements we have historically provided. The number of profits interest awards disclosed below do not correlate to the common units to be issued in connection
with this offering, and such profits interest awards will cease to be outstanding following the consummation of this offering. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>108</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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NAME="page_ea42901_1_109"> </A> </FONT> <FONT SIZE=2>


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</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ea42901_summary_compensation"> </A>
<A NAME="toc_ea42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Summary Compensation    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table and footnotes provide information regarding the compensation of the named executive officers during the year ended
December&nbsp;31, 2010. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:57%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"140%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="140%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="30pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="68pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="67pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="68pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH NOWRAP  COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:102pt;"><FONT SIZE=1><B>Name and Principal Position

<!-- COMMAND=ADD_SCROPPEDRULE,102pt -->

 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Salary<BR>
($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Bonus<BR>
($)<SUP>(1)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Profits<BR>
Interest<BR>
Awards<BR>
($)<SUP>(2)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>All Other<BR>
Compensation<BR>
($)<SUP>(3)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total<BR>
($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 David Lumpkins</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2010</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>400,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>150,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>12,741,284</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>36,281</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>13,327,565</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Executive Chairman</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nathan Ticatch</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
2010</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
361,539</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
150,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
10,424,687</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
31,946</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
10,968,172</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>President and Chief Executive Officer</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Sharon Spurlin</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
2010</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
250,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
235,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
31,946</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
516,946</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Senior Vice President and Chief Financial Officer</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hank Jeans</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
2010</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
225,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
112,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
525,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
39,200</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
901,200</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Senior Vice President&#151;Commercial</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Randy Miller</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
2010</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
230,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
230,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
700,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
34,300</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1,194,300</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Vice President&#151;Process Engineering</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bernard Sandner</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
2010</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
123,846</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
700,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
193,390</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1,017,236</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Former Project Manager and Vice President&#151; Manufacturing</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
 <!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" -->
<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" >


<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
amounts paid for services provided in fiscal 2010 pursuant to our discretionary annual cash bonus program. Also reflects a payment of $150,000 to
Ms.&nbsp;Spurlin in satisfaction of a special sign-on bonus described above.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>The
amounts reported in the "Profits Interest Awards" column reflect the aggregate grant date fair value of Class&nbsp;C and Class&nbsp;D profits
interests awarded in fiscal year 2010, computed in accordance with Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic 718. See "&#151;Management's
Discussion and Analysis of Financial Condition and Results of Operations" for additional detail regarding assumptions underlying the value of these awards.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>The
following items are reported in the "All Other Compensation" column: </FONT></DD></DL>
 </DIV>

 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="78pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:88pt;"><FONT SIZE=1><B>Named Executive Officer

<!-- COMMAND=ADD_SCROPPEDRULE,88pt -->

 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>401(k) Employer<BR>
Contributions<SUP>(a)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Severance<SUP>(b)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>David Lumpkins</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>36,281</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>36,281</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nathan Ticatch</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>31,946</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>31,946</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sharon Spurlin</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>31,946</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>31,946</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hank Jeans</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>39,200</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>39,200</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Randy Miller</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>34,300</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>34,300</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bernard Sandner</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,885</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>177,505</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>193,390</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:20%;">
 <!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" -->
<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" >


<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Represents
employer matching contributions and employer profit sharing contributions made to the 401(k) plan for 2010. </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>109</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=116,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=309233,FOLIO='109',FILE='DISK131:[11ZBV1.11ZBV42901]EA42901A.;9',USER='MTITUSS',CD='20-JUN-2011;10:40' -->
<A NAME="page_ea42901_1_110"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:20%;">
<P style="font-family:times;text-align:justify"></FONT></P>

<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Mr.&nbsp;Sandner
passed away in July 2010. We agreed to continue to pay Mr.&nbsp;Sandner's salary payments to his estate until the earlier of a sale or
an initial public offering by the company. At the time of Mr.&nbsp;Sandner's death, the value of these future payments was estimated to be $1,087,752, assuming a five-year time frame
until a sale or initial public offering of the company. The value of these future payments was accrued in full during 2010. Based on an expected completion of this offering as at September&nbsp;30,
2011, this accrual was recalculated in 2011 and the adjusted amount is included in the table above. </FONT></DD></DL>
 </DIV>
 <UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Grants of Plan-Based Awards  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table and footnotes provide information regarding grants of profits interest awards made to the named executive officers
in the fiscal year ended December&nbsp;31, 2010. The number of profits interest awards reflected in the table below does not correlate to the common units that are being issued in this offering. In
connection with this offering, our named executive officers will receive distributions with respect to their outstanding profits interest awards and those awards will then be cancelled in their
entirety and will cease to be outstanding following the completion of this offering. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:67%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="120%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="97pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="78pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="91pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH NOWRAP  COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:21pt;"><FONT SIZE=1><B>Name

<!-- COMMAND=ADD_SCROPPEDRULE,21pt -->

 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Grant Date </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number of Profits<BR>
Interests Awarded<SUP>(1)</SUP><BR>
(#) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Exercise or Base<BR>
Price of Profits<BR>
Interest Awards<BR>
($/Sh) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Grant Date Fair<BR>
Value of Profits<BR>
Interest Awards<SUP>(2)</SUP> </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>David Lumpkins</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9/29/2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>24,973,344</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,740,670</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12/17/2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>111,719</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>56,977</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;D interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9/29/2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,084,047</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,921,852</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;D interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12/17/2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>55,860</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>21,785</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nathan Ticatch</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9/29/2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>20,432,736</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,151,458</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12/17/2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>91,406</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>46,617</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;D interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9/29/2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12,341,493</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,208,788</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;D interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12/17/2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>45,703</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>17,824</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sharon Spurlin</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><p align=center style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hank Jeans</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9/29/2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,500,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>525,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Randy Miller</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9/29/2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,000,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>700,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bernard Sandner</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9/29/2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,000,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>700,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
 <!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" -->
<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" >


<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the grant of Class&nbsp;C profits interests to each of the named executive officers (other than Ms.&nbsp;Spurlin) and the grant of
Class&nbsp;D profits interests to Messrs.&nbsp;Lumpkins and Ticatch.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the grant date fair value of the Class&nbsp;C and Class&nbsp;D profits interest awards granted during fiscal 2010, computed in accordance with
FASB ASC Topic 718. </FONT></DD></DL>
 </DIV>
 <UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Narrative Discussion of Summary Compensation Table and Grants of Plan-Based Awards Table  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Profits Interest Awards.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Class&nbsp;C and Class&nbsp;D profits interest awards were granted to the named executive officers and other
key
management employees during 2010. Holders of these awards are entitled to receive distributions as determined by the board of managers of PL Manufacturing, as described above under
"&#151;Elements of Compensation&#151;Historical Equity-Based Incentive Awards." These awards vest in </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>110</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=117,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=513687,FOLIO='110',FILE='DISK131:[11ZBV1.11ZBV42901]EA42901A.;9',USER='MTITUSS',CD='20-JUN-2011;10:40' -->
<A NAME="page_ea42901_1_111"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>substantially
equal annual installments over a four year period beginning on the later of March&nbsp;11, 2009, or the recipient's commencement of employment, provided the award recipient has
continuously provided services throughout the vesting period. Additional vesting provisions applicable to these awards are described under "&#151;Elements of Compensation&#151;Historical
Equity-Based Incentive Awards" and "&#151;Potential Payments Upon Termination and Change in Control." The Class&nbsp;C profits interests reported with respect to Mr.&nbsp;Sandner were
granted following Mr.&nbsp;Sandner's death to his estate in recognition of his prior service and were fully vested at the time of grant. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
information provided with respect to these profits interest awards is provided in order to comply with the disclosure rules of the Securities and Exchange Commission regarding our
historical compensation; however, these profits interest awards will not comprise a portion of the compensation package for any of our employees following the completion of this offering. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Outstanding Equity at Fiscal Year-End and Award Exercises and Vestings  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table and narrative discussion below provide information regarding outstanding vested and unvested profits interest
awards as of December&nbsp;31, 2010. The number of profits interest awards reflected in the table below does not correlate to the common units that are being issued in this offering. In connection
with this offering, the named executive officers will receive distributions with respect to their outstanding profits interest awards and those awards will then be cancelled in their entirety and will
cease to be outstanding following the completion of this offering. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="86pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="86pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="40pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=9 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Profits Interest Awards </B></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH NOWRAP  COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:21pt;"><FONT SIZE=1><B>Name

<!-- COMMAND=ADD_SCROPPEDRULE,21pt -->

 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number of Profits<BR>
Interests(#)<BR>
Vested </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number of Profits<BR>
Interests(#)<BR>
Unvested </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Exercise<BR>
Price($) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Expiration<BR>
Date </B></FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>David Lumpkins</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;B interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,151,996</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,271,266</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>18,813,797</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;D interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,784,977</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>11,354,930</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nathan Ticatch</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;B interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,760,724</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,131,036</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,393,106</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;D interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,096,799</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,290,397</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sharon Spurlin</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>300,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hank Jeans</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>375,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,125,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Randy Miller</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>500,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,500,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bernard Sandner</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C interests</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,000,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>n/a</FONT></TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class&nbsp;B
profits interests awarded to Messrs.&nbsp;Lumpkins and Ticatch were fully vested on the date of grant. Each named executive officer holds outstanding Class&nbsp;C
profits interests that are subject to a four year vesting schedule described above under "&#151;Elements of Compensation&#151;Historical Equity-Based Incentive Awards."
Messrs.&nbsp;Ticatch and Lumpkins also hold Class&nbsp;D profits interests, which are subject to a four year vesting schedule described above under "&#151;Elements of
Compensation&#151;Historical Equity-Based Incentive Awards." One-fourth of outstanding Class&nbsp;C and Class&nbsp;D profits interests held by the named executive officers
(other than Mr.&nbsp;Sandner's estate) vested during fiscal 2010 as reflected in the </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>111</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_ea42901_1_112"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>"Outstanding
Equity at Fiscal Year-End" table above. Additional vesting provisions applicable to the Class&nbsp;C and Class&nbsp;D profits interests are described below under
"&#151;Potential Payments upon Termination and Change in Control." </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Pension Benefits  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, we do not, and we do not intend to, provide traditional defined benefit pension benefits to our employees, including the
named executive officers. Our general partner may change this policy in the future. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Nonqualified Deferred Compensation  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, we do not, and we do not intend to, sponsor or adopt a nonqualified deferred compensation plan. Our general partner may
change this policy in the future. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Potential Payments upon Termination or Change in Control  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than as described below, there were no arrangements with our named executive officers providing such individuals with severance
or change in control benefits during fiscal 2010. The employment agreement with Ms.&nbsp;Spurlin will continue in effect following the completion of this offering; however, to date, the compensation
committee of our general partner has not adopted any other arrangements that will provide severance or change in control benefits to our named executive officers following the completion of this
offering. The profits interest awards will cease to be outstanding following completion of this offering. Awards under the long-term incentive plan may provide for accelerated vesting upon
certain termination events or a change in control but, to date, the terms of such awards have not been determined. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employment Agreement with Sharon Spurlin.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The employment agreement with Ms.&nbsp;Spurlin provides for certain payments and benefits
upon specified
termination events. Specifically, if Ms.&nbsp;Spurlin's employment is terminated without cause, due to a non-renewal election by us, or for good reason, she will be entitled to receive
(a)&nbsp;her base salary through the date of termination, (b)&nbsp;accrued but unpaid vacation pay or other benefits due in accordance with our company policies, and (c)&nbsp;an amount equal to
one times Ms.&nbsp;Spurlin's annual base salary, payable in a lump sum within 10&nbsp;days of the date the associated release agreement becomes irrevocable. If such an event were to have occurred
as of December&nbsp;31, 2010, Ms.&nbsp;Spurlin would be entitled to a lump sum payment equal to $250,000, which was her annual base salary rate in effect at the end of fiscal 2010. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
purposes of Ms.&nbsp;Spurlin's employment agreement: </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Cause</I></FONT><FONT SIZE=2>" means Ms.&nbsp;Spurlin has (i)&nbsp;committed a material act of fraud, embezzlement, theft or breach of
fiduciary duty against us, (ii)&nbsp;willfully, in bad faith or due to her gross negligence, materially breached or defaulted on her obligations under the employment agreement, which has not been
cured within 30&nbsp;days of notice of such breach or default, (iii)&nbsp;been convicted of, or pleaded guilty or nolo contendere to, a felony under U.S. federal or any state law, or
(iv)&nbsp;engaged in a willful and sustained failure to perform her primary lawful job duties or responsibilities in a manner that causes material financial damages to us or gross negligence or bad
faith in the performance of such duties, which has not been cured within 30&nbsp;days of notice of such failure. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Good Reason</I></FONT><FONT SIZE=2>" means, without Ms.&nbsp;Spurlin's consent, (i)&nbsp;a material reduction in her title or position or a
material diminution of significant duties that are consistent with her title or position, (ii)&nbsp;a material reduction in Ms.&nbsp;Spurlin's base salary, other than pursuant to a reduction
applicable to all senior executives or employees generally, (iii)&nbsp;a failure to timely pay her annual bonus, (iv)&nbsp;a material breach or default of the company's obligations under the
employment agreement or another written agreement, or (v)&nbsp;a move of Ms.&nbsp;Spurlin's primary place of work or the primary offices of the company more than 25 miles from downtown Houston,
Texas. Ms.&nbsp;Spurlin must provide notice of the occurrence of any good </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>112</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>reason
event within 30&nbsp;days of its occurrence, and if such event remains uncured for 30&nbsp;days following such 30&nbsp;day notice period, then Ms.&nbsp;Spurlin's employment will
automatically terminate at the end of such 30&nbsp;day cure period. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Severance
payments under the employment agreement are contingent upon Ms.&nbsp;Spurlin's execution and nonrevocation of a standard release of claims form. The employment agreement
contains non-solicitation provisions that prohibit Ms.&nbsp;Spurlin, during her employment and for 18&nbsp;months thereafter, from soliciting our employees or customers. The employment
agreement also contains non-disclosure covenants that apply for the same period. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments to Estate of Bernard Sandner.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Sandner served as Project Manager and Vice President&#151;Manufacturing of our
predecessor
prior to his death in July 2010. Upon Mr.&nbsp;Sandner's death, we agreed to continue to pay his current base salary to his estate until the earlier to occur of an initial public offering or a sale
of the company. Based on an expected completion of this offering as at September&nbsp;30, 2011, the value of these future payments was determined to be $177,505. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Profits Interests Awards.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Unvested Class&nbsp;C and Class&nbsp;D profits interests will become fully vested upon the earlier to occur
of
(1)&nbsp;a sale or other disposition of our assets, with respect to any distribution of net proceeds received in connection with the sale, and (2)&nbsp;at the discretion of the board of managers
of PL Manufacturing. If an award recipient's employment terminates for any reason, all unvested profits interests will be forfeited, unless otherwise determined by the board of managers of PL
Manufacturing. If an award recipient's employment is terminated involuntarily for cause, all vested profits interests will also be forfeited. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following
the consummation of the offering, the profits interest awards will cease to be outstanding. See "&#151;Elements of Compensation&#151;Historical Equity-Based
Incentive Awards" for an estimate of the amount each named executive officer will receive with respect to his or her profit interest awards in connection with this offering. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ea42901_director_compensation"> </A>
<A NAME="toc_ea42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Director Compensation    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our predecessor is managed by the board of managers of PL Manufacturing. Following the consummation of this offering, we will provide
compensation to the non-employee directors of the board of our general partner; however, the terms of that compensation policy have not yet been established. Officers or employees of our
general partner or its affiliates who also serve as directors of our general partner will not receive additional compensation for their service as a director of our general partner. We anticipate that
each non-employee director will be reimbursed for out-of-pocket expenses in connection with attending meetings of the board of directors or committees. Each
director will be indemnified by us for actions associated with being a director to the fullest extent permitted under Delaware law. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ea42901_compensation_practices__ea402320"> </A>
<A NAME="toc_ea42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Compensation Practices as They Relate to Risk Management    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe our compensation programs do not encourage excessive and unnecessary risk taking by executive officers (or other employees).
Short-term annual incentives are generally paid pursuant to discretionary bonuses enabling, historically, the board of managers of PL Manufacturing, and, in the future, the compensation
committee of our general partner, to assess the actual behavior of our employees as it relates to risk taking in awarding a bonus. In the future, our use of equity-based long-term
compensation will serve our compensation program's goal of aligning the interests of executives and unitholders, thereby reducing the incentives to unnecessary risk taking. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>113</FONT></P>

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</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ec42901_security_ownership_of_certain___sec02525"> </A>
<A NAME="toc_ec42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents information regarding beneficial ownership of our common units following this offering
by: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our general partner;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>each of our general partner's directors;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>each of our general partner's executive officers;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>each unitholder known by us to beneficially hold five percent or more of our outstanding units; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>all of our general partner's named executive officers and directors as a group. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beneficial
ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. Unless indicated below, to our knowledge, the
persons and entities named in the table have sole voting and sole investment power with respect to all units beneficially owned, subject to community property laws where applicable. Except as
otherwise indicated, the business address for each of our beneficial owners is c/o PetroLogistics&nbsp;LP, 909 Fannin Street, Suite&nbsp;2630, Houston, Texas 77010. The table does not reflect any
common units that directors and executive officers may purchase in this offering through the directed unit program described under "Underwriters." </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="83pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="69pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:93pt;"><FONT SIZE=1><B>Name of Beneficial Owner

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Common Units to<BR>
be Beneficially<BR>
Owned </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Percentage of<BR>
Total Common<BR>
Units to be<BR>
Beneficially<BR>
Owned<SUP>(1)</SUP> </B></FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>PetroLogistics&nbsp;GP&nbsp;LLC<SUP>(2)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Lindsay Goldberg<SUP>(3)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>York Capital<SUP>(4)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>David Lumpkins<SUP>(5)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nathan Ticatch<SUP>(5)</SUP></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hank Jeans</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sharon Spurlin</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>John Parkinson</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Randy Miller</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Alan E. Goldberg</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Lance L. Hirt</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Zalmie Jacobs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Robert D. Lindsay</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Andrew S. Weinberg</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>All directors and executive officers of our general partner as a group (11 persons)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
 <!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="10%" ALIGN="LEFT" -->
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Less
than 1%
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Based
on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units outstanding following this offering.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>PetroLogistics&nbsp;GP&nbsp;LLC,
which is owned by our sponsors, is our general partner and manages and operates our business and has a
non-economic general partner interest in us.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Prior
to this offering, Lindsay Goldberg, through certain affiliated investment funds, owned 80% of our predecessor through its ownership of PL
Manufacturing&nbsp;LLC. The units owned by Lindsay Goldberg, as reflected in the table, are common units. The table assumes the underwriters do not exercise their option to
purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
additional common units and a portion of such units are therefore issued to Lindsay Goldberg upon the option's expiration. If such option is exercised in full, </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>114</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<P style="font-family:times;text-align:justify"></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Lindsay
Goldberg will beneficially own&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units, or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%, of the total common units outstanding.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Prior
to this offering, York Capital, through certain affiliated investment funds, owned 20% of our predecessor through its ownership of PL
Manufacturing&nbsp;LLC. The units owned by York Capital, as reflected in the table, are common units. The table assumes the underwriters do not exercise their option to purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
additional common units and a portion of such units are therefore issued to York Capital upon the option's expiration. If such option is exercised in full, York Capital will beneficially own
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units, or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%, of the total common units outstanding.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>The
table assumes the underwriters do not exercise their option to purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional common units and such units are therefore issued to
our sponsors and certain of our employees and affiliates upon the option's expiration. If such option is exercised in full, Mr.&nbsp;Lumpkins and Mr.&nbsp;Ticatch will beneficially own
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units, or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%
and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%, respectively, of the total common units outstanding. </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>115</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ec42901_certain_relationships_and_related_party_transactions"> </A>
<A NAME="toc_ec42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After this offering, our sponsors will own (1)&nbsp;an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units, representing approximately
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the total outstanding units (approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% if the underwriters exercise their option to purchase additional common units in full) and (2)&nbsp;our
general partner
with its non-economic general partner interest (which will not entitle it to receive distributions) in us. Additionally, our executive officers and employees will own an aggregate of
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units, representing approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the total outstanding units
(approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% if the underwriters exercise their option to purchase additional
common units in full). </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ec42901_distributions_and_payments_to___dis02808"> </A>
<A NAME="toc_ec42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Distributions and Payments to Our General Partner and its Affiliates    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the distributions and payments made or to be made by us to our general partner and its affiliates in
connection with the formation, ongoing operation and any liquidation of PetroLogistics&nbsp;LP. These distributions and payments were or will be determined by and among affiliated entities and,
consequently, are not the result of arm's-length negotiations. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ec42901_formation_stage"> </A>
<A NAME="toc_ec42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Formation Stage    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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 </FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="48%" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="48%" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>The consideration received by our general partner and its affiliates for the contribution of assets and liabilities to us</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:0pt;margin-left:20pt;text-indent:-20pt;"><FONT SIZE=2>  </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2> The non-economic general partner interest
to be issued to our general partner; plus</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:11pt;margin-left:20pt;text-indent:-20pt;"><FONT SIZE=2>  </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units to be issued to our sponsors and certain of our employees and affiliates.</FONT></TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ec42901_offering_stage"> </A>
<A NAME="toc_ec42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Offering Stage    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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</FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="48%" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="48%" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>Distributions to our sponsors and certain members of our executive management team</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>We will draw $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million from our new term loan facility and the use of proceeds of such drawing, in part, to distribute
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million as a reimbursement of construction capital to our sponsors. In addition, we will use approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of the proceeds of this offering to
make a distribution to our sponsors and their affiliates, our executive officers and certain of our employees (including $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million distributed to our sponsors to reimburse them for certain construction
capital expenditures.)</FONT></TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ec42901_operational_stage"> </A>
<A NAME="toc_ec42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  Operational Stage    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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</FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="48%" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="48%" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>Distributions of available cash to our sponsors and certain of our employees and affiliates</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>We will generally make cash distributions to our unitholders pro rata, including to our sponsors and their affiliates, our executive officers and certain of our employees.</FONT></TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>116</FONT></P>

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<A NAME="page_ec42901_1_117"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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 </FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="48%" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="48%" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2> Payments to our general partner and its affiliates</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><BR><FONT SIZE=2>Our general partner will not receive any management fee or other compensation in connection with the management of our business but will be entitled to be reimbursed for all direct and indirect
expenses incurred on our behalf. For instance, we will reimburse our general partner for the salary, bonus, incentive compensation and other amounts that it pays to its employees and executive officers who perform services for us.</FONT></TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ec42901_liquidation_stage"> </A>
<A NAME="toc_ec42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  Liquidation Stage    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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</FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="48%" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="48%" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2>Liquidation</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Upon our liquidation, our unitholders will be entitled to receive liquidating distributions according to their respective capital account balances.</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ec42901_agreements_with_affiliates_of_our_general_partner"> </A>
<A NAME="toc_ec42901_8"> </A>
<BR></FONT><FONT SIZE=2><B>  Agreements with Affiliates of Our General Partner    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with our formation, we will enter into several agreements with affiliates of our general partner that govern the business
relations among us, our general partner and such affiliates. In connection with the transactions that we will enter into to effect the offering, we intend to enter into new agreements with affiliates
of our general partner. The agreements being amended include our partnership agreement, the terms of which are more fully described under "The Partnership Agreement" and elsewhere in this prospectus.
These agreements were not the result of arm's-length negotiations and the terms of these agreements are not necessarily at least as favorable to the parties to these agreements as terms which could
have been obtained from unaffiliated third parties. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Contribution Agreement  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Transactions, we intend to enter into a contribution, conveyance and assumption agreement with various
affiliates of our general partner in order to facilitate the consummation of the Transactions. Pursuant to this agreement, (1)&nbsp;Propylene Holdings and our general partner will execute an amended
and restated partnership agreement; (2)&nbsp;Propylene Holdings will contribute PL Propylene to us; (3)&nbsp;we will use the net proceeds of this offering and a portion of the proceeds of the
borrowings drawn under our new term loan facility (a)&nbsp;to reimburse our sponsors for certain construction capital expenditures and (b)&nbsp;to make additional distributions to them and their
affiliates, our executive officers and certain employees, (4)&nbsp;upon the earlier to occur of the exercise in full of the underwriters' option to purchase additional common units and the
expiration of the 30-day option period, we will issue to our sponsors and certain of our employees and affiliates a number of common units equal to the excess, if any, of the total number
of option units over the number of common units, if any, actually purchased by the underwriters in connection with the exercise of their option. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Services Agreement for PL Midstream  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain of the employees and executive officers of our general partner who perform services for us also perform management and
administrative services for PL Midstream,
an entity that is controlled by Lindsay Goldberg. These employees and executive officers include our chief financial officer and certain members of our accounting team. Our general partner has entered
into a services agreement with PL Midstream, pursuant to which our general partner is entitled to be reimbursed by PL Midstream for all direct and indirect expenses that it incurs in connection with
performing services for PL Midstream. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>117</FONT></P>

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<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_ec42901_1_118"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Former Services Agreement  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, a formerly affiliated company performed services for us pursuant to a services agreement that we entered into in 2008
(the "former services agreement"). Pursuant to the former services agreement, we reimbursed this company for expenses incurred on our behalf, which expenses included executive management and employee
salaries and benefits, travel and entertainment expenses, rent and other general and administrative expenses. Such expenses were allocated to us based upon certain assumptions and estimates that were
made in order to allocate a reasonable share of such expenses from the formerly affiliated company to us so that our financial statements reflected substantially all costs of doing business. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
former services agreement will be terminated upon the closing of this offering, and we will rely on the directors, executive officers and employees of our general partner to manage
our business and conduct our operations. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Registration Rights Agreement  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with this offering, we will enter into a registration rights agreement with our sponsors, David Lumpkins and Nathan
Ticatch, pursuant to which we may be required to register the sale of the common units they hold. Under the registration rights agreement, our sponsors will have the right to request that we register
the sale of common units held by them and our sponsors, David Lumpkins and Nathan Ticatch will have the right to require us to make available shelf registration statements permitting sales of common
units into the market from time to time over an extended period. In addition, our sponsors and Messrs.&nbsp;Lumpkins and Ticatch will have the ability to exercise certain piggyback registration
rights with respect to their securities if we elect to register any of our equity interests. The registration rights agreement also includes provisions dealing with holdback agreements,
indemnification and contribution and allocation of expenses. All of our common units held
by our sponsors and any permitted transferee will be entitled to these registration rights, except that the demand registration rights may only be transferred in whole and not in part. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>118</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ee42901_conflicts_of_interest_and_fiduciary_duties"> </A>
<A NAME="toc_ee42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  CONFLICTS OF INTEREST AND FIDUCIARY DUTIES    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> <A NAME="Con_of_Int"></A>Conflicts of Interest  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Conflicts of interest exist and may arise in the future as a result of the relationships between our general partner and its affiliates
(including our sponsors), on the one hand, and us and our public unitholders, on the other hand. Conflicts may arise as a result of the duties of our general partner to act for the benefit of its
owners, which may conflict with our interests and the interests of our public unitholders. The directors and officers of our general partner, who are responsible for managing our business, have
fiduciary duties to manage our general partner in a manner beneficial to its owners, our sponsors. At the same time, our general partner has a contractual duty under our partnership agreement to
manage us in a manner that is in our best interests. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whenever
a conflict arises between our general partner, on the one hand, and us or any other public unitholder, on the other, our general partner will resolve that conflict. Our
partnership agreement contains provisions that replace default fiduciary duties under applicable law with contractual corporate governance standards as set forth therein. Our partnership agreement
also restricts the remedies available to unitholders for actions taken that, without such replacement, might constitute breaches of fiduciary duty. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
general partner will not be in breach of its obligations under our partnership agreement or its duties to us or our unitholders if the resolution of a conflict
is: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>approved by the conflicts committee of the board of directors of our general partner, although our general partner is not
obligated to seek such approval;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>approved by the vote of a majority of the outstanding common units, excluding any units owned by the general partner or
any of its affiliates, although our general partner is not obligated to seek such approval;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>fair and reasonable to us, taking into account the totality of the relationships between the parties involved, including
other transactions that may be particularly favorable or advantageous to us. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
general partner may, but is not required to, seek the approval of such resolution from the conflicts committee of its board of directors or from the common unitholders. If our
general partner does not seek approval from the conflicts committee and its board of directors determines that the resolution or course of action taken with respect to the conflict of interest
satisfies either of the standards set forth in the third and fourth bullet points above, then it will be presumed that, in making its decision, the board of directors acted in good faith, and in any
proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption. Unless the
resolution of a conflict is specifically provided for in our partnership agreement, our general partner or the conflicts committee may consider any factors it determines in good faith to consider when
resolving a conflict. When our partnership agreement requires someone to act in good faith, it requires that person to reasonably believe that he is acting in the best interests of the partnership,
unless the context otherwise requires. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Conflicts
of interest could arise in the situations described below, among others. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our general partner's affiliates may compete with us.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our partnership agreement provides that our general partner will be restricted from engaging in any business activities other than
acting as our general partner, guaranteeing debt of its affiliates and those activities incidental to its ownership of interests in us. However, except as provided in our partnership </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>119</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>agreement,
affiliates of our general partner (which includes our sponsors) are not prohibited from engaging in other businesses or activities, including those that might be in direct competition with
us. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> The owners of our general partner are not required to share business opportunities with us.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our partnership agreement provides that the owners of our general partner are permitted to engage in separate businesses which directly
compete with us and are not required to share or communicate or offer any potential business opportunities to us even if the opportunity is one that we might reasonably have pursued. The partnership
agreement provides that the owners of our general partner will not be liable to us or any unitholder for breach of any duty or obligation by reason of the fact that such person pursued or acquired for
itself any business opportunity. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our general partner is allowed to take into account the interests of parties other than us (such as our sponsors) in exercising certain rights under our partnership
agreement.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our partnership agreement contains provisions that reduce the default standards to which our general partner would otherwise be held by
state fiduciary duty law. For example, our partnership agreement permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general
partner. This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors
affecting, us, our affiliates or any limited partner. Examples include the exercise of its call right, its voting rights with respect to the units it owns, its registration rights and the
determination of whether to consent to any merger or consolidation of the partnership or amendment of the partnership agreement. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our general partner has limited its liability in the partnership agreement and replaced default fiduciary duties with contractual corporate governance standards set forth
therein, thereby restricting the remedies available to our unitholders for actions that, without such replacement, might constitute breaches of fiduciary duty.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the provisions described above, our partnership agreement contains provisions that restrict the remedies available to
our unitholders for actions that might otherwise constitute breaches of fiduciary duty. For example, our partnership agreement: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>permits our general partner to make a number of decisions in its individual capacity, as opposed to its capacity as
general partner, thereby entitling our general partner to consider only the interests and factors that it desires, and imposes no duty or obligation on our general partner to give any consideration to
any interest of, or factors affecting, us, our affiliates or any limited partner;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>provides that our general partner shall not have any liability to us or our unitholders for decisions made in its capacity
as general partner so long as it acted in good faith, meaning it believed that the decision was in the best interests of our partnership;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts
committee of the board of directors of our general partner and not involving a vote of unitholders must be on terms no less favorable to us than those generally being provided to or available from
unrelated third parties or be "fair and reasonable" to us, as determined by our general partner in good faith, and that, in determining whether a transaction or resolution is "fair and reasonable,"
our general partner may consider the totality of the relationships between the parties involved, including other transactions that may be particularly advantageous or beneficial to us; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>provides that our general partner and its officers and directors will not be liable for monetary damages to us or our
limited partners for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that the general </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>120</FONT></P>

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<UL>
<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>partner
or its officers or directors acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and </FONT></P>

</UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>provides that in resolving conflicts of interest, it will be presumed that in making its decision, the general partner or
its conflicts committee acted in good faith, and in any proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the
burden of overcoming such presumption. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By
purchasing a common unit, a common unitholder will agree to become bound by the provisions in our partnership agreement, including the provisions discussed above. See
"&#151;Fiduciary Duties." </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Actions taken by our general partner may affect the amount of cash distributions to unitholders.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of cash that is available for distribution to unitholders is affected by decisions of the board of directors of our general
partner regarding such matters as: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the expenses associated with being a public company and other general and administrative expenses; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>interest expense and other financing costs related to current and future indebtedness;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>amount and timing of asset purchases and sales;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>cash expenditures;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>borrowings; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>issuance of additional units. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
partnership agreement permits us to borrow funds to make a distribution on all outstanding units, and further provides that we and our subsidiaries may borrow funds from our general
partner and its affiliates. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our general partner and its affiliates are not required to own any of our common units. If our general partner's affiliates were to sell all or substantially all of their
common units, this would heighten the risk that our general partner would act in ways that are more beneficial to itself than our common unitholders.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the closing of this offering, affiliates of our general partner will own the majority of our outstanding units, but there is no
requirement that they continue to do so. The general partner and its affiliates are permitted to sell all of their common units, subject to certain limitations contained in our partnership agreement.
In addition, the current owners of our general partner may sell the general partner interest to an unrelated third party. If neither the general partner nor its affiliates owned any of our common
units, this would heighten the risk that our general partner would act in ways that are more beneficial to itself than our common unitholders. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We will reimburse our general partner for expenses.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will reimburse our general partner for costs incurred in managing and operating us, including salary, bonus, incentive compensation
and other amounts paid to its employees and executive officers who perform services for us. Our partnership agreement provides that the board of directors of our general partner will determine in good
faith the expenses that are allocable to us. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Common units are subject to our general partner's call right.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will have the right,
which it may assign to any of its affiliates or to us, but not the </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>121</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>obligation,
to acquire all, but not less than all, of the common units held by public unitholders at a price not less than their then-current market price, as calculated pursuant to the
terms of our partnership agreement. As a result, you may be required to sell your common units at an undesirable time or price and may not receive any return on your investment. You may also incur a
tax liability upon a sale of your common units. Our general partner is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon exercise of the
call right. There is no restriction in our partnership agreement that prevents our manager from issuing additional common units and exercising its call right. Our general partner may use its own
discretion, free of fiduciary duty restrictions, in determining whether to exercise this right. See "The Partnership Agreement&#151;Call Right." </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Contracts between us, on the one hand, and our general partner and its affiliates, on the other, will not be the result of arm's-length negotiations.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our partnership agreement allows our general partner to determine, in good faith, any amounts to pay itself or its affiliates for any
services rendered to us. Our general partner may also enter into additional contractual arrangements with any of its affiliates on our behalf. Neither our partnership agreement nor any of the other
agreements, contracts and arrangements between us and our general partner and its affiliates is or will be the result of arm's-length negotiations. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
partnership agreement generally provides that if any affiliated transaction, such as an agreement, contract or arrangement between us and our general partner and its affiliates,
is: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>approved by a majority of the members of our conflicts committee;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>approved by a majority of outstanding common units (excluding those owned by our general partner and its affiliates); </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>"fair and reasonable" to us, taking into account the totality of the relationships between the parties involved (including
other transactions that may be particularly favorable or advantageous to us) it will be deemed approved by all of our partners, and deemed to not constitute a breach of our partnership agreement or
any duty thereunder or existing at law. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
prosecution of any disputes or disagreements that could arise in the future under a contract or other agreement between us and our general partner would give rise to an automatic
conflict of interest, as a common group of executive officers is likely to be on both sides of the transaction. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
general partner will determine, in good faith, the terms of any of these related party transactions entered into after the completion of this offering. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
general partner and its affiliates will have no obligation to permit us to use any of its facilities or assets, except as may be provided in contracts entered into specifically
dealing with that use. There is no obligation of our general partner and its affiliates to enter into any contracts of this kind. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Our general partner intends to limit its liability regarding our obligations.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our general partner intends to limit its liability under contractual arrangements (including our new credit facilities) so that the
other party has recourse only to our assets and not against our general partner or its assets. Our partnership agreement provides that any action taken by our general partner to limit its liability or
our liability is not a breach of our general partner's fiduciary duties, even if we could have obtained terms that are more favorable without the limitation on liability. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>122</FONT></P>

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<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Common unitholders will have no right to enforce obligations of our general partner and its affiliates under agreements with us.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any agreements between us, on the one hand, and our general partner and its affiliates, on the other, will not grant to the
unitholders, separate and apart from us, the right to enforce the obligations of our general partner and its affiliates in our favor. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> We may choose not to retain separate counsel for ourselves or for the holders of common units.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The attorneys, independent accountants and others who perform services for us in this offering have been retained by our general
partner or its affiliates. Attorneys, independent accountants and others who perform services for us in the future will be selected by our general partner and may perform services for our general
partner and its affiliates. We may retain separate counsel for ourselves or the holders of common units in the event of a conflict of interest between our general partner and its affiliates, on the
one hand, and us or the holders of common units, on the other, depending on the nature of the conflict. However, we do not intend to do so in most cases. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Except in limited circumstances, our general partner has the power and authority to conduct our business without limited partner approval.  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our partnership agreement, our general partner has full power and authority to do all things, other than those items that require
unitholder approval or on such terms as it determines to be necessary or appropriate to conduct our business including, but not limited to, the following: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into securities of the partnership, and the incurring of any other
obligations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other
agencies having jurisdiction over our business or assets;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of our assets or the
merger or other combination of us with or into another person;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the negotiation, execution and performance of any contracts, conveyances or other instruments;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the distribution of partnership cash;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the selection and dismissal of employees and agents, outside attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of employment or hiring;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the maintenance of insurance for our benefit and the benefit of our partners;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any
further limited or general partnerships, joint ventures, corporations, limited liability companies or other entities;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the control of any matters affecting our rights and obligations, including the bringing and defending of actions at law or
in equity and otherwise engaging in the conduct of litigation, arbitration or mediation and the incurring of legal expense and the settlement of claims and litigation;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the indemnification of any person against liabilities and contingencies to the extent permitted by law; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the purchase, sale or other acquisition or disposition of our securities, or the issuance of additional options, rights,
warrants and appreciation rights relating to our securities; and </FONT></DD></DL>
</UL>
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<UL>
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<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the entering into of agreements with any of its affiliates to render services to us or to itself in the discharge of its
duties as our general partner. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See
"The Partnership Agreement" for information regarding the voting rights of common unitholders. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ee42901_fiduciary_duties"> </A>
<A NAME="toc_ee42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Fiduciary Duties    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Delaware Act provides that Delaware limited partnerships may, in their partnership agreements, restrict, expand or eliminate the
fiduciary duties owed by general partners to other partners and the partnership. Our partnership agreement has eliminated these default fiduciary standards; instead, our general partner is accountable
to us and our unitholders pursuant to the detailed contractual standards set forth in our partnership agreement. The duties owed to unitholders by our general partner are thus prescribed by our
partnership agreement and not by default fiduciary duties. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have adopted these standards to allow our general partner or its affiliates to engage in transactions with us that would otherwise be prohibited by state law fiduciary standards and
to take into account the interests of other parties in addition to our interests when resolving conflicts of interest. Without such deviation from the default standards, such transactions could result
in violations of our general partner's state law fiduciary duties. We believe this is appropriate and necessary because the board of directors of our general partner has duties to manage our general
partner in a manner beneficial to its owners, and duties to manage us in a manner that is in our best interests. Without these modifications, our general partner's ability to make decisions involving
conflicts of interest would be restricted. These modifications also enable our general partner to take into consideration all parties involved in the proposed action, so long as the resolution is in
our best interests. Further, these modifications enable our general partner to attract and retain experienced and capable directors. However, these modifications disadvantage the common unitholders
because they restrict the rights and remedies that would otherwise be available to unitholders for actions that, without such modifications, might constitute breaches of fiduciary duty, as described
below, and permit our general partner to take into account the interests of third parties in addition to our interests when resolving conflicts of interest. The following is a summary
of: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the default fiduciary duties under by the Delaware Act;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the standards contained in our partnership agreement that replace the default fiduciary duties; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>certain rights and remedies of limited partners contained in the Delaware Act. </FONT></DD></DL>
</UL>
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<TD style="font-family:times;"><FONT SIZE=2>State law fiduciary duty standards</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Fiduciary duties are generally considered to include an obligation to act in good faith and with due care and loyalty. The duty of care, in the absence of a provision in a partnership agreement providing
otherwise, would generally require a general partner to act for the partnership in the same manner as a prudent person would act on his own behalf. The duty of loyalty, in the absence of a provision in a partnership agreement providing otherwise,
would generally require that any action taken or transaction engaged in be entirely fair to the Partnership.</FONT></TD>
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<TD style="font-family:times;"><FONT SIZE=2>Partnership agreement modified standards</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Our partnership agreement contains provisions that waive or consent to conduct by our general partner and its affiliates that might otherwise raise issues as to compliance with fiduciary duties or
applicable law. For example, our partnership agreement provides that when our general partner is acting in its capacity as our general partner, as opposed to in its individual capacity, it must act in "good faith" and will not be subject to any other
standard under applicable law. In addition, when our general partner is acting in its individual capacity, as opposed to in its capacity as our general partner, it may act without any fiduciary obligation to us or the unitholders whatsoever. These
contractual standards reduce the obligations to which our general partner would otherwise be held.</FONT></TD>
</TR>
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<TD style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><BR><FONT SIZE=2>Our partnership agreement generally provides that affiliated transactions and resolutions of conflicts of interest not involving a vote of unitholders and that are not approved by the conflicts
committee of the board of directors of our general partner must be:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:11pt;margin-left:20pt;text-indent:-20pt;"><FONT SIZE=2>  </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>on terms no less favorable to us than
those generally being provided to or available from unrelated third parties; or</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:0pt;text-indent:-0pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:11pt;margin-left:20pt;text-indent:-20pt;"><FONT SIZE=2>  </FONT><FONT SIZE=2>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2>"fair and reasonable" to us, taking into
account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to us).</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><BR><FONT SIZE=2>All conflicts of interest disclosed in this prospectus (including our agreements and other arrangements with affiliates of our general partner) have been approved by all of our partners under the terms
of our partnership agreement.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><BR><FONT SIZE=2>If our general partner does not seek approval from the conflicts committee of its board of directors or the common unitholders, and its board of directors determines that the resolution or course of
action taken with respect to the conflict of interest satisfies either of the standards set forth in the bullet points above, then it will be presumed that, in making its decision, the board of directors, which may include board members affected by
the conflict of interest, acted in good faith, and in any proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption. These
standards reduce the obligations to which our general partner would otherwise be held.</FONT></TD>
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<TD style="font-family:times;"><FONT SIZE=2>Rights and remedies of limited partners</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>The Delaware Act generally provides that a limited partner may institute legal action on behalf of the partnership to recover damages from a third party where a general partner has refused to institute the
action or where an effort to cause a general partner to do so is not likely to succeed. These actions include actions against a general partner for breach of its fiduciary duties or of our partnership agreement. In addition, the statutory or case law
of some jurisdictions may permit a limited partner to institute legal action on behalf of it and all other similarly situated limited partners to recover damages from a general partner for violations of its fiduciary duties to the limited
partners.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><BR><FONT SIZE=2>Partnership agreement modified standards</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><BR><FONT SIZE=2>In addition to the other more specific provisions limiting the obligations of our general partner, our partnership agreement further provides that our general partner and its officers and directors
will not be liable for monetary damages to us or our limited partners for errors of judgment or for any acts or omissions unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that the general
partner or its officers and directors acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that such person's conduct was criminal.</FONT></TD>
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 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
order to become one of our limited partners, a common unitholder is required to agree to be bound by the provisions in our partnership agreement, including the
provisions discussed above. See "Description of Our Common Units&#151;Transfer of Common Units." This is in accordance with the policy of the Delaware Act favoring the principle of freedom of
contract and the enforceability of partnership agreements. The failure of a limited partner or assignee to sign a partnership agreement does not render our partnership agreement unenforceable against
that person. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
our partnership agreement, we must indemnify our general partner and its officers, directors and managers, to the fullest extent permitted by law, against liabilities, costs and
expenses incurred by our general partner or these other persons. We must provide this indemnification unless there has been a final and non-appealable judgment by a court of competent
jurisdiction determining that these persons acted in bad faith or engaged in fraud or willful misconduct. We also must provide this indemnification for criminal proceedings unless our general partner
or these other persons acted with knowledge that their conduct was unlawful. Thus, our general partner could be indemnified for its negligent or grossly negligent acts if it meets the requirements set
forth above. To the extent that these provisions purport to include indemnification for liabilities arising under the Securities Act, in the opinion of the SEC such indemnification is contrary to
public policy and therefore unenforceable. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ee42901_related_party_transactions"> </A>
<A NAME="toc_ee42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Related Party Transactions    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have adopted policies for the review, approval and ratification of transactions with related persons. At the discretion of our
general partner's board of directors, a proposed related party transaction may generally be approved by the board in its entirety, or by a "conflicts committee" meeting the definitional requirements
for such a committee under the partnership agreement. </FONT></P>

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<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="eg42901_description_of_our_common_units"> </A>
<A NAME="toc_eg42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  DESCRIPTION OF OUR COMMON UNITS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eg42901_our_common_units"> </A>
<A NAME="toc_eg42901_2"> </A></FONT> <FONT SIZE=2><B>  Our Common Units    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The common units offered hereby represent limited partner interests in us. The holders of common units are entitled to participate in
partnership distributions and exercise the rights and privileges provided to limited partners under our partnership agreement. For a description of the rights and privileges of holders of our common
units to partnership distributions, see "How We Make Cash Distributions" and "Our Cash Distribution Policy and Restrictions on Distributions." For a description of the rights and privileges of limited
partners under our partnership agreement, including voting rights, see "The Partnership Agreement." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eg42901_transfer_agent_and_registrar"> </A>
<A NAME="toc_eg42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Transfer Agent and Registrar    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Duties.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;American Stock Transfer&nbsp;&amp; Trust Company will serve as registrar and transfer agent for the common units. We pay all
fees charged by
the transfer agent for transfers of common units, except the following, which must be paid by unitholders: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>surety bond premiums to replace lost or stolen certificates, taxes and other governmental charges; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>special charges for services requested by a holder of a common unit; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>other similar fees or charges. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
is no charge to unitholders for disbursements of our quarterly cash distributions. We will indemnify the transfer agent, its agents and each of their stockholders, directors,
officers and employees against all claims and losses that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence or
intentional misconduct of the indemnified person or entity. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Resignation or Removal.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The transfer agent may resign, by notice to us, or be removed by us. The resignation or removal of the transfer
agent will
become effective upon our appointment of a successor transfer agent and registrar and its acceptance of the appointment. If a successor has not been appointed or has not accepted its appointment
within 30&nbsp;days after notice of the resignation or removal, our general partner may act as the transfer agent and registrar until a successor is appointed. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eg42901_transfer_of_common_units"> </A>
<A NAME="toc_eg42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Transfer of Common Units    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By transfer of common units in accordance with our partnership agreement, each transferee of common units shall be admitted as a
limited partner with respect to the common units transferred when such transfer and admission is reflected in our books and records. Each transferee: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>represents that the transferee has the capacity, power and authority to become bound by our partnership agreement; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>automatically agrees to be bound by the terms and conditions of, and is deemed to have executed, our partnership
agreement; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>gives the consents and approvals contained in our partnership agreement, such as the approval of all transactions and
agreements entered into in connection with our formation and this offering. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
transferee will become a substituted limited partner of our partnership for the transferred common units automatically upon the recording of the transfer on our books and records. Our
general partner will cause any transfers to be recorded on our books and records from time to time as necessary to accurately reflect the transfers. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>127</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
may, at our discretion, treat the nominee holder of a common unit as the absolute owner. In that case, the beneficial holder's rights are limited solely to those that it has against
the nominee holder as a result of any agreement between the beneficial owner and the nominee holder. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common
units are securities and are transferable according to the laws governing transfer of securities. In addition to other rights acquired upon transfer, the transferor gives the
transferee the right to become a limited partner in our partnership for the transferred common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until
a common unit has been transferred on our books, we and the transfer agent may treat the record holder of the common unit as the absolute owner for all purposes, except as
otherwise required by law or stock exchange regulations. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eg42901_listing"> </A>
<A NAME="toc_eg42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Listing    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to apply to list our common units on the New York Stock Exchange under the symbol "PDH." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>128</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ei42901_the_partnership_agreement"> </A>
<A NAME="toc_ei42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  THE PARTNERSHIP AGREEMENT    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of the material provisions of our partnership agreement. The form of our partnership agreement is included
in this prospectus as Appendix&nbsp;A. We will provide prospective investors with a copy of our partnership agreement upon request at no charge. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
summarize the following provisions of our partnership agreement elsewhere in this prospectus: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>with regard to distributions of cash, see "How We Make Cash Distributions";  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>with regard to the fiduciary duties of our general partner, see "Conflicts of Interest and Fiduciary Duties"; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>with regard to the authority of our general partner to manage our business and activities, see "Management&#151;Our
Management";  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>with regard to the transfer of common units, see "Description of Our Common Units&#151;Transfer of Common Units";
and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>with regard to allocations of taxable income and taxable loss, see "Material U.S. Federal Income Tax Consequences." </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_organization_and_duration"> </A>
<A NAME="toc_ei42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Organization and Duration    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were organized in June 2011 and will have a perpetual existence unless terminated pursuant to the terms of our partnership
agreement. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_purpose"> </A>
<A NAME="toc_ei42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Purpose    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our purpose under our partnership agreement is limited to engaging in any business activity that is approved by our general partner and
that lawfully may be conducted by a limited partnership organized under Delaware law. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
our general partner has the ability to cause us and our subsidiary to engage in activities other than those related to the propylene production business and activities now or
hereafter customarily conducted in conjunction with this business, our general partner may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including
any duty to act in good faith or in the best interests of us or our limited partners. In general, our general partner is authorized to perform all acts it determines to be necessary or appropriate to
carry out our purposes and to conduct our business. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_capital_contributions"> </A>
<A NAME="toc_ei42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Capital Contributions    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common unitholders are not obligated to make additional capital contributions, except as described below under "&#151;Limited
Liability." For a discussion of our general partner's right to contribute capital to maintain its and its affiliates' percentage interest if we issue additional partnership interests, see
"&#151;Issuance of Additional Partnership Interests." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_voting_rights"> </A>
<A NAME="toc_ei42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Voting Rights    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of the unitholder vote required for the matters specified below. Matters requiring the approval of a "unit
majority" require the approval of a majority of the common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
the closing of this offering, our sponsors will have the ability to ensure passage of, as well as the ability to ensure the defeat of, any amendment which requires a unit majority by
virtue of their&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% indirect, combined ownership of our common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
voting their common units, our sponsors and their affiliates will have no fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good
faith or in the best interests of us </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>129</FONT></P>

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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>or
the limited partners. The holders of a majority of the common units (including common units owned by our sponsors) represented in person or by proxy shall constitute a quorum at a meeting of such
common unitholders, unless any such action requires approval by holders of a greater percentage of such units in which case the quorum shall be such greater percentage. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following is a summary of the vote requirements specified for certain matters under our partnership agreement: </FONT></P>
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<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Issuance of additional partnership interests</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>No approval right. See "&#151;Issuance of Additional Partnership Interests."</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amendment of our partnership agreement</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Certain amendments may be made by our general partner without the approval of the common unitholders. Other
amendments generally require the approval of a unit majority. See "&#151;Amendment of Our Partnership Agreement."</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Merger of our partnership or the sale of all or substantially all of our assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unit majority in certain circumstances. See "&#151;Merger, Sale or Other Disposition of Assets."</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dissolution of our partnership</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unit majority. See "&#151;Termination and Dissolution."</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Continuation of our partnership upon dissolution</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unit majority. See "&#151;Termination and Dissolution."</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Withdrawal of our general partner</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Under most circumstances, the approval of a majority of the common units, excluding common units held by our
general partner and its affiliates, is required for the withdrawal of our general partner prior to September&nbsp;30, 2021. See "&#151;Withdrawal or Removal of Our General Partner."</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Removal of our general partner</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Not less than 66<SUP>2</SUP>/<SMALL>3</SMALL>% of the outstanding common units, including common units held by
our general partner and its affiliates. See "&#151;Withdrawal or Removal of Our General Partner."</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transfer of the general partner interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our general partner may transfer all, but not less than all, of its general partner interest in us without a vote
of our unitholders to an affiliate or another person in connection with its merger or consolidation with or into, or sale of all or substantially all of its assets to, such person. The approval of a majority of the common units, excluding common
units held by our general partner and its affiliates, is required in other circumstances for a transfer of the general partner interest to a third party prior to September&nbsp;30, 2021. See "&#151;Transfer of General Partner Interests."</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transfer of ownership interests in our general partner</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>No approval required at any time. See "&#151;Transfer of Ownership Interests in Our General Partner."</FONT></TD>
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 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
any person or group other than our general partner and its affiliates acquires beneficial ownership of 20% or more of any class of units then outstanding, that person or group will
lose voting rights on all of such units. This loss of voting rights does not apply to any person or group that acquires the units from our general partner or its affiliates and any transferees of that
person or group approved by our general partner or to any person or group who acquires the units with the specific approval of our general partner. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_applicable_law;_forum,_venue_and_jurisdiction"> </A>
<A NAME="toc_ei42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  Applicable Law; Forum, Venue and Jurisdiction    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our partnership agreement is governed by Delaware law. Our partnership agreement requires that any claims, suits, actions or
proceedings: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>arising out of or relating in any way to the partnership agreement (including any claims, suits or actions to interpret,
apply or enforce the provisions of the partnership agreement or the duties, obligations or liabilities among limited partners or of limited partners to us, or the rights or powers of, or restrictions
on, the limited partners or us);  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>brought in a derivative manner on our behalf;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of us or our general
partner, or owed by our general partner, to us or the limited partners;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>asserting a claim arising pursuant to any provision of the Delaware Act; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>asserting a claim governed by the internal affairs doctrine shall be exclusively brought in the Court of Chancery of the
State of Delaware, regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds,
or are derivative or direct claims. By purchasing a common unit, a limited partner is irrevocably consenting to these limitations and provisions regarding claims, suits, actions or proceedings and
submitting to the exclusive jurisdiction of the Court of Chancery of the State of Delaware in connection with any such claims, suits, actions or proceedings. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_limited_liability"> </A>
<A NAME="toc_ei42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  Limited Liability    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assuming that a limited partner does not participate in the control of our business within the meaning of the Delaware Act and that it
otherwise acts in conformity with the provisions of our partnership agreement, its liability under the Delaware Act will be limited, subject to possible exceptions, to the amount of capital it is
obligated to contribute to us for its common units plus its share of any undistributed profits and assets. If it were determined, however, that the right, or exercise of the right, by the limited
partners as a group: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>to remove or replace our general partner;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>to approve some amendments to our partnership agreement; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>to take other action under our partnership agreement </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>constituted
"participation in the control" of our business for the purposes of the Delaware Act, then the limited partners could be held personally liable for our obligations under the laws of
Delaware to
the same extent as our general partner. This liability would extend to persons who transact business with us who reasonably believe that the limited partner is a general partner. Neither our
partnership agreement nor the Delaware Act specifically provides for legal recourse against our general partner if a limited partner were to lose limited liability through any fault of our general
partner. While this does not mean that a limited partner could not seek legal recourse, we know of no precedent for such a claim in Delaware case law. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>131</FONT></P>

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HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the Delaware Act, a limited partnership may not make a distribution to a partner if, after the distribution, all liabilities of the limited partnership, other than liabilities to
partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specific property of the partnership, would exceed the fair value of the assets of
the limited partnership. For the purpose of determining the fair value of the assets of a limited partnership, the Delaware Act provides that the fair value of property subject to liability for which
recourse of creditors is limited shall be included in the assets of the limited partnership only to the extent that the fair value of that property exceeds the nonrecourse liability. The Delaware Act
provides that a limited partner who receives a distribution and knew at the time of the distribution that the distribution was in violation of the Delaware Act shall be liable to the limited
partnership for the amount of the distribution for three years. Under the Delaware Act, a substituted limited partner of a limited partnership is liable for the obligations of his assignor to make
contributions to the partnership, except that such person is not obligated for liabilities unknown to him at the time he became a limited partner and that could not be ascertained from the partnership
agreement. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
subsidiary conducts business in Texas. We and our current subsidiary or any future subsidiaries may conduct business in other states in the future. Maintenance of our limited
liability as a member of our operating company may require compliance with legal requirements in the jurisdictions in which our operating company conducts business, including qualifying our
subsidiaries to do business there. We have attempted to limit our liability for the obligations of our operating subsidiary by structuring it as a limited liability company. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
by virtue of our membership interest in our operating subsidiary or otherwise, it were determined that we were conducting business in any state without compliance with the applicable
limited partnership or liability company statute, or that the right, or exercise of the right by the limited partners as a group, to remove or replace our general partner, to approve some amendments
to our partnership agreement, or to take other action under our partnership agreement constituted "participation in the control" of our business for purposes of the statutes of any relevant
jurisdiction, then the limited partners could be held personally liable for our obligations under the law of that jurisdiction to the same extent as our general partner under the circumstances. We
will operate in a manner that our general partner considers reasonable and necessary or appropriate to preserve the limited liability of the limited partners. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_issuance_of_additional_partnership_interests"> </A>
<A NAME="toc_ei42901_8"> </A>
<BR></FONT><FONT SIZE=2><B>  Issuance of Additional Partnership Interests    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our partnership agreement authorizes us to issue an unlimited number of additional partnership interests for the consideration and on
the terms and conditions determined by our general partner without the approval of the unitholders. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It
is possible that we will fund acquisitions through the issuance of additional common units or other partnership interests. Holders of any additional common units we issue will be
entitled to share equally with the then-existing holders of common units in our quarterly cash distributions. In addition, the issuance of additional common units or other partnership
interests may dilute the value of the interests of the then-existing holders of common units in our net assets. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
accordance with Delaware law and the provisions of our partnership agreement, we may also issue additional partnership interests that, as determined by our general partner, have
special voting rights to which the common units are not entitled or are senior in right of distribution to the common units. In addition, our partnership agreement does not prohibit the issuance by
our subsidiary of equity interests, which may effectively rank senior to the common units. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
general partner will have the right, which it may from time to time assign in whole or in part to any of its affiliates, to purchase common units, whenever, and on the same terms
that, we issue those interests to persons other than our general partner and its affiliates, to the extent necessary to maintain its and its affiliates' percentage interest, including such interest
represented by common units, that existed </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>132</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>immediately
prior to each issuance. The holders of common units will not have preemptive rights under our partnership agreement to acquire additional common units or other partnership interests. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_amendment_of_our_partnership_agreement"> </A>
<A NAME="toc_ei42901_9"> </A>
<BR></FONT><FONT SIZE=2><B>  Amendment of Our Partnership Agreement    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> General  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendments to our partnership agreement may be proposed only by our general partner. However, our general partner will have no duty or
obligation to propose any amendment and may decline to do so free of any fiduciary duty or obligation whatsoever to us or any partner, including any duty to act in good faith or in the best interests
of us or the limited partners. In order to adopt a proposed amendment, other than the amendments discussed below under "&#151;No Unitholder Approval," our general partner is required to seek
written approval of the holders of the number of common units required to approve the amendment or call a meeting of the limited partners to consider and vote upon the proposed amendment. Except as
described below, an amendment must be approved by a unit majority. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Prohibited Amendments  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No amendment may be made that would: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>enlarge the obligations of any limited partner or general partner without its consent, unless approved by at least a
majority of the type or class of partner interests so affected;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts
distributable, reimbursable or otherwise payable by us to our general partner or any of its affiliates without the consent of our general partner, which consent may be given or withheld in its sole
discretion;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>change certain of the terms under which we can be dissolved; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>change the term of the Partnership. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
provision of our partnership agreement preventing the amendments having the effects described in any of the clauses above can be amended upon the approval of the holders of at least
90% of the outstanding common units, voting together as a single class (including common units owned by our sponsor and their affiliates). Upon completion of this offering, our sponsors and their
affiliates will own approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the outstanding common units (approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% if the underwriters exercise their option to purchase additional common
units in full). </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> No Unitholder Approval  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our general partner may generally make amendments to our partnership agreement without the approval of any other partner to
reflect: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a change in our name, the location of our principal place of business, our registered agent or our registered office; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the admission, substitution, withdrawal or removal of partners in accordance with our partnership agreement; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a change that our general partner determines to be necessary or appropriate for us to qualify or to continue our
qualification as a limited partnership or a partnership in which the limited partners have limited liability under the laws of any state or to ensure that neither we nor our subsidiary will be treated
as an association taxable as a corporation or otherwise taxed as an entity for U.S. federal income tax purposes (to the extent not already so treated or taxed); </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>133</FONT></P>

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<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>an amendment that is necessary, in the opinion of our counsel, to prevent us or our general partner or its directors,
officers, agents, or trustees from in any manner being subjected to the provisions of the Investment Company Act of 1940, the Investment Advisers Act of 1940, or "plan asset" regulations adopted under
the Employee Retirement Income Security Act of 1974, or ERISA, whether or not substantially similar to plan asset regulations currently applied or proposed;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>an amendment that our general partner determines to be necessary or appropriate for the creation, authorization or
issuance of additional partnership interests or rights to acquire partnership interests, as otherwise permitted by our partnership agreement;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>any amendment expressly permitted in our partnership agreement to be made by our general partner acting alone; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>an amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of our
partnership agreement;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>any amendment that our general partner determines to be necessary or appropriate for the formation by us of, or our
investment in, any corporation, partnership or other entity, as otherwise permitted by our partnership agreement;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a change in our fiscal year or taxable year and related changes;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>mergers with or conveyances to another limited liability entity that is newly formed and has no assets, liabilities or
operations at the time of the merger or conveyance other than those it receives by way of the merger or conveyance; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>any other amendments substantially similar to any of the matters described above. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, our general partner may make amendments to our partnership agreement without the approval of any partner if our general partner determines that those
amendments: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>do not adversely affect in any material respect the partners considered as a whole or any particular class of partners; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>are necessary or appropriate to satisfy any requirements, conditions, or guidelines contained in any opinion, directive,
order, ruling, or regulation of any federal or state agency or judicial authority or contained in any federal or state statute;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>are necessary or appropriate to facilitate the trading of limited partner interests or to comply with any rule,
regulation, guideline, or requirement of any securities exchange on which the limited partner interests are or will be listed for trading;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>are necessary or appropriate for any action taken by our general partner relating to splits or combinations of common
units under the provisions of our partnership agreement; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>are required to effect the intent expressed in this prospectus or the intent of the provisions of our partnership
agreement or are otherwise contemplated by our partnership agreement. </FONT></DD></DL>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Opinion of Counsel and Unitholder Approval  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For amendments of the type not requiring unitholder approval, our general partner will not be required to obtain an opinion of counsel
that an amendment will not result
in a loss of limited liability to the limited partners or result in our being treated as an entity for U.S. federal income tax purposes in connection with any of the amendments. No other amendments to
our partnership agreement will become effective without the approval of holders of at least 90% of the outstanding common units voting as a single class unless we first obtain an opinion of counsel to
the effect that the amendment will not affect the limited liability under Delaware law of any of our limited partners. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>134</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
amendment that would have a material adverse effect on the rights or preferences of any type or class of outstanding common units in relation to other classes of units will require
the approval of at least a majority of the type or class of common units so affected. Any amendment that would reduce the percentage of units required to take any action, other than to remove the
general partner or call a meeting of unitholders must be approved by the affirmative vote of partners whose aggregate outstanding units constitute not less than the percentage sought to be reduced. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_merger,_sale_or_other_disposition_of_assets"> </A>
<A NAME="toc_ei42901_10"> </A>
<BR></FONT><FONT SIZE=2><B>  Merger, Sale or Other Disposition of Assets    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A merger or consolidation or conversion of us requires the prior consent of our general partner. However, our general partner will have
no duty or obligation to consent to any merger or consolidation and may decline to do so free of any fiduciary duty or obligation whatsoever to us or other partners, including any duty to act in good
faith or in the best interest of us or the other partners. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, our partnership agreement generally prohibits our general partner, without the prior approval of the holders of a unit majority, from causing us to sell, exchange or
otherwise dispose of all or substantially all of our assets in a single transaction or a series of related transactions, including by way of merger, consolidation or other combination. Our general
partner may, however, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of our assets without that approval. Our general partner may also sell all or substantially
all of our assets under a foreclosure or other realization upon those encumbrances without that approval. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finally,
our general partner may consummate any merger without the prior approval of our unitholders if we are the surviving entity in the transaction, our general partner has received
an opinion of counsel regarding limited liability and tax matters, the transaction would not result in a material amendment to the partnership agreement (other than an amendment that the general
partner could adopt without the
consent of other partners), each of our common units will be an identical unit of our partnership following the transaction and the partnership securities to be issued do not exceed 20% of our
outstanding partnership interests immediately prior to the transaction. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the conditions specified in our partnership agreement are satisfied, our general partner may convert us or our subsidiary into a new limited liability entity or merge us or our
subsidiary into, or convey all of our assets to, a newly formed entity, if the sole purpose of that conversion, merger or conveyance is to effect a mere change in our legal form into another limited
liability entity, we have received an opinion of counsel regarding limited liability and tax matters and the governing instruments of the new entity provide the limited partners and our general
partner with the same rights and obligations as contained in our partnership agreement. Our unitholders are not entitled to dissenters' rights of appraisal under our partnership agreement or
applicable Delaware law in the event of a conversion, merger or consolidation, a sale of substantially all of our assets or any other similar transaction or event. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_termination_and_dissolution"> </A>
<A NAME="toc_ei42901_11"> </A>
<BR></FONT><FONT SIZE=2><B>  Termination and Dissolution    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will continue as a limited partnership until terminated under our partnership agreement. We will dissolve
upon: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the
election of our general partner to dissolve us, if approved by the holders of common units representing a unit majority;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>there
being no limited partners, unless we are continued without dissolution in accordance with applicable Delaware law;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the
entry of a decree of judicial dissolution of our partnership; or
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the
withdrawal or removal of our general partner or any other event that results in its ceasing to be our general partner other than by reason of a transfer
of its general partner interest in </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>135</FONT></P>

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<UL>
<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>accordance
with our partnership agreement or withdrawal or removal following approval and admission of a successor. </FONT></P>

</UL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
a dissolution under clause&nbsp;(4), the holders of a unit majority may also elect, within specific time limitations, to continue our business on the same terms and conditions
described in our partnership agreement by appointing as a successor general partner an entity approved by the holders of common units representing a unit majority, subject to our receipt of an opinion
of counsel to the effect that: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the action would not result in the loss of limited liability under Delaware law of any limited partner; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>neither our partnership nor our subsidiary would be treated as an association taxable as a corporation or otherwise be
taxable as an entity for U.S. federal income tax purposes upon the exercise of that right to continue (to the extent not already so treated or taxed). </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_liquidation_and_distribution_of_proceeds"> </A>
<A NAME="toc_ei42901_12"> </A>
<BR></FONT><FONT SIZE=2><B>  Liquidation and Distribution of Proceeds    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon our dissolution, unless our business is continued, the liquidator authorized to wind up our affairs will, acting with all of the
powers of our general partner that are necessary or appropriate, liquidate our assets and apply the proceeds of the liquidation as set forth in our partnership agreement. The liquidator may defer
liquidation or distribution of our assets for a reasonable period of time or distribute assets to partners in kind if it determines that a sale would be impractical or would cause undue loss to our
partners. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_withdrawal_or_removal_of_our_general_partner"> </A>
<A NAME="toc_ei42901_13"> </A>
<BR></FONT><FONT SIZE=2><B>  Withdrawal or Removal of Our General Partner    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as described below, our general partner has agreed not to withdraw voluntarily as our general partner prior to
September&nbsp;30, 2021 without obtaining the approval of the holders of at least a majority of the outstanding common units excluding common units held by our general partner and its affiliates,
and by giving 90&nbsp;days' written notice and furnishing an opinion of counsel regarding limited liability and tax matters. On or after September&nbsp;30, 2021, our general partner may withdraw
as general partner without first obtaining approval of any unitholder by giving 90&nbsp;days' written notice, and that withdrawal will not constitute a violation of our partnership agreement.
Notwithstanding the information above, our general partner may withdraw without unitholder approval upon 90&nbsp;days' notice to the unitholders if at least 50% of the outstanding common units are
held or controlled by one person and its affiliates other than our general partner and its affiliates. In addition, our partnership agreement permits our general partner in some instances to sell or
otherwise transfer all of its general partner interest without the approval of the unitholders. See "&#151;Transfer of General Partner Interest." </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
withdrawal of our general partner under any circumstances, other than as a result of a transfer by our general partner of all or a part of its general partner interest in us, the
holders of a majority of the outstanding classes of common units voting as a single class may select a successor to that withdrawing general partner. If a successor is not elected, or is elected but
an opinion of counsel regarding limited liability and tax matters cannot be obtained, we will be dissolved, wound up and liquidated, unless within a specified period of time after that withdrawal, the
holders of a unit majority agree in writing to continue our business and to appoint a successor general partner. See "&#151;Termination and Dissolution." </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
general partner may not be removed unless that removal is approved by the vote of the holders of not less than 66<SUP>2</SUP>/<SMALL>3</SMALL>% of the outstanding common units, voting together
as a single class, including common units held by our sponsors and their affiliates, and we receive an opinion of counsel regarding limited liability and tax matters. Any removal of our general
partner is also subject to the approval of a successor general partner by the vote of the holders of a majority of the outstanding common units. The ownership of more than 33<SUP>1</SUP>/<SMALL>3</SMALL>% of the
outstanding common units by our sponsors and their affiliates gives them the ability to prevent our general partner's removal. At the closing of this offering, our sponsors and their </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>136</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>affiliates
will own approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the outstanding common units (approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% if the underwriters exercise their option to purchase additional common units in
full). </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event of removal of our general partner under circumstances where cause exists or withdrawal of our general partner where that withdrawal violates our partnership agreement, a
successor general partner will have the option to purchase the general partner interest of the departing general partner for a cash payment equal to the fair market value of the general partner
interest. Under all other circumstances where our general partner withdraws or is removed, the departing general partner will have the option to require the successor general partner to purchase the
general partner interest of the departing general partner for its fair market value. In each case, this fair market value will be determined by agreement between the departing general partner and the
successor general partner. If no agreement is reached, an independent investment banking firm or other independent expert selected by the departing general partner and the successor general partner
will determine the fair market value. Or, if the departing general partner and the successor general partner cannot agree upon an expert, then an expert chosen by agreement of the experts selected by
each of them will determine the fair market value. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the option described above is not exercised by either the departing general partner or the successor general partner, the departing general partner's general partner interest will
automatically convert into common units equal to the fair market value of those interests as determined by an investment banking firm or other independent expert selected in the manner described in
the preceding paragraph. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, we will be required to reimburse the departing general partner for all amounts due to the general partner, including, without limitation, all employee-related liabilities,
including severance liabilities, incurred for the termination of any employees employed by the departing general partner or its affiliates for our benefit. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_transfer_of_general_partner_interest"> </A>
<A NAME="toc_ei42901_14"> </A>
<BR></FONT><FONT SIZE=2><B>  Transfer of General Partner Interest    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except for the transfer by our general partner of all, but not less than all, of its general partner interest in our partnership
to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>an affiliate of our general partner (other than an individual), or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>another entity as part of the merger or consolidation of our general partner with or into another entity or the transfer
by our general partner of all or substantially all of its assets to another entity,  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our general partner may not transfer all or any part of its general partner interest to another person prior to
September&nbsp;30, 2021 without the approval of both the holders of at least a majority of the outstanding common units, excluding common units held by our general partner or our sponsors and their
affiliates. On or after September&nbsp;30, 2021, the general partner interest will be freely transferable. As a condition of any transfer, the transferee must, among other things, assume the rights
and duties of our general partner, agree to be bound by the provisions of our partnership agreement and furnish an opinion of counsel regarding limited liability and tax matters. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
general partner and its affiliates may at any time transfer common units to one or more persons, without unitholder approval. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ei42901_transfer_of_ownership___ei402313"> </A>
<A NAME="toc_ei42901_15"> </A>
<BR></FONT><FONT SIZE=2><B>  Transfer of Ownership Interests in Our General Partner    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At any time, the owners of our general partner may sell or transfer all or part of their ownership interests in our general partner to
an affiliate or a third party without the approval of our unitholders. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>137</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ek42901_change_of_management_provisions"> </A>
<A NAME="toc_ek42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Change of Management Provisions    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our partnership agreement contains specific provisions that are intended to discourage a person or group from attempting to remove
PetroLogistics&nbsp;GP&nbsp;LLC as our general partner or otherwise change management. See "&#151;Withdrawal or Removal of Our General Partner" for a discussion of certain consequences of
the removal of our general partner. If any person or group other than our general partner and its affiliates acquires beneficial ownership of 20% or more of any class of common units, that person or
group loses voting rights on all of its common units. This loss of voting rights does not apply in certain circumstances. See "&#151;Voting Rights." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ek42901_call_right"> </A>
<A NAME="toc_ek42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Call Right    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If at any time our general partner and its affiliates own more than 80% of the then-issued and outstanding limited partner
interests of any class, our general partner will have the right, which it may assign in whole or in part to any of its affiliates or to us, to acquire all, but not less than all, of the limited
partner interests of the class held by public unitholders, as of a record date to be selected by our general partner, on at least 10 but not more than 60&nbsp;days' notice. Immediately following
this offering the only class of limited partner interest outstanding will be the common units, and our sponsors and their affiliates will own&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the total outstanding common units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
purchase price in the event of such an acquisition will be the greater of: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the
highest price paid by our general partner or any of its affiliates for any limited partner interests of the class purchased within the 90&nbsp;days
preceding the date on which our general partner first mails notice of its election to purchase those limited partner interests; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the
average of the daily closing prices of the limited partner interests over the 20 trading days preceding the date three days before notice of exercise of
the call right is first mailed. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a result of our general partner's right to purchase outstanding common units, a holder of common units may have its common units purchased at an undesirable time or at a price that
may be lower than market prices at various times prior to such purchase or lower than a unitholder may anticipate the market price to be in the future. The U.S. federal income tax consequences to a
unitholder of the exercise of this call right are the same as a sale by that unitholder of his common units in the market. See "Material U.S. Federal Income Tax Consequences&#151;Disposition of
Common Units." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ek42901_non-citizen_assignees;_redemption"> </A>
<A NAME="toc_ek42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Non-Citizen Assignees; Redemption    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If our general partner, with the advice of counsel, determines we are subject to U.S. federal, state or local laws or regulations that
create a substantial risk of cancellation or forfeiture of any property that we have an interest in because of the nationality, citizenship or other related status of any limited partner, then our
general partner may adopt such amendments to our partnership agreement as it determines necessary or advisable to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>obtain proof of the nationality, citizenship or other related status of our limited partner (and their owners, to the
extent relevant); and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>permit us to redeem the common units held by any person whose nationality, citizenship or other related status creates
substantial risk of cancellation or forfeiture of any property or who fails to comply with the procedures instituted by the board to obtain proof of the nationality, citizenship or other related
status. The redemption price in the case of such redemption will be the average of the daily closing prices per unit for the 20 consecutive trading days immediately prior to the date set for
redemption. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>138</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ek42901_meetings;_voting"> </A>
<A NAME="toc_ek42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Meetings; Voting    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as described below regarding a person or group owning 20% or more of any class of units then outstanding, unitholders who are
record holders of common units on the record date will be entitled to notice of, and to vote at, meetings of our unitholders and to act upon matters for which approvals may be solicited. Our general
partner does not anticipate that any meeting of unitholders will be called in the foreseeable future. Any action that is required or permitted to be taken by the unitholders may be taken either at a
meeting of the unitholders or without a meeting if consents in writing describing the action so taken are signed by holders of the number of
units necessary to authorize or take that action at a meeting. Meetings of the unitholders may be called by our general partner or by unitholders owning at least 20% of the outstanding units of the
class for which a meeting is proposed. Unitholders may vote either in person or by proxy at meetings. The holders of a majority of the outstanding units of the class or classes for which a meeting has
been called, represented in person or by proxy, will constitute a quorum unless any action by the unitholders requires approval by holders of a greater percentage of the units, in which case the
quorum will be the greater percentage. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
record holder of a unit has a vote according to his percentage interest in us, although additional limited partner interests having special voting rights could be issued. See
"&#151;Issuance of Additional Partnership Interests." However, if at any time any person or group, other than our general partner and its affiliates, a direct or subsequently approved
transferee of our general partner or their affiliates, or, upon the approval by the general partner, any other unitholder, acquires, in the aggregate, beneficial ownership of 20% or more of any class
of units then outstanding, that person or group will lose voting rights on all of its units and the units may not be voted on any matter and will not be considered to be outstanding when sending
notices of a meeting of unitholders, calculating required votes, determining the presence of a quorum, or for other similar purposes. Common units held in nominee or street name account will be voted
by the broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and his nominee provides otherwise. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
notice, demand, request, report, or proxy material required or permitted to be given or made to record holders of common units under our partnership agreement will be delivered to
the record holder by us or by the transfer agent. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ek42901_status_as_limited_partner_or_assignee"> </A>
<A NAME="toc_ek42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Status as Limited Partner or Assignee    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as described above under "&#151;Limited Liability," the common units will be fully paid, and unitholders will not be
required to make additional contributions. By transfer of common units in accordance with our partnership agreement, each transferee of common units will be admitted as a limited partner with respect
to the common units transferred when such transfer and admission is reflected in our books and records. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ek42901_indemnification"> </A>
<A NAME="toc_ek42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  Indemnification    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our partnership agreement we will indemnify the following persons in most circumstances, to the fullest extent permitted by law,
from and against all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising
from any and all threatened, pending or completed claims, demands, actions, suits or proceedings: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our
general partner;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>any
departing general partner;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>any
person who is or was a director, officer, fiduciary, trustee, manager or managing member of us or our subsidiary, our general partner or any departing
general partner; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>139</FONT></P>

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<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>any
person who is or was serving as a director, officer, fiduciary, trustee, manager or managing member of another person owing a fiduciary duty to us or
our subsidiary at the request of a general partner or any departing general partner;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>any
person who controls our general partner; or
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>any
person designated by our general partner. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
indemnification under these provisions will only be out of our assets. Unless they otherwise agree, our general partner will not be personally liable for, or have any obligation to
contribute or loan funds or assets to us to enable us to effectuate, indemnification. We may purchase insurance against liabilities asserted against and expenses incurred by persons for our
activities, regardless of whether we would have the power to indemnify the person against liabilities under our partnership agreement. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ek42901_reimbursement_of_expenses"> </A>
<A NAME="toc_ek42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  Reimbursement of Expenses    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our partnership agreement requires us to reimburse our general partner for (1)&nbsp;all direct and indirect expenses it incurs or
payments it makes on our behalf (including salary, bonus, incentive compensation and other amounts paid to any person, including affiliates of our general partner, to perform services for us or for
the general partner in the discharge of its duties to us) and (2)&nbsp;all other expenses reasonably allocable to us or otherwise incurred by our general partner in connection with operating our
business (including expenses allocated to our general partner by its affiliates). Our general partner is entitled to determine the expenses that are allocable to us. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ek42901_books_and_reports"> </A>
<A NAME="toc_ek42901_8"> </A>
<BR></FONT><FONT SIZE=2><B>  Books and Reports    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our general partner is required to keep appropriate books of our business at our principal offices. The books will be maintained for
both tax and financial reporting purposes on an accrual basis. For tax and fiscal reporting purposes, our fiscal year is the calendar year. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
will furnish or make available to record holders of our common units, within 105&nbsp;days after the close of each fiscal year, an annual report containing audited financial
statements and a report on those financial statements by our independent public accountants. Except for our fourth quarter, we will also furnish or make available a report containing our unaudited
financial statements within 50&nbsp;days after the close of each quarter. We will be deemed to have made any such report available if we file such report with the SEC on EDGAR or make the report
available on a publicly available website which we maintain. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
will furnish each record holder of a unit with tax information reasonably required for federal and state income tax reporting purposes within 90&nbsp;days after the close of each
calendar year. This information is expected to be furnished in summary form so that some complex calculations normally required of partners can be avoided. Our ability to furnish this summary
information to unitholders will depend on the cooperation of unitholders in supplying us with specific information. Every unitholder will receive information to assist him in determining his federal
and state tax liability and filing his federal and state income tax returns, regardless of whether he supplies us with information. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, our sponsors will have full and complete access to any records relating to our business, and our general partner will cause its officers and independent accountants to be
available to discuss our business and affairs with our sponsors' officers, agents and employees. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ek42901_right_to_inspect_our_books_and_records"> </A>
<A NAME="toc_ek42901_9"> </A>
<BR></FONT><FONT SIZE=2><B>  Right to Inspect Our Books and Records    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our partnership agreement provides that a limited partner can, for a purpose reasonably related to his/her interest as a limited
partner, upon reasonable demand and at his own expense, have furnished to him: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a
current list of the name and last known address of each record holder; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>140</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>information
as to the amount of cash, and a description and statement of the agreed value of any other capital contribution, contributed or to be
contributed by each partner and the date on which each became a partner;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>copies
of our partnership agreement, our certificate of limited partnership, related amendments and powers of attorney under which they have been executed;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>information
regarding the status of our business and financial condition (provided that obligation shall be satisfied to the extent the limited partner is
furnished our most recent annual report and any subsequent quarterly or periodic reports required to be filed (or which would be required to be filed) with the SEC pursuant to Section&nbsp;13 of the
Exchange Act); and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>any
other information regarding our affairs that our general partner determines is just and reasonable. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
general partner may, and intends to, keep confidential from the limited partners' trade secrets or other information the disclosure of which our general partner believes in good
faith is not in our best interests or that we are required by law or by agreements with third parties to keep confidential. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ek42901_registration_rights"> </A>
<A NAME="toc_ek42901_10"> </A>
<BR></FONT><FONT SIZE=2><B>  Registration Rights    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our partnership agreement, we have agreed to register for resale under the Securities Act and applicable state securities laws
any units sold by our general partner or any of its affiliates if an exemption from the registration requirements is not otherwise available. We will not be required to effect more than one
registration pursuant to this provision in any twelve-month period, and our general partner can defer filing a registration statement for up to six months if it determines that this would be in our
best interests due to a pending transaction, investigation or other event. We have also agreed that, if we at any time propose to file&nbsp;a registration statement for an offering of partnership
interests for cash, we will use all commercially reasonable efforts to include such number of partnership interests in such registration statement as any of our general partner or any of its
affiliates shall request. We are obligated to pay all expenses incidental to these registrations, other than underwriting discounts and commissions. The registration rights in our partnership
agreement are applicable with respect to our general partner and its affiliates after it ceases to be a general partner for up to two years following the effective date of such cessation. In addition,
in connection with this offering, we will enter into an amended and restated registration rights agreement with our sponsors and certain of our employees and affiliates, pursuant to which we may be
required to register the sale of the common units they hold. See "Common Units Eligible for Future Sale." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>141</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ek42901_common_units_eligible_for_future_sale"> </A>
<A NAME="toc_ek42901_11"> </A>
<BR></FONT><FONT SIZE=2><B>  COMMON UNITS ELIGIBLE FOR FUTURE SALE    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the completion of this offering, there will be&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units outstanding,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;of which will be owned by
our sponsors and certain of our employees and affiliates, assuming the underwriters do not exercise their option to purchase additional common units; if they exercise such option in full, our sponsors
and certain of our employees and affiliates will own&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units. The sale of these common units could have an adverse impact on the price of our common
units or on any trading market
that may develop. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
units sold in this offering (or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units if the underwriters exercise their option to purchase additional common units in full) will
generally be freely transferable without restriction or further registration under the Securities Act. However, any common units held by an "affiliate" of ours may not be resold publicly except in
compliance with the registration requirements of the Securities Act or under an exemption from the registration requirements of the Securities Act pursuant to Rule&nbsp;144 or otherwise.
Rule&nbsp;144 permits securities acquired by an affiliate of ours to be sold into the market in an amount that does not exceed, during any three-month period, the greater
of: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>1% of the total number of the class of securities outstanding; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the average weekly reported trading volume of the common units for the four calendar weeks prior to the sale. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales
under Rule&nbsp;144 by our affiliates are also subject to specific manner of sale provisions, holding period requirements, notice requirements and the availability of current
public information about us. A person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned common units for at least
six months, would be entitled to sell those common units under Rule&nbsp;144 without regard to the volume, manner of sale and notice requirements of Rule&nbsp;144 so long as we comply with the
current public information requirement for the next six months after the six-month holding period expires. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
partnership agreement provides that we may issue an unlimited number of limited partner interests of any type without a vote of the unitholders. Any issuance of additional common
units or other equity interests would result in a corresponding decrease in the proportionate ownership interest in us represented by, and could adversely affect the cash distributions to and market
price of, common units then outstanding. See "The Partnership Agreement&#151;Issuance of Additional Partnership Interests." </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
our partnership agreement, our general partner and its affiliates have the right to cause us to register under the Securities Act and applicable state securities laws the offer and
sale of any units that they hold. Subject to the terms and conditions of the partnership agreement, these registration rights allow our general partner and its affiliates or their assignees holding
any units to require registration of any of these units and to include any of these units in a registration by us of other units, including units offered by us or by any unitholder. Our general
partner will continue to have these registration rights for two years after it ceases to be a general partner. In connection with any registration of this kind, we will indemnify each unitholder
participating in the registration and its officers, directors and controlling persons from and against any liabilities under the Securities Act or any applicable state securities laws arising from the
registration statement or prospectus. We will bear all costs and expenses incidental to any registration, excluding any underwriting discounts and commissions. Our general partner and its affiliates
also may sell their units in private transactions at any time, subject to compliance with applicable laws. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with this offering, we will enter into a registration rights agreement with our sponsors and David Lumpkins and Nathan Ticatch. Under this agreement, our sponsors and David
Lumpkins and Nathan Ticatch will have the right to cause us to register under the Securities Act and applicable state securities laws the offer and sale of any units that they hold, subject to certain
limitations. See "Certain Relationships and Related Party Transactions&#151;Agreements with Certain Affiliates of our General Partner&#151;Registration Rights Agreement." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>142</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We,
our general partner, the directors and executive officers of our general partner, and our sponsors have agreed not to sell any common units until 180&nbsp;days after the date of
this prospectus, subject to certain exceptions. See "Underwriters" for a description of these lock-up provisions. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, we intend to file&nbsp;a registration statement on Form&nbsp;S-8 under the Securities Act to register&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units issuable under our
long-term incentive plan. This registration statement is expected to be filed following the effective date of the registration statement of which this prospectus is a part and will be
effective upon filing. Units issued under our long-term incentive plan will be eligible for resale in the public market without
restriction after the effective date of the Form&nbsp;S-8 registration statement, subject to Rule&nbsp;144 limitations applicable to affiliates. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>143</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="em42901_material_u.s._federal_income_tax_consequences"> </A>
<A NAME="toc_em42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This section summarizes the material U.S. federal income tax consequences that may be relevant to prospective unitholders. To the
extent this section discusses federal income taxes, that discussion is based upon current provisions of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed U.S.
Treasury regulations thereunder (the "Treasury Regulations"), and current administrative rulings and court decisions, all of which are subject to change. Changes in these authorities may cause the
federal income tax consequences to a prospective unitholder to vary substantially from those described below. Unless the context otherwise requires, references in this section to "we" or "us" are
references to the partnership and its subsidiaries. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Legal
conclusions contained in this section, unless otherwise noted, are the opinion of Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. and are based on the accuracy of representations made by us
to them for this purpose. However, this section does not address all federal income tax matters that affect us or our unitholders. Furthermore, this section focuses on unitholders who are individual
citizens or residents of the United States (for federal income tax purposes), whose functional currencies are the U.S. dollar and who hold units as capital assets (generally, property that is held for
investment). This section has limited applicability to corporations, partnerships, entities treated as partnerships for federal income tax purposes, estates, trusts, non-resident aliens or
other unitholders subject to specialized tax treatment, such as tax-exempt institutions, non-U.S. persons, individual retirement accounts ("IRAs"), employee benefit plans, real
estate investment trusts or mutual funds. Accordingly, because each unitholder may have unique circumstances beyond the scope of the discussion herein, we encourage each unitholder to consult such
unitholder's own tax advisor in analyzing the federal, state, local and non-U.S. tax consequences that are particular to that unitholder resulting from ownership or disposition of its
units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are relying on opinions and advice of Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. with respect to the matters described herein. An opinion of counsel represents only that counsel's best
legal judgment and does not bind the IRS or courts. Accordingly, the opinions and statements made herein may not be sustained by a court if contested by the IRS. Any such contest of the matters
described herein may materially and adversely impact the market for our units and the prices at which such units trade. In addition, our costs of any contest with the IRS will be borne indirectly by
our unitholders and our general partner because the costs will reduce our cash available for distribution. Furthermore, our tax treatment, or the tax treatment of an investment in us, may be
significantly modified by future legislative or administrative changes or court decisions, which might be retroactively applied. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the reasons described below, Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. has not rendered an opinion with respect to the following federal income tax issues: (1)&nbsp;the treatment of a
unitholder whose units are loaned to a short seller to cover a short sale of units (please see "&#151;Tax Consequences of Unit Ownership&#151;Treatment of Short Sales");
(2)&nbsp;whether our monthly convention for allocating taxable income and losses is permitted by existing Treasury Regulations (please see "&#151;Disposition of Units&#151;Allocations
Between Transferors and Transferees"); and (3)&nbsp;whether our method for taking into account Section&nbsp;743 adjustments is sustainable in certain cases (please see "&#151;Tax
Consequences of Unit Ownership&#151;Section&nbsp;754 Election" and "&#151;Uniformity of Units"). </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="em42901_taxation_of_the_partnership"> </A>
<A NAME="toc_em42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Taxation of the Partnership    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Partnership Status  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to be treated as a partnership for federal income tax purposes and, therefore, generally will not be liable for federal
income taxes. Instead, as described below, each of our unitholders will take into account its respective share of our items of income, gain, loss and deduction in computing its federal income tax
liability as if the unitholder had earned such income directly, even if no cash distributions are made to the unitholder. Distributions by us to a unitholder generally will not give rise to income or
gain </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>144</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>taxable
to such unitholder, unless the amount of cash distributed to a unitholder exceeds the unitholder's adjusted tax basis in its units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7704
of the Code generally provides that publicly traded partnerships will be treated as corporations for federal income tax purposes. However, if 90% or more of a
partnership's gross income for every taxable year it is publicly traded consists of "qualifying income," the partnership may continue to be treated as a partnership for federal income tax purposes
(the "Qualifying Income Exception"). Qualifying income includes (i)&nbsp;income and gains derived from the refining, transportation, storage, processing and marketing of crude oil, natural gas and
products thereof, (ii)&nbsp;interest (other than from a financial business), (iii)&nbsp;dividends, (iv)&nbsp;gains from the sale of real property and (v)&nbsp;gains from the sale or other
disposition of capital assets held for the production of qualifying income. We estimate that less than&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our current gross income is not qualifying income; however, this estimate
could change from time to time. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
upon factual representations made by us and our general partner regarding the composition of our income and the other representations set forth below, Vinson&nbsp;&amp;
Elkins&nbsp;L.L.P. is of the opinion that we will be treated as a partnership for federal income tax purposes. In rendering its opinion, Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. has relied on factual
representations made by us and our general partner. The representations made by us and our general partner upon which Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. has relied include, without
limitation: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Neither
we nor any of our partnership or limited liability company subsidiaries has elected to be treated as a corporation for federal income tax purposes;
and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>For
each taxable year since and including the year of our initial public offering, more than 90% of our gross income has been and will be income of a
character that Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. has opined is "qualifying income" within the meaning of Section&nbsp;7704(d) of the Code. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that these representations are true and will be true in the future. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
we fail to meet the Qualifying Income Exception, other than a failure that is determined by the IRS to be inadvertent and that is cured within a reasonable time after discovery (in
which case the IRS may also require us to make adjustments with respect to our unitholders or pay other amounts), we will be treated as transferring all of our assets, subject to liabilities, to a
newly formed corporation, on the first day of the year in which we fail to meet the Qualifying Income Exception, in return for stock in that corporation and then distributed that stock to our
unitholders in liquidation of their units. This deemed contribution and liquidation should not result in the recognition of taxable income by our unitholders or us so long as our liabilities do not
exceed the tax basis of our assets. Thereafter, we would be treated as an association taxable as a corporation for federal income tax purposes. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
for any reason we are taxable as a corporation in any taxable year, our items of income, gain, loss and deduction would be taken into account by us in determining the amount of our
liability for federal income tax, rather than being passed through to our unitholders. Accordingly, our taxation as a corporation would materially reduce our cash distributions to unitholders and thus
would likely substantially reduce the value of our units. In addition, any distribution made to a unitholder would be treated as (i)&nbsp;a taxable dividend income to the extent of our current or
accumulated earnings and profits, then (ii)&nbsp;a nontaxable return of capital to the extent of the unitholder's tax basis in our units, and thereafter (iii)&nbsp;taxable capital gain. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
remainder of this discussion assumes that we will be treated as a partnership for federal income tax purposes. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>145</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="em42901_tax_consequences_of_unit_ownership"> </A>
<A NAME="toc_em42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Tax Consequences of Unit Ownership    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Limited Partner Status  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unitholders who are admitted as limited partners of the partnership, as well as unitholders whose units are held in street name or by a
nominee and who have the right to direct the nominee in the exercise of all substantive rights attendant to the ownership of units, will be treated as partners of the partnership for federal income
tax purposes. For a discussion related to the risks of losing partner status as a result of short sales, please see "&#151;Tax Consequences of Unit Ownership&#151;Treatment of Short
Sales." Unitholders who are not treated as partners in us as described above are urged to consult their own tax advisors with respect to the tax consequences applicable to them under the
circumstances. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Flow-Through of Taxable Income  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the discussion below under "&#151;Entity-Level Collections of Unitholder Taxes" with respect to payments we may be
required to make on behalf of our unitholders, we will not pay any federal income tax. Rather, each unitholder will be required to report on its income tax return its share of our income, gains,
losses and deductions for our taxable year or years ending with or within its taxable year without regard to whether we make cash distributions to him. Consequently, we may allocate income to a
unitholder even if that unitholder has not received a cash distribution. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Ratio of Taxable Income to Distributions  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We estimate that a purchaser of common units in this offering who owns those common units from the date of closing of this offering
through the record date for distributions for the period ending December&nbsp;31, 2013, will be allocated, on a cumulative basis, an amount of federal taxable income for that period that will be
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% or less of the cash distributed with respect to that period. Thereafter, we anticipate that the ratio of taxable income to cash distributions to the unitholders will increase. These
estimates are based upon the assumption that earnings from operations will approximate the amount required to make the anticipated quarterly distribution on all units and other assumptions with
respect to capital expenditures, cash flow, net working capital and anticipated cash distributions. These estimates and assumptions are subject to, among other things, numerous business, economic,
regulatory, legislative, competitive and political uncertainties beyond our control. Further, the estimates are based on current tax law and tax reporting positions that we will adopt and with which
the IRS could disagree. Accordingly, we cannot assure you that these estimates will prove to be correct. The actual ratio of taxable income to cash distributions could be higher or lower than
expected, and any differences could be material and could materially affect the value of the common
units. For example, the ratio of taxable income to cash distributions to a purchaser of common units in this offering will be greater, and perhaps substantially greater, than our estimate with respect
to the period described above if: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the earnings from operations exceeds the amount required to make anticipated quarterly distributions on all units, yet we
only distribute the anticipated quarterly distributions on all units; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>we make a future offering of common units and use the proceeds of the offering in a manner that does not produce
substantial additional deductions during the period described above, such as to repay indebtedness outstanding at the time of this offering or to acquire property that is not eligible for depreciation
or amortization for federal income tax purposes or that is depreciable or amortizable at a rate significantly slower than the rate applicable to our assets at the time of this offering. </FONT></DD></DL>
</UL>
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HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Basis of Units  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A unitholder's tax basis in its units initially will be the amount it paid for those units plus its initial share of our liabilities.
That basis generally will be (i)&nbsp;increased by the unitholder's share of our income and any increases in such unitholder's share of our nonrecourse liabilities, and (ii)&nbsp;decreased, but
not below zero, by distributions to it, by its share of our losses, any decreases in its share of our nonrecourse liabilities and its share of our expenditures that are neither deductible nor required
to be capitalized. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Treatment of Distributions  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions made by us to a unitholder generally will not be taxable to the unitholder, unless such distributions exceed the
unitholder's tax basis in its units, in which case the
unitholder will recognize gain taxable in the manner described below under "&#151;Disposition of Units." </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
reduction in a unitholder's share of our "nonrecourse liabilities" (liabilities for which no partner bears the economic risk of loss) will be treated as a distribution by us of cash
to that unitholder. A decrease in a unitholder's percentage interest in us because of our issuance of additional units will decrease the unitholder's share of our nonrecourse liabilities. For purposes
of the foregoing, a unitholder's share of our nonrecourse liabilities generally will be based upon that unitholder's share of the unrealized appreciation (or depreciation) in our assets, to the extent
thereof, with any excess liabilities allocated based on the unitholder's share of our profits. Please see "Disposition of Units." </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
non-pro rata distribution of money or property (including a deemed distribution described above) may cause a unitholder to recognize ordinary income, if the distribution
reduces the unitholder's share of our "unrealized receivables," including depreciation recapture and substantially appreciated "inventory items," both as defined in Section&nbsp;751 of the Code
("Section&nbsp;751 Assets"). To the extent of such reduction, the unitholder would be deemed to receive its proportionate share of the Section&nbsp;751 Assets and exchange such assets with us in
return for an allocable portion of the non-pro rata distribution. This latter deemed exchange generally will result in the unitholder's realization of ordinary income in an amount equal to
the excess of (1)&nbsp;the non-pro rata portion of that distribution over (2)&nbsp;the unitholder's tax basis (generally zero) in the Section&nbsp;751 Assets deemed to be
relinquished in the exchange. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Limitations on Deductibility of Losses  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The deduction by a unitholder of its share of our losses will be limited to the lesser of (i)&nbsp;the unitholder's tax basis in its
units, and (ii)&nbsp;in the case of a unitholder who is an individual, estate, trust or corporation (if more than 50% of the corporation's stock is owned directly or indirectly by or for five or
fewer individuals or a specific type of tax exempt organization), the amount for which the unitholder is considered to be "at risk" with respect to our activities. In general, a unitholder will be at
risk to the extent of its tax basis in its units, reduced by (1)&nbsp;any portion of that basis attributable to the unitholder's share of our liabilities, (2)&nbsp;any portion of that basis
representing amounts otherwise protected against loss because of a guarantee, stop loss agreement or similar arrangement and (3)&nbsp;any amount of money the unitholder borrows to acquire or hold
its units, if the lender of those borrowed funds owns an interest in us, is related to another unitholder or can look only to the units for repayment. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
unitholder subject to the basis and at risk limitation must recapture losses deducted in previous years to the extent that distributions (including distributions as a result of a
reduction in a unitholder's share of nonrecourse liabilities) cause the unitholder's at risk amount to be less than zero at the end of any taxable year. Losses disallowed to a unitholder or recaptured
as a result of these limitations will carry forward and will be allowable as a deduction in a later year to the extent that the unitholder's tax basis or at risk amount, whichever is the limiting
factor, is subsequently increased. Upon a taxable disposition
of units, any gain recognized by a unitholder can be offset by losses that were previously suspended by the at risk limitation but not losses suspended by the basis limitation. Any loss previously
suspended by the at risk limitation in excess of that gain can no longer be used. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>147</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to the basis and at risk limitations, passive activity loss limitations generally limit the deductibility of losses incurred by individuals, estates, trusts, some closely
held corporations and personal service corporations from "passive activities" (generally, trade or business activities in which the taxpayer does not materially participate). The passive loss
limitations are applied separately with respect to each publicly-traded partnership. Consequently, any passive losses we generate will be available to offset only our passive income generated in the
future. Passive losses that are not deductible because they exceed a unitholder's share of income we generate may be deducted in full when he disposes of all of its units in a fully taxable
transaction with an unrelated party. The passive activity loss rules are applied after other applicable limitations on deductions, including the at risk and basis limitations. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Limitations on Interest Deductions  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The deductibility of a non-corporate taxpayer's "investment interest expense" is generally limited to the amount of that
taxpayer's "net investment income." Investment interest expense includes: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>interest on indebtedness properly allocable to property held for investment;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>interest expense attributed to portfolio income; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the portion of interest expense incurred to purchase or carry an interest in a passive activity to the extent attributable
to portfolio income. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
computation of a unitholder's investment interest expense will take into account interest on any margin account borrowing or other loan incurred to purchase or carry a unit. Net
investment income includes gross income from property held for investment and amounts treated as portfolio income under the passive loss rules, less deductible expenses other than interest directly
connected with the production of investment income. Such term generally does not include qualified dividend income or gains attributable to the disposition of property held for investment. A
unitholder's share of a publicly traded partnership's portfolio income and, according to the IRS, net passive income will be treated as investment income for purposes of the investment interest
expense limitation. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Entity-Level Collections of Unitholder Taxes  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are required or elect under applicable law to pay any federal, state, local or non-U.S. tax on behalf of any current
or former unitholder or our general partner, we are authorized to pay those taxes and treat the payment as a distribution of cash to the relevant unitholder or general partner. Where the relevant
unitholder's identity cannot be determined, we are authorized to treat the payment as a distribution to all current unitholders. We are authorized to amend our partnership agreement in the manner
necessary to maintain uniformity of intrinsic tax characteristics of units and to adjust later distributions, so that after giving effect to these distributions, the priority and characterization of
distributions otherwise applicable under our partnership agreement is maintained as nearly as is practicable. Payments by us as described above could give rise to an overpayment of tax on behalf of a
unitholder, in which event the unitholder may be entitled to claim a refund of the overpayment amount. Unitholders are urged to consult their tax advisors to determine the consequences to them of any
tax payment we make on their behalf. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Allocation of Income, Gain, Loss and Deduction  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, if we have a net profit, our items of income, gain, loss and deduction will be allocated among the general partner and our
unitholders in accordance with their percentage interests in us. If we have a net loss, our items of income, gain, loss and deduction will be allocated first among the general partner and our
unitholders in accordance with their percentage interests in us to the extent of their positive capital accounts and thereafter to our general partner. At any time that distributions are made to </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>148</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>the
common units and not to the subordinated units, or that incentive distributions are made to the general partner, gross income will be allocated to the recipients to the extent of such
distributions. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Specified
items of our income, gain, loss and deduction will be allocated under Section&nbsp;704(c) of the Code to account for any difference between the tax basis and fair market
value of our assets at the time such assets are contributed to us and at the time of any subsequent offering of our units (a "Book-Tax Disparity"). In addition, items of recapture income
will be specially allocated to the extent possible to the unitholder who was allocated the deduction giving rise to that recapture income in order to minimize the recognition of ordinary income by
other unitholders. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
allocation of items of our income, gain, loss or deduction, generally must have "substantial economic effect" as determined under Treasury Regulations. If an allocation does not have
substantially economic effect, it will be reallocated to our unitholders the basis of their interests in us, which will be determined by taking into account all the facts and circumstances,
including: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>our partners' relative contributions to us;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the interests of all of our partners in our profits and losses;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the interest of all of our partners in our cash flow; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the rights of all of our partners to distributions of capital upon liquidation. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vinson&nbsp;&amp;
Elkins&nbsp;L.L.P. is of the opinion that, with the exception of the issues described in "&#151;Section&nbsp;754 Election" and "&#151;Disposition of
Units&#151;Allocations Between Transferors and Transferees," allocations under our partnership agreement will have substantial economic effect. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Treatment of Short Sales  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A unitholder whose units are loaned to a "short seller" to cover a short sale of units may be treated as having disposed of those
units. If so, such unitholder would no longer be treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition. As
a result, during this period (i)&nbsp;any of our income, gain, loss or deduction allocated to those units would not be reportable by the unitholder, and (ii)&nbsp;any cash distributions received
by the unitholder as to those units would be fully taxable, possibly as ordinary income. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due
to lack of controlling authority, Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. has not rendered an opinion regarding the tax treatment of a unitholder whose units are loaned to a short
seller to cover a short sale of our units. Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to modify any
applicable brokerage account agreements to prohibit their brokers from borrowing and lending their units. The IRS has announced that it is studying issues relating to the tax treatment of short sales
of partnership interests. Please see "&#151;Disposition of Units&#151;Recognition of Gain or Loss." </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Alternative Minimum Tax  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a unitholder is subject to federal alternative minimum tax, such tax will apply to such unitholder's distributive share of any items
of our income, gain, loss or deduction. The current alternative minimum tax rate for non-corporate taxpayers is 26% on the first $175,000 of alternative minimum taxable income in excess of
the exemption amount and 28% on any additional alternative minimum taxable income. Prospective unitholders are urged to consult with their tax advisors with respect to the impact of an investment in
our units on their alternative minimum tax liability. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>149</FONT></P>

