QR Energy, LP (QRE) $300 million IPO with a market cap of $726 million at the price range mid-point of $20. Scheduled for Thursday, December 16, 2010.

SUMMARY

Expected payout difference is a matter of risk versus return. Targa Resources (TRGP) has room to increase its payout rate. QRE does not

. ORE’s expected payout of 8.3% (at the price range mid-point) is twice that of TRGP’s 4%. . TRGP priced its IPO December 7 at $22 and was up 16% as of Friday, December 10, 2010.

. On a proforma basis QRE revealed payout shortfalls of -$11 million and -$8 million respectively for the year ended December 2009 and the twelve months ended September 2010. . TRGP showed excesses of $70 million and $65 million respectively (see below).

COMPARISONS	Mrkt	Dividnd	Expected	ExpDividend	Price /	% offered
	Cap (mm)	payout*	payout	% payout	TangibleBV	in IPO
QR Energy, LP (QRE)	$726		$1.65	8.3%	4.5	41%
Fairly recent midstream IPOs
Targa Rsrcs Inv (TRGP)	$1,085		$1.03	4.0%	6.2	25%
ChesapeakeMidstm CHKM	$1,930		$1.35	4.8%
PAA Nat Gas Stor PNG	$798		$1.35	5.8%
Other oil/gas partnerships
Atlas Pipeline Partners (APL)	$1,310	5.79%
DCP Midstream Prtnrs(DPM)	$1,400	7.01%
Copano Energy LLC (CPNO)	$1,960	7.61%
*source, Google Finance

RISK: QRE’s estimated oil and natural gas reserves will naturally decline over time, and it is unlikely that QRE will be able to sustain distributions at the level of the minimum quarterly distribution without making accretive acquisitions or substantial capital expenditures that maintain the asset base.

BUSINESS

Recently formed oil/gas partnership designed to aggregate legacy properties.

DIVIDEND POLICY: $0.4125 per unit per quarter

USE OF IPO PROCEEDS, $275 million plus borrowings of $225 million

. $300 million for distribution to the property originating fund . $200mm repayment of debt assumed from the property originating fund

THE ORIGINATING FUND

The Fund is a collection of limited partnerships formed by the founders of Quantum Energy Partners and Don Wolf, the Chairman of the Board of the general partner, for the purpose of acquiring mature, legacy producing oil and natural gas properties with similar characteristics to the Partnership Properties.

Quantum Energy Partners is a private equity firm founded in 1998 to make investments in the energy sector. Quantum Energy Partners currently has more than $5.7 billion in assets under management, including the assets of and remaining capital commitments to the Fund.

QR Energy, LP	QRE, C, 6.5					Post IPO shares: 36.3mm
Oil/gas LLP			Proforma	Proforma	Projection	IPO Mkt
Houston, Texas			12 months	12 months	12 months	Cap (mm)
			ended	ended	ending	$726
			Dec 2009	Sept 2010	Dec 2011	@$20
Net income (loss)			-$43	$25	$42
Adju EBITDA			$67	$71	$85
Available cash			$48	$51	$65
Estimated annual cash dist			$59	$59	$59
Excess/(Shorttfall)			-$11	-$8	$6
Compare to Targe Resources (TRGP)			Proforma	Proforma
Notice Targa's excess versus			12 months	12 months
QRE's shortfall			ended	ended
			Dec 2009	Sept 2010
Net income (loss)			$41	$111
Adju EBITDA			$397	$397
Available cash			$261	$256
Estimated annual cash for dist			$191	$191
Excess/(Shorttfall)			$70	$65
COMPARISONS	Mrkt	Dividnd	Expected	ExpDividend	Price /	% offered
	Cap (mm)	payout*	payout	% payout	TangibleBV	in IPO
QR Energy, LP (QRE)	$726		$1.65	8.3%	4.5	41%
Fairly recent midstream IPOs
Targa Rsrcs Inv (TRGP)	$1,085		$1.03	4.0%	6.2	25%
ChesapeakeMidstm CHKM	$1,930		$1.35	4.8%
PAA Nat Gas Stor PNG	$798		$1.35	5.8%
Other oil/gas partnerships
Atlas Pipeline Partners (APL)	$1,310	5.79%
DCP Midstream Prtnrs(DPM)	$1,400	7.01%
Copano Energy LLC (CPNO)	$1,960	7.61%
*source, Google Finance
SCORECARD		Mgt	Market	Market Do-	Proprie-	Total
1-5, 5 is high			Growth	mination	tary	rating
20 is perfect		2	2	1.5	1	6.5