Fort Chicago announces second quarter results and updated 2008 guidance



    
    /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
    DISSEMINATION IN THE UNITED STATES./

    Trading Symbol: FCE.UN
    Exchange: TSX
    

    CALGARY, Aug. 7 /CNW/ - Fort Chicago Energy Partners L.P. today announced
its results for the three and six months ended June 30, 2008 and updated 2008
guidance. Mr. Stephen H. White, President and Chief Executive Officer
commented, "Throughout the first half of this year, the Partnership has
continued to benefit from exceptional NGL market conditions."

    
    Highlights

    -   Solid financial results from each business, including significantly
        higher distributions from Aux Sable year-to-date
    -   Strong operating performance from each business, with Alliance
        Pipeline achieving record throughput for first half of year
    -   Acquisition of Brush II Generation Facility announced on
        July 14, 2008


    Financial Highlights
    -------------------------------------------------------------------------
                                          Three months            Six months
                                         ended June 30         ended June 30
    -------------------------------------------------------------------------
    ($ Thousands, except per
     unit amounts)                     2008       2007       2008       2007
    -------------------------------------------------------------------------
    Revenues                        178,684    135,945    351,901    262,152
    Net income                       20,117     22,809     52,162     36,711
      Per Unit ($)                     0.15       0.17       0.39       0.28
    Distributable cash               41,565     39,980     84,380     70,646
      Per Unit ($)                    0.313      0.304      0.638      0.538
    Cash from operating activities   39,512     33,689    135,111     92,179
    


    Net income for the three and six months ended June 30, 2008 was
$20.1 million or $0.15 per Unit and $52.2 million or $0.39 per Unit,
respectively, compared to $22.8 million or $0.17 per Unit and $36.7 million or
$0.28 per Unit for the same periods in 2007, respectively. Continued strong
NGL market conditions in the first half of 2008 resulted in $39.6 million of
margin-based lease revenues being generated by Aux Sable, all of which has
been recognized in revenues and distributable cash. In comparison, of the
$16.1 million margin-based lease revenues generated in the first half of 2007,
$12.8 million was recognized by June 30, with the remainder being recognized
over the balance of 2007. Earnings from the Pipeline Business for the six
months ended June 30, 2008 included $10.3 million or $0.08 per Unit received
in the first quarter from Calpine Energy Services Canada Partnership ("CESCA")
in settlement of its Alliance transportation contracts. Further, year-to-date
2008 earnings included a gain of $4.2 million related to the initial public
offering of common shares by Pristine Power Inc., which resulted in Fort
Chicago's ownership interest in Pristine being diluted from approximately 20 
percent to approximately 11 percent. These increases were offset in the second
quarter and partially offset in the first half of the year by higher corporate
costs, including increased recognition of foreign exchange losses previously
deferred and recorded in the cumulative translation adjustment account,
resulting from the significant cash flows distributed by Fort Chicago's U.S.
businesses. Increased corporate costs also reflect incremental administration
and interest costs related to the Countryside acquisition, increased corporate
office and business development activities, higher taxes resulting from
increased U.S. earnings and the effect of the stronger Canadian dollar.
    Distributable cash for the three and six months ended June 30, 2008 was
$41.6 million or $0.313 per Unit and $84.4 million or $0.638 per Unit,
respectively, compared to $40.0 million or $0.304 per Unit and $70.6 million
or $0.538 per Unit for the same periods in 2007, respectively, due primarily
to record NGL margins for the first half of 2008 partially offset by higher
current taxes pertaining to Aux Sable, whose earnings are now fully taxable as
a result of utilizing its remaining prior year loss carry-forwards.
Year-to-date distributable cash also increased due to the CESCA settlement in
the first quarter of 2008. Fort Chicago Power generated positive cash flow
from operations for the three and six months ended June 30, 2008, partially
offset by higher costs associated with accelerated major maintenance at the
Ripon Cogeneration Facility. Distributable cash for the three and six months
ended June 30, 2008 also reflects higher Partnership corporate costs as
described earlier and the effect of the stronger Canadian dollar.
    Cash generated from operating activities during the three and six months
ended June 30, 2008 was $39.5 million and $135.1 million, respectively,
compared to $33.7 million and $92.2 million for the same periods last year,
respectively. These increases primarily reflect higher earnings from the NGL
Business and, for the six month period, Alliance's settlement with CESCA.

