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Crosstex Energy, L.P.
Trades on the NASDAQ Exchange under the symbol XTEX.
Press Release

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Crosstex Energy Reports Third-Quarter 2008 Financial Results

DALLAS--(BUSINESS WIRE)--Nov. 7, 2008--The Crosstex Energy companies, Crosstex Energy, L.P. (NASDAQ: XTEX) (the Partnership) and Crosstex Energy, Inc. (NASDAQ: XTXI) (the Corporation) today reported earnings for the third quarter of 2008.

    Third-Quarter 2008 -- Crosstex Energy, L.P. Financial Results

The Partnership reported a net loss of $5.2 million in the third quarter of 2008, compared with net income of $2.1 million in the third quarter of 2007. The Partnership's distributable cash flow in the third quarter of 2008 was $30.3 million, 1.02 times the amount required to cover its quarterly distribution of $0.50 per unit. Distributable cash flow in the third quarter of 2007 was $31.9 million. Distributable cash flow is a non-GAAP financial measure and is explained in greater detail under "Non-GAAP Financial Information" below. There is a reconciliation of this non-GAAP measure to net income in the tables at the end of this news release.

"Our third quarter results were negatively impacted by the effects of Hurricanes Gustav and Ike and continued volume delays in North Texas, our key growth area," said Barry E. Davis, Crosstex Chairman, President and Chief Executive Officer. "However, we still have strong underlying long-term business fundamentals, great assets and excellent customer relationships across all our assets."

Third-quarter 2008 gross margin was $110.2 million, compared to $97.2 million in the corresponding 2007 period, a 13 percent increase. Gross margin from the Midstream segment rose 14 percent to $97.3 million in the third quarter of 2008 versus gross margin of $85.7 million in the third quarter last year. The improvement is due to higher system throughput from continued expansion of gathering and transportation systems in the Barnett Shale in North Texas and system expansion projects on the Crosstex LIG system in Louisiana. The Midstream increase was offset by the negative impact of Hurricanes Gustav and Ike and decreases in the processing business due to a less favorable natural gas liquids market.

Third-quarter 2008 gross margin from the Treating segment increased 12 percent to $12.9 million, compared with gross margin of $11.5 million in the third quarter of 2007. Although the Partnership had 195 treating and dew point control plants in service at the end of both quarters, Treating gross margin increased due to increased fees per plant due to larger plants in service and throughput on its volume-based plants for the quarter.

Operating expenses were $47.0 million in the third quarter of 2008, compared with $31.7 million in the third quarter of 2007. The increase was related to expansion of gathering assets primarily in North Texas, East Texas and Louisiana and maintenance and repairs associated with the recent hurricanes. In the third quarter of 2008, general and administrative expenses rose to $16.9 million from $16.1 million in the third quarter of 2007 primarily due to an increase in bad debt expense of $1.6 million associated with SemGroup, L.P., which was partially offset by a decrease in stock-based compensation. Interest expense was $17.1 million in the third quarter of 2008 versus $20.7 million in the third quarter of 2007 due to lower interest rates between the periods.

Income from discontinued operations was $1.3 million in the third quarter of 2008, compared with $1.6 million in the third quarter of 2007. As part of its strategy to increase liquidity, the Partnership began marketing a nonstrategic asset for sale in September 2008 and the income generated by this asset is reflected in income from discontinued operations.

The net loss per limited partner unit in the third quarter of 2008 was $0.25 per unit versus a net loss of $0.10 per unit in the corresponding quarter of 2007. The loss per limited partner unit was impacted by the $5.8 million preferential allocation of net income to the general partner in the third quarter of 2008, which represented the general partner's incentive distribution rights less certain stock-based compensation costs. This allocation further increased the limited partners' net loss to $11.1 million in the third quarter of 2008.

