1. Bauer College of Business Thursday, March 26, 2009 Julie R. Jackson, ARM, CPCU, CLU, FLMI Director, Risk Management & Insurance Targa Resources, Inc.

2. Confidential 2 Agenda  Introductions / Background  Risk Manager Core Competency Model  Overview of Targa’s Business  Onshore Property Market  Offshore Property Market  D&O Liability Market  Excess Liability Market  Insurer Solvency Concerns  Q&A

3. Confidential 3 Risk Manager Core Competency Model

4. Confidential 4 RIMS Risk Manager Core Competency Model

5. Confidential 5 Overview of Targa’s Business

6. Confidential 6 April 2004 Acquired Assets from ConocoPhillips ($247 MM) Formed Targa Resources April 2003 History of Targa’s Growth Oct 2005 Acquired Dynegy Midstream Services ($2,452 MM) Successfully executing strategy to build a leading midstream energy company MLP IPO of North Texas Assets ($956 MM) Feb 2007 Sold ($117 MM ) Dec 2004 Aug 2005 Bridgeline Acquired ($100 MM) First Drop Down ($705 MM) Oct 2007

7. Confidential 7 Overview of Targa’s Business Targa is a leading provider of midstream natural gas and NGL services in the US NGL Logistics and Marketing Natural Gas Gathering and Processing

8. Confidential 8 Overview of Targa Family Assets  Overall  Leading gas gatherer and processor  Leading NGL logistics and marketing business Targa Resources, Inc.  $3.6 billion of assets  $364.9 million of adjusted EBITDA Targa Resources Partners LP  $1.6 billion of assets  $228.9 million of adjusted EBITDA  Natural Gas Gathering and Processing Division  11,000 miles of natural gas pipelines  800 miles of NGL pipelines  Gathering system encompassing 21,900 square miles  Own interest in or operate 22 natural gas processing plants  Contracts predominantly percentage of gas and liquids or percent of liquids resulting from processing  NGL Logistics and Marketing Division  Capacity to fractionate approximately 300 MBbls/d of NGLs (net to Targa) through interests in 3 fractionators, with above ground storage of approximately 900 MBbls and 65 MMBbls of below ground storage  17 terminals, 21pressurized NGL barges, 70 transport tractors, 100 tank trailers and 770 managed railcars  Predominantly fee-based and margin-based business Note: All data as of December 31, 2008

9. Confidential 9 Simplified Corporate Structure 100% Indirect Ownership 2.0% General Partner Interest 73.6% Limited Partner Interest Public Unitholders 34,684,000 Common Units Targa Resources GP LLC 943,108 General Partner Units Incentive Distribution Rights Areas of Operations North Texas Operations Louisiana Operating Unit San Angelo Operating Unit 24.4% Indirect Limited Partner Interest 11,528,231 Subordinated Units ____________________ * Ownership percentages are presented on a fully-diluted basis. ** Subordination period through February 2010 with early termination if 150% of annualized minimum quarterly distributions are paid for any four-quarter period Public Common Units 73.6% Targa Subordinated Units** 24.4 General Partner Units 2.0 Total 100.0% ManagementMerrill LynchWarburg Pincus LLC Areas of Operations Permian Plants Coastal Straddle Plants NGL Logistics & Marketing Targa Resources Investments Inc. Targa Resources Partners LP (“NGLS” or “Partnership”) 73.6% Indirect Ownership Interest * 19.9% Indirect Ownership Interest * 6.5% Indirect Ownership Interest * Targa Resources, Inc.

10. Confidential 10 Operating Results Gas Gathering & Processing NGL Distribution & Marketing Logistics Wholesale Marketing 2006 Total = $468 MM2007 Total = $525 MM2008 Total = $505 MM MMcf/dMBbls/d Natural Gas Inlet and NGL Production Gas Inlet NGL Production Operating Margin by Segment

11. Confidential 11 Targa Resources, Inc. Summary Highlights

12. Confidential 12 Overall Market Observations

13. Confidential 13 Factors Impacting Insurance Markets  Excluding hurricanes, the average property claim size increased from $6.3 million in 2002 to $22.2 million in 2007.  Financial storm is causing significant impact on the insurance market due to loss of investment income.  Underwriters’ balance sheets have been negatively impacted, leading to insurers reducing available capacity.  New capital is not flowing into the market in a similar fashion following other catastrophes and/or hard markets.  The full effect of the government’s “bail out” of AIG is still being determined as senior AIG underwriters change firms and AIG endeavors to maintain market share on certain lines of coverage.  Underwriters who relied on investment income to offset underwriting losses will now try to achieve a true profit on underwriting.  U. S. insurance companies have only made an underwriting profit in 3 of the last 30 years.