    Operating Highlights

    For the six months ended June 30, 2008 Alliance exceeded its contracted
1.325 bcf/d of firm-service capacity, with shippers utilizing record levels of
the Authorized Overrun Service ("AOS") available on the system. Actual
transportation deliveries, including utilized AOS, averaged 1.654 bcf/d, up
from 1.641 bcf/d in 2007, reflecting the reliability of Alliance's equipment
and an aggressive focus on planning and scheduling of maintenance to limit
outage times. Aux Sable also continued to operate reliably, with year-to-date
volumes of 72.4 thousand barrels per day, up from average volumes of
68.0 thousand barrels per day during the same period last year. In June, Fort
Chicago Power completed its major maintenance work at the Ripon Cogeneration
Facility, which included a two-week planned outage. The operating performance
of Fort Chicago Power's facilities continues to be in line with the
Partnership's expectations. NRGreen's Kerrobert waste heat generation facility
operated throughout the second quarter without incident, after experiencing a
failure early in the first quarter. NRGreen's Loreburn facility commenced
operations at the end of May and generated revenues throughout the month of
June.

    Key Accomplishments and Growth Initiatives

    On July 14, 2008, Fort Chicago announced the acquisition of a 100 percent
interest in the Brush II Generation Facility, a nominal 70 megawatt natural
gas fired combined cycle power generation facility situated in a 280 MW,
multi-unit complex in Brush, Colorado, approximately 150 kilometres northeast
of Denver. The aggregate purchase price is approximately US$32 million and
will be financed from existing bank credit facilities. The acquisition is
expected to close in August, subject to usual closing conditions, including
the approval of the U.S. Federal Energy Regulatory Commission. The Brush II
facility is fully contracted under long-term tolling agreements with
investment grade off-takers through December 31, 2019 and is operated by an
experienced third party contract operator, which also operates the other units
in the Brush complex. This acquisition possesses solid investment attributes
consistent with those of the Partnership's existing businesses and represents
another step in its strategy of growing its power business in North America.
    Fort Chicago and its businesses continue to advance other growth
initiatives within its existing operations and to pursue opportunities to
diversify into new energy infrastructure businesses. Steady progress is being
made in the construction of several projects, including Alliance's B.C.
Expansion project, Aux Sable's Heartland Off-gas Facility, Fort Chicago
Power's London Cogeneration Facility, NRGreen's Estlin and Alameda waste heat
facilities and the East Windsor Cogeneration Facility. As well, Alton, Jordan
Cove and Alliance continue to pursue commercial arrangements to underpin their
respective natural gas storage, LNG terminal and Rockies Alliance Pipeline
projects.

    Distributions

    For the three and six months ended June 30, 2008 Fort Chicago paid
distributions of $0.25 per Unit and $0.50 cents per Unit, respectively,
compared to $0.2325 per Unit and $0.465 per Unit for the same periods last
year, respectively, reflecting the increase of the Partnership's annualized
per Unit distribution from $0.93 to $1.00 in November 2007. For the six months
ended June 30, 2008, the payout ratio was 78 percent, resulting in the
Distribution Account increasing by $11.9 million to $81.7 million due
primarily to increased distributable cash being generated by Aux Sable and the
CESCA settlement.