    Third Quarter 2008 -- Crosstex Energy, Inc. Financial Results

The Corporation reported net income of $0.5 million for the third quarter of 2008, compared with net income of $2.2 million in the comparable 2007 period. The Corporation's net loss from continuing operations before income taxes, gain on issuance of units of the Partnership and interest of noncontrolling partners in the net income of the Partnership was $5.5 million in the third quarter of 2008, compared with net income of $0.2 million in the third quarter of 2007.

The Corporation's share of Partnership distributions, including distributions on its approximately 16.4 million participating limited partner units, its two percent general partner interest and the incentive distribution rights, was $15.5 million in the third quarter of 2008. Its share of Partnership distributions in the third quarter of 2007 was $12.6 million.

Crosstex to Hold Conference Call Today

The Partnership and the Corporation will hold their quarterly conference call to discuss third quarter 2008 financial results today, November 7, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). The dial-in number for the call is 1-888-713-4211, and the passcode is 82267047. Callers outside the United States should dial 1-617-213-4864, and the passcode is 82267047. Investors are advised to dial in to the call at least 10 minutes prior to the call time to register. Participants may preregister for the call at https://www.theconferencingservice.com/prereg/key.process?key= PTUAMRWFE. (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)

Preregistrants will be issued a pin number to use when dialing in to the live call, which will provide quick access to the conference by bypassing the operator upon connection. Interested parties also can access a live Web cast of the call on the Investors page of Crosstex's Web site at www.crosstexenergy.com.

After the conference call, a replay can be accessed until December 7, 2008, by dialing 1-888-286-8010. International callers should dial 1-617-801-6888 for a replay. The passcode for all callers listening to the replay is 40501936. Interested parties also can visit the Investors page of Crosstex's Web site to listen to a replay of the call.

About the Crosstex Energy Companies

Crosstex Energy, L.P., a midstream natural gas company headquartered in Dallas, operates approximately 5,700 miles of pipeline, 12 processing plants, four fractionators, and approximately 195 natural gas amine-treating plants and dew point control plants. The Partnership currently provides services for over 4.0 Bcf/day of natural gas, or approximately eight percent of marketed U.S. daily production.

Crosstex Energy, Inc. owns the two percent general partner interest, a 34 percent limited partner interest, and the incentive distribution rights of Crosstex Energy, L.P.

Additional information about the Partnership and the Corporation can be found at www.crosstexenergy.com.

Non-GAAP Financial Information

This press release contains a non-generally accepted accounting principle financial measure that we refer to as Distributable Cash Flow. Distributable cash flow includes earnings before noncash charges, less maintenance capital expenditures and amortization of costs of certain derivatives (puts). The amounts included in the calculation of these measures are computed in accordance with generally accepted accounting principles (GAAP), with the exception of maintenance capital expenditures and the amortization of put premiums. Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of our assets and to extend their useful lives. The puts were acquired to hedge the future price of certain natural gas liquids. The net cost of the puts is being amortized against Distributable Cash Flow over their life.

We believe this measure is useful to investors because it may provide users of this financial information with meaningful comparisons between current results and prior reported results and a meaningful measure of the Partnership's cash flow after it has satisfied the capital and related requirements of its operations. Distributable Cash Flow is not a measure of financial performance or liquidity under GAAP. It should not be considered in isolation or as an indicator of the Partnership's performance. Furthermore, it should not be seen as a measure of liquidity or a substitute for metrics prepared in accordance with GAAP. Our reconciliation of this measure to net income is included among the following tables.

This press release contains forward-looking statements within the meaning of the federal securities laws. These statements are based on certain assumptions made by the Partnership and the Corporation based upon management's experience and perception of historical trends, current conditions, expected future developments and other factors the Partnership and the Corporation believe are appropriate in the circumstances. These statements include, but are not limited to, statements with respect to the Partnership's and the Corporation's future financial condition, liquidity and results of operations. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Partnership and the Corporation, which may cause the Partnership's and the Corporation's actual results to differ materially from those implied or expressed by the forward-looking statements. These risks include the following: (1) the amount of natural gas transported in the Partnership's gathering and transmission lines may decline as a result of competition for supplies, reserve declines and reduction in demand from key customers and markets; (2) the level of the Partnership's processing and treating operations may decline for similar reasons; (3) fluctuations in natural gas and NGL prices may occur due to weather and other natural and economic forces; (4) there may be a failure to successfully integrate new acquisitions; (5) the Partnership's credit risk management efforts may fail to adequately protect against customer nonpayment; (6) the Partnership may not adequately address construction and operating risks; and (7) other factors discussed in the Partnership's and the Corporation's Annual Reports on Form 10-K for the year ended December 31, 2007, and other filings with the Securities and Exchange Commission. The Partnership and the Corporation have no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