14. Confidential 14 Why Investment Income is Critical….

15. Confidential 15 Loss Deterioration Over Time

16. Confidential 16 Onshore Energy Market

17. Confidential 17 Targa Key Gulf Coast Facility Locations

18. Confidential 18 Historical Hurricane Experience  Facilities along coast built in 60’s era  Sustained multiple severe hurricanes since constructed  Damage as far back as Camille in ’69 as a Category 5 storm was not as severe as Katrina in ’05 as a Category 4 storm  The following historical hurricane charts provide some insight into the risks to severe storms

19. Confidential 19 Venice Main Office Post-Katrina’s Visit

20. Confidential 20 Venice Main Office Post-Katrina’s Visit

21. Confidential 21 Venice Main Office Today….  New Main Office Building  Elevated over 17 feet above MSL at bottom of frame  Designed to withstand 150 MPH wind speed  Same design to be used for Stingray Offices / Control Room

22. Confidential 22 Some Loss Statistics  Insured catastrophe losses in 2008 exceeded all CAT losses in 2006 and 2007 combined.  In the U.S. large claim activity included:  Midwest floods - $725MM  Wildfires in Southern California - $500MM  Various property and business interruption energy, steel and mining occurrences  1,600 tornados (through September, 2008) compared to about 1,000 annually in a normal year  Hurricane Ike projected between $13 billion to $21 billion  16 named windstorms occurred in 2008 (4th highest since 1944) making it the 10th year out of the last 14 to have above normal storm activity.

23. Confidential 23 2008 Estimated Large Losses (excl. Hurricanes) jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj

24. Confidential 24 Example of ‘Subscription’ Market Property Program Onshore Property Program Physical Damage / Business Interruption Excludes Named Windstorm Includes $12.5MM Offshore Contingent B.I. Coverage Various Deductibles, including Wind of 2% with $1MM min. and $10MM max. A “PATCHWORK QUILT”

25. Confidential 25 Pro-Forma View of Renewal Structure Onshore Property Program Physical Damage / Business Interruption Excludes Named Windstorm May include $10MM Offshore Contingent B.I. Coverage With potentially 25-50% Self-Insured Various Deductibles, including Wind of 2% with $1MM min. and $10MM max. …..EVEN MORE “PATCHWORK” $10MM Per Occurrence Retention for Windstorm Potentially Un-aggregated Windstorm (Provides full coverage for Each and Every Storm) Potentially Annual Aggregate Windstorm (Any Loss Erodes Coverage Limit) Potentially self-insure

26. Confidential 26 Hurricane Hardening / Elevation Loss Mitigation

27. Confidential 27 Offshore Energy Market

28. Confidential 28 Storm Severity Damage Analysis Source: Watkins Syndicate Excerpt: Willis Energy Market Review – March 2009

29. Confidential 29 Hurricane Losses Difficult to Predict Excerpt: Willis Energy Market Review – March 2009

30. Confidential 30 Some Additional Loss Statistics…  A record number of 6 consecutive storms hit the U.S. in 2008 (Dolly through Ike).  9 out of 11 most expensive hurricanes have occurred since 2004 per Insurance Information Institute (III).  Hurricane Ike loss amount far exceeded underwriters’ forecast based on their models, which were updated post 2005 hurricanes  Even though it was only a category 2 hurricane, the radius of hurricane force winds was 115 miles or 10 miles wider than Hurricane Katrina which was a category 4.  Risk Management Solutions (RMS) originally estimated Ike loss to be $7 billion to $12 billion, which was revised to $13 billion to $21 billion  Lloyd’s is proposing revisions to their Realistic Disaster Scenario (RDS) for offshore Gulf of Mexico named windstorm that include extending the wind field for the “dirty side” of a hurricane.  Underwriters have no choice but to assume an ‘Ike’ type storm will hit at least every 3 out of 5 years to make a profit (some may assume annually)