    Updated 2008 Guidance

    Over the balance of the year the Partnership expects NGL market
fundamentals to continue to support strong earnings and cash flows from Aux
Sable. The Pipeline Business is expected to continue to generate stable
earnings and cash flows, which are underpinned by long-term contracts.
Earnings and cash flows from the Power Business are also expected to increase
as electrical demand in California is higher in the summer months. Based on
the Partnership's year-to-date performance and its current outlook, 2008
distributable cash is now expected to be in the range of $1.15 per Unit to
$1.50 per Unit, compared to $1.13 per Unit to $1.70 per Unit, and the payout
ratio for the year is expected to be between 67 percent and 87 percent. This
narrower range reflects Aux Sable's strong year-to-date and projected margins
and higher cash taxes as a result of higher Aux Sable earnings and the recent
decision to not implement certain tax planning initiatives designed to utilize
additional U.S. loss carry-forwards in 2008 that otherwise would be used in
future years. This decision reflects ongoing planning related to the 2007
legislation applicable to specified investment flow-through entities. Fort
Chicago's ability to maintain its existing level of distributions is not
affected by this shift of current taxes between fiscal years. Further details
concerning updated 2008 guidance can be found in the Investor Information
section of Fort Chicago's website at www.fortchicago.com.

    Conference Call
    ---------------
    Fort Chicago will hold a conference call at 9:00 a.m. Mountain time
(11:00 a.m. Eastern time) on Friday, August 8, 2008, to discuss the second
quarter results of 2008. The call can be accessed at 1-800-733-7560 or
1-416-644-3415. A replay will be available shortly thereafter at
1-877-289-8525 and 1-416-640-1917. The access code in each case is 21274265
(followed by the No. sign).

    Fort Chicago is a publicly traded limited partnership based in Calgary,
Alberta, that owns and operates energy infrastructure assets across North
America. Its Class A Units are listed on the TSX under the symbol FCE.UN and
have been assigned a stability rating by Dominion Bond Rating Service and
Standard & Poor's of STA-2 (low) and SR-2, respectively. Fort Chicago is
engaged in three principal businesses: a pipeline transportation business
comprised of interests in two pipeline systems, the Alliance Pipeline and the
Alberta Ethane Gathering System; an NGL extraction business which includes a
significant interest in a world-class extraction facility near Chicago; and a
power business with cogeneration facilities in Ontario and California,
district energy systems in Ontario and Prince Edward Island and waste heat
power facilities along the Alliance Pipeline. Fort Chicago and its businesses
are also actively developing a number of greenfield investment opportunities
that will be a key source of future growth, including various pipeline
projects across North America, an Oregon-based LNG terminal, Alberta-based
ethane and NGL extraction facilities, repowering and expansion opportunities
at the California power facilities, and a Nova Scotia-based underground
natural gas storage facility.

    
                     Class A Unit Ownership Restrictions
    

    Fort Chicago is organized in accordance with the terms and conditions of
a limited partnership agreement which provides that no Class A Units may be
transferred to, among other things, a person who is a "non-resident" of
Canada, a person in which an interest would be a "tax shelter investment" or a
partnership which is not a "Canadian partnership" for purposes of the Income
Tax Act (Canada).