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<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Tax Rates  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under current law, the highest marginal federal income tax rates for individuals applicable to ordinary income and
long-term capital gains (generally, gains from the sale or exchange of certain investment assets held for more than one year) are 35%; and 15%, respectively. However, absent new
legislation extending the current rates, beginning January&nbsp;1, 2013, the highest marginal federal income tax rate applicable to ordinary income and long-term capital gains of
individuals will increase to 39.6% and 20%, respectively. These rates are subject to change by new legislation at any time. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
3.8% Medicare tax on certain investment income earned by individuals, estates, and trusts will apply for taxable years beginning after December&nbsp;31, 2012. For these purposes,
investment income generally includes a unitholder's allocable share of our income and gain realized by a unitholder from a sale of units. In the case of an individual, the tax will be imposed on the
lesser of (i)&nbsp;the unitholder's net investment income from all investments, or (ii)&nbsp;the amount by which the unitholder's modified adjusted gross income exceeds $250,000 (if the unitholder
is married and filing jointly or a surviving spouse) or $200,000 (if the unitholder is unmarried). In the case of an estate or trust, the tax will be imposed on the lesser of (i)&nbsp;undistributed
net investment income, or (ii)&nbsp;the excess adjusted gross income over the dollar amount at which the highest income tax bracket applicable to an estate or trust begins. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Section&nbsp;754 Election  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have made the election permitted by Section&nbsp;754 of the Code that permits us to adjust the tax bases in our assets as to
specific purchased units under Section&nbsp;743(b) of the Code to reflect the unit purchase price. The Section&nbsp;743(b) adjustment separately applies to each purchaser of units based upon the
values and bases of our assets at the time of the relevant purchase. The Section&nbsp;743(b) adjustment does not apply to a person who purchases units directly from us. For purposes of this
discussion, a unitholder's basis in our assets will be considered to have two components: (1)&nbsp;its share of the tax basis in our assets as to all unitholders ("common basis") and (2)&nbsp;its
Section&nbsp;743(b) adjustment to that tax basis (which may be positive or negative). </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Treasury Regulations, a Section&nbsp;743(b) adjustment attributable to property depreciable under Section&nbsp;168 of the Code, such as our storage assets, may be amortizable
over the remaining cost recovery period for such property, while a Section&nbsp;743(b) adjustment attributable to properties subject to depreciation under Section&nbsp;167 of the Code, must be
amortized straight-line or using the 150% declining balance method. As a result, if we owned any assets subject to depreciation under Section&nbsp;167 of the Code, the amortization rates
could give rise to differences in the taxation of unitholders purchasing units from us and unitholders purchasing units from other unitholders. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
our partnership agreement, we are authorized to take a position to preserve the uniformity of units even if that position is not consistent with these or any other Treasury
Regulations. Please see "&#151;Uniformity of Units." Consistent with this authority, we intend to treat properties depreciable under Section&nbsp;167, if any, in the same manner as properties
depreciable under Section&nbsp;168 for this purpose. These positions are consistent with the methods employed by other publicly traded partnerships but are inconsistent with the existing Treasury
Regulations, and Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. has not opined on the validity of this approach. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
IRS may challenge our position with respect to depreciating or amortizing the Section&nbsp;743(b) adjustment we take to preserve the uniformity of units due to lack of controlling
authority. Because a unitholder's tax basis for its units is reduced by its share of our items of deduction or loss, any position we take that understates deductions will overstate a unitholder's
basis in its units, and may cause the unitholder to understate gain or overstate loss on any sale of such units. Please see "&#151;Disposition of Units&#151;Recognition of Gain or Loss."
If a challenge to such treatment were sustained, the gain from the sale of units may be increased without the benefit of additional deductions. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>150</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The calculations involved in the Section&nbsp;754 election are complex and will be made on the basis of assumptions as to the value of our assets and other
matters. The IRS could seek to reallocate some or all of any Section&nbsp;743(b) adjustment we allocated to our assets subject to depreciation to goodwill or nondepreciable assets. Goodwill, as an
intangible asset, is generally nonamortizable or amortizable over a longer period of time or under a less accelerated method than our tangible assets. We cannot assure any unitholder that the
determinations we make will not be successfully challenged by the IRS or that the resulting deductions will not be reduced or disallowed altogether. Should the IRS require a different tax basis
adjustment to be made, and should, in our opinion, the expense of compliance exceed the benefit of the election, we may seek permission from the IRS to revoke our Section&nbsp;754 election. If
permission is granted, a subsequent purchaser of units may be allocated more income than it would have been allocated had the election not been revoked. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eo42901_tax_treatment_of_operations"> </A>
<A NAME="toc_eo42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Tax Treatment of Operations    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Accounting Method and Taxable Year  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will use the year ending December&nbsp;31 as our taxable year and the accrual method of accounting for federal income tax
purposes. Each unitholder will be required to include in income its share of our income, gain, loss and deduction for each taxable year ending within or with its taxable year. In addition, a
unitholder who has a taxable year ending on a date other than December&nbsp;31 and who disposes of all of its units following the close of our taxable year but before the close of its taxable year
must include its share of our income, gain, loss and deduction in income for its taxable year, with the result that it will be required to include in income for its taxable year its share of more than
one year of our income, gain, loss and deduction. Please see "&#151;Disposition of Units&#151;Allocations Between Transferors and Transferees." </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Tax Basis, Depreciation and Amortization  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The tax basis of our assets will be used for purposes of computing depreciation and cost recovery deductions and, ultimately, gain or
loss on the disposition of these assets. The federal income tax burden associated with the difference between the fair market value of our assets and their tax basis immediately prior to an offering
will be borne by our partners holding interests in us prior to this offering. Please see "&#151;Tax Consequences of Unit Ownership&#151;Allocation of Income, Gain, Loss and Deduction." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
we dispose of depreciable property by sale, foreclosure or otherwise, all or a portion of any gain, determined by reference to the amount of depreciation previously deducted and the
nature of the property, may be subject to the recapture rules and taxed as ordinary income rather than capital gain. Similarly, a unitholder who has taken cost recovery or depreciation deductions with
respect to property we own will likely be required to recapture some or all of those deductions as ordinary income upon a sale of its interest in us. Please see "&#151;Tax Consequences of Unit
Ownership&#151;Allocation of Income, Gain, Loss and Deduction" and "&#151;Disposition of Units&#151;Recognition of Gain or Loss." </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
costs we incurred in offering and selling our units (called "syndication expenses") must be capitalized and cannot be deducted currently, ratably or upon our termination. While there
are uncertainties regarding the classification of costs as organization expenses, which may be amortized by us, and as syndication expenses, which may not be amortized by us, the underwriting
discounts and commissions we incur will be treated as syndication expenses. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Valuation and Tax Basis of Our Properties  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The federal income tax consequences of the ownership and disposition of units will depend in part on our estimates of the relative fair
market values and the initial tax bases of our assets. Although we may from time to time consult with professional appraisers regarding valuation matters, we will make many of the relative fair market
value estimates ourselves. These estimates and determinations of tax basis are subject to challenge and will not be binding on the IRS or the courts. If the estimates of fair market value </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>151</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>or
basis are later found to be incorrect, the character and amount of items of income, gain, loss or deduction previously reported by unitholders could change, and unitholders could be required to
adjust their tax liability for prior years and incur interest and penalties with respect to those adjustments. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eo42901_disposition_of_units"> </A>
<A NAME="toc_eo42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Disposition of Units    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Recognition of Gain or Loss  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A unitholder will be required to recognize gain or loss on a sale of units equal to the difference between the unitholder's amount
realized and tax basis for the units sold. A unitholder's amount realized will equal the sum of the cash or the fair market value of other property it receives plus its share of our liabilities with
respect to such units. Because the amount realized includes a unitholder's share of our liabilities, the gain recognized on the sale of units could result in a tax liability in excess of any cash
received from the sale. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
as noted below, gain or loss recognized by a unitholder on the sale or exchange of a unit held for more than one year generally will be taxable as long-term capital
gain or loss. However, gain or loss recognized on the disposition of units will be separately computed and taxed as ordinary income or loss under Section&nbsp;751 of the Code to the extent
attributable to Section&nbsp;751 Assets, primarily depreciation recapture. Ordinary income attributable to Section&nbsp;751 Assets may exceed net taxable gain realized on the sale of a unit and
may be recognized even if there is a net taxable loss realized on the sale of a unit. Thus, a unitholder may recognize both ordinary income and a capital loss upon a sale of units. Net capital loss
may offset capital gains and, in the case of individuals, up to $3,000 of ordinary income per year. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
IRS has ruled that a partner who acquires interests in a partnership in separate transactions must combine those interests and maintain a single adjusted tax basis for all those
interests. Upon a sale or other disposition of less than all of those interests, a portion of that tax basis must be allocated to the interests sold using an "equitable apportionment" method, which
generally means that the tax basis allocated to the interest sold equals an amount that bears the same relation to the partner's tax basis in its entire interest in the partnership as the value of the
interest sold bears to the value of the partner's entire interest in the partnership. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Treasury
Regulations under Section&nbsp;1223 of the Code allow a selling unitholder who can identify units transferred with an ascertainable holding period to elect to use the actual
holding period of the units transferred. Thus, according to the ruling discussed above, a unitholder will be unable to select high or low basis units to sell as would be the case with corporate stock,
but, according to the Treasury Regulations, a unitholder may designate specific units sold for purposes of determining the holding period of units transferred. A unitholder electing to use the actual
holding period of units transferred must consistently use that identification method for all subsequent sales or exchanges of our units. A unitholder considering the purchase of additional units or a
sale of units purchased in separate transactions is urged to consult its tax advisor as to the possible consequences of this ruling and application of the Treasury Regulations. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Specific
provisions of the Code affect the taxation of some financial products and securities, including partnership interests, by treating a taxpayer as having sold an "appreciated"
partnership interest, one in which gain would be recognized if it were sold, assigned or terminated at its fair market value, if the taxpayer or related persons enter(s)
into: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a short sale;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>an offsetting notional principal contract; or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a futures or forward contract with respect to the partnership interest or substantially identical property. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover,
if a taxpayer has previously entered into a short sale, an offsetting notional principal contract or a futures or forward contract with respect to the partnership interest, the
taxpayer will be </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>152</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>treated
as having sold that position if the taxpayer or a related person then acquires the partnership interest or substantially identical property. The Secretary of the Treasury is also authorized to
issue regulations that treat a taxpayer that enters into transactions or positions that have substantially the same effect as the preceding transactions as having constructively sold the financial
position. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Allocations Between Transferors and Transferee  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, our taxable income or loss will be determined annually, will be prorated on a monthly basis and will be subsequently
apportioned among the unitholders in proportion to the number of units owned by each of them as of the opening of the applicable exchange on the first business day of the month (the "Allocation
Date"). However, gain or loss realized on a sale or other disposition of our assets or, in the discretion of the general partner, any other extraordinary item of income, gain, loss or deduction will
be allocated among the unitholders on the Allocation Date in the month in which such income, gain, loss or deduction is recognized. As a result, a unitholder transferring units may be allocated
income, gain, loss and deduction realized after the date of transfer. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
simplifying conventions are contemplated by the Code and most publicly traded partnerships use similar simplifying conventions, the use of this method may not be permitted under
existing Treasury Regulations. Recently, however, the Department of the Treasury and the IRS issued proposed Treasury Regulations that provide a safe harbor pursuant to which a publicly traded
partnership may use a similar monthly simplifying convention to allocate tax items among transferor and transferee unitholders, although such tax items must be prorated on a daily basis. Nonetheless,
the proposed regulations do not specifically authorize the use of the proration method we have adopted. Accordingly, Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. is unable to opine on the validity of this
method of allocating income and deductions between transferee and transferor unitholders. If this method is not allowed under the Treasury Regulations, or only applies to transfers of less than all of
the unitholder's interest, our taxable income or losses might be reallocated among the unitholders. We are authorized to revise our method of allocation between transferee and transferor unitholders,
as well as among unitholders whose interests vary during a taxable year, to conform to a method permitted under future Treasury Regulations. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
unitholder who disposes of units prior to the record date set for a cash distribution for that quarter will be allocated items of our income, gain, loss and deduction attributable to
the month of disposition but will not be entitled to receive a cash distribution for that period. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Notification Requirements  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A unitholder who sells or purchases any of units is generally required to notify us in writing of that transaction within
30&nbsp;days after the transaction (or, if earlier, January&nbsp;15 of the year following the transaction). Upon receiving such notifications, we are required to notify the IRS of that transaction
and to furnish specified information to the transferor and transferee. Failure to notify us of a transfer of units may, in some cases, lead to the imposition of penalties. However, these reporting
requirements do not apply to a sale by an individual who is a citizen of the United States and who effects the sale through a broker who will satisfy such requirements. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Constructive Termination  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will be considered to have terminated our partnership for federal income tax purposes upon the sale or exchange of 50% or more of
the total interests in our capital and profits within a twelve-month period. For such purposes, multiple sales of the same unit are counted only once. A constructive termination results in the closing
of our taxable year for all unitholders. In the case of a unitholder reporting on a taxable year other than a fiscal year ending December&nbsp;31, the closing of our taxable year may result in more
than twelve months of our taxable income or loss being includable in such unitholder's taxable income for the year of termination. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>153</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
constructive termination occurring on a date other than December&nbsp;31 will result in us filing two tax returns for one fiscal year and the cost of the preparation of these returns
will be borne by all unitholders. However, pursuant to an IRS relief procedure the IRS may allow, among other things, a constructively terminated partnership to provide a single
Schedule&nbsp;K-1 for the calendar year in which a termination occurs. We would be required to make new tax elections after a termination, including a new election under
Section&nbsp;754 of the Code, and a termination would result in a deferral of our deductions for depreciation. A termination could also result in penalties if we were
unable to determine that the termination had occurred. Moreover, a termination might either accelerate the application of, or subject us to, any tax legislation enacted before the termination. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eo42901_uniformity_of_units"> </A>
<A NAME="toc_eo42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Uniformity of Units    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because we cannot match transferors and transferees of units and for other reasons, we must maintain uniformity of the economic and tax
characteristics of the units to a purchaser of these units. In the absence of uniformity, we may be unable to completely comply with a number of federal income tax requirements, both statutory and
regulatory. A lack of uniformity could result from a literal application of Treasury Regulation Section&nbsp;1.167(c)-1(a)(6), which is not anticipated to apply to a material portion of
our assets. Any non-uniformity could have a negative impact on the value of the units. Please see "&#151;Tax Consequences of Unit Ownership&#151;Section&nbsp;754 Election." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
partnership agreement permits our general partner to take positions in filing our tax returns that preserve the uniformity of our units even under circumstances like those described
above. These positions may include reducing for some unitholders the depreciation, amortization or loss deductions to which they would otherwise be entitled or reporting a slower amortization of
Section&nbsp;743(b) adjustments for some unitholders than that to which they would otherwise be entitled. Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. is unable to opine as to validity of such filing
positions. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
unitholder's basis in units is reduced by its share of our deductions (whether or not such deductions were claimed on an individual income tax return) so that any position that we take
that understates deductions will overstate the unitholder's basis in its units, and may cause the unitholder to understate gain or overstate loss on any sale of such units. Please see
"&#151;Disposition of Units&#151;Recognition of Gain or Loss" above and "&#151;Tax Consequences of Unit Ownership&#151;Section&nbsp;754 Election" above. The IRS may
challenge one or more of any positions we take to preserve the uniformity of units. If such a challenge were sustained, the uniformity of units might be affected, and, under some circumstances, the
gain from the sale of units might be increased without the benefit of additional deductions. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eo42901_tax-exempt_organizations_and_other_investors"> </A>
<A NAME="toc_eo42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Tax-Exempt Organizations and Other Investors    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ownership of units by employee benefit plans, other tax-exempt organizations, non-resident aliens,
non-U.S. corporations and other non-U.S. persons raises issues unique to those investors and, as
described below, may have substantially adverse tax consequences to them. Prospective unitholders who are tax-exempt entities or non-U.S. persons should consult their tax
advisor before investing in our units. Employee benefit plans and most other tax-exempt organizations, including IRAs and other retirement plans, are subject to federal income tax on
unrelated business taxable income. Virtually all of our income will be unrelated business taxable income and will be taxable to a tax-exempt unitholder. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-resident
aliens and foreign corporations, trusts or estates that own units will be considered to be engaged in business in the United States because of their ownership of
our units. Consequently, they will be required to file federal tax returns to report their share of our income, gain, loss or deduction and pay federal income tax at regular rates on their share of
our net income or gain. Moreover, under rules applicable to publicly traded partnerships, distributions to non-U.S. unitholders are subject to withholding at the highest applicable
effective tax rate. Each non-U.S. unitholder must obtain a taxpayer identification number from the IRS and submit that number to our transfer agent on a Form&nbsp;W-8BEN or
applicable </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>154</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>substitute
form in order to obtain credit for these withholding taxes. A change in applicable law may require us to change these procedures. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, because a foreign corporation that owns units will be treated as engaged in a United States trade or business, that corporation may be subject to the United States branch
profits tax at a rate of 30%, in addition to regular federal income tax, on its share of our income and gain, as adjusted for changes in the foreign corporation's "U.S. net equity," which is
effectively connected with the conduct of a United States trade or business. That tax may be reduced or eliminated by an income tax treaty between the United States and the country in which the
foreign corporate unitholder is a "qualified resident." In addition, this type of unitholder is subject to special information reporting requirements under Section&nbsp;6038C of the Code. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
foreign unitholder who sells or otherwise disposes of a unit will be subject to federal income tax on gain realized from the sale or disposition of that unit to the extent the gain is
effectively connected with a U.S. trade or business of the foreign unitholder. Under a ruling published by the IRS, interpreting the scope of "effectively connected income," a foreign unitholder would
be considered to be engaged in a trade or business in the U.S. by virtue of the U.S. activities of the partnership, and part or all of that unitholder's gain would be effectively connected with that
unitholder's indirect U.S. trade or business. Moreover, under the Foreign Investment in Real Property Tax Act, a foreign unitholder generally will be subject to federal income tax upon the sale or
disposition of a unit if (i)&nbsp;it owned (directly or constructively applying certain attribution rules) more than 5% of our units at any time during the five-year period ending on the
date of such disposition and (ii)&nbsp;50% or more of the fair market value of all of our assets consisted of U.S. real property interests at any time during the shorter of the period during which
such unitholder held the units or the 5-year period ending on the date of disposition. Currently, more than 50% of our assets consist of U.S. real property interests and we do not expect
that to change in the foreseeable future. Therefore, foreign unitholders may be subject to federal income tax on gain from the sale or disposition of their units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eo42901_administrative_matters"> </A>
<A NAME="toc_eo42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Administrative Matters    <BR>    </B></FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Information Returns and Audit Procedures  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to furnish to each unitholder, within 90&nbsp;days after the close of each taxable year, specific tax information,
including a Schedule&nbsp;K-1, which describes its share of our income, gain, loss and deduction for our preceding taxable year. In preparing this information, which will not be reviewed
by counsel, we will take various accounting and reporting positions, some of which have been mentioned earlier, to determine each unitholder's share of income, gain, loss and deduction. We cannot
assure our unitholders that those positions will yield a result that conforms to the requirements of the Code, Treasury Regulations or administrative interpretations of the IRS. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither
we, nor Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. can assure prospective unitholders that the IRS will not successfully contend in court that those positions are impermissible, and
such a contention could negatively affect the value of the units. The IRS may audit our federal income tax information returns. Adjustments resulting from an IRS audit may require each unitholder to
adjust a prior year's tax liability, and possibly may result in an audit of its own return. Any audit of a unitholder's return could result in adjustments not related to our returns as well as those
related to its returns. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Partnerships
generally are treated as entities separate from their owners for purposes of federal income tax audits, judicial review of administrative adjustments by the IRS and tax
settlement proceedings. The tax treatment of partnership items of income, gain, loss and deduction are determined in a partnership proceeding rather than in separate proceedings with the partners. The
Code requires that one partner be designated as the "Tax Matters Partner" for these purposes, and our partnership agreement designates our general partner. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>155</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Tax Matters Partner will make some elections on our behalf and on behalf of unitholders. In addition, the Tax Matters Partner can extend the statute of limitations for assessment of
tax deficiencies against unitholders for items in our returns. The Tax Matters Partner may bind a unitholder with less than a 1% profits interest in us to a settlement with the IRS unless that
unitholder elects, by filing a statement with the IRS, not to give that authority to the Tax Matters Partner. The Tax Matters Partner may seek judicial review, by which all the unitholders are bound,
of a final partnership administrative adjustment and, if the Tax Matters Partner fails to seek judicial review, judicial review may be sought by any unitholder having at least a 1% interest in profits
or by any group of unitholders having in the aggregate at least a 5% interest in profits. However, only one action for judicial review will go forward, and each unitholder with an interest in the
outcome may participate in that action. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
unitholder must file&nbsp;a statement with the IRS identifying the treatment of any item on its federal income tax return that is not consistent with the treatment of the item on our
return. Intentional or negligent disregard of this consistency requirement may subject a unitholder to substantial penalties. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Nominee Reporting  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Persons who hold an interest in us as a nominee for another person are required to furnish to us: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the
name, address and taxpayer identification number of the beneficial owner and the nominee;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a
statement regarding whether the beneficial owner is:
<BR><BR></FONT>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a
non-U.S. person;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a
non-U.S. government, an international organization or any wholly owned agency or instrumentality of either of the foregoing; or
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(c)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a
tax-exempt entity;
<BR><BR></FONT></DD></DL>
</DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the
amount and description of units held, acquired or transferred for the beneficial owner; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>specific
information including the dates of acquisitions and transfers, means of acquisitions and transfers, and acquisition cost for purchases, as well as
the amount of net proceeds from sales. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brokers
and financial institutions are required to furnish additional information, including whether they are U.S. persons and specific information on units they acquire, hold or
transfer for their own account. A penalty of $100 per failure, up to a maximum of $1.5&nbsp;million per calendar year, is imposed by the Code for failure to report that information to us. The
nominee is required to supply the beneficial owner of the units with the information furnished to us. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Accuracy-Related Penalties  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An additional tax equal to 20% of the amount of any portion of an underpayment of tax that is attributable to one or more specified
causes, including negligence or disregard of rules or regulations, substantial understatements of income tax and substantial valuation misstatements, is imposed by the Code. No penalty will be
imposed, however, for any portion of an underpayment if it is shown that there was a reasonable cause for the underpayment of that portion and that the taxpayer acted in good faith regarding the
underpayment of that portion. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
individuals, a substantial understatement of income tax in any taxable year exists if the amount of the understatement exceeds the greater of 10% of the tax required to be shown on
the return for the taxable year or $5,000. The amount of any understatement subject to penalty generally is reduced if any portion is attributable to a position adopted on the
return: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>for
which there is, or was, "substantial authority;" or </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>156</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>as
to which there is a reasonable basis and the relevant facts of that position are disclosed on the return. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
any item of income, gain, loss or deduction included in the distributive shares of unitholders might result in that kind of an "understatement" of income for which no "substantial
authority" exists, we must disclose the relevant facts on their returns. In addition, we will make a reasonable effort to furnish sufficient information for unitholders to make adequate disclosure on
their returns and to take other actions as may be appropriate to permit unitholders to avoid liability for this penalty. More stringent rules apply to "tax shelters," which we do not believe includes
us, or any of our investments, plans or arrangements. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
substantial valuation misstatement exists if (a)&nbsp;the value of any property, or the tax basis of any property, claimed on a tax return is 150% or more of the amount determined to
be the correct amount of the valuation or tax basis, (b)&nbsp;the price for any property or services (or for the use of property) claimed on any such return with respect to any transaction between
persons described in Code Section&nbsp;482 is 200% or more (or 50% or less) of the amount determined under Section&nbsp;482 to be the correct amount of such price, or (c)&nbsp;the net Code
Section&nbsp;482 transfer price adjustment for the taxable year exceeds the lesser of $5&nbsp;million or 10% of the taxpayer's gross receipts. No penalty is imposed unless the portion of the
underpayment attributable to a substantial valuation misstatement exceeds $5,000 ($10,000 for a corporation other than an S Corporation or a personal holding company). The penalty is increased to 40%
in the event of a gross valuation misstatement. We do not anticipate making any valuation misstatements. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, the 20% accuracy-related penalty also applies to any portion of an underpayment of tax that is attributable to transactions lacking economic substance. To the extent that
such transactions are not disclosed, the penalty imposed is increased to 40%. Additionally, there is no reasonable cause defense to the imposition of this penalty to such transactions. </FONT></P>

<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B><I> Reportable Transactions  </I></B></FONT></P>

</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we were to engage in a "reportable transaction," we (and possibly our unitholders and others) would be required to make a detailed
disclosure of the transaction to the IRS. A transaction may be a reportable transaction based upon any of several factors, including the fact that it is a type of tax avoidance transaction publicly
identified by the IRS as a "listed transaction" or that it produces certain kinds of losses for partnerships, individuals, S corporations, and trusts in excess of $2&nbsp;million in any single tax
year, or $4&nbsp;million in any combination of six successive tax years. Our participation in a reportable transaction could increase the likelihood that our federal income tax information return
(and possibly our unitholders' tax return) would be audited by the IRS. Please see "&#151;Administrative Matters&#151;Information Returns and Audit Procedures." </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover,
if we were to participate in a reportable transaction with a significant purpose to avoid or evade tax, or in any listed transaction, our unitholders may be subject to the
following provisions of the American Jobs Creation Act of 2004: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>accuracy-related penalties with a broader scope. significantly narrower exceptions, and potentially greater amounts than
described above at "&#151;Administrative Matters&#151;Accuracy-Related Penalties";  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>for those persons otherwise entitled to deduct interest on federal tax deficiencies, nondeductibility of interest on any
resulting tax liability; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>in the case of a listed transaction, an extended statute of limitations. We do not expect to engage in any "reportable
transactions." </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>157</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eo42901_state,_local_and_other_tax_considerations"> </A>
<A NAME="toc_eo42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  State, Local and Other Tax Considerations    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to federal income taxes, unitholders will be subject to other taxes, including state and local income taxes, unincorporated
business taxes, and estate, inheritance or intangibles taxes that may be imposed by the various jurisdictions in which we conduct business or own property or in which the unitholder is a resident. We
currently conduct business or own property only in Texas, which imposes an income tax on corporations and other entities but does not impose a personal income tax. Moreover, we may also own property
or do business in other states in the future that impose income or similar taxes on nonresident individuals. Although an analysis of those various taxes is not presented here, each prospective
unitholder should consider their potential impact on its investment in us. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It
is the responsibility of each unitholder to investigate the legal and tax consequences, under the laws of pertinent states and localities, of its investment in us. Vinson&nbsp;&amp;
Elkins&nbsp;L.L.P. has not rendered an opinion on the state, local, or non-U.S. tax consequences of an investment in us. We strongly recommend that each prospective unitholder consult,
and depend on, its own tax counsel or other advisor with regard to those matters. It is the responsibility of each unitholder to file all tax returns that may be required of it. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>158</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="eq42901_investment_in_petrolog__eq402430"> </A>
<A NAME="toc_eq42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  INVESTMENT IN PETROLOGISTICS&nbsp;LP BY EMPLOYEE BENEFIT PLANS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An investment in us by an employee benefit plan is subject to additional considerations because the investments of these plans are
subject to the fiduciary responsibility and prohibited transaction provisions of ERISA and restrictions imposed by Section&nbsp;4975 of the Internal Revenue Code. For these purposes the term
"employee benefit plan" includes, but is not limited to, qualified pension, profit-sharing and stock bonus plans, Keogh plans, simplified employee pension plans and tax deferred annuities or IRAs
established or maintained by an employer or employee organization. Among other things, consideration should be given to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>whether the investment is prudent under Section&nbsp;404(a)(1)(B) of ERISA;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>whether in making the investment, that plan will satisfy the diversification requirements of Section&nbsp;404(a)(1)(C)
of ERISA; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>whether the investment will result in recognition of unrelated business taxable income by the plan and, if so, the
potential after-tax investment return. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
person with investment discretion with respect to the assets of an employee benefit plan, often called a fiduciary, should determine whether an investment in us is authorized by the
appropriate governing instrument and is a proper investment for the plan. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;406
of ERISA and Section&nbsp;4975 of the Internal Revenue Code prohibit employee benefit plans, and also IRAs that are not considered part of an employee benefit plan,
from engaging in specified transactions involving "plan assets" with parties that are "parties in interest" under ERISA or "disqualified persons" under the Internal Revenue Code with respect to the
plan. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to considering whether the purchase of common units is a prohibited transaction, a fiduciary of an employee benefit plan should consider whether the plan will, by investing
in us, be deemed to own an undivided interest in our assets, with the result that our operations would be subject to the regulatory restrictions of ERISA, including its prohibited transaction rules,
as well as the prohibited transaction rules of the Internal Revenue Code. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Department of Labor regulations provide guidance with respect to whether the assets of an entity in which employee benefit plans acquire equity interests would be deemed "plan
assets" under some circumstances. Under these regulations, an entity's assets would not be considered to be "plan assets" if, among other things: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the
equity interests acquired by employee benefit plans are publicly offered securities&#151;i.e.,&nbsp;the equity interests are widely held by 100
or more investors independent of the issuer and each other, freely transferable and registered under some provisions of the federal securities laws;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the
entity is an "operating company," meaning it is primarily engaged in the production or sale of a product or service other than the investment of capital
either directly or through a majority-owned subsidiary or subsidiaries; or
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>there
is no significant investment by benefit plan investors, which is defined to mean that less than 25% of the value of each class of equity interest is
held by the employee benefit plans referred to above and IRAs. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
assets should not be considered "plan assets" under these regulations because it is expected that the investment will satisfy the requirements in (1)&nbsp;and (2)&nbsp;above. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plan
fiduciaries contemplating a purchase of common units are encouraged to consult with their own counsel regarding the consequences under ERISA and the Internal Revenue Code in light
of the serious penalties imposed on persons who engage in prohibited transactions or other violations. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>159</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="eq42901_underwriters"> </A>
<A NAME="toc_eq42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  UNDERWRITERS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named
below, for whom Morgan Stanley&nbsp;&amp;&nbsp;Co.&nbsp;LLC, Citigroup Global Markets Inc., UBS Securities LLC and Wells Fargo Securities, LLC are acting as representatives, have severally agreed to
purchase, and we have agreed to sell to them, severally, the number of common units indicated below. </FONT></P>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:21pt;"><FONT SIZE=1><B>Name

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number of<BR>
Common Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Morgan Stanley&nbsp;&amp;&nbsp;Co.&nbsp;LLC</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Citigroup Global Markets Inc.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>UBS Securities LLC</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Wells Fargo Securities, LLC</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SG Americas Securities, LLC</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stifel, Nicolaus &amp; Company, Incorporated</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
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 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
underwriters and the representatives are collectively referred to as the "underwriters" and the "representatives," respectively. The underwriters are offering the common units
subject to their acceptance of the common units from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery
of the common units offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for
all of the common units offered by this prospectus if any such common units are taken. However, the underwriters are not required to take or pay for the common units covered by the underwriters'
over-allotment option described below. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
per common unit price of any common units sold by the underwriters shall be the public offering price listed on the cover page of this prospectus, in United States dollars, less an
amount not greater than the per common unit amount of the concession to dealers described below. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
underwriters initially propose to offer part of the common units directly to the public at the public offering price listed on the cover page of this prospectus and part to certain
dealers at a price that
represents a concession not in excess of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a common unit under the public offering price. Any underwriter may allow, and such dealers may reallow, a concession not in excess of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a common unit to other underwriters or to certain dealers. After the initial offering of the common units, the offering price and other selling terms may from time to time be
varied
by the representatives. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have granted to the underwriters an option, exercisable for 30&nbsp;days from the date of this prospectus, to purchase up to an aggregate
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional common units
at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering
overallotments, if any, made in connection with the offering of the common units offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to
certain conditions, to purchase about the same percentage of the additional common units as the number listed next to the underwriter's name in the preceding table bears to the total number of common
units listed next to the names of all underwriters in the preceding table. If the underwriters' option is exercised in full, the total price to the public for the additional common units will be
approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, the total underwriters' discounts and commissions will be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, and the total proceeds to us will be
approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the underwriters do not exercise their option to purchase additional common units, we will issue&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
units to our sponsors and their affiliates, our executive
officers and certain of our </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>160</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>employees
upon the option's expiration. If and to the extent the underwriters exercise their option to purchase additional common units, the number of common units purchased by the underwriters
pursuant to such exercise will be issued to the public and the remainder, if any, will be issued to our sponsors and their affiliates, our executive officers and certain of our employees. Accordingly,
the exercise of the underwriters' option will not affect the total number of common units outstanding. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
estimate that the total expenses of this offering, excluding underwriting discounts and commissions, will be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of common units offered by them. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
intend to apply to list our common units on the New York Stock Exchange, under the symbol "PDH." </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We,
our general partner, the directors and executive officers of our general partner, and our sponsors have agreed that, without the prior written consent of Morgan
Stanley&nbsp;&amp;&nbsp;Co.&nbsp;LLC, on behalf of the
underwriters, and subject to specified exceptions, we and they will not, during the period ending 180&nbsp;days after the date of this prospectus: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any common units beneficially owned or any securities so owned that are convertible
into or exercisable or exchangeable for common units; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of the common units, </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>whether
any such transaction described above is to be settled by delivery of common units or such other securities, in cash or otherwise. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
restrictions described in this paragraph do not apply to: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the sale of common units to the underwriters pursuant to the underwriting agreement;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>the issuance by us of common units upon the exercise of an option or a warrant or the conversion of a security outstanding
on the date of this prospectus of which the underwriters have been advised in writing; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>transactions by any person other than us relating to common units or other securities acquired in open market transactions
after the completion of the offering of the shares; provided that no filing under Section&nbsp;16(a) of the Exchange Act is required or will be voluntarily made in connection with subsequent sales
of common stock or other securities acquired in such open market transactions. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
180-day restricted period described in the preceding paragraph will be automatically extended if: (1)&nbsp;during the last 17&nbsp;days of the 180-day
restricted period we issue an earnings release or announce material news or a material event; or (2)&nbsp;prior to the expiration of the 180-day restricted period, we announce that we
will release earnings results during the 15-day period following the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will
continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or material event. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
underwriters have informed us that they do not presently intend to release common units or other securities subject to the lock-up agreements. Any determination to
release any common units or other securities subject to the lock-up agreements would be based on a number of factors at the time of any such determination; such factors may include the
market price of the common units, the liquidity of the trading market for the common units, general market conditions, the number of common units or other securities </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>161</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>subject
to the lock-up agreements proposed to be sold, and the timing, purpose and terms of the proposed sale. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
order to facilitate the offering of the common units, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common units.
Specifically, the underwriters may over-allot in connection with the offering, creating a short position in the common units for their own account. In addition, to cover
over-allotments or to stabilize the price of the common units, the underwriters may bid for, and purchase, common units in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the common units in the offering, if the syndicate repurchases previously distributed common units in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the common units above independent market levels. The
underwriters are not required to engage in these activities, and may end any of these activities at any time. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because
the Financial Industry Regulatory Authority, or FINRA, views the common units offered under this prospectus as interests in a direct participation program, this offering is being
made in compliance with Rule&nbsp;2310 of the FINRA conduct rules. Investor suitability with respect to the common units should be judged similarly to the suitability with respect to other
securities that are listed for quotation on a national securities exchange. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment
banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates
have, from time to time, performed, and may in the future perform, various financial advisory, investment banking, commercial banking and other services for us, our general partner and our sponsors,
for which they received or will receive customary fees and expenses. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore,
certain of the underwriters and their respective affiliates may, from time to time, enter into arms-length transactions with us in the ordinary course of their
business. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities
activities may involve securities or instruments of PetroLogistics&nbsp;LP or our affiliates. The underwriters and their respective affiliates may also make investment recommendations or publish or
express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and
instruments. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The
representatives may agree to allocate a number of common units to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to
the underwriters that may make Internet distributions on the same basis as other allocations. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eq42901_directed_unit_program"> </A>
<A NAME="toc_eq42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Directed Unit Program    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At our request, the underwriters have reserved for sale, at the initial public offering price, up
to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units
offered hereby for our employees and the directors and officers of our general partner, and our sponsors. The number of common units available for sale to the general public </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>162</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>will
be reduced to the extent such persons purchase such reserved common units. Any reserved common units which are not so purchased will be offered by the underwriters to the general public on the
same terms as the other common units offered hereby. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eq42901_pricing_of_the_offering"> </A>
<A NAME="toc_eq42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Pricing of the Offering    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to this offering, there has been no public market for our common units. The initial public offering price was determined by
negotiations between us and the representatives. Among the factors to be considered in determining the initial public offering price will be our future prospects and those of our industry in general,
our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, the market prices of securities, and certain financial
and operating information, of companies engaged in activities similar to ours. The estimated initial public offering price range set forth on the cover page of this prospectus is subject to change as
a result of market conditions and other factors. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
cannot assure you that the prices at which the common units will sell in the public market after this offering will not be lower than the initial public offering price or that an
active trading market in our common units will develop and continue after this offering. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eq42901_european_economic_area"> </A>
<A NAME="toc_eq42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  European Economic Area    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each underwriter has
represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Member State it has not made and will not make an offer of common units
which are the subject of the offering contemplated by this prospectus to the public in that Member State other than: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>to
any legal entity which is a qualified investor as defined in the Prospectus Directive;
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>to
fewer than 100 or, if such Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other
than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>in
any other circumstances falling within Article&nbsp;3(2) of the Prospectus Directive, </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>provided
that no such offer of notes shall require us to publish a prospectus pursuant to Article&nbsp;3 of the Prospectus Directive or supplement a prospectus pursuant to Article&nbsp;16 of the
Prospectus Directive. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the purposes of the above, the expression an "offer of common units to the public" in relation to any common units in any Member State means the communication in any form and by any
means of sufficient information on the terms of the offer and the common units to be offered so as to enable an investor to decide to purchase or subscribe the common units, as the same may be varied
in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the
2010 PD Amending Directive, to the extent implemented in that Member State) and includes any relevant implementing measure in that Member State and the expression "2010 PD Amending Directive" means
Directive 2010/73/EU. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eq42901_united_kingdom"> </A>
<A NAME="toc_eq42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  United Kingdom    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus and any other material in relation to the common units described herein is only being distributed to, and is only
directed at, persons in the United Kingdom that are qualified investors within the meaning of Article&nbsp;2(1)(e) of the Prospective Directive ("qualified investors") that also (i)&nbsp;have
professional experience in matters relating to investments falling within Article&nbsp;19(5) of the Financial </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>163</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Services
and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or the Order, (ii)&nbsp;who fall within Article&nbsp;49(2)(a) to (d)&nbsp;of the Order or (iii)&nbsp;to whom it may
otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). The common units are only available to, and any invitation, offer or agreement to purchase or
otherwise acquire such common units will be engaged in only with, relevant persons. This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole
or in part) or disclosed by recipients to any other person in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this prospectus or any of its
contents. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eq42901_switzerland"> </A>
<A NAME="toc_eq42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  Switzerland    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus does not constitute an issue prospectus pursuant to Article&nbsp;652a or Article&nbsp;1156 of the Swiss Code of
Obligations ("CO") and the common units will not be listed on the SIX Swiss Exchange. Therefore, the Prospectus may not comply with the disclosure standards of the CO and/or the listing rules
(including any prospectus schemes) of the SIX Swiss Exchange. Accordingly, the common units may not be offered to the public in or from Switzerland, but only to a selected and limited circle of
investors, which do not subscribe to the common units with a view to distribution. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eq42901_hong_kong"> </A>
<A NAME="toc_eq42901_8"> </A>
<BR></FONT><FONT SIZE=2><B>  Hong Kong    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The common units may not be offered or sold by means of any document other than (i)&nbsp;in circumstances which do not constitute an
offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii)&nbsp;to "professional investors" within the meaning of the Securities and Futures Ordinance
(Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii)&nbsp;in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies
Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the common units may be issued or may be in the possession of any person for the purpose of issue (in
each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws
of Hong Kong) other than with respect to common units which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the
Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eq42901_singapore"> </A>
<A NAME="toc_eq42901_9"> </A>
<BR></FONT><FONT SIZE=2><B>  Singapore    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any
other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the common units may not be circulated or distributed, nor may the common units be
offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i)&nbsp;to an institutional investor under
Section&nbsp;274 of the Securities and Futures Act,
Chapter&nbsp;289 of Singapore (the "SFA"), (ii)&nbsp;to a relevant person, or any person pursuant to Section&nbsp;275(1A), and in accordance with the conditions, specified in Section&nbsp;275
of the SFA or (iii)&nbsp;otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Where
the common units are subscribed or purchased under Section&nbsp;275 by a relevant person which is: (a)&nbsp;a corporation (which is not an accredited investor) the sole
business of which is to hold investments and the entire common unit capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b)&nbsp;a trust (where the
trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, common units, debentures and units of common units and debentures of
that corporation or the beneficiaries' rights and interest in that trust shall not be transferable for 6&nbsp;months after that corporation or that trust has acquired the common units under
Section&nbsp;275 except: (1)&nbsp;to an institutional investor under Section&nbsp;274 of the SFA or to a relevant person, or </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>164</FONT></P>

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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>any
person pursuant to Section&nbsp;275(1A), and in accordance with the conditions, specified in Section&nbsp;275 of the SFA; (2)&nbsp;where no consideration is given for the transfer; or
(3)&nbsp;by operation of law. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="eq42901_japan"> </A>
<A NAME="toc_eq42901_10"> </A>
<BR></FONT><FONT SIZE=2><B>  Japan    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The common units have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial
Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any common units, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan
(which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale,
directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and
Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>165</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="es42901_legal_matters"> </A>
<A NAME="toc_es42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  LEGAL MATTERS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The validity of the common units and certain other legal matters will be passed upon for us by Vinson&nbsp;&amp; Elkins,&nbsp;L.L.P.,
New York, New York. Andrews Kurth&nbsp;LLP, Houston, Texas is acting as counsel to the underwriters. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="es42901_experts"> </A>
<A NAME="toc_es42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  EXPERTS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial statements of PL Propylene&nbsp;LLC at December&nbsp;31, 2010 and 2009, and for each of the three years in the period
ended December&nbsp;31, 2010, appearing in this Prospectus and Registration Statement have been audited by Ernst&nbsp;&amp; Young&nbsp;LLP, independent registered public accounting firm, as set
forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
balance sheet of PetroLogistics&nbsp;LP at June&nbsp;9, 2011 appearing in this Prospectus and Registration Statement has been audited by Ernst&nbsp;&amp; Young&nbsp;LLP,
independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and is included in reliance upon such report given on the authority of such firm as
experts in accounting and auditing. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="es42901_where_you_can_find_more_information"> </A>
<A NAME="toc_es42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  WHERE YOU CAN FIND MORE INFORMATION    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have filed with the SEC a registration statement on Form&nbsp;S-1 under the Securities Act with respect to the common
units being offered hereunder. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. For further
information with respect to us and our common units, we refer you to the registration statement and the exhibits filed as a part of the registration statement. Statements contained in this prospectus
concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, we refer you to the
copy of the contract or document that has been filed as an exhibit and reference thereto is qualified in all respects by the terms of the filed exhibit. The registration statement, including exhibits,
may be inspected without charge at the Public Reference Room of the SEC at 100&nbsp;F Street, N.E., Washington, D.C. 20549, and copies of all or any part of it may be obtained from that office after
payment of fees prescribed by the SEC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC
maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC at http://www.sec.gov. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>166</FONT></P>

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<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fa42901_index_to_financial_statements"> </A>
<A NAME="toc_fa42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  INDEX TO FINANCIAL STATEMENTS    <BR>    </B></FONT></P>
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<TD WIDTH="28pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Page </B></FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>PETROLOGISTICS&nbsp;LP</B></FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Introduction</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-2</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unaudited Pro Forma Consolidated Balance Sheet as of March&nbsp;31, 2011</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-3</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December&nbsp;31, 2010</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-4</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unaudited Pro Forma Consolidated Statement of Operations for the Three Months Ended March&nbsp;31, 2011</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-5</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Notes to Unaudited Pro Forma Consolidated Financial Statements</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-6</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>PL PROPYLENE&nbsp;LLC</B></FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Report of Independent Registered Public Accounting Firm</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-10</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Audited Balance Sheets as of December&nbsp;31, 2009 and 2010, Unaudited Balance Sheet as of March&nbsp;31, 2011 and Unaudited Supplemental
Pro Forma Balance Sheet as of March&nbsp;31, 2011</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-11</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Audited Statements of Operations for the Years Ended December&nbsp;31, 2008, 2009 and 2010 and Unaudited Statements of Operations for the
Three Months Ended March&nbsp;31, 2010 and&nbsp;2011</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-12</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Statements of Changes in Member's Equity</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-13</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Audited Statements of Cash Flows for the Years Ended December&nbsp;31, 2008, 2009 and&nbsp;2010 and Unaudited Statements of Cash Flows for
the Three Months Ended March&nbsp;31, 2010 and&nbsp;2011</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-14</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Notes to Financial Statements</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-15</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>PETROLOGISTICS&nbsp;LP</B></FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Report of Independent Registered Public Accounting Firm</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-33</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Audited Balance Sheet as of June&nbsp;9, 2011</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-34</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Notes to the Balance Sheet</FONT></TD>
<TD VALIGN="TOP" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>F-35</FONT></TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fc42901_petrologistics_lp_unaudited_pr__pet02936"> </A>
<A NAME="toc_fc42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  PETROLOGISTICS&nbsp;LP<BR>  <BR>    UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fc42901_introduction"> </A>
<A NAME="toc_fc42901_2"> </A></FONT> <FONT SIZE=2><B>  Introduction    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unaudited pro forma consolidated financial statements of PetroLogistics&nbsp;LP have been derived from the audited historical and
unaudited historical financial statements of our predecessor for accounting purposes, PL Propylene&nbsp;LLC ("PL Propylene" or the "Predecessor") included elsewhere in this prospectus and are
qualified in their entirety by reference to such historical financial statements and related notes contained therein. The unaudited pro forma consolidated financial statements should be read in
conjunction with the audited and unaudited financial statements of PL Propylene, the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included
elsewhere in this prospectus. References herein to "us", "we", "our" or similar terms when used in a historical context refer to PL Propylene. When used in the present tense or prospectively, those
terms refer to PetroLogistics&nbsp;LP and its subsidiaries unless the context otherwise requires or where otherwise indicated. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior
to this offering, we are wholly-owned by Propylene Holdings&nbsp;LLC. Effective with this offering, Propylene Holdings&nbsp;LLC will contribute PL Propylene to us, and we will
own and operate PL Propylene thereafter. The contribution of PL Propylene to us will be recorded at historical cost as it is considered to be a reorganization of entities under common control. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
unaudited pro forma consolidated financial statements have been prepared by adjusting the historical financial statements of PL Propylene. The pro forma adjustments are based on
currently available information and certain estimates and assumptions that we believe are reasonable. Therefore, the actual adjustments will differ from the pro forma adjustments. However, we believe
that the assumptions provide a reasonable basis for presenting the significant effects of the contemplated transactions and that the pro forma adjustments give appropriate effect to those assumptions
and are properly applied in the unaudited pro forma consolidated financial statements. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
unaudited pro forma consolidated financial statements are not necessarily indicative of the results that we would have achieved had the transactions described herein actually taken
place on the dates indicated, and do not purport to be indicative of future financial position or operating results. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
unaudited pro forma consolidated financial statements have been prepared on the basis that PetroLogistics will be treated as a partnership for U.S. federal income tax purposes and
assume that the underwriters do not exercise their option to purchase additional common units and that the additional common units subject to the underwriters' option are distributed to our sponsors
and their affiliates, our executive officers and certain of our employees after the option expires. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-2</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fe42901_petrologistics_lp_unaudited_pr__pet03007"> </A>
<A NAME="toc_fe42901_1"> </A></FONT> <FONT SIZE=2><B><BR>  PETROLOGISTICS&nbsp;LP    <BR>    <BR>    UNAUDITED PRO FORMA<BR>  CONSOLIDATED BALANCE SHEET    <BR>    <BR>    AS OF MARCH 31, 2011    <BR>    </B></FONT></P>
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<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Predecessor<BR>
Actual<BR>
as of<BR>
March&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Pro Forma<BR>
Adjustments </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Pro Forma<BR>
as of<BR>
March&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=10 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(In Thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Assets</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Current assets:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Cash and cash equivalents</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>5,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>380,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>a</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(179,596</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>b</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(186,779</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>c</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(8,625</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>d</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>600,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>g</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(40,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>h</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(560,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>i</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Restricted cash</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,904</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(2,904</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>b</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Accounts receivable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>31,913</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>31,913</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Accounts receivable, related parties</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>258</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>258</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Inventory</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>13,153</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>13,153</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Prepaid expenses and other current assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,757</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,757</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Total current assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>49,985</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,096</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>52,081</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Property, plant and equipment, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>605,385</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>605,385</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Intangible assets, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>9,868</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>9,868</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Deferred financing costs and other</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>10,138</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8,625</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>d</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>8,626</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(10,137</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>e</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Total assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>675,376</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>584</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>675,960</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>Liabilities and member's equity</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Current liabilities:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Accounts payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>12,345</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>12,345</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Accounts payable, related parties</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,082</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,082</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Accrued liabilities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,460</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>2,460</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Revolving loan</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>32,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(32,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>b</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Deferred revenue</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>11,363</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>11,363</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Other current liabilities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>172</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>172</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Bank debt</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>150,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(150,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>b</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Total current liabilities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>209,922</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(182,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>27,422</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Long-term debt</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>380,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>a</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>380,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Asset retirement obligation</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,114</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>1,114</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Total liabilities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>211,036</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>197,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>408,536</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Member's equity</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>464,340</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(464,340</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>f</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-top:9pt;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1><B>PRO FORMA PARTNERS' CAPITAL</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-top:9pt;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Unitholder's capital</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Units held by public</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Common units:&nbsp;&nbsp;&nbsp;&nbsp;common units issued and outstanding</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>600,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>g</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>560,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(40,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>h</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Units held by sponsors and their affiliates, executive officers and certain employees</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Common units:&nbsp;&nbsp;&nbsp;&nbsp;common units issued and outstanding</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(186,779</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>c</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(292,576</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(10,137</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>e</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>464,340</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>f</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(560,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>i</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>90,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>k</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>(90,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>)</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>k</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>General partner interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>j</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Total pro forma partners' capital</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>267,424</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>267,424</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1> </FONT><FONT SIZE=1>Total liabilities and partners' capital</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>675,376</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>584</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=1>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=1>675,960</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-3</FONT></P>

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NAME="fg42901_petrologistics_lp_unaudited_pr__pet04108"> </A>
<A NAME="toc_fg42901_1"> </A></FONT> <FONT SIZE=2><B><BR>  PETROLOGISTICS&nbsp;LP    <BR>    <BR>    UNAUDITED PRO FORMA<BR>  CONSOLIDATED STATEMENT OF OPERATIONS    <BR>    <BR>    FOR THE YEAR ENDED DECEMBER 31, 2010    <BR>    </B></FONT></P>
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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="88pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="59pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="16pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="88pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Predecessor<BR>
Actual<BR>
Year Ended<BR>
December&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Pro Forma<BR>
Adjustments </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Pro Forma<BR>
Year Ended<BR>
December&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=10 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(In Thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>30,351</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>30,351</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>41,836</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>41,836</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(11,485</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(11,485</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>22,884</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>22,884</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(34,369</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(34,369</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(5,418</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,421</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(12,343</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10,945</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>b</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(951</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>c</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(450</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>d</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>52</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>52</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss before income tax expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(39,735</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(6,925</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(46,660</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(39,735</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(6,925</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(46,660</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2> Common unitholders' interest in net income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2> Loss per common unit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2> Weighted average number of common units outstanding</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>The
accompanying notes are an integral part of these unaudited pro forma consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-4</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fh42901_petrologistics_lp_unaudited_pr__pet04347"> </A>
<A NAME="toc_fh42901_1"> </A></FONT> <FONT SIZE=2><B><BR>  PETROLOGISTICS&nbsp;LP    <BR>    <BR>    UNAUDITED PRO FORMA<BR>  CONSOLIDATED STATEMENT OF OPERATIONS    <BR>    <BR>    FOR THE THREE MONTHS ENDED MARCH&nbsp;31, 2011    <BR>
</B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="96pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="59pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="16pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="96pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Predecessor<BR>
Actual<BR>
Three months ended<BR>
March&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Pro Forma<BR>
Adjustments </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Pro Forma<BR>
Three months ended<BR>
March&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=10 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(In Thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>105,810</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>105,810</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>91,565</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>91,565</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,245</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,245</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
31,555</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
31,555</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Management fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>e</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating income (loss)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(17,810</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(17,310</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,697</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,697</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>a</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(5,127</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,675</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>b</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(339</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>c</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(113</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>d</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss before income tax expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(22,482</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>70</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(22,412</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(356</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(356</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(22,838</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>70</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(22,768</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2> Common unitholders' interest in net income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2> Loss per common unit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=9 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2> Weighted average number of common units outstanding</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>The
accompanying notes are an integral part of these unaudited pro forma consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-5</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fi42901_petrologistics_lp_notes_to_una__pet03321"> </A>
<A NAME="toc_fi42901_1"> </A></FONT> <FONT SIZE=2><B><BR>  PETROLOGISTICS&nbsp;LP    <BR>    <BR>    NOTES TO UNAUDITED PRO FORMA<BR>  CONSOLIDATED FINANCIAL STATEMENTS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> (1) Organization and Basis of Presentation  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unaudited pro forma consolidated financial statements of PetroLogistics&nbsp;LP ("PetroLogistics") have been prepared based upon the audited and unaudited historical financial
statements of PL&nbsp;Propylene&nbsp;LLC ("PL&nbsp;Propylene"), a wholly owned subsidiary of Propylene Holdings&nbsp;LLC ("Propylene Holdings"). In connection with the offering by
PetroLogistics of its common units to the public, Propylene Holdings will contribute PL&nbsp;Propylene to PetroLogistics. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
unaudited pro forma consolidated financial statements are not necessarily indicative of the results that PetroLogistics would have achieved had the transactions described herein
actually taken place on the dates indicated, and do not purport to be indicative of future financial position or operating results. The unaudited pro forma consolidated financial statements should be
read in conjunction with the historical financial statements of PL&nbsp;Propylene, the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in the prospectus. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
pro forma adjustments have been prepared as if the transactions described below had taken place on March&nbsp;31, 2011, in the case of the unaudited pro forma consolidated balance
sheet, or as of
January&nbsp;1, 2010 and January&nbsp;1, 2011, respectively, in the case of the unaudited pro forma consolidated statements of operations. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
unaudited pro forma consolidated financial statements reflect the following transactions: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Prior to the closing of this offering, PL&nbsp;Propylene expects to enter into a new $350.0&nbsp;million term loan
facility and a $120.0&nbsp;million revolving credit facility;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Prior to the closing of this offering, PL&nbsp;Propylene will draw $30.0&nbsp;million from under its new revolving
credit facility to fund its working capital needs, draw $350.0&nbsp;million under the new term loan facility and use (1)&nbsp;$179.6&nbsp;million to refinance and cancel its existing credit
facility, (2)&nbsp;approximately $186.8&nbsp;million to reimburse our sponsors for construction capital expenditures and (3)&nbsp;approximately $8.6&nbsp;million to pay associated financing
costs;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>PetroLogistics&nbsp;GP&nbsp;LLC ("PetroLogistics&nbsp;GP"), the general partner of PetroLogistics, and Propylene
Holdings will enter into an amended and restated agreement of limited partnership;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Propylene Holdings will contribute PL&nbsp;Propylene to PetroLogistics in exchange for (1)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common
units, (2)&nbsp;the right to receive the net proceeds from this offering (after deducting underwriting discounts and commissions and the expenses of this offering) and (3)&nbsp;the right to
receive additional common units, a cash distribution or both, based upon whether or not the underwriters exercise their option to purchase additional common units in full or in part; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Propylene Holdings will distribute
all&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units, its right to receive the net proceeds from this
offering (after deducting underwriting discounts and commissions and the expenses of this offering) and its right to receive additional common units, a cash distribution or both, based upon whether or
not the underwriters exercise their option to purchase additional common units in full or in part to our sponsors and their affiliates, our executive officers and certain of our employees; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>PetroLogistics will offer and
sell&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units in this offering and pay related underwriting discounts
and commissions and offering expenses; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-6</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PETROLOGISTICS&nbsp;LP </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO UNAUDITED PRO FORMA<BR>
CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> (1) Organization and Basis of Presentation (Continued) </B></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>PetroLogistics will distribute the $560.0&nbsp;million of net proceeds from this offering (after deducting underwriting
discounts and commissions and the expenses of this offering) of which (1)&nbsp;$302.8&nbsp;million will be distributed to our sponsors to reimburse them for certain construction capital
expenditures and (2)&nbsp;$257.2&nbsp;million will be a distribution to our sponsors and their affiliates, our executive officers and certain of our employees; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>The underwriters will not exercise their option to
purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional common units, and PetroLogistics
will issue such units to our sponsors and their affiliates, our executive officers and certain of our employees. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
completion of PetroLogistics' initial public offering, we expect we will incur approximately $3.5&nbsp;million in additional general and administrative expenses as a result of
being a publicly traded limited partnership that we have not previously incurred, including costs associated with compliance under the Securities Exchange Act of 1934, annual and quarterly reports to
unitholders, tax return and Schedule&nbsp;K-1 preparation and distribution, investor relations, registrar and transfer agent fees, audit fees, incremental director and officer liability
insurance costs and directors' compensation. These incremental expenses exclude the costs of the offering, as well as the costs associated with the initial implementation of our Sarbanes-Oxley
Section&nbsp;404 internal control reviews and testing. Although our financial statements following the offering will reflect the impact of these expenses, our unaudited pro forma consolidated
financial statements do not reflect these expenses. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
historical financial statements reflect significant amounts of equity-based compensation expense. We expect our equity-based awards will vest upon the completion of this offering. We
expect that this vesting will result in a charge to our statement of operations. That charge has not been included in the unaudited pro forma consolidated statements of operations because the charge
is not expected to have a continuing impact on our results of operations. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> (2) Partnership Interests  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following the initial public offering, PetroLogistics will have two types of partnership interests outstanding: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>common units representing limited partner interests, a portion of which PetroLogistics will sell in the initial public
offering (approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of all of PetroLogistics' outstanding units); and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>a non-economic general partnership interest, which is not entitled to any distributions, will be held by
PetroLogistics&nbsp;GP. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> (3) Pro Forma Balance Sheet Adjustments and Assumptions  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fi42901_as_of_march_31,_2011"> </A>
<A NAME="toc_fi42901_2"> </A></FONT> <FONT SIZE=2><B>  As of March&nbsp;31, 2011    <BR>    </B></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the amounts drawn on the new (1)&nbsp;term loan facility of $350.0&nbsp;million and (2)&nbsp;revolving credit facility of
$30.0&nbsp;million.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the refinancing and cancellation of PL&nbsp;Propylene's existing credit facility of $182.5&nbsp;million, net of the restricted cash balance of
$2.9&nbsp;million on deposit with the existing lender, which is applied to the outstanding borrowings at the time of repayment. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-7</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PETROLOGISTICS&nbsp;LP </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO UNAUDITED PRO FORMA<BR>
CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> (3) Pro Forma Balance Sheet Adjustments and Assumptions (Continued) </B></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(c)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
a distribution of $186.8&nbsp;million from the proceeds of the new term loan facility and revolving credit facility to reimburse our sponsors for
certain construction capital expenditures.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(d)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the payment of estimated deferred financing costs of $8.6&nbsp;million associated with the new credit facilities.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(e)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the write-off of deferred financing costs associated with PL&nbsp;Propylene's existing credit facility.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(f)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the contribution by Propylene Holdings of PL&nbsp;Propylene to PetroLogistics.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(g)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the issuance by PetroLogistics of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units to the public at an initial offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per common unit
resulting in aggregate gross proceeds of $600.0&nbsp;million.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(h)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the payment of underwriting commissions of $36.0&nbsp;million and other estimated offering expenses of $4.0&nbsp;million for a total of
$40.0&nbsp;million, which will be allocated to the newly issued public common units.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(i)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the distribution of the $560.0&nbsp;million of net proceeds from this offering, of which (1)&nbsp;$302.8&nbsp;million is distributed to our
sponsors to reimburse them for certain construction capital expenditures and (2)&nbsp;$257.2&nbsp;million is a distribution to our sponsors and their affiliates, our executive officers and certain
of our employees.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(j)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the non-economic general partner interest with nominal value.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(k)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the distribution of the shares related to the unexercised underwriters' option to purchase additional common units to our sponsors and their
affiliates, our executive officers and certain of our employees. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> (4) Pro Forma Statement of Operations Adjustments and Assumptions  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fi42901_for_the_year_ended_december_31,_2010"> </A>
<A NAME="toc_fi42901_3"> </A></FONT> <FONT SIZE=2><B>  For the year ended December&nbsp;31, 2010    <BR>    </B></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the reversal of interest expense and loan commitment fees incurred during the year on PL&nbsp;Propylene's existing credit facility.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the inclusion of interest expense relating to the new term loan facility of $350.0&nbsp;million at an assumed rate of 5% per annum
($17.5&nbsp;million) and the new revolving credit facility borrowings of $30.0&nbsp;million at an assumed rate of 4% per annum ($1.2&nbsp;million), net of interest expense capitalized on
$193.2&nbsp;million of the term loan ($7.8&nbsp;million) for the period January&nbsp;1, 2010 through October&nbsp;20, 2010, when the facility commenced operations. For this purpose, we have
assumed that $186.8&nbsp;million of the gross proceeds from the new credit facilities used to fund the distribution to our sponsors is not capitalized during the construction period. A
<SUP>1</SUP>/<SMALL>8</SMALL>&nbsp;percent change in the interest rates would result in a change in interest expense of approximately $0.3&nbsp;million.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(c)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
amortization of deferred financing cost over the term of the new credit facilities.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(d)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the commitment fee of 0.5% per annum on the estimated average unused portion ($90.0&nbsp;million) of the new $120.0&nbsp;million revolving
credit facility. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-8</FONT></P>

<HR NOSHADE>
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<A NAME="page_fi42901_1_9"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PETROLOGISTICS&nbsp;LP </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO UNAUDITED PRO FORMA<BR>
CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> (4) Pro Forma Statement of Operations Adjustments and Assumptions (Continued) </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fi42901_for_the_three_months_ended_march_31,_2011"> </A>
<A NAME="toc_fi42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  For the three months ended March&nbsp;31, 2011    <BR>    </B></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the reversal of interest expense and loan commitment fees incurred during the year on PL&nbsp;Propylene's existing credit facility.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the inclusion of interest expense (including amortization of deferred financing costs) at an average annual rate of approximately (1)&nbsp;5.0%
relating to the new term loan facility of $350.0&nbsp;million and (2)&nbsp;4.0% related to the revolving credit facility borrowings of $30.0&nbsp;million. A <SUP>1</SUP>/<SMALL>8</SMALL>&nbsp;percent
change in the interest rates would result in a change in interest expense of approximately $0.1&nbsp;million.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(c)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
amortization of deferred financing cost over the term of the new credit facilities.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(d)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the commitment fee of 0.5% per annum on the estimated average unused portion ($90.0&nbsp;million) of the new $120.0&nbsp;million revolving
credit facility.
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(e)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Reflects
the reversal of management fees recorded pursuant to a management services agreement with Lindsay Goldberg that expires under its terms in
conjunction with the initial public offering. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> (5) Pro Forma Net Income (Loss) Per Unit  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro forma net income (loss) per unit is determined by dividing the pro forma net income (loss) that would have been allocated, in accordance with the provisions of
PetroLogistics&nbsp;LP's partnership agreement, to the common unitholders, by the number of common units expected to be outstanding at the closing of this offering. For purposes of this calculation,
PetroLogistics assumed that pro forma distributions were equal to pro forma net income and that the number of outstanding units
was&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;common units at December&nbsp;31, 2010 and
March&nbsp;31, 2011, respectively. All units were assumed to have been outstanding since January&nbsp;1, 2010 and January&nbsp;1, 2011, respectively. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic
and diluted pro forma net income per unit are equivalent as there are no dilutive units at the date of closing of this offering. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-9</FONT></P>

<HR NOSHADE>
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<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fk42901_report_of_independent___fk402288"> </A>
<A NAME="toc_fk42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Report of Independent Registered Public Accounting Firm    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>To
Propylene Holdings&nbsp;LLC: </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have audited the accompanying balance sheets of PL Propylene&nbsp;LLC as of December&nbsp;31, 2009 and 2010, and the related statements of operations, changes in member's equity,
and cash flows for each of the three years in the period ended December&nbsp;31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of PL Propylene&nbsp;LLC at December&nbsp;31, 2009 and
2010, and the results of its operations and its cash flows for each of the three years in the period ended December&nbsp;31, 2010, in conformity with U.S. generally accepted accounting principles. </FONT></P>
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<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>/s/ Ernst&nbsp;&amp; Young&nbsp;LLP</FONT></TD>
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 <P style="font-family:times;text-align:justify"><FONT SIZE=2>Houston,
Texas<BR>
June&nbsp;17, 2011 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-10</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fm42901_pl_propylene_llc_balance_sheets_(in_thousands)"> </A>
<A NAME="toc_fm42901_1"> </A></FONT> <FONT SIZE=2><B><BR>  PL Propylene&nbsp;LLC    <BR>    <BR>    Balance Sheets    <BR>    <BR>    (In Thousands)    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="58pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="64pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=3 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=3 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Supplemental<BR>
Pro Forma<BR>
March&nbsp;31,<BR>
2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>March&nbsp;31,<BR>
2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current assets:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>30,003</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,885</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,904</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,904</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts receivable</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,376</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>31,913</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>31,913</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts receivable, related parties</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>258</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>258</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventory</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,665</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>16,043</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>13,153</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>13,153</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prepaid expenses and other current assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,855</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>866</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,757</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,757</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>33,523</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>38,170</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>49,985</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>49,985</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property, plant, and equipment, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
426,784</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
609,822</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
605,385</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
605,385</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Intangible asset, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,056</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,968</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,868</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,868</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred financing costs and other assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,285</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,916</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,138</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,138</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>484,648</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>668,876</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>675,376</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>675,376</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Liabilities and member's equity (deficit)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current liabilities:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>21,114</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12,454</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12,345</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12,345</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable, related parties</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,236</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,223</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,082</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,082</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,238</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,669</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,460</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,460</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Revolving loan</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>39,500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>32,500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>32,500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred revenue</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,803</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>11,363</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>11,363</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other current liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>172</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>172</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bank debt</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>94,700</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>150,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>150,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>150,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution payable to Member</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>746,800</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>118,288</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>211,649</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>209,922</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>956,722</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asset retirement obligation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
870</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
1,092</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
1,114</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
1,114</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>119,158</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>212,741</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>211,036</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>957,836</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Commitments and contingencies</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Member's equity (deficit)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
365,490</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
456,135</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
464,340</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(282,460</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities and member's equity (deficit)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>484,648</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>668,876</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>675,376</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>675,376</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>See
accompanying notes. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-11</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=184,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=864546,FOLIO='F-11',FILE='DISK131:[11ZBV1.11ZBV42901]FM42901A.;8',USER='AGUERRE',CD='19-JUN-2011;13:06' -->
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<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fo42901_pl_propylene_llc_state__fo402276"> </A>
<A NAME="toc_fo42901_1"> </A></FONT> <FONT SIZE=2><B><BR>  PL Propylene&nbsp;LLC    <BR>    <BR>    Statements of Operations    <BR>    <BR>    (In Thousands)    <BR>    </B></FONT></P>
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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="58pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three Months<BR>
Ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>30,351</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>105,810</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>41,836</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>91,565</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit (loss)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(11,485</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,245</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,729</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,264</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>22,884</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,851</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>31,555</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Management fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,729</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,264</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(34,369</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,851</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(17,810</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest income (expense), net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>744</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(224</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(5,418</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(657</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,697</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>52</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss before income tax expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,985</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,488</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(39,735</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2,508</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(22,482</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(356</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,985</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,488</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(39,735</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2,508</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(22,838</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=1><B>(Unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=1><B> </B></FONT><FONT SIZE=2>Supplemental pro forma net loss per unit</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units used to calculate supplemental pro forma net loss per unit</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>See
accompanying notes. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-12</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=185,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=939001,FOLIO='F-12',FILE='DISK131:[11ZBV1.11ZBV42901]FO42901A.;10',USER='AGUERRE',CD='19-JUN-2011;13:06' -->
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fq42901_pl_propylene_llc_statements_of__pl_02844"> </A>
<A NAME="toc_fq42901_1"> </A></FONT> <FONT SIZE=2><B><BR>  PL Propylene&nbsp;LLC    <BR>    <BR>    Statements of Changes in Member's Equity    <BR>    <BR>    (In Thousands)    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance, December&nbsp;31, 2007</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Member contributions</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>204,978</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity-based compensation</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,956</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,985</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance, December&nbsp;31, 2008</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>202,949</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Member contributions</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>167,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity-based compensation</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>29</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4,488</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance, December&nbsp;31, 2009</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>365,490</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Member contributions</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>115,897</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity-based compensation</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>14,483</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(39,735</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance, December&nbsp;31, 2010</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>456,135</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Member contributions (Unaudited)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,700</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity-based compensation (Unaudited)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>29,343</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss (Unaudited)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(22,838</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance, March&nbsp;31, 2011 (Unaudited)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>464,340</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>See
accompanying notes. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-13</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fs42901_pl_propylene_llc_state__fs402253"> </A>
<A NAME="toc_fs42901_1"> </A></FONT> <FONT SIZE=2><B><BR>  PL Propylene&nbsp;LLC    <BR>    <BR>    Statements of Cash Flows    <BR>    <BR>    (In Thousands)    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:73%;margin-left:10%;">
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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="110%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="56pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="56pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="56pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three Months<BR>
Ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating activities</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,985</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4,488</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(39,735</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,508</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(22,838</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjustments to reconcile net loss to net cash provided by (used in) operations:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity-based compensation expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,956</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>29</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>14,483</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>18</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>29,343</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amortization of deferred financing costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>612</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>780</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation and amortization expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,147</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8,295</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accretion expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>71</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>84</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Changes in working capital:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts receivable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(14,376</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(17,537</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts receivable, related parties</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(258</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventory</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,665</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(14,378</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(37</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,890</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prepaid expenses and other current assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,855</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>989</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>634</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(891</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>123</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6,602</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(8,660</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(426</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(109</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable, related parties</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,236</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(13</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,151</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(141</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued liabilities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>889</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>350</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,431</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,985</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,209</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred revenue</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,803</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6,560</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other current liabilities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>172</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(250</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>250</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Decrease (increase) in restricted cash</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(6,885</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,981</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by (used in) operations</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,017</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>33</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(53,248</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,833</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,058</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Investing activities</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Decrease (increase) in restricted cash</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(39,768</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,765</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>30,003</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(15,593</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Capital expenditures</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(130,183</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(290,953</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(187,452</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(80,040</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,758</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash used in investing activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(169,951</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(281,188</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(157,449</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(95,633</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,758</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-top:11pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Financing activities</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred financing costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,994</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(12,561</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Repayments of borrowings</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(72,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds from borrowings</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>94,700</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>94,800</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22,400</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>65,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Member contributions</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>204,978</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>167,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>115,897</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>71,400</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,700</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total cash provided by (used in) financing activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>202,984</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>249,139</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>210,697</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>93,800</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(5,300</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net change in cash</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>32,016</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(32,016</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash at beginning of period</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>32,016</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash at end of period</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>32,016</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Noncash activities</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest paid, net of amounts capitalized</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>818</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,774</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,917</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>See
accompanying notes. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-14</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fu42901_pl_propylene_llc_notes_to_fina__pl_05183"> </A>
<A NAME="toc_fu42901_1"> </A></FONT> <FONT SIZE=2><B><BR>  PL PROPYLENE&nbsp;LLC    <BR>    <BR>    NOTES TO FINANCIAL STATEMENTS    <BR>    <BR>    (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>  Ended March&nbsp;31,
2010 and 2011, is Unaudited)    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 1. Organization and Basis of Presentation  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_organization_and_nature_of_operations"> </A>
<A NAME="toc_fu42901_2"> </A></FONT> <FONT SIZE=2><B>  Organization and Nature of Operations    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PL Propylene&nbsp;LLC is a limited liability company that produces and markets propylene to its customers. As used in this report,
the terms "we," "us", "our," and like terms refer to PL Propylene&nbsp;LLC. We purchased a former olefins manufacturing facility from ExxonMobil Oil Corporation (ExxonMobil) in March 2008. We
developed and built new assets and converted certain existing assets into an "on-purpose" propylene production facility (the Facility) in Houston, Texas, with production beginning on
October&nbsp;21, 2010. Propylene is used as one of the basic building blocks for petrochemicals in a variety of end uses, including paints, coatings, building materials, clothing, automotive parts,
packaging and a range of other consumer and industrial products. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_basis_of_presentation"> </A>
<A NAME="toc_fu42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Basis of Presentation    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were formed under the laws of Delaware on January&nbsp;31, 2007, and we are a wholly-owned subsidiary of Propylene
Holdings&nbsp;LLC (Holdings), which is our sole member. Holdings is a wholly-owned subsidiary of PL Manufacturing&nbsp;LLC (PLM). The majority owner of PLM is LG Propylene&nbsp;LLC, an affiliate
of Lindsay Goldberg&nbsp;LLC (Lindsay Goldberg). We refer to the owners of PLM as "our sponsors." We are a limited liability company, and as such, Holdings and its members are not personally liable
for any debt, liability or obligation of ours. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
commenced operations in March 2008 when we acquired the ExxonMobil facility. The financial statements have been prepared in accordance with accounting principles generally accepted in
the United States (GAAP). </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_unaudited_interim_financial_data"> </A>
<A NAME="toc_fu42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Unaudited Interim Financial Data    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our balance sheet as of March&nbsp;31, 2011, the statements of operations and cash flows for the three months ended March&nbsp;31,
2010 and 2011, and the statement of changes in member's equity for the three months ended March&nbsp;31, 2011, are unaudited. These unaudited interim financial statements have been prepared on the
same basis as the audited financial statements and, in the opinion of management, reflect all adjustments, necessary for the fair presentation of our financial position as of March&nbsp;31, 2011 and
the results of our operations and our cash flows for the three months ended March&nbsp;31, 2010 and 2011. The financial data and other information disclosed in these notes to the financial
statements related to the three-month periods are unaudited. The results for the three months ended March&nbsp;31, 2011, are not necessarily indicative of the results to be expected for the year
ending December&nbsp;31, 2011, or for any other interim period or for any future year. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_development_stage_enterprise"> </A>
<A NAME="toc_fu42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Development Stage Enterprise    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We operated as a development stage enterprise until commencement of Facility operations in October 2010. During the development-stage
period, we devoted substantially all of our efforts to developing, constructing and financing the construction of the Facility. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-15</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 2. Summary of Significant Accounting Policies  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_use_of_estimates"> </A>
<A NAME="toc_fu42901_6"> </A></FONT> <FONT SIZE=2><B>  Use of Estimates    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the
reporting period. Actual results could differ materially from those estimates. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
more significant areas requiring the use of estimates, assumptions, and judgments relate to recoverability and valuation of long-lived assets and the valuation of
equity-based compensation awards. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_recognition_of_sales"> </A>
<A NAME="toc_fu42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  Recognition of Sales    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of propylene and by-products are recorded when persuasive evidence of an arrangement exists, goods have been
delivered, consideration to be received is fixed and determinable, and collectibility is reasonably assured. Sales are presented net of discounts and allowances. By-product sales are
reported together with propylene sales. Transportation costs billed to customers are recorded as a component of sales. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_cost_of_sales"> </A>
<A NAME="toc_fu42901_8"> </A>
<BR></FONT><FONT SIZE=2><B>  Cost of Sales    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Facility currently produces chemical grade propylene, and we expect that it will be able to produce polymer grade propylene
following modifications to the Facility. In addition, the Facility generates commercial quantities of the following by-products during the production process: hydrogen, C4 mix stream, and
C5+ stream. Cost of sales is calculated on the weighted-average cost basis. In the fourth quarter of 2010, the Facility operated below normal capacity. Accordingly, we recorded a charge of
$1.1&nbsp;million to cost of sales to reflect unabsorbed fixed costs. The Facility's substantial fixed cost structure and limited operations in the period following commencement of operations
resulted in a gross loss for 2010. During the three months ended March&nbsp;31, 2011, we again operated below normal capacity and recorded a charge of $0.6&nbsp;million to costs of sales to
reflect unabsorbed fixed overhead costs. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_cash_and_cash_equivalents"> </A>
<A NAME="toc_fu42901_9"> </A>
<BR></FONT><FONT SIZE=2><B>  Cash and Cash Equivalents    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We consider all short-term instruments with an original maturity of three months or less to be cash equivalents. We
maintain cash in bank deposit accounts that, at times, may exceed federally insured limits. We have not experienced any losses in such accounts, and we believe we are not exposed to any significant
credit risk on cash and cash equivalents. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_restricted_cash"> </A>
<A NAME="toc_fu42901_10"> </A>
<BR></FONT><FONT SIZE=2><B>  Restricted Cash    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2009, we commenced borrowings under our credit facility. Our credit facility includes certain restrictions with respect to our
cash accounts. As such, the cash balances within these accounts of $28.5&nbsp;million, $6.9&nbsp;million and $2.9&nbsp;million have been classified as restricted cash in the balance sheets as of
December&nbsp;31, 2009 and 2010, and March&nbsp;31, 2011, respectively. The remainder of our December&nbsp;31, 2009, cash balance of $1.5&nbsp;million was restricted as collateral for letters
of credit issued on our behalf. We had no outstanding letters of credit at December&nbsp;31, 2010 or March&nbsp;31, 2011. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-16</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 2. Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2010, all restricted cash on hand as of December&nbsp;31, 2009, was used in investing activities to fund the construction of the Facility. Restricted cash on hand as of
December&nbsp;31, 2010, and March&nbsp;31, 2011, was or will be used in 2011 to fund operating activities. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_accounts_receivable"> </A>
<A NAME="toc_fu42901_11"> </A>
<BR></FONT><FONT SIZE=2><B>  Accounts Receivable    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We extend credit to customers in accordance with normal industry standards and terms. We review accounts receivable monthly and
establish an allowance for doubtful accounts based on known factors surrounding the credit risk of specific customers, historical trends and other information. Accounts receivable are not
collateralized, and we will charge interest on receivables should they become past due. To date, we have not recorded any interest income related to past due receivables. Through March&nbsp;31,
2011, we have not recorded any bad debt expense. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_inventory"> </A>
<A NAME="toc_fu42901_12"> </A>
<BR></FONT><FONT SIZE=2><B>  Inventory    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory is carried at the lower of cost or market, with cost determined using a weighted-average method. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_property,_plant_and_equipment"> </A>
<A NAME="toc_fu42901_13"> </A>
<BR></FONT><FONT SIZE=2><B>  Property, Plant and Equipment    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment are recorded at cost. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets. Upon retirement or sale, we remove the cost of the asset and the related accumulated depreciation from the accounts and reflects any resulting gain or loss in the
statements of operations. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repair
and maintenance expenditures incurred in order to maintain the day-to-day operation of our existing assets are charged to expense as incurred. Costs
associated with acquisitions and improvements that expand existing capacity or extend useful life, including related interest costs, are capitalized. Cost of planned major maintenance projects, known
as turnarounds, will be deferred and amortized using the straight-line method over the period until the next plant turnaround, which is approximately three years. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_intangible_asset"> </A>
<A NAME="toc_fu42901_14"> </A>
<BR></FONT><FONT SIZE=2><B>  Intangible Asset    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible asset represents the technology license we acquired related to the propane dehydrogenation process, which is essential to
the design, construction and operation of the Facility. The technology license is being amortized on a straight-line basis over its estimated useful life of 25&nbsp;years. We have no
intangible assets with indefinite useful lives. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_deferred_financing_costs_and_other_assets"> </A>
<A NAME="toc_fu42901_15"> </A>
<BR></FONT><FONT SIZE=2><B>  Deferred Financing Costs and Other Assets    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred financing costs and other assets consist primarily of deferred financing costs incurred in connection with the closing of our
credit facility in June 2009. The costs associated with our credit facility are being amortized using the straight-line method over the term of the facility, which approximates the
effective interest method, and are classified as interest expense. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-17</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 2. Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_impairment_of_long-lived_assets"> </A>
<A NAME="toc_fu42901_16"> </A>
<BR></FONT><FONT SIZE=2><B>  Impairment of Long-Lived Assets    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-lived assets used in operations are assessed for possible impairment when events or changes in circumstances indicate
a potential significant deterioration in future cash flows projected to be generated by the assets. Individual assets are grouped for impairment purposes at the lowest level for which there are
identifiable cash flows that are largely independent of the cash flows of other groups of assets&#151;generally at the Facility level, as we produce one principal product. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
upon review, the sum of the projected undiscounted cash flows is less than the carrying value of the asset group, the carrying value is written down to estimated fair value. The fair
values of impaired assets are usually determined based on the present value of projected future cash flows using discount rates commensurate with the risks involved in the asset group, as quoted
market prices in active markets are generally not available. The expected future cash flows used for impairment reviews and related fair value calculations are based on projected production volumes,
sales volumes, prices and costs, taking into consideration available internal and external information at the date of review. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Should
an impairment of assets arise, we would be required to record a charge to operations that could be material to the period reported. To date, we have not recorded any impairment
charges. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_asset_retirement_obligation"> </A>
<A NAME="toc_fu42901_17"> </A>
<BR></FONT><FONT SIZE=2><B>  Asset Retirement Obligation    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An asset and a liability are recorded at fair value when there is a legal obligation associated with the retirement of a
long-lived asset and the amount can be reasonably estimated. When the liability is initially recorded, this cost is capitalized by increasing the carrying amount of the related
long-lived asset. Over time, the liability is increased for changes in present value, and the capitalized cost is depreciated over the estimated useful life of the related asset. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Where
we can reasonably estimate the asset retirement obligation, we accrue a liability based on an estimate of the timing and amount of settlement. In estimating our asset retirement
obligations, we utilize several assumptions based on when the liabilities were recorded, including an inflation rate and a credit-adjusted discount rate. We record changes in these estimates based on
changes in the expected amount and timing of payments to settle our obligations. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_environmental_costs"> </A>
<A NAME="toc_fu42901_18"> </A>
<BR></FONT><FONT SIZE=2><B>  Environmental Costs    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Environmental expenditures are expensed or capitalized as appropriate, depending on future economic benefit. Expenditures that relate
to an existing condition caused by past operations and that do not have future economic benefit are expensed. Liabilities for expenditures are recorded on an undiscounted basis unless the amount and
timing of cash payments for the liability are fixed or determinable, in which case they are recorded on a discounted basis. Expenditures that create future benefits or contribute to future revenue
generation are capitalized. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_income_taxes"> </A>
<A NAME="toc_fu42901_19"> </A>
<BR></FONT><FONT SIZE=2><B>  Income Taxes    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a limited liability company and are treated similar to a partnership for federal tax purposes whereby the impact of our
operations is subject to tax at the member level. Therefore, no federal income </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-18</FONT></P>