31. Confidential 31 Offshore GOM Losses vs. Total Premium Income

32. Confidential 32 A Graphical View

33. Confidential 33 Offshore Market Reinsurance Issues  Reinsurance underwriters are re-evaluating how much catastrophe protection to offer to direct underwriters:  Seek to differentiate between those direct underwriters who change their approach to coastal and/or offshore exposures  Some Reinsurers are exiting this class of business  End of the year treaty renewals are still being finalized and are expected to be up between 30% - 40%  Note: Chief Executive of Munich Re promised reinsurance rates “will now rise painfully”.  Certain underwriters will not be able to renew their reinsurance at acceptable levels and may elect to withdraw from GOM business or write a much smaller net line.  Certain onshore underwriters are contemplating the non-renewal of midstream accounts as they represent a disproportional amount of their hurricane claims.  Reinsurers and direct underwriters will tighten up Operator’s Extra Expense extensions of coverage (extended redrill, making well safe, resulting P&A expenses) which represent a large portion of the Ike offshore claims.  Underwriters are going to require a higher ‘Rate on Line’ (premium to limit provided) for both offshore and coastal exposures.

34. Confidential 34 Example of Offshore Energy Market Program Trends Many companies are having to determine if it is worth purchasing insurance

35. Confidential 35 Targa’s Offshore Property Renewal Expectations  In a nutshell – IT’S UGLY ….. VERY UGLY!!!  In our face to face meetings in London, every Offshore Underwriter had the same message…..  ”I am saving what little capacity I have for my existing insureds for renewal.”  “Of my existing insureds, I am dropping those that I don’t have a ‘relationship’ with.”  “If I lose money again this year, my capital will not continue to support me.”  “I am basically having to write my capacity on a NET basis – Reinsurance too expensive and too high of a retention.”  “Buy it, don’t buy it – I’m indifferent.”  Damages from Ike offshore show that very large losses can occur  $40mm+ Property Damage loss from Ike on neighboring pipeline  Past losses not an indication of the future (mutually exclusive)  Common sense asks …. “Where’s the value over the long-term????”  $10MM per Occurrence Retention -- ~ 3% of Scheduled Offshore Values  Assume ~ $9MM Annual Premium  Assume $40MM Limits  Year over year…..  Targa’s decision at hand:  Purchase the commercial market insurance  Consider alternative options to the commercial property insurance market  Rely on other commercial options and take the risk

36. Confidential 36 Alternatives to Commercial Insurance

37. Confidential 37 ‘Cat’ Bonds  Utilizes the Capital Markets via Institutional Investors  Can cover any ‘Cat’ perils specified  Can be for 1 – 3 year term  Typically set as a ‘parametric trigger’  Minimum wind speed trigger (e.g., Category 3 Hurricane or higher)  Eye of storm must pass within a set ‘box’ or ‘circle’ to trigger payout  Unlike traditional insurance, proof of damage sustained is not required  Bonds can cost out at a ‘rate on line’ of 20%+ of limit purchased  Very expensive to put together  Risk to purchaser – extensive damage but bond not triggered Example: Hurricane Ike  Ike’s wind speed was a Category 2, although storm surge was a Category 4  Significant damage – Onshore and Offshore  If Category 3 wind speed had been a required trigger – would not have paid out  Would have spent probably $6MM in premium and still had ??? $$ in potentially uninsured damage and business interruption

38. Confidential 38 Theoretical Reinsurance Cat Bond View Excerpt: Willis Energy Market Review – March 2009

39. Confidential 39 Targa Resources: Storm tracker map showing 50 mile and 100 mile radius ACE ‘StormTracker’ Option

40. Confidential 40 OIL Insurance Ltd – an Oil & Gas Property Mutual  Form of ‘mutualization’ for Property Risks  Limit purchased – up to $250MM  Attachment point – minimum of $20MM  Provides $750MM Aggregate to All Insureds  Provides Property Damage Coverage Only  Coverage very restrictive – not as broad as London markets  Only covers repairs to ‘mechanical completion’  Does not cover ‘expediting expenses’  Various other restrictions

41. Confidential 41 Marsh – Berkshire Hathaway ‘Triple C’ Product  Another Form of Mutualization for Property Risks  Similar to OIL Insurance Company  Limit purchased – up to $100MM  Attachment point – minimum of $25MM  5 Year Minimum Time Horizon  Provides $500MM Annual Aggregate to All Insureds  20% Retrospective Penalty Premium  Up front costs to join the ‘group’  Key questions:  Who will I be in the ‘pool’ with?  How much of the available $500MM Annual Aggregate received if losses?  Any additional ‘capital contribution costs’ to join?