    Certain information contained herein relating to, but not limited to,
Fort Chicago and its businesses constitutes forward-looking information under
applicable securities laws. All statements, other than statements of
historical fact, which address activities, events or developments that we
expect or anticipate may or will occur in the future, are forward-looking
information. Forward-looking information typically contains statements with
words such as "may", "estimate", "anticipate", "believe", "expect", "plan",
"intend", "target", "project", "forecast" or similar words suggesting future
outcomes or outlook. The following discussion is intended to identify certain
factors, although not necessarily all factors, which could cause future
outcomes to differ materially from those set forth in the forward-looking
information. The risks and uncertainties that may affect the operations,
performance, development and results of Fort Chicago's businesses include, but
are not limited to, the following factors: the ability of Fort Chicago to
successfully implement its strategic initiatives and achieve expected
benefits; the status, credit risk and continued existence of contracted
customers; the availability and price of energy commodities; fluctuations in
foreign exchange and interest rates; the regulatory environment; competitive
factors in the pipeline, NGL and power industries; and the prevailing economic
conditions in North America. The reader is cautioned that these factors and
risks are difficult to predict and that the assumptions used in the
preparation of such information, although considered reasonably accurate by
Fort Chicago at the time of preparation, may prove to be incorrect or may not
occur. Accordingly, readers are cautioned that the actual results achieved
will vary from the information provided herein and the variations may be
material. Readers are also cautioned that the foregoing list of factors and
risks is not exhaustive. Additional information on these and other risks,
uncertainties and factors that could affect Fort Chicago's operations or
financial results are included in its filings with the securities commissions
or similar authorities in each of the provinces of Canada, as may be updated
from time to time. There is no representation by Fort Chicago that actual
results achieved will be the same in whole or in part as those set out in the
forward-looking information. Furthermore, the forward-looking statements
contained herein are made as of the date hereof, and Fort Chicago does not
undertake any obligation to update publicly or to revise any forward-looking
information, whether as a result of new information, future events or
otherwise. Any forward-looking information contained herein is expressly
qualified by this cautionary statement.
    Certain financial information contained in this news release may not be
standard measures under Generally Accepted Accounting Principles ("GAAP") in
Canada and may not be comparable to similar measures presented by other
entities. These measures are considered to be important measures used by the
investment community and should be used to supplement other performance
measures prepared in accordance with GAAP in Canada. For further information
on non-GAAP financial measures used by Fort Chicago see Management's
Discussion and Analysis, in particular, the section entitled "Non-GAAP
Financial Measures" contained in the annual Management Discussion and
Analysis, filed by Fort Chicago with Canadian securities regulators.


    
    Fort Chicago Energy Partners L.P.
    -------------------------------------------------------------------------

    Consolidated Statement of Financial Position
    -------------------------------------------------------------------------
                                                        June 30, December 31,
    ($ Thousands; unaudited)                               2008         2007
    -------------------------------------------------------------------------
    Assets
    Current assets
      Cash and short-term investments                    49,614       47,191
      Restricted cash                                    44,850       75,236
      Transportation security deposits and revenue
       adjustments                                        1,955        5,991
    Receivables                                          69,201       59,568
    Inventory                                             3,537        2,623
    Prepaid expenses and other                            5,809        6,321
    -------------------------------------------------------------------------
                                                        174,966      196,930

    Long-term receivables                               232,038      218,701
    Pipeline, plant and other capital assets          2,355,062    2,326,057
    Intangible assets                                    98,429       98,876
    Goodwill                                             19,901       19,104
    Other assets                                         30,268       11,696
    -------------------------------------------------------------------------
                                                      2,910,664    2,871,364
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current liabilities
      Payables                                           88,893       69,677
      Transportation security deposits and revenue
       adjustments                                        6,130        5,275
      Distribution payable                               11,110       10,968
      Current portion of long-term senior debt and
       capital leases                                    69,709       65,292
      Subordinated convertible debentures and
       exchangeable debentures                           23,487       46,783
    -------------------------------------------------------------------------
                                                        199,329      197,995

    Long-term senior debt and capital leases          1,647,496    1,652,133
    Subordinated convertible debentures                  23,836       23,783
    Future taxes                                        210,931      198,985
    Other long-term liabilities                          38,767       43,015
    -------------------------------------------------------------------------
                                                      2,120,359    2,115,911
    -------------------------------------------------------------------------

    Partners' Equity
    Partners' capital account                         1,013,278      991,294
    Cumulative other comprehensive loss                 (75,261)    (102,092)
    Cumulative net income                               536,806      484,644
    Cumulative distributions                           (684,518)    (618,393)
    -------------------------------------------------------------------------
                                                        790,305      755,453
    -------------------------------------------------------------------------
                                                      2,910,664    2,871,364
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Fort Chicago Energy Partners L.P.
    -------------------------------------------------------------------------