<HR NOSHADE>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 2. Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>taxes
are recognized in the accompanying financial statements. As of December&nbsp;31, 2010, the tax basis of our net assets was approximately $236.8&nbsp;million. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
an entity operating in the State of Texas, we are subject to the Texas Margin Tax, which is an income tax. We follow the liability method of accounting for these income taxes. As of
December&nbsp;31, 2010, our tax returns for 2007 through 2010 were open for examination by the State of Texas. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through
December&nbsp;31, 2010, we have not paid any income taxes. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_equity-based_compensation_expense"> </A>
<A NAME="toc_fu42901_20"> </A>
<BR></FONT><FONT SIZE=2><B>  Equity-Based Compensation Expense    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We recognize compensation expense related to profits interests granted to employees based on the estimated fair value of the awards on
the date of grant, net of estimated forfeitures. The grant date fair value, and the resulting equity-based compensation expense, are estimated using the Black-Scholes option-pricing model. The grant
date fair value of the equity-based awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective
awards. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
also account for profits interests granted to non-employees based on the estimated fair value of the awards using the Black-Scholes option-pricing model. The measurement
of equity-based compensation for awards granted to non-employees is subject to periodic adjustment as the awards vest, and the resulting change in value is recognized in the statement of
operations during the period the related services are rendered. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
is inherent uncertainty in these estimates, and if different assumptions had been used, the fair value of the awards and the related equity-based compensation expense could have
been significantly different. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_fair_value_of_financial_instruments"> </A>
<A NAME="toc_fu42901_21"> </A>
<BR></FONT><FONT SIZE=2><B>  Fair Value of Financial Instruments    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We consider cash and cash equivalents (including restricted cash), accounts receivable, accounts receivable-related parties, accounts
payable, accounts payable-related parties, accrued liabilities and deferred revenue to be financial instruments in which the carrying amounts represent fair value because of the short-term
nature of the accounts. We also consider our revolving loan and bank debt to be financial instruments in which the carrying amounts approximate fair value because of their variable interest rates. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_segment_reporting"> </A>
<A NAME="toc_fu42901_22"> </A>
<BR></FONT><FONT SIZE=2><B>  Segment Reporting    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We operate in one segment for the production and sale of propylene and related by-products. All of our operations are
located in Houston, Texas. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fu42901_earnings_per_share"> </A>
<A NAME="toc_fu42901_23"> </A>
<BR></FONT><FONT SIZE=2><B>  Earnings Per Share    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have omitted earnings per share because we have operated as a private company for all periods presented. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-19</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued)  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited)  </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 3. Inventory  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory consists of the following (in thousands): </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="58pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>March&nbsp;31,<BR>
2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Product inventory:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Raw materials</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>381</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>983</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Work in progress</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,542</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,628</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Finished product</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,391</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,641</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Product inventory</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,314</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,252</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Maintenance spares</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,665</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,729</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,901</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventory</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,665</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>16,043</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>13,153</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 4. Property, Plant and Equipment  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, plant and equipment consists of the following: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Lives<BR>
in Years </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pipelines and plant</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>42,027</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Machinery and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5 to 25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>525,411</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Catalyst</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3 to 25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,818</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Air permits</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>26,415</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5 to 25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,219</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>615,890</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less accumulated depreciation and amortization</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(7,062</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>22</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>608,828</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Construction in process</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>426,762</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>994</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property, plant, and equipment, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>426,784</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>609,822</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation
and amortization expense on property, plant and equipment of $7,056,000 is included in cost of sales in the statements of operations for the year ended December&nbsp;31,
2010, and $8,195,000 for the three months ended March&nbsp;31, 2011. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the years ended December&nbsp;31, 2008, 2009 and 2010, we capitalized interest expense, including amortization of deferred financing costs, related to the construction of the
Facility of $0, $1,392,000 and $10,782,000, respectively. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-20</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=193,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=673553,FOLIO='F-20',FILE='DISK131:[11ZBV1.11ZBV42901]FW42901A.;8',USER='AGUERRE',CD='19-JUN-2011;13:06' -->
<A NAME="page_fw42901_1_21"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 5. Intangible Asset  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our intangible asset at December&nbsp;31 consists of the following (in thousands): </FONT></P>
 <DIV style="padding:0pt;position:relative;width:62%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"130%" -->


</FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="130%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Gross<BR>
Carrying<BR>
Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Accumulated<BR>
Amortization </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Net<BR>
Carrying<BR>
Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Gross<BR>
Carrying<BR>
Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Accumulated<BR>
Amortization </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Net<BR>
Carrying<BR>
Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Licensed technology</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,056</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,056</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,056</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(88</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,968</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization
expense on our intangible asset for the year ended December&nbsp;31, 2010, was $88,000, and is included in cost of sales. Prior to the commencement of operations in
October 2010, there was no amortization expense. Amortization expense of $100,000 is included in cost of sales for the three months ended March&nbsp;31, 2011. Amortization expense on the intangible
asset for each of the next five years is estimated to be $402,000. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 6. Deferred Financing Costs and Other Assets  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2009 and 2010, deferred financing costs and other assets consist primarily of deferred financing costs, net of amortization, of $14,034,000 and $10,915,000,
respectively. See Note&nbsp;8 for a summary of deferred financing cost amortization by period, including the capitalization thereof related to the construction of the Facility. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Scheduled
amortization of deferred financing costs for the next five years as of December&nbsp;31, 2010 is as follows: $3,119,000 per year for each of 2011 through 2013, and $1,558,000
in 2014. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 7. Asset Retirement Obligation  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our asset retirement obligation is comprised of expected costs to be incurred upon termination of operations and the closure of the Facility. The estimated asset retirement obligation
liability will increase, or accrete, each year over the life of the Facility until it equals the estimated cash flows expected to be incurred on anticipated closure of the Facility. The change in our
asset retirement obligation is set forth below (in thousands): </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


</FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="30pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asset retirement obligation, beginning of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>799</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>870</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accretion expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>71</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>84</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Revisions in estimated cash flows</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>138</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asset retirement obligation, end of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>870</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,092</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 8. Debt  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We entered into a five-year credit facility agreement with Soci&eacute;t&eacute; G&eacute;n&eacute;rale (the Lender) on June&nbsp;12, 2009.
The original capacity of the facility was $205,000,000, comprised of a $150,000,000 construction loan commitment and a $55,000,000 revolving loan commitment. Borrowings under the facility are secured
by substantially all of our assets. During 2010 and 2011, we entered into amendments to the agreement </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-21</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=194,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=306745,FOLIO='F-21',FILE='DISK131:[11ZBV1.11ZBV42901]FW42901A.;8',USER='AGUERRE',CD='19-JUN-2011;13:06' -->
<A NAME="page_fw42901_1_22"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 8. Debt (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>whereby,
among other things, the amount available under the revolving loan commitment was increased to $65,000,000 through June&nbsp;30, 2011, with any borrowings in excess of $55,000,000 due on
June&nbsp;30, 2011. Interest on the facility is variable and is based upon either (i)&nbsp;the Eurodollar base rate (LIBOR), subject to a LIBOR floor of 2.75%, plus a margin or (ii)&nbsp;the
Lender's prime rate plus a margin, at our election. Interest is due monthly for Eurodollar borrowings and quarterly for prime rate borrowings. The weighted-average interest rate as of
December&nbsp;31, 2009 and 2010, and March&nbsp;31, 2011, was prime-based at 8%. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrowings
under the revolving loan commitment became available beginning on June&nbsp;1, 2010, and are limited to the extent that such borrowings must be used to fund estimated
operation and maintenance expenses for the thirty days from the date of the borrowing request. The minimum borrowing amount is $3,000,000, and increases are in increments of $500,000. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the terms of the credit facility agreement, we are required to maintain a depository account with the Lender whereby all sales and proceeds of any nature are required to be
deposited and held to repay any amounts borrowed under the facility after allowing for payment of operation and maintenance expenses. On a monthly basis, proceeds from sales, to the extent they exceed
estimated operation and maintenance expenses for the next thirty days, must be used to repay the revolving loan and then the construction loan when there are no outstanding borrowings on the revolving
loan. Accordingly, we have classified all debt as current in the accompanying financial statements. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
the terms of our credit facility agreement, as amended, we were required to satisfy a series of tests demonstrating successful operation of the Facility (Performance Tests) by
May&nbsp;31, 2011. The Performance Tests required the Facility to achieve certain operating criteria for specified periods of time. In May 2011, we successfully completed the Performance Tests in
satisfaction of the loan requirements, and the construction loan was converted to a term loan with principal and interest due quarterly thereafter, beginning in the third quarter of 2011. Quarterly
principal and interest payments on the term loan are due based on a ten year amortization schedule with a balloon payment due in 2014. Any outstanding balance on the revolving loan is due at maturity
of the facility in June 2014. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With
the conversion of the construction loan to a term loan, the following table reflects the principal payments due on the term loan and revolving loan during the next five years (in
thousands): </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2011</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,885</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2012</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>10,408</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2013</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>11,322</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2014</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>162,885</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>189,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
the construction loan converted to a term loan with a ten year amortization, we are required to pay down the revolving loan and term loan with excess cash, as defined in the
credit agreement, through a sweep arrangement with the bank. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with obtaining the credit facility, we were required to obtain a supplemental equity commitment, as defined in the credit agreement, from Lindsay Goldberg in the amount of
$120,000,000 on which the Lender would have the right to foreclose in addition to the loan's collateral in the event of </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-22</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=195,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=264089,FOLIO='F-22',FILE='DISK131:[11ZBV1.11ZBV42901]FW42901A.;8',USER='AGUERRE',CD='19-JUN-2011;13:06' -->
<A NAME="page_fw42901_1_23"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 8. Debt (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>default
by us. Upon the conversion of the construction loan to a term loan in May 2011, this supplemental equity commitment from Lindsay Goldberg was reduced to $10,000,000. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the conversion of the construction loan to a term loan, we are also required to fund certain cash reserves, including a debt service reserve and a major maintenance
reserve. We funded $10.9&nbsp;million into the debt service reserve in connection with the conversion of the construction loan. Beginning in the third quarter of 2011, we will begin making quarterly
deposits to the major maintenance reserve to fund that reserve to $15&nbsp;million by June&nbsp;30, 2013. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest
income (expense), net consists of the following (in thousands): </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="30pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="34pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three Months<BR>
Ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense incurred on borrowings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(875</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10,994</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2,210</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,729</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest capitalized</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>875</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,275</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,210</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Loan commitment fees</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(826</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2,090</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(660</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(188</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amortization of deferred financing costs</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(517</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,119</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(780</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(780</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amortization of deferred financing costs capitalized</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>517</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,507</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>780</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>744</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>602</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest income (expense), net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>744</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(224</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(5,418</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(657</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,697</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
did not incur any interest expense in 2008 as we entered into our credit facility arrangement in 2009. We pay a quarterly commitment fee at 2.875% per annum of available borrowings in
excess of the outstanding borrowings. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 9. PLM Profits Interest Plan  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fw42901_overview"> </A>
<A NAME="toc_fw42901_1"> </A></FONT> <FONT SIZE=2><B>  Overview    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PLM maintains a profits interest plan (the Plan) for the benefit of our employees, as well as the key management employees of certain
affiliated companies (collectively, Management). Because the Plan is intended to compensate Management with respect to the services they perform for our benefit, the equity-based compensation expense
is reflected in our financial statements. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PetroLogistics
Company&nbsp;LLC (PetroLogistics&nbsp;LLC) is an entity owned by David Lumpkins and Nathan Ticatch. Through March&nbsp;31, 2011, the senior executives who oversee
our operations were employed by PetroLogistics&nbsp;LLC and provided management services to us pursuant to our services agreement with PetroLogistics&nbsp;LLC. The majority of the profits
interests ("Units") we have issued are to persons employed by PetroLogistics&nbsp;LLC. Therefore, for accounting purposes, we have treated these awards as being made to non-employees.
See Note&nbsp;11 for further discussion of our transactions with PetroLogistics&nbsp;LLC. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders
of Units are entitled to receive distributions when and as determined by the Board of Managers of PLM (the PLM Board). The ultimate amount received by each of the Unit holders
will vary </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-23</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=196,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=169625,FOLIO='F-23',FILE='DISK131:[11ZBV1.11ZBV42901]FW42901A.;8',USER='AGUERRE',CD='19-JUN-2011;13:06' -->
<A NAME="page_fw42901_1_24"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 9. PLM Profits Interest Plan (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>depending
on the amounts distributed. After our sponsors have received an amount equal to their aggregate capital contributions as part of the first distribution, any additional distribution amount
will next be paid to Class&nbsp;B members and will be an amount equal to $1 for each Class&nbsp;B Unit. The Class&nbsp;C and Class&nbsp;D members have approximately 10% and 5% shares,
respectively, in any subsequent distributions, as adjusted for any cost overruns on the Facility construction. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
July&nbsp;23, 2008, the PLM Board authorized the issuance of up to 3,912,720 Class&nbsp;B Units, 46,492,320 Class&nbsp;C Units, and 23,246,160 Class&nbsp;D Units to
Management. On September&nbsp;29, 2010, the PLM Board increased the number of authorized Units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following Units were issued and outstanding, or authorized and available for issuance: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="59pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="64pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="64pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>December&nbsp;31, 2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>December&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Issued and<BR>
Outstanding </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Authorized<BR>
and Available<BR>
for Issuance </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Issued and<BR>
Outstanding </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Authorized<BR>
and Available<BR>
for Issuance </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Unit Class</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;B</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,912,720</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,912,720</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,109,750</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>950,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>45,542,320</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>55,054,205</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>16,506,909</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;D</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>23,246,160</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>27,527,103</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,253,454</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,862,720</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>68,788,480</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>86,494,028</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>26,870,113</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
additional Units were authorized or issued during the three months ended March&nbsp;31, 2011. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fw42901_vesting_and_unit_rights"> </A>
<A NAME="toc_fw42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Vesting and Unit Rights    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Class&nbsp;B Units were fully vested at the date of issuance, July&nbsp;23, 2008. The issued and outstanding Class&nbsp;C and
Class&nbsp;D Units vest over four years beginning on the later of March&nbsp;11, 2009, or the recipient's date of employment. The Class&nbsp;C and Class&nbsp;D Units also fully vest upon the
occurrence of certain events including a distribution from PLM. If a Management member ceases to be employed by us, the member retains the vested Units. Any unvested Units at the time of termination
are forfeited. If the termination is for cause, all vested Units are forfeited. There were no forfeitures for any of the periods presented. The Class&nbsp;B, Class&nbsp;C and Class&nbsp;D Units
do not have voting rights. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fw42901_determination_of_equity-based_compensation_expense"> </A>
<A NAME="toc_fw42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Determination of Equity-Based Compensation Expense    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity-based compensation expense for equity-based awards issued to employees is based on the estimated grant-date fair
value of the Units. We recognize this equity-based compensation expense on a straight-line basis over the requisite service period of the award for those Units expected to vest. For Units
granted to non-employees, non-vested Units are revalued at the reporting date fair value, with any change in value reflected in the statement of operations. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-24</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=197,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=1031421,FOLIO='F-24',FILE='DISK131:[11ZBV1.11ZBV42901]FW42901A.;8',USER='AGUERRE',CD='19-JUN-2011;13:06' -->
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NAME="page_fy42901_1_25"> </A> </FONT> <FONT SIZE=2>


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</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued)  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited)  </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 9. PLM Profits Interest Plan (Continued)  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total recognized equity-based compensation expense related to the Plan was as follows for each reporting period (in thousands): </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="25pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year Ended December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three Months<BR>
Ended March&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2008 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>532</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>78</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,956</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>29</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>13,951</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>18</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>29,265</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total equity-based compensation expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,956</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>29</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>14,483</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>18</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>29,343</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fy42901_employee_awards"> </A>
<A NAME="toc_fy42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Employee Awards    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There was no activity with respect to employee Units prior to 2010. The table below summarizes the activity relating to the employee
Units during the year ended December&nbsp;31, 2010: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Class&nbsp;C Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number<BR>
of Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted-<BR>
Average<BR>
Grant Date<BR>
Fair Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units outstanding, end of year 2009</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units granted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,695,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units forfeited</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units outstanding, end of year 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,695,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
table below summarizes the activity relating to the nonvested employee Units granted under the Plan for the year ended December&nbsp;31, 2010: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="59pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Class&nbsp;C Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number<BR>
of Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted-<BR>
Average<BR>
Grant Date<BR>
Fair Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nonvested units, end of year 2009</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units granted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,695,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units vested</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2,861,250</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nonvested units, end of year 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,833,750</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vested units, end of year 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,861,250</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the three months ended March&nbsp;31, 2011, no Units were granted or forfeited. As of March&nbsp;31, 2011, no Class&nbsp;B or Class&nbsp;D Units had been granted to
employees, and 3,722,500 Class&nbsp;C Units were vested. The aggregate intrinsic value of outstanding employee Units (determined based on the number of outstanding Units multiplied by the fair value
per unit as of the reporting date) at December&nbsp;31, 2010 and </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-25</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=198,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=10549,FOLIO='F-25',FILE='DISK131:[11ZBV1.11ZBV42901]FY42901A.;9',USER='AGUERRE',CD='19-JUN-2011;13:06' -->
<A NAME="page_fy42901_1_26"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 9. PLM Profits Interest Plan (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>March&nbsp;31,
2011, was $2,904,000 and $10,593,000, respectively. The aggregate intrinsic value of vested employee Units at December&nbsp;31, 2010 and March&nbsp;31, 2011, was $1,459,000 and
$6,924,000, respectively. The total weighted-average grant date fair value for employee Units that vested during the year ended December&nbsp;31, 2010 and the three months ended March&nbsp;31,
2011, was $1,001,000 and $301,000, respectively. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fy42901_non-employee_awards"> </A>
<A NAME="toc_fy42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Non-Employee Awards    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2008, a total of 3,912,720 Class&nbsp;B Units were granted, and there was no activity with respect to the Class&nbsp;C or
Class&nbsp;D Units. During 2009, a total of 950,000 Class&nbsp;C Units were granted at a weighted average grant date fair value of $0.30, and there was no activity with respect to the
non-employee Class&nbsp;B or Class&nbsp;D Units. The table below summarizes the activity relating to the non-employee Units during the year ended December&nbsp;31, 2010: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"150%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="150%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Class&nbsp;B Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Class&nbsp;C Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Class&nbsp;D Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number<BR>
of Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted-<BR>
Average<BR>
Grant Date<BR>
Fair Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number<BR>
of Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted-<BR>
Average<BR>
Grant Date<BR>
Fair Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number<BR>
of Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted-<BR>
Average<BR>
Grant Date<BR>
Fair Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units outstanding, end of year 2009</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,912,720</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.50</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>950,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.30</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units granted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>48,409,205</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>27,527,103</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.26</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units forfeited</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units outstanding, end of year 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,912,720</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.50</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>49,359,205</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>27,527,103</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.26</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
table below summarizes the activity relating to the nonvested non-employee Units granted under the Plan for the year ended December&nbsp;31, 2010: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"150%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="150%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="55pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="65pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Class&nbsp;B Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Class&nbsp;C Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Class&nbsp;D Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number<BR>
of Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted-<BR>
Average<BR>
Grant Date<BR>
Fair Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number<BR>
of Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted-<BR>
Average<BR>
Grant Date<BR>
Fair Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Number<BR>
of Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Weighted-<BR>
Average<BR>
Grant Date<BR>
Fair Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nonvested units, end of year 2009</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>950,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.30</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units granted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>48,409,205</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>27,527,103</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.26</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Units vested</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(12,339,801</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(6,881,776</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.26</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nonvested units, end of year 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>37,019,404</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>20,645,327</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.26</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vested units, end of year 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,912,720</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.50</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12,339,801</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.35</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,881,776</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.26</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the three months ended March&nbsp;31, 2011, no Units were granted or forfeited. As of March&nbsp;31, 2011, 3,912,720 Class&nbsp;B, 24,442,103 Class&nbsp;C and 13,763,552
Class&nbsp;D units were vested for non-employees. The aggregate intrinsic value of outstanding non-employee Units (determined based on the number of outstanding Units
multiplied by the fair value per unit as of the reporting date) at December&nbsp;31, 2010 and March&nbsp;31, 2011, was $39,587,000 and $149,013,000, respectively. The aggregate intrinsic value of
vested non-employee Units at December&nbsp;31, 2010 and March&nbsp;31, 2011, was $12,655,000 and $79,132,000, </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-26</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=199,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=967984,FOLIO='F-26',FILE='DISK131:[11ZBV1.11ZBV42901]FY42901A.;9',USER='AGUERRE',CD='19-JUN-2011;13:06' -->
<A NAME="page_fy42901_1_27"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 9. PLM Profits Interest Plan (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>respectively.
The total fair value for non-employee Units that vested during the years ended December&nbsp;31, 2008, 2009, and 2010, and the three months ended March&nbsp;31, 2010 and
2011, was $1,956,000, $-0-, $8,977,000, $-0- and $34,278,000, respectively. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fy42901_unrecognized_compensation_cost"> </A>
<A NAME="toc_fy42901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  Unrecognized Compensation Cost    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At December&nbsp;31, 2010 and March&nbsp;31, 2011, compensation cost related to nonvested Units that had not yet been recognized
totaled $27,923,000 and $70,571,859, respectively. The weighted-average period over which this amount will be recognized is estimated to be 2.2&nbsp;years. If Units are forfeited, the compensation
cost related to those Units would be revised. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
noted above, Units issued to non-employees are subject to revaluation until such Units become vested. Accordingly, our future results will be impacted significantly by
future changes in the value of nonvested Units issued to non-employees as well as the vesting of the outstanding Units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fy42901_estimates_and_key_assumptions"> </A>
<A NAME="toc_fy42901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  Estimates and Key Assumptions    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We engage an independent valuation specialist to assist us in determining the fair value of the Units. We estimate the fair value of
the Units using the Black-Scholes option-pricing model. The Black-Scholes model requires the use of highly subjective and complex assumptions that determine the fair value of equity-based awards,
including the equity value of our business and the profits interests' expected time to liquidity, volatility, risk-free interest rate and dividend yield. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Given
the absence of a public trading market for our common units and in accordance with the American Institute of Certified Public Accountants Practice Guide, </FONT> <FONT SIZE=2><I>Valuation of Privately-Held-Company Equity Securities Issued as
Compensation</I></FONT><FONT SIZE=2>, we exercised reasonable judgment and considered
numerous objective and subjective factors to determine the best estimate of the equity value of our business, including, among others: publicly available forecasts of future propylene and propane
prices that are published by industry sources as of each valuation date; contemporaneous and retrospective valuations performed by an independent valuation specialist; the status of our facility's
construction and operations, including risks attendant thereto; the likelihood of our achieving a liquidity event given prevailing market conditions; the nature, history and strategy for our business;
the illiquidity of share-based awards involving private company securities; and current and expectations about future macroeconomic conditions. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
valuing our Units, we estimate the equity value of our business by considering a weighted combination of value indications under two valuation approaches, an income approach and a
market
approach. The income approach estimates the present value of future estimated cash flows, based upon forecasted sales and costs, including consideration of forecasts of future propylene and propane
prices that are published by industry sources as of each valuation date. These future cash flows are discounted to their present values using a discount rate derived from an analysis of the cost of
capital of comparable publicly traded companies in our industry or similar lines of business as of each valuation date, as adjusted to reflect the risks inherent in our cash flows. The market approach
estimates the fair value of a company by applying market multiples of comparable publicly traded companies in our industry or similar lines of business, which are based on key metrics implied by the
enterprise values or acquisition values of our comparable publicly traded companies. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-27</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=200,EFW="2204563",CP="PETROLOGISTICS LP",DN="1",CHK=350783,FOLIO='F-27',FILE='DISK131:[11ZBV1.11ZBV42901]FY42901A.;9',USER='AGUERRE',CD='19-JUN-2011;13:06' -->
<A NAME="page_fy42901_1_28"> </A>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 9. PLM Profits Interest Plan (Continued) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
fair value of our business was then allocated to each of our classes of profits interests using the Option Pricing Method (OPM). The OPM is appropriate to use when the range of
possible future outcomes is so difficult to predict that forecasts would be highly speculative. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
terms of number of Units awarded, our most significant grants occurred on (i)&nbsp;July&nbsp;23, 2008 on which 3,912,320 Class&nbsp;B Units were issued and
(ii)&nbsp;September&nbsp;29, 2010 on which 53,901,080 and 27,425,540 Class&nbsp;C and D Units, respectively, were issued. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
fair values of our Units on a per-unit basis are as follows as of each date: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="32pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="32pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="58pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>March&nbsp;31,<BR>
2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Unit Class</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;B</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.68</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.94</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2.59</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;C</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.30</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.51</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.86</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;D</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.21</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.39</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.71</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following weighted-average assumptions were used in determining the fair values: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="20pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="42pt" style="font-family:times;"></TD>
<TD WIDTH="20pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="58pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>December&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>March&nbsp;31,<BR>
2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Estimated time to liquidity event</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4&nbsp;years</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3&nbsp;years</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2.75&nbsp;years</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Expected volatility</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>40</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>45</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Risk-free interest rate</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2.2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dividend yield</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
estimated the time to a liquidity event based on our then-current expectations regarding the period during which we believed we could achieve significant milestones in our
business strategy and effect a liquidity event. We have no historical volatility since the Units have never been publicly traded. Accordingly, the volatility used has been estimated by using
volatility information from a peer group of publicly traded companies. The risk-free rate is based on the U.S. Treasury rate for notes with terms best matching the Unit's expected term.
The dividend yield assumption of 0% is based on our history and our expectation of not paying dividends. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
single event caused the valuation of our Units to increase through March&nbsp;31, 2011. Instead, a combination of the factors, described below, in each period led to the changes in
the fair value of our underlying equity value, and, therefore, our Units. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;March 2008 to December 2008.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In March 2008, we received an initial capital contribution from Lindsay Goldberg and acquired the Facility
site from
ExxonMobil. We began construction of our facility in summer 2008. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;January 2009 to December 2009.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;After a period of significant volatility in the United States and global capital markets generally, and
in the
chemical industry specifically, during the third and fourth </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-28</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 9. PLM Profits Interest Plan (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>quarters
of 2008, capital market conditions began to stabilize and recover in early 2009. In summer 2009, we hired certain key executives. Throughout 2009, the Facility construction continued. As of
December&nbsp;31, 2009, we determined the fair value of our Class&nbsp;C Units to be $0.30 per unit and our Class&nbsp;D units to be $0.21 per unit. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;January 2010 to December 2010.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the second half of 2010, we completed the construction of the Facility. We commenced Facility
operations as of
October&nbsp;21, 2010, although we operated well below capacity and we generated a negative gross margin. Beginning in the second half of 2010, the publicly available forecasts of future
propane-to-propylene spreads, which underlie our business model, and our expectations regarding our future profitability began to increase, thereby increasing our estimate of
the equity value of our business. As of December&nbsp;31, 2010, we determined a fair value of our Class&nbsp;C Units to be $0.51 per unit and our Class&nbsp;D units to be $0.39 per unit. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;January 2011 to March 2011.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;During the three months ended March&nbsp;31, 2011, we significantly increased our production. In addition,
publicly
available forecasts of future propane-to-propylene spreads reflected significant increases as of March&nbsp;31, 2011, as compared to December&nbsp;31, 2010. As a result,
our estimate of the equity value of our business, and therefore the value of our Units, increased substantially in the three months ended March&nbsp;31, 2011. As of March&nbsp;31, 2011, we
determined the fair value of our Class&nbsp;C Units to be $1.86 per unit and our Class&nbsp;D units to be $1.71 per unit. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
is a high degree of subjectivity involved when estimating the value of equity-based compensation. There is currently no market-based mechanism or other practical application to
verify the reliability and accuracy of the estimates resulting from our valuation models, nor is there a means to compare and adjust the estimates to actual values. Although the fair value of our
Units is determined using an option-pricing model, that value may not be indicative of the fair value that would be observed in a
market transaction between a willing buyer and a willing seller. If factors change and we employ different assumptions when value our Units, the equity-based compensation expense that we record in the
future may differ significantly from what we have historically reported. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 10. Employee Benefit Plan  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We sponsor a profit-sharing 401(k) plan that covers substantially all of employees, whereby eligible employees may elect to contribute a portion of their annual compensation, subject to
IRS limitations. We match 100% of an employee's contribution up to the first 6% of such employee's compensation. Additionally, the profit-sharing plan also provides for supplemental discretionary
contributions from 4% to 10% of eligible wages for eligible employees as of year-end. Total expense for the profit-sharing 401(k) plan for the years ended December&nbsp;31, 2008, 2009,
and 2010, and for the three months ended March&nbsp;31, 2010 and 2011, was $155,000, $672,000, $1,047,000, $92,000, and $116,000, respectively. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 11. Related Party and Affiliate Transactions  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PetroLogistics&nbsp;LLC and PL Midstream&nbsp;LLC (PL Midstream), which are affiliated companies, provide certain services to us, including: (i)&nbsp;accounting, payroll, and other
financial services; (ii)&nbsp;information systems, network, and communication services; (iii)&nbsp;employee benefit services, and (iv)&nbsp;management services. These services are provided in
exchange for a monthly charge. During the years ended </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-29</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 11. Related Party and Affiliate Transactions (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>December&nbsp;31,
2008, 2009, and 2010, we incurred fees of $872,000, $1,424,000 and $1,715,000 from PetroLogistics&nbsp;LLC, and $329,000, $375,000 and $12,000 from PL Midstream for services
provided during those years, respectively. During the three months ended March&nbsp;31, 2010 and 2011, we incurred fees of $345,000 and $524,000 from PetroLogistics&nbsp;LLC, and $-0-
and $-0- from PL Midstream for services provided during those periods, respectively. PetroLogistics&nbsp;LLC allocates fees on a pro rata basis between us and PL Midstream after
deducting direct expenses. PL Midstream charges us for services based on estimated time spent by PL Midstream employees on our business plus overhead. These fees from PetroLogistics&nbsp;LLC and PL
Midstream are reported as general and administrative expense. We also paid PL Midstream $169,000 and $140,000 for pipeline management fees during the year ended December&nbsp;31, 2010, and for the
three months ended March&nbsp;31, 2011, respectively, which is included in cost of sales. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the years ended December&nbsp;31, 2008, 2009 and 2010, and for the three months ended March&nbsp;31, 2010 and 2011, we utilized the services of a company owned by Lindsay
Goldberg in the amounts of $677,000, $5,276,000, $21,805,000, $4,869,000 and $724,000, respectively, in connection with Facility construction and maintenance activities. Also during 2010, we
reimbursed Lindsay Goldberg for administrative and out of pocket expenses in the amount of $58,000. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to an agreement entered into with Lindsay Goldberg, we pay an annual fee of $2,000,000 for advisory services, beginning in the first quarter of 2011. We incurred $500,000 in
advisory fees for the three months ended March&nbsp;31, 2011. This agreement terminates upon an initial public offering. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 12. Concentrations of Risk  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal market is the Texas Gulf Coast region. Our sales were to the following customers for the periods indicated: </FONT></P>
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<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="64pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="67pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Year Ended<BR>
December&nbsp;31,<BR>
2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Three Months<BR>
Ended<BR>
March&nbsp;31,<BR>
2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1><B>(Unaudited)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dow Chemical Company</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>40</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>44</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Petrochemicals USA,&nbsp;Inc.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>36</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>INEOS Olefins and Polymers USA</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>19</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have entered into long-term sales contracts with three customers to provide minimum annual quantities of propylene. These minimum quantities comprise the substantial
majority of the Facility's anticipated annual production of propylene. The loss of any of these customers without replacement on comparable terms could adversely affect our business, results of
operations and financial condition. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
concentration in the volume of business transacted with a limited number of customers subjects us to substantial risks. If we were to lose one or more of our current customers, we
would seek to engage in sales transactions with other petrochemical companies on either a long-term contract basis or in the spot market, although there is no assurance we would be able to
do so. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-30</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 12. Concentrations of Risk (Continued) </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have entered into long-term market-based contracts for the purchase of propane, our sole feedstock, as well as smaller amounts of nitrogen and natural gas to produce
propylene. There is only one supplier under each of these contracts. Interruptions in or limitations on volumes provided under these contracts subjects us to risk that we are unable to meet our
production requirements if we are unable to locate and procure replacement volumes from alternate sources. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial
instruments that subject us to concentrations of credit risk consist principally of accounts receivable, which are primarily from customers that operate in the petrochemical
industry. This industry concentration has the potential to impact our overall exposure to credit risk in that the customers may be similarly affected by changes in economic, industry, or other
conditions that subject us to credit risk. We review credit exposure and financial information of our customers and generally require prepayment from customers that are not considered creditworthy,
unless the credit risk can otherwise be reduced. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 13. Commitments and Contingencies  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are obligated under long-term propylene sales agreements to supply our three largest customers with minimum quantities of propylene annually. The agreements run through
December&nbsp;31, 2014, for two customers and through December&nbsp;31, 2013, for the third customer. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fy42901_purchase_obligations"> </A>
<A NAME="toc_fy42901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  Purchase Obligations    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms of a propylene storage contract and a nitrogen supply contract, we are obligated to make payments that approximate the
following: $1.8&nbsp;million in 2011, $1.9&nbsp;million in 2012 and 2013, $0.6&nbsp;million in 2014 and 2015 and $3.5&nbsp;million thereafter. We have contracts to purchase propane and other
materials used in the production process, but these contracts do not specify minimum purchase commitments. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fy42901_lease_obligations"> </A>
<A NAME="toc_fy42901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  Lease Obligations    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently do not have any non-cancelable lease agreements that extend beyond one year. For the year ended
December&nbsp;31, 2010, and for the three months ended March&nbsp;31, 2011, our total rent expense was $155,000 and $373,000, respectively. We did not incur any rent expense in 2008 or 2009 or
during the three months ended March&nbsp;31, 2010. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fy42901_environmental"> </A>
<A NAME="toc_fy42901_7"> </A>
<BR></FONT><FONT SIZE=2><B>  Environmental    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Facility may experience releases of hydrocarbons or other contaminants into the environment, or we may discover past releases that
were previously unidentified. Although we maintain an inspection program designed to prevent and, as applicable, detect and address such releases promptly, damages and liabilities incurred due to any
such environmental releases from our assets may affect our business. To date, management has not identified any material environmental obligations. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fy42901_insurance"> </A>
<A NAME="toc_fy42901_8"> </A>
<BR></FONT><FONT SIZE=2><B>  Insurance    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Facility may experience damage as a result of an accident, natural disaster or terrorist activity. These hazards can cause personal
injury and loss of life, severe damage to and destruction of property and </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-31</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
HREF="#bg42901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
PL PROPYLENE&nbsp;LLC </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> (Information Pertaining to March&nbsp;31, 2011, and the Three-Month Periods<BR>
Ended March&nbsp;31, 2010 and 2011, is Unaudited) </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 13. Commitments and Contingencies (Continued) </B></FONT></P>

<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>equipment,
pollution or environmental damage, and suspension of operations. We maintain insurance of various types that we consider adequate to cover our assets and operations. The insurance policies
are subject to deductibles, limits and sub-limits and other terms, such that our ability to receive indemnification thereunder is limited. Our insurance does not cover every potential risk
associated with operating the Facility. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
occurrence of a significant event that is not fully insured, indemnified or reserved against, or the failure of a party to meet its indemnification obligations, could materially and
adversely affect our operations and financial condition. We believe we are adequately insured with respect to our operations. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="fy42901_legal_matters"> </A>
<A NAME="toc_fy42901_9"> </A>
<BR></FONT><FONT SIZE=2><B>  Legal Matters    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are routinely involved in various legal matters arising from the normal course of business for which no provision has been made in
the financial statements. While the outcome of these proceedings cannot be predicted with certainty, we believe that these proceedings, when resolved, will not have a material adverse effect on our
results of operations, financial position, or liquidity. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 14. Subsequent Events  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We evaluated subsequent events through June&nbsp;17, 2011, the date on which the financial statements were available to be issued. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 15. Supplemental Pro Forma Information (Unaudited)  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unaudited supplemental pro forma balance sheet and net loss per unit have been presented in accordance with SEC Staff Accounting Bulletin Topic 1.B.3. The supplemental pro forma balance
sheet gives effect to the distribution of $746.8&nbsp;million to Holdings to be paid upon completion of a debt financing and an initial public offering. However, neither the assumed proceeds from
the debt financing nor the initial public offering have been included in the unaudited supplemental pro forma balance sheet as of March&nbsp;31, 2011. We had a net loss for the three months ended
March&nbsp;31, 2011. Accordingly, we are deemed to have used $746.8&nbsp;million of net proceeds to pay the distribution, which is evidenced by a distribution payable to Member reflected in the
unaudited supplemental pro forma balance sheet. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unaudited
supplemental pro forma net loss per unit includes additional units for the three months ended March&nbsp;31, 2011, representing the number of units deemed for accounting
purposes to have been
sold in this offering in order to raise $746.8&nbsp;million to pay the distribution. To compute the number of units, we utilized an assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per unit
(the midpoint of the range set forth on the cover page of this prospectus) after deducting the estimated underwriting discounts and offering expenses. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-32</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ga42901_report_of_independent___ga402279"> </A>
<A NAME="toc_ga42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>To
the Partners of PetroLogistics&nbsp;LP: </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have audited the accompanying balance sheet of PetroLogistics&nbsp;LP (the Partnership) as of June&nbsp;9, 2011. This balance sheet is the responsibility of the Partnership's
management. Our responsibility is to express an opinion on this balance sheet based on our audit. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of material misstatement. We were not engaged to perform an audit of the Partnership's internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of PetroLogistics&nbsp;LP at June&nbsp;9, 2011, in conformity
with U.S. generally accepted accounting principles. </FONT></P>

<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>/s/
Ernst&nbsp;&amp; Young&nbsp;LLP </FONT></P>

</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>Houston,
Texas<BR>
June&nbsp;17, 2011 </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-33</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="gc42901_petrologistics_lp_balance_sheet_june_9,_2011"> </A>
<A NAME="toc_gc42901_1"> </A></FONT> <FONT SIZE=2><B><BR>  PetroLogistics&nbsp;LP    <BR>    <BR>    Balance Sheet    <BR>    <BR>    June&nbsp;9, 2011    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
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<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Partners' Capital</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Limited partner's interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Limited partner's subscription receivable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General partner's interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total partners' capital</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>See
accompanying notes to balance sheet. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-34</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ge42901_petrologistics_lp_notes_to_balance_sheet"> </A>
<A NAME="toc_ge42901_1"> </A></FONT> <FONT SIZE=2><B><BR>  PetroLogistics&nbsp;LP    <BR>    <BR>    Notes to Balance Sheet    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 1. Formation of the Partnership, Organization and Nature Of Business  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PetroLogistics&nbsp;LP, or the "Partnership," is a Delaware limited partnership formed on June&nbsp;9, 2011, by Propylene Holdings&nbsp;LLC (Holdings) to own PL
Propylene&nbsp;LLC (PL Propylene), a wholly-owned subsidiary of Holdings. PL Propylene owns and operates the world's largest propane dehydrogenation facility ("PDH Facility") that processes propane
into propylene and selected by-products. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following
the contemplated contribution of PL Propylene&nbsp;LLC to the Partnership, the Partnership intends to offer common units, representing limited partner interests, pursuant to
an initial public offering. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holdings
plans to contribute $1,000 to the Partnership in June 2011. PetroLogistics&nbsp;GP&nbsp;LLC is the general partner and holds a non-economic interest in the
Partnership. There have been no other transactions involving the Partnership as of June&nbsp;9, 2011. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2><B> 2. Subsequent Events  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have evaluated subsequent events through June&nbsp;17, 2011, the date on which the financial statements were available to be issued. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-35</FONT></P>

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<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><A
NAME="gk42901_appendix_a"> </A>
<A NAME="toc_gk42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  APPENDIX&nbsp;A    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="gk42901_amended_and_restated_partnership_agreement"> </A>
<A NAME="toc_gk42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  AMENDED AND RESTATED PARTNERSHIP AGREEMENT    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>A-1</FONT></P>

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<A NAME="toc_gm42901_1"> </A></FONT> <FONT SIZE=2><B>  APPENDIX&nbsp;B    <BR>    </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="gm42901_glossary_of_selected_terms"> </A>
<A NAME="toc_gm42901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  GLOSSARY OF SELECTED TERMS    <BR>    </B></FONT></P>
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<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Acrylic acid</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>A liquid organic acid used to produce super-absorbents (for diapers), coatings, adhesives, floor polishes and paints. It comprises about 6% of propylene demand in 2010. Chemical Data projects U.S. demand
growth for acrylic acid at 3.0% per year from 2011 through 2015.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Acrylonitrile</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>A liquid that is an important monomer for the manufacture of useful plastics and fibers. Comprising about 9% of
propylene demand in 2010, it is used to produce synthetic rubber compounds used to create pipe, automotive body parts, golf club heads, protective head gear, nylon, coatings, toys and acrylic fiber. Chemical Data projects U.S. demand growth for
acrylonitrile at 2.9% per year from 2011 through 2015.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Alkane</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Chemical compounds that consist only of the elements carbon (C)&nbsp;and hydrogen (H)&nbsp;
(i.e.&nbsp;hydrocarbons).</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Alkylate/Alkylation</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>A highly desirable gasoline blendstock which can be produced from propylene. Alkylation is the process by which
alkylate is produced. Because alkylation is an alternative use for propylene outside of the chemical market, propylene's value as a gasoline blendstock provides a floor for the price of propylene. Propylene alkylate is used as a major gasoline
blendstock due to its physical properties and relative low cost.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Butane and butylenes</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Butane is a highly flammable, colorless, easily liquefied gas with the formula C4H10. Butane is one of various
feedstocks that can be used to produce ethylene and, as such, competes with propane for a share of ethylene feedstock demand in the Gulf Coast. Butylene is an alternate name for hydrocarbon butene, C4H8, the result of removing two hydrogen atoms from
a butane molecule.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Cracking</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>The process by which complex substances are broken down into simpler molecules by heat and pressure.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>CGP</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Chemical-grade propylene, a mix of 93.0%-95.0% propylene and 7.0%-5.0% propane and other hydrocarbons. This type
of propylene is used as a raw material for a wide variety of chemicals including propylene oxide and acrylic acid.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Ethane</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>At standard temperature and pressure, ethane (C2H6) is a colorless, odorless gas. Ethane is isolated on an
industrial scale from natural gas. Its chief use is as a feedstock for ethylene production.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Ethylene crackers</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Ethylene crackers produce propylene as a co-product secondary to ethylene production.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Enterprise</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Enterprise Products Operating&nbsp;LLC, our current supplier of propane.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Feedstock</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Any bulk raw material constituting the principal input for an industrial process.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Fluid catalytic cracking (FCC)</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>An oil refining process widely used to convert the hydrocarbons of petroleum crude oils to gasoline and other
products.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Fractionation</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>The process of separating the natural gas liquids, such as propane and ethane, into their base components
(fractions).</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Free radical reaction</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>A chemical reaction, such as combustion, involving the unpairing of electrons.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>General partner</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>PetroLogistics&nbsp;GP&nbsp;LLC, the general partner of PetroLogistics&nbsp;LP.</FONT></TD>
</TR>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Green-field project</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Examples of green-field projects are new factories or power plants which are built from scratch on undeveloped
land. A developer of a green-field project faces significant impediments with respect to permitting, availability of real estate and cost considerations.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Houston Ship Channel</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Located in Houston, Texas, the channel is the conduit for ocean-going vessels between the Houston-area shipyards
and the Gulf of Mexico. The proximity to Texas oilfields led to the establishment of numerous petrochemical refineries along the waterway.</FONT></TD>
</TR>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Hydrocarbons</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hydrocarbons are organic compounds that consist of only C and H atoms. It is often used to describe fossil
fuels.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Metathesis</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>A chemical reaction between two compounds in which parts of each are interchanged to form two new compounds
(AB&nbsp;+&nbsp;CD&nbsp;= AD&nbsp;+&nbsp;CB). Metathesis is one of three primary production techniques used by on-purpose plants to produce propylene.</FONT></TD>
</TR>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Monomers</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Molecules typically about 4-10 atoms in size that bond readily to other monomers in a process called
polymerization.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Nameplate capacity</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>The normal maximum output of a generating source.</FONT></TD>
</TR>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Naphtha</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Refers to a number of different flammable liquid mixtures of hydrocarbons. Naphtha is a feedstock derived from
crude oil used by naphtha crackers to produce ethylene.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Natural gas processing</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Natural gas processing consists of separating all of the various hydrocarbons and fluids from pure natural gas to
produce pipeline quality dry natural gas to be used by consumers. Natural gas which comes directly from a well contains many natural gas liquids, including ethane, propane, butane, iso-butane, and natural gasoline.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Olefins</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Olefins, also known as polypropylene or polyethylene, is a long-chain polymer synthetic fiber that is created when ethylene
and/or propylene gases are polymerized under very specific conditions. Olefins facilities producing ethylene produce PGP and CGP as co-products. These facilities also produce propylene as a by-product of their steam crackers.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>MMBtu</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>One million BTU. BTU (British thermal unit) is a unit of energy equal to about 1,055.05585 joules. It is
approximately the amount of energy needed to increase the temperature of 1 pound of water by 1 &deg;F.</FONT></TD>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>PGP</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Polymer-grade propylene, a mix of 99.5% propylene and 0.5% propane and other hydrocarbons. This type of propylene
is typically used as a raw material for the production of polypropylene.</FONT></TD>
</TR>
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<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>PL Propylene&nbsp;LLC</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Our wholly-owned subsidiary and our sole direct or indirect subsidiary. All of our operations are conducted and
all of the our assets owned by PL Propylene&nbsp;LLC. References in this prospectus to "PetroLogistics&nbsp;LP," "we, "our," "us," our "predecessor" or similar terms when used in a historical context refer to PL Propylene&nbsp;LLC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Polymers</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Molecules which consist of a long, repeating chain of smaller units called monomers.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Polypropylene</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Polypropylene is a thermoplastic polymer and is used in a variety of applications including packaging, ropes,
textiles, paper coatings, plastic parts, and reusable containers.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Propane</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>A commodity produced by extraction and separation from natural gas production streams and as a by-product of
refineries. Propane is the sole feedstock of our PDH facility.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Propylene</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Propylene is an important building block in the production of complex petrochemicals such as
polypropylene.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Propane dehydrogenation (PDH) facility</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>A processing facility that produces high purity polymer-grade propylene from a propane rich stream. A PDH
facility uses the CATOFIN process, which refines propane in order to produce propylene.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>RGP</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Refinery-grade propylene, a mix of approximately 60.0% propylene and 40.0% propane and other hydrocarbons. This
type of propylene is utilized in both fuel and chemicals markets.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>Sponsors</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Lindsay Goldberg&nbsp;LLC (or Lindsay Goldberg) and York Capital Management (or York Capital).</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><I>WTI crude oil</I></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p align=left style="font-family:times;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>West Texas Intermediate crude oil, which is used as a benchmark in pricing oil.</FONT></TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ho42901_common_units_representing_limited_partner_interests"> </A>
<A NAME="toc_ho42901_1"> </A>
<BR></FONT><FONT SIZE=4><B>Common Units<BR>  Representing Limited Partner Interests  <BR>  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B>
<IMG SRC="g114531.jpg" ALT="GRAPHIC" WIDTH="424" HEIGHT="55">
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ho42901_petrologistics_lp"> </A>
<A NAME="toc_ho42901_2"> </A>
<BR></FONT><FONT SIZE=5><B>PetroLogistics&nbsp;LP  <BR>  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><I>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ho42901_morgan_stanley_citi_ubs_invest__mor04192"> </A>
<A NAME="toc_ho42901_3"> </A>
<BR></FONT><FONT SIZE=5><B>Morgan Stanley<BR>  Citi<BR>  <BR>    UBS Investment Bank<BR>  <BR>    Wells Fargo Securities<BR>  <BR>    </B></FONT><FONT SIZE=3><B>SOCIETE GENERALE<BR>  Stifel Nicolaus Weisel  <BR>  </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through
and including&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011 (25&nbsp;days after the commencement of this offering), all dealers that effect
transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This delivery is in addition to a dealers' obligation to deliver a prospectus when acting as an underwriter and with respect to
their unsold allotments or subscriptions. </FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="ja42901_part_ii_information_not_required_in_prospectus"> </A>
<A NAME="toc_ja42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  PART II<BR>  <BR>    INFORMATION NOT REQUIRED IN PROSPECTUS    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ja42901_item_13._other_expense__ja401989"> </A>
<A NAME="toc_ja42901_2"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;Other Expenses of Issuance and Distribution.    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the costs and expenses to be paid by the Registrant in connection with the sale of the common units
representing limited partner interests being registered hereby. All amounts are estimates except for the SEC registration fee, the Financial Industry Regulatory Authority, or FINRA, filing fee and The
New York Stock Exchange listing fee. </FONT></P>
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<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SEC registration fee</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>69,660</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>FINRA filing fee</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>60,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>The New York Stock Exchange listing fee</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounting fees and expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Legal fees and expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Printing and engraving expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transfer agent and registrar fees and expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Miscellaneous expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>To
be included by amendment. </FONT></DD></DL>
 </DIV>
 <P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ja42901_item_14._indemnification_of_directors_and_officers."> </A>
<A NAME="toc_ja42901_3"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;Indemnification of Directors and Officers.    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The section of the prospectus entitled "The Partnership Agreement&#151;Indemnification" is incorporated herein by reference and
discloses that we will generally indemnify our executive officers and the directors and officers of our general partner and our sponsors to the fullest extent permitted by law against all losses,
claims, damages or similar events. Subject to any terms, conditions or restrictions set forth in the second amended and restated partnership agreement, Section&nbsp;17-108 of the
Delaware Revised Uniform Limited Partnership Act empowers a Delaware limited partnership to indemnify and hold harmless any partner or other person from and against all claims and demands whatsoever. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;18-108
of the Delaware Limited Liability Company Act provides that a Delaware limited liability company may indemnify and hold harmless any member or manager
or other person from and against any and all claims and demands whatsoever. The limited liability company agreement of PetroLogistics&nbsp;GP&nbsp;LLC, our general partner, provides for the
indemnification of its directors and officers against liabilities they incur in their capacities as such. The Registrant may enter into indemnity agreements with each of its current directors and
officers to give these directors and officers additional contractual assurances regarding the scope of the indemnification set forth in the Registrant's limited liability company agreement and to
provide additional procedural protections. </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
underwriting agreement that we expect to enter into with the underwriters, to be filed as Exhibit&nbsp;1.1 to this registration statement, will contain indemnification and
contribution provisions.  </FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ja42901_item_15._recent_sales_of_unregistered_securities."> </A>
<A NAME="toc_ja42901_4"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;Recent Sales of Unregistered Securities.    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;9, 2011, in connection with the formation of PetroLogistics&nbsp;LP, or the Partnership, the Partnership issued
(i)&nbsp;to PetroLogistics&nbsp;GP&nbsp;LLC, its general partner, the non-economic general partner interest in the Partnership and (ii)&nbsp;to its sponsors and certain of the
Partnership's employees and affiliates, the limited partner interest in the Partnership for $1,000. The issuance was exempt from registration under Section&nbsp;4(2) of the Securities Act of 1933.
There have been no other sales of unregistered securities within the past three years. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>II-1</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<BR>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ja42901_item_16._exhibits_and_financial_statement_schedules."> </A>
<A NAME="toc_ja42901_5"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;Exhibits and Financial Statement Schedules.    <BR>    </B></FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>The
following exhibits are filed herewith: </FONT></DD></DL>
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<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Exhibit<BR>
Number </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Exhibit Title </B></FONT></TH>
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<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>**</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>Form of Underwriting Agreement.</FONT></TD>
</TR>
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<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>3.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Certificate of Limited Partnership of PetroLogistics&nbsp;LP</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>3.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>**</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Amended and Restated Agreement of Limited Partnership of PetroLogistics&nbsp;LP (incorporated by reference to Appendix&nbsp;A to the Prospectus contained within the Registrant's Registration Statement on
Form&nbsp;S-1)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>3.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Certificate of Formation of PetroLogistics&nbsp;GP&nbsp;LLC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>3.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>**</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Form of Limited Liability Company Agreement of PetroLogistics&nbsp;GP&nbsp;LLC.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>4.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>**</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Specimen certificate for the common units (incorporated by reference to Appendix&nbsp;A to the Prospectus contained within the Registrant's Registration Statement on Form&nbsp;S-1)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>5.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>**</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Opinion of Vinson&nbsp;&amp; Elkins&nbsp;L.L.P., as to the legality of the securities being registered</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>8.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>**</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Form of opinion of Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. relating to tax matters</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>21.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>**</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>List of Subsidiaries of PetroLogistics&nbsp;LP</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>23.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Consent of Ernst&nbsp;&amp; Young&nbsp;LLP.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>23.2</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>**</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Consent of Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. (included in Exhibit&nbsp;5.1).</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>23.3</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>**</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Consent of Vinson&nbsp;&amp; Elkins&nbsp;L.L.P. (included in Exhibit&nbsp;8.1).</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>23.4</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Consent of Chemical Data</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><BR><FONT SIZE=2>24.1</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>Power of Attorney (included in signature page)</FONT></TD>
</TR>
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<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>Included
with this filing
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>**</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>To
be filed by amendment </FONT></DD></DL>
 </DIV>
 <UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>None. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
NAME="ja42901_item_17._undertakings."> </A>
<A NAME="toc_ja42901_6"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;17.&nbsp;&nbsp;&nbsp;&nbsp;Undertakings.    <BR>    </B></FONT></P>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions
described in Item&nbsp;14 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>II-2</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2><A
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<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned Registrant hereby undertakes that: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>For
purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration
Statement in reliance upon Rule&nbsp;430A and contained in a form of prospectus filed by the Registrant pursuant to Rule&nbsp;424(b)(1) or (4)&nbsp;or 497(h) under the Securities Act shall be
deemed to be part of this Registration Statement as of the time it was declared effective; and
<BR><BR></FONT></DD><DT style='font-family:times;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:times;text-align:justify"><FONT SIZE=2>For
the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. </FONT></DD></DL>
</UL>

<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Registrant undertakes to send to each limited partner at least on an annual basis a detailed statement of any transactions with PetroLogistics&nbsp;GP&nbsp;LLC, our general
partner, or any of its affiliates, and of fees, commissions, compensation and other benefits paid, or accrued to, PetroLogistics&nbsp;GP&nbsp;LLC or its affiliates for the fiscal year completed,
showing the amount paid or accrued to each recipient and the services performed. </FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Registrant undertakes to provide to the limited partners the financial statements required by Form&nbsp;10-K for the first full fiscal year of operations of the
Partnership. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>II-3</FONT></P>

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<P style="font-family:times;text-align:justify"><FONT SIZE=2>
<A HREF="#bg42901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="jc42901_signatures"> </A>
<A NAME="toc_jc42901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  SIGNATURES    <BR>    </B></FONT></P>


<P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in Houston. Texas, on this 20th day of June, 2011. </FONT></P>
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<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><FONT SIZE=2> PETROLOGISTICS&nbsp;LP</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>  By:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><BR><FONT SIZE=2>PetroLogistics&nbsp;GP&nbsp;LLC, its general partner</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:times;"><BR><FONT SIZE=2>  By:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;DAVID LUMPKINS<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Name: David Lumpkins<BR>
Title: </FONT><FONT SIZE=2><I>Executive Chairman</I></FONT></TD>
</TR>
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 <P style="font-family:times;text-align:justify"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<P style="font-family:times;text-align:justify"><font size=1></FONT><FONT SIZE=2>


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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH NOWRAP  ALIGN="CENTER" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:17pt;"><FONT SIZE=1><B>Title

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH NOWRAP  ALIGN="CENTER" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:17pt;"><FONT SIZE=1><B>Date


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<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>/s/&nbsp;DAVID LUMPKINS<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> David Lumpkins</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>Executive Chairman and director of PetroLogistics&nbsp;GP&nbsp;LLC (Principal Executive Officer)</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>June&nbsp;20, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;NATHAN TICATCH<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Nathan Ticatch</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>President and Chief Executive Officer and director of PetroLogistics&nbsp;GP&nbsp;LLC</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>June&nbsp;20, 2011</FONT></TD>
</TR>
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<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;SHARON SPURLIN<BR>


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</FONT> <FONT SIZE=2> Sharon Spurlin</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>Senior Vice President and Chief Financial Officer of PetroLogistics&nbsp;GP&nbsp;LLC (Principal Financial and Accounting Officer)</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>June&nbsp;20, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;ALAN E. GOLDBERG<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Alan E. Goldberg</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>Director of PetroLogistics&nbsp;GP&nbsp;LLC</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>June&nbsp;20, 2011</FONT></TD>
</TR>
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<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;LANCE L. HIRT<BR>


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</FONT> <FONT SIZE=2> Lance L. Hirt</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>Director of PetroLogistics&nbsp;GP&nbsp;LLC</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>June&nbsp;20, 2011</FONT></TD>
</TR>
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<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;ZALMIE JACOBS<BR>



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</FONT> <FONT SIZE=2> Zalmie Jacobs</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>Director of PetroLogistics&nbsp;GP&nbsp;LLC</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>June&nbsp;20, 2011</FONT></TD>
</TR>
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<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;ROBERT D. LINDSAY<BR>


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</FONT> <FONT SIZE=2> Robert D. Lindsay</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>Director of PetroLogistics&nbsp;GP&nbsp;LLC</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>June&nbsp;20, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>/s/&nbsp;ANDREW S. WEINBERG<BR>


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</FONT> <FONT SIZE=2> Andrew S. Weinberg</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>Director of PetroLogistics&nbsp;GP&nbsp;LLC</FONT></TD>
<TD VALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:times;"><BR><FONT SIZE=2>June&nbsp;20, 2011</FONT></TD>
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>II-4</FONT></P>

