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Duke Energy Field Services

Profile:

Duke Energy Field Services (DEFS) gathers, processes, transports, markets and stores natural gas, and produces, transports and markets natural gas liquids (NGLs) like propane, butane and ethane. DEFS gathers natural gas from producers' wells in western Canada and from Wyoming to the Gulf Coast, and processes it at more than 60 plants.

Headquartered in Denver, DEFS is the largest producer of NGLs in North America – with twice the production of its nearest competitor – and one of the largest marketers. DEFS also owns the general partner of TEPPCO, a master limited partnership which owns and operates pipelines for refined products, NGLs and crude oil, and owns natural gas gathering assets. Duke Energy owns approximately 70 percent of DEFS, and ConocoPhillips owns the remainder.

Operating Data:

	2003		2002		2001		2000		1999
Field Services
Natural gas gathered and processed/transported, TBtu/day	7.7		8.1		8.3		7.3		4.9
Natural gas liquids production, thousand barrels per day	365.3		388.7		394.0		354.9		186.3
Average natural gas price per million Btu	$ 5.39		$ 3.22		$ 4.27		$ 3.89		$ 2.27
Average natural gas liquids price per gallon	$ 0.53		$ 0.38		$ 0.45		$ 0.53		$ 0.34

Performance Highlights:

• DEFS has benefited from higher NGL prices, which have risen with increasing demand for NGLs along with natural gas and crude oil, and the “frac spread” ( the difference between the thermal value of NGLs and natural gas) has increased as well. DEFS continues to lead the NGL industry with 20 percent of market share.
• DEFS has realized strong margins from its natural gas processing business, especially on percent-of-proceeds contracts, under which DEFS keeps a percentage of the natural gas and NGLs as payment for services.
• One of DEFS' strategies for 2003 was to support the growth strategy at TEPPCO. TEPPCO expanded the pipeline and processing capacity on its Jonah Gas Gathering System in Wyoming, and increased to 50 percent its ownership interest in the Centennial Pipeline from the Gulf Coast to the Midwest.
• DEFS sold several non-strategic assets according to plan in 2003, including various gas processing plants and gathering pipelines in the Gulf Coast region and Oklahoma.

Strategy Going Forward:

• Capitalize on size and focus of existing operations.
• Be a top-3 player in every producing region where DEFS has assets.
• Optimize and rationalize the asset base.
• Focus on operational and commercial excellence.
• Maintain strong financial position and self-funding status.
• Support the growth of TEPPCO.