MLP Historical Returns, Valuation & Their Impact on Downstream M&A Presented to: February 9, 2015 CEDRIC FORTEMPS, CFA Managing Director & Principal Richmond | Baltimore | Chicago Society of Independent Gasoline Marketers of America SPENCER CAVALIER, CFA, ASA Managing Director & Principal

2 Comparison of Energy MLP and S&P 500 Total Returns  The graph below compares a $1,000 investment in January, 2004 in the Alerian MLP Index (a float-adjusted, capitalization-weighted index of energy MLPs, which includes 50 prominent companies and captures approximately 75% of available energy MLP market capitalization) versus the same investment in the S&P 500. As the graph shows, the Alerian MLP Index has significantly outperformed the S&P 500, with all of the excess returns occurring in the last 5 ½ years  One of the primary drivers of MLP valuations is the fact that investors continue to favor MLPs due to the partnerships’ units current yields (Alerian Index’s current yield as of 12/31 was approximately 6.1%) in comparison to Treasury rates (2.2%)

3 MLP Index Yield and 10-Yr Treasury Yield  Historically, the yield spread between the yield on the Alerian MLP Index and the 10 Year Treasury has ranged between 200 and 400 basis points, with the current spread being approximately 3.9%

4 Current Energy MLP Yields Versus Other Indexes Source: Alerian.com  Utilities are represented by the S&P 500 Utilities Index, a composite of utility stocks in the S&P 500  Real Estate Investment Trusts (REITs) are represented by the Real Estate 50 Index, a supplemental benchmark to the FTSE NAREIT US Real Estate Index Series to measure the performance of larger and more frequently traded equity REITs  Bonds are represented by the Barclays US Aggregate Total Return Bond Index

5 Alerian MLP Index Returns in Declining Interest Rate Market  The graph below tracks the total returns of the Alerian MLP Index against the 10 Year Treasury yield  The Alerian Index has performed tremendously well since 1996, which has been a prolonged period of declining interest rates  However, the MLPs may have challenges in continuing to provide investors with superior returns if interest rates begin to increase as the interest expenses on debt will increase, but more importantly, unit share valuations are likely to be compromised if MLPs cannot increase distributions through growth. If MLP distributions don’t increase in an increasing interest rate environment, the only way for the yield spread to remain in its historical range is for MLP unit values to decrease

6 Convenience Store Companies Enterprise Value/Corporate EBITDA Multiples  The average Enterprise Value to Corporate EBITDA valuation multiple of the publicly traded pure-play convenience store companies that have been public since 2009 has nearly doubled since early 2009 (from 5.7X to 9.9X), allowing those companies to make acquisitions at much higher multiples today than in the past, and still have them be accretive to earnings

7 Matrix Convenience Store – Market Capitalization Index  The graph below compares total equity returns since the beginning of 2007 for the Matrix Capital Index (consisting of pure- play publicly traded convenience store companies) versus the S&P 500 on a $1,000 investment in each. As the graph demonstrates, publicly traded convenience store companies have nearly doubled the returns of the S&P 500 over the last 6+ years, with all of the excess returns occurring in the last 3 ½ years

8 Valuations of Publicly Traded Companies

9 Valuations Publicly Traded Comparables (cont’d)

Unprecedented Time in the C&G Market for M&A Activity 10  The consolidation of the petroleum marketing and convenience store industry is accelerating, primarily due to the following factors: – Factors that are likely permanent: Industry maturity – shrinking motor fuels volumes and cigarette sales Need of existing and soon-to-be public entities to grow revenues and cash flow Heightened competition and a lack of interest by certain regional jobber-retailers to reinvest to compete long-term Need to reduce product acquisition costs (fuel and c-store) and suppliers’ willingness to provide better pricing terms to larger customers Need to spread overheads over a wider base Ever increasing expenses putting pressure on operators (e.g. credit card fees, insurance, health-care mandate, other government mandated costs, etc.) Generational transfers – Factors that are subject to change: Capital Cost & Availability –Low interest rates and cost of capital –Access to public equity markets by MLP’s & potential for valuation arbitrage –Cost of capital differences between smaller and larger operators

Accretion/Dilution Analysis for Acquisition by an MLP 11  The below example illustrates the purchase price that a hypothetical MLP could pay for a company with $10 million of Pro Forma Corporate EBITDA and have the acquisition be neither accretive nor dilutive to its unit price assuming yield is the sole driver of unit price