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Table of Contents
As filed with the Securities and Exchange Commission on June 21, 2011
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PetroLogistics LP
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
2890
(Primary Standard Industrial
Classification Code Number)
45-2532754
(I.R.S. Employer
Identification Number)
909 Fannin Street, Suite 2630
Houston, TX 77010
(713) 255-5990
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
National Corporate Research, Ltd.
615 South DuPont Highway
Dover, DE 19901
(800) 483-1140
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Mike Rosenwasser
James J. Fox
Vinson & Elkins L.L.P.
666 Fifth Avenue, 26th Floor
New York, NY 10103
(212) 237-0000
G. Michael O'Leary
Andrews Kurth LLP
600 Travis, Suite 4200
Houston, Texas 77002
(713) 220-4200
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the
following box.
o
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and
list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
ý
(Do not check if a
smaller reporting company)
Smaller reporting company
o
CALCULATION OF REGISTRATION FEE
Title of each class of securities
to be registered
Proposed maximum
aggregate offering
price
(1)
(2)
Amount of
registration fee
Common units representing limited partner interests
$600,000,000
$69,660
(1)
Includes
common units issuable upon exercise of the underwriters' option to purchase additional common units.
(2)
Estimated
solely for the purpose of calculating the registration fee pursuant to Rule 457(o) of the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or
until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
Table of Contents
PROSPECTUS (Subject to Completion)
dated June 21, 2011
The information in this prospectus is not complete and may be changed. We may not sell these securities, and these securities
may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting
offers to buy these securities in any state where the offer or sale is not permitted.
Common Units
Representing Limited Partner Interests
PetroLogistics LP
This is the initial public offering of our common units representing limited partner interests. Prior to this offering, there has been no public market for our
common units. We currently anticipate that the initial public offering price for our common units will be between $               and
$               per unit. We intend to apply to list the common
units on the New York Stock Exchange under the symbol "PDH."
We have granted the underwriters an option to purchase up to an
additional                             common units from us at the initial public offering price, less
underwriting discounts and commissions,
within 30 days from the date of this prospectus.
Investing in our common units involves risks. Please see "Risk Factors" beginning on page 17. These risks include
the following:
•
We may not have sufficient available cash to pay any quarterly distribution on our
common units.
•
The amount of our quarterly cash distributions, if any, will vary significantly both
quarterly and annually and will be directly dependent on the performance of our business. Unlike most publicly traded partnerships, we will not have a minimum quarterly distribution or employ
structures intended to consistently maintain or increase distributions over time.
•
The propylene business is, and propylene prices are, cyclical and highly volatile
and have experienced substantial downturns in the past. Cycles in demand and pricing could potentially expose us to significant fluctuations in our operating and financial results, and expose you to
substantial volatility in our quarterly cash distributions and material reductions in the trading price of our common units.
•
Our operations are dependent on third-party suppliers, including Enterprise, which
owns the propane pipeline that provides propane to our facility. A deterioration in the financial condition of a third-party supplier, a mechanical problem with one of their facilities or the
inability of a third-party supplier to perform in accordance with its contractual obligations could have a material adverse effect on our results of operations, financial condition and our ability to
make cash distributions.
•
We currently derive substantially all of our sales from three customers, and the
loss of any of these customers without replacement on comparable terms would affect our results of operations and cash available for distribution to our unitholders.
•
Our general partner, which is owned by funds controlled by Lindsay Goldberg and York
Capital, has fiduciary duties to Lindsay Goldberg and York Capital, and the interests of Lindsay Goldberg and York Capital may differ significantly from, or conflict with, the interests of our public
common unitholders.
•
Our unitholders have limited voting rights and are not entitled to elect our general
partner or our general partner's directors.
•
You will experience immediate and substantial dilution in the net tangible book
value of your common units.
•
We have a limited operating history upon which to rely in evaluating our ability to
pay quarterly cash distributions or our ability to be successful in implementing our business strategy.
•
Our tax treatment depends on our status as a partnership for U.S. federal income tax
purposes, as well as our not being subject to a material amount of entity-level taxation by individual states. If the IRS were to treat us as a corporation for federal income tax purposes or we were
to become subject to material additional amounts of entity-level taxation for state tax purposes, then our cash available for distribution to you could be substantially reduced.
•
You will be required to pay taxes on your share of our income even if you do not
receive any cash distributions from us.
$              Per Common Unit
Per Common Unit
Total
Initial Public Offering Price
$
$
Underwriting Discounts and Commissions
$
$
Proceeds Before Expenses to Us
$
$
The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the common units to purchasers on or
about                           , 2011.
Joint Book-Running Managers
Morgan Stanley
Citi
UBS Investment Bank
Wells Fargo Securities
Co-Managers
SOCIETE GENERALE
Stifel Nicolaus Weisel
, 2011
TABLE OF CONTENTS
PROSPECTUS SUMMARY
1
Organizational Structure
8
The Offering
10
Summary Historical and Pro Forma Consolidated Financial
Information
14
RISK FACTORS
17
Risks Related to Our Business
17
Risks Related to an Investment in Us
29
Tax Risks
35
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
39
THE TRANSACTIONS AND OUR STRUCTURE AND
ORGANIZATION
41
The Transactions
41
Management
41
Conflicts of Interest and Fiduciary Duties
42
USE OF PROCEEDS
43
CAPITALIZATION
44
DILUTION
45
OUR CASH DISTRIBUTION POLICY AND RESTRICTIONS ON
DISTRIBUTIONS
47
General
47
Forecasted Available Cash
48
Assumptions and Considerations
50
HOW WE MAKE CASH DISTRIBUTIONS
54
General
54
Common Units Eligible for Distribution
54
Method of Distributions
54
General Partner Interest
54
Adjustments to Capital Accounts upon Issuance of Additional Common
Units
54
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL
INFORMATION
55
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
58
Overview
58
Factors Affecting the Comparability of Future Results
58
Factors Affecting Results
60
How We Evaluate Our Performance
61
Results of Operations
61
Critical Accounting Policies
65
Liquidity and Capital Resources
67
Cash Flows
70
Contractual Obligations
70
Off-Balance Sheet Arrangements
71
Quantitative and Qualitative Disclosures about Market Risk
71
INDUSTRY OVERVIEW
72
Propylene Industry Overview
72
Propane Market Overview
80
BUSINESS
85
Our Business
85
Our Products and Customers
85
Our Competitive Strengths
86
Our Business Strategy
89
Our History
90
Our Sponsors
90
Our Facility
91
Our PDH Technology
92
Feedstock Supply
93
Competition
94
Environmental Matters
94
Safety, Health and Security Matters
98
Employees
98
Properties
98
Legal Proceedings
98
MANAGEMENT
99
Our Management
99
Board Committees
99
Executive Officers and Directors
100
Compensation Discussion and Analysis
103
Employment Agreements
108
Severance and Change in Control Agreements
108
Tax Considerations
108
Executive Compensation
108
Summary Compensation
109
Director Compensation
113
Compensation Practices as they Relate to Risk Management
113
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
114
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
116
Distributions and Payments to Our General Partner and its
Affiliates
116
Agreements with Affiliates of Our General Partner
117
CONFLICTS OF INTEREST AND FIDUCIARY DUTIES
119
Conflicts of Interest
119
Fiduciary Duties
124
Related Party Transactions
126
DESCRIPTION OF OUR COMMON UNITS
127
Our Common Units
127
Transfer Agent and Registrar
127
Transfer of Common Units
127
Listing
128
THE PARTNERSHIP AGREEMENT
129
Organization and Duration
129
Purpose
129
Capital Contributions
129
Voting Rights
129
Applicable Law; Forum, Venue and Jurisdiction
131
Limited Liability
131
Issuance of Additional Partnership Interests
132
Amendment of Our Partnership Agreement
133
ii
Merger, Sale or Other Disposition of Assets
135
Termination and Dissolution
135
Liquidation and Distribution of Proceeds
136
Withdrawal or Removal of Our General Partner
136
Transfer of General Partner Interest
137
Transfer of Ownership Interests in Our General Partner
137
Change of Management Provisions
138
Call Right
138
Non-Citizen Assignees; Redemption
138
Meetings; Voting
139
Status as Limited Partner or Assignee
139
Indemnification
139
Reimbursement of Expenses
140
Books and Reports
140
Right to Inspect Our Books and Records
140
Registration Rights
141
COMMON UNITS ELIGIBLE FOR FUTURE SALE
142
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
144
Taxation of the Partnership
144
Tax Consequences of Unit Ownership
146
Tax Treatment of Operations
151
Disposition of Units
152
Uniformity of Units
154
Tax-Exempt Organizations and Other Investors
154
Administrative Matters
155
State, Local and Other Tax Considerations
158
INVESTMENT IN PETROLOGISTICS LP BY EMPLOYEE BENEFIT
PLANS
159
UNDERWRITERS
160
Directed Unit Program
162
Pricing of the Offering
163
European Economic Area
163
United Kingdom
163
Switzerland
164
Hong Kong
164
Singapore
164
Japan
165
LEGAL MATTERS
166
EXPERTS
166
WHERE YOU CAN FIND MORE INFORMATION
166
INDEX TO FINANCIAL STATEMENTS
F-1
APPENDIX A    FIRST AMENDED AND RESTATED PARTNERSHIP
AGREEMENT
A-1
APPENDIX B    GLOSSARY OF SELECTED TERMS
B-1
You
should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with additional or different
information. If
iii
anyone
provides you with additional, different or inconsistent information you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any
jurisdiction where an offer or sale is not permitted. You should assume the information appearing in this prospectus is accurate as of the date on the front cover page of this prospectus only. Our
business, financial condition, results of operations and prospects may have changed since that date.
For
investors outside the United States: We have not, and the underwriters have not, done anything that would permit this offering, or possession or distribution of this prospectus, in
any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about,
and observe any restrictions relating to, the offering of the common units and the distribution of this prospectus outside of the United States.
Industry and Market Data
The data included in this prospectus regarding the propylene industry, including trends in the market and our position and the position
of our competitors within the propylene production industry, is based on a variety of sources, including information provided by Chemical Data, L.P. ("Chemical Data") independent industry
publications, government publications and other published independent sources, information obtained from customers, distributors, suppliers, trade and business organizations and publicly available
information (including the reports and other information our competitors file with the Securities and Exchange Commission, which we did not participate in preparing and as to which we make no
representation), as well as our good faith estimates, which have been derived from management's knowledge and experience in the areas in which our business operates. Estimates of market size and
relative positions in a market are difficult to develop and inherently uncertain. Accordingly, investors should not place undue weight on the industry and market share data presented in this
prospectus.
iv
Table of Contents
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this prospectus. You should carefully read
the entire prospectus, including "Risk Factors" and the historical and unaudited pro forma consolidated financial statements and related notes included elsewhere in this prospectus, before making an
investment decision. Unless otherwise indicated, the information in this prospectus assumes (1) an initial public offering price of $            per common unit (the mid-point
of the price range set forth on the cover page of this prospectus) and (2) that the underwriters do not exercise their option to purchase additional common units. References in this prospectus
to "PetroLogistics LP," "we, "our," "us," our "predecessor" or similar terms when used in a historical context refer to PL Propylene LLC ("PL Propylene"), which will be contributed to us
in connection with the closing of this offering. When used in the present tense or prospectively, those terms refer to PetroLogistics LP and its subsidiary unless the
context otherwise requires or where otherwise indicated. References to our "general partner" refer to PetroLogistics GP LLC. References in this prospectus to our "sponsors" refer to
Lindsay Goldberg LLC ("Lindsay Goldberg") and York Capital Management ("York Capital"), which, after the completion of this offering will collectively own our general partner and
        % of our common units. You should also see the "Glossary of Selected Terms" contained in Appendix B for definitions of some of the terms we use to describe our business and
industry and other terms used in this prospectus.
PETROLOGISTICS LP
Our Business
We own and operate the world's largest propane dehydrogenation ("PDH") facility that processes propane into propylene. Propylene is one
of the basic building blocks for petrochemicals that is utilized in the production of a variety of end uses including paints, coatings, building materials, clothing, automotive parts, packaging and a
range of other consumer and industrial products. We are the only independent, dedicated "on-purpose" propylene producer in North America. We are strategically located in the vicinity of
the Houston Ship Channel and within 50 miles of approximately one-half of all U.S. propylene consumption, and we have access to the leading global fractionation and storage hub for propane
located at Mt. Belvieu, Texas. The Houston Ship Channel represents the heaviest concentration of petrochemical and refining complexes in the world and provides us with unparalleled access and
connectivity to both customers and feedstock suppliers. Our newly-constructed facility has an annual nameplate production capacity of approximately 1.2 billion pounds of propylene. We commenced
operations in October 2010 and first achieved daily production rates at or above nameplate capacity in April 2011.
Current
energy commodity price dynamics are extremely favorable for our profitability. In particular, the emergence of shale gas in North America has led to a decrease in natural gas
prices, while continued robust demand for oil worldwide has resulted in high oil prices. Our profitability is enhanced by the high oil/low gas price environment in three ways. First, a significant
portion of propylene production comes from ethylene manufacturing facilities ("crackers") using feedstocks derived from oil, or "heavy feeds," such as naphtha. The high oil price has caused such
facilities to be less competitive than crackers using "light feeds" such as ethane, which produce little propylene. As a result, numerous heavy feed crackers in the U.S. have been shut down or
reconfigured to use lighter feeds, thereby reducing the supply of propylene. Second, the emergence of shale gas production has increased the supply of natural gas liquids such as ethane and propane
that are extracted from natural gas; thus increasing the U.S. supply of propane, our sole feedstock. Third, while not perfectly correlated, the price of propylene is highly related to the price of
crude oil, and the price of propane is related to the spread between the prices of crude oil and natural gas. Accordingly, a high oil/low gas price
environment leads to a wider propane-to-propylene spread and a higher gross margin for us. Chemical Data and other industry experts do not expect these dynamics to change in
the near future.
1
Table of Contents
Our
facility was developed and built on the site of a former olefins production site and related infrastructure that we acquired from ExxonMobil Oil Corporation ("ExxonMobil") in March
2008. This site was ideally suited for the development of a PDH facility based on its existing location, infrastructure, utilities, permits, logistics and certain operating units which we were able to
integrate into our new facility. By leveraging these existing assets, we were able to save significant amounts of time and money versus those associated with the development of a green-field PDH
facility. Our PDH facility uses a CATOFIN® dehydrogenation technology pursuant to a fully-paid license from CB&I Lummus. CATOFIN technology has been in use for over
60 years and is reliable and commercially proven.
Propane
is our sole feedstock. Propane is a commodity produced by extraction and separation from natural gas production streams and as a by-product of refineries. We believe
that, given our location, we have access to an abundant supply of propane from multiple sources. Our propane is currently supplied by Enterprise Products Operating LLC (together with its
affiliates, "Enterprise") under a multi-year contract at market-based rates. Enterprise delivers the propane directly to our facility site through its propane pipeline system, which
gathers propane from various natural gas processing and fractionation facilities and refineries located in the region and from its interconnection with the leading global fractionation and storage hub
for propane at Mt. Belvieu, Texas where additional suppliers store and transport propane. We believe that ongoing substantial additions to the U.S. natural gas reserves from the development of shale
gas will continue to provide an abundant and growing supply of propane for the foreseeable future.
We
currently have multi-year contracts for the sale of our propylene with The Dow Chemical Company ("Dow"), Total Petrochemicals USA, Inc. ("Total") and INEOS Olefins
and Polymers USA ("INEOS") that expire between 2013 and 2014. These contracts provide for minimum and maximum offtake volumes, with the minimum customer-contracted volumes representing 73% of facility
nameplate capacity and the maximum reflecting 97% of facility nameplate capacity. Each of our customer contracts contain pricing terms based upon market rates. We also intend to opportunistically
supply other propylene consumers on a spot basis when permitted by both operational and market conditions. Our pipeline system and interconnections provide us direct and indirect access to our
contracted customers and spot buyers of propylene. Although we anticipate approximately 96% of our sales at full operating rates will be derived from propylene sales, we will also produce commercial
amounts of hydrogen as well as a mixed stream of butane and butylenes ("C4 mix stream") and heavier hydrocarbons ("C5+ stream").
We
are currently pursuing engineering studies to significantly expand our capacity, and we intend to opportunistically pursue capacity expansion and other growth opportunities. In
addition, we intend to evaluate and pursue acquisition and development opportunities where we believe we can enhance our operating platform.
Our Competitive Strengths
•
Pure-play propane-to-propylene
production.
As propane is our sole feedstock and propylene is our primary product, our profitability is primarily determined by the
difference between the cost of the propane we purchase and the price of the propylene we sell (the "propane-to-propylene spread"). The wider the price differential between
propane and propylene, the larger our gross margin. This spread has widened in recent years, and as the sole PDH propylene producer in North America, we believe we are uniquely positioned to benefit
from current positive trends in the propane-to-propylene spread.
2
Table of Contents
The
following table shows the impact of a change in the propane-to-propylene spread on our Adjusted EBITDA based on the assumptions described herein relative to our forecasted
pricing for the twelve months ending September 30, 2012.
Illustrative Sensitivity to Propane-to-Propylene Spread
(1)(2)
Pro Forma
Twelve
Months
Ended
March 31,
2011
(2)(3)
Forecasted
Twelve
Months
Ending
September 30,
2012
(2)(4)
(dollars in millions unless otherwise indicated)
Propane-to-Propylene Spread (¢/lb)
(5)
15.0
25.0
35.0
45.0
55.0
30.2
33.6
Adjusted EBITDA
52.2
172.9
293.6
414.3
535.0
226.8
276.4
Available Cash
23.3
142.8
262.3
381.7
501.2
195.8
245.2
(1)
The
price sensitivity analysis in this table is based on the assumptions described in our forecast of Adjusted EBITDA for the twelve months ending
September 30, 2012. This includes 1.2 billion pounds of propylene sold and 344.9 million gallons of propane utilized. It also assumes $30.4 million of
by-product sales, $45.2 million of fuel and utilities expense, $13.9 million of insurance and property taxes, $30.2 million of direct operating expense and other and
$11.0 million of general and administrative expense. All other customer discounts and upcharge/delivery fees are per our September 30, 2012 forecast. There can be no assurance that we
will achieve our Adjusted EBITDA forecast for the twelve months ending September 30, 2012 or any of the specified levels of Adjusted EBITDA indicated above, or that the various
propane-to-propylene spreads will achieve any of the levels specified above.
(2)
See
"Our Cash Distribution Policy and Restrictions on Distribution—Forecasted Available Cash" for a reconciliation of our Adjusted EBITDA
forecast to our net income forecast for the twelve months ending September 30, 2012 and a discussion of the assumptions underlying our forecast.
(3)
Reflects
financial results as if the plant had been fully operational during the period. Assumes realized market pricing levels during the twelve months
ended March 31, 2011 for propylene, propane, C4 mix/C5+ streams and natural gas and that all other expenses, production rates, performance ratios, customer discounts, upcharge/delivery fees and
conversion factors are consistent with the forecast for the twelve months ending September 30, 2012.
(4)
PGP
Contract Benchmark and Propane pricing forecast provided per Chemical Data as of May 29, 2011. See "Our Cash Distribution Policy and Restrictions
on Distribution—Forecasted Available Cash" for a discussion of the assumptions underlying our forecast.
(5)
Propane-to-propylene
spread calculated as (PGP Contract Benchmark Price (¢/lb)-1.2 * (Propane Price
(¢/gl) / 4.2)). This calculation assumes that it takes approximately 1.2 pounds of propane to make 1.0 pound of propylene and that there are approximately 4.2 pounds in a gallon of
propane.
•
Strategically-Located Operations.
Our Houston Ship Channel
location places us within the heaviest concentration of petrochemical and refining complexes in the world. Our PDH facility is located within 50 miles of approximately one-half of all U.S.
propylene consumption, and our pipeline system enables us to access our contracted customers (Dow, Total and INEOS) and spot buyers of propylene. In addition, we have access to the Mt. Belvieu global
fractionation and storage hub, the world's largest and most reliable source for propane, to source our propane feedstock.
•
Cost Advantaged Facility Driven by a Proven
Technology.
Our PDH facility is the largest in the world. Our facility utilizes the CATOFIN PDH technology pursuant to a
fully-paid license from CB&I Lummus, which we believe has the best combination of capital cost, product yield and reliability. We have also enhanced the design with our own innovations
that have resulted in energy efficiencies over the basic CATOFIN system.
•
Our PDH Facility's Characteristics are Difficult to
Replicate.
In addition to its advantageous location, the ExxonMobil facility we acquired had existing air permits, pipelines, utilities,
selected processing units and other infrastructure in place which we utilized or reconfigured for our PDH process. A developer of a green-field PDH project would face significant impediments with
respect to
3
Table of Contents
permitting,
availability of real estate and cost considerations. In addition, we estimate that such a project would likely take at least four years to complete.
•
Dedicated "On-Purpose" Propylene
Production.
We are the only independent, dedicated on-purpose propylene production facility in North America. Unlike
refineries and ethylene crackers for which propylene is a secondary product, propylene is our primary product. Since propylene is our primary product and propane our only feedstock, our output will
never vary as a function of competiveness of alternative feedstock slates or decisions concerning production of other products such as ethylene or gasoline. We believe these factors represent key
advantages to our customers.
•
Contracts with Large, Prominent Customer Base.
Nearly all
of our nameplate capacity has been contracted to Dow, Total and INEOS under contracts whose maximum volumes constitute 97% of our nameplate capacity and whose minimum volumes represent 73%. The
primary Dow, Total and INEOS plants we supply produce acrylic acid, polypropylene and acrylonitrile, respectively. Each primary plant is the largest of its kind in the world. We value this diversity
of end use in the markets served by our customers. There also currently exists a spot market for propylene into which we sell our additional output.
•
Favorable Industry Conditions.
The factors contributing to
the current robust environment for propylene production are not expected to change in the near term. The current high crude oil price and low natural gas price environment in North America is a
significant contributor to this favorable environment because of its negative impact on the amount of propylene production from other sources, in particular ethylene crackers that use naphtha and
heavy liquids. These factors have resulted in a reduction in the supply of propylene and a widening of the propane-to-propylene spread.
•
Experienced Management Team.
We employ a
highly-experienced and dedicated senior management team, with an average of over 20 years of experience in the relevant disciplines of petrochemical engineering, marketing, management and
finance. See "Management—Executive Officers and Directors."
Our Business Strategy
•
Distribute All of the Available Cash We Generate Each
Quarter.
The board of directors of our general partner will adopt a policy under which we will distribute all of the available cash we
generate each quarter, as described in "Our Cash Distribution Policy and Restrictions on Distributions." Unlike many publicly traded partnerships that have general partners with economic interests and
incentive distribution rights that entitle the general partner to receive disproportionate percentages of cash distributions as distributions increase, our general partner will have a
non-economic interest and no incentive distribution rights, and accordingly, our common unitholders will receive 100% of our cash distributions.
•
Focus on Operational Excellence, Reliable Production, Safety and
Training.
Operational excellence, reliability and safety are our core values. One of the key factors driving our selection of the
CATOFIN technology was its reputation for excellence and its reliability. We also assembled our management team with an intentional focus on the complement of skills and experience necessary to
deliver consistent and efficient operational results. We believe these factors, together with our strong culture of safety, should lead to dependable performance for our customers as well as safe
working conditions.
•
Continual Optimization of Facility.
Our management team
intends to optimize and improve the operating performance of our facility by identifying low cost methods to increase propylene output beyond initial nameplate capacity and undertaking initiatives
aimed at improving propylene yield and energy efficiency and enhancing the value of the by-products output of our facility.
4
Table of Contents
•
Pursue Capacity Expansion and Other Growth
Opportunities.
We intend to opportunistically pursue capacity expansion and other growth opportunities. We are currently pursuing
engineering studies to significantly expand our capacity. In addition, we intend to evaluate and pursue acquisition and development opportunities where we believe we can enhance our operating
platform.
•
Actively Manage Customer Portfolio.
We believe that our
current customer portfolio represents an attractive composition of customers that serve diverse end-use markets and that are prominent industry members. We also have
well-established relationships with other consumers of propylene developed through active cultivation and regular interaction. We plan to build on our existing relationships and continue
to advance those relationships through spot sales in the short term and additional contracts in the long term if we are successful in expanding the facility's capacity.
Industry Overview
Propylene Supply and Demand
Propylene is an important building block in the production of complex petrochemical derivatives such as polypropylene, acrylonitrile
and acrylic acid. These derivatives are ultimately processed further to make many different consumer and industrial products such as clothing, automotive components, detergents, safety glass,
packaging materials, paints and nylon. In addition to its utility within the chemicals market, propylene also plays a significant role in the fuels market. When alkylated in a refinery, propylene is
routinely used as a gasoline blendstock. Propylene demand has historically tracked GDP growth, and experienced the first worldwide contraction in history during the recession in 2008. Following the
resumption of growth in late 2009 and 2010, Chemical Data forecasts that U.S. demand will grow at a compound annual growth rate of approximately 1.8% between 2010 and 2015.
There
are three sources of propylene production in North America: crude oil refineries, ethylene manufacturing facilities and, to a much smaller extent, on-purpose facilities
such as ours. Crude oil refineries produce propylene as a by-product of gasoline production. Ethylene crackers produce propylene as a co-product of ethylene production.
Ethylene can be produced from many different feedstocks, including ethane, propane, butane, naphtha or gas oil. Although some ethylene facilities have feed flexibility, there are two general
categories of crackers: those that use feedstocks derived from crude oil (such as naphtha), referred to as "heavy feed crackers", and those that use ethane as a feedstock, referred to as "ethane
crackers." Heavy feed crackers produce propylene as a co-product in significant quantities, whereas ethane crackers produce very little propylene.
Within
North America, increased natural gas production from shale gas discoveries has led to an abundance of natural gas liquids such as ethane and propane. Further, there has been a
fundamental decoupling of natural gas and oil prices as gas prices have fallen dramatically while global economic and geopolitical factors have propelled oil prices to the $100 per barrel range. In
the current high oil price/low natural gas price environment, heavy feed crackers generally have a cost disadvantage relative to ethane crackers. Numerous heavy feed crackers have been either
permanently shut down or reconfigured to enable them to produce ethylene using ethane as a feedstock. As a result, propylene production from ethylene manufacturing facilities has declined dramatically
from 15.5 billion pounds in 2007 to 12.1 billion pounds in 2010. Chemical Data estimates that 2 billion pounds of this reduction represents propylene supply permanently removed
from the market. Furthermore, refinery production of propylene in recent years has declined from 19.2 billion pounds in 2007 to 18.0 billion pounds in 2010
along with the general softness in gasoline demand and the increased use of ethanol. The result of these reductions has been a tight supply of propylene in the North American market at a time when
demand is improving with the resumption of economic growth.
Chemical
Data estimates that U.S. propylene supply will grow modestly through 2014, increasing at a compound annual growth rate of approximately 1.5% from year-end 2010. This
is primarily due to the belief that co-product supply of propylene from ethylene crackers is not likely to rebound in the near term
5
Table of Contents
with
the expected continuation of the high oil price/low natural gas price environment. Furthermore, refinery operations are expected to remain hindered by modest gasoline demand growth. These
conditions suggest that the current very tight supply/demand dynamic affecting the propylene market is expected to persist for the foreseeable future.
Propylene and Propane Pricing Dynamics
As propane is our sole feedstock, and propylene is the primary product sold by our facility, our profitability is primarily determined
by the difference in price between propane and propylene, the "propane-to-propylene spread." Like other commodities, the pricing for propylene and propane reflect supply and
demand dynamics and are intricately related to the price movements of crude oil, natural gas and petrochemicals. The current dynamics affecting the price of these commodities, together with the tight
supply/demand environment for propylene discussed above, have led to the recent increase in the propane-to-propylene spread as illustrated in the graphic below:
Historical Propane-to-Propylene Spread
Source U.S. Energy Information Administration ("EIA") and Chemical Data.
For reasons more fully developed in the section of this prospectus entitled "Industry Overview," propylene generally prices at a premium to crude
oil and propane trades at a discount to crude oil. Over the last decade, propylene has priced in a range of approximately 1.3 to 1.4 times the price of crude, except in the recession in 2008 and 2009
when it traded tighter. The recent short supply of propylene due to the factors described above has pushed this premium higher. Propane has historically traded at a discount to crude oil, and has
declined over the last decade from approximately 80% of the price of crude in 2000 to approximately 61% in 2010 as the supply of propane from the shale gas developments has increased and the price of
natural gas relative to the price of crude oil has declined. These factors, combined with the higher crude price, have led to the recent increase in the propane-to-propylene
spread as illustrated in the above graphic. Because the propane-to-propylene spread is the primary driver of our gross margin, these trends are highly favorable to our
profitability.
For
more information about the propylene industry, see "Industry Overview."
6
Table of Contents
Our Relationship with Lindsay Goldberg and York Capital
We are majority owned by Lindsay Goldberg and York Capital. Although the project development for our facility occurred over several
years beginning in 2003, our predecessor was legally formed in 2007 to acquire the site of a former olefins production facility from ExxonMobil and to develop this site into a PDH facility with the
support of our sponsors. After the closing of this offering, Lindsay Goldberg will indirectly own        % of our general partner and directly own        % of our common
units, York
Capital will indirectly own        % of our general partner and directly own        % of our common units and certain of our employees and affiliates will collectively
own
        % of our common units.
Lindsay
Goldberg is a private equity investment firm with approximately $10 billion of capital under management that focuses on partnering with entrepreneurial management teams
and closely held and family-owned businesses. Lindsay Goldberg has a team of 25 investment professionals who have invested over $5.6 billion of equity capital in 27 portfolio companies. Lindsay
Goldberg typically invests in companies in North America and Western Europe in the manufacturing, energy, financial and business services industries. Lindsay Goldberg has a much longer time horizon
for investments than
most other private equity investment firms because of an investment structure that permits ownership for up to 20 years. In addition to its long-term focus, Lindsay Goldberg also
identifies transformative follow-on investments and acquisitions in connection with its portfolio companies as those opportunities arise. Lindsay Goldberg has had a close relationship with
our management since 2000.
York
Capital is an event-driven global investment firm with approximately $17 billion of capital under management. The firm focuses on a variety of strategies, including private
equity investing. Established in 1991, York Capital has a team of over 150 individuals, including approximately 50 investment professionals and has offices in New York, Washington DC, London and Hong
Kong. York Capital's investment professionals possess multi-disciplinary knowledge and relationships, spanning industry sectors, geographies, business cycles and public and private equity and debt
markets. Over the past 19 years, York Capital has focused on looking beyond market cycles, trends and other temporary factors to identify companies around the world with long-term
value potential.
Lindsay
Goldberg and York Capital have been instrumental in our management team's effort to implement the optimal operating and financial platform for the development of the PDH
facility. Collectively, they will continue to own a majority of our common units upon completion of this offering and, therefore, will have a continuing incentive to support and promote the successful
implementation of our business strategy.
7
Table of Contents
Organizational Structure
The following chart provides a simplified overview of our organizational structure after giving effect to this offering and the related
transactions
(1)
:
(1)
Assumes
the underwriters do not exercise their option to purchase additional common units, and as a result, such common units will instead be issued to our
sponsors and their affiliates, our executive officers and certain of our employees upon the expiration of such option. If and to the extent the underwriters exercise their option to purchase
additional common units, the units purchased pursuant to such exercise will be issued to the public and the remainder, if any, will be issued to our sponsors
8
Table of Contents
and
certain of our employees and affiliates. Accordingly, the exercise of the underwriters' option will not affect the total number of units outstanding. If the underwriters' option is exercised in
full, then our sponsors and their affiliates, our executive officers and certain of our employees would own an aggregate        % of the common units and the public would
own        % of
the common units.
Principal Executive Offices and Internet Address
Our principal executive offices are located at 2 Houston Center, 909 Fannin Street, Suite 2630, Houston, TX 77010 and our
telephone number is (713) 255-5990. Upon completion of this offering, our website will be located at
www.                        and will be activated following the closing of this
offering. We will make our periodic reports and other information filed with or furnished to the SEC, available free of charge, through our website, as soon as reasonably practicable after those
reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into this prospectus and does not
constitute a part of this prospectus.
Risk Factors
An investment in our common units involves risks associated with our business, our partnership structure and the tax characteristics of
our common units. These risks are described under "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements." You
should carefully consider these risk factors together with all other information included in this prospectus.
9
Table of Contents
The Offering
Issuer
PetroLogistics LP, a Delaware limited partnership.
Common Units Offered to
the Public
common units.
Option to Purchase Additional Common Units from Us
If the underwriters exercise their option to purchase additional common units in full, we will issue a total
of            common units to the public.
Units Outstanding After
this Offering
common units. If
the underwriters do not exercise their option to purchase additional common units, we will issue                common units to our sponsors and their affiliates, our
executive officers and certain of our employees upon the option's expiration. If and to the extent the underwriters exercise their option to purchase additional common units, the number of common units purchased by the underwriters pursuant to such
exercise will be issued to the public and the remainder, if any, will be issued to our sponsors and their affiliates, our executive officers and certain of our employees. Accordingly, the exercise of the underwriters' option will not affect the total
number of common units outstanding.
In addition, our general partner will own a non-economic general partner interest in us which will not entitle it
to receive distributions.
Use of Proceeds
We estimate that the net proceeds to us in this offering, after deducting underwriting discounts and commissions
and the estimated expenses of this offering, will be approximately $            million (based on an assumed initial public offering price of
$            per common unit, the mid-point of the price range set forth on the cover page of this prospectus). Of the total net proceeds we receive, we will use (a) approximately
$            million to make a distribution to our sponsors to reimburse them for certain construction capital expenditures and (b) approximately
$            million to make a distribution to our sponsors and their affiliates, our executive officers and certain of our employees.
If the underwriters exercise their option to purchase additional common units in full, the additional net
proceeds would be approximately $            million (based upon the mid-point of the price range set forth on the cover page of this prospectus). We will use the net proceeds from any
exercise of such option to pay a distribution to our sponsors and their affiliates, our executive officers and certain of our employees. See "Use of Proceeds."
10
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Cash Distributions
Within 45 days after the end of each quarter, beginning with the quarter ending December 31, 2011, we expect to make
cash distributions to unitholders of record on the applicable record date.
The board of directors of our general partner will adopt a policy pursuant to which we will distribute all of the
available cash we generate each quarter. Available cash for each quarter will be determined by the board of directors of our general partner following the end of such quarter. We expect that available cash for each quarter will generally equal our
cash flow from operations for the quarter, less cash needed for maintenance capital expenditures, debt service and other contractual obligations and reserves for future operating or capital needs that the board of directors of our general partner
deems necessary or appropriate. We do not intend to maintain excess distribution coverage for the purpose of maintaining stability or growth in our quarterly distribution or to otherwise reserve cash for distributions, and we do not intend to incur
debt to pay quarterly distributions. We expect to finance substantially all of our growth externally, either by debt issuances or additional issuances of equity.
Because our policy will be to distribute all the available cash we generate each quarter, without reserving cash
for future distributions or borrowing to pay distributions during periods of low cash flow from operations, our unitholders will have direct exposure to fluctuations in the amount of cash generated by our business. We expect that the amount of our
quarterly distributions, if any, will vary based on our operating cash flow during such quarter. As a result, our quarterly cash distributions, if any, will not be stable and will vary from quarter to quarter as a direct result of variations in our
operating performance and cash flows caused by fluctuations in the prices of propane and propylene. Such variations in the amount of our quarterly distributions may be significant. Unlike most publicly traded partnerships, we will not have a minimum
quarterly distribution or employ structures intended to consistently maintain or increase distributions over time. The board of directors of our general partner may change our distribution policy at any time. Our partnership agreement does not
require us to pay cash distributions on a quarterly or other basis.
11
Table of Contents
Based upon our forecast for the twelve months ending September 30, 2012, assuming the board of directors of our general
partner declares distributions in accordance with our cash distribution policy, we expect that our aggregate distributions for the twelve months ending September 30, 2012 will be approximately
$            million, or $            per common unit. See "Our Cash Distribution Policy and Restrictions on
Distributions—Forecasted Available Cash." Unanticipated events may occur which could materially adversely affect the actual results we achieve during the forecast period. Consequently, our actual results of operations, cash flows, need for
reserves and financial condition during the forecast period may vary from the forecast, and such variations may be material. Prospective investors are cautioned not to place undue reliance on our forecast and should make their own independent
assessment of our future results of operations, cash flows and financial condition. In addition, the board of directors of our general partner may be required to or elect to eliminate our distributions at any time during periods of reduced prices or
demand for our propylene, among other reasons. Please see "Risk Factors."
We have a limited operating history upon which to rely in evaluating whether we will have sufficient cash to
allow us to pay distributions on our common units. Our PDH facility did not generate sales until the commencement of commercial operations in October 2010, and we did not achieve daily production rates at nameplate capacity until April 2011.
Accordingly, we would not have paid distributions to our common unitholders for periods prior to April 2011.
Incentive Distribution Rights
None.
Subordination Period
None.
Issuance of Additional Units
Our partnership agreement authorizes us to issue an unlimited number of additional units, including units with
rights to distributions or in liquidation that are senior to our common units, and rights to buy units for the consideration and on the terms and conditions determined by the board of directors of our general partner without the approval of our
unitholders. See "Common Units Eligible for Future Sale" and "The Partnership Agreement—Issuance of Additional Partnership Interests."
12
Table of Contents
Limited Voting Rights
Our general partner manages and operates us. Unlike the holders of common stock in a corporation, you will have only limited
voting rights on matters affecting our business. You will have no right to elect our general partner or our general partner's directors on an annual or other continuing basis. Our general partner may be removed by a vote of the holders of at least
66
2
/
3
% of the outstanding common units, including any common units owned by our general partner and its affiliates (including our sponsors). Upon the completion of this offering our sponsors will own an aggregate of
approximately        % of our outstanding common units (approximately        % if the underwriters exercise their option to purchase additional common units in full).
This will give our sponsors the ability to prevent removal of our general partner. See "The Partnership Agreement—Voting Rights."
Call Right
If at any time our general partner and its affiliates (including our sponsors) own more than 80% of the common
units, our general partner will have the right, but not the obligation, to purchase all, but not less than all, of the common units held by public unitholders at a price not less than their then-current market price, as calculated pursuant to the
terms of our Partnership Agreement. See "The Partnership Agreement—Call Right."
Estimated Ratio of Taxable Income to Distributions
We estimate that if you own the common units you purchase in this offering through the record date for
distributions for the twelve months ending                    , 2014, you will be allocated, on a cumulative basis, an amount of U.S. federal taxable
income for that period that will be        % or less of the cash distributed to you with respect to that period. For example, if you receive an annual distribution of
$            per common unit, we estimate that your average allocable U.S. federal taxable income per year will be no more than
$            per common unit. See "Material U.S. Federal Income Tax Consequences—Tax Consequences of Unit Ownership—Ratio of Taxable Income to Distributions."
Material U.S. Federal Income Tax Consequences
For a discussion of material U.S. federal income tax consequences that may be relevant to prospective unitholders,
 see "Material U.S. Federal Income Tax Consequences."
Exchange Listing
We intend to apply for listing on the New York Stock Exchange ("NYSE") under the symbol "PDH."
Risk Factors
See "Risk Factors" beginning on page 16 of this prospectus for a discussion of factors that you should
carefully consider before deciding to invest in our common units.
Depending
on market conditions at the time of pricing of this offering and other considerations, we may sell fewer or more common units than the number set forth on the cover page of
this prospectus.
13
Table of Contents
Summary Historical and Pro Forma Consolidated Financial Information
The summary financial information presented below under the caption Statement of Operations Data for the three months ended
March 31, 2011 and 2010, and for the years ended December 31, 2010, 2009 and 2008, and the summary financial information presented below under the caption Balance Sheet Data as of
March 31, 2011 and 2010, and December 31, 2010, 2009 and 2008, have been derived from the audited and unaudited financial statements of our predecessor, PL Propylene, included elsewhere
in this prospectus. Our predecessor's financial statements as of and for the years ended December 31, 2010, 2009 and 2008 have been audited by Ernst & Young LLP, independent
registered public accounting firm. Our predecessor's financial statements as of and for the three months ended March 31, 2011 and 2010 are unaudited. Our predecessor was formed in January 2007
and acquired the site where our PDH facility is located in March 2008. Our PDH facility did not
generate sales until the commencement of commercial operations in October 2010, and we did not achieve daily production rates at nameplate capacity until April 2011.
The
summary unaudited pro forma consolidated financial information presented below under the caption Statement of Operations Data for the three months ended March 31, 2011 and for
the year ended December 31, 2010 and the summary unaudited pro forma consolidated financial information presented below under the caption Balance Sheet Data as of March 31, 2011 have
been derived from our unaudited pro forma consolidated financial statements included elsewhere in this prospectus. The unaudited pro forma consolidated statements of operations data for the three
months ended March 31, 2011 and the year ended December 31, 2010 were prepared based on the assumption that we were in existence as a separate entity throughout these periods and that
the transactions described below occurred on January 1, 2011 and January 1, 2010, respectively:
•
the entry by us into a new $350.0 million term loan facility and a $120.0 million revolving credit facility,
the related drawing of $             million from the new term loan facility and $             million under the new
revolving credit facility, and the use of proceeds of such
drawings to refinance our existing credit facility and to distribute $       million as a reimbursement of construction capital to our sponsors;
•
the issuance by us to our sponsors and their affiliates, our executive officers and certain of our employees of
            common units; and
•
the issuance by us to the public of            common units and the distribution of an aggregate
$             million of the proceeds from such offering to our sponsors and their affiliates, our executive officers and certain of our employees.
The
unaudited pro forma consolidated balance sheet as of March 31, 2011, was prepared based on the assumption that the Transactions (as defined on page 38) occurred
March 31, 2011. The unaudited pro forma consolidated financial data is not comparable to our historical financial data. A more complete explanation of the pro forma data can be found in our
unaudited pro forma consolidated financial statements and accompanying notes included elsewhere in this prospectus.
The
historical data presented below has been derived from financial statements that have been prepared using accounting principles generally accepted in the United States, or GAAP, and
the pro forma data presented below has been derived from the "Unaudited Pro Forma Consolidated Financial Statements" included elsewhere in this prospectus. This data should be read in conjunction
with, and is qualified in its entirety by reference to, the financial statements and related notes and "Management's
14
Table of Contents
Discussion
and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.
Historical
Unaudited Pro
Forma Consolidated
Three Months
Ended
March 31,
Years Ended
December 31,
Three
Months
Ended
March 31,
Year Ended
December 31,
2011
2010
2010
2009
2008
2011
2010
(dollars in millions, except per unit data
and as otherwise indicated)
Statement of Operations Data:
Sales
$
105.8
$
—
$
30.4
$
—
$
—
$
105.8
$
30.4
Cost of sales
91.6
—
41.9
—
—
91.6
41.9
General and administrative expense
31.5
1.9
22.9
4.3
4.7
31.5
22.9
Management fee
0.5
—
—
—
—
—
—
Operating loss
(17.8
)
(1.9
)
(34.4
)
(4.3
)
(4.7
)
(17.3
)
(34.4
)
Other income
—
—
0.1
—
—
—
0.1
Interest income (expense), net
(4.7
)
(0.6
)
(5.4
)
(0.2
)
0.7
(5.1
)
(12.3
)
Net loss before income taxes
$
(22.5
)
$
(2.5
)
$
(39.7
)
$
(4.5
)
$
(4.0
)
$
(22.4
)
$
(46.6
)
Income tax expense
(0.4
)
—
—
—
—
(0.4
)
—
Net loss
$
(22.9
)
$
(2.5
)
$
(39.7
)
$
(4.5
)
$
(4.0
)
$
(22.8
)
$
(46.6
)
Pro forma net income (loss) per common unit, basic and diluted
$
$
Pro forma number of common units, basic and diluted in millions
Balance Sheet Data:
Cash (including restricted cash balances)
$
2.9
$
45.6
$
6.9
$
30.0
$
71.8
$
5.0
Working capital
(1)
22.6
21.5
16.0
9.9
61.4
24.7
Total assets
675.4
579.7
668.9
484.6
214.1
676.0
Total debt (including current portion)
182.5
117.1
189.5
94.7
—
380.0
Member's equity
464.3
434.4
456.1
365.5
202.9
267.4
Financial and Other Data:
Cash flows provided by (used in) operating activities
$
9.1
$
1.8
$
(53.2
)
$
—
$
(1.0
)
Cash flows used in investing activities
(3.8
)
(95.6
)
(157.4
)
(281.2
)
(170.0
)
Cash flows provided by (used in) financing activities
(5.3
)
93.8
210.7
249.1
203.0
Adjusted EBITDA
(2)
19.8
(1.9
)
(12.6
)
(3.6
)
(2.0
)
20.3
(12.6
)
Capital expenditures
3.8
80.0
187.5
291.0
130.2
Key Operating Data:
Production volume (thousand pounds unless otherwise noted):
Propylene
144,208
—
76,522
—
—
Hydrogen (thousand standard cubic feet MSCF)
295,425
—
—
—
—
C4 mix/C5+ streams
2,484
—
247
—
—
(1)
Working
capital is defined as current assets, including cash, less current liabilities, excluding bank debt.
(2)
Adjusted
EBITDA is defined as net income (loss) plus interest expense and amortization of deferred financing costs, income tax expense, depreciation,
amortization and accretion and equity-based compensation expense.
15
Table of Contents
Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors and commercial
banks, to assess:
•
the financial performance of our assets without regard to financing methods,
capital structure, income taxes or significant non-cash expenses;
•
our operating performance and return on invested capital compared to those of other
publicly traded limited partnerships, without regard to financing methods and capital structure;
•
our ability to generate cash sufficient to make distributions to our unitholders;
and
•
our ability to incur and service debt and to fund capital expenditures.
Adjusted
EBITDA should not be considered an alternative to net income, operating income, net cash flows from operating activities or any other
measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA may have material limitations as a performance measure because it excludes some, but not all, items
that affect net income from operations. In addition, Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define this term differently. The
following table presents a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measure, net income, on a historical basis and pro forma basis, as applicable, for each of
the periods indicated:
Historical
Unaudited Pro Forma
Consolidated
Three Months
Ended
March 31,
Year Ended
December 31,
Three
Months
Ended
March 31,
Year Ended
December 31,
2011
2010
2010
2009
2008
2011
2010
(dollars in millions)
Reconciliation of net loss to Adjusted EBITDA:
Net loss
$
(22.9
)
$
(2.5
)
$
(39.7
)
$
(4.5
)
$
(4.0
)
$
(22.8
)
$
(46.6
)
Plus:
Interest expense
4.7
0.6
5.4
0.8
—
5.1
12.3
Income tax expense
0.4
—
—
—
—
0.4
—
Depreciation, amortization and accretion
8.3
—
7.2
0.1
—
8.3
7.2
Equity-based compensation expense
29.3
—
14.5
—
2.0
29.3
14.5
Adjusted EBITDA
$
19.8
$
(1.9
)
$
(12.6
)
$
(3.6
)
$
(2.0
)
$
20.3
$
(12.6
)
16
Table of Contents
RISK FACTORS
You should carefully consider each of the following risks and all of the information set forth in this
prospectus before deciding to invest in our common units. If any of the following risks and uncertainties develops into an actual event, our business, financial condition, cash flows and results of
operations could be materially adversely affected. In that case, we might not be able to pay distributions on our common units, the trading price of our common units could decline materially, and you
could lose all or part of your investment. Although many of our business risks are comparable to those faced by a corporation engaged in a similar business, limited partner interests are inherently
different from the capital stock of a corporation and involve additional risks described below.
Risks Related to Our Business
We may not have sufficient available cash to pay any quarterly distribution on our common units.
We may not have sufficient available cash each quarter to enable us to pay any distributions to our common unitholders. Our PDH
facility did not generate sales until the commencement of commercial operations in October 2010, and we did not achieve daily production rates at nameplate capacity until April 2011. Accordingly, we
would not have paid distributions to our common unitholders for periods prior to April 2011. The amount of cash we will be able to distribute on our common units principally depends on the amount of
cash we generate from our operations, which is primarily dependent upon the operating margins we generate. Our operating margins, and thus, the cash we generate from operations have been volatile, and
we expect that they will fluctuate from quarter to quarter based on, among other things:
•
the amount of propylene we are able to produce from our PDH facility, which could be adversely affected by, among other
things, accidents, equipment failure or bad weather conditions;
•
the price at which we are able to sell propylene, which is affected by the supply of and demand for propylene;
•
the level of our operating costs, including the cost of propane, our sole feedstock, as well as the price of natural gas,
electricity and other costs;
•
our ability to produce propylene products that meet our customers' specifications;
•
non-payment or other non-performance by our customers and suppliers; and
•
overall economic and local market conditions.
In
addition, the actual amount of cash we will have available for distribution will depend on other factors, some of which are beyond our control, including:
•
the level of capital expenditures we make;
•
our debt service requirements;
•
fluctuations in our working capital needs;
•
our ability to borrow funds and access capital markets;
•
planned and unplanned maintenance at our facility, which will reduce our cash flows in the quarter in which it occurs;
•
restrictions on distributions and on our ability to make working capital borrowings for distributions contained in debt
agreements; and
•
the amount of cash reserves established by our general partner.
Our
partnership agreement will not require us to pay a minimum quarterly distribution. The amount of distributions that we pay, if any, and the decision to pay any distribution at all,
will be determined by the
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board
of directors of our general partner. Our quarterly distributions, if any, will be subject to significant fluctuations based on the above factors.
For
a description of additional restrictions and factors that may affect our ability to pay distributions, see "Our Cash Distribution Policy and Restrictions on Distributions."
The amount of our quarterly cash distributions, if any, will vary significantly both quarterly and annually and will be directly dependent on the performance of our
business. Unlike most publicly traded partnerships, we will not have a minimum quarterly distribution or employ structures intended to consistently maintain or increase distributions over time.
Investors who are looking for an investment that will pay predictable quarterly distributions should not invest in our common units. We
expect our business performance will be more cyclical and volatile, and our cash flows will be less stable, than the business performance and cash flows of most publicly traded partnerships. As a
result, our quarterly cash distributions will be cyclical and volatile and are expected to vary quarterly and annually. Unlike most publicly traded partnerships, we will not have a minimum quarterly
distribution or employ structures intended to consistently maintain or increase distributions over time. The amount of our quarterly cash distributions will be directly dependent on the performance of
our business, which will be volatile as a result of fluctuations in propane and propylene prices and the demand for propylene products. Because our quarterly distributions will be subject to
significant fluctuations directly related to the cash we generate after payment of our fixed and variable expenses, future quarterly distributions paid to our unitholders will vary significantly from
quarter to quarter and may be zero. Given the cyclical and volatile nature of our business, we expect that our unitholders will have direct exposure to fluctuations in the price of propylene and the
cost of propane.
The amount of cash we have available for distribution to unitholders depends primarily on our cash flow and not solely on profitability.
You should be aware that the amount of cash we have available for distribution depends primarily upon our cash flow, including cash
flow sources and uses such as from changes in financial reserves, changes in working capital and capital expenditures, and not solely on profitability, which will be affected by non-cash
items. As a result, we may make cash distributions during periods when we report losses and may not make cash distributions during periods when we report net income.
For the twelve months ended March 31, 2011, on a pro forma basis, we would not have generated sufficient available cash to have paid the per unit quarterly
distribution that we project that we will be able to pay for the twelve months ending September 30, 2012.
We project that we will be able to pay a distribution of $            per unit for the twelve months ending September 30,
2012. In order to pay this projected distribution, we must generate approximately $             million of available cash in the twelve months ending September 30, 2012. We have a
limited operating history upon which to rely in evaluating whether we will have sufficient cash to allow us to pay distributions on our common units. Our PDH facility did not generate sales until the
commencement of commercial operations in October 2010, and we did not achieve daily production rates at nameplate capacity until April 2011. Accordingly, we would not have be paid distributions to our
common unitholders for periods prior to April 2011. For a description of the price assumptions upon which we have based our projected per unit distribution for the twelve months ending
September 30, 2012, see "Our Cash Distribution Policy and Restrictions on Distributions—Assumptions and Considerations."
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The board of directors of our general partner may modify or revoke our cash distribution policy at any time at its discretion. Our partnership agreement does not require us
to pay any distributions at all.
The board of directors of our general partner will adopt a cash distribution policy pursuant to which we will distribute all of the
available cash we generate each quarter to unitholders of record on a pro rata basis. However, the board may change such policy at any time at its discretion and could elect not to pay distributions
for one or more quarters. Our partnership agreement does not require us to pay any distributions at all. Accordingly, investors are cautioned not to place undue reliance on the permanence of such a
policy in making an investment decision. Any
modification or revocation of our cash distribution policy could substantially reduce or eliminate the amounts of distributions to our unitholders. The amount of distributions we make, if any, and the
decision to make any distribution at all will be determined by the board of directors of our general partner, whose interests may differ from those of our common unitholders. Our general partner has
limited fiduciary and contractual duties, which may permit it to favor its own interests or the interests of Propylene Holdings to the detriment of our common unitholders.
None of the proceeds of this offering will be available to fund our operations or to pay distributions.
We will pay the net proceeds from this offering, including all proceeds from the exercise of the underwriters'
over-allotment option, if any, after deducting underwriting discounts and commissions, to our sponsors and their affiliates, our executive officers and certain of our employees.
Consequently, none of the proceeds from this offering will be available to fund our operations or to pay distributions to the public unitholders. See "Use of Proceeds."
The assumptions underlying the forecast of available cash that we include in "Our Cash Distribution Policy and Restrictions on Distributions—Forecasted Available
Cash" are inherently uncertain and are subject to significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those
forecasted.
Our forecast of available cash set forth in "Our Cash Distribution Policy and Restrictions on Distributions—Forecasted
Available Cash" includes our forecast of our results of operations and available cash for the twelve months ending September 30, 2012. The forecast has been prepared by our management team.
Neither our independent registered public accounting firm nor any other independent accountants have examined, compiled or performed any procedures with respect to the forecast, nor have any of them
expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for the forecast. The assumptions underlying the forecast are
inherently uncertain and are subject to significant business, economic, regulatory and competitive risks and uncertainties, including those discussed in this section, that could cause actual results
to differ materially from those forecasted. If the forecasted results are not achieved, we would not be able to pay the forecasted annual distribution, in which event the market price of the common
units may decline materially. Our actual results may differ materially from the forecasted results presented in this prospectus. Investors should review the forecast of our results of operations for
the twelve months ending September 30, 2012 together with the other information included elsewhere in this prospectus, including "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
The propylene business is, and propylene prices are, cyclical and highly volatile and have experienced substantial downturns in the past. Cycles in demand and pricing could
potentially expose us to significant fluctuations in our operating and financial results, and expose you to substantial volatility in our quarterly cash distributions and material reductions in the
trading price of our common units.
We are exposed to fluctuations in propylene demand and supply in the petrochemical industry. These fluctuations historically have had
and could in the future have significant effects on prices and, in turn, significant effects on our financial condition, cash flows and results of operations, which could result in
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significant
volatility or material adverse effects in the price of our common units or our ability to make quarterly cash distributions on our common units.
Propylene
is a commodity, and its price can be cyclical and highly volatile. The price of propylene depends on a number of factors, including the price of crude oil and other
commodities, general economic conditions, cyclical trends in end-user markets and supply and demand imbalances.
Demand
for propylene is dependent on demand for petrochemicals by the global construction, automotive and housing industries. Propylene supply is affected by available capacity and
operating rates, raw material costs, government policies and global trade. For example, an increase in the OPEC production quota may cause crude oil prices to decline and, therefore, potentially
increase the supply of propylene and reduce propylene prices. A decrease in propylene prices would have a material adverse effect on our business, cash flow and ability to make distributions. If
propylene prices fall below a certain level, we may not generate sufficient sales to operate profitably or cover our costs and our ability to make distributions will be materially adversely affected.
Our results of operations, financial condition and ability to make cash distributions may be adversely affected by the supply and price levels of propane.
The sole feedstock used in our production is propane. The price of propane can be cyclical and volatile. The cost of propane represents
a substantial portion of our cost of sales. If propane costs increase, the market price of propylene may not rise correspondingly or at all. Timing differences between propane prices, which may change
daily, and the market price of propylene, which is set monthly, may have a negative effect on our cash flow. Based on our current output, we obtain all of the propane we need from Enterprise through
its propane pipeline system, which is connected to the natural gas liquids and refined products storage hub at Mt. Belvieu. The
price that we pay Enterprise for propane fluctuates based on market prices. Propane prices could significantly increase in the future. Should Enterprise fail to perform in accordance with our existing
agreement, we would need to purchase propane from third parties on the open market, which could negatively impact our results of operations to the extent third-party propane is unavailable or
available only at higher prices.
Significant price volatility or interruptions in supply of other raw materials, such as natural gas, electricity and nitrogen, may result in increased costs that we may be
unable to pass on to our customers, which could reduce our profitability.
The raw materials we consume, such as natural gas, electricity and nitrogen, are generally commodity products that are readily
available at market prices. We frequently enter into supply agreements with particular suppliers, but disruptions of existing supply arrangements could substantially impact our profitability. If
certain of our suppliers are unable to meet their obligations under present supply agreements, we may be forced to pay higher prices to obtain the necessary materials from other sources. In addition,
if any of the raw materials that we use become unavailable within the geographic area from which they are now sourced, then we may not be able to obtain suitable or cost effective substitutes. Any
interruption in the supply of raw materials will increase our costs or decrease our sales, which will reduce our cash flow.
Our
supply agreements typically provide for market-based pricing and provide us no protection against price volatility. If the cost of any of our raw materials rises, the market price of
propylene may not rise correspondingly or at all. Timing differences between raw material prices, which may change daily, and the market price of propylene, which is set monthly, may have a negative
effect on our cash flow. Any cost increase could have a material adverse effect on our business, results of operations, financial condition and liquidity.
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Our operations are dependent on third-party suppliers, including Enterprise, which owns the propane pipeline that provides propane to our facility. A deterioration in the
financial condition of a third-party supplier, a mechanical problem with one of their facilities or the inability of a third-party supplier to perform in accordance with its contractual obligations
could have a material adverse effect on our results of operations, financial condition and our ability to make cash distributions.
Our operations depend in large part on the performance of third-party suppliers, including Enterprise for the supply of propane, a
subsidiary of Kinder Morgan Energy Partners, L.P. ("Kinder Morgan") for the supply of natural gas and Praxair, Inc. ("Praxair") for the supply of nitrogen. Should Enterprise, Kinder
Morgan, Praxair or any of our other third-party suppliers
fail to perform in accordance with existing contractual arrangements, our operation could be forced to halt. Alternative sources of supply could be difficult to obtain. Any shutdown of our operations,
even for a limited period, could have a material adverse effect on our results of operations, financial condition and ability to make cash distributions. In particular, our operations could be
adversely affected if there were a deterioration in Enterprise's financial condition such that the operation of the propane delivery system connected to our facility was disrupted.
Our facility faces operating hazards and interruptions, including unplanned maintenance or downtime. We could face potentially significant costs to the extent these hazards
or interruptions cause a material decline in production.
Our operations, located at a single location, are subject to significant operating hazards and interruptions. Any significant
curtailing of production at our PDH facility or individual units within our facility could result in materially lower levels of sales and cash flow for the duration of any shutdown and materially
adversely impact our ability to make cash distributions. Operations at our PDH facility could be curtailed or partially or completely shut down, temporarily or permanently, as the result of a number
of circumstances, most of which are not within our control. For example, our facility experienced significant unplanned downtime as a result of a mechanical problem in one of our compressors. Other
scenarios that could result in a shut down of our facility include:
•
unplanned maintenance or catastrophic events such as a major accident or fire, damage by severe weather, flooding or other
natural disaster;
•
labor difficulties that result in a work stoppage or slowdown;
•
environmental proceedings or other litigation that compel the cessation of all or a portion of the operations at our PDH
facility;
•
increasingly stringent environmental regulations;
•
a disruption in the supply of propane to our PDH facility; and
•
a governmental ban or other limitation on the use of propylene products, either generally or specifically those processed
at our facility.
The
magnitude of the effect on us of any shutdown will depend on the length of the shutdown and the extent of the facility operations affected by the shutdown. Our facility requires a
planned maintenance turnaround every three years, which generally lasts up to three to four weeks and may have a material impact on our cash flows and ability to make cash distributions in the quarter
or quarters in which it occurs. During planned maintenance turnaround times, if we elect to undertake extraordinary maintenance (for example, replacements of the defective distillation trays in our
splitter tower), our downtime may be substantially longer. In addition to the triennial maintenance projects, a more significant maintenance project will be undertaken approximately every nine years.
We anticipate each of these projects to take approximately four to six weeks. A major accident, fire, flood or other event could damage our facility or the environment and the surrounding community or
result in injuries or loss of life. Planned and unplanned maintenance could reduce our net income, cash flow and ability to make cash distributions
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during
the period of time that any of our units is not operating. Any unplanned future downtime could have a material adverse effect on our ability to make cash distributions to our unitholders.
We are not fully insured against all risks incident to our business, and if an accident or event occurs that is not fully insured it could adversely affect our business.
A major accident, fire, flood or other event could damage our facility or the environment and the surrounding community or result in
injuries or loss of life. If we experience significant property damage, business interruption, environmental claims or other liabilities, our business could be materially adversely affected to the
extent the damages or claims exceed the amount of valid and collectible insurance available to us. We are currently insured under property, business interruption, general liability (including sudden
and accidental pollution liability), business automobile, workers compensation and excess liability insurance policies. The property and business interruption insurance policies have a
$1.0 billion limit with a $1.0 million deductible for physical damage and a 60-day waiting period before losses resulting from business interruptions are recoverable. The
policies also contain exclusions and conditions that could have a materially adverse impact on our ability to receive indemnification thereunder, as well as customary sub-limits for
particular types of losses. For example, the current property policy contains specific sub-limits of $400.0 million for damage caused by flooding and $100.0 million for
damage caused by named windstorms, with deductibles of $1.0 million and $5.0 million per occurrence,
respectively. We are fully exposed to all losses in excess of the applicable limits and sub-limits and for losses due to business interruptions of fewer than 60 days. The occurrence
of any operating risk not covered by our insurance could have a material adverse effect on our business, financial condition, results of operations and ability to pay distributions to our unitholders.
Our general liability insurance policy, which includes sudden and accidental pollution coverage expires on March 1, 2012, and our property and business interruption insurance policies expire on
May 1, 2012. Market factors, including but not limited to catastrophic perils that impact our industry, significant changes in the investment returns of insurance companies, insurance company
solvency trends and industry loss ratios and loss trends, can negatively impact the future cost and availability of insurance. There can be no assurance that we will be able to buy and maintain
insurance in the future with adequate limits, reasonable pricing terms and conditions.
We face competition from other propylene producers.
Management estimates over 30 different companies produce propylene in North America. We consider companies with net long positions in
PGP and CGP to be our direct competitors, including Enterprise, Chevron Phillips, Lyondell Basell, ExxonMobil Chemical, Shell Chemical, Flint Hills and the Williams Companies. Most of our competitors
have significantly greater financial and other resources than us and are engaged on a national or international basis in many segments of the petroleum products and petrochemicals business, including
refining, transportation and marketing, on a scale substantially larger than ours. In addition, we may face competition from captive propylene production facilities operated by consumers of propylene.
For example, Dow recently announced a plan to build its own on-purpose propane dehydrogenation propylene facility for start-up in 2015. Dow also announced that it is
considering building a second propylene facility with a possible start-up date in 2018. As a result of these factors, we may be unable to expand our relationships with existing customers
or to obtain new customers on a profitable basis, or at all, which would have a material adverse effect on our business, results of operations and financial condition and our ability to pay cash
distributions.
We depend on certain third-party pipelines to supply us with feedstock and to distribute propylene to our customers. If these pipelines become unavailable to us, our
business could be adversely affected.
Our ability to obtain propane and other inputs necessary for the production of propylene is dependent upon the availability of
third-party pipeline systems interconnected to our PDH facility. In addition, we depend on third-party pipeline systems to transport propylene to our customers. Because we do not own
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these
pipelines, their continuing operation is not within our control. These pipelines may become unavailable for a number of reasons, including testing, maintenance, capacity constraints, accidents,
government regulation or other events. If third-party pipelines become partially or completely unavailable, our ability to operate could be restricted and our transportation costs could increase,
thereby reducing our profitability. A prolonged or permanent interruption in the availability of third-party pipelines could have a material adverse effect on our business, financial condition,
results of operations and ability to pay distributions.
Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increases to the price of natural gas, which may increase the price
of propane as well as the supply of our primary product, propylene, from competitors.
Hydraulic fracturing is a process used by oil and natural gas exploration and production operators in the completion of certain oil and
natural gas wells whereby water, sand and chemicals are injected under pressure into subsurface formations to stimulate natural gas production. Recently, hydraulic fracturing has come under increased
scrutiny from federal and state officials for its potential impact on health and the environment. Adoption of legislation or any implementation of regulations placing restrictions on hydraulic
fracturing activities could make it more difficult to perform hydraulic fracturing, resulting in a reduction in the supply of natural gas. The resulting increase in the price of natural gas could
narrow the propane-to-propylene spread in two ways, each adversely affecting our gross margins. First, a significant increase in natural gas prices could cause ethylene
producers to determine that the use of naphtha as a feedstock is more economical than natural gas based feedstocks such as ethane. Because the use of naphtha as a feedstock in the ethylene production
process results in significantly more propylene as co-product than ethane, the result would be an increase in propylene production by ethylene plants. The increased supply of propylene
would in turn exert downward pressure on the price of propylene, adversely affecting the price we obtain for the propylene we produce, both in the spot market and pursuant to our customer contracts,
which are market-based. Second, an increase in the price of natural gas may be accompanied by an increase in the price of propane, which is derived from natural gas, thereby further narrowing the
propane-to-propylene spread and reducing our gross margins.
We currently derive substantially all of our sales from three customers, and the loss of any of these customers without replacement on comparable terms would affect our
results of operations and cash available for distribution to our unitholders.
We have derived, and believe that we will continue to derive, substantially all of our sales from a limited number of customers that
purchase all of the propylene we produce. For the three months ended March 31, 2011, Dow, Total and INEOS accounted for 44%, 36% and 19% of our total sales, respectively. When our current
contracts with these customers expire, our customers may decide not to extend the contracts or may decide to purchase fewer pounds of propylene at lower prices during renegotiations. If our customers
decide not to renew these contracts, or decide to purchase fewer pounds of propylene or at lower prices, and we are unable to find replacement counterparties on terms as favorable as our current
contracts, our business, results of operations, financial condition and our ability to pay cash distributions to our unitholders may be materially adversely affected.
We are subject to many environmental and safety regulations that may result in unanticipated costs or liabilities, which could reduce our profitability.
We are subject to extensive federal, state and local laws, regulations, rules and ordinances relating to pollution, protection of the
environment and human health, and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials. Actual or alleged violations of
environmental laws or permit requirements could result in restrictions or
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prohibitions
on facility operations, substantial civil or criminal sanctions, as well as, under some environmental laws, the assessment of strict liability and/or joint and several liability.
Continually
increasing concerns regarding the safety of chemicals in commerce and their potential impact on the environment constitute a growing trend. Governmental, regulatory and
societal demands for continuously increasing levels of product safety and environmental protection could result in continued pressure for more stringent regulatory control with respect to the chemical
industry. In addition, these concerns could influence public perceptions, the viability of certain products, our reputation, the cost to comply with regulations and the ability to attract and retain
employees. Moreover, changes in environmental regulations could inhibit or interrupt our operations, or require us to modify our facilities or operations. Accordingly, environmental or regulatory
matters may cause us to incur significant unanticipated losses, costs or liabilities, which could reduce our profitability.
We
could incur significant expenditures in order to comply with existing or future environmental or safety laws. Capital expenditures and costs relating to environmental or safety
matters will be subject to evolving regulatory requirements and will depend on the timing of the promulgation and enforcement of specific standards which impose requirements on our operations. Capital
expenditures and costs beyond those currently anticipated may therefore be required under existing or future environmental or safety laws.
Furthermore,
we may be liable for the costs of investigating and cleaning up environmental contamination on or from our properties or at off-site locations where we disposed
of or arranged for the disposal or treatment of hazardous materials or from disposal activities that pre-dated our purchase of business. We may, therefore, incur additional costs and
expenditures beyond those currently anticipated to address all such known and unknown situations under existing and future environmental laws.
Climate change laws and regulations could have a material adverse effect on our results of operations, financial condition and ability to pay cash distributions.
On December 15, 2009, the U.S. EPA published its findings that emissions of carbon dioxide and other "greenhouse gases" present
an endangerment to public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth's atmosphere and other climatic changes, and EPA
has begun to regulate greenhouse gas emissions pursuant to the federal Clean Air Act ("CAA"). In addition, it is possible federal legislation could be adopted in the future to restrict greenhouse gas
emissions. Many states and regions have adopted greenhouse gas initiatives. The cost of compliance with any new regulations could be significant.
We are subject to strict laws and regulations regarding employee and process safety, as well as the prevention of accidental releases, and failure to comply with these laws
and regulations could have a material adverse effect on our results of operations, financial condition and ability to pay cash distributions.
Our facility is subject to the requirements of the federal Occupational Safety and Health Act ("OSHA"), and comparable state statutes
that regulate the protection of the health and safety of workers. OSHA requires that we maintain information about hazardous materials used or produced in our operations and that we provide this
information to employees, state and local governmental authorities and local residents. In addition, the Chemical Accident Prevention Provisions adopted by the EPA under the Clean Air Act require the
development of a Risk Management Plan to prevent the accidental release of hazardous substances that could harm public health or the environment. Failure to comply with these requirements, including
general industry standards, record keeping requirements and monitoring and control of potential exposure to regulated substances, could have a material adverse effect on our results of operations,
financial condition and ability to pay cash distributions if we are subjected to significant fines or compliance costs.
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Instability and volatility in the global capital and credit markets could negatively impact our business, financial condition, results of operations and cash flows.
The global capital and credit markets have experienced extreme volatility and disruption over the past two years. Our results of
operations, financial condition and ability to pay cash distributions could be negatively impacted by difficult conditions and extreme volatility in the capital, credit and commodities markets and in
the global economy. These factors, combined with
declining business and consumer confidence and increased unemployment, precipitated an economic recession in the U.S. and globally during 2009 and 2010. The difficult conditions in these markets and
the overall economy affect us in a number of ways. For example:
•
Although we believe we will have sufficient liquidity under our new revolving credit facility to run our business, under
extreme market conditions there can be no assurance that such funds would be available or sufficient, and in such a case, we may not be able to successfully obtain additional financing on favorable
terms, or at all.
•
Market volatility could exert downward pressure on the price of our common units, which may make it more difficult for us
to raise additional capital and thereby limit our ability to grow.
•
Market conditions could result in our significant customers experiencing financial difficulties. We are exposed to the
credit risk of our customers, and their failure to meet their financial obligations when due because of bankruptcy, lack of liquidity, operational failure or other reasons could result in decreased
sales and earnings for us.
We depend on key personnel for the success of our business.
We depend on the services of the executive officers of our general partner and other key personnel. The loss of the services of any
member of our executive officer team or key employee could have an adverse effect on our business and reduce our ability to make distributions to our unitholders. We may not be able to locate or
employ on acceptable terms qualified replacements for senior management or other key employees if their services were no longer available.
Certain members of our executive management team on whom we rely to manage important aspects of our business face conflicts regarding the allocation of their time.
We will rely on the executive officers and employees of our general partner to manage our operations and activities. Pursuant to a
services agreement between our general partner and PL Midstream LLC ("PL Midstream"), an entity controlled by Lindsay Goldberg, certain executive officers and employees of our general partner
will perform services for the olefins business of PL Midstream in addition to us. These shared executive officers and employees include our chief
financial officer and much of our accounting department. Because the shared officers and employees allocate time among us and PL Midstream, they may face conflicts regarding the allocation of their
time, which may adversely affect our business, results of operations and financial condition.
A shortage of skilled labor, together with rising labor costs, could adversely affect our results of operations and cash available for distribution to our unitholders.
The efficient production of propylene using modern techniques and equipment requires skilled employees. Our PDH facility relies on
technology that requires special expertise to operate efficiently and effectively. To the extent that the services of our key technical personnel become unavailable to us for any reason, we would be
required to hire other personnel. We may not be able to locate or employ such qualified personnel on acceptable terms or at all. We face competition for these professionals from our competitors, our
customers and other companies operating in our industry. If we are unable to find
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qualified
employees, or if the cost to find qualified employees increases materially, our results of operations and cash available for distribution to our unitholders could be adversely affected.
Restrictions in the agreements governing our indebtedness, including our new credit facilities, will contain significant limitations on our business operations, including
our ability to pay distributions and other payments.
We expect to enter into a new term loan facility and revolving credit facility in the third quarter of 2011. We anticipate that as of
December 31, 2010, on a pro forma basis after giving effect to this offering and the use of the estimated proceeds hereof and the establishment of our new credit facility, we would have had
$350.0 million of term loan debt outstanding and borrowing capacity of approximately $120.0 million under the revolving credit facility. We and our subsidiary may be able to incur
significant additional indebtedness in the future. If we successfully enter into these new credit facilities, our ability to pay distributions to holders of our common units and our ability to borrow
under these new credit facilities to fund distributions (if we elected to do so) will be subject to covenant restrictions under the agreement governing them. We expect that our ability to make
distributions to our common unitholders will depend, in part, on our ability to satisfy applicable covenants as well as the absence of a default or event of default under the facilities. If we were
unable to comply with any such covenant restrictions in any quarter, our ability to pay distributions to unitholders would be curtailed.
In
addition, we will be subject to covenants contained in our new credit facilities and any agreement governing other future indebtedness. These covenants will, subject to significant
exceptions, limit our
ability and the ability of our operating subsidiary to, among other things: incur, assume or permit to exist additional indebtedness, guarantees and other contingent obligations, incur liens, make
negative pledges, pay dividends or other distributions, make payments to our subsidiary, make certain loans and investments, consolidate, merge or sell all or substantially all of our assets. Any
failure to comply with these covenants could result in a default under our new credit facilities. Upon a default, unless waived, the lenders under our new credit facilities would have all remedies
available to a secured lender and could elect to terminate their commitments, cease making further loans, cause their loans to become due and payable in full, institute foreclosure proceedings against
our or our subsidiary's assets and force us and our subsidiary into bankruptcy or liquidation.
Any increase in market interest rates would make our debt service obligations more burdensome, and in turn reduce our cash available for distributions to our unitholders.
Borrowings under our new credit facilities will bear interest at variable rates. If market interest rates increase, such
variable-rate debt will create higher debt service requirements, which could adversely affect our cash flow and ability to pay cash distributions.
Our
ability to make scheduled debt payments, to refinance our obligations with respect to our indebtedness and to fund capital and non-capital expenditures necessary to
maintain the condition of our operating assets, properties and systems software, as well as to provide capacity for the growth of our business, depends on our financial and operating performance,
which, in turn, is subject to prevailing economic conditions and financial, business, competitive, legal and other factors.
If
our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing distributions, reducing or delaying our
business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital or bankruptcy protection.
Increases in interest rates could adversely impact our unit price and our ability to issue additional equity to make acquisitions, incur debt or for other purposes.
We cannot predict how interest rates will react to changing market conditions. Interest rates on our new credit facilities, future
credit facilities and debt offerings could be higher than current levels, causing
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our
financing costs to increase accordingly. Additionally, as with other yield-oriented securities, we expect that our unit price will be impacted by the level of our quarterly cash distributions and
implied distribution yield. The distribution yield is often used by investors to compare and rank related yield-oriented securities for investment decision-making purposes. Therefore, changes in
interest rates may affect the yield requirements of investors who invest in our common units, and a rising interest rate environment could have a material adverse impact on our unit price and our
ability to issue additional equity to fund our operations or to make acquisitions or to incur debt as well as increasing our interest costs.
We are a holding company and depend upon our subsidiary for our cash flow.
We are a holding company. All of our operations are conducted and all of our assets are owned by PL Propylene, our wholly-owned
subsidiary and our sole direct or indirect subsidiary. Consequently, our cash flow and our ability to meet our obligations or to pay cash distributions in the future will depend upon the cash flow of
our subsidiary and the payment of funds by our subsidiary to us in the form of dividends or otherwise. The ability of our subsidiary to make any payments to us will depend on its earnings, the terms
of its indebtedness, including the terms of any credit facilities, and legal restrictions. In particular, future credit facilities incurred at our subsidiary may impose significant limitations on the
ability of our subsidiary to pay distributions to us and consequently our ability to pay distributions to our unitholders. See also "—We may not have sufficient available cash to pay any
quarterly distribution on our common units."
We have a limited operating history upon which to rely in evaluating our ability to pay quarterly cash distributions or our ability to be successful in implementing our
business strategy.
We are dependent on our PDH facility as our sole source of propylene and by-products to generate sales, and we are,
therefore, dependent on the continued operation of this PDH facility to generate our sales. Our PDH facility did not generate sales until the commencement of commercial operations in October 2010, and
we did not achieve daily production rates at nameplate capacity until April 2011. As a newly constructed complex processing facility and the
largest of only four CATOFIN processing facilities that produce propylene, the operating performance of our facility over the short-term and long-term is not yet proven. We
have already encountered and will continue to encounter risks and difficulties frequently experienced by companies whose performance is dependent upon newly constructed world-scale processing or
manufacturing facilities, such as the risks described in this prospectus. Because of our limited operating history and performance record, it is difficult for you to evaluate our business and results
of operations to date and to assess our future prospects. Further, our historical financial statements do not present a complete twelve month period of operations, and therefore do not provide a
meaningful basis for you to evaluate our operations or our ability to achieve our business strategy. We may be less successful than a seasoned company in achieving a consistent operating level at our
facility capable of generating cash flows from our operations sufficient to regularly pay a quarterly cash distribution or to pay any quarterly cash distribution. We may also be less successful in
implementing our business strategy than a seasoned company with a longer operating history. Finally, we may be less equipped to identify and address operating risks and hazards in the conduct of our
business than those companies whose major facilities have longer operating histories.
We will incur increased costs as a result of being a publicly traded partnership.
As a publicly traded partnership, we will incur significant legal, accounting and other expenses that we did not incur prior to this
offering. In addition, the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010, as well as rules implemented by the SEC and the NYSE, require, or will require, publicly traded
entities to adopt various corporate governance practices that will further increase our costs. Before we are able to pay distributions to our unitholders, we must first pay our expenses, including the
costs of being a public company and other operating expenses. As a result, the amount of cash we have available for distribution to our unitholders will be affected by our expenses, including the
costs associated with being a
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publicly
traded partnership. We estimate that we will incur approximately $3.5 million of estimated incremental costs per year, some of which will be direct charges associated with being a
publicly traded partnership and some of which will be allocated to us by our general partner and its affiliates; however, it is possible that our actual incremental costs of being a publicly traded
partnership will be higher than we currently estimate.
Prior
to this offering, we have not filed reports with the SEC. Following this offering, we will become subject to the public reporting requirements of the Securities Exchange Act of
1934, as amended, or the Exchange Act. We expect these requirements will increase our legal and financial compliance costs and make compliance activities more time-consuming and costly.
For example, as a result of becoming a publicly traded partnership, we are required to have at least three independent directors and adopt policies regarding internal controls and disclosure controls
and procedures, including the preparation of reports on internal control over financial reporting. In addition, we will incur additional costs associated with our publicly traded company reporting
requirements.
As a publicly traded partnership we qualify for, and will rely on, certain exemptions from the New York Stock Exchange's corporate governance requirements.
As a publicly traded partnership, we qualify for, and will rely on, certain exemptions from the NYSE's corporate governance
requirements, including:
•
the requirement that a majority of the board of directors of our general partner consist of independent directors;
•
the requirement that the board of directors of our general partner have a nominating/corporate governance committee that
is composed entirely of independent directors; and
•
the requirement that the board of directors of our general partner have a compensation committee that is composed entirely
of independent directors.
As
a result of these exemptions, our general partner's board of directors will not be comprised of a majority of independent directors, our general partner's compensation committee may
not be comprised entirely of independent directors and our general partner's board of directors does not currently intend to establish a nominating/corporate governance committee. Accordingly,
unitholders will not have the same protections afforded to equityholders of companies that are subject to all of the corporate governance requirements of the NYSE. See "Management."
We will be exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act.
We are in the process of evaluating our internal controls systems to allow management to report on, and our independent auditors to
audit, our internal controls over financial reporting. We will be performing the system and process evaluation and testing (and any necessary remediation) required to comply with the management
certification and auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, and under current rules will be required to comply with Section 404 in our annual report for
the year ended December 31, 2012. Furthermore, upon
completion of this process, we may identify control deficiencies of varying degrees of severity under applicable SEC and Public Company Accounting Oversight Board, or PCAOB, rules and regulations that
remain unremediated. Although we produce our financial statements in accordance with GAAP, our internal accounting controls may not currently meet all standards applicable to companies with publicly
traded securities. As a publicly traded partnership, we will be required to report, among other things, control deficiencies that constitute a "material weakness" or changes in internal controls that,
or that are reasonably likely to, materially affect internal controls over financial reporting. A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over
financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
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If we fail to implement the requirements of Section 404 in a timely manner, we might be subject to sanctions or investigation by regulatory authorities
such as the SEC. If we do not implement improvements to our disclosure controls and procedures or to our internal controls in a timely manner, our independent registered public accounting firm may not
be able to certify as to the effectiveness of our internal controls over financial reporting pursuant to an audit of our internal controls over financial reporting. This may subject us to adverse
regulatory consequences or a loss of confidence in the reliability of our financial statements. We could also suffer a loss of confidence in the reliability of our financial statements if our
independent registered public accounting firm reports a material weakness in our internal controls, if we do not develop and maintain effective controls and procedures or if we are otherwise unable to
deliver timely and reliable financial information. Any loss of confidence in the reliability of our financial statements or other negative reaction to our failure to develop timely or adequate
disclosure controls and procedures or internal controls could result in a decline in the price of our common units. In addition, if we fail to remedy any material weakness, our financial statements
may be inaccurate, we may face restricted access to the capital markets and the price of our common units may be adversely affected.
If licensed technology were no longer available, our business may be adversely affected.
We have licensed, and may in the future license, a combination of patent, trade secret and other intellectual property rights of third
parties for use in our business. In particular, the CATOFIN dehydrogenation technology licensed to us by CB&I Lummus. The license, which is fully paid, grants us perpetual rights to use the CATOFIN
dehydrogenation technology on specified terms and conditions and is integral to the operations of our PDH facility. If this, or any other license agreements on which our operations rely were to be
terminated, licenses to alternative technology may not be available, or may only be available on terms that are not commercially reasonable or acceptable. In addition, any substitution of new
technology for currently-licensed technology may require substantial changes to manufacturing processes or equipment and may have a material adverse effect on our results of operations, financial
condition and ability to make cash distributions.
Risks Related to an Investment in Us
The board of directors of our general partner will adopt a policy to distribute all of the available cash we generate each quarter, which could limit our ability to grow and
make acquisitions.
The board of directors of our general partner will adopt a policy to distribute all of the available cash we generate each quarter to
our unitholders, beginning with the quarter ending December 31, 2011. As a result, our general partner will rely primarily upon external financing sources, including commercial bank borrowings
and the issuance of debt and equity securities, to fund our acquisitions and expansion capital expenditures. As such, to the extent we are unable to finance growth externally, our cash distribution
policy will significantly impair our ability to grow.
In
addition, because the board of directors of our general partner will adopt a policy to distribute all of the available cash we generate each quarter, our growth may not be as robust
as that of businesses that reinvest their available cash to expand ongoing operations. To the extent we issue additional units in connection with any acquisitions or expansion capital expenditures,
the payment of distributions on those additional units will decrease the amount we distribute on each outstanding unit. There are no limitations in our partnership agreement on our ability to issue
additional units, including units ranking senior to the common units. The incurrence of additional commercial borrowings or other debt to finance our growth strategy would result in increased interest
expense, which, in turn, would reduce the available cash that we have to distribute to our unitholders.
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Our general partner, which is owned by funds controlled by Lindsay Goldberg and York Capital, has fiduciary duties to Lindsay Goldberg and York Capital, and the interests of
Lindsay Goldberg and York Capital may differ significantly from, or conflict with, the interests of our public common unitholders.
Our general partner is responsible for managing us. Although our general partner has fiduciary duties to manage us in a manner that is
in our best interests, the fiduciary duties are specifically limited by the express terms of our partnership agreement, and the directors and officers of our general partner also have fiduciary duties
to manage our general partner in a manner beneficial to its owners, Lindsay Goldberg and York Capital, and the interest of Lindsay Goldberg and York Capital may differ from, or conflict with, the
interests of our common unitholders. In resolving these conflicts, our general partner may favor its own interests or the interests of Lindsay Goldberg and York Capital over our interests and those of
our common unitholders.
The
potential conflicts of interest include, among others, the following:
•
Neither our partnership agreement nor any other agreement will require the owners of our general partner to pursue a
business strategy that favors us. The affiliates of our general partner have fiduciary duties to make decisions in their own best interests and in the best interest of their owners, which may be
contrary to our interests. In addition, our general partner is allowed to take into account the interests of parties other than us or our unitholders, such as its owners, in resolving conflicts of
interest, which has the effect of limiting its fiduciary duty to our unitholders.
•
Our general partner has limited its liability and reduced its fiduciary duties under our partnership agreement and has
also restricted the remedies available to our unitholders for actions that, without those limitations and reductions, might constitute breaches of fiduciary duty. As a result of purchasing common
units, unitholders consent to some actions and conflicts of interest that might otherwise constitute a breach of fiduciary or other duties under applicable state law.
•
The board of directors of our general partner will determine the amount and timing of asset purchases and sales, capital
expenditures, borrowings, repayment of indebtedness and issuances of additional partnership interests, each of which can affect the amount of cash that is available for distribution to our common
unitholders.
•
Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any
services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf. There is no limitation on the amounts our general partner can cause us to pay it
or its affiliates.
•
Our general partner may exercise its rights to call and purchase all of our common units if at any time it and its
affiliates own more than 80% of the common units.
•
Our general partner will control the enforcement of obligations owed to us by it and its affiliates. In addition, our
general partner will decide whether to retain separate counsel or others to perform services for us.
•
Our general partner determines which costs incurred by it and its affiliates are reimbursable by us.
See
"Conflicts of Interest and Fiduciary Duties."
Our partnership agreement limits the liability and reduces the fiduciary duties of our general partner and restricts the remedies available to us and our common unitholders
for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.
Our partnership agreement limits the liability and reduces the fiduciary duties of our general partner, while also restricting the
remedies available to our common unitholders for actions that, without these limitations and reductions, might constitute breaches of fiduciary duty. Delaware partnership law permits such contractual
reductions of fiduciary duty. By purchasing common units, common unitholders consent
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to
some actions that might otherwise constitute a breach of fiduciary or other duties applicable under state law. Our partnership agreement contains provisions that reduce the standards to which our
general partner would otherwise be held by state fiduciary duty law. For example:
•
Our partnership agreement permits our general partner to make a number of decisions in its individual capacity, as opposed
to its capacity as general partner. This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any
interest of, or factors affecting, our common unitholders. Decisions made by our general partner in its individual capacity will be made by our sponsors, as the owners of our general partner, and not
by the board of directors of our general partner. Examples include the exercise of the general partner's call right, its voting rights with respect to any common units it may own, its registration
rights and its determination whether or not to consent to any merger or consolidation or amendment to our partnership agreement.
•
Our partnership agreement provides that our general partner will not have any liability to us or our unitholders for
decisions made in its capacity as general partner so long as it acted in good faith, meaning it believed that the decisions were in our best interests.
•
Our partnership agreement provides that our general partner and the officers and directors of our general partner will not
be liable for monetary damages to us for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our
general partner or those persons acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that such person's conduct was criminal.
•
Our partnership agreement generally provides that affiliate transactions and resolutions of conflicts of interest not
approved by the conflicts committee of the board of directors of our general partner and not involving a vote of unitholders must be on terms no less favorable to us than those generally provided to
or available from unrelated third parties or be "fair and reasonable." In determining whether a transaction or resolution is "fair and reasonable," our general partner may consider the totality of the
relationship between the parties involved, including other transactions that may be particularly advantageous or beneficial to us.
By
purchasing a common unit, a unitholder will become bound by the provisions of our partnership agreement, including the provisions described above. See "Description of Our Common
Units—Transfer of Common Units."
Our sponsors have the power to appoint and remove our general partner's directors.
Upon the consummation of this offering, our sponsors will have the power to elect all of the members of the board of directors of our
general partner. Our general partner has control over all decisions related to our operations. See "Management—Our Management." Our public unitholders do not have an ability to influence
any operating decisions and will not be able to prevent us from entering into any transactions. Furthermore, the goals and objectives of our sponsors, as the owner of our general partner, may not be
consistent with those of our public unitholders.
Common units are subject to our general partner's call right.
If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will have the right,
which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the common units held by public unitholders at a price not less than their
then-current market price, as calculated pursuant to the terms of our partnership agreement. As a result, you may be required to sell your common units at an undesirable time or price and
may not receive any return on your investment. You may also incur a tax liability upon a sale of your common units. Our general partner is not obligated to obtain a fairness opinion regarding the
value of the
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common
units to be repurchased by it upon exercise of the call right. There is no restriction in our partnership agreement that prevents our general partner from issuing additional common units and
then exercising its call right. Our general partner may use its own discretion, free of fiduciary duty restrictions, in determining whether to exercise this right. See "The Partnership
Agreement—Call Right."
Our unitholders have limited voting rights and are not entitled to elect our general partner or our general partner's directors.
Unlike the holders of common stock in a corporation, our unitholders have only limited voting rights on matters affecting our business
and, therefore, limited ability to influence management's decisions regarding our business. Unitholders will have no right to elect our general partner or our general partner's board of directors on
an annual or other continuing basis. The board of directors of our general partner, including the independent directors, will be chosen entirely by our sponsors as the owner of the general partner and
not by our common unitholders. Unlike publicly traded corporations, we will not hold annual meetings of our unitholders to elect directors or conduct other matters routinely conducted at annual
meetings of stockholders. Furthermore, even if our unitholders are dissatisfied with the performance of our general partner, they will have no practical ability to remove our general partner. As a
result of these limitations, the price at which the common units will trade could be diminished.
Our public unitholders will not have sufficient voting power to remove our general partner without our sponsors' consent.
Following the closing of this offering, our sponsors will own approximately        % of our common units (approximately
        % if the underwriters exercise their option to purchase
additional common units in full), which means holders of common units purchased in this offering will not be able to remove the general partner, under any circumstances, unless our sponsors sell some
of the common units that they own or we sell additional units to the public.
Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units (other than our general partner and its affiliates and permitted
transferees).
Our partnership agreement restricts unitholders' voting rights by providing that any units held by a person that owns 20% or more of
any class of units then outstanding, other than our general partner, its affiliates, their transferees and persons who acquired such units with the prior approval of the board of directors of our
general partner, may not vote on any matter. Our partnership agreement also contains provisions limiting the ability of common unitholders to call meetings or to acquire information about our
operations, as well as other provisions limiting the ability of our common unitholders to influence the manner or direction of management.
Cost reimbursements due to our general partner and its affiliates will reduce cash available for distribution to you.
Prior to making any distribution on our outstanding units, we will reimburse our general partner for all expenses it incurs on our
behalf including, without limitation, salary, bonus, incentive compensation and other amounts paid to its employees and executive officers who perform services for us. The payment of these amounts,
including allocated overhead, to our general partner and its affiliates could adversely affect our ability to make distributions to you. See "Our Cash Distribution Policy and Restrictions on
Distributions," "Certain Relationships and Related Party Transactions" and "Conflicts of Interest and Fiduciary Duties—Conflicts of Interest."
Limited partners may not have limited liability if a court finds that unitholder action constitutes control of our business.
A general partner of a partnership generally has unlimited liability for the obligations of the partnership, except for those
contractual obligations of the partnership that are expressly made without
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recourse
to the general partner. Our partnership is organized under Delaware law and our subsidiary conducts business in Texas. Limited partners could be liable for our obligations as if such limited
partners were general partners if a court or government agency determined that:
•
we were conducting business in a state but had not complied with that particular state's partnership statute; or
•
limited partners' right to act with other unitholders to remove or replace our general partner, to approve some amendments
to our partnership agreement or to take other actions under our partnership agreement constituted "control" of our business.
See
"The Partnership Agreement—Limited Liability" for a discussion of the implications of the limitations of liability on a limited partner.
Unitholders may have liability to repay distributions.
In the event that: (1) we make distributions to our unitholders when our nonrecourse liabilities exceed the sum of
(a) the fair market value of our assets not subject to recourse liability and (b) the excess of the fair market value of our assets subject to recourse liability over such liability, or
a distribution causes such a result, and (2) a unitholder knows at the time of the distribution of such circumstances, such unitholder will be liable for a period of three years from the time
of the impermissible distribution to repay the distribution under Section 17-607 of the Delaware Act.
Likewise,
upon the winding up of the partnership, in the event that (1) we do not distribute assets in the following order: (a) to creditors in satisfaction of their
liabilities; (b) to partners and former partners in satisfaction of liabilities for distributions owed under our partnership agreement; (c) to partners for the return of their
contribution; and finally (d) to the partners in the proportions in which the partners share in distributions and (2) a unitholder knows at the time of such circumstances, then such
unitholder will be liable for a period of three years from the impermissible distribution to repay the distribution under Section 17-807 of the Delaware Act.
A
purchaser of common units who becomes a limited partner is liable for the obligations of the transferring limited partner to make contributions to us that are known by the purchaser at
the time it became a limited partner and for unknown obligations if the liabilities could be determined from our partnership agreement.
Our general partner's interest in us and the control of our general partner may be transferred to a third party without unitholder consent.
Our general partner may transfer its general partner interest in us to a third party in a merger or in a sale of all or substantially
all of its assets without the consent of the unitholders. Furthermore, there is no restriction in our partnership agreement on the ability of our sponsors to transfer their equity interests in our
general partner to a third party. The new equity owner of our general partner would then be in a position to replace the board of directors and the officers of our general partner with its own choices
and to influence the decisions taken by the board of directors and officers of our general partner.
There is no existing market for our common units, and we do not know if one will develop to provide you with adequate liquidity. If our unit price fluctuates after this
offering, you could lose a significant part of your investment.
Prior to this offering, there has not been a public market for our common units. If an active trading market does not develop, you may
have difficulty selling any of our common units that you buy. The initial public offering price for the common units will be determined by negotiations between us and the underwriters and may not be
indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell our common units at prices equal to or greater than the price
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paid
by you in this offering. The market price of our common units may be influenced by many factors including:
•
the level of our distributions and our earnings or those of other companies in our industry or other publicly traded
partnerships;
•
the failure of securities analysts to cover our common units after this offering or changes in financial estimates by
analysts;
•
announcements by us or our competitors of significant contracts or acquisitions;
•
variations in quarterly results of operations;
•
loss of a large customer or supplier;
•
market prices of propylene;
•
market prices of propane;
•
general economic conditions;
•
terrorist acts;
•
changes in the applicable environmental regulations;
•
changes in accounting standards, policies, guidance, interpretations or principles;
•
future sales of our common units; and
•
investor perceptions of us and the industries in which our products are used.
As
a result of these factors, investors in our common units may not be able to resell their common units at or above the initial offering price. In addition, the stock market in general
has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies like us. These broad market and industry factors may
materially reduce the market price of our common units, regardless of our operating performance.
You will incur immediate and substantial dilution in net tangible book value per common unit.
The initial public offering price of our common units is substantially higher than the pro forma net tangible book value of our
outstanding units. As a result, if you purchase common units in this offering, you will incur immediate and substantial dilution in the amount of $            per common unit. This dilution
results primarily because the assets contributed by Propylene Holdings are recorded at their historical costs, and not their fair value, in accordance with GAAP. See "Dilution."
We may issue additional common units and other equity interests without your approval, which would dilute your existing ownership interests.