    Consolidated Statement of Income and Cumulative Income
    -------------------------------------------------------------------------
                                          Three months          Six months
                                          ended June 30        ended June 30
    -------------------------------------------------------------------------
    ($ Thousands,
     except per
     unit amounts;
     unaudited)                           2008      2007      2008      2007
    -------------------------------------------------------------------------

    Revenues
      Operating revenues               178,802   134,175   335,571   258,921
      Interest and other                  (118)    1,770    16,330     3,231
    -------------------------------------------------------------------------
                                       178,684   135,945   351,901   262,152
    -------------------------------------------------------------------------
    Expenses
      Operations and maintenance        60,073    32,041   114,321    65,940
      Depreciation and amortization     30,805    29,866    62,586    61,001
      Interest and other finance        26,352    26,766    54,719    54,136
      General, administrative and
       project development              20,100    17,277    36,800    32,766
      Foreign exchange and other         7,473      (215)   14,231     1,765
    -------------------------------------------------------------------------
                                       144,803   105,735   282,657   215,608
    -------------------------------------------------------------------------
    Net income before taxes             33,881    30,210    69,244    46,544
      Current taxes                     11,105        31    11,271       121
      Future taxes                       2,659     7,370     5,811     9,712
    -------------------------------------------------------------------------
    Net income                          20,117    22,809    52,162    36,711
    Cumulative net income at
     the beginning of the period       516,689   412,389   484,644   398,487
    -------------------------------------------------------------------------

    Cumulative net income at the
     end of the period                 536,806   435,198   536,806   435,198
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income per Unit
      Basic and diluted                   0.15      0.17      0.39      0.28
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Comprehensive Income and Cumulative Other
    Comprehensive Income
    -------------------------------------------------------------------------
                                          Three months         Six months
                                          ended June 30       ended June 30
    -------------------------------------------------------------------------
    ($ Thousands; unaudited)              2008      2007      2008      2007
    -------------------------------------------------------------------------

    Net income                          20,117    22,809    52,162    36,711
    Other comprehensive income
     (loss), net of taxes
      Cumulative translation
       adjustment
        Unrealized foreign
         exchange gain (loss) on
         translation of
         self-sustaining foreign
         operations                     (3,186)  (27,997)    9,837   (31,817)
        Deemed realization of
         cumulative translation
         adjustment reclassified
         to net income                   7,054     2,140    15,897     4,324
        Gain (loss) on hedge of
         self-sustaining foreign
         operation                         744         -    (2,440)        -
      Other                                216       720     3,537       720
    -------------------------------------------------------------------------
                                         4,828   (25,137)   26,831   (26,773)
    -------------------------------------------------------------------------
    Comprehensive income (loss)         24,945    (2,328)   78,993     9,938
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cumulative other comprehensive
     loss at the beginning of the
     period                            (80,089)  (72,528) (102,092)  (70,892)
    Other comprehensive income
     (loss), net of taxes                4,828   (25,137)   26,831   (26,773)
    -------------------------------------------------------------------------
    Cumulative other comprehensive
     loss at the end of the period     (75,261)  (97,665)  (75,261)  (97,665)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Fort Chicago Energy Partners L.P.
    -------------------------------------------------------------------------

    Consolidated Statement of Cash Flows
    -------------------------------------------------------------------------
                                          Three months         Six months
                                          ended June 30       ended June 30
    -------------------------------------------------------------------------
    ($ Thousands; unaudited)              2008      2007      2008      2007
    -------------------------------------------------------------------------