                            (Tables follow)
                        CROSSTEX ENERGY, L.P.
                 Selected Financial & Operating Data
          (All amounts in thousands except per unit numbers)

                          Three Months Ended      Nine Months Ended
                             September 30,          September 30,
                         --------------------- -----------------------
                            2008       2007       2008        2007
                         ----------- --------- ----------- -----------
                              (Unaudited)            (Unaudited)
Revenues
    Midstream            $1,310,226  $926,726  $4,087,683  $2,721,193
    Treating                 19,036    13,080      48,106      40,160
    Profit from Energy
     Trading Activities         648       587       2,332       2,180
                         ----------- --------- ----------- -----------
                          1,329,910   940,393   4,138,121   2,763,533

Cost of Gas
    Midstream             1,213,547   841,580   3,796,074   2,503,523
    Treating                  6,164     1,617      11,618       6,208
                         ----------- --------- ----------- -----------
                          1,219,711   843,197   3,807,692   2,509,731

Gross Margin                110,199    97,196     330,429     253,802

Operating Expenses           46,997    31,690     127,408      87,645
General and
 Administrative              16,897    16,127      49,695      43,010
(Gain) Loss on Sale of
 Property                        68         2      (1,591)     (1,819)
(Gain) Loss on
 Derivatives                  1,295       526      (7,193)     (3,969)
Depreciation and
 Amortization                32,828    27,465      96,927      76,845
                         ----------- --------- ----------- -----------
    Total                    98,085    75,810     265,246     201,712

Operating Income             12,114    21,386      65,183      52,090

Interest Expense and
 Other                      (16,964)  (20,481)    (46,703)    (56,159)
                         ----------- --------- ----------- -----------
Income (Loss) from
 continuing operations
 before Minority Interest
 and Taxes                   (4,850)      905      18,480      (4,069)

Minority Interest in
 Subsidiary                     (44)     (136)       (238)       (186)
Income Tax Provision         (1,683)     (236)     (2,352)       (655)
                         ----------- --------- ----------- -----------
Income (Loss) from
 Continuing Operations       (6,577)      533      15,890      (4,910)
Income from Discontinued
 Operations                   1,334     1,597       4,320       4,652
                         ----------- --------- ----------- -----------
Net Income (Loss)        $   (5,243) $  2,130  $   20,210  $     (258)
                         =========== ========= =========== ===========
General Partner Share of
 Net Income (Loss)       $    5,810  $  4,737  $   27,861  $   13,444
                         =========== ========= =========== ===========
Limited Partners' Share
 of Net Income (Loss)    $  (11,053) $ (2,607) $   (7,651) $  (13,702)
                         =========== ========= =========== ===========

Net Income (Loss) per
 Limited Partners' Unit

    Basic and Diluted
     Common Unit         $    (0.25) $  (0.10) $    (3.11) $    (0.51)
                         =========== ========= =========== ===========

    Basic and Diluted Sr.
     Sub Series C Unit   $        -  $      -  $     9.44  $        -
                         =========== ========= =========== ===========

Weighted Average Limited
 Partners' Units
 Outstanding:

    Basic and Diluted        44,869    26,718      41,466      26,682
                         =========== ========= =========== ===========
                        CROSSTEX ENERGY, L.P.
       Reconciliation of Net Income to Distributable Cash Flow
 (All amounts in thousands except ratios and distributions per unit)