Under our partnership agreement, we are authorized to issue an unlimited number of additional interests without a vote of the
unitholders. The issuance by us of additional common units or other equity interests of equal or senior rank will have the following effects:
•
the proportionate ownership interest of unitholders immediately prior to the issuance will decrease;
•
the amount of cash distributions on each unit will decrease;
•
the ratio of our taxable income to distributions may increase;
•
the relative voting strength of each previously outstanding unit will be diminished; and
•
the market price of the common units may decline.
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In
addition, our partnership agreement does not prohibit the issuance of equity interests by our subsidiary, which may effectively rank senior to the common units.
Units eligible for future sale may cause the price of our common units to decline.
Sales of substantial amounts of our common units in the public market, or the perception that these sales may occur, could cause the
market price of our common units to decline. This could also impair our ability to raise additional capital through the sale of our equity interests.
There
will be            common units outstanding following this offering.            common units are being sold to the public in this
offering (            common units
if the underwriters exercise their option to purchase additional common units in full) and an aggregate            common units will be owned by our sponsors and their affiliates, our
executive
officers and certain of our employees following this offering (              common units if the underwriters exercise their option to purchase additional common units in full).
The
common units sold in this offering will be freely transferable without restriction or further registration under the Securities Act of 1933, or the Securities Act, by persons other than "affiliates,"
as that term is defined in Rule 144 under the Securities Act.
In
addition, under our partnership agreement, affiliates of our general partner have the right to cause us to register their units under the Securities Act and applicable state
securities laws. In connection with this offering, we will enter into a registration rights agreement with our sponsors pursuant to which we may be required to register the sale of the common units
they hold under the Securities Act and applicable state securities laws.
In
connection with this offering, we, our sponsors, our general partner and our general partner's directors and executive officers will enter into lock-up agreements,
pursuant to which they will agree, subject to certain exceptions, not to sell or transfer, directly or indirectly, any of our common units until 180 days from the date of this prospectus,
subject to extension in certain circumstances. Following termination of these lockup agreements, all units held by our sponsors, members of our executive management team, our general partner and their
affiliates will be freely tradable under Rule 144, subject to the volume and other limitations of Rule 144. See "Common Units Eligible for Future Sale."
Tax Risks
In addition to reading the following risk factors, you should read "Material U.S. Federal Income Tax Consequences" for a more complete
discussion of the expected material federal income tax consequences of owning and disposing of common units.
Our tax treatment depends on our status as a partnership for U.S. federal income tax purposes, as well as our not being subject to a material amount of entity-level taxation
by individual states. If the IRS were to treat us as a corporation for federal income tax purposes or we were to become subject to material additional amounts of entity-level taxation for state tax
purposes, then our cash available for distribution to you could be substantially reduced.
The anticipated after-tax economic benefit of an investment in our common units depends largely on our being treated as a
partnership for U.S. federal income tax purposes. We have not requested, and do not plan to request, a ruling from the Internal Revenue Service (the "IRS"), on this or any other tax matter affecting
us.
Despite
the fact that we are organized as a limited partnership under Delaware law, it is possible in certain circumstances for a partnership such as ours to be treated as a corporation
for federal income tax purposes. Although we do not believe, based upon our current operations, that we will be so treated, a change in our business (or a change in current law) could cause us to be
treated as a corporation for federal income tax purposes or otherwise subject us to taxation as an entity.
If
we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our taxable income at the corporate tax rate, which is currently a maximum of 35%
and would likely pay
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state
income tax at varying rates. Distributions to you would generally be taxed again as corporate distributions, and no income, gains, losses, deductions or credits would flow through to you.
Because a tax would be imposed upon us as a corporation, our cash available for distribution to you would be substantially reduced. Therefore, treatment of us as a corporation would result in a
material reduction in the anticipated cash flow and after-tax return to the unitholders, likely causing a substantial reduction in the value of our common units.
In
Texas, we will be subject to an entity-level tax on any portion of our income that is generated in Texas in the prior year. Imposition of any such additional taxes on us or an
increase in the existing tax rates would reduce the cash available for distribution to our unitholders.
The tax treatment of publicly traded partnerships or an investment in our units could be subject to potential legislative, judicial or administrative changes and differing
interpretations, possibly on a retroactive basis.
The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units may
be modified by administrative, legislative or judicial interpretation at any time. For example, members of Congress have recently considered substantive changes to the existing federal income tax laws
that affect publicly traded partnerships. Any modification to the U.S. federal income tax laws and interpretations thereof may be applied retroactively and could make it more difficult or impossible
to meet the exception for certain publicly traded partnerships to be treated as partnerships for U.S. federal income tax purposes. Although the considered legislation would not appear to have affected
our treatment as a partnership, we are unable to predict whether any of these changes, or other proposals will be reintroduced or will ultimately be enacted. Any such changes could negatively impact
the value of an investment in our common units.
You will be required to pay taxes on your share of our income even if you do not receive any cash distributions from us.
Because our unitholders will be treated as partners to whom we will allocate taxable income that could be different in amount than the
cash we distribute, you will be required to pay any federal income taxes and, in some cases, state and local income taxes on your share of our taxable income whether or not you receive cash
distributions from us. You may not receive cash distributions from us equal to your share of our taxable income or even equal to the actual tax liability that results from that income.
The sale or exchange of 50% or more of our capital and profits interests during any twelve-month period will result in the termination of our partnership for federal income
tax purposes.
We will be considered to have terminated our partnership for federal income tax purposes if there is a sale or exchange of 50% or more
of the total interests in our capital and profits within a twelve-month period. Our termination would, among other things, result in the closing of our taxable year for all unitholders and could
result in a deferral of depreciation deductions allowable in computing our taxable income. In the case of a unitholder reporting on a taxable year other than a fiscal year ending December 31,
the closing of our taxable year may also result in more than twelve months of our taxable income or loss being includable in his taxable income for the year of termination. Our termination currently
would not affect our classification as a partnership for federal income tax purposes, but instead, we would be treated as a new partnership for federal income tax purposes. If treated as a new
partnership, we must make new tax elections and could be subject to penalties if we are unable to determine that a termination occurred. See "Material U.S. Federal Income Tax
Consequences—Disposition of Common Units—Constructive Termination" for a discussion of the consequences of our termination for federal income tax purposes.
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Tax gain or loss on the disposition of our common units could be more or less than expected.
If you sell your common units, you will recognize a gain or loss equal to the difference between the amount realized and your tax basis
in those common units. Because distributions in excess of your allocable share of our net taxable income decrease your tax basis in your common units, the amount, if any, of such prior excess
distributions with respect to the units you sell will, in effect, become taxable income to you if you sell such units at a price greater than your tax basis in those units, even if the price you
receive is less than your original cost. Furthermore, a substantial portion of the amount realized, whether or not representing gain, may be taxed as ordinary income due to potential recapture items,
including depreciation recapture. In addition, because the amount realized includes a unitholder's share of our nonrecourse liabilities, if you sell your units, you may incur a tax liability in excess
of the amount of cash you receive from the sale. See "Material U.S. Federal Income Tax Consequences—Disposition of Common Units—Recognition of Gain or Loss" for a further
discussion of the foregoing.
Tax-exempt entities and non-U.S. persons face unique tax issues from owning common units that may result in adverse tax consequences to them.
Investment in common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts
("IRAs"), and non-U.S. persons raises issues unique to them. For example, virtually all of our income allocated to organizations that are exempt from federal income tax, including IRAs and
other retirement plans, will be unrelated business taxable income and will be taxable to them. Distributions to non-U.S. persons will be reduced by withholding taxes at the highest
applicable effective tax rate, and non-U.S. persons will be required to file U.S. federal tax returns and pay tax on their share of our taxable income. If you are a
tax-exempt entity or a non-U.S. person, you should consult your tax advisor before investing in our common units.
If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted and the cost of any IRS contest will reduce our cash
available for distribution to you.
The IRS may adopt positions that differ from the positions we take. It may be necessary to resort to administrative or court
proceedings to sustain some or all of the positions we take. A court may not agree with some or all of the positions we take. Any contest with the IRS may materially and adversely impact the market
for our common units and the price at which they trade. Our costs of any contest with the IRS will be borne indirectly by our unitholders and our general partner because the costs will reduce our cash
available for distribution.
We will treat each purchaser of our common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment,
which could adversely affect the value of the common units.
Because we cannot match transferors and transferees of common units, we will adopt depreciation and amortization positions that may not
conform to all aspects of existing Treasury Regulations. A successful IRS challenge to those positions could adversely affect the amount of tax benefits available to you. It also could affect the
timing of these tax benefits or the amount of gain from your sale of common units and could have a negative impact on the value of our common units or result in audit adjustments to your tax returns.
See "Material U.S. Federal Income Tax Consequences—Tax Consequences of Unit Ownership—Section 754 Election" for a further discussion of the effect of the depreciation
and amortization positions we adopt.
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We will prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first
day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and
deduction among our unitholders.
We generally prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each month
based upon the ownership of our common units on the first day of each month, instead of on the basis of the date a particular common unit is transferred. Nonetheless, we allocate certain deductions
for depreciation of capital additions based upon the date the underlying property is placed in service. The use of this proration method may not be permitted under existing Treasury Regulations, and
although the U.S. Treasury Department issued proposed Treasury Regulations allowing a similar monthly simplifying convention, such regulations are not final and do not specifically authorize the use
of the proration method we have adopted. Accordingly, our counsel is unable to opine as to the validity of this method. If the IRS were to successfully challenge our proration method, we may be
required to change the allocation of items of income, gain, loss and deduction among our unitholders.
A unitholder whose common units are loaned to a "short seller" to cover a short sale of common units may be considered as having disposed of those common units. If so, he
would no longer be treated for tax purposes as a partner with respect to those common units during the period of the loan and may recognize gain or loss from the disposition.
Because there is no tax concept of loaning a partnership interest, a unitholder whose common units are loaned to a "short seller" to
cover a short sale of common units may be considered as having disposed of the loaned units. In that case, he may no longer be treated for tax purposes as a partner with respect to those common units
during the period of the loan to the short seller and the unitholder may recognize gain or loss from such disposition. Moreover, during the period of the loan to the short seller, any of our income,
gain, loss or deduction with respect to those common units may not be reportable by the unitholder and any cash distributions received by the unitholder as to those common units could be fully taxable
as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller should modify any applicable brokerage account
agreements to prohibit their brokers from borrowing their common units.
Unitholders may be subject to state and local taxes and return filing requirements in jurisdictions where they do not live as a result of investing in our common units.
In addition to federal income taxes, unitholders may become subject to other taxes, including state, local and non-U.S.
taxes, unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by jurisdictions in which we conduct business or own property in the future, even if they do not live
in any of those jurisdictions. We currently conduct business only in Texas, which does not impose a personal income tax but does impose a tax on corporations and other entities. We may own property or
conduct business in other states or non-U.S. countries in the future. Unitholders may be required to file state and local income tax returns and pay state and local income taxes in some or
all of those various jurisdictions. Further, unitholders may be subject to penalties for failure to comply with those requirements. It is the unitholder's responsibility to file all U.S. federal,
state, local and non-U.S. tax returns.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future
events or conditions or that include the words "will," "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and
that do not relate to historical matters identify forward-looking statements. Our forward-looking statements include statements about our business strategy, our industry, our future profitability, our
expected capital expenditures (including environmental expenditures) and the impact of such expenditures on our performance, the costs of operating as a public company and our capital expenditure
projects. All statements herein about our forecast of available cash and our forecasted results for the twelve months ending September 30, 2012
constitute forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, including the factors described under "Risk Factors," that may cause our
actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. Such risks and uncertainties include, among
other things:
•
our ability to make cash distributions on the common units;
•
the volatile nature of our business and the variable nature of our distributions;
•
the ability of our general partner to modify or revoke our distribution policy at any time;
•
our ability to forecast our future financial condition or results of operations and our future sales and expenses;
•
the cyclical nature of our business;
•
intense competition from other propylene producers;
•
our reliance on propane that we purchase from Enterprise;
•
the supply and price levels of propane and propylene;
•
the risk of a material decline in production at our propane dehydrogenation facility;
•
potential operating hazards from accidents, fire, severe weather, floods or other natural disasters;
•
the risk associated with governmental policies affecting the petrochemical industry;
•
capital expenditures and potential liabilities arising from environmental laws and regulations;
•
our potential inability to obtain or renew permits;
•
existing and proposed environmental laws and regulations, including those relating to climate change, alternative energy
or fuel sources, and on the end-use and application of propylene;
•
new regulations concerning the transportation of hazardous chemicals, risks of terrorism and the security of propane
processing facilities;
•
our lack of asset diversification;
•
our dependence on significant customers;
•
our ability to comply with employee safety laws and regulations;
•
potential disruptions in the global or U.S. capital and credit markets;
•
our potential inability to successfully implement our business strategies, including the completion of significant capital
expenditure projects;
•
additional risks, compliance costs and liabilities from expansions or acquisitions;
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•
our reliance on certain members of our senior management team;
•
the potential development of integrated propylene facilities by our current customers, displacing us as suppliers;
•
the potential shortage of skilled labor or loss of key personnel;
•
our ability to continue to license the technology used in our operations;
•
our ability to secure appropriate and adequate debt facilities at a reasonable cost of capital;
•
restrictions in our debt agreements;
•
the dependence on our subsidiary for cash to meet our debt obligations;
•
our limited operating history;
•
potential increases in costs and distraction of management resulting from the requirements of being a publicly traded
partnership;
•
exemptions we will rely on in connection with NYSE corporate governance requirements;
•
risks relating to evaluations of internal controls required by Section 404 of the Sarbanes-Oxley Act;
•
risks relating to our relationships with our sponsors;
•
control of our general partner by our sponsors;
•
limitations on the fiduciary duties owed by our general partner which are included in the partnership agreement; and
•
changes in our treatment as a partnership for U.S. income or state tax purposes.
You
should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs, forward-looking statements involve known and
unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements
expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events,
changed circumstances or otherwise, unless required by law.
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THE TRANSACTIONS AND OUR STRUCTURE AND ORGANIZATION
The Transactions
The following transactions will take place in connection with, or prior to, this offering. We refer to these transactions collectively
as the "Transactions":
•
Prior to the closing of this offering, PL Propylene expects to enter into a new $             million term loan
facility and a $             million revolving credit facility;
•
Prior to the closing of this offering, PL Propylene will draw $             million from under its revolving
credit facility to fund its working capital needs, draw $             million under the new term loan facility and use (1)
 $             million to refinance and cancel its
existing credit facility, (2) approximately $             million to reimburse our sponsors for certain construction capital expenditures and (3) approximately
$             million to pay associated financing costs;
•
Our general partner and Propylene Holdings will enter into an amended and restated agreement of limited partnership, the
form of which is attached hereto as Appendix A;
•
Propylene Holdings will contribute PL Propylene to us in exchange for (1)             common units,
(2) the right to receive the net proceeds from this offering (after deducting underwriting discounts and commissions and the expenses of this offering) and (3) the right to receive
additional common units, a cash distribution or both, based upon whether or not the underwriters exercise their option to purchase additional common units in full or in part;
•
Propylene Holdings will distribute
all                                    common units, its right to
receive the net proceeds from this
offering (after deducting underwriting discounts and commissions and the expenses of this offering) and its right to receive additional common units, a cash distribution or both, based upon whether or
not the underwriters exercise their option to purchase additional common units in full or in part to our sponsors and their affiliates, our executive officers and certain of our employees;
•
We will offer and sell            common units in this offering and pay related underwriting discounts and
commissions and offering expenses;
•
We will distribute the $             million of net proceeds from this offering (after deducting underwriting
discounts and commissions and the expenses of this offering) of which (1) $             million will be distributed to our sponsors to reimburse them for certain construction
capital
expenditures and (2) $             million will be a distribution to our sponsors and their affiliates, our executive officers and certain of our employees;
•
To the extent the underwriters exercise their option to purchase            additional common units, we will issue
such units to the public and distribute the net proceeds to our sponsors and their affiliates, our executive officers and certain of our employees; and
•
To the extent the underwriters do not exercise their option to purchase additional common units, we will issue those
common units to our sponsors and their affiliates, our executive officers and certain of our employees.
Management
The board of directors and executive officers of our general partner will manage our operations and activities. In order to carry out
our operations, our general partner will employ approximately 90 employees. Following this offering, our general partner will be owned by our sponsors. Our general partner will not receive any
management fee or other compensation in connection with the management of our business but will be entitled to be reimbursed for all direct and indirect expenses it incurs or payments it makes on our
behalf (including salary, bonus, incentive compensation and other amounts paid to its
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employees
and executive officers who perform services for us). Upon the closing of this offering, our general partner will own a non-economic general partner interest and therefore will
not be entitled to receive cash distributions. However, it may acquire common units in the future and, if it does so, will be entitled to receive pro rata distributions therefrom.
Unlike
shareholders in a corporation, our common unitholders are not entitled to elect our general partner or the board of directors of our general partner. See
"Management—Our Management."
Conflicts of Interest and Fiduciary Duties
PetroLogistics GP LLC, our general partner, has legal duties to manage us in a manner that is in our best interests.
These legal duties are commonly referred to as "fiduciary duties." Because our general partner is owned by our sponsors, the officers and directors of our general partner also have fiduciary duties to
manage the business of our general partner in a manner beneficial to our sponsors. As a result of these relationships, conflicts of interest may arise in the future between us and our unitholders, on
the one hand, and our general partner and its affiliates, on the other hand. For a more detailed description of the conflicts of interest and fiduciary duties of our general partner, see "Risk
Factors—Risks Related to an Investment in Us" and "Conflicts of Interest and Fiduciary Duties."
Our
partnership agreement limits the liability and reduces the fiduciary duties of our general partner and its directors and officers to our unitholders. Our partnership agreement also
restricts the remedies
available to unitholders for actions that might otherwise constitute breaches of our general partner's fiduciary duties. By purchasing a common unit, you are consenting to various limitations on
fiduciary duties contemplated in our partnership agreement and conflicts of interest that might otherwise be considered a breach of fiduciary or other duties under applicable law. See "Conflicts of
Interest and Fiduciary Duties—Fiduciary Duties" for a description of the fiduciary duties imposed on our general partner by Delaware law, the material modifications of these duties
contained in our partnership agreement and certain legal rights and remedies available to unitholders. In addition, our general partner will have the right to call, under specified circumstances, all
of the outstanding common units without considering whether this is in the interest of our common unitholders. For a description of such call right, see "The Partnership Agreement—Call
Right."
For
a description of our other relationships with our affiliates, see "Certain Relationships and Related Party Transactions."
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USE OF PROCEEDS
We expect to receive approximately $             million of net proceeds from the sale of common units by us in this
offering, after deducting underwriting discounts and commissions and the estimated expenses of this offering, based on an assumed initial public offering price of $            per common
unit (the
mid-point of the price range set forth on the cover page of the prospectus). We intend to use the net proceeds of this offering to make a $             million distribution to
our sponsors and their affiliates, our executive officers and certain of our employees, of which $             million will be distributed to our sponsors to reimburse them for certain
construction capital expenditures and $             million, which will be distributed as a distribution.
If
the underwriters exercise their option to purchase up to            additional common units in full, the additional net proceeds to us would be approximately
$             million (and the total net proceeds to us from this offering would be approximately $             million),
 in each case assuming an initial public offering price of
$            per common unit (the mid-point of the price range set forth on the cover page of the prospectus). We will use the net proceeds from any exercise of such option to pay a
distribution to our sponsors and certain of our employees and affiliates.
A
$1.00 increase (or decrease) in the assumed initial public offering price of $            per common unit would increase (decrease) the net proceeds to us from this offering by
$             million, assuming the number of
common units offered by us, as set forth on the cover page of this prospectus, remains the same and assuming the underwriters do not exercise their option to purchase additional common units, and
after deducting underwriting discounts and commissions. The actual initial public offering price is subject to market conditions and negotiations between us and the underwriters.
Depending
on market conditions at the time of the pricing of this offering and other considerations, we may sell fewer or more common units than the number set forth on the cover page of
this prospectus.
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CAPITALIZATION
The following table sets forth our cash and cash equivalents, restricted cash and capitalization as of March 31, 2011
on:
•
an actual basis; and
•
a pro forma basis to reflect the issuance of common units in this offering, the Transactions and the application of the
net proceeds from this offering as described under "Use of Proceeds."
The
table assumes (1) an initial public offering price of $            per unit (the mid-point of the price range set forth on the cover page of the prospectus),
and (2) no exercise by the underwriters of their option to purchase additional common units.
You
should read this table in conjunction with "Use of Proceeds," "Selected Historical and Pro Forma Consolidated Financial Information," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and the financial statements and related notes included elsewhere in this prospectus.
As of March 31, 2011
Actual
Pro Forma
Consolidated
(unaudited)
(unaudited)
(in thousands)
Cash and cash equivalents
$
—
Restricted cash
2,904
Existing term loan
(1)
150,000
Existing revolving credit facility
(1)
32,500
New term loan facility
(1)
—
New revolving credit facility
(2)
—
Member's/Partners' capital:
PL Propylene
464,340
PetroLogistics LP:
Equity held by public:
Common units: none issued and outstanding actual; issued and outstanding pro forma
—
Equity held by our sponsors and their affiliates, our executive officers and certain of our employees:
Common units: none issued and outstanding actual; issued and outstanding pro forma
—
General partner interest
—
Total partners' capital
464,340
Total capitalization
$
646,840
$
(1)
We
expect to enter into a new term loan facility prior to the closing of this offering, the proceeds of which will be used, in part, to refinance and cancel
our existing term loan facility and revolving credit facility. We will enter into new credit facilities prior to the closing of this offering. The new credit facilities will include a
$350.0 million term loan facility, which we expect will be fully drawn at closing, and a $120.0 million revolving credit facility, $             million of which we expect
will
be drawn at closing.
(2)
We
expect to have approximately $             million of available capacity under our new revolving credit facility at the closing of this
offering.
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DILUTION
Purchasers of common units offered by this prospectus will suffer immediate and substantial dilution in net tangible book value per
unit. Our unaudited pro forma consolidated net tangible book value as of March 31, 2011, excluding the net proceeds of this offering, was approximately $             million, or
approximately $            per unit. Unaudited pro forma consolidated net tangible book value per unit gives effect to the pro forma adjustments described in the notes to our unaudited pro
forma
consolidated financial statements included elsewhere in this prospectus (other than the issuance of common units in this offering and the receipt of the net proceeds from this offering as described
under "Use of Proceeds") and represents the amount of unaudited pro forma consolidated tangible assets less unaudited pro forma consolidated total liabilities (excluding the net proceeds of this
offering), divided by the pro forma number of units outstanding (excluding the units issued in this offering).
Dilution
in net tangible book value per unit represents the difference between the amount per unit paid by purchasers of our common units in this offering and the unaudited pro forma
consolidated net tangible book value per unit immediately after this offering. After giving effect to the sale
of                        common units in this offering at an assumed initial public offering
price of $            per common unit (the mid-point of the price range set forth on the cover page of the prospectus), and after deducting the estimated underwriting discounts and
commissions and estimated offering expenses payable by us, our unaudited pro forma consolidated net tangible book value as of March 31, 2011 would have been approximately
$             million, or $            per unit. This represents an immediate increase in net tangible book value of
$            per unit to our existing unitholders and an
immediate pro forma dilution of $            per unit to purchasers of common units in this offering. The following table illustrates this dilution on a per unit basis:
Assumed initial public offering price per common unit
Unaudited pro forma consolidated net tangible book value per unit before this offering
(1)
Increase in net tangible book value per unit attributable to purchasers in this offering and use of proceeds
Less: Unaudited pro forma consolidated net tangible book value per unit after this offering
(2)
Immediate dilution in net tangible book value per common unit to purchasers in this offering
(1)
Determined
by dividing the net tangible book value of our assets less total liabilities by the number of units outstanding prior to this offering.
(2)
Determined
by dividing our unaudited pro forma consolidated net tangible book value, after giving effect to the application of the net proceeds of this
offering, by the total number of units to be outstanding after this offering.
A
$1.00 increase (decrease) in the assumed initial public offering price of $            per common unit (the mid-point of the price range set forth on the cover page of
the prospectus) would increase (decrease) our unaudited pro forma consolidated net tangible book value by $             million, the unaudited pro forma consolidated net tangible book
value
per unit by $            and the dilution per common unit to new investors by $            , assuming the number of common units
offered by us, as set forth on the cover page of this
prospectus, remains the same and the underwriters do not exercise their option to purchase additional common units, and after deducting the underwriting discounts and commissions and estimated
offering expenses payable by us. Depending on market conditions at the time of pricing
of this offering and other considerations, we may sell fewer or more common units than the number set forth on the cover page of this prospectus.
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The
following table sets forth the total value contributed by our general partner and its affiliates in respect of the units held by them and the total amount of consideration
contributed to us by the purchasers of common units in this offering upon the completion of the Transactions.
Units Acquired
Total Consideration
Number
Percent
Amount
Percent
General Partner and its affiliates
New investors
Total
100.0
%
100.0
%
(1)
Reflects
the value of the assets contributed as recorded at historical cost in accordance with GAAP, as adjusted for distributions and other capital account
adjustments.
(2)
Reflects
the net proceeds of this offering after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
A
$1.00 increase (decrease) in the assumed initial public offering price of $            per common unit would increase (decrease) total consideration paid by new investors and total
consideration paid by all unitholders by $             million, assuming the number of common units offered by us, as set forth on the cover page of this prospectus, remains the same,
and
after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
If
the underwriters exercise their option to
purchase                                    common units in full, then
the pro forma increase per unit attributable to new investors would be $            ,
the net tangible book value per unit after this offering would be $            and the dilution per unit to new investors would be
$            . In addition, new investors would purchase
            common units, or approximately        % of units outstanding, and the total consideration contributed to us by new investors would
increase to $             million,
or        % of the total consideration contributed (based on an assumed initial public offering price of $            per common unit, the mid-point
of the price range set forth
on the cover page of the prospectus).
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OUR CASH DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS
You should read the following discussion of our cash distribution policy and restrictions on distributions in
conjunction with the specific assumptions upon which our cash distribution policy is based. See "—Assumptions and Considerations" below. For additional information regarding our historical
and our pro forma operating results, you should refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations," our predecessor's audited historical financial
statements, our predecessor's unaudited historical financial statements and our unaudited pro forma consolidated financial statements included elsewhere in this prospectus. In addition, you should
read "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" for information regarding statements that do not relate strictly to historical or current facts and certain risks
inherent in our business.
General
Our Cash Distribution Policy
The board of directors of our general partner will adopt a policy pursuant to which we will distribute all of the available cash we
generate each quarter, beginning with the quarter ending December 31, 2011. Available cash for each quarter will be determined by the board of directors of our general partner following the end
of such quarter. We expect that available cash for each quarter will generally equal our cash flow from operations for the quarter, less cash needed for maintenance capital expenditures, debt service
and other contractual obligations and reserves for future operating or capital needs that the board of directors of our general partner deems necessary or appropriate. We do not intend to maintain
excess distribution coverage for the purpose of maintaining stability or growth in our quarterly distribution or otherwise to reserve cash for distributions, nor do we intend to incur debt to pay
quarterly distributions. We expect to finance substantially all of our growth externally, either by debt issuances or additional issuances of equity.
Because
our policy will be to distribute all available cash we generate each quarter, without reserving cash for future distributions or borrowing to pay distributions during periods of
low cash flow from operations, our unitholders will have direct exposure to fluctuations in the amount of cash generated by our business. We expect that the amount of our quarterly distributions, if
any, will vary based on our operating cash flow during each quarter. Our quarterly cash distributions, if any, will not be stable and will vary from quarter to quarter and year to year as a direct
result of variations in our operating performance and cash flow caused by fluctuations in the price of propane and propylene, working capital and capital expenditures. Such variations may be
significant. The board of directors of our general partner may change the foregoing distribution policy at any time. Our partnership agreement does not require us to pay cash distributions on a
quarterly or other basis.
Our
PDH facility did not generate sales until the commencement of commercial operations in October 2010, and we did not achieve daily production rates at nameplate capacity until April
2011. Accordingly, we would not have paid distributions to our common unitholders for periods prior to April 2011.
Limitations on Cash Distributions; Our Ability to Change Our Cash Distribution Policy
There is no guarantee that unitholders will receive quarterly cash distributions from us. Our distribution policy may be changed at any
time and is subject to certain restrictions, including:
•
Our unitholders have no contractual or other legal right to receive cash distributions from us on a quarterly or other
basis. The board of directors of our general partner will adopt a policy at or prior to the closing of this offering pursuant to which we will distribute to our unitholders each quarter all of the
available cash we generate each quarter, as determined quarterly by the board of directors of our general partner, but it may change this policy at any time.
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•
Our business performance is expected to be more cyclical and volatile, and our cash flows are expected to be less stable,
than the business performance and cash flows of most publicly traded partnerships. As a result, our quarterly cash distributions will be cyclical and volatile and are expected to vary quarterly and
annually.
•
Unlike most publicly traded partnerships, we will not have a minimum quarterly distribution or employ structures intended
to consistently maintain or increase quarterly distributions over time. Furthermore, none of our limited partner interests, including those held by our sponsors and their affiliates, our executive
officers and certain of our employees, will be subordinate in right of distribution payment to the common units sold in this offering.
•
Under Section 17-607 of the Delaware LP Act, we may not make a distribution to our limited
partners if the distribution would cause our liabilities to exceed the fair value of our assets.
•
We expect that our distribution policy will be subject to restrictions on distributions under our new credit facilities.
Our ability to make distributions to common unitholders will depend, in part, on our fixed charge coverage ratio, and the absence of a default or event of default under the facilities. See
"Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—New Credit Facilities." Should we be unable to satisfy
these restrictions under our new credit facilities, our ability to make cash distributions to unitholders would be curtailed.
•
We may lack sufficient cash to make distributions to our unitholders due to a number of factors that would adversely
affect us, including but not limited to decreases in sales or increases in operating expenses, principal and interest payments on debt, working capital requirements, capital expenditures, disruptions
in the operations of our PDH facility or anticipated cash needs. See "Risk Factors" for information regarding these factors.
We
have a limited operating history upon which to rely in evaluating whether we will have sufficient cash to allow us to pay distributions on our common units. While we believe, based on
our financial forecast and related assumptions, that we should have sufficient cash to enable us to pay the forecasted aggregate distribution on all of our common units for the twelve months ending
September 30, 2012, we may be unable to pay the forecasted distribution or any amount on our common units.
We
intend to pay our distributions on or about the 15th day of each February, May, August and November to holders of record on or about the first day of each such month. We expect
our first distribution will include available cash for the period from the closing of the offering through December 31, 2011.
In
the section that follows, we present "PetroLogistics LP Estimated Available Cash for the Twelve Months Ending September 30, 2012," that contains our unaudited forecast
of available cash for the twelve months ending September 30, 2012.
Forecasted Available Cash
We do not as a matter of course make or intend to make projections as to future sales, earnings, or other results. However, our
management has prepared the prospective financial information set forth below in the table entitled "PetroLogistics LP Estimated Available Cash for the Twelve Months Ending September 30,
2012" to supplement the historical and unaudited pro forma consolidated financials included elsewhere in this prospectus. The table presents our expectations regarding our ability to generate
$245.2 million of available cash for the twelve months ending September 30, 2012. The accompanying prospective financial information was not prepared with a view toward complying with
the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of our management, was prepared on a reasonable
basis, reflects the best currently available estimates and judgments, and presents, to the best of management's knowledge and belief, the expected course of action and our expected future financial
performance. However, this
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information
is not fact and should not be relied upon as being indicative of future results, and readers of this prospectus are cautioned not to place undue reliance on the prospective financial
information. Neither our independent registered public accounting firm, nor any other registered public accounting firm, has compiled, examined, or performed any procedures with respect to the
prospective financial information contained in this section, nor have any of them expressed any opinion or any other form of assurance on such information or its achievability and each assumes no
responsibility for, and disclaims any association with, the prospective financial information. See "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors."
During
the twelve months ending September 30, 2012, we estimate that we will generate $245.2 million of available cash. In "—Assumptions and Considerations"
below, we discuss the major assumptions underlying this estimate. The available cash discussed in the forecast should not be viewed as management's projection of the actual available cash that we will
generate during the twelve months ending September 30, 2012. We can give you no assurance that our assumptions will be realized or that we will generate any available cash, in which event we
will not be able to pay quarterly cash distributions on our common units.
When
considering our ability to generate available cash and how we calculate forecasted available cash, investors should keep in mind all of the risk factors and other cautionary
statements under the headings "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements," which describe factors that could cause our results of operations and available cash to vary
significantly from our estimates.
The
assumptions and estimates underlying the prospective financial information are inherently uncertain. Although such assumptions and estimates are considered, as of the date of this
prospectus, to be reasonable by our management team, such assumptions and estimates are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could
cause actual results to differ materially from those contained in the prospective financial information. Accordingly, there can be no assurance that the prospective results are indicative of our
future performance or that actual results will not differ materially from those presented in the prospective financial information. Inclusion of the prospective financial information in this
prospectus should not be regarded as a representation by any person that the results contained in the prospective financial information will be achieved.
We
do not undertake any obligation to release publicly the results of any future revisions we may make to the financial forecast or to update this financial forecast to reflect events or
circumstances after the date of this prospectus. In light of the above, the statement that we believe that we will have sufficient available cash to allow us to pay the forecasted quarterly
distributions on all of our outstanding common units for the twelve months ending September 30, 2012, should not be regarded as a representation by us or the underwriters or any other person
that we will make such distributions. Therefore, you are cautioned not to place undue reliance on this information.
The
following table shows how we calculate estimated available cash for the twelve months ending September 30, 2012. The assumptions that we believe are relevant to particular
line items in the table below are explained in the corresponding footnotes and in "—Assumptions and Considerations."
Neither
our independent registered public accounting firm, nor any other independent registered public accounting firm, has compiled, examined or performed any procedures with respect to
the forecasted financial information contained herein, nor has it expressed any opinion or given any other form of assurance on such information or its achievability, and it assumes no responsibility
for such forecasted financial information. Our independent registered public accounting firm's reports included elsewhere in this prospectus relate to our audited historical financial information.
These reports do not extend to the tables and the related forecasted information contained in this section and should not be read to do so.
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PetroLogistics LP
Estimated Available Cash for the
Twelve Months Ending September 30, 2012
The following table illustrates the amount of cash that we estimate that we will generate for the twelve months ending
September 30, 2012 that would be available for distribution to our unitholders. All of the amounts for the twelve months ending September 30, 2012 in the table below are estimates.
Twelve Months Ending
September 30, 2012
Total Sales
$
900.2
Cost of Sales:
Propane
523.8
Fuel and utilities
45.2
Depreciation, amortization and accretion
32.3
Insurance and property taxes
13.9
Direct operating expenses and other
30.2
Total production cost
645.4
Change in inventory
—
Total Cost of Sales
645.4
General and administrative expenses
11.0
Interest expense and other financing costs
20.7
Interest income
(0.3
)
Income tax expense
2.5
Net Income
$
220.8
Adjustments to reconcile net income to Adjusted EBITDA:
Add:
Interest expense and other financing costs
20.7
Income tax expense
2.5
Depreciation, amortization and accretion
32.3
Adjusted EBITDA
$
276.4
Adjustments to reconcile Adjusted EBITDA to available cash:
Subtract:
Debt service costs
22.6
Cash income tax
2.5
Maintenance capital expenditures (includes environmental, health and safety expenditures)
6.0
Available cash
$
245.2
New Credit Facilities:
Interest coverage ratio
Leverage ratio
Assumptions and Considerations
General
Based upon the specific assumptions outlined below with respect to the twelve months ending September 30, 2012, we expect to
generate Adjusted EBITDA and available cash in an amount sufficient to allow us to pay $            per common unit on all of our outstanding units for the twelve months ending
September 30, 2012.
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While
we believe that these assumptions are reasonable in light of our management's current expectations concerning future events, the estimates underlying these assumptions are
inherently uncertain and are subject to significant business, economic, regulatory, environmental and competitive risks and uncertainties that could cause actual results to differ materially from
those we anticipate. If our assumptions are not correct, the amount of actual cash available to pay distributions could be substantially less than the amount we currently estimate and could,
therefore, be insufficient to allow us to pay the forecasted aggregate cash distributions for the twelve months ending September 30, 2012, or any amount, on all of our outstanding common units,
in which event the market price of our common units may decline substantially. When reading this section, you should keep in mind the risk factors and other cautionary statements under the headings
"Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements." Any of the risks discussed in this prospectus could cause our actual results to vary significantly from our estimates.
The
accompanying financial forecast and summary of significant forecast assumptions of PetroLogistics LP present the forecasted results of operations of PetroLogistics LP
for the twelve months ending September 30, 2012, assuming that the Transactions (as defined on page 41 of this prospectus) had occurred at the beginning of such period.
Capacity Utilization Rates
For the twelve months ending September 30, 2012, we estimate our facility will operate at an average capacity utilization rate
of 98.0% on an annual basis after making an allowance for downtime associated with maintenance on the facility. There is no planned maintenance for the forecast period. Our newly constructed facility
has an annual nameplate capacity of approximately 1.2 billion pounds of propylene.
Sales
Propylene.
We have secured contracts with Dow, Total and INEOS for the purchase of an aggregate minimum offtake volume of 73% and
maximum offtake
volume of 97% of our nameplate propylene capacity. We forecast that we will sell 1.2 billion pounds of propylene at an average price of $0.72 per pound during the forecast period. We have
assumed sales to our customers of the maximum offtake volumes at contractual discounts to the forecasted benchmark price. The forecasted benchmark price was determined by management based on price
projection data received from Chemical Data. In addition, we have assumed any excess volume produced will be sold in the spot market to other customers at a slight discount to the Chemical Data
forecasted benchmark price. Based on these assumptions, we forecast our net sales for the twelve months ending September 30, 2012, will be approximately $869.8 million.
Holding
all other variables constant, we expect that a 10% change in the price per pound of propylene would change our forecasted available cash by approximately $90.1 million for
the twelve months ending September 30, 2012.
Hydrogen.
We have executed a ten-year contract with Praxair in which Praxair has committed to buy a minimum of 93% of the hydrogen we
produce. We forecast that we will sell approximately 9.1 million standard cubic feet ("MSCF"), of hydrogen to Praxair at an average price of $2.01 per MSCF for net sales of $18.2 million
during the forecast period. The estimated amount of hydrogen we will produce during the forecast period was determined by management based upon the amount of propylene we expect to produce. The
estimated price per MSCF of hydrogen sold during the
forecast period was determined by management based on price projections data received from Chemical Data.
C4 Mix/C5+ Streams.
We estimate that we will sell approximately 32.9 million pounds of C4 mix/C5+ streams at an average price of
$0.37 per
pound for net sales of $12.2 million during the forecast period. We estimate net sales based on a forecast of future C4 mix/C5+ streams prices multiplied by the number of pounds we estimate we
will produce and sell during the forecast period. The estimated amount of C4 mix/C5+ streams we will produce during the forecast period was determined by management based upon the amount of propylene
we expect to produce. The estimated price per pound of C4 mix/C5+
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streams
sold during the forecast period was determined by management based on price projections data received from Chemical Data.
Based
on these assumptions, we estimate that our total net sales for the twelve months ending September 30, 2012, will be approximately $900.2 million.
Cost of Sales
Cost of sales includes cost of propane, fuel and utility expenses, depreciation, amortization and accretion expense, insurance and
property taxes, direct operating expenses, other expenses and changes in inventory. Our feedstock and raw material expenses consist of inputs into the propylene production process which are driven by
commodity prices and volumes. Approximately 81% of our forecasted cost of sales is related to the purchase of propane. We estimate that our cost of sales for the twelve months ending
September 30, 2012, will be approximately $645.4 million, or approximately 72% of sales.
Propane.
We intend to purchase 100% of our required propane feedstock volumes through a multi-year supply contract with Enterprise.
This
volumetric supply contract will be priced at a published high-low monthly average price plus a contractual upcharge and delivery fee. We assume that our product yield will be a ratio of
approximately 1.2 pounds of propane to 1.0 pound of propylene and that we will purchase a total of 344.9 million gallons (or 1.45 billion pounds) of propane during the forecast period.
We estimate that our total propane expense for the twelve months ending September 30, 2012, will be approximately $523.8 million and that our realized propane cost for
the twelve months ending September 30, 2012, will be approximately $1.52 per gallon. The estimated amount of propane we will utilize during the forecast period was determined by management
based upon the amount of propylene we expect to produce and the yield we forecast for our PDH facility. The estimated price per gallon of propane we will pay during the forecast period was determined
by management based on price projections data received from Chemical Data.
Holding
all other variables constant, we estimate that a 10% change per gallon in the price of propane would change our forecasted available cash by $51.4 million for the twelve
months ending September 30, 2012.
Fuel/Utilities.
We intend to purchase our natural gas fuel pursuant to a three-year contract with Kinder Morgan. We use natural gas to
run our generator, propane heater and other related systems. We estimate that our total natural gas usage expense, based upon the amount of propylene we expect to produce, for the twelve months ending
September 30, 2012 will be approximately $41.1 million and that our average natural gas cost for the twelve months ending September 30, 2012 will be approximately $4.28 per MMBtu.
The estimated price per MMBtu of natural gas we will pay during the forecast period was determined by management based on price projections data received from Chemical Data. We also incur variable
electricity, nitrogen and water usage expenses necessary to operate our dehydrogenation facility on a day-to-day basis. Based on management's usage expectations, we estimate
that our electricity, nitrogen and water expense will be approximately $4.1 million. We estimate that our total fuel and utilities expense for the twelve months ending September 30,
2012, will be approximately $45.2 million.
Depreciation, Amortization and Accretion.
We estimate that depreciation, amortization and accretion for the twelve months ending
September 30,
2012 will be approximately $32.3 million.
Insurance and Property Taxes.
A significant fixed component of our cost of sales expense item is the cost of insurance and property
taxes, which we
expect to be $13.9 million for the twelve months ending September 30, 2012.
Direct Operating Expenses and Other.
Direct operating expenses include all direct and indirect labor at the facility, materials,
supplies, and other
expenses associated with the operation and maintenance of the facility. We estimate that our direct operating and other expenses for the twelve months ending September 30, 2012, will be
approximately $30.2 million.
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General and Administrative Expense
General and administrative expense includes salary and benefits costs for executive management, accounting and information technology
personnel, legal, audit, tax and other professional service costs and charges for equity-based compensation expense. We estimate that our general and administrative expense, excluding equity-based
compensation expense, will be approximately $11.0 million for the twelve months ending September 30, 2012. This includes $3.5 million of expected incremental general and
administrative expenses that we expect to incur as a public company.
Debt Service
Debt service is defined as cash interest expense and debt amortization payments. As part of the Transactions, we expect to incur
$350.0 million of term debt at an assumed average interest rate of 5.0% and an annual amortization rate of 1.0%, and we expect to enter into a $120.0 working capital facility, and will pay
associated interest expense for the twelve months ending September 30, 2012. We have assumed average working capital borrowings of $30.0 million from the revolving facility during the
forecast period. The estimate excludes the amortization of $1.5 million of deferred financing and original issue discount costs related to our term loan facility and revolving credit facility.
We have assumed that the average interest rate on the revolver will be 4.35%.
Interest Income
Our estimate of interest income is based on a 0.5% return on our projected average cash balances during the twelve months ending
September 30, 2012.
Income Taxes
We estimate that we will pay no federal income tax during the forecast period. We believe the only income tax to which our operations
will be subject is the Texas Margin Tax incurred on gross margins, which is estimated to be 1.0% of gross margins for the twelve months ending September 30, 2012.
Regulatory, Industry and Economic Factors
Our forecast for the twelve months ending September 30, 2012, is based on the following assumptions related to regulatory,
industry and economic factors:
•
no material nonperformance or credit-related defaults by suppliers, customers or vendors;
•
no new regulation or interpretation of existing regulations that, in either case, would be materially adverse to our
business;
•
no material accidents, weather-related incidents, floods, unplanned turnarounds or other downtime or similar unanticipated
events that would reduce our capacity utilization below 98%;
•
no material adverse change in the markets in which we operate resulting from reduced demand for propylene or significant
changes in the market prices and supply levels of propane;
•
no material decreases in the prices we receive for our propylene;
•
no material changes to market or overall economic conditions; and
•
an annual inflation rate of 3.0%.
Actual
conditions may differ materially from those anticipated in this section as a result of a number of factors, including, but not limited to, those set forth under "Risk Factors" and
"Cautionary Note Regarding Forward-Looking Statements."
Compliance with Debt Covenants
Our ability to make distributions could be affected if we do not remain in compliance with the covenants that will be included in our
new credit facilities. We have assumed we will be in compliance with such covenants.
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HOW WE MAKE CASH DISTRIBUTIONS
General
Within 45 days after the end of each quarter, beginning with the quarter ending December 31, 2011, we expect to make
distributions, as determined by the board of directors of our general partner, to unitholders of record on the applicable record date.
Common Units Eligible for Distribution
Upon the closing of this offering, we will
have                        common units outstanding. Each common unit will be allocated a portion
of our income, gain, loss, deduction and credit on a pro-rata basis, and each common unit will be entitled to receive distributions (including upon liquidation) in the same manner as each
other unit.
Method of Distributions
The board of directors of our general partner will adopt a policy at or prior to the closing of this offering (which policy may be
changed at any time), pursuant to which we will make distributions pursuant to our general partner's determination of the amount of available cash for the applicable quarter, which we will then
distribute to our unitholders, pro rata; provided, however, that our partnership agreement allows us to issue an unlimited number of additional equity interests of equal or senior rank. Our
partnership agreement permits us to borrow to make distributions, but we are neither required, nor do we intend to borrow to pay quarterly distributions. Accordingly, there is no guarantee that we
will pay any distribution on the units in any quarter. We do not have a legal obligation to pay distributions, and the amount of distributions paid under our policy and the decision to make any
distribution will be determined by the board of directors of our general partner. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and
Capital Resources—New Credit Facilities" for a discussion of provisions to be included in our new credit facilities that restrict our ability to make distributions.
General Partner Interest
Upon the closing of this offering, our general partner will own a non-economic general partner interest and therefore will
not be entitled to receive cash distributions. However, it may acquire common units and other equity interests in the future and would be entitled to receive pro rata distributions therefrom.
Adjustments to Capital Accounts upon Issuance of Additional Common Units
We will make adjustments to capital accounts upon the issuance of additional common units. In doing so, we will generally allocate any
unrealized and, for tax purposes, unrecognized gain or loss resulting from the adjustments to our unitholders prior to such issuance on a pro rata basis so that after such issuance the capital account
balances attributable to all common units are equal.
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SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The selected financial information presented below under the caption Statement of Operations Data for the three months ended
March 31, 2011 and 2010, and for the years ended December 31, 2010, 2009 and 2008, and the selected financial information presented below under the caption Balance Sheet Data as of
March 31, 2011 and 2010, and December 31, 2010, 2009 and 2008, have been derived from the audited and unaudited financial statements of our predecessor, PL Propylene, included elsewhere
in this prospectus. Our predecessor's financial statements as of and for the years ended December 31, 2010, 2009 and 2008 have been audited by Ernst & Young LLP, independent
registered public accounting firm. Our predecessor's financial statements as of and for the
three months ended March 31, 2011 and 2010 are unaudited. Our predecessor was formed in January 2007 and acquired the site where our PDH facility is located in March 2008. Our PDH facility did
not generate sales until the commencement of commercial operations in October 2010, and we did not achieve daily production rates at nameplate capacity until April 2011.
The
selected unaudited pro forma consolidated financial information presented below under the caption Statement of Operations Data for the three months ended March 31, 2011 and
for the year ended December 31, 2010 and the selected unaudited pro forma consolidated financial information presented below under the caption Balance Sheet Data as of March 31, 2011
have been derived from our unaudited pro forma consolidated financial statements included elsewhere in this prospectus. The unaudited pro forma consolidated statements of operations data for the three
months ended March 31, 2011 and the year ended December 31, 2010 were prepared based on the assumption that we were in existence as a separate entity throughout these periods and that
the transactions described below occurred on January 1, 2011 and January 1, 2010, respectively:
•
the entry by us into a new $350.0 million term loan facility and a $120.0 million revolving credit facility,
the related drawing of $             million from the new term loan facility and $             million under the new
revolving credit facility, and the use of proceeds of such
drawings to refinance our existing credit facility and to distribute $             million as a reimbursement of construction capital to our sponsors;
•
the issuance by us to our sponsors and their affiliates, our executive officers and certain of our employees of
                        common units; and
•
the issuance by us to the public
of                        common units and the distribution of an aggregate
$             million of the proceeds from such offering to our sponsors and their affiliates, our executive officers and certain of our employees.
The
unaudited pro forma consolidated balance sheet as of March 31, 2011, was prepared based on the assumption that the Transactions (as defined on page 38) occurred
March 31, 2011. The unaudited pro forma consolidated financial data is not comparable to our historical financial data. A more complete explanation of the pro forma data can be found in our
unaudited pro forma consolidated financial statements and accompanying notes included elsewhere in this prospectus.
The
historical data presented below has been derived from financial statements that have been prepared using accounting principles generally accepted in the United States, or GAAP, and
the pro forma data presented below has been derived from the "Unaudited Pro Forma Consolidated Financial Statements" included elsewhere in this prospectus. This data should be read in conjunction
with, and is qualified in its entirety by reference to, the financial statements and related notes and "Management's
55
Table of Contents
Discussion
and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.
Historical
Unaudited Pro Forma
Consolidated
Three Months
Ended March 31,
Years Ended December 31,
Three
Months
Ended
March 31,
Year Ended
December 31,
2011
2010
2010
2009
2008
2011
2010
(dollars in millions, except per unit data
and as otherwise indicated)
Statement of Operations Data:
Sales
$
105.8
$
—
$
30.4
$
—
$
—
$
105.8
$
30.4
Cost of sales
91.6
—
41.9
—
—
91.6
41.9
General and administrative expense
31.5
1.9
22.9
4.3
4.7
31.5
22.9
Management fee
0.5
—
—
—
—
—
—
Operating loss
(17.8
)
(1.9
)
(34.4
)
(4.3
)
(4.7
)
(17.3
)
(34.4
)
Other income
—
—
0.1
—
—
—
0.1
Interest income (expense), net
(4.7
)
(0.6
)
(5.4
)
(0.2
)
0.7
(5.1
)
(12.3
)
Net loss before income taxes
$
(22.5
)
$
(2.5
)
$
(39.7
)
$
(4.5
)
$
(4.0
)
$
(22.4
)
$
(46.6
)
Income tax expense
(0.4
)
—
—
—
—
(0.4
)
—
Net loss
$
(22.9
)
$
(2.5
)
$
(39.7
)
$
(4.5
)
$
(4.0
)
$
(22.8
)
$
(46.6
)
Pro forma net income (loss) per common unit, basic and diluted
$
$
Pro forma number of common units, basic and diluted in millions
Balance Sheet Data:
Cash (including restricted cash balances)
$
2.9
$
45.6
$
6.9
$
30.0
$
71.8
$
5.0
Working capital
(1)
22.6
21.5
16.0
9.9
61.4
24.7
Total assets
675.4
579.7
668.9
484.6
214.1
676.0
Total debt (including current portion)
182.5
117.1
189.5
94.7
—
380.0
Member's equity
464.3
434.4
456.1
365.5
202.9
267.4
Financial and Other Data:
Cash flows provided by (used in) operating activities
$
9.1
$
1.8
$
(53.2
)
$
—
$
(1.0
)
Cash flows used in investing activities
(3.8
)
(95.6
)
(157.4
)
(281.2
)
(170.0
)
Cash flows provided by (used in) financing activities
(5.3
)
93.8
210.7
249.1
203.0
Adjusted EBITDA
(2)
19.8
(1.9
)
(12.6
)
(3.6
)
(2.0
)
20.3
(12.6
)
Capital expenditures
3.8
80.0
187.5
291.0
130.2
Key Operating Data:
Production volume (thousand pounds unless otherwise noted):
Propylene
144,208
—
76,522
—
—
Hydrogen (thousand standard cubic feet MSCF)
295,425
—
—
—
—
C4 mix/C5+ streams
2,484
—
247
—
—
(1)
Working
capital is defined as current assets, including cash, less current liabilities, excluding bank debt.
(2)
Adjusted
EBITDA is defined as net income (loss) plus interest expense and amortization of deferred financing costs, income tax expense, depreciation,
amortization and accretion and equity-based compensation expense.
Adjusted
EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors and commercial banks, to
assess:
•
the financial performance of our assets without regard to financing methods, capital structure, income taxes or significant
non-cash expenses;
•
our operating performance and return on invested capital compared to those of other publicly traded limited partnerships,
without regard to financing methods and capital structure;
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Table of Contents
•
our ability to generate cash sufficient to make distributions to our unitholders; and
•
our ability to incur and service debt and to fund capital expenditures.
Adjusted
EBITDA should not be considered an alternative to net income, operating income, net cash flows from operating activities or any other measure of financial performance or liquidity presented
in accordance with GAAP. Adjusted EBITDA may have material limitations as a performance measure because it excludes some, but not all, items that affect net income from operations. In addition,
Adjusted EBITDA presented by other companies may not be comparable to our presentation, since each company may define this term differently. The following table presents a reconciliation of Adjusted
EBITDA to the most directly comparable GAAP financial measure, net income, on a historical basis and pro forma basis, as applicable, for each of the periods indicated:
Historical
Unaudited Pro Forma
Consolidated
Three Months
Ended March 31,
Year Ended December 31,
Three
Months
Ended
March 31,
Year Ended
December 31,
2011
2010
2010
2009
2008
2011
2010
(dollars in millions)
Reconciliation of net loss to Adjusted EBITDA:
Net loss
$
(22.9
)
$
(2.5
)
$
(39.7
)
$
(4.5
)
$
(4.0
)
$
(22.8
)
$
(46.6
)
Plus:
Interest expense
4.7
0.6
5.4
0.8
—
5.1
12.3
Income tax expense
0.4
—
—
—
—
0.4
—
Depreciation, amortization and accretion
8.3
—
7.2
0.1
—
8.3
7.2
Equity-based compensation expense
29.3
—
14.5
—
2.0
29.3
14.5
Adjusted EBITDA
$
19.8
$
(1.9
)
$
(12.6
)
$
(3.6
)
$
(2.0
)
$
20.3
$
(12.6
)
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition, results of operations and
cash flows in conjunction with our financial statements and related notes included elsewhere in this prospectus. This discussion and analysis contains forward-looking statements that involve risks,
uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including, but not limited to,
those set forth under "Risk Factors," "Cautionary Note Regarding Forward-Looking Statements" and elsewhere in this prospectus.
Overview
We own and operate the world's largest "on-purpose" PDH facility, which uses propane as a feedstock to produce propylene.
Our facility is situated on the site of a former olefins production facility we acquired in March 2008. We believe our position as the only independent on-purpose propylene producer in the
U.S. gives us a competitive advantage in attracting and retaining customers. We commenced operations in October 2010 and first achieved daily production rates at or above nameplate capacity in April
2011.
We
have multi-year contracts with Dow, Total and INEOS, which expire between 2013 and 2014. These contracts provide for minimum and maximum offtake volumes, with the minimum
customer-contracted volumes representing approximately 73% of facility nameplate capacity and the maximum contracted volumes reflecting approximately 97% of facility nameplate capacity. We have
supplied and will continue to opportunistically supply other propylene consumers on a spot basis when permitted by both operational and market conditions. During the three months ended
March 31, 2011, our three largest customers accounted for substantially all of our propylene sales.
In
addition to propylene, we also produce commercial quantities of hydrogen and C4 mix/C5+ streams. The sales of these products represented approximately 1% of total sales in the three
months ended March 31, 2011, and do not represent a material part of our production. Accordingly, we have one operating segment.
Factors Affecting the Comparability of Future Results
Our historical results of operations and cash flows are not indicative of results of operations and cash flows to be expected in the
future, principally for the following reasons:
•
Our PDH facility did not generate sales until we commenced operations in October
2010.
We commenced operations in October 2010. Accordingly, our financial statements for the years ended December 31, 2009 and 2008 and for the three months ended
March 31, 2010 reflect neither sales nor cost of sales, and the financial statements for the year ended December 31, 2010 and for the three months ended March 31, 2011, reflect
limited operations prior to our first achieving daily production rates at or above nameplate capacity in April 2011.
•
Our historical results of operations reflect equity-based compensation expense that may not be
indicative of future equity-based compensation expense.
Our historical results of operations reflect equity-based compensation expense for both our employees and certain
employees of affiliated entities, who are treated for accounting purposes as non-employees. Equity-based awards granted to non-employees are subject to periodic fair value
adjustments as the awards vest. The changes in fair value are recognized in our statement of operations during the period the related services are rendered, resulting in greater volatility of our
results of operations. Because certain members of our senior management have previously been treated as non-employees for accounting purposes, these fair value adjustments have
significantly affected our historical results of operations. The currently outstanding equity-based awards will be fully vested as of the completion of this offering, and no additional expense related
to these awards will be recorded thereafter. However, we intend to make equity-based compensation awards subsequent to this offering pursuant to our long-term incentive
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plan,
which will again require us to record equity-based compensation expense. See "Management—Compensation Discussion and Analysis."
•
We will incur additional general and administrative expenses as a publicly traded
partnership.
We expect we will incur approximately $3.5 million in additional general and administrative expenses as a publicly traded limited partnership that we have
not previously incurred, including costs associated with compliance under the Exchange Act, annual and quarterly reports to unitholders, tax return and Schedule K-1 preparation and
distribution, investor relations, registrar and transfer agent fees, audit fees, incremental director and officer liability insurance costs and directors' compensation. These incremental expenses
exclude the costs of this offering, as well as the costs associated with the initial implementation of our Sarbanes-Oxley Section 404 internal control reviews and testing. Although our
financial statements following this offering will reflect the impact of these expenses, our unaudited pro forma consolidated financial statements do not reflect these expenses.
•
Our historical results of operations reflect allocated administrative costs that may not be
indicative of future administrative costs.
Our financial statements included elsewhere in this prospectus include certain costs of a formerly affiliated company that were
incurred on our behalf. Historically, these costs, which are reflected in our general and administrative expense, have been billed to us pursuant to a services agreement entered into in 2008 (the
"former services agreement"). See "Certain Relationships and Related Party Transactions—Former Services Agreement." Our financial statements therefore include certain expenses incurred
which may include, but are not necessarily limited to, executive management and employee salaries and benefits, travel and entertainment expenses, rent and other general and administrative expenses.
Such expenses were allocated to us based upon certain assumptions and estimates that were made in order to allocate a reasonable share of such expenses from the formerly affiliated company to us so
that our financial statements would reflect all the costs of conducting our business. The former services agreement will terminate in connection with this offering, and after the offering we will rely
on the directors, executive officers and employees of our general partner to manage our business and conduct our operations. The amounts charged or allocated to us under the former services agreement
are not necessarily indicative of the costs that we will incur after the consummation of this offering.
•
We will periodically undertake major maintenance projects.
Safe and
reliable operations at our facility are critical to our performance and financial results. As such, we expect future periods of major maintenance. Since a substantial portion of our facility is newly
built, we do not expect to undergo a major maintenance project until late 2013 or 2014, at which time the most significant activity will be to replace the reactor catalyst, which is required
approximately every three years. We expect these catalyst change-out projects will typically last approximately three to four weeks and cost approximately $15 million to
$20 million per project. In addition to the triennial maintenance projects, more significant maintenance projects will be undertaken approximately every nine years which will include
change-out of the reactor catalyst and overhauls of selected pieces of equipment. We anticipate these projects to take approximately four to six weeks and cost approximately
$25 million to $35 million. Additionally, we may undertake capital projects in connection with major maintenance projects. If we elect to undertake such projects, these capital projects
will require additional time and expense.
In
addition to planned downtime for major maintenance projects, we may experience periods of unplanned downtime. For example, our facility experienced significant unplanned downtime as a result of a
mechanical problem in one of our compressors. We expect to be able to mitigate the financial and operational impact of unplanned downtime through a targeted program of routine maintenance and diligent
monitoring of our systems. Downtime, whether planned or unplanned,
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will
result in lost sales and margin, increased capital and maintenance expenditures and working capital changes.
•
We may enter into different financing arrangements.
Our current financing
arrangement may not be representative of the arrangements we will enter into in the future. We expect to enter into new credit arrangements in the third quarter of 2011, which will include a new term
loan facility that we will draw upon, in part, to refinance and cancel our existing facility, and a revolving credit facility which we will use for our working capital needs. For descriptions of our
current and expected future financing arrangements, see "—Liquidity and Capital Resources."
Factors Affecting Results
We believe key factors that influence our business and impact our operating results are (1) the
propane-to-propylene spread, (2) our facility's capacity utilization and (3) our propane-to-propylene conversion factor.
Propane-to-Propylene Spread
The price spread between propane, our sole feedstock, and propylene, our primary product, largely determines our gross margin and is
the key driver of our profitability.
Propylene
sales constitute substantially all of our sales. Propylene is a commodity, and its price can be cyclical and highly volatile. The price of propylene depends on a number of
factors, including general economic conditions, cyclical trends in end-user markets and supply and demand imbalances. Under our propylene sales contracts, Dow, Total and INEOS pay
market-based prices for propylene, and a significant decrease in propylene prices would have a material adverse effect on sales generated from these customers. In addition, a decrease in the price of
propylene would result in decreased sales from any sales of propylene on the spot market.
Propane
is the sole feedstock in our production process, and the cost of propane represents a substantial portion of our cost of sales. Enterprise supplies 100% of our required propane
feedstock volume under a multi-year contract at market-based prices, which prices are subject to fluctuations in response to changes in supply, demand, market uncertainties and a variety
of additional factors beyond our control. See "—Quantitative and Qualitative Disclosures about Market Risk."
Capacity Utilization
Our facility has an annual design or "nameplate" production capacity of approximately 1.2 billion pounds of propylene. Actual
annual production will vary based on a number of factors, including the amount of downtime for planned and unplanned maintenance on the facility. Actual production as a percentage of nameplate
production is referred to as our "capacity utilization" rate. Excluding planned major maintenance projects, we anticipate that our PDH facility will operate at an average capacity utilization rate of
approximately 98% on an annual basis. Any significant planned or unplanned downtime will affect not only production, and therefore sales, but also capital expenditures and direct operating expenses,
primarily maintenance expenses, and fuel and utilities, primarily natural gas usage. A 98% average capacity utilization rate equates to an average daily propylene production of approximately
3.3 million pounds.
Propane-to-Propylene Conversion Factor (Monomer Factor)
An important contributor to profitability is our propane-to-propylene conversion factor, which is a ratio that
indicates how much propane is used to produce one pound of propylene. We expect to have an average monthly propane-to-propylene conversion factor of 1.0 pound of propylene for
each 1.2 pounds of propane used. This important statistic reflects our facility's operating efficiency.
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How We Evaluate Our Performance
In addition to utilizing the key factors affecting our operating results described above to evaluate our performance, our management
uses certain additional financial and operational measures as well. These measures include Adjusted EBITDA and health, safety and environmental performance.
Adjusted EBITDA
We view Adjusted EBITDA as an important indicator of cash flow generation. Adjusted EBITDA is principally affected by our sales
volumes, the propane-to-propylene spread, capacity utilization, propane-to-propylene conversion factors and, to a lesser extent, the prices of natural
gas and our by-products. Other than the cost of propane and natural gas, production-related expenses generally remain stable across broad ranges of throughput volumes, but can fluctuate
significantly depending on the planned and unplanned maintenance performed during a specific period. Our Adjusted EBITDA and available cash may not always correlate to each other.
Health, Safety and Environmental Performance
We consider our ability to manage our facility and customer needs in a safe and reliable manner to be a critical factor in assessing
our performance. Accordingly, we have an extensive training program and set annual goals on achieving operating performance and safety measures that assure the reliable operation of our facility and a
safe working environment for our employees. Further, we closely monitor all environmental metrics to assure compliance with all regulatory requirements and that we operate in an environmentally
responsible manner.
Results of Operations
The period-to-period comparisons of our results of operations have been prepared using the historical periods
included in our financial statements. In order to effectively review and assess our historical financial information below, we have also included a description of the components of the various
financial statement line items.
Sales.
Sales are comprised of propylene sales and by-product sales which include hydrogen and C4 mix/C5+ streams.
Cost of Sales.
Cost of sales represents the costs of propylene and by-products sold. These costs include the cost of propane,
fuel and
utilities used in the propylene production process, as well as direct operating expenses and insurance and property tax expenses associated with the facility. Direct operating expenses include all
direct and indirect labor at the facility, materials, supplies, and other expenses associated with the operation and maintenance of the facility. Depreciation, amortization and accretion expenses,
exclusive of amortization of deferred financing fees, are also included within cost of sales.
General and Administrative Expense.
General and administrative expense includes salary and benefits costs for executive
management, accounting and
information technology personnel, as well as legal, audit, tax and other professional service costs and charges for equity-based compensation expense. A portion of these costs were billed to us by a
formerly affiliated company pursuant to a services agreement. See "Certain Relationships and Related Party Transactions—Former Services Agreement."
Management Fee.
Management fee consists of the expense incurred through our management services agreement with Lindsay Goldberg.
This agreement
terminates upon the occurrence of various conditions including an initial public offering. As such, this agreement will terminate upon the closing of this offering. See "Certain Relationships and
Related Party Transactions—Management Agreement with Lindsay Goldberg."
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Interest Income (Expense), Net.
Interest expense includes expense incurred on outstanding debt balances under our existing
credit facility, the
amortization of deferred financing fees and loan commitment expenses. Loan commitment expense is comprised of the fees assessed on the unutilized portion of our credit facility. Interest income
results from earnings on available cash balances and is offset against interest expense.
Other Income.
Other income has historically been generated through the sale of certain equipment.
Income Tax.
As an entity operating in the State of Texas, we are subject to the Texas Margin Tax. This tax represents a tax on
gross margin and is,
therefore, reported as income tax expense in the accompanying statements of operations.
Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010
Three Months Ended March 31,
2011
2010
Increase/Decrease
(Unaudited)
%
(Amounts in thousands)
Sales
$
105,810
$
—
$
105,810
N/A
Cost of sales
91,565
—
91,565
N/A
Gross profit
14,245
—
14,245
General and administrative expense
31,555
1,851
29,704
1,605
Management fee
500
—
500
N/A
Operating loss
(17,810
)
(1,851
)
(15,959
)
Interest income (expense), net
(4,697
)
(657
)
(4,040
)
615
Other income
25
—
25
N/A
Net loss before income tax expense
(22,482
)
(2,508
)
(19,974
)
Income tax expense
(356
)
—
(356
)
N/A
Net loss
$
(22,838
)
$
(2,508
)
$
(20,330
)
Sales.
We commenced operations in October 2010 and first achieved daily production rates at or above nameplate capacity in April
2011. Accordingly,
there were no sales in the three months ended March 31, 2010. Product output for the first quarter of 2011 totaled approximately 144.2 million pounds of CGP, which represents an increase
in production of approximately 88% over the three months ended December 31, 2010.
Cost of Sales.
Three Months Ended March 31,
2011
2010
Increase/Decrease
(Amounts in thousands)
%
Propane
$
57,890
$
—
$
57,890
N/A
Fuel and utilities
7,790
—
7,790
N/A
Depreciation, amortization and accretion
8,317
—
8,317
N/A
Insurance and property taxes
2,562
—
2,562
N/A
Direct operating expenses and other
11,944
—
11,944
N/A
Total production costs
88,503
—
88,503
N/A
Change in inventory
3,062
—
3,062
N/A
Cost of sales
$
91,565
$
—
$
91,565
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Cost
of sales was $91.6 million, or approximately 87% of sales, for the three months ended March 31, 2011. The primary component of cost of sales is the propane feedstock,
which represented approximately 65% of total production costs for the three months ended March 31, 2011. There was no production in the three months ended March 31, 2010, and
accordingly, there were no costs of sales during that period.
General and Administrative Expense.
General and administrative expense was $31.6 million for the three months ended
March 31, 2011,
compared to $1.9 million for the three months ended March 31, 2010, an increase of $29.7 million. The increase is attributable to equity-based compensation expense of
$29.3 million in the first quarter of 2011 resulting from equity-based awards granted in September 2010 to both our employees and certain employees of affiliated entities, who are treated for
accounting purposes as non-employees, compared to an insignificant amount in the first three months of 2010. In addition to the increase in equity-based compensation expense, there was a
$0.4 million increase in other general and administrative expense, primarily in payroll and benefits.
Management Fee.
We incurred management fees of $0.5 million for the three months ended March 31, 2011, compared to
zero for the three
months ended March 31, 2010. The management fees incurred
relate to a management services agreement, pursuant to which we pay Lindsay Goldberg a total of $2.0 million per year, beginning on January 1, 2011. The agreement and related management
fees will be terminated at the closing of this offering.
Interest Income (Expense), Net.
Interest expense of $3.7 million was incurred for the three months ended March 31, 2011,
 on an average
daily debt balance of $189.1 million. Interest expense of $2.2 million was incurred on an average daily balance of $111.6 million for the three months ended March 31, 2010,
and was capitalized as part of construction costs. Interest expense for the three months ended March 31, 2011 includes $0.8 million of amortized deferred financing costs. Amortized
deferred financing costs for March 31, 2010 totaled $0.8 million, all of which was capitalized.
Loan
commitment expense for the three months ended March 31, 2011, was $0.2 million, a decrease of $0.5 million from the first quarter of 2010. The decrease was
largely due to the construction loan commitment being fully drawn upon in the first quarter of 2011. The only commitment expense we incurred in 2011 was on our existing revolving credit facility.
Other Income.
Other income resulted from the gain on sale of certain equipment.
Income Tax Expense.
Income tax expense was $0.4 million for the three months ended March 31, 2011, compared to zero
for the three
months ended March 31, 2010, resulting from income taxes incurred on gross margin with the State of Texas. As there were no gross margins in the first three months of 2010, no income taxes were
incurred.
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
Years Ended December 31,
2010
2009
Increase/Decrease
(Amounts in thousands)
%
Sales
$
30,351
$
—
$
30,351
N/A
Cost of sales
41,836
—
41,836
N/A
Gross loss
(11,485
)
—
(11,485
)
N/A
General and administrative expense
22,884
4,264
18,620
437
Operating loss
(34,369
)
(4,264
)
(30,105
)
706
Interest income (expense), net
(5,418
)
(224
)
(5,194
)
2,319
Other income
52
—
52
N/A
Net loss
$
(39,735
)
$
(4,488
)
$
(35,247
)
785
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Sales.
The facility commenced operations in October 2010. Accordingly, financial statements for the year ended December 31,
2009, reflect
neither sales nor cost of sales, and the financial statements for the year ended December 31, 2010, reflect the operations of the facility from the date when we commenced commercial operations,
in October 2010, to December 31, 2010.
During
the first few months of start-up, the facility's operations were periodically suspended in connection with routine start-up and other maintenance
activities. Accordingly, we were unable to fully absorb fixed overhead costs, and we reported a negative gross profit. Product output for the period from October 2010 to December 31, 2010,
totaled approximately 76.5 million pounds of CGP.
Cost of Sales.
Years Ended December 31,
2010
2009
Increase/Decrease
(Amounts in thousands)
%
Propane
$
30,540
$
—
$
30,540
N/A
Fuel and utilities
5,747
—
5,747
N/A
Depreciation, amortization and accretion
7,056
—
7,056
N/A
Insurance and property taxes
1,146
—
1,146
N/A
Direct operating expenses and other
7,661
—
7,661
N/A
Total production costs
52,150
—
52,150
N/A
Change in inventory
(10,314
)
—
(10,314
)
N/A
Cost of sales
$
41,836
$
—
$
41,836
N/A
Cost
of sales was $41.8 million, or approximately 138% of sales for the year ended December 31, 2010. The commencement of operations in October 2010 was followed by several
months of routine start-up and other maintenance activities. Accordingly, we were unable to fully absorb fixed overhead costs, and we recorded a negative gross profit. The primary
component of cost of sales is the propane feedstock, which represented approximately 59% of total production costs for the year ended December 31, 2010.
General and Administrative Expense.
General and administrative expense was $22.9 million for the year ended December 31,
 2010, compared
to $4.3 million for the year ended December 31, 2009, an increase of $18.6 million. Equity-based compensation expense, as a component of general and administrative expense, was
$14.0 million in 2010 resulting from equity-based awards granted in September 2010 to both employees and non-employees compared to zero for the year ended December 31, 2009.
Also, as part of the transition of the facility from development stage, management added accounting and information systems support personnel and accounting, systems and tax consultants, resulting in
increases of $1.5 million and $1.1 million, respectively. Legal fees increased by $0.5 million, and other expenses increased by $1.5 million.
Interest Income (Expense), Net.
We entered into a five-year credit facility agreement in
June 2009, which included a $150 million secured construction loan commitment and a $55 million revolving credit facility. We did not draw upon the construction loan commitment until the
end of October 2009. The average construction loan balance from that point until December 31, 2009, was $50.9 million, resulting in interest expense of $0.9 million for the year,
all of which was capitalized as part of construction costs. Interest expense in 2009 includes $0.8 million of loan commitment fees on the unutilized portion of our credit facility. Interest
income of $0.6 million was earned during 2009 on cash balances.
During
2010, the average construction loan balance was approximately $132 million, resulting in interest of $10.5 million for the year, of which $8.3 million was
capitalized as part of construction costs. The increase in total interest of $9.1 million on the construction loan from 2009 to 2010 was primarily the result of the higher level of borrowing
due to the capital spending on the facility construction. The interest
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rate
remained unchanged at 8% during the periods ended December 31, 2010 and December 31, 2009. No interest income was earned in 2010.
The
revolving loan commitment was not drawn upon until August 2010; accordingly, there was no interest expense on the revolving loan during 2009. The average revolving loan balance from
August 2010 to December 31, 2010, was $14.6 million, resulting in interest of $0.5 million for the year ended December 31, 2010.
Loan
commitment expense increased $1.3 million to $2.1 million in 2010 due to the bank debt facility being in place for the full year. Also, during the year ended
December 31, 2010, we recorded amortization of deferred financing costs of $3.1 million, of which we capitalized $2.5 million.
Other Income.
Other income resulted from the gain on sale of certain equipment.
Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
Years Ended December 31,
2009
2008
Increase/Decrease
(Amounts in thousands)
%
Sales
$
—
$
—
$
—
N/A
Cost of sales
—
—
—
N/A
Gross profit
—
—
—
N/A
General and administrative expense
4,264
4,729
(465
)
(10
)
Operating loss
(4,264
)
(4,729
)
465
(10
)
Interest income (expense), net
(224
)
744
(968
)
(130
)
Other income
—
—
—
N/A
Net loss
$
(4,488
)
$
(3,985
)
$
(503
)
13
Sales.
The facility commenced operations in October 2010. Accordingly, there were no sales in 2009 and 2008.
Cost of Sales.
There was no production in either 2009 or 2008. Accordingly, there were no cost of sales in 2009 or 2008.
General and Administrative Expense.
General and administrative expense was $4.3 million for the year ended December 31,
2009, compared
to $4.7 million for the year ended December 31, 2008, a decrease of $0.4 million. The higher general and administrative expense in 2008 was driven by $2.0 million in
equity-based compensation expense resulting from an award of fully vested profits interests to certain key individuals in 2008. Excluding the equity-based compensation expense, general and
administrative expense increased $1.6 million, primarily due to increased property taxes.
Interest Income (Expense), Net.
Interest income was $0.6 million for the year ended December 31, 2009, compared to
interest income of
$0.7 million for the year ended December 31, 2008. Interest income was generated from the cash held from initial capital contributions of the members for the construction of the PDH
facility. As the construction project was fully underway in 2009, cash balances decreased and reduced interest income. We did not enter into a bank credit facility until June 2009. Accordingly, there
was no loan commitment expense or interest expense in 2008. However, during the year ended December 31, 2009, we recorded $0.8 million in loan commitment expense on the unutilized
portion of our credit facility.
Critical Accounting Policies
The preparation of our financial statements in accordance with GAAP requires that management make estimates and assumptions affecting
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the
reporting period. The following is a discussion of the accounting policies applied by us that are considered to involve a higher degree of judgment in their application. See Note 2 (Summary of
Significant Accounting Policies) to our audited financial statements included elsewhere in this prospectus.
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Impairment of Long-Lived Assets
We account for impairment of long-lived assets in accordance with ASC 360, "Plant, Property and
Equipment—Impairment or Disposal of Long-Lived Assets." Long-lived assets used in operations are assessed for possible impairment when events or changes in
circumstances indicate a potential significant deterioration in future cash flows projected to be generated by the assets. Individual assets are grouped for impairment purposes at the lowest level for
which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets—generally at the facility level, as we produce one primary product.
If,
upon review, the sum of the projected undiscounted cash flows is less than the carrying value of the asset group, the carrying value is written down to estimated fair value. The fair
values of impaired assets are usually determined based on the present value of projected future cash flows using discount rates commensurate with the risks involved in the asset group, as quoted
market prices in active markets are generally not available. The expected future cash flows used for impairment reviews and related fair value calculations are based on projected production volumes,
sales volumes, prices, and costs, taking into consideration available internal and external information at the date of review.
Should
an impairment of assets arise, we may be required to record a charge to operations that could be material to the period reported. To date, we have not recorded any impairment
charges.
Equity-Based Compensation
We recognize equity-based compensation expense related to the profits interests granted to employees based on the estimated fair value
of the awards on the grant date. The grant date fair value of the equity-based awards to employees is recognized on a straight-line basis over the requisite service period, which is the
vesting period of the respective awards.
We
also account for profit interests granted to certain employees of affiliated entities, who are treated for accounting purposes as non-employees, based on the estimated
fair value of the awards. The measurement of equity-based compensation for awards granted to non-employees is subject to periodic adjustment as the awards vest, and the resulting change in
value, if any, is recognized in our statements of operations during the period the related services are rendered.
We
engage an independent valuation specialist to assist us in determining the fair value of the awards as of the grant date for employees, and as of each reporting date for
non-employees. The fair value of our business was allocated to each of our classes of profits interests using the Option Pricing Method (OPM). The OPM is appropriate to use when the range
of possible future outcomes is so difficult to predict that forecasts would be highly speculative. In applying the OPM, we utilized the Black-Scholes option-pricing model. The Black-Scholes model
requires the use of highly subjective and complex assumptions that determine the fair value of equity-based awards, including the equity value of our business and the expected time to liquidity,
volatility, risk-free interest rate and dividend yield.
Given
the absence of a public trading market for our common units and in accordance with the American Institute of Certified Public Accountants Practice Guide,
Valuation of Privately-Held-Company Equity Securities Issued as
Compensation
, we
exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the equity value of our business, including: publicly available forecasts of
future propylene and propane prices that are published by industry sources as of each valuation date; contemporaneous and retrospective valuations performed by an independent valuation specialist; the
status of our facility's construction and operations, including risks attendant thereto; the likelihood of our achieving a liquidity event given prevailing market conditions in the estimated
timeframe; the nature, history and strategy of our business; the illiquidity of equity-based awards involving private company securities; and current expectations about future macroeconomic
conditions.
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We
estimate the value of our business by considering a weighted combination of value indications under two valuation approaches, an income approach and a market approach. The income
approach estimates the present value of future estimated cash flows, based upon forecasted sales and costs, including consideration of forecasts of future propylene and propane prices that are
published by industry sources as of each valuation date. These future cash flows are discounted to their present values using a discount rate derived from an analysis of the cost of capital of
comparable publicly traded companies in our industry or similar lines of business as of each valuation date and are adjusted to reflect the risks inherent in our cash flows. The market approach
estimates the fair value of a company by applying market multiples of comparable publicly traded companies in our industry or similar lines of business, which are based on key metrics implied by the
enterprise values or acquisition values of our comparable publicly traded companies.
In
the latter part of 2010 and in the first quarter of 2011, our estimates of future results, and therefore, our estimates of the equity value of our business, have increased
substantially as a result of (1) the completion of the construction of our facility and (2) significantly higher expectations of future profitability based on increases in the forecasted
propane-to-propylene spread.
For
a further discussion of our historical equity-based compensation, please see Notes 2 and 9 in our audited financial statements included elsewhere in this prospectus.
Liquidity and Capital Resources
Our principal sources of liquidity have historically been equity contributions from our sponsors and borrowings under our existing
credit facility. Our principal uses of
cash are expected to be operations, distributions, capital expenditures and funding our debt service obligations. We believe that our cash from operations will be adequate to satisfy commercial
commitments for the next twelve months and that the borrowings under our revolving credit facility will be adequate to fund our planned capital expenditures and working capital needs.
Our
ability to make payments on and to refinance our indebtedness, to make distributions, to fund planned capital expenditures and to satisfy our other capital and commercial commitments
will depend on our ability to generate cash flow in the future. This, to a certain extent, is subject to the prevailing propane-to-propylene spread, natural gas prices and
general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our business may not generate sufficient cash flow from operations, and future
borrowings may not be available to us under our new credit facilities in amounts sufficient to enable us to make quarterly distributions, finance necessary capital expenditures, service our
indebtedness or fund our other liquidity needs. We may seek to sell assets or issue debt securities or additional equity securities to fund our liquidity needs but may not be able to do so. We may
also need to refinance all or a portion of our indebtedness on or before maturity. We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all.
Existing Credit Facility
We entered into a five-year credit facility agreement in June 2009 that included a $150.0 million construction loan
commitment and a $55.0 million revolving credit facility. Interest for the facility is based upon LIBOR plus a margin or the bank's prime rate plus a margin, at our option. All of our
obligations under the credit facility are secured by all of our assets, subject to certain exceptions and exclusions. Principal and interests payment are due based on a ten-year
amortization schedule with a balloon payment due in 2014. Additional information about this credit facility may be found in our audited financial statements and accompanying notes included elsewhere
in this prospectus. We plan to refinance and cancel this credit facility with borrowings under the new term loan facility we expect to enter into in the third quarter of 2011. See Note 8 to our
financial statements included elsewhere in this prospectus.
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New Credit Facilities
Prior to the closing of this offering, PL Propylene, as borrower, expects to enter into a new term loan facility of
$350.0 million. PL Propylene also expects to enter into a revolving credit facility of $120.0 million with Morgan Stanley Senior Funding, Inc. as lead arranger. Morgan Stanley
Senior Funding, Inc. (the "Agent") will act as the administrative agent and collateral agent for both the term loan facility and the revolving credit facility. PL Propylene has engaged a group
of financial institutions to use their commercially reasonable efforts to arrange the term loan facility. Also, PL Propylene has received a commitment letter from a group of financial institutions in
respect of the full amount of the revolving credit facility. It is a condition to the commitment of the lenders under the revolving credit facility commitment letter that a portion of the term loan
facility is successfully closed and funded.
We
expect the term loan facility and the revolving credit facility will mature in 2018 and 2016, respectively. Proceeds of the new credit facilities will be used (1) to refinance
and cancel our existing credit facility, (2) to pay transaction costs associated with entering into the new credit facilities and (3) to make a distribution to our sponsors to reimburse
them for certain construction capital expenditures. In respect of the revolving credit facility, (1) on the closing date of the revolving loan facility, we may draw up to $60.0 million
of revolving loans (a) to make a distribution to our sponsors to reimburse them for certain construction capital expenditures and (b) to pay transaction costs associated with entering
into the credit facilities and (2) on and after the closing date of the revolving loan facility, we may draw available amounts to fund our working capital needs and for other general
partnership purposes. Borrowings under our new credit facilities will each be subject to the satisfaction of customary conditions, including the absence of a default, and the accuracy, in all material
respects, of all representations and warranties. We will also have the right to add, subject to certain restrictions and conditions, incremental term loan and revolving credit facilities in an amount
not to exceed $200.0 million.
Interest Rate and Fees.
We currently expect that borrowings under the term loan facility and revolving credit facility will bear
interest at a rate
per annum equal to either: (1) the "ABR," defined as the highest of (a) the rate of interest publicly announced by the Agent as its prime rate, (b) the federal funds effective
rate from time to time plus 0.50% per annum and (c) in respect of the term loan facility only, one-month LIBOR plus 1.00% per annum,
plus
an applicable margin
OR
(2) the higher of (a) at the election of PL Propylene, one,
two, three, six, or, if available to all relevant affected lenders, nine or twelve month (or shorter) LIBOR or (b) in respect of the term loan facility only, 1.25% per annum,
plus
an applicable
margin. Additionally, we expect that the revolver will bear a commitment fee calculated at a rate per annum equal to 0.50% on the
average daily unused portion of the commitments under the revolving credit facility.
The
applicable margins under the credit facilities are subject to step-ups and step-downs based on our leverage ratio and our credit rating, respectively. In
addition,
PL Propylene will pay an underwriter fee and an upfront fee as well as an annual management fee for our term loan facility and our revolving credit facility.
Mandatory Prepayments.
We will be required to prepay outstanding amounts under our term loan facility with the net proceeds from
certain issuances of
debt (other than debt permitted to be incurred under the facility). We will also be required to prepay outstanding amounts under our term loan facility in an amount equal to the net proceeds from any
non-ordinary course asset sale, subject to certain thresholds, exemptions and reinvestment rights.
Voluntary Prepayments/Commitment Reductions.
We expect that we may, at any time, voluntarily prepay, in whole or in part, outstanding
amounts under
our new credit facilities without premium or penalty; provided, we may be subject to a 1.0% penalty for refinancing or repricing the term loan facility within one year after the closing of the new
term loan facility under certain circumstances.
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Amortization and Final Maturity.
We expect amortization of the new term loan facility in aggregate amounts of 1.0% per year of the
original principal
amount and that it will mature on the seventh anniversary of the closing date. We expect that the revolving credit facility will terminate on the fifth anniversary of the closing date.
Restrictive Covenants and Other Matters.
We expect that our new credit facilities will contain covenants requiring us to maintain
certain financial
ratios such as leverage, interest coverage and current ratios. In addition, we expect that the term loan and revolving credit facilities will include negative covenants that will, subject to
significant exceptions, limit our ability and the ability of our sole subsidiary, PL Propylene, to, among other things:
•
incur, assume or permit to exist additional indebtedness, guarantees and other contingent obligations;
•
incur liens;
•
make negative pledges;
•
pay dividends or make other distributions;
•
make certain loans and investments;
•
consolidate, merge or sell all or substantially all of our assets; and
•
enter into transactions with affiliates.
The
credit facilities are expected to contain certain customary representations and warranties, affirmative covenants and events of default, including among other things, payment
defaults, breach of representations and warranties, covenant defaults, cross-defaults to material indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments, actual or
asserted failure of any guaranty or security document supporting the credit facilities to be in force and effect, and change of control. If an event of default occurs, the Agent would be entitled to
take various actions, including the acceleration of amounts due under the new credit facilities, termination of the commitments under the revolving credit facility and all remedial actions available
to a secured creditor.
Capital Spending
In 2010, we incurred $187.5 million of capital expenditures to complete the construction of our PDH facility which commenced
operations in October 2010.
Major
planned turnaround costs will be deferred and amortized over the period until the next turnaround. Capital expenditures are for discretionary projects. Our new term loan facility
may limit the amount we can spend on capital expenditures.
Our
future capital spending will be determined by the board of directors of our general partner. We currently plan to incur maintenance capital expenditures of $14.5 million in
2011 and $6.0 million per year for each of 2012 through 2014. We have not planned maintenance capital expenditures beyond 2014. Since a substantial portion of our facility is newly built, we do
not expect to undergo a major maintenance project until late 2013 or 2014, at which time the most significant activity will be to replace the reactor catalyst, which is required approximately every
three years. We expect these catalyst change-out projects will typically cost approximately $15 million to $20 million per project. In addition to the triennial maintenance
projects, a more significant maintenance project will be undertaken approximately every nine years, which will include change-out of the reactor catalyst and overhauls of selected pieces
of equipment. We anticipate these projects to cost approximately $25 million to $35 million.
Our
estimated capital expenditures and planned major maintenance costs are subject to change due to unforeseen circumstances and unanticipated increases in the cost, scope and completion
time. For
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example,
we may experience increases in labor or equipment costs necessary to comply with government regulations or to complete projects that sustain or improve the profitability of our PDH facility.
Maintenance capital expenditures and planned turnaround expenses will be funded using cash flow from operations. Other capital expenditures (including growth capital expenditures), should we identify
opportunities for such expenditures, will be funded by issuances of debt or equity.
Cash Flows
Operating Activities
Net cash used in operating activities for the year ended December 31, 2010, was $53.2 million. This negative cash flow
from operating activities was primarily attributable to increases in accounts receivable and inventory and a decrease in accounts payable combined with our loss from operations.
Net
cash flows used in operating activities for the year ended December 31, 2009 and 2008, were zero and $1.0 million, respectively, each due primarily to our net loss
offset by changes in components of working capital.
Investing Activities
Net cash used in investing activities for the years ended December 31, 2010, 2009 and 2008, was $157.4 million,
$281.2 million and $170.0 million, respectively. Net cash used in investing activities principally relates to capital expenditures in connection with construction of our facility.
Financing Activities
Net cash provided by financing activities for the years ended December 31, 2010, 2009 and 2008, was $210.7 million,
$249.1 million and $203.0 million, respectively. Net cash provided by financing activities resulted from proceeds from member capital contributions and proceeds from debt borrowings.
Contractual Obligations
The following table sets forth our contractual obligations for the periods indicated as of December 31, 2010:
Payments Due by Period
Total
2011
2012
2013
2014
2015
There-
after
(in millions)
Bank Debt
(1)
$
189.5
$
189.5
$
—
$
—
$
—
$
—
$
—
Purchase Obligations
(2)
10.3
1.8
1.9
1.9
0.6
0.6
3.5
Asset Retirement Obligations
(3)
1.1
—
—
—
—
—
1.1
Total
$
200.9
$
191.3
$
1.9
$
1.9
$
0.6
$
0.6
$
4.6
(1)
Our
debt obligations as of December 31, 2010, include (i) a $150 million term loan and (ii) $39.5 million of outstanding
debt drawn on our revolving credit facility. These amounts are reflected as being due in 2011 based on our anticipated repayment of these amounts pursuant to our entry into new credit facilities in
advance of this offering. These amounts exclude interest payments and loan commitment fees. See Note 8 in our audited financial statements for discussion of interest rates and loan commitment
fees. We expect to enter into new credit facilities prior to the closing of this offering. Payments on borrowings under the new credit facility have not been included in the table above as they were
not contractual obligations as of December 31, 2010.
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(2)
Represents
the aggregate minimum purchase commitments pursuant to a nitrogen supply contract and a propylene storage contract. We have contracts to purchase
propane and other raw materials used in the production of propylene. These contracts do not specify any minimum quantities to be purchased, and accordingly, this table does not reflect amounts that
may be payable under these contracts.
(3)
Represents
amounts to be incurred in connection with the retirement of the facility at the end of its life. The amount included herein reflects the amount
recorded in our December 31, 2010, financial statements and does not include the effects of inflation. Our recorded asset retirement obligation will be accreted over time until it is equivalent
to the anticipated ultimate cash retirement cost.
Off-Balance Sheet Arrangements
We do not have any "off-balance sheet arrangements" as such term is defined within the rules and regulations of the SEC.
Quantitative and Qualitative Disclosures about Market Risk
Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse
changes in financial and commodity market prices and rates. We do not currently use derivative financial instruments to manage risks related to changes in prices of commodities (e.g., propane)
or interest rates. Given that our business is currently based entirely in the U.S., we are not directly exposed to foreign currency exchange rate risk.
We
do not engage in activities that expose us to speculative or non-operating risks, including derivative trading activities. In connection with our new term loan facility,
we expect to enter into certain interest rate protection agreements. Additionally, our management will continue to monitor whether financial derivatives become available which could effectively hedge
identified risks and management may in the future elect to use derivative financial instruments consistent with our overall business objectives to avoid unnecessary risk and to limit, to the extent
practical, risks associated with our operating activities.
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INDUSTRY OVERVIEW
Propylene Industry Overview
Propylene Overview
Propylene is a versatile basic hydrocarbon predominantly produced as a by-product of petroleum refining and as a
co-product of ethylene production. Propylene is an important building block in the production of complex petrochemicals such as polypropylene, acrylonitrile and acrylic acid. As such,
propylene is the foundation of many different consumer and industrial products such as plastics, clothing, automotive components, detergents, safety glass, packaging materials, paints and nylon. In
addition to its utility within the chemicals market, propylene also plays a significant role in the fuels market. When alkylated in a refinery, propylene is used as a major gasoline blendstock.
Propylene
pricing reflects supply and demand dynamics that are intricately related to the price movements of crude oil, natural gas and petrochemicals. Within North America, recent shale
gas discoveries and the use of new extraction technologies have been one factor that has led to an abundance of natural gas and natural gas liquids ("NGLs") such as ethane and propane, significantly
impacting propylene production and pricing. In addition, there has been a fundamental decoupling of natural gas and oil prices in North America as gas prices have fallen dramatically while global
economic and geopolitical factors have propelled oil prices to the $100 per barrel range. Given this dynamic, North American ethylene producers have shifted to lighter natural gas liquids as their
primary feedstocks, which yield less propylene per pound of feed than heavy feedstocks such as naphtha. The result has been a tight supply of propylene in the North American market.
The
following diagram depicts the principal uses of propylene:
Propylene Supply Chain
Propylene
is produced globally primarily in regions containing crude oil refineries or an abundant supply of hydrocarbon feedstocks. The export and import of propylene between regions is
relatively limited
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due
to the expense associated with transport of highly pressurized or refrigerated liquids. When sold, propylene is divided into grades based on final composition of the saleable product. There are
three grades of propylene produced in the U.S.:
•
Polymer-Grade Propylene ("PGP"):
a mix of 99.5% propylene
and 0.5% propane and other hydrocarbons; this type of propylene is typically used as a raw material for polypropylene. Polypropylene is a thermoplastic polymer and is used in a variety of applications
including packaging, ropes, textiles, paper coatings, plastic parts and reusable containers;
•
Chemical-Grade Propylene ("CGP"):
a mix of 93.0% to 95.0%
propylene and 7.0% to 5.0% propane and other hydrocarbons; this type of propylene is used as a raw material for a wide variety of chemicals including propylene oxide, oxo alcohols, cumene,
acrylonitrile, acrylic acid and isopropanol;
•
Refinery-Grade Propylene ("RGP"):
a mix of approximately
60.0% propylene and 40.0% propane and other hydrocarbons; this type of propylene is utilized in both fuel and chemicals markets. RGP can be used directly in cumene, isopropanol and propylene oligomer
markets or purified into CGP or PGP. In the fuel market, RGP can be converted into propylene alkylate or dimersol/polygas and blended directly into motor gasoline, or RGP can be blended in propane.
The
following table depicts historical market prices of PGP and CGP during the period from 2005 through 2011 and projected 2011 through 2015:
Historical and Projected Propylene Pricing Levels
Source: Chemical Data
Propylene Supply Sources
There are three sources of propylene production in North America:
•
Crude oil refineries produce RGP as a by-product of gasoline production. RGP is typically produced in the
fluid catalytic cracker unit ("FCC unit" or "cat cracker") associated with a refinery. U.S. refineries produced approximately 18 billion pounds of propylene in 2010 (approximately 60% of total
U.S. propylene production);
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•
Olefins facilities (ethylene crackers) produce PGP and CGP as co-products of ethylene production. These
facilities include both heavy feed crackers and light feed crackers. Ethylene crackers produced approximately 12 billion pounds of propylene in 2010 (approximately 40% of total U.S.
production); and
•
On-purpose propylene plants produce PGP and CGP as their primary products. Currently, on-purpose
plants produce propylene using three primary production techniques: metathesis (ethylene and butane-2 feedstocks), propane dehydrogenation (propane feedstock) and methanol to propylene
(methanol feedstock—derived from natural gas, biomass or coal). Chemical Data estimates that on-purpose metathesis propylene plants produced 3% of U.S. propylene in 2010 and
that with the start-up of our facility, on-purpose facilities will account for approximately 7% of total U.S. propylene.
The
following chart show the change in propylene sources from 2006 to 2011.
Change in U.S. Propylene Production Sources
Source: Chemical Data
Propylene Production via Oil Refineries
Propylene is produced as a by-product in oil refineries when they process crude oil with the primary goal of creating
gasoline. The first part of the refining process is to heat the crude oil to a very high temperature and feed it to a distillation column in which lighter distillates will rise as vapors and heavier
distillates liquefy, thus separating the fractions. The fractions are further processed in a variety of ways, but it is the fraction sent to the FCC unit that has the capability to produce substantial
amounts of propylene.
The
FCC unit takes heavy gas oil as an input with the goal of producing gasoline and/or distillate fuel oil. The cat cracker "cracks" the bigger compounds in the heavy gas oil into
smaller compounds. When the "cracked" product leaves the reaction chamber, it is separated in a dedicated fractionator. The products leaving the fractionator include a mix of heavy gas oil, light gas
oil, gasoline and a gas stream. The gas stream is then further processed in a distillation tower to separate the gases into a propane/propylene mix, namely refinery grade propylene.
The
refiner then has three primary options for the resulting refinery grade propylene:
•
Sell the combined stream to the merchant market for further processing (by "splitters") into propane and propylene. The
merchant fractionators will then sell this refinery-derived propylene into the market for use in petrochemical plants;
•
Process the propylene into propylene alkylate, a motor gasoline blendstock; or
•