    Operating
      Net income                        20,117    22,809    52,162    36,711
      Less: Non-cash
             transportation revenue     (2,760)   (3,891)   (3,508)  (10,094)
      Add:  Depreciation,
             amortization and other
             non-cash items             32,319    30,567    56,564    60,057
        Unrealized foreign exchange
         loss (gain)                     8,039      (912)   14,704       614
        Future taxes                     2,669     7,370     5,811     9,712
      Changes in non-cash working
       capital                         (20,872)  (22,254)    9,378    (4,821)
    -------------------------------------------------------------------------
                                        39,512    33,689   135,111    92,179
    -------------------------------------------------------------------------
    Financing
      Long-term debt issued,
       net of issue costs                6,800    29,465    37,468    43,141
      Long-term debt repaid            (50,718)  (30,570)  (58,863)  (33,205)
      Distributions paid               (33,062)  (30,613)  (65,983)  (60,993)
      Other                             (1,258)        -      (402)        -
    -------------------------------------------------------------------------
                                       (78,238)  (31,718)  (87,780)  (51,057)
    -------------------------------------------------------------------------
    Investing
      Pipeline, plant and other
       capital assets                  (36,648)  (18,412)  (64,768)  (31,658)
      Restricted cash                   20,189         -    30,797         -
      Other                                  -         -   (11,307)        -
      Changes in non-cash
       investing working capital        (5,615)   (1,514)     (285)   (4,557)
    -------------------------------------------------------------------------
                                       (22,074)  (19,926)  (45,563)  (36,215)
    -------------------------------------------------------------------------
    Increase in cash and short-term
     investments before the effect
     of foreign exchange rate
     changes on cash and short-term
     investments                       (60,800)  (17,955)    1,768     4,907
    Effect of foreign exchange
     rate changes on cash and
     short-term investments               (399)   (2,853)      655    (3,103)
    Cash and short-term investments
     at the beginning of the period    110,813    67,330    47,191    44,718
    -------------------------------------------------------------------------
    Cash and short-term investments
     at the end of the period           49,614    46,522    49,614    46,522
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Fort Chicago Energy Partners L.P.
    -------------------------------------------------------------------------

    Distributable Cash (1)
    -------------------------------------------------------------------------
                                          Three months         Six months
                                          ended June 30       ended June 30
    -------------------------------------------------------------------------
    ($ Thousands, except where noted)     2008    2007(3)     2008    2007(3)
    -------------------------------------------------------------------------

    Cash inflows
      Alliance distributions,
       prior to withholdings for
       capital expenditures and
       net of debt service              27,186    28,083    64,684    58,522
      AEGS distributable cash,
       after non-recoverable capital
       expenditures and debt service     4,052     4,078     7,994     7,839
      Aux Sable distributions,
       net of support payments,
       non-recoverable debt service
       costs and maintenance capital    28,607    12,610    38,847    13,740
      Fort Chicago Power distributable
       cash, after maintenance capital
       expenditures and debt service(4)    888         -       503         -
      NRGreen distributions, prior to
       withholding for project
       development costs                   275       350       525       660
    Interest income and other               44       260       370       485
    -------------------------------------------------------------------------
                                        61,052    45,381   112,923    81,246

    Cash outflows
      General and administrative        (4,198)   (1,892)   (7,264)   (3,619)
      Interest and other finance        (3,437)   (2,673)   (8,491)   (5,179)
      Taxes                            (11,091)      (22)  (11,224)     (106)
      Principal repayments on
       senior debt                        (761)     (814)   (1,564)   (1,696)
    -------------------------------------------------------------------------