                              Three Months Ended   Nine Months Ended
                                September 30,        September 30,
                             -------------------- --------------------
                                  2008     2007       2008      2007
                             ----------- -------- ----------- --------
                                 (Unaudited)          (Unaudited)
Net Income (Loss)               $(5,243) $ 2,130    $ 20,210  $  (258)
Depreciation and
 Amortization (1)                33,322   27,999      98,434   78,351
Stock-based Compensation          1,885    3,549       8,251    8,635
Financial Derivatives Mark-
 to-Market                        5,134    2,460      (1,980)     439
Other (2)                           425       44        (654)     133
                             ----------- -------- ----------- --------
Cash Flow                        35,523   36,182     124,261   87,300

Amortization of Put Premiums          -   (2,708)          -   (6,176)
Maintenance Capital
 Expenditures                    (5,249)  (1,609)    (12,816)  (6,165)
                             ----------- -------- ----------- --------
Distributable Cash Flow         $30,274  $31,865    $111,444  $74,959
                             =========== ======== =========== ========
Actual Distribution             $29,708  $22,796    $111,389  $65,318
Distribution Coverage              1.02     1.40        1.00     1.15

Distributions per Limited
 Partner Unit                   $  0.50  $  0.59    $   1.75  $  1.72
                             =========== ======== =========== ========

 (1) Excludes minority interest share of depreciation and amortization
  of $76,000 and $206,000 for the three and nine months ended
  September 30, 2008, respectively, and $31,000 and $174,000 for the
  three months and nine months ended September 30, 2007, respectively.
  Includes discontinued operation depreciation and amortization of
  $571,000 and $1,713,000 for the three and nine months ended
  September 30, 2008, respectively and $565,000 and $1,680,000 for the
  three and nine months ended September 30, 2007 respectively.
 (2) Includes taxes and gain from the disposition of assets.
                        CROSSTEX ENERGY, L.P.
                            Operating Data


                            Three Months Ended     Nine Months Ended
                               September 30,         September 30,
                           --------------------- ---------------------
                             2008       2007       2008       2007
                           ---------- ---------- ---------- ----------

Pipeline Throughput
 (MMBtu/d)
  South Texas (1)            423,000    429,000    423,000    396,000
  LIG Pipeline and
   Marketing (1)             895,000  1,023,000    973,000    921,000
  North Texas - Gathering    762,000    393,000    653,000    312,000
  North Texas -
   Transmission              342,000    296,000    337,000    225,000
  Other Midstream            221,000    202,000    208,000    186,000
                           ---------- ---------- ---------- ----------
Total Gathering and
 Transmission Volume       2,643,000  2,343,000  2,594,000  2,040,000

Natural Gas Processed
 (MMBtu/d)
  South Louisiana (1)      1,037,000  1,473,000  1,289,000  1,439,000
  LIG System (1)             262,000    314,000    325,000    317,000
  South Texas                184,000    219,000    200,000    221,000
  North Texas                200,000    150,000    191,000    102,000
                           ---------- ---------- ---------- ----------
Total Gas Volumes
 Processed                 1,683,000  2,156,000  2,005,000  2,079,000

  Weighted Average Natural
   Gas Liquids Price
   ($/gallon)                   1.36       1.18       1.43       1.07
  Weighted Average Natural
   Gas Liquids to Gas
   Ratio                         210%       222%       193%       180%

Commercial Services Volume
 (MMBtu/d)                    74,000     92,000     81,000     95,000

North Texas Gathering (2)
  Wells Connected                 46         57        135        157

Treating Plants in Service
 and GPM
  Treating and DPC plants
   in service (3)                195        195        195        195
  Total GPM of treating
   plants in service (4)      10,718      9,863     10,718      9,863