Burn the propane/propylene mix as fuel. Only in isolated areas or capital constrained plants does this make economic
sense.
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Propylene Production via Ethylene Plants
Ethylene is the most common petrochemical in the world and Chemical Data estimates that over 50 billion pounds are produced
annually in the U.S. Ethylene is a major building block for many common products. It is produced in an ethylene plant (also referred to as an olefins plant, ethylene cracker, steam cracker or a
cracker defined by the feed type, such as "naphtha cracker" or "ethane cracker").
Ethylene
can be produced by a variety of chemical reactions involving many different feedstocks, including ethane, propane, butane, naphtha or gas oil. Many ethylene plants in the U.S.
are designed to shift between feedstocks as relative economics shift. Regardless of the feedstock, the basic process is the same: the feed is mixed with steam and heated to 750 to 950 degrees Celsius,
inducing numerous free radical reactions followed by immediate cooling to freeze the reactions. The resulting output streams are separated from each other by repeated compression and distillation. The
table below is illustrative of the relative production of propylene for the various feedstocks.
Illustrative Olefins Crack Yields: Pounds of Product per Pound of Feed
Ethane
Propane
Naphtha
Gas Oil
Yield:
Ethylene
0.78
0.42
0.37
0.23
Propylene
0.03
0.17
0.18
0.15
Other
0.19
0.41
0.45
0.62
Source: Chemical Data
As
is portrayed in the above table, olefins plants that crack primarily ethane will result in almost no co-product propylene generation, whereas crackers that use heavier
feeds, referred to as heavy feed crackers, such as naphtha or gas oil will result in more co-product propylene generation. While not all ethylene plants are able to shift between feed
types, for the "flexible" crackers that are able to adjust, the choice of feedstock depends on a complex interaction of feedstock prices, as well as ethylene and co-product prices.
Propylene Supply Dynamics
U.S. oil refineries and ethylene plants historically produced approximately equal relative amounts of propylene each year. Beginning in
2007, this relationship changed as two parallel events resulted in the permanent closure of various ethylene plants and the curtailment of refinery production, conditions that have led to an extremely
tight propylene market.
First,
new U.S. supplies of natural gas from liquid rich shale deposits have brought an abundant supply of natural gas and natural gas liquids into the U.S. market. As a result, the
price of natural gas declined in a period of rising oil prices. This decoupling of the oil to gas price ratio has caused natural gas based feedstocks such as ethane to be favored versus crude oil
based feedstocks such as naphtha for ethylene production. Accordingly, steam crackers that crack only naphtha or heavy oil based liquids have generally become economically cost disadvantaged. As a
result, numerous heavy feed crackers have been permanently shut down or reconfigured to enable them to use lighter feedstocks. As a key supply source of propylene is from the steam cracking of heavy
liquids, propylene production by ethylene plants has been reduced and is expected to remain so in the future, leaving the propylene market to remain tight.
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The
illustration below shows historical crude oil and natural gas pricing for the period from 2000 to May 31, 2011.
Historical Oil and Natural Gas Pricing: 2000 through 2011 YTD
Source: EIA
The
second event influencing U.S. propylene production has been the reduced demand for gasoline caused by the economic recession and subsequent slow recovery as well as the increased use
of ethanol. A reduction in gasoline demand reduces refining operations, which in turn limits the by-product production of propylene. With reduced gasoline demand, refineries curtailed
production and reduced FCC unit output. The combination of closures and reconfigurations of heavy feed ethylene crackers and reduced output of FCC units at refineries reduced annual U.S. propylene
production by approximately 4 billion pounds from 2007 through 2010 according to Chemical Data estimates. Of that total, Chemical Data estimates that approximately 2 billion pounds of
supply from ethylene plants was permanently removed from the market, slightly offset by an increase in refinery capacity.
As
illustrated below, propylene supply in the U.S. contracted sharply by 17.0% from 2007 through 2009 before rebounding 7.5% in 2010 according to Chemical Data estimates. Chemical Data
also estimates that U.S. propylene supply will grow modestly through 2014, increasing at a compound annual growth rate of approximately 1.5% from year-end 2010. This is primarily due to
the belief that co-product supply of propylene from heavy feed ethylene crackers is not likely to rebound in the near term. As mentioned earlier, overall production economics strongly
favor lighter feedstocks, hindering the supply of propylene from ethylene crackers. In 2015, Chemical Data assumes that a new PDH plant is added to U.S. capacity, contributing to an annual supply
growth rate that year of 3.4%. However, despite this growth, supply is expected to remain below levels achieved in 2007.
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The
following table depicts historical and projected propylene production in the U.S. for the period from 2005 through 2015.
Historical & Projected U.S. Propylene Supply (millions of pounds)
Source: Chemical Data
Propylene Demand Summary
Propylene demand in the U.S. has historically tracked GDP growth and was driven by increases in consumer consumption of both durable
and non-durable plastics, nylon, insulation, furniture, carpets, appliances and adhesives, among other items. The recession that began in 2008 spurred the first worldwide contraction in
propylene demand in history, and U.S. demand fell by 11.4% from 2007 to 2008. In early 2009, U.S. propylene demand continued to experience a contraction as a wide range of industries were affected by
the global recession. Propylene demand growth resumed in the U.S. in late 2009 and 2010. Chemical Data forecasts that U.S. demand is expected to grow at a compound annual growth rate of approximately
1.8% between 2010 and 2015, with further growth somewhat constrained by the tight supply market.
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The
following graph shows historical and projected propylene demand in the U.S. for the period from 2005 through 2015.
Historical & Projected U.S. Propylene Demand (millions of pounds)
Source: Chemical Data
Propylene Demand by Product
As one of the primary petrochemical building blocks, propylene demand is driven by four key products: polypropylene, propylene oxide,
acrylonitrile and acrylic acid. The following chart shows U.S. propylene demand by product in 2010.
2010 U.S. Propylene Demand by Product
Source: Chemical Data
Polypropylene
(approximately 49% of propylene demand in 2010) is produced as a solid pellet that can be modified and molded into both hard
and flexible plastic materials for both durable use (transportation, building and construction, electrical, furniture, industrial machinery) and
non-durable use (packaging, consumer and industrial products). For example, a key use of polypropylene is in plastic component parts of automobiles. Chemical Data projects U.S.
polypropylene demand growth of approximately 1.6% per year from 2011 through 2015.
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Propylene oxide
(approximately 13% of demand in 2010) is primarily used to produce foam and polyurethane products. It has historically
been produced by one of two methods: reacting propylene with ethyl-benzene and by reacting propylene with isobutene. Chemical Data projects U.S. propylene oxide demand growth of approximately 2.0% per
year from 2011 through 2015.
Acrylonitrile
(approximately 9% of propylene demand in 2010) is used to produce synthetic rubber compounds, automotive body parts, golf
club heads, clothing, carpet fibers, protective head gear, coatings and toys (LEGO® bricks). Asian manufacturers also import acrylonitrile from U.S. producers for use in the creation of
nylon, among other items. Chemical Data projects U.S. acrylonitrile demand growth of approximately 2.9% per year from 2011 through 2015.
Acrylic acid
(approximately 6% of propylene demand in 2010) is used to produce super-absorbents (for diapers), coatings, adhesives, floor
polishes and paints. Chemical Data projects U.S. acrylic acid demand growth of approximately 3.0% per year from 2011 through 2015.
Propylene's Relation to WTI Crude Oil
The price of propylene has always been closely related to the price of crude oil. The chart below illustrates the price ratio between
propylene and WTI crude oil over historical periods and shows that propylene trades at a premium to crude oil on a per barrel basis. This is because propylene is a by-product of refinery
output and can be alkylated and used as a gasoline blendstock. Propylene's value outside of the chemicals market as a gasoline blendstock provides a floor for the price of propylene since gasoline
always trades at a premium to crude oil.
Propylene Price as a Multiple of Crude Oil
Source: EIA, Chemical Data
Note: Propylene price expressed as a multiple of WTI crude oil price on a dollar per barrel equivalent basis.
As depicted in the above chart, with the exception of the recession in 2008 and 2009, the price of propylene relative to crude oil has been fairly
consistent over the past decade in a range between roughly 1.3 to 1.4 times the price of crude oil. Since the alkylation value of propylene establishes the floor for propylene pricing, the price of
propylene has never fallen below the price of crude oil for more than a very brief period. As described above, since 2010 the curtailed supply of propylene has resulted in a substantially higher price
of propylene relative to crude oil.
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North American Propylene Industry Structure
Management estimates that over 30 different companies produce propylene in North America. However, we do not consider most of these
producers as our direct competition when seeking contractual or spot customers. First, refineries that produce refinery grade propylene are not direct competitors. Refinery grade propylene is
generally sold to other companies, such as Enterprise and ExxonMobil, for further purification, or splitting, into PGP and CGP. Second, many producers, such as Dow, Formosa and INEOS, consume all of
the propylene they produce and purchase significant additional volumes of propylene from third parties. We consider companies with net long positions in polymer and chemical grade propylene to be our
direct competitors, including Enterprise, Chevron Phillips, Lyondell Basell, ExxonMobil Chemical, Shell Chemical, Flint Hills, and Williams Companies.
Most
of our competitors have significantly greater financial and other resources than us and are engaged on a national or international basis in many segments of the petroleum products
business including refining, transportation and marketing, on a scale substantially larger than ours.
Competition
in our industry is determined by price considerations, logistics and, to some extent, stability of supply. Our ability to compete effectively depends on our responsiveness to
customers' needs, our pipeline connectivity to customer facilities and our ability to provide reliable supply at competitive prices. We are the only independent dedicated on-purpose
propylene production facility in North America. We believe this is a significant advantage because it enables us to provide customers a more consistent, predictable supply offering than conventional
suppliers. However, it is possible that a competitor could construct an on-purpose propylene plant in future years and offer our customers similar capabilities.
International Propylene Markets
International trade of propylene is limited due to the expense of transporting highly pressurized or refrigerated liquids. Most of the
propylene trade crossing international borders is in the form of derivative chemicals, usually polypropylene or acrylonitrile. Historically, the U.S. has been the incremental supplier to the world.
However, this trend is expected to move toward equilibrium in the near term due to two primary factors: (1) the shift to lighter feedstocks in the U.S. and the resulting reduction in propylene
supply and (2) the increase in Middle Eastern and Asian production facilities. Middle Eastern propylene production capacity, once nearly non-existent, is experiencing growth as the
region adds capacity through the construction of new crackers, refineries and on-purpose facilities. This incremental Middle Eastern production capacity is expected to be more than offset
by the growth in net propylene equivalent demand in Asia, despite that region's own capacity increases. As such, the North American propylene market is expected to be driven by its own domestic supply
and demand dynamics.
Propane Market Overview
Propane Overview
Propane, our sole feedstock, is a hydrocarbon that exists as a gas at atmospheric pressure and temperature. It is derived from
petroleum products during oil and natural gas processing. U.S. propane production from gas processing plants comes in the form of natural gas liquids (a mix of ethane, propane and butane) and from
refineries in the form of liquefied petroleum gas. The two primary U.S. uses for propane are retail (primarily heating in rural areas and as a motor fuel) and as a chemical feedstock (primarily in
ethylene plants). The U.S. maintains an abundant supply of natural gas and reserves have increased in recent years to 2,552 trillion cube feet of potential natural gas resources according to the U.S.
Energy Information Administration.
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Propane Supply
Propane supplies in the U.S. are derived from natural gas plants (approximately 50% in 2010), refineries (approximately 39% in 2010)
and imports (approximately 11% in 2010).
Currently,
the majority of propane in the U.S. is supplied by gas processing plants. When natural gas is produced, it is sometimes accompanied by NGLs such as ethane, propane and butane,
as well as heavier hydrocarbons such as condensate. These liquids can be separated from the natural gas by either cooling or absorption and fractionation in gas processing plants. The recent increase
in the supply of shale gas in North America has led to additional propane supply coming online with new NGL fractionation capacity. Chemical Data projects propane supply from U.S. gas processing
plants will increase at a compound annual growth rate of 2.6% from 2011 through 2015.
According
to Chemical Data, refinery produced propane is expected to grow at a relatively modest 1% compound annual growth rate over the same forecast period due to a reduced demand for
gasoline. Almost all refinery processing units generate some volumes of propane, some of which is consumed on site as fuel at the refineries. Chemical Data also projects propane imports, most of which
are from Canada, will decline slightly over the next four years as exporting countries seek higher prices in other markets.
Overall,
propane supply in the U.S. is projected by Chemical Data to grow at a compound annual growth rate of 1.4% from 2011 through 2015. The below chart shows historical and projected
propane supply in the U.S., broken out by source, for the period from 2005 through 2015:
U.S. Propane Supply by Source (thousands of barrels per day)
Source: Chemical Data
Propane Demand
The two primary U.S. uses for propane are retail (primarily heating in rural areas and as a motor fuel) and as a chemical feedstock for
ethylene plants. Propane is also exported and, with the completion of our facility, used as a feedstock for PDH processing.
The
use of propane as heating/motor fuel in the residential and commercial end-use sectors is currently the largest market for propane, totaling nearly 700 thousand
barrels per day (bpd) during the last few years, and 60% of demand in 2010. Chemical Data expects that natural gas will increasingly replace propane in some rural areas, and therefore projects demand
for propane for heating and motor fuel use to decline at approximately 1.4% per year through 2015.
Propane
consumption as an ethylene cracker feedstock is the second largest end use sector at approximately 30% of the total U.S. propane market in 2010. Ethylene cracker consumption is
forecasted by Chemical Data to remain fairly constant over the next several years, between 320 and 350 thousand bpd from 2011 to 2015.
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Exports
are expected by Chemical Data to nearly double from 109 thousand bpd in 2010 to 196 thousand bpd in 2015. Chemical Data expects that the surplus in propane
production, primarily from gas processing plants and the shale gas developments, will encourage the development of export terminals. Overall, Chemical Data expects the U.S. to convert its current even
trade balance into a net export position of 100 thousand bpd by year-end 2015. The below chart shows historical and projected propane demand in the U.S., broken out by use, for the
period from 2005 through 2015:
U.S. Propane Demand by Use (thousands of barrels per day)
Source: Chemical Data
Propane's Relation to WTI Crude Oil
The price of propane has always been closely correlated to the price of crude oil. In general, propane trades at a discount to crude
oil when compared on a per barrel basis. Propane trades at a discount to crude oil in part because the marginal consumer of propane is the
flexible ethylene cracker. Flexible ethylene cracker operators constantly evaluate production costs of ethylene based on the price of each of their alternative feedstocks. Certain feedstock
alternatives, like naphtha and natural gasoline, are crude oil based and have alternate uses in the gasoline market. However, these crude oil derived feedstocks do not contain the more valuable
fractions of the crude barrel and they require significant further processing in order to be used as a gasoline blendstock. Thus, naphtha and natural gasoline trade at a discount to crude.
Since
propane is an alternative ethylene cracker feedstock, flexible ethylene cracker operators continuously evaluate propane relative to the crude oil derived feedstock alternatives,
creating a constant price competition between the various feedstocks. This causes the price of propane to trade in a band below the price of crude on a per barrel basis. Further, since the majority of
propane is derived from natural gas production, its supply and price are partially a function of the rate of development of natural gas and the natural gas price. Natural gas supplies in the U.S. have
increased due to shale gas development and gas prices have declined as a result. The low natural gas price has led producers to concentrate their development efforts on regions rich in natural gas
liquids, such as propane, to capture additional profitability afforded by the sale of the liquids. This has led to (1) abundant supplies of both natural gas and propane, (2) a
historically low gas price relative to the price of crude oil and (3) a decrease in the price of propane relative to the price of crude. The diagram below illustrates the effects of these
dynamics on the historical price ratio between propane and WTI crude oil.
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Propane as a Multiple of Crude Oil
Source: EIA and Chemical Data
Note: Propane price expressed as a multiple of WTI crude oil price on a dollar per barrel equivalent
basis
The Propane-to-Propylene Spread
The propane-to-propylene spread is the primary driver for our profitability. The figure below illustrates the
relative price of propylene and propane to crude oil since the year 2000. Although the relationship between propane, crude oil and propylene is fairly consistent over time it is evident that the
positive trends identified above have led to a widening of this spread recently.
Propane and Propylene as a Multiple of Crude Oil
Source: EIA, Chemical Data
Note: Propane and propylene price expressed as a multiple of WTI crude oil price on a dollar per barrel equivalent
basis
In
summary, several factors are contributing to the currently favorable propane-to-propylene spread. First, the growth in production from the shale gas formations
with associated natural gas liquids (ethane, propane and butane), has led to increasingly abundant propane supplies in the U.S. This provides downward pressure on propane prices at a time when there
is upward pressure on propylene prices due to
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the
tight propylene market. Second, the prices for both propane and propylene are correlated to the price of crude oil—propane trades at a discount to crude and propylene at a premium. The
price of propane is also influenced by the price of natural gas from which it is derived. When the price of natural gas is low relative to the price of crude oil, as in the current environment, the
price of propane will be lower relative to crude oil as well. Third, because the prices of propane and propylene are correlated to the price of crude oil, the differential between their prices is
correlated to crude as well. Therefore a high absolute price of oil leads to a higher propane-to-propylene spread. Accordingly, the current high oil price, low natural gas
price environment is a significant contributor to the widening of the propane-to-propylene spread. Because the propane-to-propylene spread is the
primary driver of our gross margin, these trends are highly favorable to our profitability.
Historical Propane-to-Propylene Spread
Source EIA and Chemical Data.
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BUSINESS
Our Business
We own and operate the world's largest PDH facility that processes propane into propylene. Propylene is one of the basic building
blocks for petrochemicals that is utilized in the production of a variety of end uses including paints, coatings, building materials, clothing, automotive parts, packaging and a range of other
consumer and industrial products. We are the only independent, dedicated "on-purpose" propylene producer in North America. We are strategically located in the vicinity of the Houston Ship
Channel and within 50 miles of approximately one-half of all U.S. propylene consumption, and we have direct access to the leading global fractionation and storage hub for propane located
at Mt. Belvieu, Texas. The Houston Ship Channel represents the heaviest concentration of petrochemical and refining complexes in the world and provides us with unparalleled access and connectivity to
both customers and feedstock suppliers. Our newly-constructed facility has an annual nameplate production capacity of approximately 1.2 billion pounds of propylene. We commenced operations in
October 2010 and first achieved daily production rates at or above nameplate capacity in April 2011.
Our
facility was developed and built on the site of a former olefins production site and related infrastructure acquired from ExxonMobil in March 2008. This site was ideally suited for
the development of a PDH facility based on its existing location, infrastructure, utilities, permits, logistics and certain operating units which we were able to integrate into our new facility. By
leveraging these existing assets, we were able to save significant amounts of time and money versus those of a green-field PDH facility. Our PDH facility uses a CATOFIN dehydrogenation technology
pursuant to a fully-paid license from CB&I Lummus. CATOFIN technology has been in use for over 60 years and is reliable and commercially proven. Our plan of operation for the
remainder of the year ending December 31, 2011 is to continue to utilize our PDH facility to process propane into propylene, and to sell such propylene pursuant to customer contracts or on the
spot market. For more information about our state-of-the-art PDH facility, see "—Our Facility."
Our Products and Customers
We derive our sales from three different sources: propylene sales, hydrogen sales and C4 mix/C5+ streams sales. For more information
relating to the sales, assets, profits and losses of our business since inception, see the audited and unaudited financial statements and our unaudited pro forma consolidated financial statements
included elsewhere in this prospectus.
Contracted Propylene Sales
We are party to long-term propylene sales contracts with Dow, Total and INEOS, which use the propylene we supply in the
largest acrylic acid, polypropylene and acrylonitrile plants, respectively, in the world. Each of these customers has a significant net short position in propylene. Each contract details both minimum
offtake volumes and maximum offtake volumes as well as pricing terms. As is customary in the propylene industry, our customer contracts are based on market prices. Consistent with industry practice
for such contracts, our pricing terms with these customers reflect a specified discount to the monthly benchmark propylene price published by the Chemical Market Associates, Inc. ("CMAI").
We
deliver propylene to these customers through our integrated pipeline system, which directly connects our facility to the Dow and Total plants and, through interconnected third-party
pipelines, connects our facility to the INEOS plant and to other potential propylene customers.
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The
following table illustrates certain information regarding our propylene contracts with Dow, Total and INEOS (in thousands of pounds):
Company
Connections
Max
Min
Term
Dow
Direct
690
510
12/31/14
Total
Direct
300
220
12/31/14
INEOS
Shell
200
160
12/31/13
Total
1,190
890
% of our nameplate capacity
97
%
73
%
Spot-Market Propylene Sales
Through our integrated pipeline system, we are also able to access other consumers of propylene which we are able to supply on a spot
basis with our excess production capacity. We are located in a propylene market area that is net short of propylene and connected to major propylene consumers with the necessary logistics (feed and
offtake pipelines) already in place. We actively manage our contract and spot portfolio and have received a high degree of interest from other customers for both spot volumes, in the short term, and
longer term contracts.
We
have well-established relationships with other prominent consumers of propylene, which we have developed through active cultivation and regular interaction. We plan to
continue to advance those relationships through spot sales in the short term to enable us to optimize our contracted portfolio in the future. Since we commenced operations in October 2010, less than
1% of our sales have been in the spot market.
Hydrogen Gas Sales
As part of the PDH process, we produce commercial quantities of hydrogen. Hydrogen is primarily consumed in numerous refinery processes
including fuel desulphurization. As a result, we have entered into a ten-year contract with Praxair for the sale of our hydrogen production. Praxair has committed to buying a minimum of
93% of the hydrogen produced, which it supplies to local refineries along the upper Texas Gulf Coast. Although we anticipate the sale of 100% of our hydrogen volumes, any volumes we do not sell will
be consumed in our fuel system reducing our requirement to purchase natural gas.
An
additional benefit of our hydrogen production is that it provides a natural hedge against rising fuel costs due to the strong and positive correlation between natural gas prices and
hydrogen prices. While an increase in natural gas prices would increase our operating costs (since we consume natural gas as a fuel), such increase would be partially offset by the higher prices we
would earn through our hydrogen sales.
C4 Mix/C5+ Streams Sales
We also produce commercial quantities of C4 mix/C5+ streams. We sell the C4 mix stream to specialty chemical consumers and these
customers transport the purchased volumes from our facility by truck. The C5+ stream, which is heavy in aromatics, is transported by our pipeline to a Kinder Morgan terminal, and then sold to Texas
Aromatics for use in the chemical or gasoline markets.
Our Competitive Strengths
We believe we are well positioned to execute on our business strategies based upon the following strengths:
•
Pure-play propane-to-propylene
production.
As propane is our sole feedstock, and propylene is the primary product sold by our facility, our profitability is primarily
determined by the propane-to-propylene spread. The wider the price differential between propane and propylene, the
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larger
our gross margin. As discussed above, this spread has widened in recent years due to the currently high price of oil relative to the price of natural gas, due in part to the robust global
demand for oil and the emergence of the natural gas shale plays in North America. As the sole PDH propylene manufacturer in North America, we believe we are uniquely positioned to benefit from current
positive trends in the propane-to-propylene spread. Given the recent completion of our facility, our expected near-term capital requirements are low. With
relatively low planned maintenance capital expenditures of approximately $6 million per year in non-turnaround years, we expect to convert the enhanced profitability generated by
the current propane-to-propylene spread dynamics relatively effectively into distributable cash flow.
The
following table shows the impact of a change in the propane-to-propylene spread on our Adjusted EBITDA based on the
assumptions described herein relative to our forecasted pricing for the twelve months ending September 30, 2012.
Illustrative Sensitivity to Propane-to-Propylene Spread
(1)(2)
Pro Forma
Twelve
Months
Ended
March 31,
2011
(2)(3)
Forecasted
Twelve
Months
Ending
September 30,
2012
(2)(4)
(dollars in millions unless otherwise indicated)
Propane-to-Propylene Spread (¢/lb)
(5)
15.0
25.0
35.0
45.0
55.0
30.2
33.6
Adjusted EBITDA
52.2
172.9
293.6
414.3
535.0
226.8
276.4
Available Cash
23.3
142.8
262.3
381.7
501.2
195.8
245.2
(1)
The
price sensitivity analysis in this table is based on the assumptions described in our forecast of Adjusted EBITDA for the twelve months ending
September 30, 2012. This includes 1.2 billion pounds of propylene sold and 344.9 million gallons of propane utilized. It also assumes $30.4 million of
by-product sales, $45.2 million of fuel and utilities expense, $13.9 million of insurance and property taxes, $30.2 million of direct operating expense and other and
$11.0 million of general and administrative expense. All other customer discounts and upcharge/delivery fees are per our September 30, 2012 forecast. There can be no assurance that we
will achieve our Adjusted EBITDA forecast for the twelve months ending September 30, 2012 or any of the specified levels of Adjusted EBITDA indicated above, or that the various
propane-to-propylene spreads will achieve any of the levels specified above.
(2)
See
"Our Cash Distribution Policy and Restrictions on Distribution—Forecasted Available Cash" for a reconciliation of our Adjusted EBITDA
forecast to our net income forecast for the twelve months ending September 30, 2012 and a discussion of the assumptions underlying our forecast.
(3)
Reflects
financial results as if the plant had been fully operational during the period. Assumes realized market pricing levels during the twelve months
ended March 31, 2011 for propylene, propane, C4 mix/C5+ streams and natural gas and that all other expenses, production rates, performance ratios, customer discounts, upcharge/delivery fees and
conversion factors are consistent with the forecast for the twelve months ending September 30, 2012.
(4)
PGP
Contract Benchmark and Propane pricing forecast provided per Chemical Data as of May 29, 2011. See "Our Cash Distribution Policy and Restrictions
on Distribution—Forecasted Available Cash" for a discussion of the assumptions underlying our forecast.
(5)
Propane-to-propylene
spread calculated as (PGP Contract Benchmark Price (¢/lb)—1.2 * (Propane Price
(¢/gl) / 4.2)). This calculation assumes that it takes approximately 1.2 pounds of propane to make 1.0 pound of propylene and that there are approximately 4.2 pounds in a gallon of
propane.
•
Strategically-Located Operations.
Our Houston Ship Channel
location places us within the heaviest concentration of petrochemical and refining complexes in the world. In terms of access to both customers and feedstock supply, we believe there is no more
advantageous location for PDH propylene production anywhere in the world. The U.S. is the largest propylene consuming country and our PDH facility is located within 50 miles of approximately
one-half of all U.S. propylene consumption. The pipeline distribution system we use enables us to access not only our contracted customers (Dow, Total and INEOS) but also spot buyers of
propylene. We believe this access
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provides
us critical optionality when it is time to renew or optimize our contracted customer base. Our Houston Ship Channel location and logistics infrastructure also provide us access to the Mt.
Belvieu global fractionation and storage hub, the world's largest and most reliable source for propane, to source our propane feedstock.
•
Cost-Advantaged Facility Driven by a Proven
Technology.
Our PDH facility is the largest in the world. Our facility utilizes the CATOFIN PDH technology pursuant to a
fully-paid license from CB&I Lummus, which we believe has the best combination of capital cost, product yield and reliability. We believe we were able to benefit from the best existing
CATOFIN PDH technology utilized by other facilities outside the U.S., and we also enhanced the design with our own innovations that have resulted in energy efficiencies over the basic CATOFIN system.
•
Our PDH Facility's Characteristics are Difficult to
Replicate.
In addition to its advantageous location, the ExxonMobil facility we acquired had existing air permits, pipelines, utilities,
selected processing units and other infrastructure in place which we utilized or reconfigured for our PDH process. A developer of a green-field PDH project would face significant impediments with
respect to permitting, availability of real estate and cost considerations. Utilizing the ExxonMobil facility saved us significant amounts of time and money compared to those associated with the
development of a green-field project. We estimate that such a project would likely take at least four years to complete at a cost significantly higher than our project.
•
Dedicated "On-Purpose" Propylene
Production.
We are the only independent dedicated on-purpose propylene production facility in North America. We believe this
enables us to provide customers a more consistent, predictable propylene supply offering than conventional suppliers. Unlike refineries and ethylene crackers for which propylene is a secondary
product, propylene is our primary product. As a result, our goal is to produce a consistent output of propylene to meet customer requirements. Since propylene is our primary product and propane our
only feedstock, our output will never vary as a function of competiveness of alternative feedstock slates or decisions concerning production of other products such as ethylene or gasoline. We believe
these factors represent key advantages to our customers.
•
Contracts with Large, Prominent Customer Base.
Nearly all
of our nameplate capacity has been contracted to Dow, Total and INEOS under contracts whose maximum volumes constitute 97% of our nameplate capacity and whose minimum volumes represent 73%. The
primary Dow, Total and INEOS plants we supply produce acrylic acid, polypropylene and acrylonitrile, respectively. Each primary plant is the largest of its kind in the world. We value this derivative
diversification in our portfolio. Our contract terms range from 3.5 to 4.5 years, which is consistent with industry norms. Further, each of these customers has a significant net short position.
There also currently exists a spot market for propylene into which we sell our additional output.
•
Favorable Industry Conditions.
The current environment for
propylene production is extremely robust as end market demand continues to recover and production capacity remains constrained. We do not expect the factors leading to this dynamic to change in the
near term. The current high crude oil price and low natural gas price environment is a significant contributor to this favorable environment because of its negative impact on the economics of
propylene production from conventional sources. The proliferation of shale gas technology bringing additional natural gas and natural gas liquids to the market has greatly influenced the economics for
ethylene facility feedstocks as several steam crackers that crack only naphtha or heavy liquids (producing the co-product propylene) have become severely disadvantaged and reduced or
ceased production. Furthermore, the reduced demand for gasoline has curtailed production by refineries thereby
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reducing
the supply of propylene from refineries, causing a widening of the propane-to-propylene spread.
•
Experienced Management Team.
We employ a
highly-experienced and dedicated senior management team, with an average of over 20 years of experience in the relevant disciplines of petrochemical engineering, marketing, management and
finance. Our current executive team identified the PDH project opportunity, developed the concept and executed the plan to bring our PDH facility into operation, and through their expertise and
innovation, we believe they have since enhanced the cost and operating efficiencies of our facility. Following the closing of this offering, our executive officers and employees will own an aggregate
        % of our common units. See "Management—Executive Officers and Directors."
Our Business Strategy
Our objective is to maximize our quarterly cash distributions to our unitholders by executing the following
strategies:
•
Distribute All of the Available Cash We Generate Each
Quarter.
Our strategy is to pay out all of the available cash we generate each quarter. The board of directors of our general partner
will adopt a policy under which we will distribute all of the available cash we generate each quarter, as described in "Our Cash Distribution Policy and Restrictions on Distributions." We do not
intend to maintain excess distribution coverage for the purpose of maintaining stability or growth in our quarterly distributions or otherwise to reserve cash for future distributions. Unlike many
publicly traded partnerships that have general partners with economic interests and incentive distribution rights that entitle the general partner to receive disproportionate percentages of cash
distributions as distributions increase (often up to 50%), our general partner will have a non-economic interest and no incentive distribution rights, and will, therefore, not be entitled
to receive cash distributions. Our common unitholders will receive 100% of our cash distributions.
•
Focus on Operational Excellence, Reliable Production, Safety, and
Training.
Operational excellence, reliability and safety are our core values. One of the key factors driving our selection of the
CATOFIN technology was its reputation for excellence and its reliability. We also assembled our key management team with an intentional focus on the complement of skills and experience necessary to
deliver consistent and efficient operational results. We believe these factors, together with our strong culture of safety, should lead to dependable performance for our customers as well as safe
working conditions.
•
Continual Optimization of Facility.
The same team that
developed the important innovations leading to our effective operations is continually working to further optimize and improve the operating performance of our facility. One major focus is to identify
low cost methods to increase propylene output beyond initial nameplate capacity. We also have initiatives underway to optimize propylene yield, energy efficiency and fine tune feedstock composition to
enhance the value of the by-products output of our facility.
•
Pursue Capacity Expansion and Other Growth
Opportunities.
We intend to opportunistically pursue capacity expansion and other growth opportunities. We are currently pursuing
engineering studies to significantly expand our capacity. In addition, we intend to evaluate and pursue acquisition and development opportunities where we believe we can enhance our operating
platform.
•
Actively Manage Customer Portfolio.
We believe that our
current customer portfolio represents an attractive composition of customers that serve diverse end-use markets and that are prominent industry members. We also have
well-established relationships with other consumers of propylene developed through active cultivation and regular interaction. We plan to build on our existing
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relationships
and continue to advance those relationships through spot sales in the short term and additional contracts in the long term if we are successful in expanding the facility's capacity.
Our History
Our senior management team has been affiliated with Lindsay Goldberg, our majority financial sponsor, since 2000 and has worked with
them on a variety of petrochemical and midstream investment projects. The concept for the PDH facility was developed in 2003 and the ExxonMobil Houston olefins plant was identified as the best
location and platform for the project in 2005. An agreement to acquire the olefins plant from ExxonMobil was signed in December 2006 at which time we commenced front end engineering design work for
the project. Our predecessor closed on the purchase of the ExxonMobil olefins plant in March 2008 and commenced demolition of certain facilities and construction of the new facility shortly
thereafter. Mechanical completion of the construction phase of the project was completed in July 2010 at which time facility commissioning
commenced. Initial production commenced in October 2010, and we first achieved daily production rates at or above nameplate capacity in April 2011.
We
are a Delaware limited partnership formed in June 2011. In connection with this offering, Propylene Holdings will contribute our predecessor to us in exchange
for                        
common units, the right to receive the net proceeds from this offering and the right to receive additional common units, a cash distribution, or both based upon whether or not the underwriters
exercise in whole or in part the option to purchase additional common units. Immediately thereafter, Propylene Holdings will distribute
all                        common units, its right to receive net
proceeds of this offering and its right to receive to receive additional common units, a cash distribution or both, based upon whether or not the underwriters exercise in whole or in part their option
to purchase additional common units, to our sponsors and their affiliates, our executive officers and certain of our employees. Our general partner will own a non-economic general partner
interest and will not be entitled to receive distributions therefrom.
Our Sponsors
Lindsay Goldberg is a private equity investment firm with approximately $10 billion of capital under management that focuses on
partnering with entrepreneurial management teams and closely held and family-owned businesses. Lindsay Goldberg has a team of 25 highly talented and experienced investment professionals who have
successfully invested over $5.6 billion of equity capital in 27 portfolio companies. Lindsay Goldberg typically invests in companies in North America and Western Europe in the manufacturing,
energy, financial and business services industries. Lindsay Goldberg has a much longer time horizon than most other private equity investment firms because of an investment structure that permits
ownership for up to 20 years. In addition to its long-term focus, Lindsay Goldberg also identifies transformative follow-on investments and acquisitions in connection
with its portfolio companies as those opportunities arise. Lindsay Goldberg has had a close relationship with our management since 2000.
York
Capital is an event-driven global investment firm with approximately $17 billion of capital under management. The firm focuses on a variety of strategies, including private
equity investing. Established in 1991, York Capital has a team of over 150 individuals, including approximately 50 investment professionals, and has offices in New York, Washington DC, London and Hong
Kong. York Capital's investment professionals possess multi-disciplinary knowledge and relationships, spanning industry sectors, geographies, business cycles and public and private equity and debt
markets. Over the past 19 years, York has focused on looking beyond market cycles, trends and other temporary factors to identify companies around the world with long-term value
potential.
Lindsay
Goldberg and York Capital have been instrumental in our management team's effort to implement the optimal operating and financial platform for the project. Collectively, they
will continue to own a majority of our common units upon completion of this offering and therefore will have a continuing incentive to support and promote the successful implementation of our business
plan. Following the
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closing
of this offering, Lindsay Goldberg and York Capital will indirectly own 80% and 20% interests in our general partner
and                        and                
        common units, respectively.
Our Facility
Our state-of-art PDH facility is a world-scale facility that is currently the largest of its kind in the world.
It is located on our 67-acre site in the vicinity of the Houston Ship Channel that was formerly the site of an ExxonMobil olefins plant. Our facility commenced operations in October 2010
and first achieved daily production rates at or above nameplate capacity in April 2011. Our newly-constructed facility has an annual nameplate production capacity of approximately 1.2 billion
pounds of propylene. At times our facility has produced propylene at rates approximately 10% in excess of the nameplate capacity. We believe that our PDH facility has the capability to produce above
nameplate capacity on a sustained basis as our facility optimization proceeds. We believe the former ExxonMobil site was ideally suited for the development of our project based on its location,
infrastructure, utilities, permits, logistics, and certain operating units we were able to utilize in the new process. As part of our purchase of the site, we acquired all major environmental and
regulatory permits, and we were able to take advantage of these permits through amendments to reflect the specifications of the PDH process. Management estimates that utilization of the ExxonMobil
olefins plant cost significantly less time and money than would have been required for the development of a green-field PDH facility.
We
believe our location in the vicinity of the Houston Ship Channel provides unparalleled access and connectivity to both our existing and prospective customers and our feedstock
suppliers. We are located within 50 miles of approximately one-half of all U.S. propylene consumption. We also have access through third parties to the leading global fractionation and
storage hub for propane, our feedstock, located at Mt. Belvieu, Texas, approximately 30 miles from our facility.
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The following is an illustration of the extensive pipeline system connected to our facility which makes our location uniquely suited to the business of propylene
production, followed by a table indicating pipeline system ownership:
Pipeline
Ownership
Pipeline
Ownership
Propane
Enterprise
Coker Gas (unutilized)
Lyondell
Propane (unutilized)
ETP—Regency Midstream
FCC Gas (unutilized)
Valero
PGP
PetroLogistics
Hydrogen Delivery
Praxair
CGP
PetroLogistics
Nitrogen Delivery
Praxair
C4 Mix Stream (inactive)
PetroLogistics
Natural Gas
Kinder Morgan
C5+ Stream
PetroLogistics
Our PDH Technology
Propane dehydrogenation is a straightforward chemical process that involves refining propane by removing two atoms of hydrogen
(H
2
) from one molecule of propane (C
3
H
8
) to produce one molecule of propylene (C
3
H
6
). The technology that is used to remove hydrogen from
the propane feedstock in order to produce propylene is the CATOFIN process, licensed by CB&I Lummus to us on a non-exclusive and perpetual basis. Our current license requires no further
payment to CB&I Lummus to the extent we produce at our nameplate capacity. To the extent we increase our operational capacity, we are responsible for additional one-time payments to CB&I
Lummus equal to $22.00 per metric ton of additional capacity above the current nameplate. We selected this technology because of its straightforward design, its record of high reliability and expected
low operating costs. Further, our team developed and implemented a variety of energy cost-saving processes which improved upon the typical CATOFIN design.
The
CATOFIN process uses fixed-bed reactors to convert propane to propylene, recycling unconverted propane back to the reactors in order to optimize conversion, selectivity
and energy consumption. During the dehydrogenation process, propane feed and propane recycle are vaporized, heated and dehydrogenated across the catalyst under a vacuum. After the dehydrogenation
cycle, the catalyst is then regenerated with hot air. The hot air is then evacuated and the dehydrogenation sequence begins again. The reactor effluent is sent to the purification section where, using
compression,
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refrigeration
and distillation steps, the various hydrocarbons are separated into fuel gas and our products: propylene, C4 mix/C5+ streams and hydrogen.
The
CATOFIN propane dehydrogenation process is illustrated below:
Process Flow Diagram
Thirty-one
CATOFIN (or CATADIENE as the process is known when producing butadiene) facilities have been licensed and built since 1944 to produce iso-butylene,
butadiene, or propylene. Our facility is the fourth CATOFIN unit to produce propylene. The first propylene unit came on-line almost 20 years ago in Belgium.
Although
our facility relies on the typical CATOFIN process design, we also implemented a number of energy cost savings process innovations. For example, the facility produces
regeneration air using gas turbines instead of the typical compressor/heater configuration. Also, the hydrogen by-product is captured and purified by a pressure swing absorption unit then
sold and consumed in neighboring refineries.
We
have also designed and constructed the facility with the features necessary for high reliability. These include a state-of-the-art Honeywell
Experian distributive control system, redundant/independent electrical power supplies, auxiliary steam production, redundant pumps for critical operations, redundant compressors where practical,
redundant dryers, and even redundant fractionation towers for some operations.
Feedstock Supply
Propane is our sole feedstock. Propane is produced by extraction and separation from natural gas production streams via gas processing
facilities and fractionation. It is also produced as a by-product of refineries. Our propane is provided to us by Enterprise under a multi-year contract with market-based
pricing consistent with industry standards. Under the propane supply contract, we pay a market price based on the published high-low monthly average price for propane. The initial term of
the propane supply contract is for a period of five years (expiring in 2015). Thereafter, the contract is automatically renewed
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for
successive three year terms unless cancelled by either party giving one year prior written notice of cancellation. Enterprise delivers the propane we purchase to our facility through a connection
to
Enterprise's propane pipeline system. The Enterprise propane pipeline system gathers propane from various natural gas processing and fractionation facilities and refineries located in the region and
is connected to the leading global fractionation and storage hub for propane at Mt. Belvieu, Texas, where additional suppliers store and transport propane as well.
We
believe that our supply strategy meets our expected feedstock requirements for the foreseeable future. However, if we choose not to or are unable to renew our Enterprise contract, we
believe that, given our location, alternative propane supplies will be readily available from other suppliers in order to meet our production requirements.
See
"Risk Factors—Risks Related to our Business—Our results of operations, financial condition and ability to make cash distributions may be adversely affected by
the supply and price levels of propane."
Competition
Management estimates over 30 different companies produce propylene in North America. We consider companies with net long positions in
PGP and CGP to be our direct competitors, including Enterprise, Chevron Phillips, Lyondell Basell, ExxonMobil Chemical, Shell Chemical, Flint Hills and the Williams Companies. Most of our competitors
have significantly greater financial and other resources than us and are engaged on a national or international basis in many segments of the petroleum products business including refining,
transportation and marketing, on a scale substantially larger than ours. In addition, we may face competition from captive propylene production facilities operated by consumers of propylene. For
example, Dow Chemical recently announced its plan to build its own on-purpose propane dehydrogenation propylene facility for start-up in 2015. Dow also announced that it is
considering building a second propylene facility with a possible start-up date in 2018.
Competition
in our industry is determined by price considerations, logistics and, to some extent, stability of supply. Our ability to compete effectively depends on our responsiveness to
customer needs, our pipeline connectivity to customer facilities and our ability to provide reliable supply at competitive prices. We are the only independent dedicated on-purpose
propylene production facility in North America. We believe this is a significant advantage because it enables us to provide customers a more consistent, predictable supply offering than conventional
suppliers. However, it is possible that a competitor could construct an on-purpose propylene facility in future years and offer our customers similar capabilities.
See
"Risk Factors—Risks Related to our Business—We face competition from propylene producers."
Environmental Matters
The petrochemical business is subject to extensive and frequently changing federal, state and local laws and regulations relating to
the protection of human health, workplace safety and the environment. These laws, their underlying regulatory requirements and their enforcement impact our business in a number of respects by
imposing:
•
The need to obtain, renew and comply with permits, licenses and authorizations;
•
Regulatory controls such as monitoring and recordkeeping requirements;
•
Requirements to install enhanced or additional pollution controls;
•
Fines and penalties for failing to comply with requirements of applicable laws or permits; and
•
Liability for the investigation and remediation of contaminated soil or groundwater at current and former facilities and
off-site waste disposal locations.
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Environmental
laws and regulations change regularly and any changes that result in more stringent requirements could affect our operations and financial position adversely. While we
believe that we are in substantial compliance with currently applicable environmental laws and regulations and that continued compliance with existing requirements would not have a material adverse
impact on us or our business, there is no assurance that this trend will continue in the future. Failure to comply with environmental laws and regulations may result in the assessment of
administrative, civil and criminal fines and penalties and the imposition of injunctive relief.
Our
operations are subject to the requirements of the OSHA and comparable state statutes that regulate the protection of the health and safety of workers. In addition, the OSHA hazard
communication standard requires that we maintain information about hazardous materials used or produced in our operations and that we provide this information to employees, state and local government
authorities and local residents. Failure to comply with OSHA requirements, including general industry standards, record keeping requirements and monitoring of occupational exposure to regulated
substances could reduce our ability to make distributions to our unitholders if we are subjected to fines or significant compliance costs.
Federal Clean Air Act
The federal Clean Air Act and its implementing regulations as well as the corresponding state laws and regulations that regulate
emissions of pollutants into the air affect our operations both directly and indirectly. We are required to comply with federal and state air permitting regulations or emissions control requirements
relating to specific air pollutants. Some or all of the standards promulgated pursuant to the federal Clean Air Act, or any future standards which may be promulgated, may require the installation of
controls or changes to our operations. If new controls or changes to operations are needed, then the costs could be material.
The
federal Clean Air Act requires us, in certain situations, to obtain various construction and operating permits and to incur capital expenditures to install certain air pollution
control devices at our PDH facility. Some of the applicable programs are the various general and specific source standards under the National Emission Standard for Hazardous Air Pollutants, New Source
Performance Standards, and New Source Review. We may incur substantial capital expenditures to maintain compliance with these and other air emission regulations.
In
addition, the EPA adopted rules to require the development of a Risk Management Plan to prevent the accidental release of hazardous substances that could harm public health or the
environment.
Some
facilities in Texas have obtained permits from the Texas Commission on Environmental Quality ("TCEQ") that are at risk from overfilling by the EPA. Specifically, on July 15,
2010, the EPA formally disapproved the flexible permits program submitted by the TCEQ in 1994 for inclusion in its Clean Air
Act implementation plan. The EPA determined that Texas' flexible permit program did not meet several requirements under the federal Clean Air Act. Because we did not use flexible permits, our
facility's operations were not affected by EPA's actions. However, the EPA has also formally disapproved the TCEQ pollution control standard permit. This action could require companies to undergo
conventional permitting for pollution control equipment. Industry groups and others have brought suit against the EPA for these actions. The EPA has also objected to several Title V permits in Texas
and other states. Environmental groups have filed a notice of intent to sue the EPA, seeking to require the EPA to assume control of all pollution control permits from TCEQ. All of these developments
have created substantial uncertainty regarding existing and future permitting in Texas. The EPA's challenges to the Texas permitting system created uncertainties about the authority of TCEQ to issue
permits for air emissions which could have a material adverse effect on our operations.
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Climate Change
Currently, legislative and regulatory measures to address greenhouse gas emissions (including CO
2
, methane and nitrous
oxides) are in various phases of discussion or implementation. At the federal legislative level, Congress could adopt some form of federal mandatory greenhouse gas emission reduction laws, although
the specific requirements and timing of any such laws are uncertain at this time. In June 2009, the U.S. House of Representatives passed a bill that would create a nationwide
cap-and-trade program designed to regulate emissions of CO
2
, methane and other greenhouse gases. A similar bill was introduced in the U.S. Senate, but was not voted
upon. Congressional passage of such legislation does not appear likely at this time, though it could be adopted at a future date. It is also possible that Congress may pass alternative climate change
bills that do not mandate a nationwide cap-and-trade program and instead focus on promoting renewable energy and energy efficiency.
In
the absence of congressional legislation curbing greenhouse gas emissions, the EPA has begun to regulate GHG emissions pursuant to the CAA based on the April 2007 United States
Supreme Court ruling in Massachusetts, et al. v. EPA that the EPA has authority to regulate carbon dioxide emissions. The GHG regulations that EPA has issued following exercising the authority
affirmed by Massachusetts v. EPA include: (1) the December 2009 "endangerment finding" determining that air pollution from six GHGs endangers public health and welfare, and that mobile sources
cause or contribute to that air pollution; (2) the May 2010 "Tailpipe Rule," issued jointly with the National Highway Traffic Safety Administration setting GHG emission and fuel economy
standards for new light-duty vehicles; (3) the April 2010 "Timing Rule," concluding that stationary source regulation under Titles I and V of the CAA (involving Prevention of
Significant Deterioration regulations and operating permits, respectively) must regulate GHG emissions beginning when such emissions are subject to controls under the mobile source provisions of the
Act; (4) the June 2010 "Tailoring Rule," temporarily exempting small stationary sources from PSD and Title V requirements through regulations modifying
the Act's emissions thresholds; and (5) the December 2010 "SIP Call" rule, finding 13 State Implementation Plans ("SIPs") inadequate because they did not regulate GHGs from stationary sources,
and directing those States to correct the inadequacies or face federalization of their permitting programs. The first four rules have been challenged in consolidated litigation in the D.C. Circuit.
However, the Court refused to stay the rules while the challenge is pending.
In
addition to the above rules, the EPA has stated that it intends to propose standards for power plants in July 2011 and for refineries in December 2011 and will issue final standards
in May 2012 and November 2012, respectively. Finally, in December 2010, the EPA issued its plan to update pollution standards for fossil fuel power plants and petroleum refineries.
The
EPA's endangerment finding, the Greenhouse Gas Tailoring Rule and certain other greenhouse gas emission rules have been challenged and will likely be subject to extensive litigation.
In addition, a number of Congressional bills to overturn the endangerment finding and bar the EPA from regulating greenhouse gas emissions, or at least to defer such action by the EPA under the
federal Clean Air Act, have been proposed in the past, although President Obama has announced his intention to veto any such bills if passed.
In
2007, the U.S. Supreme Court decided that carbon dioxide is an air pollutant which is subject to regulation under the federal Clean Air Act for the purposes of vehicle emissions.
Similar lawsuits have been filed seeking to require the EPA to regulate carbon dioxide emissions from stationary sources, such as petrochemical plants like our PDH facility. The implementation of EPA
regulations and/or the passage of federal or state climate change legislation will likely result in increased costs to (1) operate and maintain our facilities, (2) install new emission
controls on our facilities and (3) administer and manage any greenhouse gas emissions program. Increased costs associated with compliance with any future legislation or regulation of greenhouse
gas emissions, if it occurs, may have a material adverse effect on our results of operations, financial condition and ability to make cash distributions.
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Clean Water Act
The federal Clean Water Act, or CWA, affects our operations by prohibiting discharges of pollutants into, or impacting, navigable
waters except in compliance with permits issued by federal and state governmental agencies. Regular monitoring, reporting requirements and performance standards are preconditions for the issuance and
renewal of permits. The federal government has delegated authority to Texas to manage the CWA permit and enforcement process. The
CWA and comparable state statutes provide for civil, criminal, and administrative penalties for the unauthorized discharge of pollutants into wetlands or other waters and impose liability on parties
responsible for those discharges for the cost of cleaning up any environmental damage or natural resource damages resulting from the release. Our business maintains waste water and storm water
discharge permits as required under the National Pollutant Discharge Elimination System program and the Texas Pollutant Discharge Elimination System program. Under the CWA, onshore facilities that
could reasonably be expected to cause substantial harm to the environment by discharging pollutants to navigable waters are required to maintain plans for spill prevention, preparedness and response.
We have implemented internal programs to oversee our compliance efforts and we believe that we are in substantial compliance with the CWA. In the future, changes to the CWA, state law, or state and
federal regulations could require us to make additional capital expenditures or incur additional costs in order to comply with new rules and could have a significant effect on our profitability.
Emergency Planning and Community Right-to-Know Act
The Emergency Planning and Community Right-to-Know Act, or EPCRA, requires facilities to report certain
chemical inventories to local emergency planning committees and response departments. We believe that we are in substantial compliance with our EPCRA reporting requirements.
Resource Conservation and Recovery Act (RCRA)
Our operations are subject to the RCRA requirements for the generation, management, and disposal of hazardous wastes. These
requirements entail certain costs. When feasible, materials that would be subject to RCRA are recycled instead of being disposed of. Though we believe that we are in substantial compliance with the
existing requirements of RCRA, we cannot assure you that compliance with existing and future RCRA requirements will not entail costs that are significant.
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)
CERCLA and comparable state laws impose liability, without regard to fault or the legality of the original conduct, on certain classes
of persons who are considered to be responsible for the release of a hazardous substance into the environment. These persons include the owner or operator of the site where the release occurred and
companies that disposed or arranged for
the disposal of the hazardous substances. Under CERCLA, these persons may be subject to joint and several liability for the costs of cleaning up the hazardous substances that have been released into
the environment, for damages to natural resources and for the costs of certain health studies. CERCLA also authorizes the EPA, and in some instances third parties, to act in response to threats to the
public health or the environment and to seek to recover from the responsible persons the costs they incur. It is possible for neighboring landowners and other third parties to file claims for personal
injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment. In the course of our ordinary operations, we may generate substances that fall
within CERCLA's definition of a hazardous substance, and as a result, we may be jointly and severally liable under CERCLA for all or part of the costs required to clean up sites at which those
hazardous substances have been released into the environment.
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Under
CERCLA, we could be required to remove or remediate previously disposed wastes, including wastes disposed of or released by prior owners or operators, to clean up contaminated
property, including groundwater contaminated by prior owners or operators.
Safety, Health and Security Matters
Our extensive safety program includes, among other things, (1) employing two full-time safety professionals,
(2) implementing policies and procedures to protect employees and visitors at our facility (3) conducting routine safety tests on our facilities and (4) ensuring that each
employee undergoes the required safety, hazard and task training.
Employees
To carry out our operations, our general partner will employ approximately 90 employees. Our employees are not represented by a labor
union and are not covered by a collective bargaining agreement. We believe that we have good relations with our employees.
In
addition to performing services for us, certain of our employees and executive officers perform management and administrative services for the olefins business of PL Midstream, an
entity that is beneficially owned by Lindsay Goldberg, pursuant to a shared services agreement. PL Midstream will reimburse our general partner for its reasonable costs and expenses incurred in
connection with the provision of management and administrative services to it. See "Certain Relationships and Related Party Transactions—PL Midstream Services Agreement."
Properties
We own one facility, our PDH facility, which is located in Houston, Texas. Our executive offices are located in Houston, Texas, where a
number of our senior executives work. We believe that our owned PDH facility, together with our leased executive office, are sufficient for our needs.
Legal Proceedings
We are, and will continue to be, subject to litigation from time to time in the ordinary course of our business. We are not party to
any pending legal proceedings that we believe will have a material adverse effect on our business, and there are no existing legal proceedings where we believe that the reasonably possible loss or
range of loss is material.
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MANAGEMENT
Our Management
Our general partner manages our operations and activities subject to the terms and conditions specified in our partnership agreement.
Our general partner will be owned by our sponsors. The operations of our general partner in its capacity as general partner are managed by its board of directors. Actions by our general partner that
are made in its individual capacity will be made by our sponsors as the owners of our general partner and not by the board of directors of our general partner. Our general partner is not elected by
our unitholders and will not be subject to re-election on a regular basis in the future. The executive officers of our general partner will manage our day-to-day
activities consistent with the policies and procedures adopted by the board of directors of our general partner.
Limited
partners will not be entitled to elect the directors of our general partner or directly or indirectly participate in our management or operation. Our partnership agreement
contains various provisions which replace default fiduciary duties under applicable law with contractual corporate governance standards. See "The Partnership Agreement." Our general partner will be
liable, as a general partner, for all of our debts (to the extent not paid from our assets), except for indebtedness or other obligations that are made expressly non-recourse to it. Our
general partner therefore may cause us to incur indebtedness or other obligations that are non-recourse to it. It is expected that our new credit facilities will be
non-recourse to our general partner.
Whenever
our general partner makes a determination or takes or declines to take an action in its individual, rather than representative, capacity, it is entitled to make such
determination or to take or decline to take such other action free of any fiduciary duty or obligation whatsoever to us, any limited partner or assignee, and it is not required to act in good faith or
pursuant to any other standard imposed by our partnership agreement or under Delaware law or any other law. Examples include the exercise of its call right, its voting rights and its determination
whether or not to consent to any merger or consolidation of the partnership. Actions by our general partner that are made in its individual capacity will be made by our sponsors, the owners of our
general partner, and not by its board of directors.
As
a publicly traded partnership, we qualify for, and intend to rely on, certain exemptions from the NYSE's corporate governance requirements, including the requirement that a majority
of the board of directors of our general partner consist of independent directors and the requirement that the board of directors of our general partner have a nominating/corporate governance
committee that is composed entirely of independent directors. While not required by NYSE rules, the board of directors of our general partner intends to have a compensation committee, however, our
compensation committee may not be composed entirely of independent directors.
As
a result of these exemptions, our general partner's board of directors will not be comprised of a majority of independent directors, our general partner's compensation committee may
not be comprised entirely of independent directors and our general partner's board of directors does not currently intend to establish a nominating/corporate governance committee. Accordingly,
unitholders will not have the same protections afforded to equityholders of companies that are subject to all of the corporate governance requirements of the NYSE.
Board Committees
As required by our partnership agreement, the board of directors of our general partner will maintain a conflicts committee, comprised
of independent directors that will determine if the resolution of a conflict of interest with our general partner or its affiliates is fair and reasonable to us. Any matters approved by the conflicts
committee will be conclusively deemed to be fair and reasonable to us, approved by all of our partners and not a breach by our general partner of any duties it may owe us or our unitholders. The
members of the conflicts committee may not be directors, officers or employees of our general partner or
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any
person controlling our general partner, including Lindsay Goldberg and York Capital, and must meet the independence standards established by the NYSE and the Exchange Act to serve on an audit
committee of a board of directors, along with other requirements in our partnership agreement. Any matters approved by the conflicts committee in good faith will be conclusively deemed to be fair and
reasonable to us, approved by all of our partners and not a breach by our general partner of any duties it may owe us or our unitholders. In addition, as required by the Exchange Act and the listing
standards of the NYSE, the board of directors of our general partner will maintain an audit committee comprised of at least three independent directors. The audit committee may also serve as the
conflicts committee.
The
board of directors of our general partner will have at least one independent director to serve on the audit committee prior to our units being listed for trading on the NYSE, at
least one additional independent directors to serve on the audit committee within 90 days after listing of our units on the NYSE and a third independent director to serve on the audit committee
not later than one year following the listing of our units on the NYSE.
This
committee will oversee, review, act on and report to our board of directors of our general partner on various auditing and accounting matters, including: the selection of our
independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the performance of our independent accountants and our accounting practices. In addition, the
audit committee will oversee our compliance programs relating to legal and regulatory requirements.
Upon
completion of this offering, the compensation committee will operate pursuant to a written charter. This committee will establish salaries, incentives and other forms of
compensation for officers and other employees. The compensation committee will also administer our incentive compensation and benefit plans.
Executive Officers and Directors
We are managed and operated by the board of directors and executive officers of our general partner. In this prospectus, we refer to
the executive officers of our general partner as "our executive officers." All of our executive officers below, with the exception of Ms. Spurlin and Mr. Jeans, will devote all of their
business time and effort to our business. Ms. Spurlin and Mr. Jeans will divide their working time between the management of PL Midstream and the management of us.
The
following table sets forth the names, positions and ages (as of June 20, 2011) of our executive officers and directors:
Name
Age
Position with Our General Partner
David Lumpkins
56
Executive Chairman and Director
Nathan Ticatch
45
President, Chief Executive Officer and Director
Sharon Spurlin
46
Senior Vice President and Chief Financial Officer
Hank Jeans
58
Senior Vice President—Commercial
John Parkinson
49
Vice President—Operations
Randy Miller
45
Vice President—Engineering
Alan E. Goldberg
56
Director
Lance L. Hirt
44
Director
Zalmie Jacobs
45
Director
Robert D. Lindsay
56
Director
Andrew S. Weinberg
37
Director
David Lumpkins,
co-founder of our predecessor, is responsible for formulating and executing our business strategy as well as
providing general executive oversight of our managerial and commercial activities. Mr. Lumpkins has had a key role since the initial conception in the development and execution of the plan to
develop the PDH facility now owned and operated by the Partnership. Mr. Lumpkins has
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been
affiliated with Lindsay Goldberg since 2000, during which time he has worked on a number of investment opportunities in the petrochemical and energy mid-stream industries including
Lindsay Goldberg's investment in PL Midstream which he helped initiate and served as Chairman. Prior to his affiliation with Lindsay Goldberg, Mr. Lumpkins worked in the investment banking
industry for 17 years principally for Morgan Stanley and Credit Suisse. In 1995, Mr. Lumpkins opened Morgan Stanley's Houston office and served as head of the firm's southwest region.
Mr. Lumpkins' extensive experience in the petrochemical, energy midsteam and finance industries adds significant value to the board of directors of our general partner.
Nathan Ticatch,
co-founder of our predecessor, is responsible for formulating and executing our business strategy and for
managing the operations and commercial activities of the Partnership. Mr. Ticatch is the originator of the PDH project idea and has had a key role in the development and execution of the plan
to develop the PDH facility now owned and operated by the Partnership. Mr. Ticatch has been affiliated with Lindsay Goldberg since 2000, during which time he has worked on a number of
investment opportunities in the petrochemical and energy mid-stream industries including Lindsay Goldberg's investment in PL Midstream which he helped initiate and most recently served as
Vice-Chairman. Prior to his affiliation with Lindsay Goldberg, Mr. Ticatch worked in the petrochemical and logistics industry for GATX Terminals and ICI Americas.
Mr. Ticatch's record of innovation in the petrochemical and logistics industries provides the critical capabilities that the board of directors of our general partner needs to manage our
business.
Sharon Spurlin
has served as Senior Vice President and Chief Financial Officer of our predecessor since 2009. Ms. Spurlin also
serves in that capacity for PL Midstream, another investment of Lindsay Goldberg related to the energy and petrochemical logistics sector. Ms. Spurlin is responsible for overseeing our
accounting and financial reporting functions, business banking relations, treasury, and information systems. From September 2002 to June 2009, Ms. Spurlin served as the Assistant Treasurer for
Plains All American Pipeline, L.P., where she also started up their Internal Audit group. Prior to joining Plains All American Pipeline, L.P., Ms. Spurlin held the roles of
Controller and Director of Financial Analysis for American Ref-Fuel Company and was an audit manager for a public accounting firm.
Hank Jeans
has served as the Senior Vice President—Commercial for our predecessor since inception. He has also served in that
capacity for PL Midstream, another investment of Lindsay Goldberg related to the energy and petrochemical logistics sector. Mr. Jeans is responsible for managing our business development and
commercial activities. Prior to his affiliation with Lindsay Goldberg, Mr. Jeans worked in the crude oil, natural gas liquids and petrochemical industry for 30 years, most recently at
Williams Olefins (from 1999 to 2004), where he was Director of NGL Feedstocks and Olefins. His responsibilities in that capacity included the acquisition of feedstocks and the marketing of ethylene,
propylene and other olefins co-products. Prior to his employment with Williams Olefins, Mr. Jeans spent 16 years with Union Texas Petroleum Corporation where he held various
management positions.
John Parkinson
has served as the Vice President—Operations of our predecessor since 2010. In 2008 and 2009
Mr. Parkinson served as Operations Manager. Mr. Parkinson is the PDH facility site manager and is responsible for managing all the operations of our PDH facility. Mr. Parkinson
has worked in the petrochemical industry for over 26 years holding various business and operating positions of increasing responsibility. Prior to joining our predecessor in June 2008,
Mr. Parkinson worked for 12 years for Lyondell Chemical Company, where he held various roles in the business and manufacturing groups with the most recent assignments as the specialty
polymers business manager and plant manager at the Clinton, Iowa facility. Prior to Lyondell, Mr. Parkinson worked for Chevron Chemical Company for eight and a half years and Allied Signal for
four years in various manufacturing roles.
Randy Miller
has served as the Vice President—Process Engineering of our predecessor since 2007. Mr. Miller has been
instrumental in the design and development of the PDH facility since the commencement of the front end engineering design work in 2007. Mr. Miller has worked in the
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petrochemical
industry for over 20 years. Prior to joining our predecessor, he served as a Senior Process Consultant at Barnes and Click Inc. from 1999 to 2006 where his last assignment
was to advise us with respect to the development of the PDH project concept. Prior to Barnes and Click he worked for Westlake Chemical Company from 1995 to 1999 and for Dow Chemical from 1988 to 1995.
He is a Registered Engineer in the State of Texas.
Alan E. Goldberg
was appointed as a director of our general partner in June 2011. Mr. Goldberg co-founded Lindsay
Goldberg in 2001. Previously, he served as Chairman and Chief Executive Officer of Morgan Stanley Private Equity from 1998 to 2001. Mr. Goldberg joined Morgan Stanley in 1978 and played an
integral role in founding its Private Equity business in 1984 and building the firm's highly successful global private equity business. Mr. Goldberg holds a J.D. from Yeshiva University, an
M.B.A. from the New York University Graduate School of Business, and a B.A. in philosophy and economics from New York University. Mr. Goldberg is a director of Brightstar Corp., FAPS
Holdings, Inc., Maine Beverage Company, LLC, PL Olefins LLC, Continental Energy Systems LLC, Intermex Holdings, Inc., The Brock Group, Inc.,
Rosetta LLC, PL Propylene LLC, RECON Holdings III Inc., Ambulatory Services of America, Inc., Crane & Co., Inc., Scandza AS, PSC, LLC, Panadero
Aggregates Holdings, LLC, Aviv REIT, Inc. and Pacific Architects and Engineers Incorporated. He also serves as a Trustee of Yeshiva University. Mr. Goldberg brings senior
leadership and global strategic expertise to the Board. His role at Lindsay Goldberg allows him to bring significant business development and merger and acquisition experience to the board of
directors of our general partner.
Lance L. Hirt
was appointed as a director of our general partner in June 2011. Mr. Hirt is a partner at Lindsay Goldberg. Prior to
joining Lindsay Goldberg in 2003, Mr. Hirt was a Managing Director at Morgan Stanley where he spent nine years in the mergers and acquisitions department advising a broad range of general
industrial clients. Mr. Hirt began his career practicing law at Sullivan & Cromwell in New York and was subsequently a management consultant at Touche Ross & Co.
Mr. Hirt received his M.B.A. and J.D. from Harvard University and graduated from Yeshiva College with a B.A. in economics. He currently serves as a Director of Brightstar Corp., PL
Olefins LLC, Brock Holdings, Inc., PL Propylene LLC, RECON Holdings III Inc., Scandza AS, PSC, LLC, Trygg Pharma Holding AS and Panadero Aggregates
Holdings, LLC. He also serves as a Trustee of Yeshiva University in New York City. Mr. Hirt brings extensive private equity experience and mergers and acquisition expertise to the board
of directors of our general partner.
Zalmie Jacobs
was appointed as a director of our general partner in June 2011. Mr. Jacobs joined York Capital in March 2008 and is
Co-Head of Private Equity at York Capital and a partner of the firm. Prior to joining York Capital, for eleven years Mr. Jacobs co-led an investment group at Leucadia
National Corporation. Previously, Mr. Jacobs worked as a Vice President at The Carlyle Group. Prior to that, he was a corporate attorney at Davis, Polk & Wardwell. Mr. Jacobs
received a B.A. from Columbia College and a J.D. from Harvard Law School. Mr. Jacobs' knowledge of our business and extensive investment experience make him a valuable addition to the board of
directors of our general partner.
Robert D. Lindsay
was appointed as a director of our general partner in June 2011. Mr. Lindsay co-founded Lindsay
Goldberg in 2001. Previously, he was the managing general partner of Bessemer Holdings and, prior to joining Bessemer Holdings in 1991, he was a managing director at Morgan Stanley Private Equity,
where he played an integral role in founding the business in 1984. Mr. Lindsay holds a B.A. in English and American literature and language from Harvard College and an M.B.A. from Stanford
University. He is President and Chief Executive Officer of Bessemer Securities LLC as well as a director of The Bessemer Group, Incorporated and its subsidiary banks, including Bessemer Trust
Company, N.A. Mr. Lindsay serves as a director of Brightstar Corp., Pike Electric Corporation, FAPS Holdings, Inc., Maine Beverage Company, LLC, PL Olefins LLC, Continental
Energy Systems LLC, Intermex Holdings, Inc., The Brock Group, Inc., Bell Nursery Holdings, LLC, Rosetta LLC, PL Propylene LLC, Ambulatory Services of
America, Inc., Crane & Co., Inc., Scandza AS, PSC, LLC, Panadero Aggregates Holdings, LLC, Aviv REIT, Inc. and Pacific Architects and Engineers
Incorporated. He also serves as a
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Trustee
of the Cold Spring Harbor Biological Laboratory and St. Paul's School in Concord, New Hampshire. Mr. Lindsay was selected to serve on the board of directors of our general
partner due to the perspective and experience he brings as one of our largest stockholders with Lindsay Goldberg, as well as his experience with the venture capital industry.
Andrew S. Weinberg
was appointed as a director in June 2011. Mr. Weinberg is a partner at Lindsay Goldberg, which he joined in
2003. Previously, he was an associate at Goldman, Sachs & Co. in the Principal Investment Area. Mr. Weinberg began his career at Morgan Stanley in the mergers and acquisitions
department in New York and in the leveraged finance group in London. Mr. Weinberg holds an M.B.A. from Stanford University, and an A.B. in Economics and History from Dartmouth College. He
currently serves as a Director of Brightstar Corp., PL Olefins LLC, The Brock Group, Inc., PL Propylene LLC, RECON Holdings III Inc., Scandza AS, PSC, LLC, and Trygg
Pharma Holding AS. Mr. Weinberg was selected to serve on the board of directors of our general partner due to his senior leadership, strategic and merger and acquisition expertise.
The
directors of our general partner hold office until the earlier of their death, resignation or removal.
Compensation Discussion and Analysis
Our general partner has the sole responsibility for conducting our business and for managing our operations and its board of directors
and officers make decisions on our behalf. In connection with the completion of this offering, the board of directors of our general partner will form a compensation committee that will
determine the future compensation of the directors and officers of our general partner, including the named executive officers.
Historically,
the board of managers of PL Manufacturing, the indirect owner of our predecessor, made all decisions regarding the compensation of our predecessor's executive officers.
Prior to the completion of this offering, certain of our executive officers, including Messrs. Lumpkins, Ticatch, and Jeans and Ms. Spurlin, have performed services for both PL Propylene
and PL Midstream, an entity controlled by Lindsey Goldberg, and the aggregate compensation paid to those executive officers has been in recognition of services provided to both entities. See "Certain
Relationships and Related Party Transactions—Agreements with Affiliates of our General Partner" for a discussion of the arrangements between our predecessor and its affiliated entities
with respect to the shared services performed by our executive officers and the allocation of costs associated with such arrangements. The narratives and tables provided below describe the aggregate
compensation received by the named executive officers. Going forward, certain executive officers, including Ms. Spurlin and Mr. Jeans, will continue to perform services both for us and
for PL Midstream. See "Certain Relationships and Related Party Transactions—Agreements with Affiliates of our General Partner" for information regarding the shared services arrangements
following the completion of this offering.
In
addition to discussing the aggregate compensation paid to the executive officers of our predecessor, this compensation discussion and analysis, or CD&A, provides information about the
compensation objectives and policies for these individuals and is intended to place in perspective the information contained in the executive compensation tables that follow this discussion. This CD&A
provides a
general description of the compensation program and specific information about its various components.
Throughout
this discussion, the following individuals are referred to as the "named executive officers" and are included in the Summary Compensation Table:
•
David Lumpkins—Executive Chairman
•
Nathan Ticatch—President and Chief Executive Officer
•
Sharon Spurlin—Senior Vice President and Chief Financial Officer
•
Hank Jeans—Senior Vice President—Commercial
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•
Randy Miller—Vice President—Process Engineering
•
Bernard Sandner (deceased)—former Project Manager and Vice President—Manufacturing
The
historical compensation discussion that follows reflects the total compensation the named executive officers received for services provided, and the philosophy and policies that
drove the compensation decisions for these named executive officers, as implemented by the board of managers of PL Manufacturing. Current and forward-looking statements refer to the compensation
philosophy, policy and practices of our general partner and the procedures our general partner either has adopted or intends to adopt, though these practices are largely a continuation of the
compensation practices historically employed. Unless otherwise noted, within the remainder of this CD&A, references to "we" and "our" refer to both the philosophy and policies historically
implemented, as well as the philosophy and policies to be implemented by our general partner upon completion of this offering. The philosophy and policies may change in the future.
Compensation Philosophy and Objectives
Our future success and the ability to create long-term value for our unitholders depends on our ability to attract, retain,
and motivate the executives necessary to manage our business. We employ a compensation philosophy that emphasizes pay for performance. We believe that compensation should:
•
Align the interests of the individual with those of our unitholders;
•
Pay for performance, whereby an individual's total compensation is heavily influenced by the partnership's and the
individual's performance; and
•
Be competitive with compensation paid to persons having similar responsibilities and duties in other companies in the same
and closely related industries in order to help us attract and retain the most qualified individuals.
Although
not formally adopted as objectives in 2010 and prior years, the preceding objectives are consistent with the compensation arrangements we have utilized historically. In the
future, we also intend to ensure that a portion of the total compensation made available to the named executive officers is based on the total return received by our unitholders, thus assuring an
alignment of interests between employees and our unitholders.
Compensation Setting Process
Historically, the board of managers of PL Manufacturing determined the overall compensation philosophy and set the final compensation
of the named executive officers without the assistance of a compensation consultant. Following the formation of the compensation committee by the board of directors of our general partner, all
compensation decisions for the named executive officers will be determined by the compensation committee.
The
compensation committee will seek to provide a total compensation package designed to drive performance and reward contributions in support of our business strategies and to attract,
motivate and retain high quality talent with the skills and competencies required by us. It is possible that the compensation committee will examine the compensation practices of our peer companies
and may also review compensation data from our industry generally to the extent the competition for executive talent is broader than a group of selected peer companies. In addition, the compensation
committee may review and, in certain cases, participate in, various relevant compensation surveys and consult with compensation consultants with respect to determining compensation for the named
executive officers. We expect that our Executive Chairman, Mr. Lumpkins, and our President and Chief Executive Officer, Mr. Ticatch, will provide periodic recommendations to the
compensation committee regarding the compensation of the other named executive officers. It is also possible that we may engage a compensation consultant prior to
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the
completion of this offering to assist us in determining the compensation of our named executive officers that will become effective upon the completion of the offering.
Elements of Compensation
The following discussion regarding the elements of compensation provided to the named executive officers reflects our historical
philosophy concerning the division of the elements of senior management employees' compensation packages, which our general partner, at this time, continues to employ. For the fiscal year ended
December 31, 2010, the principal elements of compensation for the named executive officers were the following:
•
base salary;
•
discretionary bonus awards;
•
long-term equity-based incentive awards; and
•
non-discriminatory welfare and retirement benefits.
The
long-term equity-based incentive awards that we have historically granted to our employees have been in the form of profits interest awards. Historically, profits
interest awards have comprised a significant portion of the potential compensation for our named executive officers and other employees in order to incentivize and motivate our employees to grow
unitholder value. Profits interests are not the same security as the common units being issued in this offering, and the number of profits interests awarded does not correlate to the common units that
are being issued in this offering. In connection with this offering, our employees will receive distributions with respect to their outstanding profits interest awards and those awards will then be
cancelled in their entirety and will cease to be outstanding following the completion of this offering. The information provided with respect to these profits interest awards in the following
narratives and tables is provided in order to comply with the disclosure rules of the Securities and Exchange Commission regarding our historical compensation; however, these profits interest awards
will not comprise a portion of the compensation package for any of our employees following the completion of this offering.
Base Salary.
Base salary is the fixed annual compensation we pay to each named executive officer for performing specific job duties. It
represents
the minimum income a named executive officer may receive for a full year's performance.
Historically,
the board of managers of PL Manufacturing has established the annual base salary rate for each of the named executive officers at a level necessary to retain the
individual's services. While we believe it is important to provide our named executive officers with an appropriate amount of fixed compensation each year, the base salaries of our named executive
officers have been a small portion of their total compensation relative to the potential value that our named executive officers could realize with respect to the profits interest awards we granted in
2010 and prior years. The board of managers of PL Manufacturing reviews base salaries on an annual basis, in consultation with the Executive Chairman and the President and Chief Executive Officer, and
may adjust base salaries upon consideration of the factors discussed above. We did not increase the base salaries of the named executive officers during fiscal 2010, except that Mr. Ticatch's
annual rate of base salary was increased in April 2010 from $275,000 to $400,000 to reflect his growing responsibilities and contributions to our
business. Ms. Spurlin's base salary is set in her employment agreement, subject to annual review and adjustment at the discretion of the board of managers of PL Manufacturing. See
"—Employment Agreements" below for additional information regarding Ms. Spurlin's employment agreement.
For
2011, we have adopted base salary increases for certain of our named executive officers. Specifically, for 2011, (a) Ms. Spurlin's base salary was increased from
$250,000 to $260,000, (b) Mr. Jeans' base salary was increased from $225,000 to $240,000 and (c) Mr. Miller's base salary was increased from
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$230,000
to $250,000. Contemporaneous with the consummation of this offering, we may adopt base salary adjustments as deemed necessary in order for us to maintain a competitive compensation program
following the effectiveness of this offering. In light of the elimination of our profits interest program in connection with the completion of this offering, going forward, we anticipate that base
salary determinations made by the compensation committee of the board of directors of our general partner will be based on a broader group of factors than those we have historically considered,
including the amounts considered necessary to attract and retain the highest quality executives, the responsibilities of the named executive officers, the officer's position and level of
responsibility, and the base salary amounts paid to executive officers in similar positions with similar responsibility at other companies in our industry.
Discretionary Bonus Awards.
Historically, annual bonuses have been discretionary. We review annual cash bonus awards for the named
executive officers
annually to determine award payments for the last completed fiscal year, as well as to establish award opportunities for the current fiscal year. However, Ms. Spurlin's employment agreement
provides that she is eligible for an annual target bonus of 30% of her base salary based on our performance and the company bonus policies then in effect. Bonuses are determined based both on
individual performance and our performance. We believe that an annual bonus program based on performance motivates management to achieve key short-term corporate objectives and aligns
executives' interests with our unitholders' interests.
The
bonuses paid for 2010 were approved by the board of managers of PL Manufacturing following a year-end review of the individual performance of the executive officer in
question and our overall performance. For 2010, the company performance component was primarily based on efforts expended by our named executive officers towards the completion of construction and
successful start-up of our PDH facility. In addition to her annual bonus, Ms. Spurlin received a special sign-on bonus payment of $150,000 in June 2010 pursuant to the
terms of her employment agreement. See "—Employment Agreements" below for additional information regarding Ms. Spurlin's employment agreement.
In
the future, we expect that the compensation committee of our general partner's board of directors will continue to rely on discretionary annual bonus awards to the named executive
officers, subject to any applicable employment agreement. Our general partner intends to use discretionary bonus awards for achieving financial and operational goals and for achieving individual
performance objectives.
Historical Equity-Based Incentive Awards.
As discussed above, historically, our compensation structure has included long-term
equity-based incentive awards in the form of profits interests that allow key employees to share in the distributions received by the unitholders of PL Manufacturing once a certain level of proceeds
has been generated. Value with respect to these awards is only realized once certain investment return thresholds have been met. These profits interest awards have comprised a substantial portion of
the potential compensation that our named executive officers and other employees could realize in order to motivate such individuals to grow unitholder value. Award holders will receive distributions
with respect to these profit interest awards in connection with the completion of this offering, and these awards will cease to exist following the completion of the offering.
Prior
to 2010, (a) fully vested Class B profits interests were issued to Messrs. Lumpkins and Ticatch and (b) Class C profits interests were issued to
Ms. Spurlin in accordance with her employment agreement. In addition, in 2010, (i) Class C profits interests were issued to all members of the management team (other than
Ms. Spurlin), and (ii) Class D profits interests were issued to Messrs. Lumpkins and Ticatch. The Class C and Class D profits interests are subject to a
vesting schedule that requires continued service by the award recipient, and will vest in substantially equal annual installments over the four year period beginning on the later of March 11,
2009, or the recipient's commencement of employment. The profits interests will become fully vested upon the earlier to occur of (1) a sale or other disposition of our assets, with respect to
any distribution of net proceeds received in connection with the sale, or (2) at the discretion of the board of managers of PL Manufacturing. If an award recipient's employment terminates for
any reason, all unvested profits interests will be forfeited unless otherwise determined by the board of
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managers
of PL Manufacturing. If an award recipient's employment is terminated involuntarily for cause, all vested profits interests will also be forfeited. The Class C profits interests issued
with respect to Mr. Sandner were granted following Mr. Sandner's death to his estate in recognition of his prior services and were fully vested at the time of grant.
Holders
of profits interest awards are entitled to receive distributions when and as determined by the board of managers of PL Manufacturing. The ultimate amount received by each holder
will vary depending on the level of amounts distributed. We anticipate that the named executive officers will receive the following estimated amounts in respect of their Class B, Class C
and Class D profits interests, as applicable, in connection with the completion of this offering: (a) Mr. Ticatch—$            ,
(b) Ms. Spurlin—$            , (c) Mr. Lumpkins—$            , (d)
 Mr. Jeans—$            ,
(e) Mr. Miller—$            , and (f) estate of Mr. Sandner—$            . These amounts will be
paid to the named executive officers in a
combination of cash and our common units. Following the consummation of this offering, the profits interests will be cancelled and will cease to be outstanding.
In
order to incentivize management members following the completion of this offering to continue to grow our business, our general partner intends to adopt a long-term
incentive plan for employees, consultants and directors of our general partner and its affiliates, who perform services for us. Each of the named executive officers will be eligible to participate in
this plan. The long-term incentive plan provides for the grant of unit awards, restricted units, phantom units, unit options, unit appreciation rights, distribution equivalent rights and
substitute awards. These awards are intended to align the interests of key employees (including the named executive officers) with those of our unitholders and to give those employees the opportunity
to share in our long-term performance.
Employee Benefits.
In addition to the elements of compensation previously discussed, the named executive officers are eligible for the
same health,
welfare and other employee benefits as are available to our employees generally, which include medical and dental insurance, short and long-term disability insurance, life insurance, and a
401(k) profit sharing plan. The 401(k) plan permits all eligible employees, including the named executive officers, to make voluntary salary deferrals, subject to applicable tax limitations. The
401(k) plan also provides a dollar-for-dollar safe harbor matching contribution on the first 6% of eligible salary deferrals, which is 100% vested at all times. We will also
make discretionary profit sharing contributions to the 401(k) plan for employees who have completed a year of service and are employed on the last day of the plan year, and these contributions are
based upon age and a target rate and are typically paid in the first quarter of the following year. In addition, we have historically provided minimal perquisites to our named executive officers, as
approved on a case-by-case basis, and the annual costs of these personal benefits has been less than $10,000 per individual officer. We do not sponsor any defined benefit
pension plan or nonqualified deferred compensation arrangements at this time.
The
general benefits offered to all employees (and thus to the named executive officers) are reviewed each year, and we anticipate that, in the future, any benefits offered only to named
executive officers will be reviewed by the compensation committee of our general partner in conjunction with its annual review of executive officer compensation.
Compensation Mix.
Going forward, the compensation committee of our general partner's board of directors will determine the mix of
compensation, both
among short- and long-term compensation and cash and non-cash compensation, to establish structures that it believes are appropriate for each of the named executive officers.
We believe that the mix of base salary, bonus awards, awards under the long-term incentive plan and the other benefits that will be available to the named executive officers fit the
overall compensation objectives of our general partner and us. We believe this mix of compensation provides competitive compensation opportunities to align and drive employee performance in support of
our business strategies and to attract, motivate and retain high quality talent with the skills and competencies required by us.
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Employment Agreements
Ms. Spurlin previously entered into an employment agreement with PL Manufacturing and certain related entities. The employment
agreement with Ms. Spurlin commenced on June 9, 2009, and automatically extends for successive one year periods each June 9, unless either party gives 30 days' advance
notice prior to the end of the then current employment period. In addition to the provisions previously described above, the employment agreement with Ms. Spurlin provides for vacation and
other standard employee benefits and reimbursement for certain out-of-pocket expenses. Ms. Spurlin's employment agreement also provides for certain payments and benefits
to be made to her in the event her employment is terminated for specified reasons, including without cause or for good reason. The employment agreement also subjects Ms. Spurlin to certain
restrictive covenants, including non-solicitation and confidentiality covenants. These payments, benefits and covenants are described in greater detail below under "—Executive
Compensation—Potential Payments upon Termination and Change in Control."
At
this time, the remainder of our named executive officers are "at will" and we expect them to remain "at will," although we have in the past entered into employment agreements with
other executive officers on a case-by-case basis.
Severance and Change in Control Arrangements
Other than the employment agreement with Ms. Spurlin and the profits interest awards, we did not have any agreements in place
with our named executive officers providing for severance and/or change in control benefits during 2010 and prior years. However, upon the death of Mr. Sandner in July 2010, we agreed to
continue to pay Mr. Sandner's salary to his estate until the earlier to occur of an initial public offering and a sale of the company. See "—Executive
Compensation—Summary Compensation Table" and "Executive Compensation—Potential Payments upon Termination and Change in Control" for additional information. To date, our general
partner has not adopted any other arrangements that would provide severance and/or change in control benefits to our named executive officers for periods
of time following the consummation of this offering. Our general partner may change this policy in the future.
Tax Considerations
With respect to the deduction limitations under Section 162(m) of the Internal Revenue Code, we are a limited partnership and do
not meet the definition of a "corporation" under Section 162(m). Therefore, we will not be subject to the $1 million deduction limitation imposed by Section 162(m).
Executive Compensation
The following tables and narratives reflect historic compensation paid to our named executive officers for the fiscal year ended
December 31, 2010. Certain column and other heading descriptions have been modified from the heading names prescribed by the applicable Securities and Exchange Commission rules in order to more
accurately describe the compensation arrangements we have historically provided. The number of profits interest awards disclosed below do not correlate to the common units to be issued in connection
with this offering, and such profits interest awards will cease to be outstanding following the consummation of this offering.
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Summary Compensation
The following table and footnotes provide information regarding the compensation of the named executive officers during the year ended
December 31, 2010.
Name and Principal Position
Year
Salary
($)
Bonus
($)
(1)
Profits
Interest
Awards
($)
(2)
All Other
Compensation
($)
(3)
Total
($)
David Lumpkins
2010
$
400,000
$
150,000
$
12,741,284
$
36,281
$
13,327,565
Executive Chairman
Nathan Ticatch
2010
$
361,539
$
150,000
$
10,424,687
$
31,946
$
10,968,172
President and Chief Executive Officer
Sharon Spurlin
2010
$
250,000
$
235,000
—
$
31,946
$
516,946
Senior Vice President and Chief Financial Officer
Hank Jeans
2010
$
225,000
$
112,000
$
525,000
$
39,200
$
901,200
Senior Vice President—Commercial
Randy Miller
2010
$
230,000
$
230,000
$
700,000
$
34,300
$
1,194,300
Vice President—Process Engineering
Bernard Sandner
2010
$
123,846
—
$
700,000
$
193,390
$
1,017,236
Former Project Manager and Vice President— Manufacturing
(1)
Reflects
amounts paid for services provided in fiscal 2010 pursuant to our discretionary annual cash bonus program. Also reflects a payment of $150,000 to
Ms. Spurlin in satisfaction of a special sign-on bonus described above.
(2)
The
amounts reported in the "Profits Interest Awards" column reflect the aggregate grant date fair value of Class C and Class D profits
interests awarded in fiscal year 2010, computed in accordance with Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic 718. See "—Management's
Discussion and Analysis of Financial Condition and Results of Operations" for additional detail regarding assumptions underlying the value of these awards.
(3)
The
following items are reported in the "All Other Compensation" column:
Named Executive Officer
401(k) Employer
Contributions
(a)
Severance
(b)
Total
David Lumpkins
$
36,281
—
$
36,281
Nathan Ticatch
$
31,946
—
$
31,946
Sharon Spurlin
$
31,946
—
$
31,946
Hank Jeans
$
39,200
—
$
39,200
Randy Miller
$
34,300
—
$
34,300
Bernard Sandner
$
15,885
$
177,505
$
193,390
(a)
Represents
employer matching contributions and employer profit sharing contributions made to the 401(k) plan for 2010.
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(b)
Mr. Sandner
passed away in July 2010. We agreed to continue to pay Mr. Sandner's salary payments to his estate until the earlier of a sale or
an initial public offering by the company. At the time of Mr. Sandner's death, the value of these future payments was estimated to be $1,087,752, assuming a five-year time frame
until a sale or initial public offering of the company. The value of these future payments was accrued in full during 2010. Based on an expected completion of this offering as at September 30,
2011, this accrual was recalculated in 2011 and the adjusted amount is included in the table above.
Grants of Plan-Based Awards
The following table and footnotes provide information regarding grants of profits interest awards made to the named executive officers
in the fiscal year ended December 31, 2010. The number of profits interest awards reflected in the table below does not correlate to the common units that are being issued in this offering. In
connection with this offering, our named executive officers will receive distributions with respect to their outstanding profits interest awards and those awards will then be cancelled in their
entirety and will cease to be outstanding following the completion of this offering.
Name
Grant Date
Number of Profits
Interests Awarded
(1)
(#)
Exercise or Base
Price of Profits
Interest Awards
($/Sh)
Grant Date Fair
Value of Profits
Interest Awards
(2)
David Lumpkins
Class C interests
9/29/2010
24,973,344
n/a
$
8,740,670
Class C interests
12/17/2010
111,719
n/a
$
56,977
Class D interests
9/29/2010
15,084,047
n/a
$
3,921,852
Class D interests
12/17/2010
55,860
n/a
$
21,785
Nathan Ticatch
Class C interests
9/29/2010
20,432,736
n/a
$
7,151,458
Class C interests
12/17/2010
91,406
n/a
$
46,617
Class D interests
9/29/2010
12,341,493
n/a
$
3,208,788
Class D interests
12/17/2010
45,703
n/a
$
17,824
Sharon Spurlin
—
—
—
—
Hank Jeans
Class C interests
9/29/2010
1,500,000
n/a
$
525,000
Randy Miller
Class C interests
9/29/2010
2,000,000
n/a
$
700,000
Bernard Sandner
Class C interests
9/29/2010
2,000,000
n/a
$
700,000
(1)
Reflects
the grant of Class C profits interests to each of the named executive officers (other than Ms. Spurlin) and the grant of
Class D profits interests to Messrs. Lumpkins and Ticatch.
(2)
Reflects
the grant date fair value of the Class C and Class D profits interest awards granted during fiscal 2010, computed in accordance with
FASB ASC Topic 718.
Narrative Discussion of Summary Compensation Table and Grants of Plan-Based Awards Table
Profits Interest Awards.
Class C and Class D profits interest awards were granted to the named executive officers and other
key
management employees during 2010. Holders of these awards are entitled to receive distributions as determined by the board of managers of PL Manufacturing, as described above under
"—Elements of Compensation—Historical Equity-Based Incentive Awards." These awards vest in
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substantially
equal annual installments over a four year period beginning on the later of March 11, 2009, or the recipient's commencement of employment, provided the award recipient has
continuously provided services throughout the vesting period. Additional vesting provisions applicable to these awards are described under "—Elements of Compensation—Historical
Equity-Based Incentive Awards" and "—Potential Payments Upon Termination and Change in Control." The Class C profits interests reported with respect to Mr. Sandner were
granted following Mr. Sandner's death to his estate in recognition of his prior service and were fully vested at the time of grant.
The
information provided with respect to these profits interest awards is provided in order to comply with the disclosure rules of the Securities and Exchange Commission regarding our
historical compensation; however, these profits interest awards will not comprise a portion of the compensation package for any of our employees following the completion of this offering.
Outstanding Equity at Fiscal Year-End and Award Exercises and Vestings
The following table and narrative discussion below provide information regarding outstanding vested and unvested profits interest
awards as of December 31, 2010. The number of profits interest awards reflected in the table below does not correlate to the common units that are being issued in this offering. In connection
with this offering, the named executive officers will receive distributions with respect to their outstanding profits interest awards and those awards will then be cancelled in their entirety and will
cease to be outstanding following the completion of this offering.
Profits Interest Awards
Name
Number of Profits
Interests(#)
Vested
Number of Profits
Interests(#)
Unvested
Exercise
Price($)
Expiration
Date
David Lumpkins
Class B interests
2,151,996
—
n/a
n/a
Class C interests
6,271,266
18,813,797
n/a
n/a
Class D interests
3,784,977
11,354,930
n/a
n/a
Nathan Ticatch
Class B interests
1,760,724
—
n/a
n/a
Class C interests
5,131,036
15,393,106
n/a
n/a
Class D interests
3,096,799
9,290,397
n/a
n/a
Sharon Spurlin
Class C interests
100,000
300,000
n/a
n/a
Hank Jeans
Class C interests
375,000
1,125,000
n/a
n/a
Randy Miller
Class C interests
500,000
1,500,000
n/a
n/a
Bernard Sandner
Class C interests
2,000,000
—
n/a
n/a
Class B
profits interests awarded to Messrs. Lumpkins and Ticatch were fully vested on the date of grant. Each named executive officer holds outstanding Class C
profits interests that are subject to a four year vesting schedule described above under "—Elements of Compensation—Historical Equity-Based Incentive Awards."
Messrs. Ticatch and Lumpkins also hold Class D profits interests, which are subject to a four year vesting schedule described above under "—Elements of
Compensation—Historical Equity-Based Incentive Awards." One-fourth of outstanding Class C and Class D profits interests held by the named executive officers
(other than Mr. Sandner's estate) vested during fiscal 2010 as reflected in the
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"Outstanding
Equity at Fiscal Year-End" table above. Additional vesting provisions applicable to the Class C and Class D profits interests are described below under
"—Potential Payments upon Termination and Change in Control."
Pension Benefits
Currently, we do not, and we do not intend to, provide traditional defined benefit pension benefits to our employees, including the
named executive officers. Our general partner may change this policy in the future.
Nonqualified Deferred Compensation
Currently, we do not, and we do not intend to, sponsor or adopt a nonqualified deferred compensation plan. Our general partner may
change this policy in the future.
Potential Payments upon Termination or Change in Control
Other than as described below, there were no arrangements with our named executive officers providing such individuals with severance
or change in control benefits during fiscal 2010. The employment agreement with Ms. Spurlin will continue in effect following the completion of this offering; however, to date, the compensation
committee of our general partner has not adopted any other arrangements that will provide severance or change in control benefits to our named executive officers following the completion of this
offering. The profits interest awards will cease to be outstanding following completion of this offering. Awards under the long-term incentive plan may provide for accelerated vesting upon
certain termination events or a change in control but, to date, the terms of such awards have not been determined.
Employment Agreement with Sharon Spurlin.
The employment agreement with Ms. Spurlin provides for certain payments and benefits
upon specified
termination events. Specifically, if Ms. Spurlin's employment is terminated without cause, due to a non-renewal election by us, or for good reason, she will be entitled to receive
(a) her base salary through the date of termination, (b) accrued but unpaid vacation pay or other benefits due in accordance with our company policies, and (c) an amount equal to
one times Ms. Spurlin's annual base salary, payable in a lump sum within 10 days of the date the associated release agreement becomes irrevocable. If such an event were to have occurred
as of December 31, 2010, Ms. Spurlin would be entitled to a lump sum payment equal to $250,000, which was her annual base salary rate in effect at the end of fiscal 2010.
For
purposes of Ms. Spurlin's employment agreement:
(a)   "
Cause
" means Ms. Spurlin has (i) committed a material act of fraud, embezzlement, theft or breach of
fiduciary duty against us, (ii) willfully, in bad faith or due to her gross negligence, materially breached or defaulted on her obligations under the employment agreement, which has not been
cured within 30 days of notice of such breach or default, (iii) been convicted of, or pleaded guilty or nolo contendere to, a felony under U.S. federal or any state law, or
(iv) engaged in a willful and sustained failure to perform her primary lawful job duties or responsibilities in a manner that causes material financial damages to us or gross negligence or bad
faith in the performance of such duties, which has not been cured within 30 days of notice of such failure.
(b)   "
Good Reason
" means, without Ms. Spurlin's consent, (i) a material reduction in her title or position or a
material diminution of significant duties that are consistent with her title or position, (ii) a material reduction in Ms. Spurlin's base salary, other than pursuant to a reduction
applicable to all senior executives or employees generally, (iii) a failure to timely pay her annual bonus, (iv) a material breach or default of the company's obligations under the
employment agreement or another written agreement, or (v) a move of Ms. Spurlin's primary place of work or the primary offices of the company more than 25 miles from downtown Houston,
Texas. Ms. Spurlin must provide notice of the occurrence of any good
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reason
event within 30 days of its occurrence, and if such event remains uncured for 30 days following such 30 day notice period, then Ms. Spurlin's employment will
automatically terminate at the end of such 30 day cure period.
Severance
payments under the employment agreement are contingent upon Ms. Spurlin's execution and nonrevocation of a standard release of claims form. The employment agreement
contains non-solicitation provisions that prohibit Ms. Spurlin, during her employment and for 18 months thereafter, from soliciting our employees or customers. The employment
agreement also contains non-disclosure covenants that apply for the same period.
Payments to Estate of Bernard Sandner.
Mr. Sandner served as Project Manager and Vice President—Manufacturing of our
predecessor
prior to his death in July 2010. Upon Mr. Sandner's death, we agreed to continue to pay his current base salary to his estate until the earlier to occur of an initial public offering or a sale
of the company. Based on an expected completion of this offering as at September 30, 2011, the value of these future payments was determined to be $177,505.
Profits Interests Awards.
Unvested Class C and Class D profits interests will become fully vested upon the earlier to occur
of
(1) a sale or other disposition of our assets, with respect to any distribution of net proceeds received in connection with the sale, and (2) at the discretion of the board of managers
of PL Manufacturing. If an award recipient's employment terminates for any reason, all unvested profits interests will be forfeited, unless otherwise determined by the board of managers of PL
Manufacturing. If an award recipient's employment is terminated involuntarily for cause, all vested profits interests will also be forfeited.
Following
the consummation of the offering, the profits interest awards will cease to be outstanding. See "—Elements of Compensation—Historical Equity-Based
Incentive Awards" for an estimate of the amount each named executive officer will receive with respect to his or her profit interest awards in connection with this offering.
Director Compensation
Our predecessor is managed by the board of managers of PL Manufacturing. Following the consummation of this offering, we will provide
compensation to the non-employee directors of the board of our general partner; however, the terms of that compensation policy have not yet been established. Officers or employees of our
general partner or its affiliates who also serve as directors of our general partner will not receive additional compensation for their service as a director of our general partner. We anticipate that
each non-employee director will be reimbursed for out-of-pocket expenses in connection with attending meetings of the board of directors or committees. Each
director will be indemnified by us for actions associated with being a director to the fullest extent permitted under Delaware law.
Compensation Practices as They Relate to Risk Management
We believe our compensation programs do not encourage excessive and unnecessary risk taking by executive officers (or other employees).
Short-term annual incentives are generally paid pursuant to discretionary bonuses enabling, historically, the board of managers of PL Manufacturing, and, in the future, the compensation
committee of our general partner, to assess the actual behavior of our employees as it relates to risk taking in awarding a bonus. In the future, our use of equity-based long-term
compensation will serve our compensation program's goal of aligning the interests of executives and unitholders, thereby reducing the incentives to unnecessary risk taking.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information regarding beneficial ownership of our common units following this offering
by:
•
our general partner;
•
each of our general partner's directors;
•
each of our general partner's executive officers;
•
each unitholder known by us to beneficially hold five percent or more of our outstanding units; and
•
all of our general partner's named executive officers and directors as a group.
Beneficial
ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. Unless indicated below, to our knowledge, the
persons and entities named in the table have sole voting and sole investment power with respect to all units beneficially owned, subject to community property laws where applicable. Except as
otherwise indicated, the business address for each of our beneficial owners is c/o PetroLogistics LP, 909 Fannin Street, Suite 2630, Houston, Texas 77010. The table does not reflect any
common units that directors and executive officers may purchase in this offering through the directed unit program described under "Underwriters."
Name of Beneficial Owner
Common Units to
be Beneficially
Owned
Percentage of
Total Common
Units to be
Beneficially
Owned
(1)
PetroLogistics GP LLC
(2)
Lindsay Goldberg
(3)
York Capital
(4)
David Lumpkins
(5)
Nathan Ticatch
(5)
Hank Jeans
Sharon Spurlin
John Parkinson
Randy Miller
Alan E. Goldberg
Lance L. Hirt
Zalmie Jacobs
Robert D. Lindsay
Andrew S. Weinberg
All directors and executive officers of our general partner as a group (11 persons)
*
Less
than 1%
(1)
Based
on            common units outstanding following this offering.
(2)
PetroLogistics GP LLC,
which is owned by our sponsors, is our general partner and manages and operates our business and has a
non-economic general partner interest in us.
(3)
Prior
to this offering, Lindsay Goldberg, through certain affiliated investment funds, owned 80% of our predecessor through its ownership of PL
Manufacturing LLC. The units owned by Lindsay Goldberg, as reflected in the table, are common units. The table assumes the underwriters do not exercise their option to
purchase            