42. Confidential 42 D & O Liability Market

43. Confidential 43 Financial Services Industry – The Current ‘Crash’

44. Confidential 44 Securities Class Action Filings 200620072008 2008 Filings (Subprime/Credit Crisis Related) Advisen14521421846% Cornerstone13119522649% NERA11917625543%  Outside of financial services sector, the number of securities class action filings actually decreased from 2007 to 2008  Severe market volatility is driving the stock prices down across the board  Difficult for plaintiffs to isolate company-specific stock price move from the general market moves

45. Confidential 45 Targa Comparison to Peers

46. Confidential 46 Targa NGLS vs. Major Indexes

47. Confidential 47 Targa’s D&O Renewal Expectations  Many insurer’s Combined Ratios (losses plus expenses) are well below 100%, so still making a profit  Several new ‘entrants’ adding capacity to the market, which drives competition and keeps rates steady  AEGIS (industry mutual) provides ‘primary’ coverage on TRPLP tower – initially talking about increases  So far no FI impacts crossing over into Energy Book and increasing premiums  Since Targa primarily ‘privately held’, overall program should stay Flat from prior year

48. Confidential 48 Excess Liability Market

49. Confidential 49 Targa’s Excess Liability Renewal Expectations  Targa’s first $135MM in limits -- Industry Mutuals  AEGIS  Energy Insurance Mutual  Significant liability losses – CA Wildfires (through entire coverage tower – Sempra)  Significant loss of investment income – lost ~ 1/5 th of Policyholder Surplus  AEGIS (industry mutual) provides ‘primary’ coverage  Reducing limit for ‘midstream’ accounts by nearly half – from $35MM to $15-20MM  Increasing retentions to $3 – 5 MM  Propane Claim Issues  Applying Aggregate of Coverage Limit for Wildfires  Other Options - Talking with other potential insurers to ‘fill-in’ coverage gaps  EIM specifying CA Wildfires as an Aggregate (not as broad as AEGIS)  Excess layers (Lloyds of London) has had a few markets indicate non-renewing  Several markets not currently on placement may write coverage

50. Confidential 50 Insurer Solvency Concerns

51. Confidential 51 Insurer Solvency Concerns The decline in the financial markets has impacted the country’s insurance underwriters. As some of these insurance companies face liquidity challenges or even potential insolvency, it is imperative that risk managers monitor and evaluate the viability of the carriers that participate in their insurance programs.  AIG, Swiss Re, Hartford, XL and others – Largest Insurers  Financial products – Credit Derivative Swaps / Mortgage Backed Securities  Insurer minimum A.M. Best Rating: A- VII  Monitor insurance programs  Long-tail vs. short-tail risk programs  D&O Policies  Primary coverage vs. high excess coverage  What are the alternatives? Cost? Coverage?  Have a ‘back-up’ plan

52. Confidential 52 Insurer Solvency and Claims - Top of the List Insurer Strength Tops Risk Manager Concerns By Sarah Veysey March 24, 2009  LONDON—The financial security of insurance companies has become the No. 1 priority of insurance buyers in the United Kingdom, according to the London-based Assn. of Insurance and Risk Managers (AIRMIC).  John Hurrell, chief executive of AIRMIC, told attendees at a Tuesday seminar in London organized by the International Underwriting Assn. that an informal survey of AIRMIC members earlier this year showed 75% of respondents say market security is their top concern.  Anecdotally, he said, many AIRMIC members reported having “difficult conversations” with their chief financial officers about insurer financial security in recent months. AIRMIC, he said, has organized several events to help risk managers better understand the issue, including a seminar next month at which a rating agency, an insurer and a broker are to discuss the issue.  As a result of concerns about insurer stability, Mr. Hurrell said the association noted a trend among its members of spreading their risks among a larger number of insurers.  He said claims are the No. 2 concern of AIRMIC members.  “This is the issue that defines the effectiveness of the insurance product,” Mr. Hurrell said. AIRMIC late last year published its “Claims Best Practice Guide” to help insurers and buyers assess the quality of claims service.  Speedy settlement of claims has become particularly important in the economic downturn, especially because bridging facilities from banks are far less available than previously, Mr. Hurrell said.  The association said it was talking with the Chartered Institute of Loss Adjusters and a major loss adjusting company to try to devise a claims payment protocol that does not impair buyers’ cash flow, Mr. Hurrell said. Source: Business Insurance

53. Confidential 53 Q & A

54. Confidential 54