  (1) Volumes in this period were significantly negatively impacted by
   Hurricane Gustav, Hurricane Ike and Tropical Storm Edouard on these
   systems.
  (2) North Texas Gathering wells connected are as of the last day of
   the period and include Centralized Delivery Point ("CDP")
   connections where Crosstex connects multiple wells at a single
   meter station.
  (3) Treating plants and Dew Point Control ("DPC") plants in Service
   represents plants in service as of the last day of the period.
  (4) The numbers represent the total Gallons per Minute ("GPM")
   capacity of all the Amine Treating plants in service as of the last
   day of the period.
                        CROSSTEX ENERGY, INC.
                 Selected Financial & Operating Data
         (All amounts in thousands except per share numbers)

                          Three Months Ended      Nine Months Ended
                             September 30,          September 30,
                         --------------------- -----------------------
                            2008       2007       2008        2007
                         ----------- --------- ----------- -----------
                              (Unaudited)            (Unaudited)
Revenues
  Midstream              $1,310,226  $926,726  $4,087,683  $2,721,193
  Treating                   19,036    13,080      48,106      40,160
  Profit from Energy
   Trading Activities           648       587       2,332       2,180
                         ----------- --------- ----------- -----------
                          1,329,910   940,393   4,138,121   2,763,533

Cost of Gas
  Midstream               1,213,547   841,580   3,796,074   2,503,523
  Treating                    6,164     1,617      11,618       6,208
                         ----------- --------- ----------- -----------
                          1,219,711   843,197   3,807,692   2,509,731

Gross Margin                110,199    97,196     330,429     253,802

Operating Expenses           46,998    31,706     127,415      87,678
General and
 Administrative              17,613    16,886      51,767      45,074
(Gain) Loss on
 Derivatives                  1,295       526      (7,193)     (3,969)
(Gain) Loss on Sale of
 Property                        68         2      (1,591)     (1,819)
Depreciation and
 Amortization                32,848    27,477      97,039      76,880
                         ----------- --------- ----------- -----------
  Total                      98,822    76,597     267,437     203,844

Operating Income             11,377    20,599      62,992      49,958

Interest Expense and
 Other                      (16,903)  (20,390)    (46,542)    (55,826)
                         ----------- --------- ----------- -----------
Income (Loss) from
 Continuing Operations
  before Income Taxes,
   Gain on Issuance of
   Units of the
   Partnership and
   Interest of
   Noncontrolling
   Partners in the
   Partnership's Net
   Income (Loss)             (5,526)      209      16,450      (5,868)
Gain on Issuance of
 Units of the
 Partnership                      -         -      14,748           -
Income Tax Provision         (2,061)     (914)    (10,731)     (2,111)
Interest of
 Noncontrolling Partners
 in the Partnership's
 Net Income (Loss)            7,833     2,533       7,280      11,402
                         ---------------------------------------------
Income from Continuing
 Operations                     246     1,828      27,747       3,423
Income from Discontinued
 Operations, net of
 Taxes and Minority
 Interest                       294       352         951       1,024
                         ----------- --------- ----------- -----------

Net Income               $      540  $  2,180  $   28,698  $    4,447
                         =========== ========= =========== ===========

Net Income per Common
 Share

  Basic Earnings per
   Common Share          $     0.01  $   0.05  $     0.62  $     0.10
                         =========== ========= =========== ===========

  Diluted Earnings per
   Common Share          $     0.01  $   0.05  $     0.62  $     0.10
                         =========== ========= =========== ===========

Weighted Average Shares
 Outstanding:

  Basic                      46,299    45,996      46,285      45,978
                         =========== ========= =========== ===========

  Diluted                    46,649    46,655      46,626      46,591
                         =========== ========= =========== ===========

  Dividends per Common
   Share                 $     0.32  $   0.24  $     1.06  $     0.69
                         =========== ========= =========== ===========

    CONTACT: Crosstex Energy
             Investor Contact:
             Crystal C. Bell, 214-721-9407
             Investor Relations Specialist
             or
             Media Contact:
             Jill McMillan, 214-721-9271
             Manager of Public & Industry Affairs

    SOURCE: Crosstex Energy

 
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