additional common units and a portion of such units are therefore issued to Lindsay Goldberg upon the option's expiration. If such option is exercised in full,
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Lindsay
Goldberg will beneficially own            common units, or        %, of the total common units outstanding.
(4)
Prior
to this offering, York Capital, through certain affiliated investment funds, owned 20% of our predecessor through its ownership of PL
Manufacturing LLC. The units owned by York Capital, as reflected in the table, are common units. The table assumes the underwriters do not exercise their option to purchase            
additional common units and a portion of such units are therefore issued to York Capital upon the option's expiration. If such option is exercised in full, York Capital will beneficially own
            common units, or        %, of the total common units outstanding.
(5)
The
table assumes the underwriters do not exercise their option to purchase            additional common units and such units are therefore issued to
our sponsors and certain of our employees and affiliates upon the option's expiration. If such option is exercised in full, Mr. Lumpkins and Mr. Ticatch will beneficially own
            and            common units, or        %
and        %, respectively, of the total common units outstanding.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
After this offering, our sponsors will own (1) an aggregate of            common units, representing approximately
        % of the total outstanding units (approximately        % if the underwriters exercise their option to purchase additional common units in full) and (2) our
general partner
with its non-economic general partner interest (which will not entitle it to receive distributions) in us. Additionally, our executive officers and employees will own an aggregate of
            common units, representing approximately        % of the total outstanding units
(approximately        % if the underwriters exercise their option to purchase additional
common units in full).
Distributions and Payments to Our General Partner and its Affiliates
The following table summarizes the distributions and payments made or to be made by us to our general partner and its affiliates in
connection with the formation, ongoing operation and any liquidation of PetroLogistics LP. These distributions and payments were or will be determined by and among affiliated entities and,
consequently, are not the result of arm's-length negotiations.
Formation Stage
The consideration received by our general partner and its affiliates for the contribution of assets and liabilities to us
•
The non-economic general partner interest
to be issued to our general partner; plus
•
common units to be issued to our sponsors and certain of our employees and affiliates.
Offering Stage
Distributions to our sponsors and certain members of our executive management team
We will draw $        million from our new term loan facility and the use of proceeds of such drawing, in part, to distribute
$        million as a reimbursement of construction capital to our sponsors. In addition, we will use approximately $        million of the proceeds of this offering to
make a distribution to our sponsors and their affiliates, our executive officers and certain of our employees (including $        million distributed to our sponsors to reimburse them for certain construction
capital expenditures.)
Operational Stage
Distributions of available cash to our sponsors and certain of our employees and affiliates
We will generally make cash distributions to our unitholders pro rata, including to our sponsors and their affiliates, our executive officers and certain of our employees.
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Payments to our general partner and its affiliates
Our general partner will not receive any management fee or other compensation in connection with the management of our business but will be entitled to be reimbursed for all direct and indirect
expenses incurred on our behalf. For instance, we will reimburse our general partner for the salary, bonus, incentive compensation and other amounts that it pays to its employees and executive officers who perform services for us.
Liquidation Stage
Liquidation
Upon our liquidation, our unitholders will be entitled to receive liquidating distributions according to their respective capital account balances.
Agreements with Affiliates of Our General Partner
In connection with our formation, we will enter into several agreements with affiliates of our general partner that govern the business
relations among us, our general partner and such affiliates. In connection with the transactions that we will enter into to effect the offering, we intend to enter into new agreements with affiliates
of our general partner. The agreements being amended include our partnership agreement, the terms of which are more fully described under "The Partnership Agreement" and elsewhere in this prospectus.
These agreements were not the result of arm's-length negotiations and the terms of these agreements are not necessarily at least as favorable to the parties to these agreements as terms which could
have been obtained from unaffiliated third parties.
Contribution Agreement
In connection with the Transactions, we intend to enter into a contribution, conveyance and assumption agreement with various
affiliates of our general partner in order to facilitate the consummation of the Transactions. Pursuant to this agreement, (1) Propylene Holdings and our general partner will execute an amended
and restated partnership agreement; (2) Propylene Holdings will contribute PL Propylene to us; (3) we will use the net proceeds of this offering and a portion of the proceeds of the
borrowings drawn under our new term loan facility (a) to reimburse our sponsors for certain construction capital expenditures and (b) to make additional distributions to them and their
affiliates, our executive officers and certain employees, (4) upon the earlier to occur of the exercise in full of the underwriters' option to purchase additional common units and the
expiration of the 30-day option period, we will issue to our sponsors and certain of our employees and affiliates a number of common units equal to the excess, if any, of the total number
of option units over the number of common units, if any, actually purchased by the underwriters in connection with the exercise of their option.
Services Agreement for PL Midstream
Certain of the employees and executive officers of our general partner who perform services for us also perform management and
administrative services for PL Midstream,
an entity that is controlled by Lindsay Goldberg. These employees and executive officers include our chief financial officer and certain members of our accounting team. Our general partner has entered
into a services agreement with PL Midstream, pursuant to which our general partner is entitled to be reimbursed by PL Midstream for all direct and indirect expenses that it incurs in connection with
performing services for PL Midstream.
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Former Services Agreement
Historically, a formerly affiliated company performed services for us pursuant to a services agreement that we entered into in 2008
(the "former services agreement"). Pursuant to the former services agreement, we reimbursed this company for expenses incurred on our behalf, which expenses included executive management and employee
salaries and benefits, travel and entertainment expenses, rent and other general and administrative expenses. Such expenses were allocated to us based upon certain assumptions and estimates that were
made in order to allocate a reasonable share of such expenses from the formerly affiliated company to us so that our financial statements reflected substantially all costs of doing business.
The
former services agreement will be terminated upon the closing of this offering, and we will rely on the directors, executive officers and employees of our general partner to manage
our business and conduct our operations.
Registration Rights Agreement
In connection with this offering, we will enter into a registration rights agreement with our sponsors, David Lumpkins and Nathan
Ticatch, pursuant to which we may be required to register the sale of the common units they hold. Under the registration rights agreement, our sponsors will have the right to request that we register
the sale of common units held by them and our sponsors, David Lumpkins and Nathan Ticatch will have the right to require us to make available shelf registration statements permitting sales of common
units into the market from time to time over an extended period. In addition, our sponsors and Messrs. Lumpkins and Ticatch will have the ability to exercise certain piggyback registration
rights with respect to their securities if we elect to register any of our equity interests. The registration rights agreement also includes provisions dealing with holdback agreements,
indemnification and contribution and allocation of expenses. All of our common units held
by our sponsors and any permitted transferee will be entitled to these registration rights, except that the demand registration rights may only be transferred in whole and not in part.
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CONFLICTS OF INTEREST AND FIDUCIARY DUTIES
Conflicts of Interest
Conflicts of interest exist and may arise in the future as a result of the relationships between our general partner and its affiliates
(including our sponsors), on the one hand, and us and our public unitholders, on the other hand. Conflicts may arise as a result of the duties of our general partner to act for the benefit of its
owners, which may conflict with our interests and the interests of our public unitholders. The directors and officers of our general partner, who are responsible for managing our business, have
fiduciary duties to manage our general partner in a manner beneficial to its owners, our sponsors. At the same time, our general partner has a contractual duty under our partnership agreement to
manage us in a manner that is in our best interests.
Whenever
a conflict arises between our general partner, on the one hand, and us or any other public unitholder, on the other, our general partner will resolve that conflict. Our
partnership agreement contains provisions that replace default fiduciary duties under applicable law with contractual corporate governance standards as set forth therein. Our partnership agreement
also restricts the remedies available to unitholders for actions taken that, without such replacement, might constitute breaches of fiduciary duty.
Our
general partner will not be in breach of its obligations under our partnership agreement or its duties to us or our unitholders if the resolution of a conflict
is:
•
approved by the conflicts committee of the board of directors of our general partner, although our general partner is not
obligated to seek such approval;
•
approved by the vote of a majority of the outstanding common units, excluding any units owned by the general partner or
any of its affiliates, although our general partner is not obligated to seek such approval;
•
on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or
•
fair and reasonable to us, taking into account the totality of the relationships between the parties involved, including
other transactions that may be particularly favorable or advantageous to us.
Our
general partner may, but is not required to, seek the approval of such resolution from the conflicts committee of its board of directors or from the common unitholders. If our
general partner does not seek approval from the conflicts committee and its board of directors determines that the resolution or course of action taken with respect to the conflict of interest
satisfies either of the standards set forth in the third and fourth bullet points above, then it will be presumed that, in making its decision, the board of directors acted in good faith, and in any
proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption. Unless the
resolution of a conflict is specifically provided for in our partnership agreement, our general partner or the conflicts committee may consider any factors it determines in good faith to consider when
resolving a conflict. When our partnership agreement requires someone to act in good faith, it requires that person to reasonably believe that he is acting in the best interests of the partnership,
unless the context otherwise requires.
Conflicts
of interest could arise in the situations described below, among others.
Our general partner's affiliates may compete with us.
Our partnership agreement provides that our general partner will be restricted from engaging in any business activities other than
acting as our general partner, guaranteeing debt of its affiliates and those activities incidental to its ownership of interests in us. However, except as provided in our partnership
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agreement,
affiliates of our general partner (which includes our sponsors) are not prohibited from engaging in other businesses or activities, including those that might be in direct competition with
us.
The owners of our general partner are not required to share business opportunities with us.
Our partnership agreement provides that the owners of our general partner are permitted to engage in separate businesses which directly
compete with us and are not required to share or communicate or offer any potential business opportunities to us even if the opportunity is one that we might reasonably have pursued. The partnership
agreement provides that the owners of our general partner will not be liable to us or any unitholder for breach of any duty or obligation by reason of the fact that such person pursued or acquired for
itself any business opportunity.
Our general partner is allowed to take into account the interests of parties other than us (such as our sponsors) in exercising certain rights under our partnership
agreement.
Our partnership agreement contains provisions that reduce the default standards to which our general partner would otherwise be held by
state fiduciary duty law. For example, our partnership agreement permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general
partner. This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors
affecting, us, our affiliates or any limited partner. Examples include the exercise of its call right, its voting rights with respect to the units it owns, its registration rights and the
determination of whether to consent to any merger or consolidation of the partnership or amendment of the partnership agreement.
Our general partner has limited its liability in the partnership agreement and replaced default fiduciary duties with contractual corporate governance standards set forth
therein, thereby restricting the remedies available to our unitholders for actions that, without such replacement, might constitute breaches of fiduciary duty.
In addition to the provisions described above, our partnership agreement contains provisions that restrict the remedies available to
our unitholders for actions that might otherwise constitute breaches of fiduciary duty. For example, our partnership agreement:
•
permits our general partner to make a number of decisions in its individual capacity, as opposed to its capacity as
general partner, thereby entitling our general partner to consider only the interests and factors that it desires, and imposes no duty or obligation on our general partner to give any consideration to
any interest of, or factors affecting, us, our affiliates or any limited partner;
•
provides that our general partner shall not have any liability to us or our unitholders for decisions made in its capacity
as general partner so long as it acted in good faith, meaning it believed that the decision was in the best interests of our partnership;
•
generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts
committee of the board of directors of our general partner and not involving a vote of unitholders must be on terms no less favorable to us than those generally being provided to or available from
unrelated third parties or be "fair and reasonable" to us, as determined by our general partner in good faith, and that, in determining whether a transaction or resolution is "fair and reasonable,"
our general partner may consider the totality of the relationships between the parties involved, including other transactions that may be particularly advantageous or beneficial to us;
•
provides that our general partner and its officers and directors will not be liable for monetary damages to us or our
limited partners for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that the general
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partner
or its officers or directors acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and
•
provides that in resolving conflicts of interest, it will be presumed that in making its decision, the general partner or
its conflicts committee acted in good faith, and in any proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the
burden of overcoming such presumption.
By
purchasing a common unit, a common unitholder will agree to become bound by the provisions in our partnership agreement, including the provisions discussed above. See
"—Fiduciary Duties."
Actions taken by our general partner may affect the amount of cash distributions to unitholders.
The amount of cash that is available for distribution to unitholders is affected by decisions of the board of directors of our general
partner regarding such matters as:
•
the expenses associated with being a public company and other general and administrative expenses;
•
interest expense and other financing costs related to current and future indebtedness;
•
amount and timing of asset purchases and sales;
•
cash expenditures;
•
borrowings; and
•
issuance of additional units.
Our
partnership agreement permits us to borrow funds to make a distribution on all outstanding units, and further provides that we and our subsidiaries may borrow funds from our general
partner and its affiliates.
Our general partner and its affiliates are not required to own any of our common units. If our general partner's affiliates were to sell all or substantially all of their
common units, this would heighten the risk that our general partner would act in ways that are more beneficial to itself than our common unitholders.
Upon the closing of this offering, affiliates of our general partner will own the majority of our outstanding units, but there is no
requirement that they continue to do so. The general partner and its affiliates are permitted to sell all of their common units, subject to certain limitations contained in our partnership agreement.
In addition, the current owners of our general partner may sell the general partner interest to an unrelated third party. If neither the general partner nor its affiliates owned any of our common
units, this would heighten the risk that our general partner would act in ways that are more beneficial to itself than our common unitholders.
We will reimburse our general partner for expenses.
We will reimburse our general partner for costs incurred in managing and operating us, including salary, bonus, incentive compensation
and other amounts paid to its employees and executive officers who perform services for us. Our partnership agreement provides that the board of directors of our general partner will determine in good
faith the expenses that are allocable to us.
Common units are subject to our general partner's call right.
If at any time our general partner and its affiliates own more than 80% of the common units, our general partner will have the right,
which it may assign to any of its affiliates or to us, but not the
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obligation,
to acquire all, but not less than all, of the common units held by public unitholders at a price not less than their then-current market price, as calculated pursuant to the
terms of our partnership agreement. As a result, you may be required to sell your common units at an undesirable time or price and may not receive any return on your investment. You may also incur a
tax liability upon a sale of your common units. Our general partner is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon exercise of the
call right. There is no restriction in our partnership agreement that prevents our manager from issuing additional common units and exercising its call right. Our general partner may use its own
discretion, free of fiduciary duty restrictions, in determining whether to exercise this right. See "The Partnership Agreement—Call Right."
Contracts between us, on the one hand, and our general partner and its affiliates, on the other, will not be the result of arm's-length negotiations.
Our partnership agreement allows our general partner to determine, in good faith, any amounts to pay itself or its affiliates for any
services rendered to us. Our general partner may also enter into additional contractual arrangements with any of its affiliates on our behalf. Neither our partnership agreement nor any of the other
agreements, contracts and arrangements between us and our general partner and its affiliates is or will be the result of arm's-length negotiations.
Our
partnership agreement generally provides that if any affiliated transaction, such as an agreement, contract or arrangement between us and our general partner and its affiliates,
is:
•
approved by a majority of the members of our conflicts committee;
•
approved by a majority of outstanding common units (excluding those owned by our general partner and its affiliates);
•
on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or
•
"fair and reasonable" to us, taking into account the totality of the relationships between the parties involved (including
other transactions that may be particularly favorable or advantageous to us) it will be deemed approved by all of our partners, and deemed to not constitute a breach of our partnership agreement or
any duty thereunder or existing at law.
The
prosecution of any disputes or disagreements that could arise in the future under a contract or other agreement between us and our general partner would give rise to an automatic
conflict of interest, as a common group of executive officers is likely to be on both sides of the transaction.
Our
general partner will determine, in good faith, the terms of any of these related party transactions entered into after the completion of this offering.
Our
general partner and its affiliates will have no obligation to permit us to use any of its facilities or assets, except as may be provided in contracts entered into specifically
dealing with that use. There is no obligation of our general partner and its affiliates to enter into any contracts of this kind.
Our general partner intends to limit its liability regarding our obligations.
Our general partner intends to limit its liability under contractual arrangements (including our new credit facilities) so that the
other party has recourse only to our assets and not against our general partner or its assets. Our partnership agreement provides that any action taken by our general partner to limit its liability or
our liability is not a breach of our general partner's fiduciary duties, even if we could have obtained terms that are more favorable without the limitation on liability.
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Common unitholders will have no right to enforce obligations of our general partner and its affiliates under agreements with us.
Any agreements between us, on the one hand, and our general partner and its affiliates, on the other, will not grant to the
unitholders, separate and apart from us, the right to enforce the obligations of our general partner and its affiliates in our favor.
We may choose not to retain separate counsel for ourselves or for the holders of common units.
The attorneys, independent accountants and others who perform services for us in this offering have been retained by our general
partner or its affiliates. Attorneys, independent accountants and others who perform services for us in the future will be selected by our general partner and may perform services for our general
partner and its affiliates. We may retain separate counsel for ourselves or the holders of common units in the event of a conflict of interest between our general partner and its affiliates, on the
one hand, and us or the holders of common units, on the other, depending on the nature of the conflict. However, we do not intend to do so in most cases.
Except in limited circumstances, our general partner has the power and authority to conduct our business without limited partner approval.
Under our partnership agreement, our general partner has full power and authority to do all things, other than those items that require
unitholder approval or on such terms as it determines to be necessary or appropriate to conduct our business including, but not limited to, the following:
•
the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into securities of the partnership, and the incurring of any other
obligations;
•
the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other
agencies having jurisdiction over our business or assets;
•
the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of our assets or the
merger or other combination of us with or into another person;
•
the negotiation, execution and performance of any contracts, conveyances or other instruments;
•
the distribution of partnership cash;
•
the selection and dismissal of employees and agents, outside attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of employment or hiring;
•
the maintenance of insurance for our benefit and the benefit of our partners;
•
the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any
further limited or general partnerships, joint ventures, corporations, limited liability companies or other entities;
•
the control of any matters affecting our rights and obligations, including the bringing and defending of actions at law or
in equity and otherwise engaging in the conduct of litigation, arbitration or mediation and the incurring of legal expense and the settlement of claims and litigation;
•
the indemnification of any person against liabilities and contingencies to the extent permitted by law;
•
the purchase, sale or other acquisition or disposition of our securities, or the issuance of additional options, rights,
warrants and appreciation rights relating to our securities; and
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•
the entering into of agreements with any of its affiliates to render services to us or to itself in the discharge of its
duties as our general partner.
See
"The Partnership Agreement" for information regarding the voting rights of common unitholders.
Fiduciary Duties
The Delaware Act provides that Delaware limited partnerships may, in their partnership agreements, restrict, expand or eliminate the
fiduciary duties owed by general partners to other partners and the partnership. Our partnership agreement has eliminated these default fiduciary standards; instead, our general partner is accountable
to us and our unitholders pursuant to the detailed contractual standards set forth in our partnership agreement. The duties owed to unitholders by our general partner are thus prescribed by our
partnership agreement and not by default fiduciary duties.
We
have adopted these standards to allow our general partner or its affiliates to engage in transactions with us that would otherwise be prohibited by state law fiduciary standards and
to take into account the interests of other parties in addition to our interests when resolving conflicts of interest. Without such deviation from the default standards, such transactions could result
in violations of our general partner's state law fiduciary duties. We believe this is appropriate and necessary because the board of directors of our general partner has duties to manage our general
partner in a manner beneficial to its owners, and duties to manage us in a manner that is in our best interests. Without these modifications, our general partner's ability to make decisions involving
conflicts of interest would be restricted. These modifications also enable our general partner to take into consideration all parties involved in the proposed action, so long as the resolution is in
our best interests. Further, these modifications enable our general partner to attract and retain experienced and capable directors. However, these modifications disadvantage the common unitholders
because they restrict the rights and remedies that would otherwise be available to unitholders for actions that, without such modifications, might constitute breaches of fiduciary duty, as described
below, and permit our general partner to take into account the interests of third parties in addition to our interests when resolving conflicts of interest. The following is a summary
of:
•
the default fiduciary duties under by the Delaware Act;
•
the standards contained in our partnership agreement that replace the default fiduciary duties; and
•
certain rights and remedies of limited partners contained in the Delaware Act.
State law fiduciary duty standards
Fiduciary duties are generally considered to include an obligation to act in good faith and with due care and loyalty. The duty of care, in the absence of a provision in a partnership agreement providing
otherwise, would generally require a general partner to act for the partnership in the same manner as a prudent person would act on his own behalf. The duty of loyalty, in the absence of a provision in a partnership agreement providing otherwise,
would generally require that any action taken or transaction engaged in be entirely fair to the Partnership.
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Partnership agreement modified standards
Our partnership agreement contains provisions that waive or consent to conduct by our general partner and its affiliates that might otherwise raise issues as to compliance with fiduciary duties or
applicable law. For example, our partnership agreement provides that when our general partner is acting in its capacity as our general partner, as opposed to in its individual capacity, it must act in "good faith" and will not be subject to any other
standard under applicable law. In addition, when our general partner is acting in its individual capacity, as opposed to in its capacity as our general partner, it may act without any fiduciary obligation to us or the unitholders whatsoever. These
contractual standards reduce the obligations to which our general partner would otherwise be held.
Our partnership agreement generally provides that affiliated transactions and resolutions of conflicts of interest not involving a vote of unitholders and that are not approved by the conflicts
committee of the board of directors of our general partner must be:
•
on terms no less favorable to us than
those generally being provided to or available from unrelated third parties; or
•
"fair and reasonable" to us, taking into
account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to us).
All conflicts of interest disclosed in this prospectus (including our agreements and other arrangements with affiliates of our general partner) have been approved by all of our partners under the terms
of our partnership agreement.
If our general partner does not seek approval from the conflicts committee of its board of directors or the common unitholders, and its board of directors determines that the resolution or course of
action taken with respect to the conflict of interest satisfies either of the standards set forth in the bullet points above, then it will be presumed that, in making its decision, the board of directors, which may include board members affected by
the conflict of interest, acted in good faith, and in any proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption. These
standards reduce the obligations to which our general partner would otherwise be held.
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Rights and remedies of limited partners
The Delaware Act generally provides that a limited partner may institute legal action on behalf of the partnership to recover damages from a third party where a general partner has refused to institute the
action or where an effort to cause a general partner to do so is not likely to succeed. These actions include actions against a general partner for breach of its fiduciary duties or of our partnership agreement. In addition, the statutory or case law
of some jurisdictions may permit a limited partner to institute legal action on behalf of it and all other similarly situated limited partners to recover damages from a general partner for violations of its fiduciary duties to the limited
partners.
Partnership agreement modified standards
In addition to the other more specific provisions limiting the obligations of our general partner, our partnership agreement further provides that our general partner and its officers and directors
will not be liable for monetary damages to us or our limited partners for errors of judgment or for any acts or omissions unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that the general
partner or its officers and directors acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that such person's conduct was criminal.
In
order to become one of our limited partners, a common unitholder is required to agree to be bound by the provisions in our partnership agreement, including the
provisions discussed above. See "Description of Our Common Units—Transfer of Common Units." This is in accordance with the policy of the Delaware Act favoring the principle of freedom of
contract and the enforceability of partnership agreements. The failure of a limited partner or assignee to sign a partnership agreement does not render our partnership agreement unenforceable against
that person.
Under
our partnership agreement, we must indemnify our general partner and its officers, directors and managers, to the fullest extent permitted by law, against liabilities, costs and
expenses incurred by our general partner or these other persons. We must provide this indemnification unless there has been a final and non-appealable judgment by a court of competent
jurisdiction determining that these persons acted in bad faith or engaged in fraud or willful misconduct. We also must provide this indemnification for criminal proceedings unless our general partner
or these other persons acted with knowledge that their conduct was unlawful. Thus, our general partner could be indemnified for its negligent or grossly negligent acts if it meets the requirements set
forth above. To the extent that these provisions purport to include indemnification for liabilities arising under the Securities Act, in the opinion of the SEC such indemnification is contrary to
public policy and therefore unenforceable.
Related Party Transactions
We have adopted policies for the review, approval and ratification of transactions with related persons. At the discretion of our
general partner's board of directors, a proposed related party transaction may generally be approved by the board in its entirety, or by a "conflicts committee" meeting the definitional requirements
for such a committee under the partnership agreement.
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DESCRIPTION OF OUR COMMON UNITS
Our Common Units
The common units offered hereby represent limited partner interests in us. The holders of common units are entitled to participate in
partnership distributions and exercise the rights and privileges provided to limited partners under our partnership agreement. For a description of the rights and privileges of holders of our common
units to partnership distributions, see "How We Make Cash Distributions" and "Our Cash Distribution Policy and Restrictions on Distributions." For a description of the rights and privileges of limited
partners under our partnership agreement, including voting rights, see "The Partnership Agreement."
Transfer Agent and Registrar
Duties.
American Stock Transfer & Trust Company will serve as registrar and transfer agent for the common units. We pay all
fees charged by
the transfer agent for transfers of common units, except the following, which must be paid by unitholders:
•
surety bond premiums to replace lost or stolen certificates, taxes and other governmental charges;
•
special charges for services requested by a holder of a common unit; and
•
other similar fees or charges.
There
is no charge to unitholders for disbursements of our quarterly cash distributions. We will indemnify the transfer agent, its agents and each of their stockholders, directors,
officers and employees against all claims and losses that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence or
intentional misconduct of the indemnified person or entity.
Resignation or Removal.
The transfer agent may resign, by notice to us, or be removed by us. The resignation or removal of the transfer
agent will
become effective upon our appointment of a successor transfer agent and registrar and its acceptance of the appointment. If a successor has not been appointed or has not accepted its appointment
within 30 days after notice of the resignation or removal, our general partner may act as the transfer agent and registrar until a successor is appointed.
Transfer of Common Units
By transfer of common units in accordance with our partnership agreement, each transferee of common units shall be admitted as a
limited partner with respect to the common units transferred when such transfer and admission is reflected in our books and records. Each transferee:
•
represents that the transferee has the capacity, power and authority to become bound by our partnership agreement;
•
automatically agrees to be bound by the terms and conditions of, and is deemed to have executed, our partnership
agreement; and
•
gives the consents and approvals contained in our partnership agreement, such as the approval of all transactions and
agreements entered into in connection with our formation and this offering.
A
transferee will become a substituted limited partner of our partnership for the transferred common units automatically upon the recording of the transfer on our books and records. Our
general partner will cause any transfers to be recorded on our books and records from time to time as necessary to accurately reflect the transfers.
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We
may, at our discretion, treat the nominee holder of a common unit as the absolute owner. In that case, the beneficial holder's rights are limited solely to those that it has against
the nominee holder as a result of any agreement between the beneficial owner and the nominee holder.
Common
units are securities and are transferable according to the laws governing transfer of securities. In addition to other rights acquired upon transfer, the transferor gives the
transferee the right to become a limited partner in our partnership for the transferred common units.
Until
a common unit has been transferred on our books, we and the transfer agent may treat the record holder of the common unit as the absolute owner for all purposes, except as
otherwise required by law or stock exchange regulations.
Listing
We intend to apply to list our common units on the New York Stock Exchange under the symbol "PDH."
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THE PARTNERSHIP AGREEMENT
The following is a summary of the material provisions of our partnership agreement. The form of our partnership agreement is included
in this prospectus as Appendix A. We will provide prospective investors with a copy of our partnership agreement upon request at no charge.
We
summarize the following provisions of our partnership agreement elsewhere in this prospectus:
•
with regard to distributions of cash, see "How We Make Cash Distributions";
•
with regard to the fiduciary duties of our general partner, see "Conflicts of Interest and Fiduciary Duties";
•
with regard to the authority of our general partner to manage our business and activities, see "Management—Our
Management";
•
with regard to the transfer of common units, see "Description of Our Common Units—Transfer of Common Units";
and
•
with regard to allocations of taxable income and taxable loss, see "Material U.S. Federal Income Tax Consequences."
Organization and Duration
We were organized in June 2011 and will have a perpetual existence unless terminated pursuant to the terms of our partnership
agreement.
Purpose
Our purpose under our partnership agreement is limited to engaging in any business activity that is approved by our general partner and
that lawfully may be conducted by a limited partnership organized under Delaware law.
Although
our general partner has the ability to cause us and our subsidiary to engage in activities other than those related to the propylene production business and activities now or
hereafter customarily conducted in conjunction with this business, our general partner may decline to do so free of any fiduciary duty or obligation whatsoever to us or the limited partners, including
any duty to act in good faith or in the best interests of us or our limited partners. In general, our general partner is authorized to perform all acts it determines to be necessary or appropriate to
carry out our purposes and to conduct our business.
Capital Contributions
Common unitholders are not obligated to make additional capital contributions, except as described below under "—Limited
Liability." For a discussion of our general partner's right to contribute capital to maintain its and its affiliates' percentage interest if we issue additional partnership interests, see
"—Issuance of Additional Partnership Interests."
Voting Rights
The following is a summary of the unitholder vote required for the matters specified below. Matters requiring the approval of a "unit
majority" require the approval of a majority of the common units.
At
the closing of this offering, our sponsors will have the ability to ensure passage of, as well as the ability to ensure the defeat of, any amendment which requires a unit majority by
virtue of their        % indirect, combined ownership of our common units.
In
voting their common units, our sponsors and their affiliates will have no fiduciary duty or obligation whatsoever to us or the limited partners, including any duty to act in good
faith or in the best interests of us
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or
the limited partners. The holders of a majority of the common units (including common units owned by our sponsors) represented in person or by proxy shall constitute a quorum at a meeting of such
common unitholders, unless any such action requires approval by holders of a greater percentage of such units in which case the quorum shall be such greater percentage.
The
following is a summary of the vote requirements specified for certain matters under our partnership agreement:
Issuance of additional partnership interests
No approval right. See "—Issuance of Additional Partnership Interests."
Amendment of our partnership agreement
Certain amendments may be made by our general partner without the approval of the common unitholders. Other
amendments generally require the approval of a unit majority. See "—Amendment of Our Partnership Agreement."
Merger of our partnership or the sale of all or substantially all of our assets
Unit majority in certain circumstances. See "—Merger, Sale or Other Disposition of Assets."
Dissolution of our partnership
Unit majority. See "—Termination and Dissolution."
Continuation of our partnership upon dissolution
Unit majority. See "—Termination and Dissolution."
Withdrawal of our general partner
Under most circumstances, the approval of a majority of the common units, excluding common units held by our
general partner and its affiliates, is required for the withdrawal of our general partner prior to September 30, 2021. See "—Withdrawal or Removal of Our General Partner."
Removal of our general partner
Not less than 66
2
/
3
% of the outstanding common units, including common units held by
our general partner and its affiliates. See "—Withdrawal or Removal of Our General Partner."
Transfer of the general partner interest
Our general partner may transfer all, but not less than all, of its general partner interest in us without a vote
of our unitholders to an affiliate or another person in connection with its merger or consolidation with or into, or sale of all or substantially all of its assets to, such person. The approval of a majority of the common units, excluding common
units held by our general partner and its affiliates, is required in other circumstances for a transfer of the general partner interest to a third party prior to September 30, 2021. See "—Transfer of General Partner Interests."
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Transfer of ownership interests in our general partner
No approval required at any time. See "—Transfer of Ownership Interests in Our General Partner."
If
any person or group other than our general partner and its affiliates acquires beneficial ownership of 20% or more of any class of units then outstanding, that person or group will
lose voting rights on all of such units. This loss of voting rights does not apply to any person or group that acquires the units from our general partner or its affiliates and any transferees of that
person or group approved by our general partner or to any person or group who acquires the units with the specific approval of our general partner.
Applicable Law; Forum, Venue and Jurisdiction
Our partnership agreement is governed by Delaware law. Our partnership agreement requires that any claims, suits, actions or
proceedings:
•
arising out of or relating in any way to the partnership agreement (including any claims, suits or actions to interpret,
apply or enforce the provisions of the partnership agreement or the duties, obligations or liabilities among limited partners or of limited partners to us, or the rights or powers of, or restrictions
on, the limited partners or us);
•
brought in a derivative manner on our behalf;
•
asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of us or our general
partner, or owed by our general partner, to us or the limited partners;
•
asserting a claim arising pursuant to any provision of the Delaware Act; or
•
asserting a claim governed by the internal affairs doctrine shall be exclusively brought in the Court of Chancery of the
State of Delaware, regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds,
or are derivative or direct claims. By purchasing a common unit, a limited partner is irrevocably consenting to these limitations and provisions regarding claims, suits, actions or proceedings and
submitting to the exclusive jurisdiction of the Court of Chancery of the State of Delaware in connection with any such claims, suits, actions or proceedings.
Limited Liability
Assuming that a limited partner does not participate in the control of our business within the meaning of the Delaware Act and that it
otherwise acts in conformity with the provisions of our partnership agreement, its liability under the Delaware Act will be limited, subject to possible exceptions, to the amount of capital it is
obligated to contribute to us for its common units plus its share of any undistributed profits and assets. If it were determined, however, that the right, or exercise of the right, by the limited
partners as a group:
•
to remove or replace our general partner;
•
to approve some amendments to our partnership agreement; or
•
to take other action under our partnership agreement
constituted
"participation in the control" of our business for the purposes of the Delaware Act, then the limited partners could be held personally liable for our obligations under the laws of
Delaware to
the same extent as our general partner. This liability would extend to persons who transact business with us who reasonably believe that the limited partner is a general partner. Neither our
partnership agreement nor the Delaware Act specifically provides for legal recourse against our general partner if a limited partner were to lose limited liability through any fault of our general
partner. While this does not mean that a limited partner could not seek legal recourse, we know of no precedent for such a claim in Delaware case law.
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Under
the Delaware Act, a limited partnership may not make a distribution to a partner if, after the distribution, all liabilities of the limited partnership, other than liabilities to
partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specific property of the partnership, would exceed the fair value of the assets of
the limited partnership. For the purpose of determining the fair value of the assets of a limited partnership, the Delaware Act provides that the fair value of property subject to liability for which
recourse of creditors is limited shall be included in the assets of the limited partnership only to the extent that the fair value of that property exceeds the nonrecourse liability. The Delaware Act
provides that a limited partner who receives a distribution and knew at the time of the distribution that the distribution was in violation of the Delaware Act shall be liable to the limited
partnership for the amount of the distribution for three years. Under the Delaware Act, a substituted limited partner of a limited partnership is liable for the obligations of his assignor to make
contributions to the partnership, except that such person is not obligated for liabilities unknown to him at the time he became a limited partner and that could not be ascertained from the partnership
agreement.
Our
subsidiary conducts business in Texas. We and our current subsidiary or any future subsidiaries may conduct business in other states in the future. Maintenance of our limited
liability as a member of our operating company may require compliance with legal requirements in the jurisdictions in which our operating company conducts business, including qualifying our
subsidiaries to do business there. We have attempted to limit our liability for the obligations of our operating subsidiary by structuring it as a limited liability company.
If,
by virtue of our membership interest in our operating subsidiary or otherwise, it were determined that we were conducting business in any state without compliance with the applicable
limited partnership or liability company statute, or that the right, or exercise of the right by the limited partners as a group, to remove or replace our general partner, to approve some amendments
to our partnership agreement, or to take other action under our partnership agreement constituted "participation in the control" of our business for purposes of the statutes of any relevant
jurisdiction, then the limited partners could be held personally liable for our obligations under the law of that jurisdiction to the same extent as our general partner under the circumstances. We
will operate in a manner that our general partner considers reasonable and necessary or appropriate to preserve the limited liability of the limited partners.
Issuance of Additional Partnership Interests
Our partnership agreement authorizes us to issue an unlimited number of additional partnership interests for the consideration and on
the terms and conditions determined by our general partner without the approval of the unitholders.
It
is possible that we will fund acquisitions through the issuance of additional common units or other partnership interests. Holders of any additional common units we issue will be
entitled to share equally with the then-existing holders of common units in our quarterly cash distributions. In addition, the issuance of additional common units or other partnership
interests may dilute the value of the interests of the then-existing holders of common units in our net assets.
In
accordance with Delaware law and the provisions of our partnership agreement, we may also issue additional partnership interests that, as determined by our general partner, have
special voting rights to which the common units are not entitled or are senior in right of distribution to the common units. In addition, our partnership agreement does not prohibit the issuance by
our subsidiary of equity interests, which may effectively rank senior to the common units.
Our
general partner will have the right, which it may from time to time assign in whole or in part to any of its affiliates, to purchase common units, whenever, and on the same terms
that, we issue those interests to persons other than our general partner and its affiliates, to the extent necessary to maintain its and its affiliates' percentage interest, including such interest
represented by common units, that existed
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immediately
prior to each issuance. The holders of common units will not have preemptive rights under our partnership agreement to acquire additional common units or other partnership interests.
Amendment of Our Partnership Agreement
General
Amendments to our partnership agreement may be proposed only by our general partner. However, our general partner will have no duty or
obligation to propose any amendment and may decline to do so free of any fiduciary duty or obligation whatsoever to us or any partner, including any duty to act in good faith or in the best interests
of us or the limited partners. In order to adopt a proposed amendment, other than the amendments discussed below under "—No Unitholder Approval," our general partner is required to seek
written approval of the holders of the number of common units required to approve the amendment or call a meeting of the limited partners to consider and vote upon the proposed amendment. Except as
described below, an amendment must be approved by a unit majority.
Prohibited Amendments
No amendment may be made that would:
•
enlarge the obligations of any limited partner or general partner without its consent, unless approved by at least a
majority of the type or class of partner interests so affected;
•
enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts
distributable, reimbursable or otherwise payable by us to our general partner or any of its affiliates without the consent of our general partner, which consent may be given or withheld in its sole
discretion;
•
change certain of the terms under which we can be dissolved; or
•
change the term of the Partnership.
The
provision of our partnership agreement preventing the amendments having the effects described in any of the clauses above can be amended upon the approval of the holders of at least
90% of the outstanding common units, voting together as a single class (including common units owned by our sponsor and their affiliates). Upon completion of this offering, our sponsors and their
affiliates will own approximately        % of the outstanding common units (approximately        % if the underwriters exercise their option to purchase additional common
units in full).
No Unitholder Approval
Our general partner may generally make amendments to our partnership agreement without the approval of any other partner to
reflect:
•
a change in our name, the location of our principal place of business, our registered agent or our registered office;
•
the admission, substitution, withdrawal or removal of partners in accordance with our partnership agreement;
•
a change that our general partner determines to be necessary or appropriate for us to qualify or to continue our
qualification as a limited partnership or a partnership in which the limited partners have limited liability under the laws of any state or to ensure that neither we nor our subsidiary will be treated
as an association taxable as a corporation or otherwise taxed as an entity for U.S. federal income tax purposes (to the extent not already so treated or taxed);
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•
an amendment that is necessary, in the opinion of our counsel, to prevent us or our general partner or its directors,
officers, agents, or trustees from in any manner being subjected to the provisions of the Investment Company Act of 1940, the Investment Advisers Act of 1940, or "plan asset" regulations adopted under
the Employee Retirement Income Security Act of 1974, or ERISA, whether or not substantially similar to plan asset regulations currently applied or proposed;
•
an amendment that our general partner determines to be necessary or appropriate for the creation, authorization or
issuance of additional partnership interests or rights to acquire partnership interests, as otherwise permitted by our partnership agreement;
•
any amendment expressly permitted in our partnership agreement to be made by our general partner acting alone;
•
an amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of our
partnership agreement;
•
any amendment that our general partner determines to be necessary or appropriate for the formation by us of, or our
investment in, any corporation, partnership or other entity, as otherwise permitted by our partnership agreement;
•
a change in our fiscal year or taxable year and related changes;
•
mergers with or conveyances to another limited liability entity that is newly formed and has no assets, liabilities or
operations at the time of the merger or conveyance other than those it receives by way of the merger or conveyance; or
•
any other amendments substantially similar to any of the matters described above.
In
addition, our general partner may make amendments to our partnership agreement without the approval of any partner if our general partner determines that those
amendments:
•
do not adversely affect in any material respect the partners considered as a whole or any particular class of partners;
•
are necessary or appropriate to satisfy any requirements, conditions, or guidelines contained in any opinion, directive,
order, ruling, or regulation of any federal or state agency or judicial authority or contained in any federal or state statute;
•
are necessary or appropriate to facilitate the trading of limited partner interests or to comply with any rule,
regulation, guideline, or requirement of any securities exchange on which the limited partner interests are or will be listed for trading;
•
are necessary or appropriate for any action taken by our general partner relating to splits or combinations of common
units under the provisions of our partnership agreement; or
•
are required to effect the intent expressed in this prospectus or the intent of the provisions of our partnership
agreement or are otherwise contemplated by our partnership agreement.
Opinion of Counsel and Unitholder Approval
For amendments of the type not requiring unitholder approval, our general partner will not be required to obtain an opinion of counsel
that an amendment will not result
in a loss of limited liability to the limited partners or result in our being treated as an entity for U.S. federal income tax purposes in connection with any of the amendments. No other amendments to
our partnership agreement will become effective without the approval of holders of at least 90% of the outstanding common units voting as a single class unless we first obtain an opinion of counsel to
the effect that the amendment will not affect the limited liability under Delaware law of any of our limited partners.
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Any
amendment that would have a material adverse effect on the rights or preferences of any type or class of outstanding common units in relation to other classes of units will require
the approval of at least a majority of the type or class of common units so affected. Any amendment that would reduce the percentage of units required to take any action, other than to remove the
general partner or call a meeting of unitholders must be approved by the affirmative vote of partners whose aggregate outstanding units constitute not less than the percentage sought to be reduced.
Merger, Sale or Other Disposition of Assets
A merger or consolidation or conversion of us requires the prior consent of our general partner. However, our general partner will have
no duty or obligation to consent to any merger or consolidation and may decline to do so free of any fiduciary duty or obligation whatsoever to us or other partners, including any duty to act in good
faith or in the best interest of us or the other partners.
In
addition, our partnership agreement generally prohibits our general partner, without the prior approval of the holders of a unit majority, from causing us to sell, exchange or
otherwise dispose of all or substantially all of our assets in a single transaction or a series of related transactions, including by way of merger, consolidation or other combination. Our general
partner may, however, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of our assets without that approval. Our general partner may also sell all or substantially
all of our assets under a foreclosure or other realization upon those encumbrances without that approval.
Finally,
our general partner may consummate any merger without the prior approval of our unitholders if we are the surviving entity in the transaction, our general partner has received
an opinion of counsel regarding limited liability and tax matters, the transaction would not result in a material amendment to the partnership agreement (other than an amendment that the general
partner could adopt without the
consent of other partners), each of our common units will be an identical unit of our partnership following the transaction and the partnership securities to be issued do not exceed 20% of our
outstanding partnership interests immediately prior to the transaction.
If
the conditions specified in our partnership agreement are satisfied, our general partner may convert us or our subsidiary into a new limited liability entity or merge us or our
subsidiary into, or convey all of our assets to, a newly formed entity, if the sole purpose of that conversion, merger or conveyance is to effect a mere change in our legal form into another limited
liability entity, we have received an opinion of counsel regarding limited liability and tax matters and the governing instruments of the new entity provide the limited partners and our general
partner with the same rights and obligations as contained in our partnership agreement. Our unitholders are not entitled to dissenters' rights of appraisal under our partnership agreement or
applicable Delaware law in the event of a conversion, merger or consolidation, a sale of substantially all of our assets or any other similar transaction or event.
Termination and Dissolution
We will continue as a limited partnership until terminated under our partnership agreement. We will dissolve
upon:
(1)
the
election of our general partner to dissolve us, if approved by the holders of common units representing a unit majority;
(2)
there
being no limited partners, unless we are continued without dissolution in accordance with applicable Delaware law;
(3)
the
entry of a decree of judicial dissolution of our partnership; or
(4)
the
withdrawal or removal of our general partner or any other event that results in its ceasing to be our general partner other than by reason of a transfer
of its general partner interest in
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accordance
with our partnership agreement or withdrawal or removal following approval and admission of a successor.
Upon
a dissolution under clause (4), the holders of a unit majority may also elect, within specific time limitations, to continue our business on the same terms and conditions
described in our partnership agreement by appointing as a successor general partner an entity approved by the holders of common units representing a unit majority, subject to our receipt of an opinion
of counsel to the effect that:
•
the action would not result in the loss of limited liability under Delaware law of any limited partner; and
•
neither our partnership nor our subsidiary would be treated as an association taxable as a corporation or otherwise be
taxable as an entity for U.S. federal income tax purposes upon the exercise of that right to continue (to the extent not already so treated or taxed).
Liquidation and Distribution of Proceeds
Upon our dissolution, unless our business is continued, the liquidator authorized to wind up our affairs will, acting with all of the
powers of our general partner that are necessary or appropriate, liquidate our assets and apply the proceeds of the liquidation as set forth in our partnership agreement. The liquidator may defer
liquidation or distribution of our assets for a reasonable period of time or distribute assets to partners in kind if it determines that a sale would be impractical or would cause undue loss to our
partners.
Withdrawal or Removal of Our General Partner
Except as described below, our general partner has agreed not to withdraw voluntarily as our general partner prior to
September 30, 2021 without obtaining the approval of the holders of at least a majority of the outstanding common units excluding common units held by our general partner and its affiliates,
and by giving 90 days' written notice and furnishing an opinion of counsel regarding limited liability and tax matters. On or after September 30, 2021, our general partner may withdraw
as general partner without first obtaining approval of any unitholder by giving 90 days' written notice, and that withdrawal will not constitute a violation of our partnership agreement.
Notwithstanding the information above, our general partner may withdraw without unitholder approval upon 90 days' notice to the unitholders if at least 50% of the outstanding common units are
held or controlled by one person and its affiliates other than our general partner and its affiliates. In addition, our partnership agreement permits our general partner in some instances to sell or
otherwise transfer all of its general partner interest without the approval of the unitholders. See "—Transfer of General Partner Interest."
Upon
withdrawal of our general partner under any circumstances, other than as a result of a transfer by our general partner of all or a part of its general partner interest in us, the
holders of a majority of the outstanding classes of common units voting as a single class may select a successor to that withdrawing general partner. If a successor is not elected, or is elected but
an opinion of counsel regarding limited liability and tax matters cannot be obtained, we will be dissolved, wound up and liquidated, unless within a specified period of time after that withdrawal, the
holders of a unit majority agree in writing to continue our business and to appoint a successor general partner. See "—Termination and Dissolution."
Our
general partner may not be removed unless that removal is approved by the vote of the holders of not less than 66
2
/
3
% of the outstanding common units, voting together
as a single class, including common units held by our sponsors and their affiliates, and we receive an opinion of counsel regarding limited liability and tax matters. Any removal of our general
partner is also subject to the approval of a successor general partner by the vote of the holders of a majority of the outstanding common units. The ownership of more than 33
1
/
3
% of the
outstanding common units by our sponsors and their affiliates gives them the ability to prevent our general partner's removal. At the closing of this offering, our sponsors and their
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affiliates
will own approximately        % of the outstanding common units (approximately        % if the underwriters exercise their option to purchase additional common units in
full).
In
the event of removal of our general partner under circumstances where cause exists or withdrawal of our general partner where that withdrawal violates our partnership agreement, a
successor general partner will have the option to purchase the general partner interest of the departing general partner for a cash payment equal to the fair market value of the general partner
interest. Under all other circumstances where our general partner withdraws or is removed, the departing general partner will have the option to require the successor general partner to purchase the
general partner interest of the departing general partner for its fair market value. In each case, this fair market value will be determined by agreement between the departing general partner and the
successor general partner. If no agreement is reached, an independent investment banking firm or other independent expert selected by the departing general partner and the successor general partner
will determine the fair market value. Or, if the departing general partner and the successor general partner cannot agree upon an expert, then an expert chosen by agreement of the experts selected by
each of them will determine the fair market value.
If
the option described above is not exercised by either the departing general partner or the successor general partner, the departing general partner's general partner interest will
automatically convert into common units equal to the fair market value of those interests as determined by an investment banking firm or other independent expert selected in the manner described in
the preceding paragraph.
In
addition, we will be required to reimburse the departing general partner for all amounts due to the general partner, including, without limitation, all employee-related liabilities,
including severance liabilities, incurred for the termination of any employees employed by the departing general partner or its affiliates for our benefit.
Transfer of General Partner Interest
Except for the transfer by our general partner of all, but not less than all, of its general partner interest in our partnership
to:
•
an affiliate of our general partner (other than an individual), or
•
another entity as part of the merger or consolidation of our general partner with or into another entity or the transfer
by our general partner of all or substantially all of its assets to another entity,
•
our general partner may not transfer all or any part of its general partner interest to another person prior to
September 30, 2021 without the approval of both the holders of at least a majority of the outstanding common units, excluding common units held by our general partner or our sponsors and their
affiliates. On or after September 30, 2021, the general partner interest will be freely transferable. As a condition of any transfer, the transferee must, among other things, assume the rights
and duties of our general partner, agree to be bound by the provisions of our partnership agreement and furnish an opinion of counsel regarding limited liability and tax matters.
Our
general partner and its affiliates may at any time transfer common units to one or more persons, without unitholder approval.
Transfer of Ownership Interests in Our General Partner
At any time, the owners of our general partner may sell or transfer all or part of their ownership interests in our general partner to
an affiliate or a third party without the approval of our unitholders.
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Change of Management Provisions
Our partnership agreement contains specific provisions that are intended to discourage a person or group from attempting to remove
PetroLogistics GP LLC as our general partner or otherwise change management. See "—Withdrawal or Removal of Our General Partner" for a discussion of certain consequences of
the removal of our general partner. If any person or group other than our general partner and its affiliates acquires beneficial ownership of 20% or more of any class of common units, that person or
group loses voting rights on all of its common units. This loss of voting rights does not apply in certain circumstances. See "—Voting Rights."
Call Right
If at any time our general partner and its affiliates own more than 80% of the then-issued and outstanding limited partner
interests of any class, our general partner will have the right, which it may assign in whole or in part to any of its affiliates or to us, to acquire all, but not less than all, of the limited
partner interests of the class held by public unitholders, as of a record date to be selected by our general partner, on at least 10 but not more than 60 days' notice. Immediately following
this offering the only class of limited partner interest outstanding will be the common units, and our sponsors and their affiliates will own        % of the total outstanding common units.
The
purchase price in the event of such an acquisition will be the greater of:
(1)
the
highest price paid by our general partner or any of its affiliates for any limited partner interests of the class purchased within the 90 days
preceding the date on which our general partner first mails notice of its election to purchase those limited partner interests; and
(2)
the
average of the daily closing prices of the limited partner interests over the 20 trading days preceding the date three days before notice of exercise of
the call right is first mailed.
As
a result of our general partner's right to purchase outstanding common units, a holder of common units may have its common units purchased at an undesirable time or at a price that
may be lower than market prices at various times prior to such purchase or lower than a unitholder may anticipate the market price to be in the future. The U.S. federal income tax consequences to a
unitholder of the exercise of this call right are the same as a sale by that unitholder of his common units in the market. See "Material U.S. Federal Income Tax Consequences—Disposition of
Common Units."
Non-Citizen Assignees; Redemption
If our general partner, with the advice of counsel, determines we are subject to U.S. federal, state or local laws or regulations that
create a substantial risk of cancellation or forfeiture of any property that we have an interest in because of the nationality, citizenship or other related status of any limited partner, then our
general partner may adopt such amendments to our partnership agreement as it determines necessary or advisable to:
•
obtain proof of the nationality, citizenship or other related status of our limited partner (and their owners, to the
extent relevant); and
•
permit us to redeem the common units held by any person whose nationality, citizenship or other related status creates
substantial risk of cancellation or forfeiture of any property or who fails to comply with the procedures instituted by the board to obtain proof of the nationality, citizenship or other related
status. The redemption price in the case of such redemption will be the average of the daily closing prices per unit for the 20 consecutive trading days immediately prior to the date set for
redemption.
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Meetings; Voting
Except as described below regarding a person or group owning 20% or more of any class of units then outstanding, unitholders who are
record holders of common units on the record date will be entitled to notice of, and to vote at, meetings of our unitholders and to act upon matters for which approvals may be solicited. Our general
partner does not anticipate that any meeting of unitholders will be called in the foreseeable future. Any action that is required or permitted to be taken by the unitholders may be taken either at a
meeting of the unitholders or without a meeting if consents in writing describing the action so taken are signed by holders of the number of
units necessary to authorize or take that action at a meeting. Meetings of the unitholders may be called by our general partner or by unitholders owning at least 20% of the outstanding units of the
class for which a meeting is proposed. Unitholders may vote either in person or by proxy at meetings. The holders of a majority of the outstanding units of the class or classes for which a meeting has
been called, represented in person or by proxy, will constitute a quorum unless any action by the unitholders requires approval by holders of a greater percentage of the units, in which case the
quorum will be the greater percentage.
Each
record holder of a unit has a vote according to his percentage interest in us, although additional limited partner interests having special voting rights could be issued. See
"—Issuance of Additional Partnership Interests." However, if at any time any person or group, other than our general partner and its affiliates, a direct or subsequently approved
transferee of our general partner or their affiliates, or, upon the approval by the general partner, any other unitholder, acquires, in the aggregate, beneficial ownership of 20% or more of any class
of units then outstanding, that person or group will lose voting rights on all of its units and the units may not be voted on any matter and will not be considered to be outstanding when sending
notices of a meeting of unitholders, calculating required votes, determining the presence of a quorum, or for other similar purposes. Common units held in nominee or street name account will be voted
by the broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and his nominee provides otherwise.
Any
notice, demand, request, report, or proxy material required or permitted to be given or made to record holders of common units under our partnership agreement will be delivered to
the record holder by us or by the transfer agent.
Status as Limited Partner or Assignee
Except as described above under "—Limited Liability," the common units will be fully paid, and unitholders will not be
required to make additional contributions. By transfer of common units in accordance with our partnership agreement, each transferee of common units will be admitted as a limited partner with respect
to the common units transferred when such transfer and admission is reflected in our books and records.
Indemnification
Under our partnership agreement we will indemnify the following persons in most circumstances, to the fullest extent permitted by law,
from and against all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising
from any and all threatened, pending or completed claims, demands, actions, suits or proceedings:
(1)
our
general partner;
(2)
any
departing general partner;
(3)
any
person who is or was a director, officer, fiduciary, trustee, manager or managing member of us or our subsidiary, our general partner or any departing
general partner;
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(4)
any
person who is or was serving as a director, officer, fiduciary, trustee, manager or managing member of another person owing a fiduciary duty to us or
our subsidiary at the request of a general partner or any departing general partner;
(5)
any
person who controls our general partner; or
(6)
any
person designated by our general partner.
Any
indemnification under these provisions will only be out of our assets. Unless they otherwise agree, our general partner will not be personally liable for, or have any obligation to
contribute or loan funds or assets to us to enable us to effectuate, indemnification. We may purchase insurance against liabilities asserted against and expenses incurred by persons for our
activities, regardless of whether we would have the power to indemnify the person against liabilities under our partnership agreement.
Reimbursement of Expenses
Our partnership agreement requires us to reimburse our general partner for (1) all direct and indirect expenses it incurs or
payments it makes on our behalf (including salary, bonus, incentive compensation and other amounts paid to any person, including affiliates of our general partner, to perform services for us or for
the general partner in the discharge of its duties to us) and (2) all other expenses reasonably allocable to us or otherwise incurred by our general partner in connection with operating our
business (including expenses allocated to our general partner by its affiliates). Our general partner is entitled to determine the expenses that are allocable to us.
Books and Reports
Our general partner is required to keep appropriate books of our business at our principal offices. The books will be maintained for
both tax and financial reporting purposes on an accrual basis. For tax and fiscal reporting purposes, our fiscal year is the calendar year.
We
will furnish or make available to record holders of our common units, within 105 days after the close of each fiscal year, an annual report containing audited financial
statements and a report on those financial statements by our independent public accountants. Except for our fourth quarter, we will also furnish or make available a report containing our unaudited
financial statements within 50 days after the close of each quarter. We will be deemed to have made any such report available if we file such report with the SEC on EDGAR or make the report
available on a publicly available website which we maintain.
We
will furnish each record holder of a unit with tax information reasonably required for federal and state income tax reporting purposes within 90 days after the close of each
calendar year. This information is expected to be furnished in summary form so that some complex calculations normally required of partners can be avoided. Our ability to furnish this summary
information to unitholders will depend on the cooperation of unitholders in supplying us with specific information. Every unitholder will receive information to assist him in determining his federal
and state tax liability and filing his federal and state income tax returns, regardless of whether he supplies us with information.
In
addition, our sponsors will have full and complete access to any records relating to our business, and our general partner will cause its officers and independent accountants to be
available to discuss our business and affairs with our sponsors' officers, agents and employees.
Right to Inspect Our Books and Records
Our partnership agreement provides that a limited partner can, for a purpose reasonably related to his/her interest as a limited
partner, upon reasonable demand and at his own expense, have furnished to him:
(1)
a
current list of the name and last known address of each record holder;
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(2)
information
as to the amount of cash, and a description and statement of the agreed value of any other capital contribution, contributed or to be
contributed by each partner and the date on which each became a partner;
(3)
copies
of our partnership agreement, our certificate of limited partnership, related amendments and powers of attorney under which they have been executed;
(4)
information
regarding the status of our business and financial condition (provided that obligation shall be satisfied to the extent the limited partner is
furnished our most recent annual report and any subsequent quarterly or periodic reports required to be filed (or which would be required to be filed) with the SEC pursuant to Section 13 of the
Exchange Act); and
(5)
any
other information regarding our affairs that our general partner determines is just and reasonable.
Our
general partner may, and intends to, keep confidential from the limited partners' trade secrets or other information the disclosure of which our general partner believes in good
faith is not in our best interests or that we are required by law or by agreements with third parties to keep confidential.
Registration Rights
Under our partnership agreement, we have agreed to register for resale under the Securities Act and applicable state securities laws
any units sold by our general partner or any of its affiliates if an exemption from the registration requirements is not otherwise available. We will not be required to effect more than one
registration pursuant to this provision in any twelve-month period, and our general partner can defer filing a registration statement for up to six months if it determines that this would be in our
best interests due to a pending transaction, investigation or other event. We have also agreed that, if we at any time propose to file a registration statement for an offering of partnership
interests for cash, we will use all commercially reasonable efforts to include such number of partnership interests in such registration statement as any of our general partner or any of its
affiliates shall request. We are obligated to pay all expenses incidental to these registrations, other than underwriting discounts and commissions. The registration rights in our partnership
agreement are applicable with respect to our general partner and its affiliates after it ceases to be a general partner for up to two years following the effective date of such cessation. In addition,
in connection with this offering, we will enter into an amended and restated registration rights agreement with our sponsors and certain of our employees and affiliates, pursuant to which we may be
required to register the sale of the common units they hold. See "Common Units Eligible for Future Sale."
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COMMON UNITS ELIGIBLE FOR FUTURE SALE
Upon the completion of this offering, there will be                common units outstanding,
                of which will be owned by
our sponsors and certain of our employees and affiliates, assuming the underwriters do not exercise their option to purchase additional common units; if they exercise such option in full, our sponsors
and certain of our employees and affiliates will own                common units. The sale of these common units could have an adverse impact on the price of our common
units or on any trading market
that may develop.
The                common
units sold in this offering (or                common units if the underwriters exercise their option to purchase additional common units in full) will
generally be freely transferable without restriction or further registration under the Securities Act. However, any common units held by an "affiliate" of ours may not be resold publicly except in
compliance with the registration requirements of the Securities Act or under an exemption from the registration requirements of the Securities Act pursuant to Rule 144 or otherwise.
Rule 144 permits securities acquired by an affiliate of ours to be sold into the market in an amount that does not exceed, during any three-month period, the greater
of:
•
1% of the total number of the class of securities outstanding; or
•
the average weekly reported trading volume of the common units for the four calendar weeks prior to the sale.
Sales
under Rule 144 by our affiliates are also subject to specific manner of sale provisions, holding period requirements, notice requirements and the availability of current
public information about us. A person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned common units for at least
six months, would be entitled to sell those common units under Rule 144 without regard to the volume, manner of sale and notice requirements of Rule 144 so long as we comply with the
current public information requirement for the next six months after the six-month holding period expires.
Our
partnership agreement provides that we may issue an unlimited number of limited partner interests of any type without a vote of the unitholders. Any issuance of additional common
units or other equity interests would result in a corresponding decrease in the proportionate ownership interest in us represented by, and could adversely affect the cash distributions to and market
price of, common units then outstanding. See "The Partnership Agreement—Issuance of Additional Partnership Interests."
Under
our partnership agreement, our general partner and its affiliates have the right to cause us to register under the Securities Act and applicable state securities laws the offer and
sale of any units that they hold. Subject to the terms and conditions of the partnership agreement, these registration rights allow our general partner and its affiliates or their assignees holding
any units to require registration of any of these units and to include any of these units in a registration by us of other units, including units offered by us or by any unitholder. Our general
partner will continue to have these registration rights for two years after it ceases to be a general partner. In connection with any registration of this kind, we will indemnify each unitholder
participating in the registration and its officers, directors and controlling persons from and against any liabilities under the Securities Act or any applicable state securities laws arising from the
registration statement or prospectus. We will bear all costs and expenses incidental to any registration, excluding any underwriting discounts and commissions. Our general partner and its affiliates
also may sell their units in private transactions at any time, subject to compliance with applicable laws.
In
connection with this offering, we will enter into a registration rights agreement with our sponsors and David Lumpkins and Nathan Ticatch. Under this agreement, our sponsors and David
Lumpkins and Nathan Ticatch will have the right to cause us to register under the Securities Act and applicable state securities laws the offer and sale of any units that they hold, subject to certain
limitations. See "Certain Relationships and Related Party Transactions—Agreements with Certain Affiliates of our General Partner—Registration Rights Agreement."
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We,
our general partner, the directors and executive officers of our general partner, and our sponsors have agreed not to sell any common units until 180 days after the date of
this prospectus, subject to certain exceptions. See "Underwriters" for a description of these lock-up provisions.
In
addition, we intend to file a registration statement on Form S-8 under the Securities Act to register                common units issuable under our
long-term incentive plan. This registration statement is expected to be filed following the effective date of the registration statement of which this prospectus is a part and will be
effective upon filing. Units issued under our long-term incentive plan will be eligible for resale in the public market without
restriction after the effective date of the Form S-8 registration statement, subject to Rule 144 limitations applicable to affiliates.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
This section summarizes the material U.S. federal income tax consequences that may be relevant to prospective unitholders. To the
extent this section discusses federal income taxes, that discussion is based upon current provisions of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed U.S.
Treasury regulations thereunder (the "Treasury Regulations"), and current administrative rulings and court decisions, all of which are subject to change. Changes in these authorities may cause the
federal income tax consequences to a prospective unitholder to vary substantially from those described below. Unless the context otherwise requires, references in this section to "we" or "us" are
references to the partnership and its subsidiaries.
Legal
conclusions contained in this section, unless otherwise noted, are the opinion of Vinson & Elkins L.L.P. and are based on the accuracy of representations made by us
to them for this purpose. However, this section does not address all federal income tax matters that affect us or our unitholders. Furthermore, this section focuses on unitholders who are individual
citizens or residents of the United States (for federal income tax purposes), whose functional currencies are the U.S. dollar and who hold units as capital assets (generally, property that is held for
investment). This section has limited applicability to corporations, partnerships, entities treated as partnerships for federal income tax purposes, estates, trusts, non-resident aliens or
other unitholders subject to specialized tax treatment, such as tax-exempt institutions, non-U.S. persons, individual retirement accounts ("IRAs"), employee benefit plans, real
estate investment trusts or mutual funds. Accordingly, because each unitholder may have unique circumstances beyond the scope of the discussion herein, we encourage each unitholder to consult such
unitholder's own tax advisor in analyzing the federal, state, local and non-U.S. tax consequences that are particular to that unitholder resulting from ownership or disposition of its
units.
We
are relying on opinions and advice of Vinson & Elkins L.L.P. with respect to the matters described herein. An opinion of counsel represents only that counsel's best
legal judgment and does not bind the IRS or courts. Accordingly, the opinions and statements made herein may not be sustained by a court if contested by the IRS. Any such contest of the matters
described herein may materially and adversely impact the market for our units and the prices at which such units trade. In addition, our costs of any contest with the IRS will be borne indirectly by
our unitholders and our general partner because the costs will reduce our cash available for distribution. Furthermore, our tax treatment, or the tax treatment of an investment in us, may be
significantly modified by future legislative or administrative changes or court decisions, which might be retroactively applied.
For
the reasons described below, Vinson & Elkins L.L.P. has not rendered an opinion with respect to the following federal income tax issues: (1) the treatment of a
unitholder whose units are loaned to a short seller to cover a short sale of units (please see "—Tax Consequences of Unit Ownership—Treatment of Short Sales");
(2) whether our monthly convention for allocating taxable income and losses is permitted by existing Treasury Regulations (please see "—Disposition of Units—Allocations
Between Transferors and Transferees"); and (3) whether our method for taking into account Section 743 adjustments is sustainable in certain cases (please see "—Tax
Consequences of Unit Ownership—Section 754 Election" and "—Uniformity of Units").
Taxation of the Partnership
Partnership Status
We expect to be treated as a partnership for federal income tax purposes and, therefore, generally will not be liable for federal
income taxes. Instead, as described below, each of our unitholders will take into account its respective share of our items of income, gain, loss and deduction in computing its federal income tax
liability as if the unitholder had earned such income directly, even if no cash distributions are made to the unitholder. Distributions by us to a unitholder generally will not give rise to income or
gain
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taxable
to such unitholder, unless the amount of cash distributed to a unitholder exceeds the unitholder's adjusted tax basis in its units.
Section 7704
of the Code generally provides that publicly traded partnerships will be treated as corporations for federal income tax purposes. However, if 90% or more of a
partnership's gross income for every taxable year it is publicly traded consists of "qualifying income," the partnership may continue to be treated as a partnership for federal income tax purposes
(the "Qualifying Income Exception"). Qualifying income includes (i) income and gains derived from the refining, transportation, storage, processing and marketing of crude oil, natural gas and
products thereof, (ii) interest (other than from a financial business), (iii) dividends, (iv) gains from the sale of real property and (v) gains from the sale or other
disposition of capital assets held for the production of qualifying income. We estimate that less than        % of our current gross income is not qualifying income; however, this estimate
could change from time to time.
Based
upon factual representations made by us and our general partner regarding the composition of our income and the other representations set forth below, Vinson &
Elkins L.L.P. is of the opinion that we will be treated as a partnership for federal income tax purposes. In rendering its opinion, Vinson & Elkins L.L.P. has relied on factual
representations made by us and our general partner. The representations made by us and our general partner upon which Vinson & Elkins L.L.P. has relied include, without
limitation:
(1)
Neither
we nor any of our partnership or limited liability company subsidiaries has elected to be treated as a corporation for federal income tax purposes;
and
(2)
For
each taxable year since and including the year of our initial public offering, more than 90% of our gross income has been and will be income of a
character that Vinson & Elkins L.L.P. has opined is "qualifying income" within the meaning of Section 7704(d) of the Code.
We
believe that these representations are true and will be true in the future.
If
we fail to meet the Qualifying Income Exception, other than a failure that is determined by the IRS to be inadvertent and that is cured within a reasonable time after discovery (in
which case the IRS may also require us to make adjustments with respect to our unitholders or pay other amounts), we will be treated as transferring all of our assets, subject to liabilities, to a
newly formed corporation, on the first day of the year in which we fail to meet the Qualifying Income Exception, in return for stock in that corporation and then distributed that stock to our
unitholders in liquidation of their units. This deemed contribution and liquidation should not result in the recognition of taxable income by our unitholders or us so long as our liabilities do not
exceed the tax basis of our assets. Thereafter, we would be treated as an association taxable as a corporation for federal income tax purposes.
If
for any reason we are taxable as a corporation in any taxable year, our items of income, gain, loss and deduction would be taken into account by us in determining the amount of our
liability for federal income tax, rather than being passed through to our unitholders. Accordingly, our taxation as a corporation would materially reduce our cash distributions to unitholders and thus
would likely substantially reduce the value of our units. In addition, any distribution made to a unitholder would be treated as (i) a taxable dividend income to the extent of our current or
accumulated earnings and profits, then (ii) a nontaxable return of capital to the extent of the unitholder's tax basis in our units, and thereafter (iii) taxable capital gain.
The
remainder of this discussion assumes that we will be treated as a partnership for federal income tax purposes.
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Tax Consequences of Unit Ownership
Limited Partner Status
Unitholders who are admitted as limited partners of the partnership, as well as unitholders whose units are held in street name or by a
nominee and who have the right to direct the nominee in the exercise of all substantive rights attendant to the ownership of units, will be treated as partners of the partnership for federal income
tax purposes. For a discussion related to the risks of losing partner status as a result of short sales, please see "—Tax Consequences of Unit Ownership—Treatment of Short
Sales." Unitholders who are not treated as partners in us as described above are urged to consult their own tax advisors with respect to the tax consequences applicable to them under the
circumstances.
Flow-Through of Taxable Income
Subject to the discussion below under "—Entity-Level Collections of Unitholder Taxes" with respect to payments we may be
required to make on behalf of our unitholders, we will not pay any federal income tax. Rather, each unitholder will be required to report on its income tax return its share of our income, gains,
losses and deductions for our taxable year or years ending with or within its taxable year without regard to whether we make cash distributions to him. Consequently, we may allocate income to a
unitholder even if that unitholder has not received a cash distribution.
Ratio of Taxable Income to Distributions
We estimate that a purchaser of common units in this offering who owns those common units from the date of closing of this offering
through the record date for distributions for the period ending December 31, 2013, will be allocated, on a cumulative basis, an amount of federal taxable income for that period that will be
        % or less of the cash distributed with respect to that period. Thereafter, we anticipate that the ratio of taxable income to cash distributions to the unitholders will increase. These
estimates are based upon the assumption that earnings from operations will approximate the amount required to make the anticipated quarterly distribution on all units and other assumptions with
respect to capital expenditures, cash flow, net working capital and anticipated cash distributions. These estimates and assumptions are subject to, among other things, numerous business, economic,
regulatory, legislative, competitive and political uncertainties beyond our control. Further, the estimates are based on current tax law and tax reporting positions that we will adopt and with which
the IRS could disagree. Accordingly, we cannot assure you that these estimates will prove to be correct. The actual ratio of taxable income to cash distributions could be higher or lower than
expected, and any differences could be material and could materially affect the value of the common
units. For example, the ratio of taxable income to cash distributions to a purchaser of common units in this offering will be greater, and perhaps substantially greater, than our estimate with respect
to the period described above if:
•
the earnings from operations exceeds the amount required to make anticipated quarterly distributions on all units, yet we
only distribute the anticipated quarterly distributions on all units; or
•
we make a future offering of common units and use the proceeds of the offering in a manner that does not produce
substantial additional deductions during the period described above, such as to repay indebtedness outstanding at the time of this offering or to acquire property that is not eligible for depreciation
or amortization for federal income tax purposes or that is depreciable or amortizable at a rate significantly slower than the rate applicable to our assets at the time of this offering.
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Basis of Units
A unitholder's tax basis in its units initially will be the amount it paid for those units plus its initial share of our liabilities.
That basis generally will be (i) increased by the unitholder's share of our income and any increases in such unitholder's share of our nonrecourse liabilities, and (ii) decreased, but
not below zero, by distributions to it, by its share of our losses, any decreases in its share of our nonrecourse liabilities and its share of our expenditures that are neither deductible nor required
to be capitalized.
Treatment of Distributions
Distributions made by us to a unitholder generally will not be taxable to the unitholder, unless such distributions exceed the
unitholder's tax basis in its units, in which case the
unitholder will recognize gain taxable in the manner described below under "—Disposition of Units."
Any
reduction in a unitholder's share of our "nonrecourse liabilities" (liabilities for which no partner bears the economic risk of loss) will be treated as a distribution by us of cash
to that unitholder. A decrease in a unitholder's percentage interest in us because of our issuance of additional units will decrease the unitholder's share of our nonrecourse liabilities. For purposes
of the foregoing, a unitholder's share of our nonrecourse liabilities generally will be based upon that unitholder's share of the unrealized appreciation (or depreciation) in our assets, to the extent
thereof, with any excess liabilities allocated based on the unitholder's share of our profits. Please see "Disposition of Units."
A
non-pro rata distribution of money or property (including a deemed distribution described above) may cause a unitholder to recognize ordinary income, if the distribution
reduces the unitholder's share of our "unrealized receivables," including depreciation recapture and substantially appreciated "inventory items," both as defined in Section 751 of the Code
("Section 751 Assets"). To the extent of such reduction, the unitholder would be deemed to receive its proportionate share of the Section 751 Assets and exchange such assets with us in
return for an allocable portion of the non-pro rata distribution. This latter deemed exchange generally will result in the unitholder's realization of ordinary income in an amount equal to
the excess of (1) the non-pro rata portion of that distribution over (2) the unitholder's tax basis (generally zero) in the Section 751 Assets deemed to be
relinquished in the exchange.
Limitations on Deductibility of Losses
The deduction by a unitholder of its share of our losses will be limited to the lesser of (i) the unitholder's tax basis in its
units, and (ii) in the case of a unitholder who is an individual, estate, trust or corporation (if more than 50% of the corporation's stock is owned directly or indirectly by or for five or
fewer individuals or a specific type of tax exempt organization), the amount for which the unitholder is considered to be "at risk" with respect to our activities. In general, a unitholder will be at
risk to the extent of its tax basis in its units, reduced by (1) any portion of that basis attributable to the unitholder's share of our liabilities, (2) any portion of that basis
representing amounts otherwise protected against loss because of a guarantee, stop loss agreement or similar arrangement and (3) any amount of money the unitholder borrows to acquire or hold
its units, if the lender of those borrowed funds owns an interest in us, is related to another unitholder or can look only to the units for repayment.
A
unitholder subject to the basis and at risk limitation must recapture losses deducted in previous years to the extent that distributions (including distributions as a result of a
reduction in a unitholder's share of nonrecourse liabilities) cause the unitholder's at risk amount to be less than zero at the end of any taxable year. Losses disallowed to a unitholder or recaptured
as a result of these limitations will carry forward and will be allowable as a deduction in a later year to the extent that the unitholder's tax basis or at risk amount, whichever is the limiting
factor, is subsequently increased. Upon a taxable disposition
of units, any gain recognized by a unitholder can be offset by losses that were previously suspended by the at risk limitation but not losses suspended by the basis limitation. Any loss previously
suspended by the at risk limitation in excess of that gain can no longer be used.
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In
addition to the basis and at risk limitations, passive activity loss limitations generally limit the deductibility of losses incurred by individuals, estates, trusts, some closely
held corporations and personal service corporations from "passive activities" (generally, trade or business activities in which the taxpayer does not materially participate). The passive loss
limitations are applied separately with respect to each publicly-traded partnership. Consequently, any passive losses we generate will be available to offset only our passive income generated in the
future. Passive losses that are not deductible because they exceed a unitholder's share of income we generate may be deducted in full when he disposes of all of its units in a fully taxable
transaction with an unrelated party. The passive activity loss rules are applied after other applicable limitations on deductions, including the at risk and basis limitations.
Limitations on Interest Deductions
The deductibility of a non-corporate taxpayer's "investment interest expense" is generally limited to the amount of that
taxpayer's "net investment income." Investment interest expense includes:
•
interest on indebtedness properly allocable to property held for investment;
•
interest expense attributed to portfolio income; and
•
the portion of interest expense incurred to purchase or carry an interest in a passive activity to the extent attributable
to portfolio income.
The
computation of a unitholder's investment interest expense will take into account interest on any margin account borrowing or other loan incurred to purchase or carry a unit. Net
investment income includes gross income from property held for investment and amounts treated as portfolio income under the passive loss rules, less deductible expenses other than interest directly
connected with the production of investment income. Such term generally does not include qualified dividend income or gains attributable to the disposition of property held for investment. A
unitholder's share of a publicly traded partnership's portfolio income and, according to the IRS, net passive income will be treated as investment income for purposes of the investment interest
expense limitation.
Entity-Level Collections of Unitholder Taxes
If we are required or elect under applicable law to pay any federal, state, local or non-U.S. tax on behalf of any current
or former unitholder or our general partner, we are authorized to pay those taxes and treat the payment as a distribution of cash to the relevant unitholder or general partner. Where the relevant
unitholder's identity cannot be determined, we are authorized to treat the payment as a distribution to all current unitholders. We are authorized to amend our partnership agreement in the manner
necessary to maintain uniformity of intrinsic tax characteristics of units and to adjust later distributions, so that after giving effect to these distributions, the priority and characterization of
distributions otherwise applicable under our partnership agreement is maintained as nearly as is practicable. Payments by us as described above could give rise to an overpayment of tax on behalf of a
unitholder, in which event the unitholder may be entitled to claim a refund of the overpayment amount. Unitholders are urged to consult their tax advisors to determine the consequences to them of any
tax payment we make on their behalf.
Allocation of Income, Gain, Loss and Deduction
In general, if we have a net profit, our items of income, gain, loss and deduction will be allocated among the general partner and our
unitholders in accordance with their percentage interests in us. If we have a net loss, our items of income, gain, loss and deduction will be allocated first among the general partner and our
unitholders in accordance with their percentage interests in us to the extent of their positive capital accounts and thereafter to our general partner. At any time that distributions are made to
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the
common units and not to the subordinated units, or that incentive distributions are made to the general partner, gross income will be allocated to the recipients to the extent of such
distributions.
Specified
items of our income, gain, loss and deduction will be allocated under Section 704(c) of the Code to account for any difference between the tax basis and fair market
value of our assets at the time such assets are contributed to us and at the time of any subsequent offering of our units (a "Book-Tax Disparity"). In addition, items of recapture income
will be specially allocated to the extent possible to the unitholder who was allocated the deduction giving rise to that recapture income in order to minimize the recognition of ordinary income by
other unitholders.
An
allocation of items of our income, gain, loss or deduction, generally must have "substantial economic effect" as determined under Treasury Regulations. If an allocation does not have
substantially economic effect, it will be reallocated to our unitholders the basis of their interests in us, which will be determined by taking into account all the facts and circumstances,
including:
•
our partners' relative contributions to us;
•
the interests of all of our partners in our profits and losses;
•
the interest of all of our partners in our cash flow; and
•
the rights of all of our partners to distributions of capital upon liquidation.
Vinson &
Elkins L.L.P. is of the opinion that, with the exception of the issues described in "—Section 754 Election" and "—Disposition of
Units—Allocations Between Transferors and Transferees," allocations under our partnership agreement will have substantial economic effect.
Treatment of Short Sales
A unitholder whose units are loaned to a "short seller" to cover a short sale of units may be treated as having disposed of those
units. If so, such unitholder would no longer be treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition. As
a result, during this period (i) any of our income, gain, loss or deduction allocated to those units would not be reportable by the unitholder, and (ii) any cash distributions received
by the unitholder as to those units would be fully taxable, possibly as ordinary income.
Due
to lack of controlling authority, Vinson & Elkins L.L.P. has not rendered an opinion regarding the tax treatment of a unitholder whose units are loaned to a short
seller to cover a short sale of our units. Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to modify any
applicable brokerage account agreements to prohibit their brokers from borrowing and lending their units. The IRS has announced that it is studying issues relating to the tax treatment of short sales
of partnership interests. Please see "—Disposition of Units—Recognition of Gain or Loss."
Alternative Minimum Tax
If a unitholder is subject to federal alternative minimum tax, such tax will apply to such unitholder's distributive share of any items
of our income, gain, loss or deduction. The current alternative minimum tax rate for non-corporate taxpayers is 26% on the first $175,000 of alternative minimum taxable income in excess of
the exemption amount and 28% on any additional alternative minimum taxable income. Prospective unitholders are urged to consult with their tax advisors with respect to the impact of an investment in
our units on their alternative minimum tax liability.
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Tax Rates
Under current law, the highest marginal federal income tax rates for individuals applicable to ordinary income and
long-term capital gains (generally, gains from the sale or exchange of certain investment assets held for more than one year) are 35%; and 15%, respectively. However, absent new
legislation extending the current rates, beginning January 1, 2013, the highest marginal federal income tax rate applicable to ordinary income and long-term capital gains of
individuals will increase to 39.6% and 20%, respectively. These rates are subject to change by new legislation at any time.
A
3.8% Medicare tax on certain investment income earned by individuals, estates, and trusts will apply for taxable years beginning after December 31, 2012. For these purposes,
investment income generally includes a unitholder's allocable share of our income and gain realized by a unitholder from a sale of units. In the case of an individual, the tax will be imposed on the
lesser of (i) the unitholder's net investment income from all investments, or (ii) the amount by which the unitholder's modified adjusted gross income exceeds $250,000 (if the unitholder
is married and filing jointly or a surviving spouse) or $200,000 (if the unitholder is unmarried). In the case of an estate or trust, the tax will be imposed on the lesser of (i) undistributed
net investment income, or (ii) the excess adjusted gross income over the dollar amount at which the highest income tax bracket applicable to an estate or trust begins.
Section 754 Election
We have made the election permitted by Section 754 of the Code that permits us to adjust the tax bases in our assets as to
specific purchased units under Section 743(b) of the Code to reflect the unit purchase price. The Section 743(b) adjustment separately applies to each purchaser of units based upon the
values and bases of our assets at the time of the relevant purchase. The Section 743(b) adjustment does not apply to a person who purchases units directly from us. For purposes of this
discussion, a unitholder's basis in our assets will be considered to have two components: (1) its share of the tax basis in our assets as to all unitholders ("common basis") and (2) its
Section 743(b) adjustment to that tax basis (which may be positive or negative).
Under
Treasury Regulations, a Section 743(b) adjustment attributable to property depreciable under Section 168 of the Code, such as our storage assets, may be amortizable
over the remaining cost recovery period for such property, while a Section 743(b) adjustment attributable to properties subject to depreciation under Section 167 of the Code, must be
amortized straight-line or using the 150% declining balance method. As a result, if we owned any assets subject to depreciation under Section 167 of the Code, the amortization rates
could give rise to differences in the taxation of unitholders purchasing units from us and unitholders purchasing units from other unitholders.
Under
our partnership agreement, we are authorized to take a position to preserve the uniformity of units even if that position is not consistent with these or any other Treasury
Regulations. Please see "—Uniformity of Units." Consistent with this authority, we intend to treat properties depreciable under Section 167, if any, in the same manner as properties
depreciable under Section 168 for this purpose. These positions are consistent with the methods employed by other publicly traded partnerships but are inconsistent with the existing Treasury
Regulations, and Vinson & Elkins L.L.P. has not opined on the validity of this approach.
The
IRS may challenge our position with respect to depreciating or amortizing the Section 743(b) adjustment we take to preserve the uniformity of units due to lack of controlling
authority. Because a unitholder's tax basis for its units is reduced by its share of our items of deduction or loss, any position we take that understates deductions will overstate a unitholder's
basis in its units, and may cause the unitholder to understate gain or overstate loss on any sale of such units. Please see "—Disposition of Units—Recognition of Gain or Loss."
If a challenge to such treatment were sustained, the gain from the sale of units may be increased without the benefit of additional deductions.
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The calculations involved in the Section 754 election are complex and will be made on the basis of assumptions as to the value of our assets and other
matters. The IRS could seek to reallocate some or all of any Section 743(b) adjustment we allocated to our assets subject to depreciation to goodwill or nondepreciable assets. Goodwill, as an
intangible asset, is generally nonamortizable or amortizable over a longer period of time or under a less accelerated method than our tangible assets. We cannot assure any unitholder that the
determinations we make will not be successfully challenged by the IRS or that the resulting deductions will not be reduced or disallowed altogether. Should the IRS require a different tax basis
adjustment to be made, and should, in our opinion, the expense of compliance exceed the benefit of the election, we may seek permission from the IRS to revoke our Section 754 election. If
permission is granted, a subsequent purchaser of units may be allocated more income than it would have been allocated had the election not been revoked.
Tax Treatment of Operations
Accounting Method and Taxable Year
We will use the year ending December 31 as our taxable year and the accrual method of accounting for federal income tax
purposes. Each unitholder will be required to include in income its share of our income, gain, loss and deduction for each taxable year ending within or with its taxable year. In addition, a
unitholder who has a taxable year ending on a date other than December 31 and who disposes of all of its units following the close of our taxable year but before the close of its taxable year
must include its share of our income, gain, loss and deduction in income for its taxable year, with the result that it will be required to include in income for its taxable year its share of more than
one year of our income, gain, loss and deduction. Please see "—Disposition of Units—Allocations Between Transferors and Transferees."
Tax Basis, Depreciation and Amortization
The tax basis of our assets will be used for purposes of computing depreciation and cost recovery deductions and, ultimately, gain or
loss on the disposition of these assets. The federal income tax burden associated with the difference between the fair market value of our assets and their tax basis immediately prior to an offering
will be borne by our partners holding interests in us prior to this offering. Please see "—Tax Consequences of Unit Ownership—Allocation of Income, Gain, Loss and Deduction."
If
we dispose of depreciable property by sale, foreclosure or otherwise, all or a portion of any gain, determined by reference to the amount of depreciation previously deducted and the
nature of the property, may be subject to the recapture rules and taxed as ordinary income rather than capital gain. Similarly, a unitholder who has taken cost recovery or depreciation deductions with
respect to property we own will likely be required to recapture some or all of those deductions as ordinary income upon a sale of its interest in us. Please see "—Tax Consequences of Unit
Ownership—Allocation of Income, Gain, Loss and Deduction" and "—Disposition of Units—Recognition of Gain or Loss."
The
costs we incurred in offering and selling our units (called "syndication expenses") must be capitalized and cannot be deducted currently, ratably or upon our termination. While there
are uncertainties regarding the classification of costs as organization expenses, which may be amortized by us, and as syndication expenses, which may not be amortized by us, the underwriting
discounts and commissions we incur will be treated as syndication expenses.
Valuation and Tax Basis of Our Properties
The federal income tax consequences of the ownership and disposition of units will depend in part on our estimates of the relative fair
market values and the initial tax bases of our assets. Although we may from time to time consult with professional appraisers regarding valuation matters, we will make many of the relative fair market
value estimates ourselves. These estimates and determinations of tax basis are subject to challenge and will not be binding on the IRS or the courts. If the estimates of fair market value
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or
basis are later found to be incorrect, the character and amount of items of income, gain, loss or deduction previously reported by unitholders could change, and unitholders could be required to
adjust their tax liability for prior years and incur interest and penalties with respect to those adjustments.
Disposition of Units
Recognition of Gain or Loss
A unitholder will be required to recognize gain or loss on a sale of units equal to the difference between the unitholder's amount
realized and tax basis for the units sold. A unitholder's amount realized will equal the sum of the cash or the fair market value of other property it receives plus its share of our liabilities with
respect to such units. Because the amount realized includes a unitholder's share of our liabilities, the gain recognized on the sale of units could result in a tax liability in excess of any cash
received from the sale.
Except
as noted below, gain or loss recognized by a unitholder on the sale or exchange of a unit held for more than one year generally will be taxable as long-term capital
gain or loss. However, gain or loss recognized on the disposition of units will be separately computed and taxed as ordinary income or loss under Section 751 of the Code to the extent
attributable to Section 751 Assets, primarily depreciation recapture. Ordinary income attributable to Section 751 Assets may exceed net taxable gain realized on the sale of a unit and
may be recognized even if there is a net taxable loss realized on the sale of a unit. Thus, a unitholder may recognize both ordinary income and a capital loss upon a sale of units. Net capital loss
may offset capital gains and, in the case of individuals, up to $3,000 of ordinary income per year.
The
IRS has ruled that a partner who acquires interests in a partnership in separate transactions must combine those interests and maintain a single adjusted tax basis for all those
interests. Upon a sale or other disposition of less than all of those interests, a portion of that tax basis must be allocated to the interests sold using an "equitable apportionment" method, which
generally means that the tax basis allocated to the interest sold equals an amount that bears the same relation to the partner's tax basis in its entire interest in the partnership as the value of the
interest sold bears to the value of the partner's entire interest in the partnership.
Treasury
Regulations under Section 1223 of the Code allow a selling unitholder who can identify units transferred with an ascertainable holding period to elect to use the actual
holding period of the units transferred. Thus, according to the ruling discussed above, a unitholder will be unable to select high or low basis units to sell as would be the case with corporate stock,
but, according to the Treasury Regulations, a unitholder may designate specific units sold for purposes of determining the holding period of units transferred. A unitholder electing to use the actual
holding period of units transferred must consistently use that identification method for all subsequent sales or exchanges of our units. A unitholder considering the purchase of additional units or a
sale of units purchased in separate transactions is urged to consult its tax advisor as to the possible consequences of this ruling and application of the Treasury Regulations.
Specific
provisions of the Code affect the taxation of some financial products and securities, including partnership interests, by treating a taxpayer as having sold an "appreciated"
partnership interest, one in which gain would be recognized if it were sold, assigned or terminated at its fair market value, if the taxpayer or related persons enter(s)
into:
•
a short sale;
•
an offsetting notional principal contract; or
•
a futures or forward contract with respect to the partnership interest or substantially identical property.
Moreover,
if a taxpayer has previously entered into a short sale, an offsetting notional principal contract or a futures or forward contract with respect to the partnership interest, the
taxpayer will be
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treated
as having sold that position if the taxpayer or a related person then acquires the partnership interest or substantially identical property. The Secretary of the Treasury is also authorized to
issue regulations that treat a taxpayer that enters into transactions or positions that have substantially the same effect as the preceding transactions as having constructively sold the financial
position.
Allocations Between Transferors and Transferee
In general, our taxable income or loss will be determined annually, will be prorated on a monthly basis and will be subsequently
apportioned among the unitholders in proportion to the number of units owned by each of them as of the opening of the applicable exchange on the first business day of the month (the "Allocation
Date"). However, gain or loss realized on a sale or other disposition of our assets or, in the discretion of the general partner, any other extraordinary item of income, gain, loss or deduction will
be allocated among the unitholders on the Allocation Date in the month in which such income, gain, loss or deduction is recognized. As a result, a unitholder transferring units may be allocated
income, gain, loss and deduction realized after the date of transfer.
Although
simplifying conventions are contemplated by the Code and most publicly traded partnerships use similar simplifying conventions, the use of this method may not be permitted under
existing Treasury Regulations. Recently, however, the Department of the Treasury and the IRS issued proposed Treasury Regulations that provide a safe harbor pursuant to which a publicly traded
partnership may use a similar monthly simplifying convention to allocate tax items among transferor and transferee unitholders, although such tax items must be prorated on a daily basis. Nonetheless,
the proposed regulations do not specifically authorize the use of the proration method we have adopted. Accordingly, Vinson & Elkins L.L.P. is unable to opine on the validity of this
method of allocating income and deductions between transferee and transferor unitholders. If this method is not allowed under the Treasury Regulations, or only applies to transfers of less than all of
the unitholder's interest, our taxable income or losses might be reallocated among the unitholders. We are authorized to revise our method of allocation between transferee and transferor unitholders,
as well as among unitholders whose interests vary during a taxable year, to conform to a method permitted under future Treasury Regulations.
A
unitholder who disposes of units prior to the record date set for a cash distribution for that quarter will be allocated items of our income, gain, loss and deduction attributable to
the month of disposition but will not be entitled to receive a cash distribution for that period.
Notification Requirements
A unitholder who sells or purchases any of units is generally required to notify us in writing of that transaction within