    Distributable cash(1)               41,565    39,980    84,380    70,646
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributable cash per
     Unit ($)(2)                         0.313     0.304     0.638     0.538
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributions paid/payable          33,183    30,590    66,124    61,015
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Distributions paid/payable
     per Unit ($)                       0.2500    0.2325    0.5000    0.4650
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Distributable cash is not a standard measure under generally accepted
        accounting principles in Canada and may not be comparable to similar
        measures presented by other entities. Distributable cash represents
        the cash available to Fort Chicago for distribution to holders of
        Units after providing for debt service obligations and any capital
        expenditures that are not growth-oriented or recoverable but does not
        include distribution reserves, if any, available in Fort Chicago's
        jointly held businesses, or project development costs, which
        represent discretionary costs, the recoverability of which has not
        been established, incurred to assess the commercial viability of new
        greenfield business initiatives unrelated to the Partnership's
        operating businesses. Distributable cash is an important measure used
        by the investment community to assess the source and sustainability
        of Fort Chicago's cash distributions and should be used to supplement
        other performance measures prepared in accordance with generally
        accepted accounting principles in Canada. See the following table for
        the reconciliation of distributable cash to cash flow from operating
        activities.
    (2) The number of Units used to calculate distributable cash per Unit is
        based on the average number of Units outstanding at each record date.
        For the three months ended June 30, 2008, the average number of Units
        outstanding for this calculation was 132,788,996 (2007 - 131,226,180)
        and 136,446,174 (2007 - 136,483,012) on a basic and diluted basis,
        respectively. For the six months ended June 30, 2008, the average
        number of Units outstanding for this calculation was 132,302,721
        (2007 - 131,214,237) and 136,464,593 (2007 - 136,483,012) on a basic
        and diluted basis, respectively. The number of Units outstanding
        would increase by 2,261,621 (2007 - 5,174,167) Units if the
        outstanding Convertible Debentures as at June 30, 2008 were converted
        into Units.
    (3) Certain comparative figures have been reclassified to conform to
        presentation adopted in 2008.
    (4) Assets acquired August 10, 2007.



    Fort Chicago Energy Partners L.P.
    -------------------------------------------------------------------------

    Reconciliation of Distributable Cash to Cash Flow from Operating
    Activities
    -------------------------------------------------------------------------
                                          Three months         Six months
                                          ended June 30       ended June 30
    -------------------------------------------------------------------------
    ($ Thousands, except where noted;
     unaudited)                           2008      2007      2008      2007
    -------------------------------------------------------------------------

    Consolidated cash flow from
     operating activities               39,512    33,689   135,111    92,179
    Deduct: Cash flow used by
     (generated from) operating
     activities applicable to
     jointly held businesses(1)          8,236    (3,630)  (45,168)  (31,905)
    -------------------------------------------------------------------------
    Cash flow from operating
     activities applicable to
     wholly-owned businesses(2)         47,748    30,059    89,943    60,274

    Add (deduct) amounts applicable
     to wholly-owned businesses
      Project development costs          3,386     3,250     5,429     5,984
      Change in non-cash working
       capital                          (6,323)   (2,385)   (7,446)   (2,346)
      Principal repayments on
       senior notes                     (1,357)   (1,378)   (2,756)   (2,824)
      Maintenance capital
       expenditures                     (3,938)        -    (7,450)        -
      Distributions earned greater
       than distributions received(3)    2,049    10,434     6,660     9,558
    -------------------------------------------------------------------------

    Distributable cash                  41,565    39,980    84,380    70,646
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Represents the cash flow from operating activities applicable to
        jointly held businesses which is not under the sole control of the
        Partnership and, as a consequence, is not included in distributable
        cash until such time as distributions are declared by the jointly
        held businesses.
    (2) Net of support payments made to Alliance Canada Marketing of $0.7
        million and $1.7 million for the three and six months ended June 30,
        2008, respectively (2007 - $0.7 million and $1.5 million,
        respectively).
    (3) Represents the difference between distributions declared by jointly
        held businesses and distributions received.
    





For further information:

For further information: Stephen H. White, President and C.E.O.; Hume D.
Kyle, Vice President, Finance and C.F.O., Fort Chicago Energy Partners L.P.,
Livingston Place, Suite 440, 222 - 3rd Avenue S.W., Calgary, AB, T2P 0B4,
Phone: (403) 296-0140, Fax: (403) 213-3648, www.fortchicago.com

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