1179060--3/1/2010--CROSSTEX_ENERGY

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{tax, income, asset}

{gas, price, oil}

{debt, indebtedness, cash}

{operation, natural, condition}

{stock, price, operating}

{loss, insurance, financial}

{regulation, change, law}

{personnel, key, retain}

{acquisition, growth, future}

{operation, international, foreign}

{control, financial, internal}

{cost, regulation, environmental}

{provision, law, control}

{product, market, service}

{capital, credit, financial}

{customer, product, revenue}

{investment, property, distribution}

Risks Inherent In Our Business Our profitability is dependent upon prices and market demand for natural gas and NGLs, which are beyond our control and have been volatile. Our substantial indebtedness could limit our flexibility and adversely affect our financial health. We may not be able to obtain additional funding for future capital needs or to refinance our debt, either on acceptable terms or at all. Due to current economic conditions, our ability to obtain funding under our new credit facility could be impaired. Due to our lack of asset diversification, adverse developments in our gathering, transmission, processing and producer services businesses would materially impact our financial condition. Many of our customers drilling activity levels and spending for transportation on our pipeline system or gathering and processing at our facilities have been, and may continue to be, impacted by the current deterioration in the credit markets. We are exposed to the credit risk of our customers and counterparties, and a general increase in the nonpayment and nonperformance by our customers could have an adverse effect on our financial condition and results of operations. Our use of derivative financial instruments does not eliminate our exposure to fluctuations in commodity prices and interest rates and has in the past and could in the future result in financial losses or reduce our income. We may not be successful in balancing our purchases and sales. We must continually compete for natural gas supplies, and any decrease in our supplies of natural gas could adversely affect our financial condition and results of operations. We are vulnerable to operational, regulatory and other risks due to our concentration of assets in south Louisiana and the Gulf of Mexico, including the effects of adverse weather conditions such as hurricanes. Increased regulation of hydraulic fracturing could result in reductions or delays in natural gas production by our customers, which could adversely impact our revenues. A substantial portion of our assets is connected to natural gas reserves that will decline over time, and the cash flows associated with those assets will decline accordingly. Growing our business by constructing new pipelines and processing facilities subjects us to construction risks, risks that natural gas supplies will not be available upon completion of the facilities and risks of construction delay and additional costs due to obtaining rights-of-way and complying with federal, state and local laws. Acquisitions typically increase our debt and subject us to other substantial risks, which could adversely affect our results of operations. We expect to encounter significant competition in any new geographic areas into which we seek to expand and our ability to enter such markets may be limited. We may not be able to retain existing customers or acquire new customers, which would reduce our revenues and limit our future profitability. We depend on certain key customers, and the loss of any of our key customers could adversely affect our financial results. Our business involves many hazards and operational risks, some of which may not be fully covered by insurance. The threat of terrorist attacks has resulted in increased costs, and future war or risk of war may adversely impact our results of operations and our ability to raise capital. Federal, state or local regulatory measures could adversely affect our business. Our business involves hazardous substances and may be adversely affected by environmental regulation. Our success depends on key members of our management, the loss or replacement of whom could disrupt our business operations. Risk Inherent In An Investment In the Partnership Crosstex Energy, Inc., or CEI, controls our general partner and owned a 25.0% limited partner interest in us as of January 31, 2010. Our general partner has conflicts of interest and limited fiduciary responsibilities, which may permit our general partner to favor its own interests. Our unitholders have no right to elect our general partner or the directors of its general partner and have limited ability to remove our general partner. Cost reimbursements due our general partner may be substantial and will reduce the cash available for distribution to our unitholders. The control of our general partner may be transferred to a third party, and that third party could replace our current management team. Our general partner s absolute discretion in determining the level of cash reserves may adversely affect our ability to make cash distributions to our unitholders. Our partnership agreement contains provisions that reduce the remedies available to our unitholders for actions that might otherwise constitute a breach of fiduciary duty by our general partner. We may issue additional units without our unitholders approval, which would dilute our unitholders ownership interests. Our general partner has a limited call right that may require our unitholders to sell their common units at an undesirable time or price. Our unitholders may not have limited liability if a court finds that unitholder action constitutes control of our business. Tax Risks to Our Unitholders Our tax treatment depends on our status as a partnership for federal income tax purposes, as well as our not being subject to entity level taxation by individual states. If the IRS treats us as a corporation or we become subject to entity level taxation for state tax purposes, it would substantially reduce the amount of cash available for distribution to you. If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted and the costs of any contest could reduce the cash available for distribution to our unitholders. Unitholders may be required to pay taxes on our income even if they do not receive any cash distributions from us. Tax gain or loss on the disposition of our common units could be different than expected. Tax-exempt entities and foreign persons face unique tax issues from owning common units that may result in adverse tax consequences to them. We will determine the tax benefits that are available to an owner of units without regard to the specific units purchased. The IRS may challenge this treatment, which could adversely affect the value of the common units. The sale or exchange of 50% or more of our capital and profits interests within a 12-month period will result in the termination of our partnership for federal income tax purposes. The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis. As a result of investing in our common units, you will likely be subject to state and local taxes and return filing or withholding requirements in jurisdictions where you do not live. We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders. A unitholder whose units are loaned to a short seller to cover a short sale of units may be considered as having disposed of those units. If so, he would no longer be treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition.

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1179060--3/1/2010--CROSSTEX_ENERGY_LP