30 days after the transaction (or, if earlier, January 15 of the year following the transaction). Upon receiving such notifications, we are required to notify the IRS of that transaction
and to furnish specified information to the transferor and transferee. Failure to notify us of a transfer of units may, in some cases, lead to the imposition of penalties. However, these reporting
requirements do not apply to a sale by an individual who is a citizen of the United States and who effects the sale through a broker who will satisfy such requirements.
Constructive Termination
We will be considered to have terminated our partnership for federal income tax purposes upon the sale or exchange of 50% or more of
the total interests in our capital and profits within a twelve-month period. For such purposes, multiple sales of the same unit are counted only once. A constructive termination results in the closing
of our taxable year for all unitholders. In the case of a unitholder reporting on a taxable year other than a fiscal year ending December 31, the closing of our taxable year may result in more
than twelve months of our taxable income or loss being includable in such unitholder's taxable income for the year of termination.
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A
constructive termination occurring on a date other than December 31 will result in us filing two tax returns for one fiscal year and the cost of the preparation of these returns
will be borne by all unitholders. However, pursuant to an IRS relief procedure the IRS may allow, among other things, a constructively terminated partnership to provide a single
Schedule K-1 for the calendar year in which a termination occurs. We would be required to make new tax elections after a termination, including a new election under
Section 754 of the Code, and a termination would result in a deferral of our deductions for depreciation. A termination could also result in penalties if we were
unable to determine that the termination had occurred. Moreover, a termination might either accelerate the application of, or subject us to, any tax legislation enacted before the termination.
Uniformity of Units
Because we cannot match transferors and transferees of units and for other reasons, we must maintain uniformity of the economic and tax
characteristics of the units to a purchaser of these units. In the absence of uniformity, we may be unable to completely comply with a number of federal income tax requirements, both statutory and
regulatory. A lack of uniformity could result from a literal application of Treasury Regulation Section 1.167(c)-1(a)(6), which is not anticipated to apply to a material portion of
our assets. Any non-uniformity could have a negative impact on the value of the units. Please see "—Tax Consequences of Unit Ownership—Section 754 Election."
Our
partnership agreement permits our general partner to take positions in filing our tax returns that preserve the uniformity of our units even under circumstances like those described
above. These positions may include reducing for some unitholders the depreciation, amortization or loss deductions to which they would otherwise be entitled or reporting a slower amortization of
Section 743(b) adjustments for some unitholders than that to which they would otherwise be entitled. Vinson & Elkins L.L.P. is unable to opine as to validity of such filing
positions.
A
unitholder's basis in units is reduced by its share of our deductions (whether or not such deductions were claimed on an individual income tax return) so that any position that we take
that understates deductions will overstate the unitholder's basis in its units, and may cause the unitholder to understate gain or overstate loss on any sale of such units. Please see
"—Disposition of Units—Recognition of Gain or Loss" above and "—Tax Consequences of Unit Ownership—Section 754 Election" above. The IRS may
challenge one or more of any positions we take to preserve the uniformity of units. If such a challenge were sustained, the uniformity of units might be affected, and, under some circumstances, the
gain from the sale of units might be increased without the benefit of additional deductions.
Tax-Exempt Organizations and Other Investors
Ownership of units by employee benefit plans, other tax-exempt organizations, non-resident aliens,
non-U.S. corporations and other non-U.S. persons raises issues unique to those investors and, as
described below, may have substantially adverse tax consequences to them. Prospective unitholders who are tax-exempt entities or non-U.S. persons should consult their tax
advisor before investing in our units. Employee benefit plans and most other tax-exempt organizations, including IRAs and other retirement plans, are subject to federal income tax on
unrelated business taxable income. Virtually all of our income will be unrelated business taxable income and will be taxable to a tax-exempt unitholder.
Non-resident
aliens and foreign corporations, trusts or estates that own units will be considered to be engaged in business in the United States because of their ownership of
our units. Consequently, they will be required to file federal tax returns to report their share of our income, gain, loss or deduction and pay federal income tax at regular rates on their share of
our net income or gain. Moreover, under rules applicable to publicly traded partnerships, distributions to non-U.S. unitholders are subject to withholding at the highest applicable
effective tax rate. Each non-U.S. unitholder must obtain a taxpayer identification number from the IRS and submit that number to our transfer agent on a Form W-8BEN or
applicable
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substitute
form in order to obtain credit for these withholding taxes. A change in applicable law may require us to change these procedures.
In
addition, because a foreign corporation that owns units will be treated as engaged in a United States trade or business, that corporation may be subject to the United States branch
profits tax at a rate of 30%, in addition to regular federal income tax, on its share of our income and gain, as adjusted for changes in the foreign corporation's "U.S. net equity," which is
effectively connected with the conduct of a United States trade or business. That tax may be reduced or eliminated by an income tax treaty between the United States and the country in which the
foreign corporate unitholder is a "qualified resident." In addition, this type of unitholder is subject to special information reporting requirements under Section 6038C of the Code.
A
foreign unitholder who sells or otherwise disposes of a unit will be subject to federal income tax on gain realized from the sale or disposition of that unit to the extent the gain is
effectively connected with a U.S. trade or business of the foreign unitholder. Under a ruling published by the IRS, interpreting the scope of "effectively connected income," a foreign unitholder would
be considered to be engaged in a trade or business in the U.S. by virtue of the U.S. activities of the partnership, and part or all of that unitholder's gain would be effectively connected with that
unitholder's indirect U.S. trade or business. Moreover, under the Foreign Investment in Real Property Tax Act, a foreign unitholder generally will be subject to federal income tax upon the sale or
disposition of a unit if (i) it owned (directly or constructively applying certain attribution rules) more than 5% of our units at any time during the five-year period ending on the
date of such disposition and (ii) 50% or more of the fair market value of all of our assets consisted of U.S. real property interests at any time during the shorter of the period during which
such unitholder held the units or the 5-year period ending on the date of disposition. Currently, more than 50% of our assets consist of U.S. real property interests and we do not expect
that to change in the foreseeable future. Therefore, foreign unitholders may be subject to federal income tax on gain from the sale or disposition of their units.
Administrative Matters
Information Returns and Audit Procedures
We intend to furnish to each unitholder, within 90 days after the close of each taxable year, specific tax information,
including a Schedule K-1, which describes its share of our income, gain, loss and deduction for our preceding taxable year. In preparing this information, which will not be reviewed
by counsel, we will take various accounting and reporting positions, some of which have been mentioned earlier, to determine each unitholder's share of income, gain, loss and deduction. We cannot
assure our unitholders that those positions will yield a result that conforms to the requirements of the Code, Treasury Regulations or administrative interpretations of the IRS.
Neither
we, nor Vinson & Elkins L.L.P. can assure prospective unitholders that the IRS will not successfully contend in court that those positions are impermissible, and
such a contention could negatively affect the value of the units. The IRS may audit our federal income tax information returns. Adjustments resulting from an IRS audit may require each unitholder to
adjust a prior year's tax liability, and possibly may result in an audit of its own return. Any audit of a unitholder's return could result in adjustments not related to our returns as well as those
related to its returns.
Partnerships
generally are treated as entities separate from their owners for purposes of federal income tax audits, judicial review of administrative adjustments by the IRS and tax
settlement proceedings. The tax treatment of partnership items of income, gain, loss and deduction are determined in a partnership proceeding rather than in separate proceedings with the partners. The
Code requires that one partner be designated as the "Tax Matters Partner" for these purposes, and our partnership agreement designates our general partner.
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The
Tax Matters Partner will make some elections on our behalf and on behalf of unitholders. In addition, the Tax Matters Partner can extend the statute of limitations for assessment of
tax deficiencies against unitholders for items in our returns. The Tax Matters Partner may bind a unitholder with less than a 1% profits interest in us to a settlement with the IRS unless that
unitholder elects, by filing a statement with the IRS, not to give that authority to the Tax Matters Partner. The Tax Matters Partner may seek judicial review, by which all the unitholders are bound,
of a final partnership administrative adjustment and, if the Tax Matters Partner fails to seek judicial review, judicial review may be sought by any unitholder having at least a 1% interest in profits
or by any group of unitholders having in the aggregate at least a 5% interest in profits. However, only one action for judicial review will go forward, and each unitholder with an interest in the
outcome may participate in that action.
A
unitholder must file a statement with the IRS identifying the treatment of any item on its federal income tax return that is not consistent with the treatment of the item on our
return. Intentional or negligent disregard of this consistency requirement may subject a unitholder to substantial penalties.
Nominee Reporting
Persons who hold an interest in us as a nominee for another person are required to furnish to us:
(1)
the
name, address and taxpayer identification number of the beneficial owner and the nominee;
(2)
a
statement regarding whether the beneficial owner is:
(a)
a
non-U.S. person;
(b)
a
non-U.S. government, an international organization or any wholly owned agency or instrumentality of either of the foregoing; or
(c)
a
tax-exempt entity;
(3)
the
amount and description of units held, acquired or transferred for the beneficial owner; and
(4)
specific
information including the dates of acquisitions and transfers, means of acquisitions and transfers, and acquisition cost for purchases, as well as
the amount of net proceeds from sales.
Brokers
and financial institutions are required to furnish additional information, including whether they are U.S. persons and specific information on units they acquire, hold or
transfer for their own account. A penalty of $100 per failure, up to a maximum of $1.5 million per calendar year, is imposed by the Code for failure to report that information to us. The
nominee is required to supply the beneficial owner of the units with the information furnished to us.
Accuracy-Related Penalties
An additional tax equal to 20% of the amount of any portion of an underpayment of tax that is attributable to one or more specified
causes, including negligence or disregard of rules or regulations, substantial understatements of income tax and substantial valuation misstatements, is imposed by the Code. No penalty will be
imposed, however, for any portion of an underpayment if it is shown that there was a reasonable cause for the underpayment of that portion and that the taxpayer acted in good faith regarding the
underpayment of that portion.
For
individuals, a substantial understatement of income tax in any taxable year exists if the amount of the understatement exceeds the greater of 10% of the tax required to be shown on
the return for the taxable year or $5,000. The amount of any understatement subject to penalty generally is reduced if any portion is attributable to a position adopted on the
return:
(1)
for
which there is, or was, "substantial authority;" or
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(2)
as
to which there is a reasonable basis and the relevant facts of that position are disclosed on the return.
If
any item of income, gain, loss or deduction included in the distributive shares of unitholders might result in that kind of an "understatement" of income for which no "substantial
authority" exists, we must disclose the relevant facts on their returns. In addition, we will make a reasonable effort to furnish sufficient information for unitholders to make adequate disclosure on
their returns and to take other actions as may be appropriate to permit unitholders to avoid liability for this penalty. More stringent rules apply to "tax shelters," which we do not believe includes
us, or any of our investments, plans or arrangements.
A
substantial valuation misstatement exists if (a) the value of any property, or the tax basis of any property, claimed on a tax return is 150% or more of the amount determined to
be the correct amount of the valuation or tax basis, (b) the price for any property or services (or for the use of property) claimed on any such return with respect to any transaction between
persons described in Code Section 482 is 200% or more (or 50% or less) of the amount determined under Section 482 to be the correct amount of such price, or (c) the net Code
Section 482 transfer price adjustment for the taxable year exceeds the lesser of $5 million or 10% of the taxpayer's gross receipts. No penalty is imposed unless the portion of the
underpayment attributable to a substantial valuation misstatement exceeds $5,000 ($10,000 for a corporation other than an S Corporation or a personal holding company). The penalty is increased to 40%
in the event of a gross valuation misstatement. We do not anticipate making any valuation misstatements.
In
addition, the 20% accuracy-related penalty also applies to any portion of an underpayment of tax that is attributable to transactions lacking economic substance. To the extent that
such transactions are not disclosed, the penalty imposed is increased to 40%. Additionally, there is no reasonable cause defense to the imposition of this penalty to such transactions.
Reportable Transactions
If we were to engage in a "reportable transaction," we (and possibly our unitholders and others) would be required to make a detailed
disclosure of the transaction to the IRS. A transaction may be a reportable transaction based upon any of several factors, including the fact that it is a type of tax avoidance transaction publicly
identified by the IRS as a "listed transaction" or that it produces certain kinds of losses for partnerships, individuals, S corporations, and trusts in excess of $2 million in any single tax
year, or $4 million in any combination of six successive tax years. Our participation in a reportable transaction could increase the likelihood that our federal income tax information return
(and possibly our unitholders' tax return) would be audited by the IRS. Please see "—Administrative Matters—Information Returns and Audit Procedures."
Moreover,
if we were to participate in a reportable transaction with a significant purpose to avoid or evade tax, or in any listed transaction, our unitholders may be subject to the
following provisions of the American Jobs Creation Act of 2004:
•
accuracy-related penalties with a broader scope. significantly narrower exceptions, and potentially greater amounts than
described above at "—Administrative Matters—Accuracy-Related Penalties";
•
for those persons otherwise entitled to deduct interest on federal tax deficiencies, nondeductibility of interest on any
resulting tax liability; and
•
in the case of a listed transaction, an extended statute of limitations. We do not expect to engage in any "reportable
transactions."
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State, Local and Other Tax Considerations
In addition to federal income taxes, unitholders will be subject to other taxes, including state and local income taxes, unincorporated
business taxes, and estate, inheritance or intangibles taxes that may be imposed by the various jurisdictions in which we conduct business or own property or in which the unitholder is a resident. We
currently conduct business or own property only in Texas, which imposes an income tax on corporations and other entities but does not impose a personal income tax. Moreover, we may also own property
or do business in other states in the future that impose income or similar taxes on nonresident individuals. Although an analysis of those various taxes is not presented here, each prospective
unitholder should consider their potential impact on its investment in us.
It
is the responsibility of each unitholder to investigate the legal and tax consequences, under the laws of pertinent states and localities, of its investment in us. Vinson &
Elkins L.L.P. has not rendered an opinion on the state, local, or non-U.S. tax consequences of an investment in us. We strongly recommend that each prospective unitholder consult,
and depend on, its own tax counsel or other advisor with regard to those matters. It is the responsibility of each unitholder to file all tax returns that may be required of it.
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INVESTMENT IN PETROLOGISTICS LP BY EMPLOYEE BENEFIT PLANS
An investment in us by an employee benefit plan is subject to additional considerations because the investments of these plans are
subject to the fiduciary responsibility and prohibited transaction provisions of ERISA and restrictions imposed by Section 4975 of the Internal Revenue Code. For these purposes the term
"employee benefit plan" includes, but is not limited to, qualified pension, profit-sharing and stock bonus plans, Keogh plans, simplified employee pension plans and tax deferred annuities or IRAs
established or maintained by an employer or employee organization. Among other things, consideration should be given to:
•
whether the investment is prudent under Section 404(a)(1)(B) of ERISA;
•
whether in making the investment, that plan will satisfy the diversification requirements of Section 404(a)(1)(C)
of ERISA; and
•
whether the investment will result in recognition of unrelated business taxable income by the plan and, if so, the
potential after-tax investment return.
The
person with investment discretion with respect to the assets of an employee benefit plan, often called a fiduciary, should determine whether an investment in us is authorized by the
appropriate governing instrument and is a proper investment for the plan.
Section 406
of ERISA and Section 4975 of the Internal Revenue Code prohibit employee benefit plans, and also IRAs that are not considered part of an employee benefit plan,
from engaging in specified transactions involving "plan assets" with parties that are "parties in interest" under ERISA or "disqualified persons" under the Internal Revenue Code with respect to the
plan.
In
addition to considering whether the purchase of common units is a prohibited transaction, a fiduciary of an employee benefit plan should consider whether the plan will, by investing
in us, be deemed to own an undivided interest in our assets, with the result that our operations would be subject to the regulatory restrictions of ERISA, including its prohibited transaction rules,
as well as the prohibited transaction rules of the Internal Revenue Code.
The
Department of Labor regulations provide guidance with respect to whether the assets of an entity in which employee benefit plans acquire equity interests would be deemed "plan
assets" under some circumstances. Under these regulations, an entity's assets would not be considered to be "plan assets" if, among other things:
(1)
the
equity interests acquired by employee benefit plans are publicly offered securities—i.e., the equity interests are widely held by 100
or more investors independent of the issuer and each other, freely transferable and registered under some provisions of the federal securities laws;
(2)
the
entity is an "operating company," meaning it is primarily engaged in the production or sale of a product or service other than the investment of capital
either directly or through a majority-owned subsidiary or subsidiaries; or
(3)
there
is no significant investment by benefit plan investors, which is defined to mean that less than 25% of the value of each class of equity interest is
held by the employee benefit plans referred to above and IRAs.
Our
assets should not be considered "plan assets" under these regulations because it is expected that the investment will satisfy the requirements in (1) and (2) above.
Plan
fiduciaries contemplating a purchase of common units are encouraged to consult with their own counsel regarding the consequences under ERISA and the Internal Revenue Code in light
of the serious penalties imposed on persons who engage in prohibited transactions or other violations.
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UNDERWRITERS
Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named
below, for whom Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., UBS Securities LLC and Wells Fargo Securities, LLC are acting as representatives, have severally agreed to
purchase, and we have agreed to sell to them, severally, the number of common units indicated below.
Name
Number of
Common Units
Morgan Stanley & Co. LLC
Citigroup Global Markets Inc.
UBS Securities LLC
Wells Fargo Securities, LLC
SG Americas Securities, LLC
Stifel, Nicolaus & Company, Incorporated
Total
The
underwriters and the representatives are collectively referred to as the "underwriters" and the "representatives," respectively. The underwriters are offering the common units
subject to their acceptance of the common units from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery
of the common units offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for
all of the common units offered by this prospectus if any such common units are taken. However, the underwriters are not required to take or pay for the common units covered by the underwriters'
over-allotment option described below.
The
per common unit price of any common units sold by the underwriters shall be the public offering price listed on the cover page of this prospectus, in United States dollars, less an
amount not greater than the per common unit amount of the concession to dealers described below.
The
underwriters initially propose to offer part of the common units directly to the public at the public offering price listed on the cover page of this prospectus and part to certain
dealers at a price that
represents a concession not in excess of $            a common unit under the public offering price. Any underwriter may allow, and such dealers may reallow, a concession not in excess of
$            a common unit to other underwriters or to certain dealers. After the initial offering of the common units, the offering price and other selling terms may from time to time be
varied
by the representatives.
We
have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate
of                        additional common units
at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering
overallotments, if any, made in connection with the offering of the common units offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to
certain conditions, to purchase about the same percentage of the additional common units as the number listed next to the underwriter's name in the preceding table bears to the total number of common
units listed next to the names of all underwriters in the preceding table. If the underwriters' option is exercised in full, the total price to the public for the additional common units will be
approximately $             million, the total underwriters' discounts and commissions will be approximately
$             million, and the total proceeds to us will be
approximately $             million.
If
the underwriters do not exercise their option to purchase additional common units, we will issue                        common
units to our sponsors and their affiliates, our executive
officers and certain of our
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employees
upon the option's expiration. If and to the extent the underwriters exercise their option to purchase additional common units, the number of common units purchased by the underwriters
pursuant to such exercise will be issued to the public and the remainder, if any, will be issued to our sponsors and their affiliates, our executive officers and certain of our employees. Accordingly,
the exercise of the underwriters' option will not affect the total number of common units outstanding.
We
estimate that the total expenses of this offering, excluding underwriting discounts and commissions, will be approximately $             million.
The
underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of common units offered by them.
We
intend to apply to list our common units on the New York Stock Exchange, under the symbol "PDH."
We,
our general partner, the directors and executive officers of our general partner, and our sponsors have agreed that, without the prior written consent of Morgan
Stanley & Co. LLC, on behalf of the
underwriters, and subject to specified exceptions, we and they will not, during the period ending 180 days after the date of this prospectus:
•
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any common units beneficially owned or any securities so owned that are convertible
into or exercisable or exchangeable for common units; or
•
enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of the common units,
whether
any such transaction described above is to be settled by delivery of common units or such other securities, in cash or otherwise.
The
restrictions described in this paragraph do not apply to:
•
the sale of common units to the underwriters pursuant to the underwriting agreement;
•
the issuance by us of common units upon the exercise of an option or a warrant or the conversion of a security outstanding
on the date of this prospectus of which the underwriters have been advised in writing; or
•
transactions by any person other than us relating to common units or other securities acquired in open market transactions
after the completion of the offering of the shares; provided that no filing under Section 16(a) of the Exchange Act is required or will be voluntarily made in connection with subsequent sales
of common stock or other securities acquired in such open market transactions.
The
180-day restricted period described in the preceding paragraph will be automatically extended if: (1) during the last 17 days of the 180-day
restricted period we issue an earnings release or announce material news or a material event; or (2) prior to the expiration of the 180-day restricted period, we announce that we
will release earnings results during the 15-day period following the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will
continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or material event.
The
underwriters have informed us that they do not presently intend to release common units or other securities subject to the lock-up agreements. Any determination to
release any common units or other securities subject to the lock-up agreements would be based on a number of factors at the time of any such determination; such factors may include the
market price of the common units, the liquidity of the trading market for the common units, general market conditions, the number of common units or other securities
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subject
to the lock-up agreements proposed to be sold, and the timing, purpose and terms of the proposed sale.
In
order to facilitate the offering of the common units, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common units.
Specifically, the underwriters may over-allot in connection with the offering, creating a short position in the common units for their own account. In addition, to cover
over-allotments or to stabilize the price of the common units, the underwriters may bid for, and purchase, common units in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the common units in the offering, if the syndicate repurchases previously distributed common units in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the common units above independent market levels. The
underwriters are not required to engage in these activities, and may end any of these activities at any time.
We
and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.
Because
the Financial Industry Regulatory Authority, or FINRA, views the common units offered under this prospectus as interests in a direct participation program, this offering is being
made in compliance with Rule 2310 of the FINRA conduct rules. Investor suitability with respect to the common units should be judged similarly to the suitability with respect to other
securities that are listed for quotation on a national securities exchange.
The
underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment
banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates
have, from time to time, performed, and may in the future perform, various financial advisory, investment banking, commercial banking and other services for us, our general partner and our sponsors,
for which they received or will receive customary fees and expenses.
Furthermore,
certain of the underwriters and their respective affiliates may, from time to time, enter into arms-length transactions with us in the ordinary course of their
business. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities
activities may involve securities or instruments of PetroLogistics LP or our affiliates. The underwriters and their respective affiliates may also make investment recommendations or publish or
express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and
instruments.
A
prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The
representatives may agree to allocate a number of common units to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to
the underwriters that may make Internet distributions on the same basis as other allocations.
Directed Unit Program
At our request, the underwriters have reserved for sale, at the initial public offering price, up
to                                    common units
offered hereby for our employees and the directors and officers of our general partner, and our sponsors. The number of common units available for sale to the general public
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will
be reduced to the extent such persons purchase such reserved common units. Any reserved common units which are not so purchased will be offered by the underwriters to the general public on the
same terms as the other common units offered hereby.
Pricing of the Offering
Prior to this offering, there has been no public market for our common units. The initial public offering price was determined by
negotiations between us and the representatives. Among the factors to be considered in determining the initial public offering price will be our future prospects and those of our industry in general,
our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, the market prices of securities, and certain financial
and operating information, of companies engaged in activities similar to ours. The estimated initial public offering price range set forth on the cover page of this prospectus is subject to change as
a result of market conditions and other factors.
We
cannot assure you that the prices at which the common units will sell in the public market after this offering will not be lower than the initial public offering price or that an
active trading market in our common units will develop and continue after this offering.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each underwriter has
represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Member State it has not made and will not make an offer of common units
which are the subject of the offering contemplated by this prospectus to the public in that Member State other than:
(1)
to
any legal entity which is a qualified investor as defined in the Prospectus Directive;
(2)
to
fewer than 100 or, if such Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other
than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or
(3)
in
any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided
that no such offer of notes shall require us to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the
Prospectus Directive.
For
the purposes of the above, the expression an "offer of common units to the public" in relation to any common units in any Member State means the communication in any form and by any
means of sufficient information on the terms of the offer and the common units to be offered so as to enable an investor to decide to purchase or subscribe the common units, as the same may be varied
in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the
2010 PD Amending Directive, to the extent implemented in that Member State) and includes any relevant implementing measure in that Member State and the expression "2010 PD Amending Directive" means
Directive 2010/73/EU.
United Kingdom
This prospectus and any other material in relation to the common units described herein is only being distributed to, and is only
directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospective Directive ("qualified investors") that also (i) have
professional experience in matters relating to investments falling within Article 19(5) of the Financial
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Services
and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or the Order, (ii) who fall within Article 49(2)(a) to (d) of the Order or (iii) to whom it may
otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). The common units are only available to, and any invitation, offer or agreement to purchase or
otherwise acquire such common units will be engaged in only with, relevant persons. This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole
or in part) or disclosed by recipients to any other person in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this prospectus or any of its
contents.
Switzerland
This prospectus does not constitute an issue prospectus pursuant to Article 652a or Article 1156 of the Swiss Code of
Obligations ("CO") and the common units will not be listed on the SIX Swiss Exchange. Therefore, the Prospectus may not comply with the disclosure standards of the CO and/or the listing rules
(including any prospectus schemes) of the SIX Swiss Exchange. Accordingly, the common units may not be offered to the public in or from Switzerland, but only to a selected and limited circle of
investors, which do not subscribe to the common units with a view to distribution.
Hong Kong
The common units may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an
offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance
(Cap.571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies
Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document relating to the common units may be issued or may be in the possession of any person for the purpose of issue (in
each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws
of Hong Kong) other than with respect to common units which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the
Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any
other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the common units may not be circulated or distributed, nor may the common units be
offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under
Section 274 of the Securities and Futures Act,
Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275
of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where
the common units are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole
business of which is to hold investments and the entire common unit capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the
trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, common units, debentures and units of common units and debentures of
that corporation or the beneficiaries' rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the common units under
Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or
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any
person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or
(3) by operation of law.
Japan
The common units have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial
Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any common units, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan
(which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale,
directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and
Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
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LEGAL MATTERS
The validity of the common units and certain other legal matters will be passed upon for us by Vinson & Elkins, L.L.P.,
New York, New York. Andrews Kurth LLP, Houston, Texas is acting as counsel to the underwriters.
EXPERTS
The financial statements of PL Propylene LLC at December 31, 2010 and 2009, and for each of the three years in the period
ended December 31, 2010, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set
forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
The
balance sheet of PetroLogistics LP at June 9, 2011 appearing in this Prospectus and Registration Statement has been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and is included in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the common
units being offered hereunder. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. For further
information with respect to us and our common units, we refer you to the registration statement and the exhibits filed as a part of the registration statement. Statements contained in this prospectus
concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, we refer you to the
copy of the contract or document that has been filed as an exhibit and reference thereto is qualified in all respects by the terms of the filed exhibit. The registration statement, including exhibits,
may be inspected without charge at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549, and copies of all or any part of it may be obtained from that office after
payment of fees prescribed by the SEC. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC
maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC at http://www.sec.gov.
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INDEX TO FINANCIAL STATEMENTS
Page
PETROLOGISTICS LP
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Introduction
F-2
Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2011
F-3
Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2010
F-4
Unaudited Pro Forma Consolidated Statement of Operations for the Three Months Ended March 31, 2011
F-5
Notes to Unaudited Pro Forma Consolidated Financial Statements
F-6
PL PROPYLENE LLC
Report of Independent Registered Public Accounting Firm
F-10
Audited Balance Sheets as of December 31, 2009 and 2010, Unaudited Balance Sheet as of March 31, 2011 and Unaudited Supplemental
Pro Forma Balance Sheet as of March 31, 2011
F-11
Audited Statements of Operations for the Years Ended December 31, 2008, 2009 and 2010 and Unaudited Statements of Operations for the
Three Months Ended March 31, 2010 and 2011
F-12
Statements of Changes in Member's Equity
F-13
Audited Statements of Cash Flows for the Years Ended December 31, 2008, 2009 and 2010 and Unaudited Statements of Cash Flows for
the Three Months Ended March 31, 2010 and 2011
F-14
Notes to Financial Statements
F-15
PETROLOGISTICS LP
Report of Independent Registered Public Accounting Firm
F-33
Audited Balance Sheet as of June 9, 2011
F-34
Notes to the Balance Sheet
F-35
F-1
Table of Contents
PETROLOGISTICS LP
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Introduction
The unaudited pro forma consolidated financial statements of PetroLogistics LP have been derived from the audited historical and
unaudited historical financial statements of our predecessor for accounting purposes, PL Propylene LLC ("PL Propylene" or the "Predecessor") included elsewhere in this prospectus and are
qualified in their entirety by reference to such historical financial statements and related notes contained therein. The unaudited pro forma consolidated financial statements should be read in
conjunction with the audited and unaudited financial statements of PL Propylene, the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included
elsewhere in this prospectus. References herein to "us", "we", "our" or similar terms when used in a historical context refer to PL Propylene. When used in the present tense or prospectively, those
terms refer to PetroLogistics LP and its subsidiaries unless the context otherwise requires or where otherwise indicated.
Prior
to this offering, we are wholly-owned by Propylene Holdings LLC. Effective with this offering, Propylene Holdings LLC will contribute PL Propylene to us, and we will
own and operate PL Propylene thereafter. The contribution of PL Propylene to us will be recorded at historical cost as it is considered to be a reorganization of entities under common control.
The
unaudited pro forma consolidated financial statements have been prepared by adjusting the historical financial statements of PL Propylene. The pro forma adjustments are based on
currently available information and certain estimates and assumptions that we believe are reasonable. Therefore, the actual adjustments will differ from the pro forma adjustments. However, we believe
that the assumptions provide a reasonable basis for presenting the significant effects of the contemplated transactions and that the pro forma adjustments give appropriate effect to those assumptions
and are properly applied in the unaudited pro forma consolidated financial statements.
The
unaudited pro forma consolidated financial statements are not necessarily indicative of the results that we would have achieved had the transactions described herein actually taken
place on the dates indicated, and do not purport to be indicative of future financial position or operating results.
The
unaudited pro forma consolidated financial statements have been prepared on the basis that PetroLogistics will be treated as a partnership for U.S. federal income tax purposes and
assume that the underwriters do not exercise their option to purchase additional common units and that the additional common units subject to the underwriters' option are distributed to our sponsors
and their affiliates, our executive officers and certain of our employees after the option expires.
F-2
Table of Contents
PETROLOGISTICS LP
UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2011
Predecessor
Actual
as of
March 31, 2011
Pro Forma
Adjustments
Pro Forma
as of
March 31, 2011
(In Thousands)
Assets
Current assets:
Cash and cash equivalents
$
—
$
—
$
5,000
380,000
a
(179,596
)
b
(186,779
)
c
(8,625
)
d
600,000
g
(40,000
)
h
(560,000
)
i
Restricted cash
2,904
(2,904
)
b
—
Accounts receivable
31,913
—
31,913
Accounts receivable, related parties
258
—
258
Inventory
13,153
—
13,153
Prepaid expenses and other current assets
1,757
—
1,757
Total current assets
49,985
2,096
52,081
Property, plant and equipment, net
605,385
—
605,385
Intangible assets, net
9,868
—
9,868
Deferred financing costs and other
10,138
8,625
d
8,626
(10,137
)
e
Total assets
$
675,376
$
584
$
675,960
Liabilities and member's equity
Current liabilities:
Accounts payable
$
12,345
$
—
$
12,345
Accounts payable, related parties
1,082
—
1,082
Accrued liabilities
2,460
—
2,460
Revolving loan
32,500
(32,500
)
b
—
Deferred revenue
11,363
—
11,363
Other current liabilities
172
—
172
Bank debt
150,000
(150,000
)
b
—
Total current liabilities
209,922
(182,500
)
27,422
Long-term debt
—
380,000
a
380,000
Asset retirement obligation
1,114
—
1,114
Total liabilities
211,036
197,500
408,536
Member's equity
464,340
(464,340
)
f
—
PRO FORMA PARTNERS' CAPITAL
Unitholder's capital
Units held by public
Common units:    common units issued and outstanding
—
600,000
g
560,000
(40,000
)
h
Units held by sponsors and their affiliates, executive officers and certain employees
Common units:    common units issued and outstanding
—
(186,779
)
c
(292,576
)
(10,137
)
e
464,340
f
(560,000
)
i
90,000
k
(90,000
)
k
General partner interest
—
—
j
Total pro forma partners' capital
—
267,424
267,424
Total liabilities and partners' capital
$
675,376
$
584
$
675,960
F-3
Table of Contents
PETROLOGISTICS LP
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2010
Predecessor
Actual
Year Ended
December 31, 2010
Pro Forma
Adjustments
Pro Forma
Year Ended
December 31, 2010
(In Thousands)
Sales
$
30,351
$
—
30,351
Cost of sales
41,836
—
41,836
Gross loss
(11,485
)
—
(11,485
)
General and administrative expense
22,884
—
22,884
Operating loss
(34,369
)
—
(34,369
)
Interest expense, net
(5,418
)
5,421
a
(12,343
)
(10,945
)
b
(951
)
c
(450
)
d
Other income
52
—
52
Net loss before income tax expense
(39,735
)
(6,925
)
(46,660
)
Income tax expense
—
—
—
Net loss
$
(39,735
)
$
(6,925
)
$
(46,660
)
Common unitholders' interest in net income
$
Loss per common unit
Weighted average number of common units outstanding
The
accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
F-4
Table of Contents
PETROLOGISTICS LP
UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
Predecessor
Actual
Three months ended
March 31, 2011
Pro Forma
Adjustments
Pro Forma
Three months ended
March 31, 2011
(In Thousands)
Sales
$
105,810
$
—
$
105,810
Cost of sales
91,565
—
91,565
Gross profit
14,245
—
14,245
General and administrative expense
31,555
—
31,555
Management fee
500
(500
)
e
—
Operating income (loss)
(17,810
)
500
(17,310
)
Interest expense
(4,697
)
4,697
a
(5,127
)
(4,675
)
b
(339
)
c
(113
)
d
Other income
25
—
25
Net loss before income tax expense
(22,482
)
70
(22,412
)
Income tax expense
(356
)
—
(356
)
Net loss
$
(22,838
)
$
70
$
(22,768
)
Common unitholders' interest in net income
$
Loss per common unit
Weighted average number of common units outstanding
The
accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.
F-5
Table of Contents
PETROLOGISTICS LP
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
(1) Organization and Basis of Presentation
The unaudited pro forma consolidated financial statements of PetroLogistics LP ("PetroLogistics") have been prepared based upon the audited and unaudited historical financial
statements of PL Propylene LLC ("PL Propylene"), a wholly owned subsidiary of Propylene Holdings LLC ("Propylene Holdings"). In connection with the offering by
PetroLogistics of its common units to the public, Propylene Holdings will contribute PL Propylene to PetroLogistics.
The
unaudited pro forma consolidated financial statements are not necessarily indicative of the results that PetroLogistics would have achieved had the transactions described herein
actually taken place on the dates indicated, and do not purport to be indicative of future financial position or operating results. The unaudited pro forma consolidated financial statements should be
read in conjunction with the historical financial statements of PL Propylene, the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in the prospectus.
The
pro forma adjustments have been prepared as if the transactions described below had taken place on March 31, 2011, in the case of the unaudited pro forma consolidated balance
sheet, or as of
January 1, 2010 and January 1, 2011, respectively, in the case of the unaudited pro forma consolidated statements of operations.
The
unaudited pro forma consolidated financial statements reflect the following transactions:
•
Prior to the closing of this offering, PL Propylene expects to enter into a new $350.0 million term loan
facility and a $120.0 million revolving credit facility;
•
Prior to the closing of this offering, PL Propylene will draw $30.0 million from under its new revolving
credit facility to fund its working capital needs, draw $350.0 million under the new term loan facility and use (1) $179.6 million to refinance and cancel its existing credit
facility, (2) approximately $186.8 million to reimburse our sponsors for construction capital expenditures and (3) approximately $8.6 million to pay associated financing
costs;
•
PetroLogistics GP LLC ("PetroLogistics GP"), the general partner of PetroLogistics, and Propylene
Holdings will enter into an amended and restated agreement of limited partnership;
•
Propylene Holdings will contribute PL Propylene to PetroLogistics in exchange for (1)
                         common
units, (2) the right to receive the net proceeds from this offering (after deducting underwriting discounts and commissions and the expenses of this offering) and (3) the right to
receive additional common units, a cash distribution or both, based upon whether or not the underwriters exercise their option to purchase additional common units in full or in part;
•
Propylene Holdings will distribute
all                        common units, its right to receive the net proceeds from this
offering (after deducting underwriting discounts and commissions and the expenses of this offering) and its right to receive additional common units, a cash distribution or both, based upon whether or
not the underwriters exercise their option to purchase additional common units in full or in part to our sponsors and their affiliates, our executive officers and certain of our employees;
•
PetroLogistics will offer and
sell                        common units in this offering and pay related underwriting discounts
and commissions and offering expenses;
F-6
Table of Contents
PETROLOGISTICS LP
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(1) Organization and Basis of Presentation (Continued)
•
PetroLogistics will distribute the $560.0 million of net proceeds from this offering (after deducting underwriting
discounts and commissions and the expenses of this offering) of which (1) $302.8 million will be distributed to our sponsors to reimburse them for certain construction capital
expenditures and (2) $257.2 million will be a distribution to our sponsors and their affiliates, our executive officers and certain of our employees;
•
The underwriters will not exercise their option to
purchase                        additional common units, and PetroLogistics
will issue such units to our sponsors and their affiliates, our executive officers and certain of our employees.
Upon
completion of PetroLogistics' initial public offering, we expect we will incur approximately $3.5 million in additional general and administrative expenses as a result of
being a publicly traded limited partnership that we have not previously incurred, including costs associated with compliance under the Securities Exchange Act of 1934, annual and quarterly reports to
unitholders, tax return and Schedule K-1 preparation and distribution, investor relations, registrar and transfer agent fees, audit fees, incremental director and officer liability
insurance costs and directors' compensation. These incremental expenses exclude the costs of the offering, as well as the costs associated with the initial implementation of our Sarbanes-Oxley
Section 404 internal control reviews and testing. Although our financial statements following the offering will reflect the impact of these expenses, our unaudited pro forma consolidated
financial statements do not reflect these expenses.
Our
historical financial statements reflect significant amounts of equity-based compensation expense. We expect our equity-based awards will vest upon the completion of this offering. We
expect that this vesting will result in a charge to our statement of operations. That charge has not been included in the unaudited pro forma consolidated statements of operations because the charge
is not expected to have a continuing impact on our results of operations.
(2) Partnership Interests
Following the initial public offering, PetroLogistics will have two types of partnership interests outstanding:
•
common units representing limited partner interests, a portion of which PetroLogistics will sell in the initial public
offering (approximately        % of all of PetroLogistics' outstanding units); and
•
a non-economic general partnership interest, which is not entitled to any distributions, will be held by
PetroLogistics GP.
(3) Pro Forma Balance Sheet Adjustments and Assumptions
As of March 31, 2011
(a)
Reflects
the amounts drawn on the new (1) term loan facility of $350.0 million and (2) revolving credit facility of
$30.0 million.
(b)
Reflects
the refinancing and cancellation of PL Propylene's existing credit facility of $182.5 million, net of the restricted cash balance of
$2.9 million on deposit with the existing lender, which is applied to the outstanding borrowings at the time of repayment.
F-7
Table of Contents
PETROLOGISTICS LP
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(3) Pro Forma Balance Sheet Adjustments and Assumptions (Continued)
(c)
Reflects
a distribution of $186.8 million from the proceeds of the new term loan facility and revolving credit facility to reimburse our sponsors for
certain construction capital expenditures.
(d)
Reflects
the payment of estimated deferred financing costs of $8.6 million associated with the new credit facilities.
(e)
Reflects
the write-off of deferred financing costs associated with PL Propylene's existing credit facility.
(f)
Reflects
the contribution by Propylene Holdings of PL Propylene to PetroLogistics.
(g)
Reflects
the issuance by PetroLogistics of                        common units to the public at an initial offering price of
$            per common unit
resulting in aggregate gross proceeds of $600.0 million.
(h)
Reflects
the payment of underwriting commissions of $36.0 million and other estimated offering expenses of $4.0 million for a total of
$40.0 million, which will be allocated to the newly issued public common units.
(i)
Reflects
the distribution of the $560.0 million of net proceeds from this offering, of which (1) $302.8 million is distributed to our
sponsors to reimburse them for certain construction capital expenditures and (2) $257.2 million is a distribution to our sponsors and their affiliates, our executive officers and certain
of our employees.
(j)
Reflects
the non-economic general partner interest with nominal value.
(k)
Reflects
the distribution of the shares related to the unexercised underwriters' option to purchase additional common units to our sponsors and their
affiliates, our executive officers and certain of our employees.
(4) Pro Forma Statement of Operations Adjustments and Assumptions
For the year ended December 31, 2010
(a)
Reflects
the reversal of interest expense and loan commitment fees incurred during the year on PL Propylene's existing credit facility.
(b)
Reflects
the inclusion of interest expense relating to the new term loan facility of $350.0 million at an assumed rate of 5% per annum
($17.5 million) and the new revolving credit facility borrowings of $30.0 million at an assumed rate of 4% per annum ($1.2 million), net of interest expense capitalized on
$193.2 million of the term loan ($7.8 million) for the period January 1, 2010 through October 20, 2010, when the facility commenced operations. For this purpose, we have
assumed that $186.8 million of the gross proceeds from the new credit facilities used to fund the distribution to our sponsors is not capitalized during the construction period. A
1
/
8
percent change in the interest rates would result in a change in interest expense of approximately $0.3 million.
(c)
Reflects
amortization of deferred financing cost over the term of the new credit facilities.
(d)
Reflects
the commitment fee of 0.5% per annum on the estimated average unused portion ($90.0 million) of the new $120.0 million revolving
credit facility.
F-8
Table of Contents
PETROLOGISTICS LP
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(4) Pro Forma Statement of Operations Adjustments and Assumptions (Continued)
For the three months ended March 31, 2011
(a)
Reflects
the reversal of interest expense and loan commitment fees incurred during the year on PL Propylene's existing credit facility.
(b)
Reflects
the inclusion of interest expense (including amortization of deferred financing costs) at an average annual rate of approximately (1) 5.0%
relating to the new term loan facility of $350.0 million and (2) 4.0% related to the revolving credit facility borrowings of $30.0 million. A
1
/
8
percent
change in the interest rates would result in a change in interest expense of approximately $0.1 million.
(c)
Reflects
amortization of deferred financing cost over the term of the new credit facilities.
(d)
Reflects
the commitment fee of 0.5% per annum on the estimated average unused portion ($90.0 million) of the new $120.0 million revolving
credit facility.
(e)
Reflects
the reversal of management fees recorded pursuant to a management services agreement with Lindsay Goldberg that expires under its terms in
conjunction with the initial public offering.
(5) Pro Forma Net Income (Loss) Per Unit
Pro forma net income (loss) per unit is determined by dividing the pro forma net income (loss) that would have been allocated, in accordance with the provisions of
PetroLogistics LP's partnership agreement, to the common unitholders, by the number of common units expected to be outstanding at the closing of this offering. For purposes of this calculation,
PetroLogistics assumed that pro forma distributions were equal to pro forma net income and that the number of outstanding units
was                        common units at December 31, 2010 and
March 31, 2011, respectively. All units were assumed to have been outstanding since January 1, 2010 and January 1, 2011, respectively.
Basic
and diluted pro forma net income per unit are equivalent as there are no dilutive units at the date of closing of this offering.
F-9
Table of Contents
Report of Independent Registered Public Accounting Firm
To
Propylene Holdings LLC:
We
have audited the accompanying balance sheets of PL Propylene LLC as of December 31, 2009 and 2010, and the related statements of operations, changes in member's equity,
and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of PL Propylene LLC at December 31, 2009 and
2010, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Houston,
Texas
June 17, 2011
F-10
Table of Contents
PL Propylene LLC
Balance Sheets
(In Thousands)
December 31,
Supplemental
Pro Forma
March 31,
2011
March 31,
2011
2009
2010
(Unaudited)
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
—
$
—
$
—
$
—
Restricted cash
30,003
6,885
2,904
2,904
Accounts receivable
—
14,376
31,913
31,913
Accounts receivable, related parties
—
—
258
258
Inventory
1,665
16,043
13,153
13,153
Prepaid expenses and other current assets
1,855
866
1,757
1,757
Total current assets
33,523
38,170
49,985
49,985
Property, plant, and equipment, net
426,784
609,822
605,385
605,385
Intangible asset, net
10,056
9,968
9,868
9,868
Deferred financing costs and other assets
14,285
10,916
10,138
10,138
Total assets
$
484,648
$
668,876
$
675,376
$
675,376
Liabilities and member's equity (deficit)
Current liabilities:
Accounts payable
$
21,114
$
12,454
$
12,345
$
12,345
Accounts payable, related parties
1,236
1,223
1,082
1,082
Accrued liabilities
1,238
3,669
2,460
2,460
Revolving loan
—
39,500
32,500
32,500
Deferred revenue
—
4,803
11,363
11,363
Other current liabilities
—
—
172
172
Bank debt
94,700
150,000
150,000
150,000
Distribution payable to Member
—
—
—
746,800
Total current liabilities
118,288
211,649
209,922
956,722
Asset retirement obligation
870
1,092
1,114
1,114
Total liabilities
119,158
212,741
211,036
957,836
Commitments and contingencies
Member's equity (deficit)
365,490
456,135
464,340
(282,460
)
Total liabilities and member's equity (deficit)
$
484,648
$
668,876
$
675,376
$
675,376
See
accompanying notes.
F-11
Table of Contents
PL Propylene LLC
Statements of Operations
(In Thousands)
Year Ended December 31,
Three Months
Ended March 31,
2008
2009
2010
2010
2011
(Unaudited)
Sales
$
—
$
—
$
30,351
$
—
$
105,810
Cost of sales
—
—
41,836
—
91,565
Gross profit (loss)
—
—
(11,485
)
—
14,245
General and administrative expense
4,729
4,264
22,884
1,851
31,555
Management fee
—
—
—
—
500
Operating loss
(4,729
)
(4,264
)
(34,369
)
(1,851
)
(17,810
)
Interest income (expense), net
744
(224
)
(5,418
)
(657
)
(4,697
)
Other income
—
—
52
—
25
Net loss before income tax expense
(3,985
)
(4,488
)
(39,735
)
(2,508
)
(22,482
)
Income tax expense
—
—
—
—
(356
)
Net loss
$
(3,985
)
$
(4,488
)
$
(39,735
)
$
(2,508
)
$
(22,838
)
(Unaudited)
Supplemental pro forma net loss per unit
$
Units used to calculate supplemental pro forma net loss per unit
$
See
accompanying notes.
F-12
Table of Contents
PL Propylene LLC
Statements of Changes in Member's Equity
(In Thousands)
Balance, December 31, 2007
$
—
Member contributions
204,978
Equity-based compensation
1,956
Net loss
(3,985
)
Balance, December 31, 2008
202,949
Member contributions
167,000
Equity-based compensation
29
Net loss
(4,488
)
Balance, December 31, 2009
365,490
Member contributions
115,897
Equity-based compensation
14,483
Net loss
(39,735
)
Balance, December 31, 2010
456,135
Member contributions (Unaudited)
1,700
Equity-based compensation (Unaudited)
29,343
Net loss (Unaudited)
(22,838
)
Balance, March 31, 2011 (Unaudited)
$
464,340
See
accompanying notes.
F-13
Table of Contents
PL Propylene LLC
Statements of Cash Flows
(In Thousands)
Year Ended December 31,
Three Months
Ended March 31,
2008
2009
2010
2010
2011
(Unaudited)
Operating activities
Net loss
$
(3,985
)
$
(4,488
)
$
(39,735
)
$
(2,508
)
$
(22,838
)
Adjustments to reconcile net loss to net cash provided by (used in) operations:
Equity-based compensation expense
1,956
29
14,483
18
29,343
Amortization of deferred financing costs
—
—
612
—
780
Depreciation and amortization expense
—
3
7,147
1
8,295
Accretion expense
—
71
84
19
22
Changes in working capital:
Accounts receivable
—
—
(14,376
)
—
(17,537
)
Accounts receivable, related parties
—
—
—
(4
)
(258
)
Inventory
—
(1,665
)
(14,378
)
(37
)
2,890
Prepaid expenses and other current assets
—
(1,855
)
989
634
(891
)
Accounts payable
123
6,602
(8,660
)
(426
)
(109
)
Accounts payable, related parties
—
1,236
(13
)
2,151
(141
)
Accrued liabilities
889
350
2,431
1,985
(1,209
)
Deferred revenue
—
—
4,803
—
6,560
Other current liabilities
—
—
—
—
172
Other assets
—
(250
)
250
—
(2
)
Decrease (increase) in restricted cash
—
—
(6,885
)
—
3,981
Net cash provided by (used in) operations
(1,017
)
33
(53,248
)
1,833
9,058
Investing activities
Decrease (increase) in restricted cash
(39,768
)
9,765
30,003
(15,593
)
—
Capital expenditures
(130,183
)
(290,953
)
(187,452
)
(80,040
)
(3,758
)
Net cash used in investing activities
(169,951
)
(281,188
)
(157,449
)
(95,633
)
(3,758
)
Financing activities
Deferred financing costs
(1,994
)
(12,561
)
—
—
—
Repayments of borrowings
—
—
—
—
(72,000
)
Proceeds from borrowings
—
94,700
94,800
22,400
65,000
Member contributions
204,978
167,000
115,897
71,400
1,700
Total cash provided by (used in) financing activities
202,984
249,139
210,697
93,800
(5,300
)
Net change in cash
32,016
(32,016
)
—
—
—
Cash at beginning of period
—
32,016
—
—
—
Cash at end of period
$
32,016
$
—
$
—
$
—
$
—
Noncash activities
Interest paid, net of amounts capitalized
$
—
$
818
$
4,774
$
—
$
3,917
See
accompanying notes.
F-14
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31,
2010 and 2011, is Unaudited)
1. Organization and Basis of Presentation
Organization and Nature of Operations
PL Propylene LLC is a limited liability company that produces and markets propylene to its customers. As used in this report,
the terms "we," "us", "our," and like terms refer to PL Propylene LLC. We purchased a former olefins manufacturing facility from ExxonMobil Oil Corporation (ExxonMobil) in March 2008. We
developed and built new assets and converted certain existing assets into an "on-purpose" propylene production facility (the Facility) in Houston, Texas, with production beginning on
October 21, 2010. Propylene is used as one of the basic building blocks for petrochemicals in a variety of end uses, including paints, coatings, building materials, clothing, automotive parts,
packaging and a range of other consumer and industrial products.
Basis of Presentation
We were formed under the laws of Delaware on January 31, 2007, and we are a wholly-owned subsidiary of Propylene
Holdings LLC (Holdings), which is our sole member. Holdings is a wholly-owned subsidiary of PL Manufacturing LLC (PLM). The majority owner of PLM is LG Propylene LLC, an affiliate
of Lindsay Goldberg LLC (Lindsay Goldberg). We refer to the owners of PLM as "our sponsors." We are a limited liability company, and as such, Holdings and its members are not personally liable
for any debt, liability or obligation of ours.
We
commenced operations in March 2008 when we acquired the ExxonMobil facility. The financial statements have been prepared in accordance with accounting principles generally accepted in
the United States (GAAP).
Unaudited Interim Financial Data
Our balance sheet as of March 31, 2011, the statements of operations and cash flows for the three months ended March 31,
2010 and 2011, and the statement of changes in member's equity for the three months ended March 31, 2011, are unaudited. These unaudited interim financial statements have been prepared on the
same basis as the audited financial statements and, in the opinion of management, reflect all adjustments, necessary for the fair presentation of our financial position as of March 31, 2011 and
the results of our operations and our cash flows for the three months ended March 31, 2010 and 2011. The financial data and other information disclosed in these notes to the financial
statements related to the three-month periods are unaudited. The results for the three months ended March 31, 2011, are not necessarily indicative of the results to be expected for the year
ending December 31, 2011, or for any other interim period or for any future year.
Development Stage Enterprise
We operated as a development stage enterprise until commencement of Facility operations in October 2010. During the development-stage
period, we devoted substantially all of our efforts to developing, constructing and financing the construction of the Facility.
F-15
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of sales and expenses during the
reporting period. Actual results could differ materially from those estimates.
The
more significant areas requiring the use of estimates, assumptions, and judgments relate to recoverability and valuation of long-lived assets and the valuation of
equity-based compensation awards.
Recognition of Sales
Sales of propylene and by-products are recorded when persuasive evidence of an arrangement exists, goods have been
delivered, consideration to be received is fixed and determinable, and collectibility is reasonably assured. Sales are presented net of discounts and allowances. By-product sales are
reported together with propylene sales. Transportation costs billed to customers are recorded as a component of sales.
Cost of Sales
The Facility currently produces chemical grade propylene, and we expect that it will be able to produce polymer grade propylene
following modifications to the Facility. In addition, the Facility generates commercial quantities of the following by-products during the production process: hydrogen, C4 mix stream, and
C5+ stream. Cost of sales is calculated on the weighted-average cost basis. In the fourth quarter of 2010, the Facility operated below normal capacity. Accordingly, we recorded a charge of
$1.1 million to cost of sales to reflect unabsorbed fixed costs. The Facility's substantial fixed cost structure and limited operations in the period following commencement of operations
resulted in a gross loss for 2010. During the three months ended March 31, 2011, we again operated below normal capacity and recorded a charge of $0.6 million to costs of sales to
reflect unabsorbed fixed overhead costs.
Cash and Cash Equivalents
We consider all short-term instruments with an original maturity of three months or less to be cash equivalents. We
maintain cash in bank deposit accounts that, at times, may exceed federally insured limits. We have not experienced any losses in such accounts, and we believe we are not exposed to any significant
credit risk on cash and cash equivalents.
Restricted Cash
During 2009, we commenced borrowings under our credit facility. Our credit facility includes certain restrictions with respect to our
cash accounts. As such, the cash balances within these accounts of $28.5 million, $6.9 million and $2.9 million have been classified as restricted cash in the balance sheets as of
December 31, 2009 and 2010, and March 31, 2011, respectively. The remainder of our December 31, 2009, cash balance of $1.5 million was restricted as collateral for letters
of credit issued on our behalf. We had no outstanding letters of credit at December 31, 2010 or March 31, 2011.
F-16
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
2. Summary of Significant Accounting Policies (Continued)
During
2010, all restricted cash on hand as of December 31, 2009, was used in investing activities to fund the construction of the Facility. Restricted cash on hand as of
December 31, 2010, and March 31, 2011, was or will be used in 2011 to fund operating activities.
Accounts Receivable
We extend credit to customers in accordance with normal industry standards and terms. We review accounts receivable monthly and
establish an allowance for doubtful accounts based on known factors surrounding the credit risk of specific customers, historical trends and other information. Accounts receivable are not
collateralized, and we will charge interest on receivables should they become past due. To date, we have not recorded any interest income related to past due receivables. Through March 31,
2011, we have not recorded any bad debt expense.
Inventory
Inventory is carried at the lower of cost or market, with cost determined using a weighted-average method.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets. Upon retirement or sale, we remove the cost of the asset and the related accumulated depreciation from the accounts and reflects any resulting gain or loss in the
statements of operations.
Repair
and maintenance expenditures incurred in order to maintain the day-to-day operation of our existing assets are charged to expense as incurred. Costs
associated with acquisitions and improvements that expand existing capacity or extend useful life, including related interest costs, are capitalized. Cost of planned major maintenance projects, known
as turnarounds, will be deferred and amortized using the straight-line method over the period until the next plant turnaround, which is approximately three years.
Intangible Asset
Intangible asset represents the technology license we acquired related to the propane dehydrogenation process, which is essential to
the design, construction and operation of the Facility. The technology license is being amortized on a straight-line basis over its estimated useful life of 25 years. We have no
intangible assets with indefinite useful lives.
Deferred Financing Costs and Other Assets
Deferred financing costs and other assets consist primarily of deferred financing costs incurred in connection with the closing of our
credit facility in June 2009. The costs associated with our credit facility are being amortized using the straight-line method over the term of the facility, which approximates the
effective interest method, and are classified as interest expense.
F-17
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
2. Summary of Significant Accounting Policies (Continued)
Impairment of Long-Lived Assets
Long-lived assets used in operations are assessed for possible impairment when events or changes in circumstances indicate
a potential significant deterioration in future cash flows projected to be generated by the assets. Individual assets are grouped for impairment purposes at the lowest level for which there are
identifiable cash flows that are largely independent of the cash flows of other groups of assets—generally at the Facility level, as we produce one principal product.
If,
upon review, the sum of the projected undiscounted cash flows is less than the carrying value of the asset group, the carrying value is written down to estimated fair value. The fair
values of impaired assets are usually determined based on the present value of projected future cash flows using discount rates commensurate with the risks involved in the asset group, as quoted
market prices in active markets are generally not available. The expected future cash flows used for impairment reviews and related fair value calculations are based on projected production volumes,
sales volumes, prices and costs, taking into consideration available internal and external information at the date of review.
Should
an impairment of assets arise, we would be required to record a charge to operations that could be material to the period reported. To date, we have not recorded any impairment
charges.
Asset Retirement Obligation
An asset and a liability are recorded at fair value when there is a legal obligation associated with the retirement of a
long-lived asset and the amount can be reasonably estimated. When the liability is initially recorded, this cost is capitalized by increasing the carrying amount of the related
long-lived asset. Over time, the liability is increased for changes in present value, and the capitalized cost is depreciated over the estimated useful life of the related asset.
Where
we can reasonably estimate the asset retirement obligation, we accrue a liability based on an estimate of the timing and amount of settlement. In estimating our asset retirement
obligations, we utilize several assumptions based on when the liabilities were recorded, including an inflation rate and a credit-adjusted discount rate. We record changes in these estimates based on
changes in the expected amount and timing of payments to settle our obligations.
Environmental Costs
Environmental expenditures are expensed or capitalized as appropriate, depending on future economic benefit. Expenditures that relate
to an existing condition caused by past operations and that do not have future economic benefit are expensed. Liabilities for expenditures are recorded on an undiscounted basis unless the amount and
timing of cash payments for the liability are fixed or determinable, in which case they are recorded on a discounted basis. Expenditures that create future benefits or contribute to future revenue
generation are capitalized.
Income Taxes
We are a limited liability company and are treated similar to a partnership for federal tax purposes whereby the impact of our
operations is subject to tax at the member level. Therefore, no federal income
F-18
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
2. Summary of Significant Accounting Policies (Continued)
taxes
are recognized in the accompanying financial statements. As of December 31, 2010, the tax basis of our net assets was approximately $236.8 million.
As
an entity operating in the State of Texas, we are subject to the Texas Margin Tax, which is an income tax. We follow the liability method of accounting for these income taxes. As of
December 31, 2010, our tax returns for 2007 through 2010 were open for examination by the State of Texas.
Through
December 31, 2010, we have not paid any income taxes.
Equity-Based Compensation Expense
We recognize compensation expense related to profits interests granted to employees based on the estimated fair value of the awards on
the date of grant, net of estimated forfeitures. The grant date fair value, and the resulting equity-based compensation expense, are estimated using the Black-Scholes option-pricing model. The grant
date fair value of the equity-based awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective
awards.
We
also account for profits interests granted to non-employees based on the estimated fair value of the awards using the Black-Scholes option-pricing model. The measurement
of equity-based compensation for awards granted to non-employees is subject to periodic adjustment as the awards vest, and the resulting change in value is recognized in the statement of
operations during the period the related services are rendered.
There
is inherent uncertainty in these estimates, and if different assumptions had been used, the fair value of the awards and the related equity-based compensation expense could have
been significantly different.
Fair Value of Financial Instruments
We consider cash and cash equivalents (including restricted cash), accounts receivable, accounts receivable-related parties, accounts
payable, accounts payable-related parties, accrued liabilities and deferred revenue to be financial instruments in which the carrying amounts represent fair value because of the short-term
nature of the accounts. We also consider our revolving loan and bank debt to be financial instruments in which the carrying amounts approximate fair value because of their variable interest rates.
Segment Reporting
We operate in one segment for the production and sale of propylene and related by-products. All of our operations are
located in Houston, Texas.
Earnings Per Share
We have omitted earnings per share because we have operated as a private company for all periods presented.
F-19
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
3. Inventory
Inventory consists of the following (in thousands):
December 31,
March 31,
2011
2009
2010
(Unaudited)
Product inventory:
Raw materials
$
—
$
381
$
983
Work in progress
—
1,542
1,628
Finished product
—
8,391
4,641
Product inventory
—
10,314
7,252
Maintenance spares
1,665
5,729
5,901
Inventory
$
1,665
$
16,043
$
13,153
4. Property, Plant and Equipment
Property, plant and equipment consists of the following:
December 31,
Lives
in Years
2009
2010
(in thousands)
Pipelines and plant
25
$
—
$
42,027
Machinery and equipment
5 to 25
—
525,411
Catalyst
3 to 25
—
15,818
Air permits
25
—
26,415
Other
5 to 25
25
6,219
25
615,890
Less accumulated depreciation and amortization
(3
)
(7,062
)
22
608,828
Construction in process
426,762
994
Property, plant, and equipment, net
$
426,784
$
609,822
Depreciation
and amortization expense on property, plant and equipment of $7,056,000 is included in cost of sales in the statements of operations for the year ended December 31,
2010, and $8,195,000 for the three months ended March 31, 2011.
For
the years ended December 31, 2008, 2009 and 2010, we capitalized interest expense, including amortization of deferred financing costs, related to the construction of the
Facility of $0, $1,392,000 and $10,782,000, respectively.
F-20
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
5. Intangible Asset
Our intangible asset at December 31 consists of the following (in thousands):
2009
2010
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Licensed technology
$
10,056
$
—
$
10,056
$
10,056
$
(88
)
$
9,968
Amortization
expense on our intangible asset for the year ended December 31, 2010, was $88,000, and is included in cost of sales. Prior to the commencement of operations in
October 2010, there was no amortization expense. Amortization expense of $100,000 is included in cost of sales for the three months ended March 31, 2011. Amortization expense on the intangible
asset for each of the next five years is estimated to be $402,000.
6. Deferred Financing Costs and Other Assets
As of December 31, 2009 and 2010, deferred financing costs and other assets consist primarily of deferred financing costs, net of amortization, of $14,034,000 and $10,915,000,
respectively. See Note 8 for a summary of deferred financing cost amortization by period, including the capitalization thereof related to the construction of the Facility.
Scheduled
amortization of deferred financing costs for the next five years as of December 31, 2010 is as follows: $3,119,000 per year for each of 2011 through 2013, and $1,558,000
in 2014.
7. Asset Retirement Obligation
Our asset retirement obligation is comprised of expected costs to be incurred upon termination of operations and the closure of the Facility. The estimated asset retirement obligation
liability will increase, or accrete, each year over the life of the Facility until it equals the estimated cash flows expected to be incurred on anticipated closure of the Facility. The change in our
asset retirement obligation is set forth below (in thousands):
December 31,
2009
2010
Asset retirement obligation, beginning of period
$
799
$
870
Accretion expense
71
84
Revisions in estimated cash flows
—
138
Asset retirement obligation, end of period
$
870
$
1,092
8. Debt
We entered into a five-year credit facility agreement with Société Générale (the Lender) on June 12, 2009.
The original capacity of the facility was $205,000,000, comprised of a $150,000,000 construction loan commitment and a $55,000,000 revolving loan commitment. Borrowings under the facility are secured
by substantially all of our assets. During 2010 and 2011, we entered into amendments to the agreement
F-21
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
8. Debt (Continued)
whereby,
among other things, the amount available under the revolving loan commitment was increased to $65,000,000 through June 30, 2011, with any borrowings in excess of $55,000,000 due on
June 30, 2011. Interest on the facility is variable and is based upon either (i) the Eurodollar base rate (LIBOR), subject to a LIBOR floor of 2.75%, plus a margin or (ii) the
Lender's prime rate plus a margin, at our election. Interest is due monthly for Eurodollar borrowings and quarterly for prime rate borrowings. The weighted-average interest rate as of
December 31, 2009 and 2010, and March 31, 2011, was prime-based at 8%.
Borrowings
under the revolving loan commitment became available beginning on June 1, 2010, and are limited to the extent that such borrowings must be used to fund estimated
operation and maintenance expenses for the thirty days from the date of the borrowing request. The minimum borrowing amount is $3,000,000, and increases are in increments of $500,000.
Pursuant
to the terms of the credit facility agreement, we are required to maintain a depository account with the Lender whereby all sales and proceeds of any nature are required to be
deposited and held to repay any amounts borrowed under the facility after allowing for payment of operation and maintenance expenses. On a monthly basis, proceeds from sales, to the extent they exceed
estimated operation and maintenance expenses for the next thirty days, must be used to repay the revolving loan and then the construction loan when there are no outstanding borrowings on the revolving
loan. Accordingly, we have classified all debt as current in the accompanying financial statements.
Under
the terms of our credit facility agreement, as amended, we were required to satisfy a series of tests demonstrating successful operation of the Facility (Performance Tests) by
May 31, 2011. The Performance Tests required the Facility to achieve certain operating criteria for specified periods of time. In May 2011, we successfully completed the Performance Tests in
satisfaction of the loan requirements, and the construction loan was converted to a term loan with principal and interest due quarterly thereafter, beginning in the third quarter of 2011. Quarterly
principal and interest payments on the term loan are due based on a ten year amortization schedule with a balloon payment due in 2014. Any outstanding balance on the revolving loan is due at maturity
of the facility in June 2014.
With
the conversion of the construction loan to a term loan, the following table reflects the principal payments due on the term loan and revolving loan during the next five years (in
thousands):
2011
$
4,885
2012
10,408
2013
11,322
2014
162,885
Total
$
189,500
Although
the construction loan converted to a term loan with a ten year amortization, we are required to pay down the revolving loan and term loan with excess cash, as defined in the
credit agreement, through a sweep arrangement with the bank.
In
connection with obtaining the credit facility, we were required to obtain a supplemental equity commitment, as defined in the credit agreement, from Lindsay Goldberg in the amount of
$120,000,000 on which the Lender would have the right to foreclose in addition to the loan's collateral in the event of
F-22
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
8. Debt (Continued)
default
by us. Upon the conversion of the construction loan to a term loan in May 2011, this supplemental equity commitment from Lindsay Goldberg was reduced to $10,000,000.
In
connection with the conversion of the construction loan to a term loan, we are also required to fund certain cash reserves, including a debt service reserve and a major maintenance
reserve. We funded $10.9 million into the debt service reserve in connection with the conversion of the construction loan. Beginning in the third quarter of 2011, we will begin making quarterly
deposits to the major maintenance reserve to fund that reserve to $15 million by June 30, 2013.
Interest
income (expense), net consists of the following (in thousands):
Year Ended December 31,
Three Months
Ended March 31,
2008
2009
2010
2010
2011
(Unaudited)
Interest expense incurred on borrowings
$
—
$
(875
)
$
(10,994
)
$
(2,210
)
$
(3,729
)
Interest capitalized
—
875
8,275
2,210
—
Loan commitment fees
—
(826
)
(2,090
)
(660
)
(188
)
Amortization of deferred financing costs
—
(517
)
(3,119
)
(780
)
(780
)
Amortization of deferred financing costs capitalized
—
517
2,507
780
—
Interest income
744
602
3
3
—
Interest income (expense), net
$
744
$
(224
)
$
(5,418
)
$
(657
)
$
(4,697
)
We
did not incur any interest expense in 2008 as we entered into our credit facility arrangement in 2009. We pay a quarterly commitment fee at 2.875% per annum of available borrowings in
excess of the outstanding borrowings.
9. PLM Profits Interest Plan
Overview
PLM maintains a profits interest plan (the Plan) for the benefit of our employees, as well as the key management employees of certain
affiliated companies (collectively, Management). Because the Plan is intended to compensate Management with respect to the services they perform for our benefit, the equity-based compensation expense
is reflected in our financial statements.
PetroLogistics
Company LLC (PetroLogistics LLC) is an entity owned by David Lumpkins and Nathan Ticatch. Through March 31, 2011, the senior executives who oversee
our operations were employed by PetroLogistics LLC and provided management services to us pursuant to our services agreement with PetroLogistics LLC. The majority of the profits
interests ("Units") we have issued are to persons employed by PetroLogistics LLC. Therefore, for accounting purposes, we have treated these awards as being made to non-employees.
See Note 11 for further discussion of our transactions with PetroLogistics LLC.
Holders
of Units are entitled to receive distributions when and as determined by the Board of Managers of PLM (the PLM Board). The ultimate amount received by each of the Unit holders
will vary
F-23
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
9. PLM Profits Interest Plan (Continued)
depending
on the amounts distributed. After our sponsors have received an amount equal to their aggregate capital contributions as part of the first distribution, any additional distribution amount
will next be paid to Class B members and will be an amount equal to $1 for each Class B Unit. The Class C and Class D members have approximately 10% and 5% shares,
respectively, in any subsequent distributions, as adjusted for any cost overruns on the Facility construction.
On
July 23, 2008, the PLM Board authorized the issuance of up to 3,912,720 Class B Units, 46,492,320 Class C Units, and 23,246,160 Class D Units to
Management. On September 29, 2010, the PLM Board increased the number of authorized Units.
The
following Units were issued and outstanding, or authorized and available for issuance:
December 31, 2009
December 31, 2010
Issued and
Outstanding
Authorized
and Available
for Issuance
Issued and
Outstanding
Authorized
and Available
for Issuance
Unit Class
Class B
3,912,720
—
3,912,720
2,109,750
Class C
950,000
45,542,320
55,054,205
16,506,909
Class D
—
23,246,160
27,527,103
8,253,454
Total
4,862,720
68,788,480
86,494,028
26,870,113
No
additional Units were authorized or issued during the three months ended March 31, 2011.
Vesting and Unit Rights
The Class B Units were fully vested at the date of issuance, July 23, 2008. The issued and outstanding Class C and
Class D Units vest over four years beginning on the later of March 11, 2009, or the recipient's date of employment. The Class C and Class D Units also fully vest upon the
occurrence of certain events including a distribution from PLM. If a Management member ceases to be employed by us, the member retains the vested Units. Any unvested Units at the time of termination
are forfeited. If the termination is for cause, all vested Units are forfeited. There were no forfeitures for any of the periods presented. The Class B, Class C and Class D Units
do not have voting rights.
Determination of Equity-Based Compensation Expense
Equity-based compensation expense for equity-based awards issued to employees is based on the estimated grant-date fair
value of the Units. We recognize this equity-based compensation expense on a straight-line basis over the requisite service period of the award for those Units expected to vest. For Units
granted to non-employees, non-vested Units are revalued at the reporting date fair value, with any change in value reflected in the statement of operations.
F-24
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
9. PLM Profits Interest Plan (Continued)
Total recognized equity-based compensation expense related to the Plan was as follows for each reporting period (in thousands):
Year Ended December 31,
Three Months
Ended March 31,
2008
2009
2010
2010
2011
(Unaudited)
Cost of sales
$
—
$
—
$
532
$
—
$
78
General and administrative expense
1,956
29
13,951
18
29,265
Total equity-based compensation expense
$
1,956
$
29
$
14,483
$
18
$
29,343
Employee Awards
There was no activity with respect to employee Units prior to 2010. The table below summarizes the activity relating to the employee
Units during the year ended December 31, 2010:
Class C Units
Number
of Units
Weighted-
Average
Grant Date
Fair Value
Units outstanding, end of year 2009
—
$
—
Units granted
5,695,000
0.35
Units forfeited
—
—
Units outstanding, end of year 2010
5,695,000
$
0.35
The
table below summarizes the activity relating to the nonvested employee Units granted under the Plan for the year ended December 31, 2010:
Class C Units
Number
of Units
Weighted-
Average
Grant Date
Fair Value
Nonvested units, end of year 2009
—
$
—
Units granted
5,695,000
0.35
Units vested
(2,861,250
)
0.35
Nonvested units, end of year 2010
2,833,750
$
0.35
Vested units, end of year 2010
2,861,250
$
0.35
During
the three months ended March 31, 2011, no Units were granted or forfeited. As of March 31, 2011, no Class B or Class D Units had been granted to
employees, and 3,722,500 Class C Units were vested. The aggregate intrinsic value of outstanding employee Units (determined based on the number of outstanding Units multiplied by the fair value
per unit as of the reporting date) at December 31, 2010 and
F-25
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
9. PLM Profits Interest Plan (Continued)
March 31,
2011, was $2,904,000 and $10,593,000, respectively. The aggregate intrinsic value of vested employee Units at December 31, 2010 and March 31, 2011, was $1,459,000 and
$6,924,000, respectively. The total weighted-average grant date fair value for employee Units that vested during the year ended December 31, 2010 and the three months ended March 31,
2011, was $1,001,000 and $301,000, respectively.
Non-Employee Awards
During 2008, a total of 3,912,720 Class B Units were granted, and there was no activity with respect to the Class C or
Class D Units. During 2009, a total of 950,000 Class C Units were granted at a weighted average grant date fair value of $0.30, and there was no activity with respect to the
non-employee Class B or Class D Units. The table below summarizes the activity relating to the non-employee Units during the year ended December 31, 2010:
Class B Units
Class C Units
Class D Units
Number
of Units
Weighted-
Average
Grant Date
Fair Value
Number
of Units
Weighted-
Average
Grant Date
Fair Value
Number
of Units
Weighted-
Average
Grant Date
Fair Value
Units outstanding, end of year 2009
3,912,720
$
0.50
950,000
$
0.30
—
$
—
Units granted
—
—
48,409,205
0.35
27,527,103
0.26
Units forfeited
—
—
—
—
—
—
Units outstanding, end of year 2010
3,912,720
$
0.50
49,359,205
$
0.35
27,527,103
$
0.26
The
table below summarizes the activity relating to the nonvested non-employee Units granted under the Plan for the year ended December 31, 2010:
Class B Units
Class C Units
Class D Units
Number
of Units
Weighted-
Average
Grant Date
Fair Value
Number
of Units
Weighted-
Average
Grant Date
Fair Value
Number
of Units
Weighted-
Average
Grant Date
Fair Value
Nonvested units, end of year 2009
—
$
—
950,000
$
0.30
—
$
—
Units granted
—
—
48,409,205
0.35
27,527,103
0.26
Units vested
—
—
(12,339,801
)
0.35
(6,881,776
)
0.26
Nonvested units, end of year 2010
—
$
—
37,019,404
$
0.35
20,645,327
$
0.26
Vested units, end of year 2010
3,912,720
$
0.50
12,339,801
$
0.35
6,881,776
$
0.26
During
the three months ended March 31, 2011, no Units were granted or forfeited. As of March 31, 2011, 3,912,720 Class B, 24,442,103 Class C and 13,763,552
Class D units were vested for non-employees. The aggregate intrinsic value of outstanding non-employee Units (determined based on the number of outstanding Units
multiplied by the fair value per unit as of the reporting date) at December 31, 2010 and March 31, 2011, was $39,587,000 and $149,013,000, respectively. The aggregate intrinsic value of
vested non-employee Units at December 31, 2010 and March 31, 2011, was $12,655,000 and $79,132,000,
F-26
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
9. PLM Profits Interest Plan (Continued)
respectively.
The total fair value for non-employee Units that vested during the years ended December 31, 2008, 2009, and 2010, and the three months ended March 31, 2010 and
2011, was $1,956,000, $-0-, $8,977,000, $-0- and $34,278,000, respectively.
Unrecognized Compensation Cost
At December 31, 2010 and March 31, 2011, compensation cost related to nonvested Units that had not yet been recognized
totaled $27,923,000 and $70,571,859, respectively. The weighted-average period over which this amount will be recognized is estimated to be 2.2 years. If Units are forfeited, the compensation
cost related to those Units would be revised.
As
noted above, Units issued to non-employees are subject to revaluation until such Units become vested. Accordingly, our future results will be impacted significantly by
future changes in the value of nonvested Units issued to non-employees as well as the vesting of the outstanding Units.
Estimates and Key Assumptions
We engage an independent valuation specialist to assist us in determining the fair value of the Units. We estimate the fair value of
the Units using the Black-Scholes option-pricing model. The Black-Scholes model requires the use of highly subjective and complex assumptions that determine the fair value of equity-based awards,
including the equity value of our business and the profits interests' expected time to liquidity, volatility, risk-free interest rate and dividend yield.
Given
the absence of a public trading market for our common units and in accordance with the American Institute of Certified Public Accountants Practice Guide,
Valuation of Privately-Held-Company Equity Securities Issued as
Compensation
, we exercised reasonable judgment and considered
numerous objective and subjective factors to determine the best estimate of the equity value of our business, including, among others: publicly available forecasts of future propylene and propane
prices that are published by industry sources as of each valuation date; contemporaneous and retrospective valuations performed by an independent valuation specialist; the status of our facility's
construction and operations, including risks attendant thereto; the likelihood of our achieving a liquidity event given prevailing market conditions; the nature, history and strategy for our business;
the illiquidity of share-based awards involving private company securities; and current and expectations about future macroeconomic conditions.
In
valuing our Units, we estimate the equity value of our business by considering a weighted combination of value indications under two valuation approaches, an income approach and a
market
approach. The income approach estimates the present value of future estimated cash flows, based upon forecasted sales and costs, including consideration of forecasts of future propylene and propane
prices that are published by industry sources as of each valuation date. These future cash flows are discounted to their present values using a discount rate derived from an analysis of the cost of
capital of comparable publicly traded companies in our industry or similar lines of business as of each valuation date, as adjusted to reflect the risks inherent in our cash flows. The market approach
estimates the fair value of a company by applying market multiples of comparable publicly traded companies in our industry or similar lines of business, which are based on key metrics implied by the
enterprise values or acquisition values of our comparable publicly traded companies.
F-27
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
9. PLM Profits Interest Plan (Continued)
The
fair value of our business was then allocated to each of our classes of profits interests using the Option Pricing Method (OPM). The OPM is appropriate to use when the range of
possible future outcomes is so difficult to predict that forecasts would be highly speculative.
In
terms of number of Units awarded, our most significant grants occurred on (i) July 23, 2008 on which 3,912,320 Class B Units were issued and
(ii) September 29, 2010 on which 53,901,080 and 27,425,540 Class C and D Units, respectively, were issued.
The
fair values of our Units on a per-unit basis are as follows as of each date:
December 31,
March 31,
2011
2009
2010
(Unaudited)
Unit Class
Class B
$
0.68
$
0.94
$
2.59
Class C
0.30
0.51
1.86
Class D
0.21
0.39
1.71
The
following weighted-average assumptions were used in determining the fair values:
December 31,
March 31,
2011
2009
2010
(Unaudited)
Estimated time to liquidity event
4 years
3 years
2.75 years
Expected volatility
40
%
50
%
45
%
Risk-free interest rate
2.2
%
1.0
%
1.3
%
Dividend yield
0
%
0
%
0
%
We
estimated the time to a liquidity event based on our then-current expectations regarding the period during which we believed we could achieve significant milestones in our
business strategy and effect a liquidity event. We have no historical volatility since the Units have never been publicly traded. Accordingly, the volatility used has been estimated by using
volatility information from a peer group of publicly traded companies. The risk-free rate is based on the U.S. Treasury rate for notes with terms best matching the Unit's expected term.
The dividend yield assumption of 0% is based on our history and our expectation of not paying dividends.
No
single event caused the valuation of our Units to increase through March 31, 2011. Instead, a combination of the factors, described below, in each period led to the changes in
the fair value of our underlying equity value, and, therefore, our Units.
March 2008 to December 2008.
In March 2008, we received an initial capital contribution from Lindsay Goldberg and acquired the Facility
site from
ExxonMobil. We began construction of our facility in summer 2008.
January 2009 to December 2009.
After a period of significant volatility in the United States and global capital markets generally, and
in the
chemical industry specifically, during the third and fourth
F-28
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
9. PLM Profits Interest Plan (Continued)
quarters
of 2008, capital market conditions began to stabilize and recover in early 2009. In summer 2009, we hired certain key executives. Throughout 2009, the Facility construction continued. As of
December 31, 2009, we determined the fair value of our Class C Units to be $0.30 per unit and our Class D units to be $0.21 per unit.
January 2010 to December 2010.
In the second half of 2010, we completed the construction of the Facility. We commenced Facility
operations as of
October 21, 2010, although we operated well below capacity and we generated a negative gross margin. Beginning in the second half of 2010, the publicly available forecasts of future
propane-to-propylene spreads, which underlie our business model, and our expectations regarding our future profitability began to increase, thereby increasing our estimate of
the equity value of our business. As of December 31, 2010, we determined a fair value of our Class C Units to be $0.51 per unit and our Class D units to be $0.39 per unit.
January 2011 to March 2011.
During the three months ended March 31, 2011, we significantly increased our production. In addition,
publicly
available forecasts of future propane-to-propylene spreads reflected significant increases as of March 31, 2011, as compared to December 31, 2010. As a result,
our estimate of the equity value of our business, and therefore the value of our Units, increased substantially in the three months ended March 31, 2011. As of March 31, 2011, we
determined the fair value of our Class C Units to be $1.86 per unit and our Class D units to be $1.71 per unit.
There
is a high degree of subjectivity involved when estimating the value of equity-based compensation. There is currently no market-based mechanism or other practical application to
verify the reliability and accuracy of the estimates resulting from our valuation models, nor is there a means to compare and adjust the estimates to actual values. Although the fair value of our
Units is determined using an option-pricing model, that value may not be indicative of the fair value that would be observed in a
market transaction between a willing buyer and a willing seller. If factors change and we employ different assumptions when value our Units, the equity-based compensation expense that we record in the
future may differ significantly from what we have historically reported.
10. Employee Benefit Plan
We sponsor a profit-sharing 401(k) plan that covers substantially all of employees, whereby eligible employees may elect to contribute a portion of their annual compensation, subject to
IRS limitations. We match 100% of an employee's contribution up to the first 6% of such employee's compensation. Additionally, the profit-sharing plan also provides for supplemental discretionary
contributions from 4% to 10% of eligible wages for eligible employees as of year-end. Total expense for the profit-sharing 401(k) plan for the years ended December 31, 2008, 2009,
and 2010, and for the three months ended March 31, 2010 and 2011, was $155,000, $672,000, $1,047,000, $92,000, and $116,000, respectively.
11. Related Party and Affiliate Transactions
PetroLogistics LLC and PL Midstream LLC (PL Midstream), which are affiliated companies, provide certain services to us, including: (i) accounting, payroll, and other
financial services; (ii) information systems, network, and communication services; (iii) employee benefit services, and (iv) management services. These services are provided in
exchange for a monthly charge. During the years ended
F-29
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
11. Related Party and Affiliate Transactions (Continued)
December 31,
2008, 2009, and 2010, we incurred fees of $872,000, $1,424,000 and $1,715,000 from PetroLogistics LLC, and $329,000, $375,000 and $12,000 from PL Midstream for services
provided during those years, respectively. During the three months ended March 31, 2010 and 2011, we incurred fees of $345,000 and $524,000 from PetroLogistics LLC, and $-0-
and $-0- from PL Midstream for services provided during those periods, respectively. PetroLogistics LLC allocates fees on a pro rata basis between us and PL Midstream after
deducting direct expenses. PL Midstream charges us for services based on estimated time spent by PL Midstream employees on our business plus overhead. These fees from PetroLogistics LLC and PL
Midstream are reported as general and administrative expense. We also paid PL Midstream $169,000 and $140,000 for pipeline management fees during the year ended December 31, 2010, and for the
three months ended March 31, 2011, respectively, which is included in cost of sales.
During
the years ended December 31, 2008, 2009 and 2010, and for the three months ended March 31, 2010 and 2011, we utilized the services of a company owned by Lindsay
Goldberg in the amounts of $677,000, $5,276,000, $21,805,000, $4,869,000 and $724,000, respectively, in connection with Facility construction and maintenance activities. Also during 2010, we
reimbursed Lindsay Goldberg for administrative and out of pocket expenses in the amount of $58,000.
Pursuant
to an agreement entered into with Lindsay Goldberg, we pay an annual fee of $2,000,000 for advisory services, beginning in the first quarter of 2011. We incurred $500,000 in
advisory fees for the three months ended March 31, 2011. This agreement terminates upon an initial public offering.
12. Concentrations of Risk
Our principal market is the Texas Gulf Coast region. Our sales were to the following customers for the periods indicated:
Year Ended
December 31,
2010
Three Months
Ended
March 31,
2011
(Unaudited)
Dow Chemical Company
40
%
44
%
Total Petrochemicals USA, Inc.
9
%
36
%
INEOS Olefins and Polymers USA
50
%
19
%
Other
1
%
1
%
Total sales
100
%
100
%
We
have entered into long-term sales contracts with three customers to provide minimum annual quantities of propylene. These minimum quantities comprise the substantial
majority of the Facility's anticipated annual production of propylene. The loss of any of these customers without replacement on comparable terms could adversely affect our business, results of
operations and financial condition.
This
concentration in the volume of business transacted with a limited number of customers subjects us to substantial risks. If we were to lose one or more of our current customers, we
would seek to engage in sales transactions with other petrochemical companies on either a long-term contract basis or in the spot market, although there is no assurance we would be able to
do so.
F-30
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
12. Concentrations of Risk (Continued)
We
have entered into long-term market-based contracts for the purchase of propane, our sole feedstock, as well as smaller amounts of nitrogen and natural gas to produce
propylene. There is only one supplier under each of these contracts. Interruptions in or limitations on volumes provided under these contracts subjects us to risk that we are unable to meet our
production requirements if we are unable to locate and procure replacement volumes from alternate sources.
Financial
instruments that subject us to concentrations of credit risk consist principally of accounts receivable, which are primarily from customers that operate in the petrochemical
industry. This industry concentration has the potential to impact our overall exposure to credit risk in that the customers may be similarly affected by changes in economic, industry, or other
conditions that subject us to credit risk. We review credit exposure and financial information of our customers and generally require prepayment from customers that are not considered creditworthy,
unless the credit risk can otherwise be reduced.
13. Commitments and Contingencies
We are obligated under long-term propylene sales agreements to supply our three largest customers with minimum quantities of propylene annually. The agreements run through
December 31, 2014, for two customers and through December 31, 2013, for the third customer.
Purchase Obligations
Under the terms of a propylene storage contract and a nitrogen supply contract, we are obligated to make payments that approximate the
following: $1.8 million in 2011, $1.9 million in 2012 and 2013, $0.6 million in 2014 and 2015 and $3.5 million thereafter. We have contracts to purchase propane and other
materials used in the production process, but these contracts do not specify minimum purchase commitments.
Lease Obligations
We currently do not have any non-cancelable lease agreements that extend beyond one year. For the year ended
December 31, 2010, and for the three months ended March 31, 2011, our total rent expense was $155,000 and $373,000, respectively. We did not incur any rent expense in 2008 or 2009 or
during the three months ended March 31, 2010.
Environmental
The Facility may experience releases of hydrocarbons or other contaminants into the environment, or we may discover past releases that
were previously unidentified. Although we maintain an inspection program designed to prevent and, as applicable, detect and address such releases promptly, damages and liabilities incurred due to any
such environmental releases from our assets may affect our business. To date, management has not identified any material environmental obligations.
Insurance
The Facility may experience damage as a result of an accident, natural disaster or terrorist activity. These hazards can cause personal
injury and loss of life, severe damage to and destruction of property and
F-31
Table of Contents
PL PROPYLENE LLC
NOTES TO FINANCIAL STATEMENTS (Continued)
(Information Pertaining to March 31, 2011, and the Three-Month Periods
Ended March 31, 2010 and 2011, is Unaudited)
13. Commitments and Contingencies (Continued)
equipment,
pollution or environmental damage, and suspension of operations. We maintain insurance of various types that we consider adequate to cover our assets and operations. The insurance policies
are subject to deductibles, limits and sub-limits and other terms, such that our ability to receive indemnification thereunder is limited. Our insurance does not cover every potential risk
associated with operating the Facility.
The
occurrence of a significant event that is not fully insured, indemnified or reserved against, or the failure of a party to meet its indemnification obligations, could materially and
adversely affect our operations and financial condition. We believe we are adequately insured with respect to our operations.
Legal Matters
We are routinely involved in various legal matters arising from the normal course of business for which no provision has been made in
the financial statements. While the outcome of these proceedings cannot be predicted with certainty, we believe that these proceedings, when resolved, will not have a material adverse effect on our
results of operations, financial position, or liquidity.
14. Subsequent Events
We evaluated subsequent events through June 17, 2011, the date on which the financial statements were available to be issued.
15. Supplemental Pro Forma Information (Unaudited)
Unaudited supplemental pro forma balance sheet and net loss per unit have been presented in accordance with SEC Staff Accounting Bulletin Topic 1.B.3. The supplemental pro forma balance
sheet gives effect to the distribution of $746.8 million to Holdings to be paid upon completion of a debt financing and an initial public offering. However, neither the assumed proceeds from
the debt financing nor the initial public offering have been included in the unaudited supplemental pro forma balance sheet as of March 31, 2011. We had a net loss for the three months ended
March 31, 2011. Accordingly, we are deemed to have used $746.8 million of net proceeds to pay the distribution, which is evidenced by a distribution payable to Member reflected in the
unaudited supplemental pro forma balance sheet.
Unaudited
supplemental pro forma net loss per unit includes additional units for the three months ended March 31, 2011, representing the number of units deemed for accounting
purposes to have been
sold in this offering in order to raise $746.8 million to pay the distribution. To compute the number of units, we utilized an assumed initial public offering price of
$                per unit
(the midpoint of the range set forth on the cover page of this prospectus) after deducting the estimated underwriting discounts and offering expenses.
F-32
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Partners of PetroLogistics LP:
We
have audited the accompanying balance sheet of PetroLogistics LP (the Partnership) as of June 9, 2011. This balance sheet is the responsibility of the Partnership's
management. Our responsibility is to express an opinion on this balance sheet based on our audit.
We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of material misstatement. We were not engaged to perform an audit of the Partnership's internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
In
our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of PetroLogistics LP at June 9, 2011, in conformity
with U.S. generally accepted accounting principles.
/s/
Ernst & Young LLP
Houston,
Texas
June 17, 2011
F-33
Table of Contents
PetroLogistics LP
Balance Sheet
June 9, 2011
Assets
Cash
$
—
Total assets
$
—
Partners' Capital
Limited partner's interest
1,000
Limited partner's subscription receivable
(1,000
)
General partner's interest
—
Total partners' capital
$
—
See
accompanying notes to balance sheet.
F-34
Table of Contents
PetroLogistics LP
Notes to Balance Sheet
1. Formation of the Partnership, Organization and Nature Of Business
PetroLogistics LP, or the "Partnership," is a Delaware limited partnership formed on June 9, 2011, by Propylene Holdings LLC (Holdings) to own PL
Propylene LLC (PL Propylene), a wholly-owned subsidiary of Holdings. PL Propylene owns and operates the world's largest propane dehydrogenation facility ("PDH Facility") that processes propane
into propylene and selected by-products.
Following
the contemplated contribution of PL Propylene LLC to the Partnership, the Partnership intends to offer common units, representing limited partner interests, pursuant to
an initial public offering.
Holdings
plans to contribute $1,000 to the Partnership in June 2011. PetroLogistics GP LLC is the general partner and holds a non-economic interest in the
Partnership. There have been no other transactions involving the Partnership as of June 9, 2011.
2. Subsequent Events
We have evaluated subsequent events through June 17, 2011, the date on which the financial statements were available to be issued.
F-35
Table of Contents
APPENDIX A
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
A-1
APPENDIX B
GLOSSARY OF SELECTED TERMS
Acrylic acid
A liquid organic acid used to produce super-absorbents (for diapers), coatings, adhesives, floor polishes and paints. It comprises about 6% of propylene demand in 2010. Chemical Data projects U.S. demand
growth for acrylic acid at 3.0% per year from 2011 through 2015.
Acrylonitrile
A liquid that is an important monomer for the manufacture of useful plastics and fibers. Comprising about 9% of
propylene demand in 2010, it is used to produce synthetic rubber compounds used to create pipe, automotive body parts, golf club heads, protective head gear, nylon, coatings, toys and acrylic fiber. Chemical Data projects U.S. demand growth for
acrylonitrile at 2.9% per year from 2011 through 2015.
Alkane
Chemical compounds that consist only of the elements carbon (C) and hydrogen (H) 
(i.e. hydrocarbons).
Alkylate/Alkylation
A highly desirable gasoline blendstock which can be produced from propylene. Alkylation is the process by which
alkylate is produced. Because alkylation is an alternative use for propylene outside of the chemical market, propylene's value as a gasoline blendstock provides a floor for the price of propylene. Propylene alkylate is used as a major gasoline
blendstock due to its physical properties and relative low cost.
Butane and butylenes
Butane is a highly flammable, colorless, easily liquefied gas with the formula C4H10. Butane is one of various
feedstocks that can be used to produce ethylene and, as such, competes with propane for a share of ethylene feedstock demand in the Gulf Coast. Butylene is an alternate name for hydrocarbon butene, C4H8, the result of removing two hydrogen atoms from
a butane molecule.
Cracking
The process by which complex substances are broken down into simpler molecules by heat and pressure.
CGP
Chemical-grade propylene, a mix of 93.0%-95.0% propylene and 7.0%-5.0% propane and other hydrocarbons. This type
of propylene is used as a raw material for a wide variety of chemicals including propylene oxide and acrylic acid.
Ethane
At standard temperature and pressure, ethane (C2H6) is a colorless, odorless gas. Ethane is isolated on an
industrial scale from natural gas. Its chief use is as a feedstock for ethylene production.
Ethylene crackers
Ethylene crackers produce propylene as a co-product secondary to ethylene production.
Enterprise
Enterprise Products Operating LLC, our current supplier of propane.
B-1
Feedstock
Any bulk raw material constituting the principal input for an industrial process.
Fluid catalytic cracking (FCC)
An oil refining process widely used to convert the hydrocarbons of petroleum crude oils to gasoline and other
products.
Fractionation
The process of separating the natural gas liquids, such as propane and ethane, into their base components
(fractions).
Free radical reaction
A chemical reaction, such as combustion, involving the unpairing of electrons.
General partner
PetroLogistics GP LLC, the general partner of PetroLogistics LP.
Green-field project
Examples of green-field projects are new factories or power plants which are built from scratch on undeveloped
land. A developer of a green-field project faces significant impediments with respect to permitting, availability of real estate and cost considerations.
Houston Ship Channel
Located in Houston, Texas, the channel is the conduit for ocean-going vessels between the Houston-area shipyards
and the Gulf of Mexico. The proximity to Texas oilfields led to the establishment of numerous petrochemical refineries along the waterway.
Hydrocarbons
Hydrocarbons are organic compounds that consist of only C and H atoms. It is often used to describe fossil
fuels.
Metathesis
A chemical reaction between two compounds in which parts of each are interchanged to form two new compounds
(AB + CD = AD + CB). Metathesis is one of three primary production techniques used by on-purpose plants to produce propylene.
Monomers
Molecules typically about 4-10 atoms in size that bond readily to other monomers in a process called
polymerization.
Nameplate capacity
The normal maximum output of a generating source.
Naphtha
Refers to a number of different flammable liquid mixtures of hydrocarbons. Naphtha is a feedstock derived from
crude oil used by naphtha crackers to produce ethylene.
Natural gas processing
Natural gas processing consists of separating all of the various hydrocarbons and fluids from pure natural gas to
produce pipeline quality dry natural gas to be used by consumers. Natural gas which comes directly from a well contains many natural gas liquids, including ethane, propane, butane, iso-butane, and natural gasoline.
B-2
Olefins
Olefins, also known as polypropylene or polyethylene, is a long-chain polymer synthetic fiber that is created when ethylene
and/or propylene gases are polymerized under very specific conditions. Olefins facilities producing ethylene produce PGP and CGP as co-products. These facilities also produce propylene as a by-product of their steam crackers.
MMBtu
One million BTU. BTU (British thermal unit) is a unit of energy equal to about 1,055.05585 joules. It is
approximately the amount of energy needed to increase the temperature of 1 pound of water by 1 °F.
PGP
Polymer-grade propylene, a mix of 99.5% propylene and 0.5% propane and other hydrocarbons. This type of propylene
is typically used as a raw material for the production of polypropylene.
PL Propylene LLC
Our wholly-owned subsidiary and our sole direct or indirect subsidiary. All of our operations are conducted and
all of the our assets owned by PL Propylene LLC. References in this prospectus to "PetroLogistics LP," "we, "our," "us," our "predecessor" or similar terms when used in a historical context refer to PL Propylene LLC.
Polymers
Molecules which consist of a long, repeating chain of smaller units called monomers.
Polypropylene
Polypropylene is a thermoplastic polymer and is used in a variety of applications including packaging, ropes,
textiles, paper coatings, plastic parts, and reusable containers.
Propane
A commodity produced by extraction and separation from natural gas production streams and as a by-product of
refineries. Propane is the sole feedstock of our PDH facility.
Propylene
Propylene is an important building block in the production of complex petrochemicals such as
polypropylene.
Propane dehydrogenation (PDH) facility
A processing facility that produces high purity polymer-grade propylene from a propane rich stream. A PDH
facility uses the CATOFIN process, which refines propane in order to produce propylene.
RGP
Refinery-grade propylene, a mix of approximately 60.0% propylene and 40.0% propane and other hydrocarbons. This
type of propylene is utilized in both fuel and chemicals markets.
Sponsors
Lindsay Goldberg LLC (or Lindsay Goldberg) and York Capital Management (or York Capital).
WTI crude oil
West Texas Intermediate crude oil, which is used as a benchmark in pricing oil.
B-3
Common Units
Representing Limited Partner Interests
PetroLogistics LP
Morgan Stanley
Citi
UBS Investment Bank
Wells Fargo Securities
SOCIETE GENERALE
Stifel Nicolaus Weisel
Through
and including                        , 2011 (25 days after the commencement of this offering), all dealers that effect
transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This delivery is in addition to a dealers' obligation to deliver a prospectus when acting as an underwriter and with respect to
their unsold allotments or subscriptions.
Table of Contents
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13.    Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses to be paid by the Registrant in connection with the sale of the common units
representing limited partner interests being registered hereby. All amounts are estimates except for the SEC registration fee, the Financial Industry Regulatory Authority, or FINRA, filing fee and The
New York Stock Exchange listing fee.
SEC registration fee
$
69,660
FINRA filing fee
60,500
The New York Stock Exchange listing fee
*
Accounting fees and expenses
*
Legal fees and expenses
*
Printing and engraving expenses
*
Transfer agent and registrar fees and expenses
*
Miscellaneous expenses
*
Total
$
*
*
To
be included by amendment.
Item 14.    Indemnification of Directors and Officers.
The section of the prospectus entitled "The Partnership Agreement—Indemnification" is incorporated herein by reference and
discloses that we will generally indemnify our executive officers and the directors and officers of our general partner and our sponsors to the fullest extent permitted by law against all losses,
claims, damages or similar events. Subject to any terms, conditions or restrictions set forth in the second amended and restated partnership agreement, Section 17-108 of the
Delaware Revised Uniform Limited Partnership Act empowers a Delaware limited partnership to indemnify and hold harmless any partner or other person from and against all claims and demands whatsoever.
Section 18-108
of the Delaware Limited Liability Company Act provides that a Delaware limited liability company may indemnify and hold harmless any member or manager
or other person from and against any and all claims and demands whatsoever. The limited liability company agreement of PetroLogistics GP LLC, our general partner, provides for the
indemnification of its directors and officers against liabilities they incur in their capacities as such. The Registrant may enter into indemnity agreements with each of its current directors and
officers to give these directors and officers additional contractual assurances regarding the scope of the indemnification set forth in the Registrant's limited liability company agreement and to
provide additional procedural protections.
The
underwriting agreement that we expect to enter into with the underwriters, to be filed as Exhibit 1.1 to this registration statement, will contain indemnification and
contribution provisions.
Item 15.    Recent Sales of Unregistered Securities.
On June 9, 2011, in connection with the formation of PetroLogistics LP, or the Partnership, the Partnership issued
(i) to PetroLogistics GP LLC, its general partner, the non-economic general partner interest in the Partnership and (ii) to its sponsors and certain of the
Partnership's employees and affiliates, the limited partner interest in the Partnership for $1,000. The issuance was exempt from registration under Section 4(2) of the Securities Act of 1933.
There have been no other sales of unregistered securities within the past three years.
II-1
Table of Contents
Item 16.    Exhibits and Financial Statement Schedules.
(a)
The
following exhibits are filed herewith:
Exhibit
Number
Exhibit Title
1.1
**
Form of Underwriting Agreement.
3.1
*
Certificate of Limited Partnership of PetroLogistics LP
3.2
**
Amended and Restated Agreement of Limited Partnership of PetroLogistics LP (incorporated by reference to Appendix A to the Prospectus contained within the Registrant's Registration Statement on
Form S-1)
3.3
*
Certificate of Formation of PetroLogistics GP LLC.
3.4
**
Form of Limited Liability Company Agreement of PetroLogistics GP LLC.
4.1
**
Specimen certificate for the common units (incorporated by reference to Appendix A to the Prospectus contained within the Registrant's Registration Statement on Form S-1)
5.1
**
Opinion of Vinson & Elkins L.L.P., as to the legality of the securities being registered
8.1
**
Form of opinion of Vinson & Elkins L.L.P. relating to tax matters
21.1
**
List of Subsidiaries of PetroLogistics LP
23.1
*
Consent of Ernst & Young LLP.
23.2
**
Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1).
23.3
**
Consent of Vinson & Elkins L.L.P. (included in Exhibit 8.1).
23.4
*
Consent of Chemical Data
24.1
*
Power of Attorney (included in signature page)
*
Included
with this filing
**
To
be filed by amendment
(b)
None.
Item 17.    Undertakings.
The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement
certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions
described in Item 14 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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The
undersigned Registrant hereby undertakes that:
(1)
For
purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration
Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this Registration Statement as of the time it was declared effective; and
(2)
For
the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof.
The
Registrant undertakes to send to each limited partner at least on an annual basis a detailed statement of any transactions with PetroLogistics GP LLC, our general
partner, or any of its affiliates, and of fees, commissions, compensation and other benefits paid, or accrued to, PetroLogistics GP LLC or its affiliates for the fiscal year completed,
showing the amount paid or accrued to each recipient and the services performed.
The
Registrant undertakes to provide to the limited partners the financial statements required by Form 10-K for the first full fiscal year of operations of the
Partnership.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in Houston. Texas, on this 20th day of June, 2011.
PETROLOGISTICS LP
By:
PetroLogistics GP LLC, its general partner
By:
/s/ DAVID LUMPKINS
Name: David Lumpkins
Title:
Executive Chairman
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature
Title
Date
/s/ DAVID LUMPKINS
David Lumpkins
Executive Chairman and director of PetroLogistics GP LLC (Principal Executive Officer)
June 20, 2011
/s/ NATHAN TICATCH
Nathan Ticatch
President and Chief Executive Officer and director of PetroLogistics GP LLC
June 20, 2011
/s/ SHARON SPURLIN
Sharon Spurlin
Senior Vice President and Chief Financial Officer of PetroLogistics GP LLC (Principal Financial and Accounting Officer)
June 20, 2011
/s/ ALAN E. GOLDBERG
Alan E. Goldberg
Director of PetroLogistics GP LLC
June 20, 2011
/s/ LANCE L. HIRT
Lance L. Hirt
Director of PetroLogistics GP LLC
June 20, 2011
/s/ ZALMIE JACOBS
Zalmie Jacobs
Director of PetroLogistics GP LLC
June 20, 2011
/s/ ROBERT D. LINDSAY
Robert D. Lindsay
Director of PetroLogistics GP LLC
June 20, 2011
/s/ ANDREW S. WEINBERG
Andrew S. Weinberg
Director of PetroLogistics GP LLC
June 20, 2011
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